When contemplating your next real estate transaction, I believe that you should follow some guidelines to help yourself and everyone involved. It is hard to even know where to begin,……I have seen and been involved in thousands of transactions as a buyer, seller, managing broker or interested Realtor. I have seen the difficulties and disappointments of a failed transaction, as well as many successful closings.
The most common errors or failed transactions are caused by the agent’s themselves. An uneducated buyer or seller kills many deals…….EDUCATION IS THE REALTOR’S RESPONSIBILITY! I believe that the agent should show their clients why the offer in hand is something that they should seriously consider, or what are the odds of a better deal coming? (this can easily be shown by looking at the trends of the market with our record keeping-we call this a CMA).
I also believe that the agent has the responsibility to write a well thought out offer that can be seriously considered—-without a forced counter-offer. All details should be considered beforehand when possible. Price should be the negotiated item, and if at all possible the agent should have discussion with the listing agent or selling agent to make sure that possession, closing date, personal property, and other easily negotiated items are known BEFORE the offer is written. If all the terms work, the chances of a closing will increase tremendously. The rule of thumb is “don’t write an offer that requires a counter”, because when terms are countered, price usually gets changed too!
A WARNING FOR THE BUYER: Beware of the investor or uninformed family member (usually a parent) who hasn’t looked at Real Estate or helped with the sorting of the properties. Typically, at the last minute the investor or family member attempts to take control and encourages the buyer to make an unreasonable offer, or look further…..even after the buyer has looked at everything. I always advise my buyers that if a parent is involved, get them involved early so that they won’t be nervous and cause the buyers to make a poor decision. It is easier for a parent to squelch a deal vs. endorse the deal because it is safer for the PARENT. How can anyone assess risk, or know the market without taking a thorough look at the other choices in the market?
Another big problem that we are dealing with now is the fact that cash is at an all time of scarcity for the bulk of our buyers. A well informed seller (again the agent’s responsibility) will understand that the buyer will need help with the closing costs. Typically, buyers understand (or should know-hopefully the buyer has an “educating Realtor”) that they will pay more for the benefit of the seller’s help. FHA is now required 3.5 percent of cash from the buyer and the $2500-$3000 in closing costs is usually paid by the seller with a reasonable offer from the buyer. A seller needs to know, “What is my Net in pocket at closing” and a buyer usually wants to know, ” what is my cash requirement and what will my payment be?”
We also are faced with the dilemma of the reaction and emotions of buyer and sellers in the negotiation process. Not always, but most buyers want to buy for as low as possible and of course, most sellers want to sell for all that the market will allow. The motivation to buy or sell plays into the transaction of course. A good listing agent will price the property competitively and a good buyer’s agent will help the buyer to recognize if the house is listed below market or above market. Emotions or feelings become problematic if the transaction is not tempered by the agents with LOGIC!
The question comes up often about why the buyer and seller remain separate in the transaction. The easy answer is, negotiations are typically better handled by a “third party”, and ONE party or another usually is better served if the buyer and seller meet together. Also, verbal agreements and statements can be twisted later, and are totally un-enforcable and can easily cause lawsuits. I do agree that a seller sometimes can explain a property better, but a good listing agent should gather and present all the information for the property, so the need for a meeting is minimized.
I believe that timeliness is very important. I try to keep the buyer and seller from sleeping on a deal after the buyer’s eyes light up. Nothing is gained, and the risk is great that the delay will cause disappointments. A weak agent is afraid to ask the buyer to decide…if the property fits, make an offer before another buyer has time to make an offer. The odds increase that the transaction will close when negotiations don’t drag out. Seller’s should reply swiftly too! In the Real Estate world, nothing is more important than delivering responses when buyer’s and seller’s are making decisions! Many properties are sold with a process of offers and counter-offers…..please don’t REJECT the offer, COUNTER the offer. In this market, few buyers are making FULL PRICE OFFERS with the first offer….
Also, the buyer should be pre-approved and understand the financing terms BEFORE they see the perfect property. A buyer many times is very nervous, and a good agent will make sure the buyer knows when a property is exceptional. Truth is, an exceptional property will sell quickly in most markets….the definition of the exceptional property is when it meets the buyer’s needs in terms of need, price and location. These properties are usually very difficult to duplicate! …Find an agent that you can trust—-a great agent will tell you NOT TO BUY certain properties too! Indiana law creates “buyer agency”-the agent is representing YOUR BEST INTERESTS.
I could write forever on this, but this is supposed to be brief…….Remember to be courteous…please be on time to the showing if you are the buyer. Seller’s: please have the house ready to show, and be prepared to show your property, even on short notice. REMEMBER MR. SELLER: IMPULSE BUYS DO OCCUR EVERYDAY! Be prepared!
Even if the price seems low, make sure you don’t let the buyer slip away without a chance. In this market, if you think you are selling low, before you say NO, look and see what you might be able to buy the next house for……the amount of TRADE DIFFERENCE is really more important than what you are selling for!!!!
Even though the negotiations appear to be adversary sometimes, everyone should keep in mind that we all want the same thing….to see the closing occur!
Please START some dialogs here……there is much more to discuss! Thank YOU!
