Real Estate Sellers Should Never Negotiate a Verbal Offer

  

Under no circumstances should a real estate seller ever negotiate a verbal offer. It does not matter who is presenting the offer to purchase, a verbal offer should be avoided at all costs. If a verbal offer is passed along to a seller by the way of a Realtor, shame on the Realtor. Whether it is a buyer’s Realtor of the seller’s Realtor they should know better than to place a Seller in such a bad negotiating position. Steer clear of professionals that practice such poor behavior.

 

Included in a written Offer to Purchase should be the complete terms of the sale. Many of these items are potentially critical and all of them are entirely negotiable by the Seller.

 

Minimally an offer to purchase real estate should contain:

• Total price

• Deposit amounts
• Additional deposits and dates
• Identify holder of deposit money
• Contingencies
  • Financing amount and when obtained
  • Inspections and when preformed
  • Who pays for inspections
  • Permits or approvals
  • Who pays for permits and approvals
• Commission amounts
• Who pays for commissions
• What’s included in sale (what goes & what stays)
• Time allowed to meet contingencies
• Conflict remedies
• Special provisions
• Closing transaction date
• Location of closing
• Identification of property
• Date

 

By negotiating a verbal offer the seller is placed in two very bad situations.

First the buyer is talking (remember talk is cheap) one sidedly about the price without making an actual commitment because there does not exist deposit money from the buyer at this point to bind the outcome of the discussions. Everything that has been spoken of can change on a simple whim.

Secondly and more importantly a buyer can pick apart a seller and take extreme advantage of the seller by negotiating piece meal, one item at a time. Sellers need to see the entire proposal in order to make a good decision and prevent being taken advantage of.

By working verbally a seller could find themselves in a position where they are all excited by concentrating solely about the price only to be disappointed weeks later by any of the other sales terms. Perhaps a seller finds out much later on in the process that the buyers have a house to sell or that the buyers need the seller to carry a second mortgage in order to obtain the necessary financing. It could even be something strange like the buyers want the house to come fully furnished. With the exception of price all of the other many important terms have been left wide open because the complete sale specifications were not in print from the very beginning.

The point is the seller cannot be sure what the terms of an agreement are and they do not know what can unexpectedly appear later on because they were not spelt out early on in the negotiations. 

 

In order to have a clear meeting of the minds, there needs to be a complete understandings from both side of all the agreed upon terms. An offer to purchase needs to be in writing, contain all the necessary terms of agreement and contain a good faith binding deposit.

If you are self marketing do not fall into the verbal offer trap. Accept and discuss only what is in writing and is accompanied by a deposit. Remember that if you are unclear about what any of the terms of the sale are you need to definitely seek out legal advice before you sign.

 

 

 In my new book LISTING REALTORS ARE OBSOLETE. USE THE INTERNET TO SELL YOUR PROPERTY AND SAVE THOUSANDS OF DOLLARS IN COMMISSIONS I explain many of the changes and conflicts of interests that take place and have a negative impact on the sellers of real estate and how so many Realtors are actually counterproductive and harmful to the Seller’s cause.

I have more than 25 years experience in the Real Estate Industry as a Broker, Builder, Developer and Investor. I have bought and sold many, many properties directly without the use of MLS or listing Realtors. In fact I have sold entire subdivisions with very little involvement from the Realtor community and I can show you how to use the Internet to sell your property without wasting your money on a listing Realtor.

Sellers do not need the negative outdated services of listing Realtors. I will show you how to work directly with buyers and cooperate with the type of Realtors that are entirely worthwhile, the buyer’s agents. My 12 PRINCIPLES FOR SUCCESSFUL ONLINE PROPERTY SELLING is available online for free at http://www.AskJamesJoseph.com so be sure to get your free copy.

My mission is to bring about the needed changes in this industry and reestablish control for the Sellers once more by educating sellers and property owners how to perform many of the simple steps to selling on their own.

 

 

 

Real Estate Marketing Advice: Now is the Time to Get Very Serious About Selling. The R/E Maven

 

 

If you truly desire to sell your property now is the time for you and everyone involved to get extremely serious about the sales task.

In the very near future trillions of dollars worth of real estate will be competing with the sale of your real estate. If you do not beat this wave you will find your properties value in decline as you attempt to compete with properties that are for sale at lower prices.

 

Simple supply and demand will affect your values to go lower. Unfortunately there is no other alternative. An increased supply of homes for sale that the government will be forced to sell at below market prices will drag everyone’s values down. The additional demand needed to absorb this enormous amount of housing stock will only be increased if the prices are decreased to such a point that new buyers cannot resist the urge to take advantage of this new opportunity. Take a good look at the current real estate market. Very few homes are selling and the interest rates and selection could not be better. This leaves the only single variable available that can change the current demand to be price and price alone.

 

So if you are serious about selling your real estate here is what you need to do.

• Move swiftly in order to beat the influx of bargain priced property
• Make sure your marketing is top notch
  • Your property is included on all the major Internet sites
  • Full assortment of pictures
  • Consider video tour
  • Pay for better placement on Internet sites if available
  • Include great property descriptions
  • Use local and regional newspaper Internet ads
  • Open houses
  • Signage – do not keep the for sale fact a secret- now is not the time
• Price needs to accurate. Do not play the pad the price game. You will lose that and more if you do not more your property soon.
• Analyze your Realtor or agent. If you suspect they are not doing everything in their power to market your property run don’t walk to find a better alternative.

 

 

The proposed bail out will have an adverse effect on the value of real estate.

With the very real possibility that the real estate market and values are going to go south, sellers need to protect themselves and do everything that can to sell their property before the further decline in property value.

 

 

 

 

 

Real Estate Marketing Advice: Realtor sinks to new low! The R/E Maven

 

 

I was surprised by the comments a Realtor recently made in an article about FSBO’s in the question and answer section of www.trulia.com. What was particularly bothersome in the article was the Realtors use of scare tactics.

The Realtor questioned whether a For Sale By Owner (FSBO) female would be prepared to have someone else around, at a moments notice, to help with security during a showing.

This Realtor did give equal billing to the men by also questioning the comfort and security a male would feel about allowing strangers into the home?

Is this a new low point in the need for Listing Realtors to maintain or justify their necessity?

The fact is that most Realtors are in fact females. Are they so concerned about being accompanied by others during a showing that they refuse to perform showings if a suitable person cannot be found?

What about lock boxes? Realtors have relied upon these for years. The use of a lockbox almost guarantees that only strangers will enter the property and this will take place when there is not a soul to watch over the real or personal property.

Let’s face it showing your home is an imposition but a very necessary one in order to secure a buyer. There is no other alternative. Buyers need to enter and see.

So according to the Realtor/Author of the original article, he or she feels that the female Realtors do not need to worry about their security and can be unaccompanied with buyers but the female property owner is running a greater risk.

And the security of the male is also a problem.

The world is full of dangerous people and I do think everyone needs to take precautions and have a back up plan if possible. Simple steps such as requiring a buyer to register and then following up with a phone call or email to verify the information is a wise move.

Questioning where a buyer currently lives or works and if the buyer intends to bring along their partner (how is that for politically correct) or children is always appropriate.

But if you decide to list your property for sale with a Realtor just because of scare tactics like this then you might as well stop the mail, UPS or even the oil delivery from coming.

Remember showing do not have to occure on a moments notice. By appointment is a usual and customary situation for showings.

 

 

Realtor attempts to justify usefulness by using scare tactics on For Sale By Owners (FSBO). The truth is most property is shown and seen by complete strangers. Cooperating agents (buyer’s agents) in most cases have never been to a property before.

Simple measures can be taken to gain security in showing your own property. 

 

 

 

 

 

Real estate marketing advice: Reason number 6 why sellers need to perform property inspections before marketing.

 

 

Before a seller places a property on the market they need to have all property inspections performed before they self market or list for sale thru a Realtor.

 

The reasons that performing these inspections before you seek a buyer are so important include:

1. Establishment of price
2. Learning the exact nature of the property
3. Misrepresentations
4. Avoiding price renegotiations
5. Error and omissions insurance coverage
6. Maintain arms length negotiations

 

Reason #6 is designed to maintain distance in between the seller and buyer.

 

There is an old saying that familiarity breeds contempt. Well, when it comes to a real estate transaction familiarity breeds altered negotiations.

Anything a seller does or says will most often be used against them in the arena of negotiations. The more a seller keeps his or her distance from a buyer or a buyer’s agent the less chance they will have to figure out what make a seller tick. What their motivation are for selling. What their negotiating strategy or lack of one is.

 

If a seller performs the inspection reports and gives a copy to an interested buyer before they negotiate they in effect create some very useful and necessary distance between them so negotiations will not be based from a point of familiarity.

  

If a seller is not careful they will usually tip their hand and show the buyers the real motivation behind their contemplated sale. These reasons vary greatly but this information can be used by the buyer to negotiate a better deal for themselves if they are made aware of the true reasons a seller is selling.

 The less time a seller is in the company or direct verbal communications with a buyer the better off the seller will be. Let the inspection reports do the talking.

 

At some point in the sales process it will become inevitable these reports are performed.

It is entirely in the SELLER’S BEST INTEREST to maintain this control and have these inspections performed at their own expense. In the long run it will always save the seller time, aggravation and money.

 

 

By maintaining a safe communication policy with the buyers a seller will insulate themselves from the possibility of sharing too much information with the buyers. Performing the home inspections in advance enables the seller to keep the proper distance needed to protect this policy.  The seller should let the inspection reports do the talking for them.

 

 

 

Real estate marketing advice: Reason number 5 why sellers need to perform property inspections before marketing.

 

Before a seller places a property on the market they need to have all property inspections performed before they self market or list for sale thru a Realtor.

 

The reasons that performing these inspections before you seek a buyer are so important include:

1. Establishment of price
2. Learning the exact nature of the property
3. Misrepresentations
4. Avoiding price renegotiations
5. Error and omissions insurance coverage
6. Maintain arms length negotiations

 

Reason #5 is entirely for the Sellers self-protection.

 

The inspection companies (and every professional) that the seller hires, must possess and show proof of proper error and omissions insurance or general liability insurance coverage. These insurance certificates are to be requested and obtained by the seller before any work is paid for.

The property inspection company is providing the seller with a fairly in-depth report concerning the exact nature about the property condition. This report will become the basis by which several different groups will form some very important decisions upon. The sellers shall base the worth of the property on the condition of how the property does or does not compared to other properties. Buyers will use to it formulate what they believe the property will need for repairs or improvements in the immediate future.

If the analysis of the inspection company should contain any incorrect information the sellers must have the security in knowing that they reiterated information that came from a reliable and fortified entity and that they are protected not just by the inspection company themselves but also by the insurance company that insures the inspection work.

Coldwell Banker Residential Brokerage, part of the largest real estate sales companies in the country has customers sign a “Disclaimer regarding service providers” which states the following “Coldwell Banker has not conducted an investigation into the qualifications or financial status of these service providers. So if the largest sales company feels the need to use this disclaimer the seller should demand that the service provider has adequate insurance coverage.

”It is nice to believe that the firm that is hired will stand up and cover their work by making good on any errors or oversights. However a seller needs to be guaranteed that this is actually the case? Sellers do not know the financial shape or ability of the inspection company as to whether they are able or not to make the seller whole after an unexpected issue arises. The seller is on a completely different footing if they know, in advance, who the actual insurance provider of the inspection company is.

 

 

 

 

At some point in the sales process it will become inevitable these reports are performed.

It is entirely in the SELLER’S BEST INTEREST to maintain this control and have these inspections performed at their own expense. In the long run it will always save the seller time, aggravation and money.

 

By demanding that the home inspection company a seller chooses to use has proper insurance coverage, a seller is in the position where the work will be guaranteed by two companies, the inspection company and their insurance company. Sellers cannot afford to risk their home sale to inadequate risks and hoping an inspector has insurance is just not good enough, they need proof.

 

 

 

Real estate marketing advice: Reason number 3 why sellers need to perform property inspections before marketing.

 

Before a seller places their property on the market they need to have all property inspections performed before they self market or list for sale thru a Realtor.

 

The reasons that performing these inspections before you seek a buyer are so important include:

1. Establishment of price
2. Learning the exact nature of the property
3. Misrepresentations
4. Avoiding price renegotiations
5. Error and omissions insurance coverage
6. Maintain arms length negotiations
7.  

Reason #3 concerns misrepresentations or more accurately how to avoid making misrepresentations.

When a truly interested buyer looks at the property they will most likely have questions about the property. Since the Realtors cannot be relied upon to provide the answers, a seller needs to be able to turn to someone or something else for the appropriate answers. The buyer’s real estate agent will not be familiar with the property so they cannot be expected to know and if the seller is unlucky enough to have a listing agent, these agents and their own forms make it perfectly clear that all their information comes from the seller anyway.

So what a seller needs to do in order to have correct answers available is to have a professional property inspector perform the necessary inspections before the property is put up for sale.

 

There are four ways in which a seller can handle property specific questions:

1. From the information on the inspection reports
2. Information that the sellers definitely knows the answer to (NO GUESSING)
3. It is perfectly acceptable to respond that the seller simply does not know the answer
4. Provide the buyer with the opportunity to obtain the answers elsewhere.

 

Remember that incorrect answers can later be interpreted as decieptful or misleading answers.

At some point in the sales process it will become inevitable these reports are performed.

It is entirely in the SELLER’S BEST INTEREST to maintain this control and have these inspections performed at their own expense. It will always save the seller time, aggravation and money.

 

Sellers need to be cautious in order to avoid any claims of misrepresentation. Although this can be done innocently enough it is easy to avoid by simply having a property inspection performed before they market their property.

 

Real estate marketing advise: Reasons 1 & 2 thet seller needs to perform property inspections before they go to market. The R/E Maven

Before a seller places their property on the market they need to have all property inspections performed before they self market or list for sale thru a Realtor.

The reason that performing these inspections before you seek a buyer are so important include:
1. Establishment of price
2. Learning the exact nature of the property
3. Misrepresentations
4. Avoiding price re-negotiations
5. Error and omissions insurance coverage
6. Maintain arms length negotiations

Reasons 1 and 2 both deal with pricing. Before a property value can be absolutely determined the owner/seller must know what he or she is actually selling. In order to learn the exact nature about your property you need to have an unbiased professional take a good look at everything about the property. Through an experienced inspector a property owner will learn the present status of the property that they may not have been aware of. This information can then be used to establish a firm basis to build a solid price upon.
Most owners tend to look at their property through rose-colored glasses. After many years or shared history and experiences sellers become emotionally attached. Who can blame them? So many of their fond memories may have occurred at this location. But what they seek to do now is to start the process of emotionally involving buyers. And one of the best ways to build trust in the property for a buyer is to educate them about the entire property. Avoid any surprises that might effect the buyers confidence at a later date.
An accurate disclosure of conditions up front is much better than surprises later on in the transaction process.
At some point in the sales process it will become inevitable these reports are performed.
It is entirely in the SELLER’S BEST INTEREST to maintain this control and have these inspections performed at their own expense. It will always save the seller time aggravation and money.

 

Realtor conflict of interest: Who to believe, The Dept. of Justice or The National Association of Realtors. The R/E Maven

 

 

 

The Department of Justice announced a proposed settlement to the now almost three year old, civil antitrust lawsuit that they filed against the National Association of Realtors.

 

The Justice Department announced that the “settlement will result in more choices, better services and lower commission rates for consumers.

The Department of Justice challenged the National Association of Realtors polices and related rules that obstruct real estate brokers who use innovative Internet-based tools to offer better services and lower costs to consumers. These policies by the National Association of Realtors prevented consumers from receiving the full benefit of competition. Under the terms of the announced settlement, The National Association of Realtors will repeal its anticompetitive polices and require affiliated Multiple Listing Services to do the same.

 

On the other hand the National Association of Realtors President Richard F. Gaylord recently announced in Realtor Magazine that the proposes settlement is “a win for consumers and Realtors.” Further stating that the proposed settlement resolves Department of Justice concerns, ensuring a level playing field for brokers operating a virtual office Web site and that the settlement affirms the value of the Multiple Listing Service as a tool of broker-to-broker cooperation.

 

So who are we to believe, the Department of Justice or The National Association of realtors? Both the Realtors and the Government spent an enormous amount of money on the action. Who is telling the truth and who do you suspect is putting a lot of spin on this one?

 

Perhaps tomorrow I will examine this a little deeper.

 

 

 

Real estate marketing advice: Check up on your Realtor and review your online listing information. The R/E Maven

 

 

Please go to www.realtor.com and lookup MLS#754553. It happens to be an oceanfront property for sale with an asking price of $10,250,000. It is known as “Seaweed” and is located in Newport Rhode Island somewhere in the Ocean Avenue area.

 

What is so special about this listing that I ask you go view it for yourselves? Namely what the heck is this Realtor attempting to sell for more than 10 million dollars? I cannot tell. There is only one Arial photo on the site and it is from hundreds of yards away. I’ll bet this property has all sorts of great and interesting character but I have to use my imagination to fully enjoy the experience of its architecture.

What are the seller or this agent thinking by making such a marketing 101 mistake?

Is this the agent’s fault? Is he perhaps too lazy or cheap to have some class A photography performed and shared. Or is it more than likely at the seller direction that buyers are to be left to guess what 10 million dollars will buy. Could it be that the seller’s ego so far out of line that they believe this one poor photo is good enough and why did not the agent demand better for all his marketing efforts. There is no answer good to these questions to justify this mistake.

My point to all of this is to demonstrate to other sellers that they should not be intimidated as to whether they are capable of marketing their own property. If this type real estate can suffer through this type of marketing with the assistance of a real estate professional then you can feel good about your own marketing efforts without an agent.

With the enormous exposure possibilities of the Internet sellers need visit the most popular sites and check and see that their Realtor has their listing located there and that all its information is correct and valuable.

Oh and one last thing, did you notice that the address to this property on the Multiple Listing Service is kind of a secret?

 

 

Real estate mrketing advice; Have you ever wonder why Realtors need watch dogs? The R/E Maven

 

 

Some of the national brand real estate offices have a computer generated phone lead system that is necessary for several reasons.

The public relations reason that these companies most proudly display to potential customers for the need of the system is how fast a response is made to an inquiry about a particular property.  The system is set up so that it places the agents in a move it or loose it situation. The Realtor has only one chance to answer the phone or loose the lead. The second reason and I believe the actual reason for this system is to make sure that there actually is a response.  I don’t blame these companies for developing this system. They spend hundreds of thousand of dollars on advertising to make the phone ring and then agents don’t return the calls. So then these companies need to spend millions more upon a watchdog system to ensure the leads are followed up on.

 

The last study of response time that I had seen is several years old. This study claimed that the national average response time by real estate agents to be 72 hours! I would like to add and that’s if they respond at all. Isn’t this ridiculous?  A three day average to respond and that is the national average. Many responses take even longer. I can stand to wait three days for my cable company to show up. Can you imagine if it took your cable company three days just to call you back, never mind show up and perform the repair.

 

Five days ago I contacted seven different real estate agents that had land listed for sale on loopnet, requesting additional information. I received a response from only two. That’s a 29% response rate and the sad part is from my experience this is not uncommon.

Last fall I performed a test for some very close friends of mine. They had helped one of their sons purchase a commercial piece if land in Savannah and it has become a huge problem in their lives and they now need to sell this land that has a new building upon in and is located at least 1000 miles away from where they live. Neither they nor I know of any commercial real estate brokers in Georgia so I looked up seven of the larger firms and gave them each a call. I pretended to be a buyer in search of the exact type of property my friends will need to list for sale. From this test I believed that I could accomplice several things. First, I could check out the competition. See what’s for sale that is similar to theirs. Second I could get a ballpark value of what their property is worth by comparing it to the competing properties and the third and most importantly I would become familiar with what agent in Savannah is a real go getter that should list this property for sale. An agent who hustles to show me listings, finds out about my needs and perhaps how solid my finances are in order to perform. The results of the test were awful. No office or agent was impressive whatsoever. I spoke live with seven different agents. Some of these included the principle brokers and owners. I left a message for an eighth agent and that was the only agent that ever got back to me.

This was an easy exercise for them to pass. I did not make it difficult. The specifications that I gave out were simple to fulfill and I only heard back from one agent.

Surely the real estate market in Savannah or any other place in the entire country cannot be good enough to ignore a ready, willing and able buyer but how would they know because not one of these agents spent enough time with me to find out.

 

 Keep in mind that this would not have been a waist of time for any of these agents because I was going to list the parcel for sale with the most impressive broker. There now exists a small industrial site that will be sold in their back yard but not through this inefficient bunch.