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New Agent Bootcamp Program Table of Contents Section Seven - Active Listings, Negotiations, Closing Section Seven Section Expectations & Tasks………………………………………………………………..…………………...4 Listing Activation Preparations Photography Scheduling………………………………………………………………………..………………...…5 Gathering Missing Documentation & Forms…………………………………………………………...…...6 Photo Day Agent Checklist…….………..……………………………………………………………………...…..7 Review listing in MLS…………………………………………………………………………………………….…...8 Live Listing Showings on your listings……...………….…………………………………………………………………...…..9 Marketing on your listings………...…………………………………………………………………………..…. 10 Seller updates and communications……...…………………………………………………………………....12 Reevaluate Pricing & Marketing Strategies……………………………………………………………….....13 Seller Negotiations Multiple Offer Situations…………………………………………………………………………………………...26 Presenting Offers to Sellers……………………………………………………………………………………….33 Tips & Tricks for Negotiating for your Sellers……………………………………………………………..34 Mutual Transition to TC “Pass the Baton Conversation”………………………………………………………….45 Expectations on Inspections - Sellers Perspective……………………………………………………….47 Home Inspection Tips for Sellers……………………………………………………………………………….51 Seller Repairs…………………………………………………………………………………………………………..68 Closing Expectations Final Walk Through…………………………………………………………………………………………………...69 Review of Settlement Statement………………………………………………………………………………….70 2
Closing Table…………………………………………………………………………………………………………….76 NLA Standards & Expectations for Closing Process (gifts, pics)……………………………………..77 Keeping in Touch with your Seller……………………………………………………………………………….78 Section 7 Close Section Seven Test out……………...………………………………………………………………………………..88 3
Section 7 Expectations & Tasks Each week you will see an expectations & tasks list like the one below. Follow along and check off items as they are completed to assure you are on track each week. ❏ Arrive on time & prepared ❏ Attend scheduled KASH talk ❏ Attend Team Meeting ❏ Attend Sales Meeting ❏ Participate in all scheduled trainings ❏ Participate in Scripting calls ❏ Continue to study Script Book ❏ Practice scripting 30 minutes every day. ❏ In office every day making calls from 8am-11am minimum ❏ Preview 5 homes on your own ❏ Shadow a CT on a photo appointment ❏ Date: ____________________ Time: ___________________ Trainer: ___________________________________________ ❏ Track all LG activities ❏ Complete your Sunday Reporting for Meeting 4
Photography Scheduling Photography of your new listing will be scheduled by the Operations Manager. To initiate this, please answer the photography questions on her the Jotform New Upcoming Listing Submission & Activation #3. Photos need to be taken on new listings the Friday prior to listing activation to allow time for marketing preparations and ordering supplies. Once the appointment has been scheduled, you will receive a calendar invite via email for the date and time. Agents on a 60/40 split are expected to attend the photo appointment. Agents on a 75/35 split will not need to attend the photo appointment, as NLA staff will attend. Please make sure to provide any necessary details on unique situations to the OM in the notes section of the jotform submission. 5
Gathering Missing Documentation & Forms NLA as well as the MLS have set required documents for listing a home for sale. Please refer to the form pages in section 6 of Bootcamp. Required Listing Forms ● Form 1 - Listing Input ● Form 1A - Exclusive sale & listing agreement ● Form 7B - Seller Information undisclosed ● Form 17 - Seller Disclosure ● Form 22E - FIRPTA certification ● Form 22J - Lead Based Paint Disclosure (if applicable) ● Form 22K - Identification of Utilities ● Form 42A - Agency Disclosure, Multiple Brokers ● Lockbox Agreement ● LORA - receipt of Law of Real Estate Agency ● Form P6 - Wire Fraud Alert Agent will submit all completed forms with Jotform submission for activating a new listing. At this point, NLA’s listing manager will set up a SLACK channel specific to this listing. She will then notify you of any and all missing documents or signatures. Agent will be responsible for either collecting the missing items from the seller within 24 hours, or requesting listing manager to step in and assist in collecting these items. Listing manager will not collect items unless specifically asked from the agent to do so. Failure to collect all documents and signatures in a timely manner may result in listing not being able to be activated on planned activation date, and would have to be moved to the following Thursday for activation. 6
Photo Day Agent Checklist 7
Review Listing in MLS Using the documents you submitted with the Jotform listing activation form, the Listing Manager will completely input your listing for you. Her attention to detail and amazing way with words typically create an eye catching listing for marketing. However being that she is not familiar with the home, property, or client, it is extremely important that the Listing Agent review the listing in the MLS prior to activation. The Listing Manager will notify the team when the listing is entered into the MLS and ready for review. Listing Agent, Operations Manager, and Team Lead all will go in and review the listing for errors or changes needed. All listings are input under Managing Broker, Nykole Larson’s MLS. To review your listing you will need to login through her account. Access to her account is to be used only for review, and Agents are not allowed to make any changes or adjustments while in there. If Agent notices any issues, they are to notify Listing Manager through SLACK channel for her to adjust. MLS Login: 86007 Password: Request from OM or Listing Manager when ready (ever changing) 8
Showings on your Listings Agent should always discuss with their Seller on the preferred showing details. Specific days and times that are NOT good or BEST times. How much notice the seller needs prior to a showing? Agent should either add these details to the Jotform submission for listing activation, or add them to the SLACK channel for your listing. Listing Manager will set up Showing Time using the specific details that the Agent has provided, allowing other agents to schedule showing around your criteria. So it is extremely important to be detailed and accurate. For information about how Showing Time works, please refer to Bootcamp Section 5 book. Besides Showing Time, it will be noted in the listing that interested parties/agents contact YOU the listing agent and not Nykole the Managing Broker or the NLA staff. 9
Marketing on Your Listings Once your listing is active, Marketing begins! Below is a list of all marketing items, and who is responsible for the item. Pay special attention to the AGENT MARKETING section, and make sure you know what are your responsibilities. Of course, you can always go above and beyond! Effective marketing can make the difference of whether or not the home sells. NLA Staff: ● Input into MLS & Activate ● Brand Photos with NLA info and text codes ● Order Listing Power Tools Marketing Box ● Order Sign and any riders for property ● Input into KWLS (which syndicates to multiple websites, see diagram below) ● Schedule and pay for professional HDR photography (drone photos if applicable) ● Post Listing to Social Media ○ Facebook Paid Boosted ○ Instagram ● Post on KW Intranet ● Emailed to database ● Added to Monthly Newsletter ● Mail out just listed postcards to neighborhood farm ● Provide seller with shareable links to active home listing ● Reverse prospecting ● Open House Flyers and social media marketing NLA Agent: ● Mark ground for sign post ● Hang any riders on sign ● Place any Marketing Materials in home 10
● Doorknock the neighborhood at activation, pending, and sold ● Video made of home and neighborhood (could do facebook live, or other) post to social media ● Open House ***All completed items from lists above should be reported in SLACK channel for listing manager to include on Friday weekly updates to sellers KWLS Syndication Marketing 11
Seller Updates and Communications A seller needs to know what is going on with the sale of their home. Too many Real Estate agents get a client and then only check back in when they get an offer. Real Estate agents should regularly update their customers on the feedback from showings and about anything else that may concern them. Even if there are no offers, keeping in touch lets a seller know that you are doing something – and worth paying for. Often surveys are done, and the #1 complaint from consumers with towards real estate agents is a lack of proper communication. Real Estate agents who don’t communicate get bad reputations among their peers and their clients. There are some clues as a home seller you can observe before you hire an agent that will give you a pretty good indication of how things will be moving forward. Do they return your calls or emails promptly? In my mind, all phone calls or emails should be returned within an hour unless you are already with another client. There is no excuse for poor communication. Staying in touch is something all sellers have a right to expect from their Realtor. -Bill Gassett Plan to speak to your clients at minimum weekly. NLA Listing Coordinator will also be updating your clients weekly. She will be sending out a weekly update via email on Friday’s. Included in her update are: ● A mini CMA or market overview letting your seller’s know what is happening around them with homes selling, going active, or pending. ● A list of all marketing done on the home for the week along with any results that come with them. ● How many showings have been done in the week along with any feedback provided from showings on showing time or via email. ● Any Open Houses and results that were held from the week. Agents are responsible for providing any feedback received via telephone to clients or listing coordinator to add to her weekly update. Agents can use these updates to help discuss or negotiate items that may need attention to help get home sold. Repairs, cleaning, price, etc. 12
Reevaluate Pricing & Marketing Strategies PRICE THEIR HOME TO SELL, NOT SIT Sep 12, 2018 6:50:37 PM You recognize the importance of pricing a home to sell, but sometimes lofty goals and emotions can cloud the pricing conversation. Steve Schlueter, a Keller Williams agent for 19 years, offers techniques to help you move past humps and allow your sellers to see the right price for their home. The Importance of the Right Price “There’s a lot at stake for both you, the real estate agent, and seller when the home sits on the market,” says Schlueter. It is imperative you get the price of the home right the first time. Your reputation. T he client assumes that you are not doing EVERYTHING possible to sell their home. 13
Their profit. The longer a home sits on the market, the further the price drops. Research shows that a house that has to chase the market with repeated price drops will sell for less. Schlueter is adamant that, “If a home sits on the market for more than 14 days, the reason is price.” If it’s been two weeks, it’s time to ask the seller if they’re ready to re-evaluate the price of their home. Before you do, you must be confident about the price the home should sell at. Home Pricing 101 In S HIFT: How Real Estate Agents Tackle Tough Times, Gary Keller, co-founder of Keller Williams, teaches on the principles of a good pricing strategy. Effective pricing begins with identifying the right comparable properties. \"The right comps make the analysis more accurate and a seller's acceptance more likely. So what makes a property comparable? There are four main factors: location, size, amenities, and condition. Whether you use recent pendings and solds or active listings and expireds, you are attempting to assess the price range in which a home will sell,\" he writes. Schleuter adds, \"There are three prices for every home: premium, market, and wholesale. To set the price of a home, walk your client through each,” he says. “Make sure to compare active listings in competing neighborhoods – do not limit comparisons to their neighborhood.” Kelle – your AI-powered virtual assistant – has made this easier than ever! Through the Market Snaps f eature, you have access to neighborhood-specific market reports in the United States and Canada. Additionally, sellers must understand the reality of the market they are in and how it's moving. \"The direction in which a market is going and the speed at which it's moving determine pricing strategies,\" reminds Keller. *Here are some basic factors to watch to determine if you're in a buyers', sellers' or balanced market. 14
Inventory: How much is for sale, and is it rising or falling. Days on Market (DOM): How long it is taking properties to sell Price per Square Foot: A good comparative indicator of prices - when a group of properties has common qualities and features Changes in the Local Landscape: Monitor changes in major employers, shopping, schools, other services in the community, and changes in local laws that impact housing. \"Remember, market cycles are like a seesaw. It's the balance between the number of buyers on one side and the number of sellers on the other. More sellers drive prices down; more buyers drive prices up,\" says Keller. When the Price Is too High If you’ve discovered the home has been priced too high for the market it's in, “the tactic is to fix it elegantly with price adjustments to get it sold in a certain time frame,” says Schlueter. Here are some techniques to get your sellers onboard: Hit on emotion: Dianna Kokoszka, CEO of KW MAPS Coaching, says, “Come from contribution and focus on emotion. Ask your sellers to think of the reasons why they want to sell their home and remind them of their motivation. Remember, logic makes you think, emotion makes you act.” Educate: Make sure your sellers understand the market they are in and clearly outline why their home will not sell at its current price. Your local market can change quickly, so it’s imperative you stay plugged into your local numbers. With this education in hand, you can effectively move your clients in the right direction. Schlueter reminds us, “Ultimately, the market tells us if we are on track and are able to meet this objective.” Practice and deliver the scripts: Scripts are important for several reasons. They give you confidence and help you navigate the pricing conversation with ease. Kick off the pricing conversation with this script from KW MAPS Coaching: Seller: We just don't think that the market is nearly as bad as everyone thinks, and our house is a lot nicer than the others in the neighborhood. 15
Agent: [Insert Seller's Name], I can appreciate where you are coming from, and let's take a quick look at the market statistics for your area. Today there are [Insert Data] times the number of houses on the market than there were just a year ago, and as you can see sales are down approximately [Insert Data] percent. From a marketing standpoint, this theory is called supply and demand. Therefore, when the supply goes up and the demand goes down, what has to happen to pricing? Does it go up or down? Seller: Down. Agent: Let's do the right thing and do it based on the shifting market and price the home where it will sell, not a price that will cause it to expire. With the right pricing techniques, you will get the home sold, secure a profit, and establish a client connection that lasts long after the sale. Top 6 Myths About Pricing a Home For Sale March 7, 2016 By Bill Gassett 6 Home Pricing Myths Debunked Every seller wants to sell their home for the best possible price – and hopefully as quickly as possible. But accomplishing these goals requires taking a certain approach to the home sales process that many owners are unaware of. Without experience selling homes and an understanding of how the market works, it can be hard to get the results you want. The following six myths are commonly accepted as truth among many homeowners. You do not want to make the mistake of thinking these things are true, because they aren’t. In fact, belief in these myths plays a large part in why so many sellers fail to get the most out of their home sale. By believing these top 6 myths about pricing a home for sale you are setting yourself up for failure. 16
Getting your home priced accurately starts with picking a real estate agent you can trust. Keep in mind the best agents are usually the ones who don’t need a sale. You will get far better advice from someone who isn’t starving for money. Real Estate agents that need to make a sale tend to think about their pocketbook first and not giving the best possible advice. Recently I wrote about things to expect from your real estate agent when selling a home. The first item on the list is setting the correct list price! Waiting Longer Makes Better Offers Appear If you are willing to wait long enough and hold out for a good offer, it will come. This is a common assumption among many people. In fact, I probably have heard “we have all the time to wait things out” more than I care to in my real estate career. The opposite of the above statement is how real estate sales work the vast majority of the time – the longer your home stays on the market, the worse the offers will get or none at all. As a home sits on the market week after week, buyers start to wonder what is wrong with it. Why has it taken so long to sell? A lot of buyers may spend months looking through listings, so they can see your house when it first goes up, and then the next month, and then the next. Eventually, they assume that you are either pricing the home too high, or there is something seriously wrong with the property. Homes sell for the most money when they are on the market for less than 30 days in most markets. The number one question all buyers ask their real estate agent is “how long has the home been on the market.” Buyers ask this question for one reason – they want to know the likelihood a seller will negotiate and by how much. Right or wrong, the general assumption with most buyers is the longer a home is for sale, the most negotiating room there should be. This is why pricing a home correctly out of the gate is so critical. Time on market is not a sellers friend! As the days on market increase, history shows us that the gap between the listing price and sale price grows. The risks of overpricing a home are substantial. Many sellers just think they can drop the price later, and it 17
won’t matter. It will matter! If you overprice your home, the odds dramatically increase that you’ll sell it for less than you would have if priced correctly on day one. Quick Offers Means The Home is Priced Too Low A quick offer is an indication that you priced the house too low. This statement is one of the more common pricing myths among sellers. A quick show of hands by all the real estate agents reading would tell you they have heard many times from sellers that “they gave their home away” because it sold quickly. This is 100 percent false. The moment your home is listed on the market, it will be seen by multiple buyers. Depending on the area, it could be hundreds or even thousands of shoppers that at least skim by your listing as they filter through all the possible homes they could buy. If you have priced your home right, many of these buyers will be interested in it immediately. These buyers may have been shopping for weeks or months, looking for a home like yours at a competitive price point. With the right price in the right market, you could get multiple offers in a very short amount of time. This is especially true when there are a limited number of homes available to purchase. Inventory levels will often dictate how quickly a home receives an offer. You want offers on your home – from multiple buyers if possible. With multiple offers, you can encourage competition among buyers and hopefully get more for your home. You obviously do not want to price your home lower than it is worth, but you do want to price it low enough to get buyers excited and making offers. Hopefully the contract comes right after your Realtor puts up the listing! The key is finding a real estate agent you can trust who knows how to price a home for sale without leaving money on the table! Unique Marketing Brings Higher Prices If your home is marketed correctly, it will fetch a higher price. This is a 100 percent true statement but that doesn’t mean outside of the box, or crazy marketing ideas make homes sell for more. Have you ever run into the right intention of some sellers 18
who think they know more about good real estate marketing than you do? I know I have! Have you ever heard something like this “Bill do you believe that we could run an add in the NY Times this weekend?” The internet doesn’t seem to be cutting it. Of course, the internet isn’t cutting it because your home is priced $20,000 higher than it should be! The internet does not sell overpriced homes and neither will an add in the NY Times! The market value of your home has nothing to do with outside the box real estate marketing. Marketing is all about visibility and attracting the right kind of buyer. With an efficient marketing plan, your home listing will find its way in front of thousands of well-qualified buyers. Good marketing will display all the best qualities of your home and encourage potential buyers to look further into the listing and to schedule a viewing. But marketing does not change the value of your home. If your home is overpriced, the best marketing in the world won’t cure that. We Just Need The Right Buyer “We just need to find the right buyer to sell our home for a great price.” Another misconception when it comes to the sale of a home. I am sure if I waited long enough dating a super model would be easy for me too. Fat chance! This myth is similar to #1, but the emphasis is on the individuals considering your home instead of time. But just like more time will not encourage higher offers, finding the one-in-a-thousand buyer that will overlook the advice of his or her Realtor and ignore the realities of the market is extremely unlikely. Buyers do not tend to break very far from the group, and for good reason. The market is what it is because of supply and demand, of all the available houses and all the possible buyers and all the transactions taking place. For a purchaser to go far outside of the norm and buy a home for far above market value is unusual because it is not a sound financial decision. Another thing to consider about holding out for an individual buyer is that the only kind of buyer that can buy a home that is priced far too high is a cash buyer. Lenders verify 19
the market value of every home they lend money on to ensure that the bank is protected financially. Even if a buyer is foolish enough to try and buy an overpriced house, there is a high chance that the lender will deny the loan due to the price. This will be due to a low appraisal value on the property. We Need to Price Our Home With More Negotiating Room Needing to price a home with significant “negotiating room” is a very common pricing myth among sellers. Negotiation is an essential part of the sales process; there is not denying that. Your Realtor should be prepared to negotiate on your behalf to help you get what you want out of the sale, and to keep you from being taken advantage of. But pricing a home excessively high is not necessary to create an opportunity to negotiate and reach a middle ground. Yes, you can expect buyers to make an offer below your original price in many instances. Buyers will expect to have to negotiate up. But the negotiating room does not have to be substantial. Trying to price to create a lot of negotiating room will result in you never getting the chance to settle in the first place. When a home is priced too high, it will be avoided by buyers and their agents. They will all be waiting for the price to go down to something reasonable. If you wait very long, you will run into the problem of buyers thinking something is wrong with your house. Talk to your real estate agent about how to price your home and about what will happen with negotiations. Your Realtor can help you understand what price will be competitive for your home, and will help you decide on the minimum offer you will accept. Then your agent will list the home at slightly higher that your lowest acceptable offer. Zillow Says It’s Worth More “The value you have come up with for my home can’t possibly be right because Zillow thinks it’s worth X.” Your mom thinks you are the best looking man or woman in town too. Let us get one thing straight – you have better odds of seeing Bigfoot than an 20
accurate Zillow value on your home. The fact of the matter is Zillow’s values are all over the board. I have personally seen homes as much as $150,000 both over and under the actual value. So when someone asks me whether a Zillow home value is accurate, the look on my face is usually one of disgust. If you have been drinking the Zillow Kool-Aid, you need to stop. In the article above you will see a comprehensive explanation why a “Zillow estimate of value” is not something, you should ever consider useful. While Zillow has an excellent site for looking at homes, as well as other data points, their Zestimate is their weak spot. In fact, it is surprising they have kept this feature with all the backlash they have received from both real estate appraisers and agents alike. This is one real estate pricing myth worth dumping fast! Another myth that some sellers believe is that a home’s assessed value has anything to do with market value. This is among the many ways sellers end up overpricing their home. What’s funny about this myth is that only those that have a higher assessed value than the real value believe it. Rarely do you ever hear a seller questioning the value when the assessed value is super low. Final Thoughts Pricing a home properly is a skill and an art. The price is also the most important consideration for getting your home sold. If you get the price, wrong nothing else you or your agent does will matter. In fact setting the right price is 75% of the marketing for your home. The correct price attracts the right buyers. So how do you know your home is overpriced? Glad you asked! In the article, you will see ten tell tail signs your home is not priced as it should be. Price Reduction Strategy: When to Reduce the Price of Your House 21
Every home seller expects their house to sell quickly, especially if you live in a fast-moving real estate market. But what do you do if those offers don’t start rolling in as quickly as you expect — or at all? Nationwide, 12.9 percent of sellers reduce the price of their house at least once. If you’re thinking about doing a price reduction, consider this: the longer a home is on the market, the l ower your odds are of selling it for list price. Sellers who accept an offer within the first week of listing have a 57-percent chance of selling for list price. During week two, it’s 50 percent, and then it drops to 39, 32, and so on. Of course, this is based on national data, and if you live in a strong sellers market, your odds of selling for list price, and quickly, are much higher. So is it the right time for you to consider a price adjustment? Consider these factors: 22
Indicators your home needs a price adjustment Nearby comps are priced lower Of course, when you select a list price for your home, you want to get as much profit as possible, while still being competitive with other listings. How to price your home to sell is a bit of an art form, and that’s why many sellers end up adjusting their list price within a few weeks. Take a second look at other similar homes for sale in your neighborhood. Is it possible you priced your home too aggressively given your current market? Are other similar homes selling more quickly? You’re not receiving offers While there are multiple possible reasons why nobody’s biting on your home, price is often the culprit. If buyers feel like they can find a similar home at a better value, they’re unlikely to put in an offer, or even set up a showing. If people are viewing your listing online but not submitting an offer, or if you’re getting open house attendance but with no results, your price could be the problem. You’re having few showings Speaking of showings, the foot traffic coming through the door is a great indicator of the attractiveness of your list price. Open house and showing traffic tend to drop off after the first two weeks, so you’ll know pretty quickly if your price isn’t resonating with buyers. Your home appraised low 23
Savvy sellers often pay for their own appraisal before they list as a way to get an objective opinion on an appropriate list price. If you haven’t gotten an appraisal already, it might be money well spent. If the home appraises well below your asking price, then you have your answer. Or if you’ve had a contract fall through due to a low appraisal from the buyer’s appraiser, that’s another good indicator that a price adjustment might be a good idea. Marketing steps to take before a price reduction Before taking action in reducing your price, you’ll want to take a step back and make sure that the price is really the issue, and it’s not an issue of i neffective marketing. ● Load up the photos and videos: Even though your home may be beautiful in person, if your listing has low-quality photos (or worse, none at all), you’ll never get buyers through the door. Professional real estate photos are always worth the money, especially in a competitive market. And consider adding a 3D Home virtual tour to help buyers get a better feel for the home’s layout. ● Ensure your online listing is complete: Make sure your listing description is putting your house in its best possible light. Be sure to showcase the home’s best features, share information about what makes the neighborhood special, and pack it full of the keywords buyers love. A local real estate agent should be able to give you insights into the most popular home features in your area. ● Make sure your home is listed in multiple places: Whether you’re working with an agent or selling for sale by owner (FSBO), you should make sure that your home is showing up in multiple places, including on your local MLS, on Zillow, on other real estate search sites, and on social media. If you’re using an agent, touch base with them about their online marketing plan for your home. ● Post signage in prominent locations: According to Zillow research, 55 percent of recent buyers said that for sale or open house signs played a role in their home search. Make sure you have plenty of visible signs around the neighborhood, with wayfinding signage for open houses, especially. ● Address buyer feedback: People who have toured your home but didn’t end up making an offer are a great resource. If you set up these past 24
showings yourself, consider asking for feedback directly. If you’re using an agent, ask your agent to follow up after showings and ask for constructive criticism. Then, take action on any fixable pieces of feedback — and try not to take it personally. Price reduction strategies ● Act fast: As we mentioned earlier, the number of showings and open house attendees drops off significantly after the first few weeks your listing is active, so don’t wait to take action. If you’re realizing you need to reduce the price, don’t wait. ● Be realistic: When discussing what your new, lower price will be, make sure you’re comfortable with the amount. What’s the lowest you can accept and successfully move on from the sale? It’s not a good price if you’re not realistically able to take the amount. ● See what other sellers are doing: Use Zillow’s neighborhood-by-neighborhood data to see what other sellers are up to. How long are they waiting to make a price adjustment? How much are they cutting the price? Get clues from recent sales to gauge your timing and discount. ● Only reduce the price once: Nobody likes to make a price cut, so sellers are often inclined to make multiple small price adjustments to ease the pain. Avoid this strategy — it can take multiple small reductions before buyers finally take notice, so you’ll only end up prolonging the sales process. Instead, decide on a cut that’s significant enough to jump-start interest in your home. According to Zillow, the average price cut is 2.9 percent of the list price. 25
Multiple Offer Situations There may be times when you receive multiple offers for the same property listing: how do you review these offers and determine which one seems the most beneficial for your client? In this guide, we explore how to handle multiple offers of purchase on real property. “Buyers and sellers need to appreciate that in multiple offer situations only one offer will result in a sale, and the other buyers will often be disappointed their offers were not accepted. While little can be done to assuage that disappointment, fair and honest treatment throughout the offer and negotiation process, coupled with prompt, ongoing and open communication, can enhance the chances that all buyers – successful or not – will feel they were treated fairly and honestly.” Source: A Buyers’ and Sellers’ Guide to Multiple Offer Negotiations, (National Association of REALTORS®, 2005). “When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their clients. This obligation to the client’s interests is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly.” (from Article 1 of the 2014 REALTORS® Code of Ethics) “REALTORS® shall submit offers and counter-offers objectively and as quickly as possible.” (Standard of Practice 1-6) Perhaps no situation routinely faced by REALTORS® can be more frustrating, fraught with potential for misunderstanding and missed opportunity, and elusive of a formulaic solution than presenting and negotiating multiple purchase or lease offers and/or counter-offers on the same 26
property. Consider the competing dynamics. Listing brokers are charged with helping sellers get the highest price and the most favorable terms for their property. Buyers’ brokers help their clients purchase property at the lowest price and on favorable terms. Balanced against the Code’s mandate of honesty is the imperative to refrain from making disclosures that may not, in the final analysis, be in a client’s interests. (Revised 11/01) Will disclosing the existence of one offer make a second potential purchaser more likely to sign a full price purchase offer—or to pursue a different opportunity? Will telling several potential purchasers that each will be given a final opportunity to make their best offer result in spirited competition for the seller’s property—or in a table devoid of offers? What is fair? What is honest? What is to be done? Who decides? And why is there not a simple way to deal with these situations? As REALTORS® know, there are almost never simple answers to complex situations. And multiple offer presentations and negotiations are nothing if not complex. But, although there is not a single, standard approach to dealing with multiple offers, there are fundamental principles to guide REALTORS®. While these guidelines focus on negotiation of purchase offers, the following general principles are equally applicable to negotiation of lease agreements. (Revised 11/01) Be aware of your duties to your client—seller or buyer—both as established in the Code of Ethics and in state law and regulations. (Revised 5/01) The Code requires you to protect and promote your client’s interests. State law or regulations will likely also spell out duties you owe to your client. The Code requires that you be honest with all parties. State law or regulations will likely spell out duties you owe to other parties and to other real estate professionals. Those duties may vary from the general guidance offered here. REALTORS® need to be familiar with applicable laws and regulations. Be aware of your duties to other parties—both as established in the Code of Ethics and in state law and regulation. Remember that the decisions about how offers will be presented, how offers will be negotiated, whether counter-offers will be made and ultimately which offer, if any, will be accepted, are made by the seller—not by the listing broker. (Revised 5/01) Remember that decisions about how counter-offers will be presented, how counter-offers will be negotiated, and whether a counter-offer will be accepted, are made by the buyer—not by the buyer’s broker. (Adopted 5/01) 27
When taking listings, explain to sellers that receiving multiple, competing offers is a possibility. Explain the various ways they may be dealt with (e.g., acceptance of the “best” offer; informing all potential purchasers that other offers are on the table and inviting them to make their best offer; countering one offer while putting the others to the side; countering one offer while rejecting the other offers, etc.). Explain the pluses and minuses of each approach (patience may result in an even better offer; inviting each offeror to make their “best” offer may produce a better offer[s] than what is currently on the table—or may discourage offerors and result in their pursuing other properties). Explain that your advice is just that and that your past experience cannot guarantee what a particular buyer may do. Remember—and remind the seller—that the decisions are theirs to make—not yours, and that you are bound by their lawful and ethical instructions. When entering into buyer representation agreements, explain to buyers that you or your firm may represent more than one buyer-client, that more than one of your clients or your firm’s clients may be interested in purchasing the same property, and how offers and counter-offers will be negotiated if that happens. (Adopted 5/01) Explain the pluses and minuses of various negotiating strategies (that a “low” initial offer may result in the buyer purchasing the desired property at less than the listed price—or in another, higher offer from another buyer being accepted; that a full price offer may result in the buyer purchasing the desired property while paying more than the seller might have taken for the property, etc.). (Adopted 5/01) Explain to the buyer that sellers are not bound by the Code of Ethics. Sellers, in multiple offer situations, are not prohibited from “shopping” offers. Real estate brokers may, unless prohibited by law or regulation, “shop” offers. Therefore, REALTORS® assisting purchasers in formulating purchase offers should advise those purchasers it is possible that the existence, terms, and conditions of any offer they make may be disclosed to other purchasers by sellers or by sellers’ representatives except where such disclosure is prohibited by law or regulation. (Adopted 5/05) Remember—and remind the buyer—that the decisions are theirs to make—not yours, and that you are bound by their lawful and ethical instructions. (Adopted 5/01) If the possibility of multiple offers—and the various ways they might be dealt with—were not discussed with the seller when their property was listed and it becomes apparent that multiple offers may be (or have been) made, immediately 28
explain the options and alternatives available to the sellers—and get direction from them. When representing sellers or buyers, be mindful of Standard of Practice 1-6’s charge to “. . . submit offers and counter-offers objectively and as quickly as possible.” (Revised 5/01) With the seller's approval \"...divulge the existence of offers on the property\" consistent with Standard of Practice 1-15. (Adopted 11/02) While the Code of Ethics does not expressly mandate “fairness” (given its inherent subjectivity), remember that the Preamble has long noted that “. . . REALTOR® has come to connote competency, fairness, and high integrity. . . .” If a seller directs you to advise offerors about the existence of other purchase offers, fairness dictates that all offerors or their representatives be so informed. Article 3 calls on REALTORS® to “. . . cooperate with other brokers except when cooperation is not in the client’s best interest.” Implicit in cooperation is forthright sharing of information related to cooperative transactions and potential cooperative transactions. Much of the frustration that occurs in multiple offer situations results from cooperating brokers being unaware of the status of offers they have procured. Listing brokers should make reasonable efforts to keep cooperating brokers informed. Similarly, buyer brokers should make reasonable efforts to keep listing brokers informed about the status of counter-offers their seller-clients have made. (Revised 5/01) Realize that in multiple offer situations only one offer will result in a sale and one (or more) potential purchasers will be disappointed that their offer was not accepted. While little can be done to assuage their disappointment, fair and honest treatment throughout the process; coupled with prompt, ongoing and open communication, will enhance the likelihood they will feel they were treated fairly and honestly. In this regard, “. . . REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, ‘Whatsoever ye would that others should do to you, do ye even so to them.’ ” (from the Preamble to the Code of Ethics). (Revised 5/05) A Buyers’ and Sellers’ Guide to Multiple Offer Negotiations Presented by the National Association of REALTORS® and the ____________ Association of REALTORS® Copyright 2005 National Association of REALTORS® Information for Buyers 29
In some situations sellers will have several competing purchase offers to consider. Sellers have several ways to deal with multiple offers. Sellers can accept the “best” offer; they can inform all potential purchasers that other offers are “on the table”; they can “counter” one offer while putting the other offers to the side awaiting a decision on the counter-offer; or they can “counter” one offer and reject the others. While the listing broker can offer suggestions and advice, decisions about how offers will be presented – and dealt with – are made by the seller - not by the listing broker. There are advantages and disadvantages to the various negotiating strategies you can employ in multiple offer negotiations. A low initial offer may result in buying the property you desire for less than the listed price – or it may result in another buyer’s higher offer being accepted. On the other hand, a full price offer may result in paying more than the seller might have required. In some cases there can be several full price offers competing for the seller’s attention – and acceptance. Your buyer-representative will explain the pros and cons of these (and possibly other) negotiating strategies. The decisions, however, are yours to make. Purchase offers generally aren’t confidential. In some cases sellers may make other buyers aware that your offer is in hand, or even disclose details about your offer to another buyer in hope of convincing that buyer to make a “better” offer. In some cases sellers will instruct their listing broker to disclose an offer to other buyers on their behalf. Listing brokers are required to follow lawful, ethical instructions from their clients in the same way that buyer-representatives must follow lawful, ethical instructions from their buyer-clients. While some REALTORS® may be reluctant to disclose terms of offers, even at the direction of their seller-clients, the Code of Ethics does not prohibit such disclosure. In some cases state law or real estate regulations may limit the ability of brokers to disclose the existence or terms of offers to third parties. You may want to discuss with your buyer-representative the possibility of making your offer confidential, or of establishing a confidentiality agreement between yourself and the seller prior to commencing negotiations. Realize that as a represented buyer, your broker likely has other buyer-clients, some of whom may be interested in the same properties as you are. Ask your broker how offers and counter-offers will be presented and negotiated if more than one of her buyer-clients are trying to buy the same property. Appreciate that your buyer-representative’s advice is based on past experience and is no guarantee as to how any particular seller will act (or react) in a specific situation. 30
Information for Sellers It’s possible you may be faced with multiple competing offers to purchase your property. Your listing broker can explain various negotiating strategies for you to consider. For example, you can accept the “best” offer; you can inform all potential purchasers that other offers are “on the table” and invite them to make their “best” offer; you can “counter” one offer while putting the other offers to the side awaiting a decision on your counter-offer; or you can “counter” one offer and reject the others. If you have questions about the possibility of multiple offers and the way they can be dealt with, ask your listing broker to explain your options and alternatives. Realize that each of these approaches has advantages and disadvantages. Patience may result in an even better offer being received; inviting buyers to make their “best” offers may produce an offer (or offers) better than those “on the table” – or may discourage buyers who feel they’ve already made a fair offer resulting in them breaking off negotiations to pursue other properties. Your listing broker will explain the pros and cons of these strategies (and possibly other) negotiating strategies. The decisions, however, are yours to make. Appreciate that your listing broker’s advice is based on past experience and is no guarantee about how any particular buyer will act (or react) in a specific situation. Information for Buyers and Sellers Perhaps no situation facing buyers or sellers is more potentially frustrating or fraught with potential for misunderstanding and for missed opportunity than presenting and negotiating multiple, competing offers to purchase the same property. Consider the following issues and dynamics: Sellers want to get the highest price and best terms for their property. Buyers want to buy at the lowest price and on the most favorable terms.Listing brokers – acting on behalf of sellers – represent sellers’ interests.Buyer representatives represent the interests of their buyer-clients. Will a seller disclosing information about one buyer’s offer make a second buyer more likely to make a full price offer? Or will that second buyer pursue a different property? Will telling several buyers that each is being given a chance to make their “best offer” result in spirited competition for the seller’s property? Or will it result in the buyers looking elsewhere? What’s fair? What’s honest? Why isn’t there a single, simple way to deal with multiple competing offers? 31
Knowledgeable buyers and sellers realize there are rarely simple answers to complex situations. But some fundamental principles can make negotiating multiple offers a little simpler. Realize the listing broker represents the seller – and the seller’s interests, and the buyer-representative represents the buyer – and the buyer’s interests. Real estate professionals are subject to state real estate regulation and, if they are REALTORS®, to the Code of Ethics of the National Association of REALTORS®. The Code of Ethics obligates REALTORS® to be honest with all parties; to present offers and counter-offers quickly and objectively; and to cooperate with other brokers. Cooperation involves sharing of relevant information. Frequently frustration and misunderstanding results from cooperating brokers being unaware of the status of offers they have presented on behalf of their buyer-clients. Listing brokers should make reasonable efforts to keep buyer-representatives up-to-date on the status of offers. Similarly, buyer-representatives should keep listing brokers informed about the status of counter-offers their seller-clients have made. Finally, buyers and sellers need to appreciate that in multiple offer situations only one offer will result in a sale, and the other buyers will often be disappointed their offers were not accepted. While little can be done to assuage that disappointment, fair and honest treatment throughout the offer and negotiation process, coupled with prompt, ongoing and open communication, can enhance the chances that all buyers – successful or not – will feel they were treated fairly and honestly. (cdn 7.13.05/rev 7.22.05/rev 9.20.05/rev 9.21.05/rev 9.23.05/rev9.27.05) 32
Presenting Offers to Sellers Remember that ALL offers that come in on a listing, M UST b e presented to your seller even if you know that your client will not be willing to accept it. The preferred method of an offer delivery is always in person if possible and with champagne flutes and cider. If the property received multiple offers, NLA requests that you bring your client into the office to present offers. We will provide a number balloon with NLA balloons for the number of offers received as well as champagne flutes and cider. We also encourage a photo taken of the clients with balloons and posted to social media with a congratulations post, with their approval. For an in person meeting, you will want to have ALL offers printed out for delivery to the client. It is also best practice to complete an easy to read spreadsheet for comparison. Sample below. 33
Tips & Tricks for Negotiating for your Sellers 1. Ethics – It’s the first word in negotiations. First and foremost, it’s important to gain the trust of the buyer. Always be honest and straightforward. We’ve had sellers ask us to tell the buyer that they will not sell for any less than “$$$,$$$”, when in fact they would. If you present a price limit that is in fact not your real limit, you’ll lose the buyer’s respect and then compromise your position from that point forward. 2. The Golden Rule – There are those who believe that a contentious, confrontational and negative approach is the formula to be successful in negotiations. Our experience runs counter to that philosophy. Being the tough negotiator encourages the other party to dig in and respond in like kind. When you negotiate with the Golden Rule as your principle, you’ll find people are more likely to become more cooperative in working with you to come to a mutually beneficial agreement. 3. The Other Guy Isn’t the Enemy – Are you offended when someone who does not know you projects a condescending attitude? Have you ever felt like another person treated you like the bad guy? If the other party offends you with their ill-founded, 34
preconceived ideas about you, you can pretty much bet that you could easily offend them with yours! Approach the buyer with respect and a willingness to try to work cooperatively. 4. Understand That the Buyer Does Not See a Dollar the Same Way You Do – As a seller a $5,000 higher price means that much more for you at closing. But your buyer does not see it the same way. To them a $5,000 price difference represents less than a $25.00 change in their monthly payment (assuming a 30 year amortization schedule at 4%). But the buyer’s perception of the any price concession depends on their timeframe. In the long haul they could save much more than $5,000 if they kept the home for a long enough period of time. For you it’s about price, for the buyer it’s about the deal – meaning the price and their financing and timeframe. 5. You’re Not Selling a Used Car – Most people have haggled over the price of a used car and many other items they have bought or sold. So it’s no surprise that people often assume when buying or selling real estate it will necessarily include another haggle over price. One of the most common mistakes inexperienced sellers make is to simply let the negotiation process begin. When you’re selling a used car, you and the buyer both put the same value on a dollar, but as we’ve seen there is a big difference when it comes to real estate. There are other BIG differences also. You and the buyer may well be negotiating one of the biggest financial transactions of your lives. It has long term implications and it’s about much more than the final agreed price. There are almost always other very important factors like financing contingencies, home inspections, and timing the closing to work for both you and the buyer’s situations to name just a few. Take the time to prepare. Consider all the elements in the big picture when you review the buyer’s offer. 6. A Little Friction is Not a Bad Thing – Have you ever been involved in a negotiation that ended quickly when the other party was very agreeable with your offer? How did it make you feel? Did you think that maybe you didn’t get as good a deal as you 35
could have? When the other party offers little resistance, they were likely happy with the deal and you may have gotten the short end of the deal. The fact is that the other party may walk away feeling the same way because you were quickly agreeable also. Although a cooperative spirit by both parties can help to foster an effective negotiation that brings the parties to a mutual agreement, without a little friction both parties can often be left feeling like they did not work hard enough to earn the best deal they could. 7. Never Reopen a Closed Issue – Make sure you take the time to make each negotiation decision carefully. Re-opening an issue that was previously agreed to will almost always upset the buyer party, compromise your credibility and therefore your effectiveness in negotiating any remaining open issues. 8. Negotiating in a Buyer’s Market – In a Buyers’ market you are clearly at a disadvantage. Buyers are few and far between and once you have an interested party, the challenge is getting the best you can without risking that the buyer decides to walk away from the negotiation. Prices tend to be soft or even trending downward slightly at times. Strategy (be flexible and prompt in making concessions) ● Spend the extra time and effort to present your property in its best light. Make sure it is clean, well-staged and that there are no significant repairs needed. ● Set your price at or very near the figure you are willing to sell at. Buyers have a lot to choose from and too high of an asking price will kill buyer interest. ● Be as flexible as possible on agreeing to buyer terms such as closing cost concessions and closing date. ● Accept offers that have a home sale contingency as long as they also include a b ump clause. 36
9. Negotiating in a Seller’s Market – When there are more buyer’s than properties, i.e., when inventories are low, you are in a favorable position when it comes to negotiation. In a sellers’ market, properties sell fast and buyers therefore are more likely to make concessions. Prices tend to be trending upward and in a very strong seller’s market multiple offers and bidding wars are not uncommon. Strategy (hold your ground) ● Negotiate hard on the price. In a seller’s market you can often hold firm on your asking price. In fact you may even have several buyers at the table at the same time. If that is the case, always consider responding with a Multiple Counter Offer to get all buyer’s highest and best. ● Look for “clean” offers that are simple and straightforward. ● Negotiate hard for terms that best suit your needs such as the closing date. ● Consider not accepting offers that have a home sale contingency. In a seller’s market you can often wait briefly and then get another offer without the often bothersome contingency. 10. Negotiating in a Balanced Market – When supply of homes on the market is balanced with the demand of all the buyers who are looking, neither side feels urgency and both sides can give equal importance to their own personal priorities. Expect the back-and-forth counter offer phase to take longer than it does in either a buyers’ or seller’s market. After several rounds of paperwork, buyer and seller might agree to do a 50-50 split of their differences on price, terms and personal property. ____________________________ If you work hard to be your best at negotiations, this might just be in your future – 37
Success! 6 negotiating tricks to try when selling your house Pressmaster/Shutterstock When my husband and I first started the hunt for Atlanta, GA, real estate, I cringed at the tough negotiating he was doing, as did our a gent. \"You sound like a fast-talking big-city businessman,\" she said to him in her smooth drawl. But 38
as cringe-worthy as it seemed at the time, he was just engaging in some tried-and-true horse-trading — trying to make a deal that both sides could feel good about. You might be the type of person I was; the kind who never questions the price of an item. If that sounds like you, it can't hurt to brush up on your negotiation skills, whether you're buying or selling real estate. When s elling your home, your first reaction might be a big \"oh heck no\" when you get a lowball offer, but take a deep breath and at least consider your options. Here are six negotiation skills for doing more than just playing the game: for winning. 39
1. Price your house right There's a difference between the price you want to get (or what you think the house is worth) and what the market will bear. \"Pricing is not based on how much a seller needs to net,\" says Brian Horan, a broker who specializes in L os Angeles, CA, real estate. \"Sellers always seem to need a certain amount, but that has nothing to do with the price of tea in China.\" Look into neighborhood comps to give yourself a more realistic idea. A savvy real estate agent will also be able to provide a benchmark for asking prices that reflect market valuations. 2. Consider the first offer \"Really pay attention to your first offer,\" says C hris Leavitt, star of \"Million Dollar Listing: Miami.\" \"Because that will probably be your best one.\" Leavitt, who once sold a Miami Beach, FL, condo for $34 million, the highest condo sale in Florida history at the time, knows a little something about 40
negotiating. \"Your best offers usually come at the beginning, so it would be a mistake to not listen to those offers, regardless of what they are,\" he says. 3. Think like a salesperson \"All home sellers should establish their BATNA before listing their house for sale,\" says Patrick Malone, senior partner at The PAR Group. (No, he isn't telling you to become Batman.) \"BATNA\" stands for \"best alternative to a negotiated agreement\" and serves as a negotiator's fallback option in case there's no deal. Having a BATNA puts you in a stronger negotiation position. Maybe you've decided that if you don't get your bottom line, you'll rent the place and try again later, or maybe you'll 41
renovate and stay. Keeping your BATNA in the back of your mind can help prevent you from agreeing to a bad deal out of desperation. 4. Don't be an emotional seller It's probably best not to listen to Miranda Lambert's \"The House That Built Me\" before you enter negotiations with a potential buyer. Garratt Hasenstab, managing broker with the Verdigris Group, advises buyers to do their best to stay levelheaded throughout the process. \"This is business, simple as that,\" he says. \"Rational thinking, business skill, and negotiation skill are what it's all about.\" Hasenstab also recommends that your real estate agent find out the buyer's prequalification amount from the bank or what the buyer's desired purchase price is. The more information you have about a buyer's financial situation and needs, the better position you'll be in when it comes time to negotiate. 42
Flickr/Holly Lay 5. Be realistic Being stubborn is usually not the best strategy in any negotiation. If your goal is to sell, taking less than your ideal price is usually better than not selling at all. \"Sellers must account for the real cost of not selling — not just a monthly mortgage payment, but utilities, insurance, maintenance, yard work, and risk of vandalism or theft,\" says Glenn S. Phillips of Lake Homes Realty in Birmingham, AL. Once you know the total cost of keeping your home on the market each month, it might put offers, even the lower ones, in better perspective. 6. Embrace creativity If you and your potential buyer are at a stalemate regarding price, it might be time to entertain some out-of-the-box ideas. Chris Leavitt suggests you offer to 43
throw in the furniture. Phillips asked for some extras when b uying his first home: the riding lawn mower, the window treatments — and even the dog. It paid off: \"Mikey the Mortgage Dog has been one of the best dogs ever.\" 44
Transition to TC “Pass the Baton” Once you have a MUTUAL CONTRACT you will need to pass the reigns to most of the Transaction Coordinating over to the NLA TC. In order to do this, you will need to provide all of the necessary information for the TC to pick up where you left off, and have it be as seamless as possible for your client. The last thing we want is for our TC to call your client all excited with congratulations only to find out that your client is selling their home due to a death or divorce. 1. Step one make sure your client(s) information is in CINC and is completely and accurately filled out. 2. Step two complete the “New Contract Submission” Jotform completely and accurately within 24 hours of mutual. https://form.jotform.com/81080582866160 3. Step three, make sure to submit a full packet including: a. All documents required in your mutual package 4. Step four, make sure to send a message to the NLA TC or add notes in jotform with any specific details pertaining to this client and transaction that she will need to know before processing. To help understand responsibilities of NLA team members as it pertains to a transaction, please see below. 45
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Expectations on Inspections - Sellers Perspective Seeing an inspection from seller’s point of view Updated Jan 31, 2015 By AP, a [email protected] As the Seller, once you have an acceptable offer and have agreed to terms with a ready, willing and able Buyer, you are halfway – but not all the way – there. There are still obstacles to overcome. One, of course, is the appraisal. Another is the Buyer’s loan approval. Still another – and the one that you perhaps have the most control over — is the inspection. In the standard Georgia contracts, Buyers may (and usually do) choose to ask for a due diligence period; and typically the Seller will agree to that. The due diligence period is the time in which the Buyer does all their inspections – structural, electrical, plumbing, systems, etc. Usually the Buyer will call in one inspector for a general inspection and if that inspector finds anything that needs further investigation, the Buyer will call in additional experts. Typically, however, there is one inspector, one inspection, which results in a 20- to 30-page inspection report. Don’t let the length of it scare you. There is a lot of “fluff” in most inspection reports that give the Buyer information about maintenance of the home and other things. The actual inspection items that need to be fixed can be distilled down to one “list.” Some Buyers will ask the Seller to fix everything — others may decide that nothing is severe enough to ask the Seller to fix. Usually we see something in-between. During this “due diligence period,” the Buyer can terminate the contract with no penalty for any reason or no reason at all. Therefore, the Buyer has the upper 47
hand (unless, of course, there were multiple bids and/or it is a “hot” property). That’s why the Georgia due diligence provision is also called the “free look” provision. So if you are happy with the contract in hand, as a Seller it behooves you to accommodate the Buyer if and where you can, and to make any repairs that are requested that you deem “reasonable.” As the Seller, your obligation is to make the property available for inspection on the date and time scheduled. All utilities must be operational. The inspection will take between two and five hours, and it is customary for the Seller to leave during that period of time. Your agent can guide you on this. As long as the inspector is a licensed home inspector and we are familiar with him/her and/or the company, you can rest assured that it is safe to leave the inspector in your home. If there is any doubt, the buyer’s agent or your agent can stay for the full inspection. However, it is also customary for the listing agent NOT to be present. The reason is that the buyer and inspector want freedom to discuss any and all problems they may find without interruption or argument. If the Buyer does decide to ask for repairs, they must provide you, the Seller, with a copy of the inspection report and an “Amendment to Address Concerns” setting forth the precise repairs they are requesting be made. You can counteroffer the Buyer’s initial demands and negotiate something less than the original items asked for. In addition, the parties may and often do agree on a monetary concession by the Seller in lieu of repairs. That may be preferable to you as a Seller because it eliminates any dispute over the quality of the repairs performed, and saves you from the possibility that the repairs may end up costing more than is originally calculated. A good agent can guide you through all of this. I typically will let my Sellers know what general amount they should “budget” for inspection repairs at the time we get the initial offer, so that they can better calculate their net proceeds from a given contract. By necessity, this budget will be based on the items the Seller knows might need repair, and may include a cushion for the unforeseen. With a little advance planning and good counsel, you can sail through the inspection and head on to closing. 48
Seller Expectations of the Home Inspection Seller Expectations of the Home Inspection POSTED ON JULY 24, 2014 You are selling your house and finally after six months your house is under contract. The Home Inspection is scheduled and you are stressed to the max hoping the inspector won’t find too many things wrong with your house. What can a Seller do to relieve some of the stress and increase the likelihood that the inspection process will have a positive outcome – a sold home? Here are a few suggestions: Expect a minimum of 2-4 hours for the average home. General rule of thumb is an hour per 1000 square feet; age and additional equipment (ie. Pool) may add to the time. All utilities including gas, water and electricity should be on. The home inspector will not move furniture, owner possessions, etc. while conducting the inspection. You should p rovide easy access (move possessions, remove locks, etc.) to the water heater, attic access, mechanical equipment, electrical panel, garage, etc. If the inspector cannot access all necessary areas, he/she will have to note that they could not be inspected. Typically the buyer will want the inspector to return to the property and re-inspect the items that were not inspected which could result in a potential delay in moving past the inspection period. Secure all pets. Provide remote controls for ceiling fans, pool equipment, lights, etc. Have your handyman/contractor correct common findings to reduce the potential number of items found by the Home Inspector. Take a look at our T op 10 Inspection Findings to aid you. 49
Many sellers believe that they should attend the inspection to keep an eye on the inspector and make sure he knows where everything is and how to operate it all. A seasoned Home Inspector will find your water heater, attic access, electrical panel, etc. and know how to operate the various systems in the home. Bear in the mind that if you attend the inspection, the home inspection can be very emotional and stressful. The inspector will be operating the A/C, heating system, flushing toilets, opening cabinet doors, and completing a very detailed examination of your home. You may find the inspection to be an invasion of your personal space and become offended, anxious and not understand why the inspector is doing all these things when you know everything in my house is in working order. If you attend the inspection, we recommend that you stay out of the inspector’s way and allow the inspector and buyer time together to go over the inspection findings. The above are recommendations that can be implemented when you have very little time to prepare your home for the Home Inspection. The preferred method for reducing the stress of the Home Inspection is to complete a Pre-Listing Inspection of your home prior to putting your home on the market for sale. The Pre-Listing Inspection can identify any issues that you can correct prior to the buyer having their own inspection. The Pre-Listing Inspection will also dramatically reduce the number of issues found by the buyer’s inspector and affirm that they are buying a home that has been well maintained and cared for. 50
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