A real estate license is a permit to be held accountable to legal standards of performance, not a certification of license law capability.
It’s tempting to think the 40 hours of class and a fill in the blank form is all we need to start a real estate career. But of course we know learning comes first.
Why do we do what we do? Once that question is asked, somebody will start to ponder, and eventually discover that the answer in part is: Because we always have.
The person who raises attention to another way will meet resistance. Being an early adapter is risky. Seeing what other people deny or resist will not make you popular in the status quo club. But, we don’t change the norm to be popular. We change the world to enhance the lives of people. Only a few years ago this country was dependent on the oil of foreign nations. Automobiles still look the same, but not for long. Somebody asked “Why” and very soon auto transportation will not include 4 wheels, a steering column, and a trunk.
Change is only inevitable when we question intent, purpose, expectations, processes. Why do real estate purchase contracts all look alike? Just asking.
The attorney and real estate licensee are able to, with little effort, protect the buyer from any form of harm in a real estate purchase. Most of the work was done by the creators of the WB Offer to Purchase forms. For an extra layer of bubble wrap, individual firms created addenda with a buffet of buyer-safe contingencies. Until the market flipped to a seller’s market, buyer-safe contingencies galore were acceptable in Offers.
And then the market changed and Sellers owned the upper hand in negotiations. The WB Offer forms and addenda stayed stuck in time (2011 for the WB 11) and the market ran away from the Offer. Unless the drafter of the contract, whether lawyer, public, or the real estate licensee, effectively discusses drafting options with the client, the Offer to Purchase submitted by the most ready, willing, able buyer will appear just as risky to the seller as any other on the table.
Standardized forms cost home buyers billions every year because when everything looks the same to the seller, the only difference maker is price. It’s easier than you might think to customize the Offer to fit your buyer client when you view the contract from the seller’s perspective. I’ll show you how to customize your next offer.
You can have any color car you want, as long as you want black. The Model T was built efficiently in mass production assembly line factories, for anyone who wanted to get from here to there on their own schedule without depending on a horse. The mass production model groups everyone into the same box. By standardization, the producers have control, and the product is reliably consistent, even if it’s not reliably effective.
The residential offer to purchase documents (including firm crafted addenda) are inefficient, unreliable, products costing the American home buyers billions of dollars annually. Real estate values are pushed up and beyond the reach of a large segment of the population because these documents reduce even the most attractive buyer to ordinary. When critical terms of the Offer are equal on paper, the only difference maker in the eyes of a home seller is PRICE.
Smart Realtors know how to customize an Offer for their buyer-clients, to make the document work to their advantage while giving the owner all of the security they desire at a price they are willing to accept. A customized Offer tells the owner everything they want to know about the buyer’s commitment, ability, reliability to make a decision to commit to sell to them. Oh, sure some people want to know about families, career, where you’re from, what you look like, how much you love their decorating, but they won’t make a commitment to take unreasonable risk because of your personal story.
Customized Offers are the solution to rejection. Customized offers don’t cost you anything. In fact, they are more efficient, more powerful, more fair, more acceptable, and can be the difference in thousands of dollars in the price you pay to own your first choice home. 60 Seconds to a Customized Offer
WRA.org Article by Tom Larson, WRA
Until January of this year waterfront property buyers could have reasonably expected to have the right to place a pier at the water’s edge of their property. A Supreme Court case settled a family dispute with the outcome property rights of landowners on a flowage. The legal perspective is explained in the link to attorney Tom Larson’s article in the WRA Real Estate Magazine, April 2018.
Tom explains Wisconsin has about 260 flowages around the state, and a flowage is a body of water created by a dam. There are different rights for flowages created by a lake, than those created by a river, or stream. The bed of the flowage created by the stream or river is generally owned by a private entity. This is the problem:
Envision you are buying lake front home on a flowage. At the water’s edge is a beautiful wooden pier with a boat slip, a lift, a pontoon boat, a fishing boat and a jet ski. All included in the sale. Are you sure you have legal right to keep this pier for your pleasure? Up through 2017 the presumption was you could. Because of the decision it is now critical that you know if the flowage was created by the damming of a lake, or a river or stream. If the lake bed of a flowage created by the dam on the river or stream is not owned by you, but a private entity, you can be prohibited from placing a pier which stands on the bed. However, it appears if the flowage was created by a dam on a lake, you are permitted to place the pier because the bed is not owned by a private entity but belongs to the government which permits legal access to the water for shoreline property owners.
Lakes are not all the same. When you go to look at property, know if the body of water is a flowage, and then know if the flowage was created by a dam on a river, stream, or a lake. It matters.
Three people made offers on the same house. Two offers included well written, emotion inducing letters with photographs of the married man and woman, complete with details of their employment, education, professional credentials, and community involvement in causes for good. Both expressed their love for the property and their awareness of the owner’s own remarkable traits. Each of these offers included double digit items (14 and 17) an owner would counter to make the offer safe enough for the owner to commit to. Two of the three offers were for prices the owner would accept.
One offer was for the most money, and represented less risk than the other two. However, it included two ambiguous contingencies, and one exit clause the buyer could exercise six days prior to closing. The open exit door and ambiguity were reasons for the seller to question the buyer’s commitment.
Had any of the offers been written with terms proving the buyer’s no-reservation commitment to closing, or at least left no exit doors open, their offer would have been accepted. The letters induced an emotional response. The emotional response did not cause a compelling response to accept one offer or negotiate with any one person.
Had as much attention been given to writing a customized, seller-safe offer, any one of these couples could have had their offer accepted. And, unfortunately, two of the couples and two of the licensees may think their letters helped their cause.
Buyers are improving their skill in writing fiction. They’re getting professional help on-line. Be the licensee who improves her skill in customizing, seller-safe offers to match the commitment of the buyer. The pleading letter is no match for customized offers.
The inspection contingency in the Wisconsin Offer to Purchase is designed to permit a buyer reasonable time and access to the property to complete their due diligence. A definition of “defect” was added to the agreement to create some objective criteria for a defect. Objectivity is not a strength of the definition. Defect is still subject to the opinion of the buyer and seller. (Not the licensees. Our opinion is not relevant in the conversation.)
To deter a buyer from objecting to only the defects which are worth losing the property over, the contingency was built with a lever on the Seller’s side. Here’s a visual of the deterrent: Buyer discovers a few defects he wants cured prior to closing. The Buyer approaches the Seller with a NOTICE of Defects in his hand. Standing in front of the Seller, on a trap door, the Buyer gives the Notice to the Seller. The Seller receives the Notice and reads: Buyer objects to the following defects identified in the attached inspection report. The Seller has the Notice in her left hand, and her right hand is on a lever. With no explanation required, the Seller who has been Noticed, may pull the lever, opening the trap door, and send the Buyer away.
A less risky approach could be attempted first. A buyer could offer a written amendment to the seller requesting the seller agree to a specified resolution. A repair prior to closing or a price concession are typical.
Beginning with the amendment, a Buyer retains the right to deliver the Notice prior to the deadline for delivering the Notice. Some issues are worth the risk to some buyers. No one should take the Notice step without weighing the cost of the Seller’s choice. On the other side, before a Seller terminates an offer because of a Notice of defects, a Seller may want to consider their obligation to future transactions now that they have some information about a condition they did not have prior. Buyers trust that the fact the owner will have to contend with the issue to satisfy the next buyer is enough to motivate the seller to cure the defects and not terminate the Offer.
Just my opinion, but people waiting in secondary positions are likely to accept a condition the first buyer would not, or because they are the fresh face waiting in the wings, Sellers are receptive to giving the next buyer something they would not give the primary buyer. A human nature thing.