Is This Really a Price Escalation Offer? Probably not.

Buyer: “Mrs. Seller. You are asking $300,000 for your house. Here is my offer for $300,000.  If you get another offer by 7:00 PM tonight for $300,000 or more, my offer will then be $1,000 more than that other offer, up to $351,000.”   The first price escalation offer may have started just like this. A capable, committed, fearless buyer promising to pay more than any other offer the owner has in hand,  up to a specific amount. That’s a true escalation offer. It’s free of stipulations. No if, and, or but. This buyer is appealing.

The Price Escalation clause common in our market is remarkably diluted of fearless commitments from the buyer with weak if, and, and buts.  If we take the written watered down clause and put it in a conversation it looks like this:

Buyer: “Mrs. Seller. You’re asking $300,000. My offer is $300,000. If you have another offer in hand for $300,000 or more, I’ll increase my offer by $1,000 up to $351,000. BUT you have to show me the other offer as proof. AND I get to scrutinize it to see if that offer has credits, concessions, or seller costs which mine doesn’t have. If after I compare to make  sure we are apples to apples, and I’m satisfied, I will sign an amendment to change the purchase price. Oh, by the way; if the appraisal doesn’t support the price, I can rescind my offer. We’ll see the appraisal in oh, 30 or 35 days from now. About 5 days before closing. ” 

Every real estate licensee and attorney  sees the caveat filled contingency is trouble waiting to happen.  The buyer who needs this kind of protection is not the price escalation buyer you want. This buyer is hopeful that you will be so enthralled by the big number that you will overlook the conditions. The game is on and it’s a gambler’s game. You and the buyer are taking a chance that the appraisal will or will not support the Offer price. A low appraisal is a big win for the buyer. You’re 4 weeks closer to closing and your other buyers are gone as is your leverage.  So, before you accept an offer with a diluted escalation clause you gotta ask yourself: “Do you feel lucky?”

A skilled real estate licensee will know how to modify the Offer to protect you when this contingency shows up in your offer. It’s great to have a strong, committed buyer interested in your property. The buyer capable of a true escalation commitment won’t be afraid. You’ll know her when you see her offer.

How to be a Superhero

Google Trends 2017 is an inspiring video. We are asking how to do and be everything. How to be fearless, how to change a tire, how to be a good parent, how to be a superhero. Once we know how-to, we have a choice to make. Take action or stay out.

The superhero does not sit this one out. All superheros have in common a desire to do good for the well being of other people.   While I’ve never seen a superhero accept a check to cash at a bank, the superhero is rewarded with trust and call backs.

To be a superhero, declare yourself one. Be a superhero Realtor®. Declare an intention to do good for the well being of other people in every interaction in 2018, and then begin by being that superhero you would want on your side with your next interaction. And then do it again.

Improve the experience.

Real estate technology changed rapidly. Creators of the technology know who their customers are and they’re making apps to make their customer’s lives easier, swifter, more efficient. From our offices we open access for our customers to use these apps. The real estate experience of those folks also may be easier, swifter, more efficient because the app exists.  We didn’t create the app. We have not improved the experience by being a pathway to the technology.

Those who make techno tools may devise something people can’t see living without. (a camera in their phone) Those who don’t could make a low tech advantage the client will not want to live without.  Feelings keep a person coming back or moving away.   It’s easy to  let a person feel special. It’s also easy to leave a person feeling disregarded.  How we approach contracts is a great place to change the feeling from disregard to special.

As the world turns toward technological precision and away from human interaction skills, there may be a giant gap in the human interaction enhancement world.  Whoever fills this gap will have the secret to the real estate agent remaining relevant. Or even necessary.

 

The Opportunity of Failure

Seth Godin wrote a simple thought about failure today. He said, “Failure (and the fear of failure) gives you a chance to have a voice…”.  Because we care, the Realtor has a voice in calming the fear, in removing the risk.  How often do we begin with calming the fear, and when do we begin by raising the anxiety?  A typical message from the real estate industry begins with creating fear of loss. Loss of economic opportunity, loss of prestige, loss of a house, loss of time, loss of winning. And then, after we’ve riled the public into discontent, our industry expects the public to look to us to provide a solution.  All we’ve done is created an environment for businesses with a calming voice to step in and take the share of the market which desires security.

The expansion of Zillow’s presence in the market place is directly related to our industry’s commitment to continue to instill fear and worry in the public with media campaigns and mantras. “Now is the time… Don’t wait…Rates are going up…prices are going up…prices are going down…”.

Empowering people to make wise decisions in controlled environments is the alternative to keeping people in the dark, and raising instilling fear. As long as Realtors continue to rely on fear of failure, there will be great opportunity for Realtors who deliver contentment, security, hope, and confidence.   Seth Godin

Did an Attorney Draft that Offer? Even a first year agent can draft impressive contracts.

A Realtor in his first 12 months of business submitted an offer yesterday and got this response from the listing agent. ” Did her attorney draft this Offer?”  Agent replied, “Nope. Just me.”  Listing agent: “Are you a lawyer?” Agent: “Nope”.

I always ask new licensees to tell me what they fear most about starting their careers. It’s common to hear that what wakes them up at 3 AM with worries is making mistakes, disappointing someone, or just plain looking like they don’t know what they’re doing.  There is a solution to that worry and fear. It’s learning. More than two years ago we started weekly Skill Share sessions designed to raise our knowledge of contracts.  We believe the best way to be relevant in the real estate transaction is to know how to make the contracts work for our clients and to do that we had to know what is and isn’t in the contracts. We had to learn to take addenda from other firms and lawyers apart to discover the hidden trips, and traps. We’ve done that, and more.

Today, our experienced agents and our relatively new agents who make the commitment to attend, participate, learn, and share have insight well beyond the understanding of even the most experienced agents. (Don’t be so sure that experience equals competence. Time is not the difference maker, learning is.)

Imagine being well prepared to fix a bad contingency and prepared to draft terms that work for everyone. You can do it in your first year. Just make the commitment to learn. We’ll give you the insight. That’s our unfair advantage. We care that you’re prepared.

Is an Email a Notice?

Hypothetical Situation:  The terms of the contract include this statement: “Within 24 hours of receipt of the report, Buyer shall deliver a copy of the report and a notice to Seller stating the defects the Buyer objects to, or this contingency shall be considered satisfied.”

At 3:00 PM on October 21st, the buyer receives “the report”.  At 9:00 AM on the 22nd,  the Buyer agent attaches the report to an email and sends to the Listing Agent. The email reads in part:  “The buyer is concerned about the condition of the furnace. They would like ask Seller to have an HVAC contractor service the furnace.”

It is now 4:00  PM on October 22nd.  The Listing Agent informs the Buyer Agent that the Seller considers the contingency satisfied because the 24 hours has lapsed without the Buyer delivering a Notice of Defects per the terms of the Offer.   The Buyer agent believes his email was sufficient to be the notice called for in the Offer.

Is the email a Notice? Maybe. Determining if the buyer delivered notice timely is a question for the courts.  Deciding which forms to use is the responsibility of the licensee. Whether or not an email, text, or phone call is sufficient the licensee could first  determine if an approved form is available. (Wis Stat 452.40(2) and REEB 16 explain our obligation to use approved forms). In this case, a  Notice is available. The term notice is used in the Offer, the agent drafting the Offer is a licensee, and the parties could reasonably expect the licensees to use proper forms. It’s probably reasonable that the listing agent and the seller considered the email a “heads up” that a Notice was coming.  The Notice did not arrive and the agent and Seller concluded the buyer had a change of mind and opted to let the contingency be satisfied.

Could an attorney consider an email from him or her a sufficient notice. Probably. The attorney does not share our obligation to use available forms.

If the reason for sending an email, text, or leaving a voice message has anything to do with saving time, or for convenience, the question of whether or not a Notice is required is probably answered. Yes.

Buyer’s Protected in Wisconsin Sales

“. ..legal developments of the past three or four decades, in Wisconsin, and elsewhere, have substantially increased the protections for the real estate buyer, especially for the buyer of a newly constructed home. ” p. 18-22 Consumer Protection, Wisconsin Real Estate Law 2017 Edition.

Is a single family home seller free and clear of liability by ignoring the Real Estate Condition Report? Not likely.  Of course in each situation parties should consult an attorney. The cautions in the Offer to Purchase give us enough of a hint to conclude that a seller is far from safe by omitting the RECR. The Offer to Purchase form as it reads today includes  language where the seller represents that he or she has no knowledge of conditions which meet the definition of a defect. (Remember that the RECR is a series of affirmative statements, such as “I am aware of defects in the roof.” )

In the Offer the statement is “the seller has no notice or knowledge of conditions affecting the property OR TRANSACTION.  The possible conditions are listed as A through ff. A good number of these match the conditions on the RECR.  An owner who knows of a condition affecting the property or the transaction (such as I am not the sole owner of the property) should not sign the Offer as written.

The RECR is dated as of the date the Seller completed the form. The Seller’s representation of no conditions affecting the property or transaction is as of the date of acceptance of the offer. If the known facts are different than shown on the RECR disclosure is expected. A licensee is prudent to advise a seller to consult an attorney before accepting any offer which inaccurately states the seller’s knowledge of conditions.  A counter offer is the proper form for notifying a buyer and permitting the seller the opportunity to have some protection.