Month: March 2018

Asking Questions, or Questioning Actions? One requires genuine curiosity.

Tell me more about that.  You’ve given this a lot of thought. What other ideas did you consider? If this works, what will it mean to you?  Why is that important? You mentioned something you see as an obstacle. What happens if we don’t overcome that obstacle? Is that a big problem or an inconvenience?  What is unique about the person who will buy the most expensive, unique property, in this community? Have you ever been that person in another transaction? Have you ever bought a house? Have you ever been sold a house?  Know anyone who has?

You know the property in a way no one else does or could. Your family history is in this home. What does it mean to you to be the person who sells it? Who else is involved in the decision? You have not tried to sell before. Why now? Why is this the year to sell? What if it doesn’t sell this year? Who looks after the house when you’re out of state? What do you do when something needs to be fixed? What’s the most inconvenient problem that’s come up in the last few years? How did that impact your life? When you think about this house, what wakes you up at 3 am?

What do you know about real estate marketing that you like? What would you like to avoid? Do you have a value in mind, and how did you arrive at the price?  Will the buyer pay cash or use financing? Are there other sales to support the price?  How will that affect our process? If closing doesn’t happen this year, what’s your backup plan?

May I share my thoughts about the plan you described?

There are so many questions to ask when judgment is overcome by curiosity?

 

 

 

Standardized Offers make you look uncommitted in the eyes of home sellers

Video Tom Explaining the Value of Customized Offers

Every buyer who submits an offer on a house this week will not be the same as every other buyer. Someone will have more commitment, more confidence, more willingness to fair play, and a sincere desire to get to closing on time with no trouble.

Unfortunately, that someone is hard to pick out of the crowd of Offers. The Wisconsin Offer to Purchase Agreement, and the addenda that get attached are standardized, buyer friendly, seller risky documents.  The contingency choices appear as a dinner buffet to buyers, and they fill up their offer with all sorts of fatty contingencies that make there offer unhealthy.

We can do better.  Instead of a standardized offer, making you look like the most uncertain buyer in the bunch, we can customize your purchase agreement to appeal to the seller’s number one interest: assurance.  Price gets the attention because offers typically are equal in risk. When risk is eliminated for the seller, and a closing on time, with no worry is more important than a few dollars more.

Before committing to an agent, find out what ideas they have to improve your offer without you paying more money…or writing a letter. When you’re selling, make sure your agent knows how to eliminate the exit clauses and high risk contingencies from your offer.

 

 

Feedback. Everything can be used against you.

Everything you say can and will be used against your client to benefit the other side. You know that’s true. Then why do we give the listing firm feedback from our client?  We do it because we always did it, and a long time ago,  we were legally responsible to do it. Licensees, under the old agency law, represented the seller; they had an obligation to share all pertinent information with the seller.  The law changed and made disclosing confidential information an illegal act.  And still, we reveal relevant negotiating information to the other side without the permission of the client.

Everyday buyer agents are responding to showing feedback requests and placing their clients in compromising positions.  A sample of questions include: “Is this your clients 1st choice, second choice, third or fourth choice house?”  “When does your client need a home by?” “What does your client think about the price? Too High, Just Right, Too Low?” “Is your client making an offer on another house?”  “Is this price at the bottom, middle, top of your client’s price range?” “What does your client dislike about the property?””Was the house clean and well presented? Disorganized and unprepared? In need of cleaning?”

It’s easy to see the questions that a buyer is likely to prefer you not answer.  If the house is the buyer’s first choice, advantage seller. When seller knows the date the buyer has to move by, advantage seller. There are other questions which if answered could work against the buyer. A response to a question on condition may not set well with an owner. “They thought my house was not clean???!!  They said my basement smelled musty???!!”  How many buyers want to tell the seller, “We think your house is priced right.”?

Listing agents who ask questions to gather information to persuade the seller the price is too high, or the condition needs attention are using you to do their job. “I didn’t say your house was a mess, the other agents did.”  There is no good reason for a buyer agent to bite on these questions.  Our job is to put our client first, not the listing agent.  If my answer to a condition question is not well received by the seller, it could be my client who loses when the seller connects my statement to this buyer’s offer.

Showing feedback in the day of buyer agency is at least a dangerous practice, and arguably a  violation of confidentiality. Maybe a safe response is: “Nice house. Thank you. The buyer wants us to tell the seller they have a beautiful home.”

 

 

 

 

Standardized, Computerized, Personalized. The evolution of real estate.

We Skillshare to learn and adapt.  How recent was it when the value of our business was possession of a private data base of real estate for sale? Property was the commodity. Information in 1988 was only accurate up to two weeks earlier. Gradually computerization decentralized the data from one giant computer to the single shared machine in individual offices.

Data, the commodity of real estate, gradually moved closer to up to date. First  by the week, then to within a day.  The public wanted access to data. Our industry refused. Realtor.com was released. Consumers could peek at data. To get more they had to call us. We have always held a pay to play attitude toward the consumer. We have always been in the business of “capturing leads”. The consumer  did not accept Realtor.com. The industry didn’t trust it. Realtors couldn’t figure out how to monetize the service. Realtor.com was a loser.

The rights to the platform and it’s operating brain were relinquished.  Zillow stepped up,  joined our organization, and quickly flipped the perspective. The value is not in the data we put into the brain, the value is in the data the brain collects.  Zillow delivered the service the public was eager to get.  Exclusive access to King Data was reduced to a day for the Realtor. Today it’s seconds, or maybe not. The public wants to be able to tell the consumer “Hey, I’m thinking about selling.”  We tell the public, decide and we will give you a platform to reach the consumers.  Zillow responds with “Make me move” and the public is given what they want. Again.

What do we do with members who share what they know to give a consumer an edge? We penalize them with punitive fines. Our value, we believe, is in cooperation for our mutual benefit. The value of delivering data for the benefit of the consumer is not only unrecognized, delivering data to the consumer is penalized. Standardization is demanded by us for us.  Zillow gives the consumer a computerized, personalized platform.

Consumers, not property, are the valuable commodity in the transaction. Zillow figured that out. We now pay Zillow to share their consumers who are interested in our property.  They realized monetizing was not in the ability of the brain of the computer to store and standardize data, it is in it’s ability to personalize, organize, and distribute data on people who are interested in owning what we’re selling. Zillow uses technology to deliver information to the consumer. In exchange the consumer would freely give what we demanded they share, their personal information.  Does the consumer trust Zillow? For good reason we are seeing consumers have every reason to not trust tech giants with their private data. And still, they do.

Our standardized data on real estate is given away.  We pay an outside firm to share the people they meet who are interested in our data (property). Our property is actually used to attract consumers who are sold to our competitors at a price we won’t pay to keep what we considered valuable: exclusive access to data.

Where is the uproar? It didn’t happen. Paying to play is now the norm.

in the early years of the 21st Century an idea to change real estate licensees from an agency model to a facilitator model.  The legal industry was in favor of turning us from agents to facilitators.  We feared the consumer would see less value (worth less in fees) in a facilitator than agent. We fought to remain agents.  Facilitating was left for computerization.  The public wants personalized facilitation. We want standardized agency.

We retain our right to fill in blanks of purchase contracts at the objection of the legal industry. To keep that right we require accuracy in the service. To be accurate we restrict our work to standardization. Fill in blanks, check boxes of standardized forms in an increasingly personalized business. Our profession is point and click.  We think we have value in our ability to explain a standardized form. In fact, 100% of computers have the ability to accurately explain the forms and they can do it better than 99% of the licensees. To top it off, computerizing the drafting and presenting of offers allows including real estate legal advice and interpretation.

Soon. Very soon ,computers will analyze, evaluate, and explain financial qualifications of the parties. They will interpret and summarize the commitment and intent of the buyer and seller.  The decision of which offer is the best offer for the seller can be done with present technology. To craft a better offer, the computer will personalize the contract to match the buyer and seller’s most important requirements.

The trait the computer excels at compared to humans, is the computer listens and understands the parties. No suggestion is made until the computer has received and processed the information from the consumer. Do we do that? Not well. We present and tell people what to do based on what we always do or only heard.

A computer is able to facilitate a transaction between the most ready, willing, able buyer, with the ready, willing, and able seller who has the property that best matches their desires.  Agency is not what the consumer wants from us. They want personalized facilitation. They want ideas to help them get their offer accepted in competition. They want a way to connect with the seller on a personal level. The seller’s want safety. They want to reduce their risk by getting into contracts with the most able, prepared, and committed buyer.

The future is bright for Realtors. The ones who learn, adapt, deliver to the consumer what the consumer demands will thrive as our industry moves from standardized to personalized. We can, if we want to, be the better facilitator. We can be better at  crafting personalized offers, eliminating risk, and facilitating smooth transaction. We  can meet this demand if we move from standardized and computerized, to personalized and computerized.

Agency they can get from attorneys. For now.

 

 

 

 

 

Title Insurance Contingencies Merit Consideration

To get to closing we direct our attention to the inspection, appraisal, and financing contingencies.  Another condition of the Offer receives very little attention and yet it’s a very big hurdle. The Title Insurance contingencies, page 7 of the 9 page WB-11 Residential Offer to Purchase, pose a serious risk to a successful closing.

Provision of Merchantable Title Lines 348-352:  This contingency requires the Seller to provide a Title Insurance Commitment to Buyer or Buyer’s attorney, NOT LESS THAN 5 BUSINESS days before closing. The commitment shall show  evidence that the title is merchantable (Suitable for its purpose) to the standards as stated in lines 326-334.

Here’s where things get risky. Title Not Acceptable for Closing, lines 353-359, allow the buyer to object to title BY THE TIME SET FOR CLOSING.  Once the buyer objects, the closing is extended to allow Seller a reasonable time to clear the objection. The buyer’s obligation is to permit the Seller no more than 15 days to resolve and the closing is extended AS NECESSARY.  (Uncertainty).  If the Seller is unable to remove the objection, the seller must notify Buyer. Once the notice is received, buyer has 5 DAYS to to waive the objection. Unless the buyer takes the affirmative step to deliver written notice and waive the objection, the offer becomes Null and Void.

Without seeing this happen in person, it’s easy to see the problems sellers are facing until this contingency is satisfied.  Which raises the question, Are buyer’s giving notice of satisfaction of the Title Commitment contingency or are we walking into closing with the buyer holding the right to object before the Time Set For Closing?

I have seen an attorney use the Title Unacceptable for Closing contingency used by an attorney to force a seller to release a buyer who objected to Covenants and Restrictions, when there was no contingency to approve Covenants and Restrictions.  The attorney stated the Covenants would be an exception to the title insurance policy and the buyer would find that exception objectionable…hence, we may as well part ways now.  What? Wasn’t “recorded building and use restrictions” an agreed upon exception per lines 326-331?  The lawyer’s argument met no objection from the Seller’s attorney (maybe to simply move on)  and the buyer was released.

Maybe the Title Contingency is an exit clause we should pay more attention to.

Are you in the home business or contract business?

Some Realtors are in the home business. All Wisconsin Real Estate Licensees are in the contract business.  Maybe for most people the home business is more appealing than the contract business, but you may not do the home business long without learning and continuing to learn the contract aspects of the business.

Study Contracts at Harvard From Your Home  Online learning from the finest institutions in the world is an opportunity previous generations could not even imagine. Several years ago universities began experimenting with online learning by offering free courses to the world. They learned how to make on-line learning efficient and appealing.

Lawyers and will be law students are registered for the Contract Law Course at taught by a Harvard professor. I started the course on Friday. It’s a learning experience for me and I love the contract part of the business. I won’t finish with a degree, but I am learning, and that’s what I am after.