Memory might be the least dependable faculty of the human brain. Facts, or statements presented as facts, are presented non-stop from wake up to sleep without hesitation. Humans run on facts. We can’t get enough. And we can’t remember most what we hear. When what we hear is a statement from another person, that statement is only as accurate tomorrow as the recall of the person who made it, and the recall of the person who heard it. Given that humans are human, perspectives change, needs change, words have more than one meaning, the real estate licensee who “verbally negotiates” is playing with fire.
“I will remove and install new windows in the second floor bedrooms.” Easy to remember and verify? Should be. In 30 days from now after new information on the cost of windows, labor, and with a second opinion about the condition of half of the windows one person (person paying) might recall the promise as, “I will remove the defective windows in the second floor bedrooms and replace them with new windows.” With the second opinion concluding there are only 4 of 8 defective windows, the recall of the one who made the promise no longer matches the recall of the person who accepted the promise. Who’s going to decide the difference? Who’s going to pay for the resolution?
Verbally negotiating and subsequently recording the agreement as we remember it will always end in the resolution to the disagreement being in writing with the person who pays to settle signing the agreement and a check.
Is taking the time to keep buyer and seller negotiations in writing via approved contract forms, amendments, counter offers, and notices worth the reward? I hope so. The cost of settling disagreements is greater than the money.
By Sunday morning dozens of people will decide to buy a house. Around noon they’ll join the dozens who decided to do the same. They will cross paths coming and going to open house after open house. As April turns into May, and June becomes July, most of these multiple dozens will have made offers and come in fourth, third, even second at least once. Few will become owners of their first choice home. Is it necessary to try and fail, and learn, and stress before finally being the lucky chosen-one in this ultra competitive real estate market? No, it is not. Learn from those who tried and failed, Avoid attending the school of hard knocks yourself. Become committed.
Competitive markets separate those who decide to buy from those who are committed to own. Deciding to buy is easy because it requires no investment of time, money, or energy. Deciding to buy can begin with an idea and get no further than searching Zillow on a smart phone at work and talking house shopping with co-workers. Committing to own is an entirely different mindset. The first one to reach commitment will own the home everyone else decides to buy.
You can tell a committed buyer from one who has only decided to buy by looking at their Offer. The reluctance of the decider shows through in the contingencies. Types of contingencies and the volume of contingencies. Contingencies are “maybes”. They are “if, and, or, and buts”. Escape clauses. Side door, back door, and front doors left open to walk away before the commitment is made.
The committed person’s offer isn’t exactly the same as “I will buy your house at this price, and on this date”, but it’s close. Those 12 words are what an Offer to Purchase might have once been. The Offer we use in Wisconsin small print crammed onto 9 pages of 8 x 11 paper. The 12 words are included, more or less, and if, and, or, and but make up the 8.99 pages. The person committed to own hands in an offer with very few check boxes, more than a typical number of lines stricken, and no extra words. Clean and simple and appealing to the seller shows commitment.
This is a good day to prepare yourself to be committed on Sunday. Let the others decide to buy. Today you commit to own.
Good luck future home owners!
As an investment strategy Buy Low and Sell High is simple and effective. And if we could see just get to the future without leaving the present we’d know if today is a buy low day. Rats.
I’ve seen a real estate bubble burst. In the run-up we denied a housing bubble was an economic reality, until it splattered. Are we approaching the next bubble? Maybe. The fuel driving our market today is different than the gas of 2001-2008 in the way air and helium differ. The outcome of too much of either pumped into a balloon makes the same BANG when the over inflated balloon bursts.
Is this a “good” real estate market? I don’t know. Define good. Good for who? As of today, 4/16/19, we are in an furiously competitive market at some price points, and in some neighborhoods. West side Madison buyers looking for homes under $250,000 will find the home they want to own is the same home a dozen or more people are trying to buy. (I saw 18 offers on a house Monday, and there were more coming in.) We can be certain, this house is not being sold low, and unless there is no truth to the fact that what goes up must come down, selling high in the future is less likely than selling lower.
Should you buy a house today? It depends on all aspects of your situation. Regardless of what your friends are doing, or what a banker or REALTOR tell you to do, only after considering all factors, objectives, intents, expectations, and options can you know if attempting to own is prudent in this market. Do check your expectations. If you expect to find a bargain you should expect to be disappointed. Even home sellers who make a mistake and price too low are safe as long as they invite more than one person to look at their home.
A smart expectation to achieve home ownership is to come prepared to own. Expecting to negotiate leads to certain failure. Enough people have paid the price to learn house buying is not a business of price negotiating today. You will be up against them. It’s OK to be hopeful, but eventually you will either quit or concede to the facts. If you want to own a home, think in terms of being the buyer you know the seller wants to meet. Don’t be the buyer the seller can’t depend on. Put yourself in the seller’s shoes. Would you get into business with you if you have options? This isn’t poker. Bluffing is a waste of time. Put your best foot forward if you want to own a home. And remember, home ownership is not investing. For a home to be a wise investment financially, trust the fundamental fact, real estate is a long term investment. Some folks win in the short term, but this market does not have what it takes to be short term winners. A home is a home first, second, and third.
Forms used in real estate transactions are the product of years of fears. What was once a handshake agreement to pay X Dollars for That Land is no less than nine pages, soon to be a dozen, of if this, and that, or this, but not that conditions. If something once happened to somebody, someone wants to insert a provision into the boiler plate form to give everyone some options to try to avert the isolated incident they once saw. The time wasted by people who don’t require someone to think for them so that those who don’t want to learn is astronomical and the outcome is greater harm than good.
We have a choice. Keep it simple and allow buyers and sellers, their attorneys and real estate agents to structure terms to satisfy the expectations of parties of each transaction, or build a monster to address whatever might happen, once happened, or is unlikely to happen. Building the monster might provide options few people would have thought of, however if a person can’t think of the solution on their own, it’s a good chance they won’t understand the solution you provided for them.
Rather than trying to think for those who want the thinking done for them, wouldn’t it be better for the industry to raise the standard of comprehension and ability to draft contracts, or remove contract drafting responsibility from the licensee? Eliminating these pre-written, boiler plate, inflexible provisions might increase the competency of our industry by reducing the participation of those who choose not to learn. As those individuals and their respective firms fall behind those who strive to learn and adjust to new conditions, the market will naturally eliminate the stragglers.
It’s a choice between increasing the competency of the professionals for the benefit of the consumer, or decreasing the need for competency for the benefit of the least competent practitioners to the detriment of the consumer.