Net Equity, Not The Purchase Price, Is The Prize.

We think of the residential real estate sale as a price transaction when, in fact, it’s a trade of NET EQUITY. Price and expenses are factors in the formula to calculate a home seller’s home equity. PRICE – EXPENSES = EQUITY. By keeping eyes on equity, real estate agents have many more options to craft Offers sellers are likely to accept. 

 Selling our homes is how we release our home equity to do the next thing. By focusing on NET EQUITY, not price, we avoid the consequences of agreeing to expenses that deplete our equity and terms that leave negotiations open. By structuring our Offers to reduce the owner’s costs to sell, we increase their NET EQUITY and improve our chances of getting our offer accepted. The price is only a participation trophy. The actual money and the security of a sure thing is the real prize. 

Price is misleading

Homebuyers who only know how to improve an offer by increasing the price will pay a premium in negotiations. The buyers who provide the seller with secure terms and a reasonable price receive accepted offers and probably retain some unspent equity by not overpaying. To pay a reasonable price without being the highest price offer on the table, increase the Seller’s Net Equity after the sale by decreasing the Seller’s costs to sell.

The Secret Is Knowing Where The Money Is In The Purchase Agreement

You’ll find those opportunities to improve your offer without increasing the price throughout the Offer. There are at least two places on the first page of the WB Purchase Agreement, and at least six more throughout the 10-page offer.

At Essential Real Estate, we know how to make the Offer work for our buyer clients, when the goal is to be the most attractive buyer. The same strategy works to give our seller clients every opportunity to eliminate risk and increase the amount of the equity check they’ll receive at closing.

Author: Tom Meyer, Owner-Broker, Essential Real Estate, LLC Madison, WI

The real estate transaction, disclosure, and confidentiality are the business of a Wisconsin licensee. It's in the transaction where the skill of the licensee, and their commitment to the law where the public is protected or placed at risk. What you see REALTORS do to brand themselves and their firms, promote their service, advertise, and process paper do not require a license. I believe negotiations to create and honor a real estate purchase agreement is where the agent has the greatest value in a transaction. Paying professional fee rates for the administrative services is a choice consumers deserve. Old business model driven commission rates are taxing the home equity of American home sellers. Essential Real Estate was created to put more money in the hands of the consumer by eliminating expenses for the firm and charging a fair price for the real real estate service.

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