Author: Tom Meyer Real Estate Broker, Madison, WI

I believe every every Offer to Purchase can present the unique ability of the person the contract is written for. The person who is most compelled to be cooperative, most qualified, most sincere, most committed, least risk adverse, can have an Offer drafted to show their true ability and commitment. Home sellers are likely to look favorably upon those offers which give them the most comfort. Licensees who know how to craft Offers as unique as the individual buyer are worth their weight in gold.

Be Accurate. Be Better. Be Careful. Verify your work.

My guess is you are more likely to be accurate when you’re not distracted. Where and when do you do your most careful work?

Be Accurate: Home Depot, Fleet Farm, and your local True Value Hardware Store sell 25 foot steel tape measures by Stanley, Milwaukee, and Dywalt. For less than a dollar a foot, you can own one of these tough and ready tapes. Even if you use it on every listing (and I hope you will) one of these could last your entire career.  The 26 foot Fat Max by Stanley measures in Metric also. That could be handy if metric catches on in the USA.

Be Better: When you list a house which I last sold, how can you be sure the measurements and sizes I stated on the old MLS sheet are accurate? Don’t take my word for it. I could have made an error. Measure rooms. Check public records. Look at surveys. We all think we do our jobs well. And we all make mistakes. Be better than the agent before you. Do your own measuring.

Be Careful:  The best place for me to prepare detailed offers and detailed representations of property is in my office with no distractions. My guess is you are more likely to be accurate when you are not distracted, where you have access to all the tools you might need. Where do you do your most careful work?  When are you most careful?

Once you’ve prepared your marketing material (MLS Data, Flyers, Web posts) check for accuracy. Send the material to your client and ask them to review for accuracy. When an error is identified, make the correction promptly.  If you work with an assistant for data entry,  have a system for verifying accurate information is entered and inaccurate information is corrected.

When the Notice or Amendment appears unfavorable, why do we call the other agent?

Working through inspection related contingencies is when the most agent to agent calls (by calls I mean text, email, and phone calls) are initiated.  Why is a call made so quickly in response to Notices and Amendments?  I believe it’s an unnecessary practice.  Here’s why:

The Offer to Purchase is an agreement between the Buyer and Seller. Sufficiently written contingencies (and every licensee believes they wrote sufficient contingencies) include the steps the parties will take when this or that happens. The contingencies define key terms. The parties agreed to these steps and terms. When one party follows those terms by sending a Notice or Amendment, or doesn’t follow those terms, by sending the wrong form or no form, the receiving party has a predetermined course of action. Nothing in the contract or license law states a licensee must, or should, make a call to object, question, debate, or educate the sender.  The approved and understood options include the recipient party responding by Notice, Amendment, acceptance, or silence. Of the  approved forms for licensees, email, text, and phone calls are not mentioned for good reason.

Lawyers may have permission to speak on behalf of their clients. They may have the protection to make representations. Licensees do not have the legal authority of an attorney. A good way to lose the authority we still have to complete forms is to fail to complete forms. Let’s think about this.

A call (text, phone, email, fax) is documentation of a message from one licensee to another. The commitment to the statements is arguably attached to the sender and whomever responds.  There is no commitment to the statements from the principals. A Notice, Amendment, Counter Offer on the other hand, is signed by the principals confirming the words are their words; the promise is their promise; the responsibility is their responsibility.   Documentation is clear when appropriate forms are signed.

If the intent of a call in lieu of a proper form is to speed the process or challenge the other agent, the intent is reason enough that the form is a better choice.

 

 

 

 

 

 

Where’s the evidence? Does limiting the window of opportunity benefit the Seller?

The property was listed on the MLS on Wednesday. Showings were restricted to no sooner than the open house on Sunday at noon.  In the remarks, we are told Offers will be presented to the Seller on Tuesday at 10:00 AM.  What’s the objective?

If the objective is to give the listing firm a leg up on the competition to attract a buyer and earn more money, data exists to show this does or does not work. (I hope the data proves this is not the result.) If the objective is to give buyers a fair opportunity to get their offer considered, or if the objective is to give the sellers more offers to consider, the empirical evidence has not been gathered.

Retail business with thousands, and thousands of potential buyers for a limited product can prove the limited window of buying opportunity increases demand and subsequently price. (Thing Black Friday) The data base is big enough and the evidence is solid for comparison to sales with or without the limitations. That’s not true for real estate. Even in a Seller’s market like we just experienced we probably can not ( I doubt we have tried) accurately measure the effect on price or demand.

The real estate industry works in part because it has the means to expose individual properties to a mass market of buyers…many who are qualified, motivated, and NOT in the community.  A limited window of opportunity may corral a few folks who are nearby at that moment. Those who are not nearby are eliminated; they are effectively blocked from the property.

If this method of squeezing the market to a tiny window of a few hours of time is more advantageous to the Seller and not detrimental to the marketplace, where’s the evidence?

What Do We Want to Accomplish?

 

Seth Godin’s Blog

“Will the seller take a cash offer with no contingencies?”

Offers to Purchase are handshakes. You own this property, and I want to own it. I’ll give you $X and you give me the Deed on this date. The details could be left out if no one ever had a reservation. The details are the exit doors. Our job is to attempt to make clear what everyone intends and expects.

Dishonorable people intent on not keeping a promise will not be impeded by language of a contract.  Seth Godin notes that our future depends on good agreements with good people. What do we want to accomplish? We want to work with good people. The good contracts keep us in business so the good people can benefit from our good work.

Inspection Contingency: Two ambiguous deficiencies you want to avoid

Wisconsin Residential Offer to Purchase page 9 of 9, Inspection Contingency

Deficiency number 1. NOT TESTING.  Line 410 reads: “This contingency only authorizes inspection, not testing…”. To add clarity, lines 395-409 have the definition of the terms inspect and test.  You can inspect, but you shall not test.   It’s agreed, testing can not be done without a specific contingency and the inspection contingency is specifically not for testing.  Or, is it? At least one firm in Madison has an addendum with an additional contingency altering the inspection contingency to apparently permit testing.

“Addition to Home Inspection Contingency: It is understood that if the buyers’ home inspector recommends that additional inspections/test be completed, Seller agrees to that portion of the inspection being extended for ____days…”.  I put the problematic words in bold.  If I’m interpreting this correctly, if a home inspector recommends a radon, mold, lead paint, water, or air quality test be done, the contingency is extended.  I don’t know if the parties are agreeing to permit the test, or just extend the contingency satisfaction deadline.

Practice Tip:  Do not include any reference to testing under the Inspection Contingency. Use a specific testing contingency with stated acceptable levels.

Deficiency number 2, NOT ENTIRE PREMISES. line 412 to 413: “This Offer is further contingent upon a qualified independent inspector or independent qualified third party performing an inspection of________________________________________________________________________(list any Property component(s) to be separately inspect, e.g., swimming pool, roof, foundation, chimney, etc.)…”. Even with the hint telling us to insert components of the property, some licensees are writing “Entire Premises”.  The consequence of the words “entire premises” in the blank where specific components are to be written may be this:  A qualified independent inspector or independent qualified third party may do the inspection of the property instead of a “Wisconsin registered home inspector” as was first stated on lines 410-411.

When a component (fireplace, roof, foundation…) is inserted in the blank line as intended, the contingency is not ambiguous, and we have an agreement by the parties to allow a buyer to have a Wisconsin registered home inspector inspect the entire property, and a qualified third party or other inspector inspect the component stated, such as “the fireplace, the roof, the swimming pool, the shed, etc.”.

Practice Tip:  When in doubt about what might be written in the blank lines, first look to see if the creators of the form offered any hints or suggestions immediately after the blank lines. I can think of two places where they’ve done so in the Offer. If there is no suggestion, and you feel it necessary to insert something, make sure the words you choose complete a sentence and do not contradict the intent of the contingency.

 

 

Happiness lives on the other side of fear

Fear of falling increases with altitude. At one foot I have no fear. At 10 feet I begin to get cautious. At 15, I’m afraid. The tipping point to fear is about 11 1/2 feet when I have one foot on a rung and the other foot reaching for the next.

Last week when I first attempted to climb I almost quit. The job appeared big as well as high. With a little guidance from a guy who knows something about ladders, I managed to begin cleaning and staining the highest points of my house. My fear of falling subsided when I made it past the horizontal mid point. From there I could see the end. I also discovered that my chance of completing this job without a tragedy were higher than my mind told me when I first inched my way up to the top.  I realized a life lesson as the fear of failure evaporated and the feeling of happiness of completing a job I thought could not be done was within reach. Happiness is on the other side of fear, and fear has its place.

Fear is a choice. Once we decide if fear will keep us planted where we are, run,  or inspire us to proceed with caution, we have a commitment to make. Reminding ourselves there is happiness to be had we press on learning to navigate in the risky areas. Sooner than we might expect, the fear gives way to confidence (and a healthy respect for the real danger) and confidence with competence takes us to the goal. Even if happiness is fleeting, it may be worth overcoming the fear to feel the happiness.

Own and Live in Downtown Madison–Forgivable Loans Available

Follow the money around downtown Madison. You can see where developers are investing with new commercial buildings and quality apartments. These people know the same thing you know…people want to live and work in the authentic Madison neighborhoods.  Greenbush, Mansion Hill, James Madison Park Neighborhoods have the classic early Madison homes people are tripping over themselves to own. Or they would be if they could afford the renovations.

Community Development Division of the City of Madison has $80,000 to $100,000 forgivable loans available for purchase and renovation of these properties. Commit to live in the building for 10 years (and a few other requirements). Live a downtown Madison lifestyle.

This program ends December 31, 2017