Category: Be Creative.

It’s About the Net to Seller, Not the Price

There are always  gimmicks. Buyer markets gave us the Appraisal Contingency – Escape Clause, and the Buyer-Gets-the Last-Word Inspection Contingency. Seller markets spawned the Escalation Clause.  Insecurity morphed the Escalation Clause into a watered down, useless jumble of nonsense. (I’ll beat any offer price as long as I get to see the offer, and then I get to deduct a laundry list of expenses from the price, and maybe I will agree to amend our price, but I don’t have to pay this amount if the appraisal doesn’t match our price, and then….)

All of the gimmicks look like good ideas until you, ah well, look at them. People who hire smart real estate brokers as Buyer Agents get their Offers accepted by steering clear of the gimmicks. The savvy Realtor® out thinks the competition by seeing  knowing the objective of the Seller is really the Net to Seller, not the Price Offered. I believe the Wisconsin Offer to Purchase (Residential, the Condo Offer, and Vacant Lane Offer) are boiler plate forms where costs paid by Seller are pre-determined. To increase the Seller’s Net without increasing the price, financially capable Buyers will take on the Seller’s typical expenses (some may be tax deductible—see your accountant), and save themselves thousands of dollars in interest and higher property tax bills over the years of owning the home.

This weekend when you write your offer try this: Think like you are in cooperation with the Seller, not in competition. The Offer has at least 8 areas you can modify to improve the love your offer receives from the Seller…and none of them require sappy letters and photos of your kids. If you haven’t committed to a Realtor® yet, before you do, ask them what ideas they have to help you get your offer accepted. Commit to the professionals who know how to make the Offer work for you AND the Seller.

Choose To Fight or To Understand

Memorable outcomes of my fights to be right serve a purpose when I look at them and ask, “What did you learn?” It’s so easy to rush to battle, and so admirable to watch people who first seek to understand and then to be understood (Melanie Trump said that…no she didn’t, Steven Covey did in 7 Habits of Highly Effective People).

The art of understanding is in listening. When I’ve been most respectful I am shown the the feelings rooted in fear which may be a contributor to an attitude of battle. Respect is served with space and patience. In my rushing to results days, impatience bowls through the space and rumbles over respect. I know what patience looks like and accomplishes.  I’ve seen admirable patience in my sons, young people who let go, seniors who know what life is about, and other well adjusted people who probably have faith in the power of Karma.

I was just told that a person believes I’m not trying hard enough. She may be right. Trying hard is not a path I will walk.  I’m being patient. I’m being gentle. I’m listening and understanding. It’s freedom to be at peace with the world. I choose to not fight today. Let’s see if the universe accepts patience. I believe it does.

Hottest Trend in Real Estate; Price Escalation Clause

The purchase price of this Offer shall be $1,000.00 greater, up to a maximum price of $_______, than the purchase price of any bona fide offer….

Source: Hottest Trend in Real Estate; Price Escalation Clause

Hottest Trend in Real Estate; Price Escalation Clause

The purchase price of this Offer shall be $1,000.00 greater, up to a maximum price of $_______, than the purchase price of any bona fide offer….

Smart homes, modern kitchens, latest paint colors, big houses, not-so-big houses, the trends never end. This year’s popular trend is not in a can, a box, or a store. It’s an idea. Before you pick out paint, new kitchen appliances, or the latest in bathroom fixtures, you’ve got to get your Offer to Purchase on the house accepted. It’s  seller’s market in South Central Wisconsin where Necessity has once again proven to be the Mother of Invention. Her latest creation is the “Price Escalation Clause” and it’s a powerful idea.

Here’s how it works: House comes on the market at $300,000. Buyer A makes an offer for $300,000. Buyer B offers $310,000. Buyer C, knowing nothing about the other offers, is determined to get her offer accepted. She’s qualified to purchase up to $350,000, and this house is perfect for her. Buyer C writes her offer  as a Purchase Price of $298,000, with a clause to escalate her price if the seller has any offers for more money than the $298,000 she offered, to a price of $1,000.00 higher than any bona fide offer, with a maximum purchase price of $315,000.  Seller likes all of  the offers but likes $315,000 best. Buyer C goes from 3rd best offer to Accepted Offer because she let the seller pick the price, provided it was only $1,000 more than any other offer and not higher than $315,000.

Pretty easy right? Maybe not. Real estate brokers and lawyers recognizing the opportunities for foul play crafted  contingencies which may be more complex than necessary. Everyone has an idea and it seems every idea is incorporated into one of the dozens of versions of an escalation clause. Typical of first generation vehicles, these non-uniform contingencies are overbuilt and cumbersome to navigate.

Here’s a simplified price escalation clause  to help you understand the concept. Check with an attorney before using a version of any escalation clause. This one is only for an example, not to be used in your offer.

The purchase price of this Offer shall be $1,000.00 greater, up to a maximum price of $_________(a), than the purchase price of any bona fide offer the seller has received at the time of acceptance of this Offer.  Along with this accepted Offer, Seller shall send written notice to buyer stating the purchase, which shall be no more than $1,000.oo more than said bona fide offer and not more than $___________(a). Buyer and seller agree to promptly execute an amendment to state the purchase price as the amount given on said Notice from Seller to Buyer.

Broker and lawyer crafted contingencies call for the seller to provide the buyer a copy of the competing offer to prove the purchase price of the other offer. You’ll even see the term Net Price used to account for credits and concessions before calculating the escalating buyer’s offering price. Both conditions are good ideas. Whether or not they are necessary depends on the buyer. I believe the need for proof of existence of other offers is overblown, and calculating Net Price is splitting hairs.  Everyday as long as there have been more than one buyer for a property, buyers have offered more money than they might have otherwise, because they knew or thought another offer was coming in to the seller. Never, ever do those buyers require proof that their offer wasn’t already better than the one that did or did not come in. I believe in requiring the sharing of competing offers, we’re are adding a solution where no problem exists.

The easiest offer for a seller to accept is one that is easy to understand, and includes a  preferred price. Keep it simple and legal to have a better chance of being the next owner of the home of your  dreams….oh yes, there is still the issue of appraising for the purchase price. Seller’s be careful…make sure you are protected against appraisals below that escalated purchase price. Appraisers and underwriters are not as inspired as buyers and sellers to put unsupported values on properties.

Always use an attorney to review your contracts.

 

 

 

Words I Wish We Hadn’t Wrote

Robert Fulghum is an author who compiled a book of words he didn’t write, but wished he had… Words I Wish I Wrote. This is a book filled with words painted together into inspiring or pleasing art. My blog isn’t such a thing, but neither is the work of sales trainers and consultants who use words that remove the people from the process. The May edition of The Wisconsin Real Estate Magazine again perpetuates the practice which will make the Realtor less relevant the more the idea is adapted. The Gold Rush Mining For Leads. What is a lead?? Why is it gold??

Unfortunately a lead is what our industry calls people. These leads are not people, they are gold…if they do business with us. Maybe they are lead if they don’t. How long now have we Realtors practiced removing the person from the process? Forever maybe? Do you want to make a ruckus in real estate? Break away from the cliches of Close, Deals, Leads, Touch, Follow up, Drip campaign, SOI, floor call, and FSBO. Surely there are  more but this is a start.  He or She who eliminates these words will see a rise in their attitude and will cause people to have an inspired attitude about him or her. Think about it; when you go in to see a professional, do you want to be a lead or would you prefer to be a person? We treat people the way see them. I’ve never met a lead, I’ve never had a deal. We work with people, parents, sons, daughters, families, who have emotions and wishes. We create contracts. A contract is more valuable than a deal. A person is more respected than a lead.

I think I’ve written about this before.

 

The Enemy of Creativity is Fear: Or Good Stuff From Seth Godin

Embrace fear and wrap it in creativity. Use fear to improve your creative idea, not to extinguish it.

Great ideas become popular internet Apps, inventions, tools to improve life, amazing books, and movies. Chances are the person credited with the Great Idea probably wasn’t the first to imagine the potential. What the person who made it happen did was overcome fear. Fear is placed in our minds by imagining the idea will fail, be rejected, we’ll be ridiculed. Kind of funny to think that the same idea we imagine to be clever and worthwhile has two faces. One bright and optimistic, the other gloom and doom.

People who set out to make a difference have fear nipping at their heals right up to the date of launch. What they do that allows them to move forward is probably a combination of ignoring the fear and embracing it. Fear embraced for what it is helps the creative person think about areas of opportunity, weakness, areas to be enhanced. When fear derails a creative idea fear succeeds in undermining a person’s pride, ego, confidence. commitment, desire to make a difference. Want to try it? Think of a social issue and suggest a creative solution to friends. They will show you what you should fear. Suggest a business idea to your spouse. If you get an enthusiastic “let’s do it!” you’re one of the fortunate few.

Seth Godin points out that the enemy of Fear is Creativity. Willing to learn from failure allows a person to be creative in face of fear. Fear can not stand up to creativity. Creativity will attract creative people.

Embrace fear. Be creative. Be as fearless as a child who only knows imagination. Wrap that fear in creativity.