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.
Regardless of hopes, expectations, and myths, buyer agency places the licensee and the buyer on the same side with a shared perspective. Buyer agency is a privileged relationship where the most effective assets a Realtor legally has at her disposal are available for the buyer. Without buyer agency the licensee is unquestionably working as a sub agent for the listing broker with clear obligations to the interests of the seller. There is no gray area in Wisconsin real estate agency law.
In my opinion, there is one reason for working as a buyer agent and this is it: I intend to legally provide all of the services, share all of my insight, and work with the buyer to create appropriately safe terms. And this is important: Some of those terms may be to the advantage of the seller. I believe an informed person, given logical choices, is comfortable taking on risk commensurate with the reward.
The assumption that buyers are best served by tipping the scales of every point in their favor is dangerous in the real estate market. Price is always important and to some extent it may be second to risk. Given a competitive price, prudent sellers weigh the risks of the contingencies before committing. An attractive number with high risk and low probability of closing might appeal to the gambler, but for the typical home seller who has other plans and commitments to meet, shifting risk to the buyer in exchange for a reasonable price is a more acceptable strategy. The wise buyer agent knows the areas of a boiler plate contract ideal for softening. We will find some of those easy to improve areas of offers in the coming weeks of Skill Share Thursday’s at Restaino & Associates. 9:30 to 11:00. Let me know if you want to attend.
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