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.

Rejecting the Broker Offer of Compensation…Why do we do THIS?

You’re the Agent of the Buyer. You have a Buyer Agency Contract with your client to pay you 3.0% of the Purchase Price at closing as your Buyer Agent Broker Fee. You draft an Offer to Purchase on a property listed by a Broker member of the Multiple Listing Service you belong to. The Offer of Compensation made by the listing  broker to your broker is 3.0%.   Why does your buyer client’s Offer include a provision that states their broker (you) reject the Offer of compensation from the listing broker, and require the Seller to pay your 3.0% buyer agency fee at closing?  These are the mythical reasons we still  do what we’ve been doing for years:

  1. If I don’t accept the broker’s offer of compensation the broker can not take me to arbitration and recover the commission on the grounds that I did not procure the buyer. Not true since January 2005 when Article 17, Standard of Practice 17-4 was amended. If you didn’t procure the buyer you’re not safe from arbitration. You might have the money in your account but you are at risk.
  2. The listing broker might reduce the commission without my permission. This can’t happen. Article 3, Standard of Practice 3-2. Once the Offer is submitted, the fee to the cooperating broker is set as disclosed. You can agree to receive less, but a unilateral reduction is violation of the code of ethics…you can collect in arbitration.
  3. I will get my check at closing instead of waiting fro the listing broker to send it to my broker a week after closing. Back in the day that was true. Today the title company issues the check to the selling broker and a check to the listing broker.
  4. That’s the way we always do it. and That’s the way my broker told me to write the Offer.  Yes. That’s probably why,  but it’s not reasonable.

Are you interested in an idea as to why we might not want to include that language

  1. When the Buyer Broker fee is paid by the Seller as part of the Offer, the fee is as open to negotiation as the price, closing date, included items, and everything else that might make a difference to the Seller’s bottom line.

If you have another opinion based on a fact, I’d like to hear your thoughts.

 

 

Why do we do that? Cuz, we always do.

Because that’s the way I was taught. Yup. That’s a common answer to a question that may get thought more than it get’s asked out loud. And that’s too bad. Change begins with asking, “Why?” Growth is stunted when we accept, “Cuz we always do”. Why do include the Appraisal Contingency in Offers?  Don’t tell me to protect the buyer. That’s not a reason we use the contingency. We use the contingency because it’s there.   And it’s been there since 2011. Carved in ink stone, that relic will protect  a person from an imaginary threat to the point of keeping them from ever getting a chance to appraise the property…cuz they came in second.

What’s wrong with that Appraisal Contingency? It’s old and  stuck in its way. It’s inflexible. It’s a seller unfriendly curmudgeon. It’s not a contingency, it’s an ESCAPE CLAUSE. Read it from the perspective of a seller… a seller who lives in a seller’s market. You can see the problem instantly…should the appraisal, which is a subjective process, show a value of even a dollar less than the purchase price the buyer CAN terminate the Offer. Will they? Probably not, but 30 days from acceptance the seller is in no good place to negotiate and without an agreement to modify the contract to something fair, the buyer is in a position to negotiate price, closing date, concessions of any kind.  Smart sellers and will pass your offer over if they have a smart buyer who knows they don’t need an overkill contingency to be safe.

Savvy Realtors are proactively thinking up better conditions to create a win-win for the buyer and seller who have an offer with an appraisal contingency. This is a version you’re welcome to copy:  Appraisal Contingency:  In the event that said appraisal shows a value less than the purchase price, buyer shall deliver to seller a copy of the appraisal and a signed amendment to the Offer to change the purchase price to appraised value amount. Said amendment shall include no other conditions and shall allow Seller one (1) day to accept. Buyer shall not deliver the Notice to terminate provided for in this contingency prior to seller’s deadline for acceptance of the price change amendment.

If you grew up thinking your’s is not to question why, your’s is to either do or die, there’s good news—you’re not gonna die…ASK WHY and find a better way.  Next contingency that has outlived it’s use is the “Buyer direct Broker to reject the listing broker’s offer of compensation. Seller to pay buyer broker  ____% at closing for buyer agency fees…” This monument to old times has no good reason linger longer…you know why, right?

 

No, Stupid. That’s Not What Business People Do

I sort of hope that happens (housing market collapses) because then people like me would go in and buy.”  Donald Trump 2006.

Trump in 2016, On being called out for rooting for a housing market collapse: “I mean, I’m a businessman, I like it when it-when it goes down it goes down.” “What am I going to do. I’m in business. Never thought I was going to run for office.” 

The Onion didn’t write the satire. This was no fictitious businessman, smirking with selfish irresponsibility. This was the epitome of the money grubbing, selfish thugs who thinks death and misery of others is a game of opportunity for them. If we were in business participating in perpetuation of the no-bubble lie, we have some responsibility for the humanity crisis of the start of this century. If our only contribution to change is taking what is not ours at a steep discount then we are not business people at all.

Oh, I understand, there were opportunities in acquiring properties lost by “business people” who leveraged what they did not have, but that’s not the target of people like Trump. Their target were moms and dads. Young people. Retired people. People with young children who lost their homes because they lost their jobs and their banks refused to modify their aggressive interest rate loans. A business person takes what talent, ability, assets they have and puts them to use to relieve the misery of others.

Another opportunity to be a business person in a crisis will come along again. If I have to think if my action is right or wrong based on my intention to run for office, or If I have to ask rhetorically, “What am I going to do?” then I’m stupid.

 

 

The Escalation Clause Rendered Useless

“In other words, an entire new world is pointed to, by this….It is authentically a new thing on the face of the earth.  Pieces such as this….” he picked up the pin once more briefly. Closing the lid he returned the box…”can be mass-produced….” The Man In The High Castle, Philip K Dick

We marvel at a new idea, something so special, perfectly suited for nearly no one, yet remarkably powerful for a bold and brave few. Being useless to the masses, its unique appeal makes the authentically new thing sensationally valuable. And then, because everyone wants one, we strip away its authenticity, its most powerful attributes, and render the idea useless. We  did this in the mid ’90’s with a brilliant marketing strategy known as Range Pricing and we just did it again with the Price Escalation Clause.

Savvy, capable real estate buyers, seeking a negotiating strategy to acquire property at a price more than they planned to spend, but at a price less than they are willing to lose the house over, hit upon the Price Escalation Clause (EC) It’s a simple and powerful clause shifting risk from the seller to the most qualified or boldest of a bevy of buyers.

The authentic EC looks like this: “This Offer price is changed to $1,000.00 over the purchase price, of any bona fide Offer Seller has in possession at the time of binding acceptance of this Offer. Said purchase price of this Offer shall not increase above $______________, regardless of the purchase price of said other bona fide Offer. Seller to notify buyer of the purchase price by written notice to buyer with acceptance of this Offer. Buyer agrees to pay any difference between purchase price and appraised value in cash at closing as necessary to satisfy mortgage financing requirements.”

The well versed seller sees safety in this remarkable offer of commitment from the bold and confident buyer. This buyer is a person the  seller wants to be in business with. This buyer knows what she wants and is willing to assume some risk to acquire the property. She fears nothing. She uses a tool that satisfies her desire to prevail.

Unfortunately we’ve lost sight of the purpose. No longer is the EC written as a tool to acquire a property, we’ve turned to mass production and churned out a contingency for the faint of heart who think they can eliminate competition to clear the field for their safety and security. The remarkable piece of authentic art the EC was, is now a plastic charm. In the hands of the unknowing user, what’s being represented as an EC is a useless garble of hidden security terms complete with a poison pill.

We’ve rendered the EC useless, and that’s not really a surprise. However, the smart Realtor and courageous buyer, there is an alternative. I hope you find it.

 

 

 

 

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