If everything I’m reading these days sounds something like “housing hasn’t hit bottom..,” or something like “housing prices are plummeting..,”
Let’s get something straight – you and me. I work for you. I am contractually obligated and have a fiduciary responsibility to you. Just you. I promise to always have your best interest at heart. I am your agent and you are my client. This is even true if I don’t like you (rarely) or you don’t like me (occasionally). I take our relationship very seriously and I always explain it carefully so you will too. What you tell me in confidence always stays between us – you and me. If you tell me you will accept less than the asking price or that, for some reason, you need to sell your home immediately – that stays between us – you and me. Anything you tell me that would reveal your negotiating position is just between you and me. These things are never revealed to the other side – the other you – the you who I am about to address.
Now as for you. I don’t work for you. I work with you. You are not my client, you are my customer. We have no contractual agreement and my only obligation to you is to treat you fairly and honestly. I take this particular obligation very seriously, and always fulfill my end of the bargain. I usually like you, and we often get along swimmingly and you can trust me. However, none of that changes that I don’t work for you. So, please don’t ask me if the owner is negotiable, or what can you get this place for. Those questions are all going to get you the same answer. The answer is that I work for the seller, and I take that obligation very seriously, and because of that I’m not going to answer those questions. However, if you need to know if the seller is negotiable, or how much you can get a property for, then make an offer. I promise to present your offer to the owner promptly, and get back to you with his or her reply. And this, in no uncertain terms, will answer your question.
Me? I’m a broker. I work for you. That is, the you who is selling your home and you, who has signed a contract with me. My job is to get you the best price for your place -. the absolute best price that the market will bear. I take my job very seriously. On the other hand, I don’t work for you. You, who has a lot of agents telling you that you should only work with them, that only they can find you the perfect home, that they are your agent, that they are your broker, that they are your best friend. Me, I don’t understand how they can say this to you. They have never signed a contract with you, they know that New York State law says that they don’t work for you, and they know who they really work for. They know that we all work for the seller. But that’s just me, telling you and you, like it is. Thanks for reading.
By far the most effective strategy for moving a sale from accepted offer to contract is to be prepared – a.k.a do your homework, a.k.a have all your ducks in a row – or as we are calling it here: pre-qualify yourself.
What does it take? Being pre-qualified means that you have an understanding of your financial affairs, your papers are organized in such a way that you could sign a contract within a week (if you had to), and you have identified your real estate team. Specifically,
- and most importantly, hire a lawyer. If you are a buyer you need to do this before you begin shopping for a home. If you are the seller you need to do this before you put your property on the market. For more on this see What Happens Now?
- You have made, or accepted, the offer in writing. This is not a binding contract; this is just the offer, in writing, to cut down on the ambiguity. Why in writing? Here are some things that I have actually heard people say – “that’s not what I offered;” “I only said 10% down;” and “no, I meant $559K, not $595K.” If you are the seller, you should have a pre-printed Offer to Purchase Form ready to be filled out. If you are the buyer, you should have your own Offer to Purchase Form, in case the seller doesn’t have one. At a minimum you should fax or e-mail the other party the following information: your contact information; the offer amount; the amount of down payment; where the down payment is coming from? (i.e. is it coming from the buyers’ savings or are they borrowing it); and any contingencies (i.e. the buyers need to sell their own property/home in order to purchase the one at issue).
- If you are a buyer, you have obtained a pre-qualify letter from a bank or mortgage broker. If you are the seller, you will ask the buyer for this – if he or she doesn’t have it, then the sale is a no go (unless of course the buyer is paying all cash, in which case you just won the lottery!). Besides having a letter to present to the seller, this process will inform you about how much of a house you can afford.
- If, you wish to inspect the property before going into contract then you have hired an engineer. This means that you have spoken to them and they are aware that you may be scheduling an appointment soon.
- You have sat down and gone over your finances – for example, if you plan on liquidating assets to put toward the down payment, you know what is involved and how long the lead time is.
- You have located the documents you will need to give the mortgage lender, such as pay stubs and bank statements.
There is a lot more that can be said on this topic, so feel free to leave your own tips/suggestions as a comment at the bottom of this post. Thanks for reading, Jim.
After Last weeks post, “What Happens Now?” I received a lot of questions about what exactly an accepted offer is. Here goes:
An accepted offer is defined as a verbal agreement between a buyer and a seller whereby a property owned by the seller will be purchased by the buyer for the agreed on price and terms.
Admittedly, Atticus Finch I’m not; but you do get the general idea: two people are agreeing to go forward with a transaction. It’s very important to note that this is almost always a handshake agreement. Further, it’s an agreement that either party can walk away from -anytime, for any reason. Buyer’s walk away when they get buyer’s remorse (and Oh Boy, do I need to write a post about that), find another property they like better, get divorced, lose their job, etc. Sellers walk away too -often because they have received a better offer. Point is, that no one is legally bound to sell or buy a property until both parties sign a written contract (and usually after a little bit of good-faith moolah, is handed over by the buyer). This is because, in New York State, there is a law called the Statute of Frauds and it essentially states that certain contracts (i.e. agreements) must be in writing in order for them to be enforced. In New York State, a Real Estate Contract of Sale, also know as a Purchase Agreement, happens to fall under the Statute of Frauds.
(Please Note: I’m not suggesting that you behave like a real estate monster. It is impolite to willy-nilly present or accept offers just because you can. Let me stress, beg, plead, implore, and appeal to your sense of decency by asking you not to verbally commit to a transaction unless you mean it. Besides the business reasons, you shouldn’t do it because it’s downright dishonest. )
Next week, I’ll write about how best to get yourself from Accepted Offer to Contract. Thanks for reading, Jim.