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Real Estate Made Easy
Part 2 – Working With Buyers
Prior to leaving the air-conditioned comfort of the office to view properties, an experienced and professional Agent will accomplish five fairly simple and routine functions:
1. Identify the financial neighborhood the Buyer is qualified for.
If you can learn to pre-qualify your Buyer based on their Gross Monthly Income, and Outstanding Debts, you’ll be ahead of 90% of the Agents working today. It’s simple to determine, and will take you about five minutes with your clients. We’ll go over this in more depth in a future post.
2. Identify the financial neighborhood the Buyer is comfortable with.
These first two conditions may sound similar, but they can be VERY different. Your Buyer may be able to qualify for a certain amount, but may be very uncomfortable with the monthly payment required to meet that amount. You need to find your Buyer’s comfort level, and be willing to work with that.
3. Identify the geographical neighborhood the Buyer is comfortable with.
You’ll need to spend some time with your clients, quizzing them about the kind of area they’re looking for. What elevation? In town? Outside of town? Quiet and private, or within walking distance of shops and restaurants? You can save yourself days of driving around looking at properties that don’t work for your clients if you can narrow down these basics before you ever get in the car.
It would make absolutely no sense and would be a major waste of both the Buyer’s time and the Agent’s time to begin showing property until both Buyer and Agent have addressed and are comfortable with the first three concerns.
4. Know the total inventory of properties available that will fit your client’s needs.
This is where your knowledge and professionalism come into play. Do you go to every Broker Caravan so that you know all the available properties? Do you know all the subdivisions (and their CC&Rs) and the condominium complexes (and their Association Rules & Regs)? Which complexes allow pets? Which ones have pools? Do you check out the updates, new listings and changes on the Multiple Listing Service every day? Knowledge is Power. The more you know, the better you can help your clients. All that remains is to match the Buyer’s needs and suitability with the Agent’s extensive knowledge of available inventory to identify the optimum property.
5. Have the Buyer sign a Buyer’s Representation Agreement and a Dual Agency Form prior to looking at property.
The signed Buyer’s Representation Agreement will ensure that the Agent will be paid if the Buyer buys any property from any source (like a For Sale by Owner property) during the term of the Agreement. You would never consider representing a Seller without a signed contract, why would you do it for a Buyer? Both Buyer and Agent benefit from having their mutual responsibilities spelled out – in writing- before entering into a business arrangement. Everyone would therefore know what is expected of them, and what their responsibilities are.
The Accredited Buyer Representative Course is HIGHLY recommended if you need more convincing about this changing area of real estate.
The signed Dual Agency Form satisfies the legal requirement that the client was informed upon first contact as to the concept of Agency and how it works.
Once an Agent masters the above concepts - given that sufficient inventory exists, it should be only a matter of days before a happy, satisfied Buyer is in Escrow with the property of their choice.
Scenario #2:
Don’t bother to ask the Buyer any pre-qualifying questions. Take days or weeks showing the Buyer every listing in town before making an offer & opening Escrow. Hope the Buyer can afford what they just bought. Pray that the Buyer doesn’t experience Buyer’s Remorse and cancel the Escrow because they really didn’t understand or feel comfortable with the entire process. Curse and moan because the Buyer bought a home from a FSBO or Developer and now you won’t get paid – after spending weeks showing them every property for miles around.
Which way of doing business makes more sense to you?
The choice of the above alternatives would seem to be a no-brainer; however, it is amazing how many Agents make a career (usually a very short one) of choosing the second alternative! In my humble opinion, this is the #1 reason why – according to NAR statistics – 85% of new agents are out of real estate within the first three years.
Hopefully, this will help you to be among the remaining 15% of Agents that enjoy a long and fruitful career in this very demanding profession!
I hope you’ve found this information helpful! Until next time – Take Good Care!
Jay J. Spadinger, REALTOR, BIC, ABR
Hawaii State Educator
Rainbow Properties
Akahi Real Estate Network, LLC
www.rainbowproperties.com
www.jayhawaii.com
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Real Estate Made Easy
Part One – Working With Sellers
The Real Estate Profession is by no means easy. However, it can be made a lot easier with a few simple guidelines.
Scenario #1
You leave a Seller’s home with a signed Listing Contract – congratulations!
However - if you’ve left the Seller with the impression that the sale of their property is now totally in your hands – you are in deep, deep trouble.
The message needs to be delivered loud & clear to the Seller that the Listing Contract is, in effect, a Partnership Agreement between the Agent and the Owner, with both having major responsibilities.
It must be made clear that the Seller’s responsibilities are just as important as the Agents’. If the Seller does not perform all of their responsibilities, an optimum sale will not result.
The Seller’s responsibilities are fairly simple:
1. PRICE the property RIGHT - an accurate CMA is essential.
2. Insure the property SHOWS WELL.
3. Make sure the property is AVAILABLE for showings.
The Agent’s responsibilities are also fairly simple:
1. MARKET THE SELLER’S PROPERTY to the greatest extent possible, utilizing the most effective, efficient means available. The Marketing Plan should be fully discussed with and agreed to by the Seller during the Listing Presentation.
2. PRESENT ALL OFFERS to the Seller immediately upon receipt. This is a fundamental requirement of real estate license law.
3. CONTINUE TO MARKET the property for BACK-UP OFFERS right up to the day of closing. If the deal falls through, you'll be the hero for having other Buyer clients ready to pick up the deal – instead of having to start from scratch looking for another Buyer, putting your Seller client months behind the curve.
When Seller and Agent are both aware of their respective responsibilities, and are working toward the same goal - a fast, well-priced sale – then happy, satisfied clients are the end result. These clients won’t hesitate to recommend you to their friends and family because they’ve seen that you represent their best interests – not just your commission.
I hope you have found this information helpful. Until next time – take good care!
Jay J. Spadinger, REALTOR, BIC, ABR
Hawaii State Educator
Rainbow Properties
Akahi Real Estate Network, LLC
www.rainbowproperties.com
www.jayhawaii.com
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What Does the Sales Contract Say?
Over the years, I’ve seen many situations where an Agent recognizes that a transaction is starting to go off the tracks. Their Broker is likely to get a frantic call for help and the question, “What do I do now”? Typically the Agent has a transaction in escrow, and some incident occurs that puts the closing in jeopardy. My answer to the Agent would more than likely be in the form of another question, i.e. “What does the contract say”? The contract itself, in almost every instance, holds the answer to the Agent’s question.
Often the answer to the Agent’s question is in a paragraph that does not have a “check mark” beside it – a paragraph commonly called a “boiler plate” provision of the contract. There is a tendency by some not to read those paragraphs and/or not to address them with their clients. These typically are the same Agents who tell their clients – as they progress through the multiple pages of the contract - to simply “initial here and sign here” and it is only after the deal starts to go south that anyone pays any attention to those “boiler plate” provisions.
Another concern is the Agent who simply places numbers in the “fill in the blank” type of paragraphs without regard for the consequences of what those numbers actually represent. For example, if you enter “45 Days” in a contract as the time period before closing, consider carefully what the actual closing date will be. Look at the calendar and see what day of the week the closing is scheduled. Is it on a holiday when the Escrow Company may be closed? Is it more advantageous for your client to have closing on a Friday, or a Monday? At the end of the month or the beginning of the month? How will it affect their mortgage payment? When you just fill numbers in blanks without thought for the actual circumstances involved, you could have very unhappy clients on your hands, especially if you’ve cost them money by not paying attention.
Sometimes an Agent fails to comprehend that the entire contract does, in fact, tie together and is not just page after page of totally unrelated information. The impact of every single paragraph has to be gone over with every client. Not just when something hits the fan; but in every circumstance prior to the client signing the contract.
Another dangerous tendency I have seen over the past twenty-five years is that, when deals start to go south, some Agents typically try to place the blame on the other client or on the other Agent. The rationale appears to be for the Agent to get their client convinced that the problem always lies with the other party, i.e., the other party is being unreasonable, stupid, greedy, unethical, etc.
I have never found this tactic to be anything but totally destructive. Rather than trying to work their way though the dilemma by seeking solutions, the Agent just adds fuel to the fire by doing this, and compounds the existing problem. Suddenly, the client is unsure why you, as their Agent are being so negative about another Agent. They may wonder, “Is the other Agent really that bad, or are you trying to make yourself look better at the other Agent’s expense?” When you take the high road and stay professional, everybody wins. When you take the low road – everyone looks bad.
Buying and selling real estate can be a very emotional experience and it is up to the Agent to try to keep everyone’s emotions in check – both the client’s and the Agent’s. This is especially true, but not limited to, when both clients are in the same office. Once emotion and/or greed take over, (or if the Seller happens to be a bank in a foreclosure situation), logic does not govern the situation. Logic and law are not always the same, and Realtors are, in almost all cases, dealing with Contract Law, not a course in Logic!
Comments to an upset client such as “I understand how you feel, but it may be helpful to look at the situation from the other party’s point of view….” will usually be more constructive than demeaning to the other party, and prevents fueling the hostility. A change of perspective can sometimes put an entirely different light on a client’s thought process, and could work towards finding some middle ground to operate from.
However, when all else fails, fall back on, “What does the contract say”? You may be surprised how many problems and questions can be resolved simply by a careful and thorough re-reading of what the contract says, and what the parties involved have already agreed, in writing, to do. Most of the time, pointing out what’s already there resolves the issue for everyone, with a minimum of conflict.
IT’S A DETAIL BUSINESS!
I know everyone's heard the old saying, “The Devil is in the Details!” As mentioned above, it’s a little late to read and comprehend the contract after a deal starts to come apart. Here’s a tip that I’ve found to be invaluable once the transaction is in escrow: Thoroughly go through the contract, line-by-line, highlighting each and every contract provision requiring action of some kind. Highlight with one color all of the items that are your responsibility, and use another color for the items that are the other Agent’s responsibility. This will help keep you on track for the things you need to do, but will also remind you to keep a sharp eye out to make sure that the other Agent is fulfilling their contractual responsibilities. As you know, accomplishment of all contract items is crucial to the successful conclusion of the transaction. There may be times when the other party would like to kill the deal, and may be hoping that you will fail to hold them to a contract provision, thereby enabling them to cancel the transaction. Don’t let it happen on your watch.
I hope you’ve found this information helpful! Until next time – Take Good Care!
Jay J. Spadinger, REALTOR, BIC, ABR
Hawaii State Educator
Rainbow Properties
Akahi Real Estate Network, LLC
www.rainbowproperties.com
www.jayhawaii.com
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How to Avoid Problems with, C52, C53, and C57 of the Hawaii Sales Contract (DROA), i.e., Disclosures for "Vacant" Land
This post will look at a few of the more troublesome, and sometime abused, paragraphs of the DROA; Paragraphs C-52, C53, and C57, especially as they pertain to Vacant Land.
Property Condition Maintenance, Final Walk-Through, & Removal of Items from Property.
I recently experienced a transaction where a Broker countered an offer with a deletion of these paragraphs. He stated that he did so because, “they do not apply to vacant land purchases”. Nothing could be further from the truth. This could in fact be a very expensive experience for your Buyer client if allowed to be deleted by the agent on the other side of your transaction.
Whether it is vacant land or an “improved” property, those paragraphs are there for a reason: to protect the Buyer client so that they can be assured the property is in the identical (or better) condition than when they originally inspected the property – i.e., during the Inspection Period.
And yes, “vacant” land can have numerous issues – all the more reason to NEVER sell a piece of property without a survey. At a bare minimum, at least make sure you personally walk the property looking for problems. If your clients decide they don’t want to pay for the survey, in my opinion, it would be in your best interest to pay for it yourself. At the VERY LEAST, have them sign a Survey/Staking Waiver holding you and your company harmless - if they absolutely refuse a Survey or Staking.
Some agents act like the “see no evil/hear no evil” monkeys. “If you find something, it could kill the deal!” they say. Yes, it could – but isn’t it better to lose a transaction than have your clients end up with a nightmare that YOU could have avoided for them? How much more will they rely on your judgment when you point out the issues that make a particular piece of property one to avoid – and find one that is right for them without the problems. Not to mention avoiding a potential lawsuit for yourself and your company.
Maybe the mechanic who lives next door to the vacant lot has been dumping his used oil from his oil changing business there for the last twenty years? Maybe there are leaky underground tanks that were used to store gasoline for farm vehicles. Suddenly that “vacant lot” with no problems is a Hazardous Materials site! You may find rock walls that were built partly on the neighbor’s property. Here in Hawaii, there may be an old lava tube filled with several years’ worth of rubbish that will need to be cleaned out and hauled away.
There could be a heiau (an ancient Hawaiian temple), possibly with human remains and archeological artifacts hidden by the foliage. If your client’s new property is declared to be an archeological site, they may find that they own a very expensive piece of land, and not be able to build on it – but they’re still responsible for paying the property taxes!
Maybe there are native plants on the property that are being gathered regularly by Hawaiians – who may be allowed to do so under the PASH provisions (native gathering rights). Will your clients be comfortable with strangers coming onto their property whenever they want? If so, fine. If not, they will want to know about this provision.
Your Buyer client may close escrow to find their new “vacant” property loaded with trash, junk cars, old refrigerators, washers, dryers, etc. upon closing if these paragraphs are not in the contract and enforced. They will then call YOU, their agent to take care of this problem for them.
How do you think the agent on the other side of the transaction will respond when you politely ask them to have the Seller client clean up the mess - after they’ve already spent their commission check, and their client has moved on?
You don’t want to put yourself, your clients, your company or your Broker in that situation.
I hope you’ve found this information helpful! Until next time – Take Good Care!
Jay J. Spadinger, REALTOR, BIC, ABR
Hawaii State Educator
Rainbow Properties
Akahi Real Estate Network, LLC
www.rainbowproperties.com
www.jayhawaii.com
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