Changing Marketing Strategy

I've written recently about changing thoughts about marketing properties. But I'm also rethinking how I market myself and my services. Obviously, if you've read that previous blog you know I'm not marketing myself in local print advertising! But I'm also rethinking the mailings I send out.

For years I've sent out post cards as well as other assorted mailings on a regular basis. I track where my business comes from each year and a very, very small percentage is directly trackable to mailings. Now I do get a lot of referral business from people who I mail things to. But these people also hear from me by telephone, in person and by e-mail. It's hard to believe that the most anonymous of these methods of communication, the generic postcard or letter, was responsible for the referral.

So, effectiveness is one reason to question whether to continue with physical mailings. Another is the ecological cost. I am an environmentalist and believe each of us personally is responsible for taking care of our world. I know that 99.9% of everything I mail is immediately thrown in the trash. And that's even if you really, really like me! (I don't include personal, hand-written notes in this!) The way that direct mail marketing is supposed to work is that even as you throw that card in the trash can each month, somewhere in the back of your mind you've registered that, "Yup! Julie is still a real estate agent!" Is that a good enough reason to fill up landfills? More and more, the physical mailings seem inconsistent with what I believe to be the right thing to do.

There's also a case to be made that in a market that's tough for my sellers, investing that money in marketing their properties and drawing in more buyers is better for them and thus, ultimately better for me since most of my business comes from referrals.

And, in this digital age, there are plenty of other ways to market myself. This blog is one of them. Hopefully it both markets who I am and my expertise, but also provides valuable information for the consumer. There's also my web site, drip e-mail campaigns with useful real estate information e-mailed on a monthly basis and new possibilities such as pod casts,etc.

So, give me your input on this. If you've been on my mailing list over the years, would you miss it if there were no more postcards? Would you remember me when the time came to refer a friend or neighbor even without the monthly reminders?

If you're an agent, have you wrestled with this problem? Do you worry about the spam issue? What answers have you arrived at?

I look forward to hearing your responses!

Playing Chicken

Contracts Falling Apart

There seem to be a large number of contracts falling apart recently. This is purely anecdotal, but it seems like more than normal are failing to move from contract stage to settlement successfully.

There could be a number of reasons for this. The most obvious one is that they may be contingent on the sale of the buyers home and in this market many of them simply aren't selling.

Interest rates have increased very moderately in the past few months and there are some buyers who, even if they still qualify, are getting worried about handling the monthly payments and back out. And lending institutions are becoming less interested in some of the more exotic financial instruments!

Buyers are also backing away from contracts occasionally because they fear prices will go lower still and they won't get the best deal. While prices may still go lower, I believe you'll have trouble justifying the money you'll lose on rising interest rates versus what you gain by falling prices. There's a caveat there. If you're not planning on staying more than three years I'd still be careful about buying right now.

And then there are the deals that fall apart in any market over home inspection issues. But I wonder if some sellers are more reluctant to agree to fix any home inspection items because the contract price is already so low?

That's what I'm seeing. What are you seeing out there if you're an agent? If you're a buyer or seller, share your experiences!

Out of Area Settlement Companies

I just had another contract come in on one of my listings that designated a settlement agent far away from where the actual property is located. In this case the property is in Culpeper County and the settlement agent was in Arlington. This is not at all uncommon.

While the regional contract lets the buyer choose the settlement agent, the reality is that most buyers don't know any or don't have any preference and so the agent chooses. The agent makes their choice based on who they know will get the job done and based on convenience for themselves and their clients.

The problem arises after settlement when the settlement company needs to record the deed at the county courthouse in the county where the property is located. I've consistently run into settlement companies who are in no hurry to rush out and record the deed because it's just not convenient for them. This delays funds being released to my seller, which often delays their ability to close on their next home, particularly if they're buying their next home out of state.

I've solved this dilemna by giving the buyer's agent and their clients a choice in these situations. If you still want to use the designated settlement agent who's located out of the area, we add a clause to the contract saying posession, including the handing over of keys doesn't occur until after the deed is recorded. Since the buyers want into their new house, they've now got incentive to lean on their settlement agency!

Or, their other option is to move to a settlement agency nearby who will have the ability to typically record the same day as settlement.

Overall, this policy has worked well for both myself and my sellers.

Are there other agents or sellers out there who have run into these issues? Do you have other ways of addressing them?

The Death of Print Advertising

I was fortunate enough to hear John Tuccillo speak this week. John was formerly the chief economist for the National Association of REALTORS and I always appreciate his candor.

John's remarks along with some statistics I heard yesterday reinforce yet again how insane it is for real estate agents to continue to pour tons of money into print advertising.

Yesterday I heard a statistic from a national marketing group that only 4% of all newspaper readers ever look at the classified ads, including real estate ads. Today John Tuccillo talked about how the younger generation, basically most people under 40, never, ever pick up a newspaper. Think about that! What is the population most likely to be buying the typical suburban family home? It's the 20 and thirty somethings! And they're not looking for those homes in print, they're looking at the internet.

I'd add another factor in here locally. Buyers got trained during the booming sellers market that there was no point in looking in print, even in they were so inclined. The houses in the newspaper were under contract before that newspaper ever hit the stands.

So, it makes no sense to advertise in print from a seller's perspective because that's not where buyers look. It makes no sense to advertise in print from a real estate agent's perspective because they're throwing away enormous sums of money. Why, then, are there still so very many print ads?

One reason is habit! Real estate agents can be a slow bunch to adjust to change! Advertising in the newspaper and putting up signs is how real estate has been sold for generations!

One reason is sellers who don't yet get it either. But it's our job as their agent to educate them. If an agent is spending all their advertising money to get the client's home in the newspaper, that leaves next to nothing for the online advertising that can truly make a difference!

And, just putting it in the MLS is not an internet marketing strategy!

Bottom line is, both agents and sellers need to adjust to the new reality of today's marketplace!

January Market Data

It's time for another update on what the local market conditions look like from a statistical standpoint. The numbers I'm providing here are January, 2007 numbers unless I specify otherwise. These statstics are taken from the local Mulitple Listing Service (MLS).

We'll start with what I see as the most discouraging numbers: the total number of newly ratified contract in the Greater Piedmont Region (Fauquier, Culpeper, Rappahannock, Orange & Madison counties) in January of 2007 is 150. The total number of new listings entering the market was 485. Clearly inventory is headed back up again and that's bad for sellers. Buyers, life continues to look pretty rosy from your perspective!

Average days on market was 82 in January of 2006 and is now up to 148.

Average sales price as a percentage of list price was 94.59% in January of 2006. That number is now down to 90.58%.

Here's an interesting one for you! Average list price is up 2.66% year over year, but average sales price is down 1.69% for that same period.

Total active listings is 1903 as compared to 1334 last year at this time. This gets even more striking when you consider that just a month ago, December 2006, there were a total of 1260 active listings. I can confirm that I'm getting calls to take new listings almost daily.

What does this all mean? If you thought the spring would bring a hot sellers market, not a chance! For all those who are saying we've hit bottom, I doubt it! While there have indeed been more buyers out looking around they're not opening up the checkbook and you shouldn't count on them to.

If your home is not in top condition and priced very aggressively you are probably doomed to fail. If you don't have to sell right now, don't!

If you're a buyer, the news just keeps getting better!  Enjoy!

Local Artisan

Occasionally I try to focus on a local business in this space. And last week I had the pleasure of meeting with Lance Huber from The Tool Box. He's local here in Rappahannock County and he does some amazing work.

The Tool Box is primarily a handyman service. And every homeowner knows how hard it can be to find a good, reliable, reasonably priced handyman! Lance fits the bill on all counts. Whether it's drywall repair, doors that need adjusting or minor electrical and plumbing jobs, he's done it all.

Now all of that is pretty impressive because it's so rare to be able to find someone who even shows up when they say they will! But I'm even more impressed with the woodworking that Lance does.

The above photograph illustrates some of the more formal furnishings that Lance has done. But that's not all he's produced.

Pieces like this garden bench are more whimsical. I love this piece!

And this "rooster chalet" is a remarkable, totally unique work of art!

His work has been featured and sold all over the world. And it's wonderful to have such a treasure right here in Rappahannock County!

If you'd like to contact Lance either for his handyman services or to purchase some of his woodworking skills you can give him a call at 540-937-3332.

Junk Fees

Junk fees are certainly not unique to real estate! If you've bought a car lately you know what I'm talking about.

There's been a fair amount of discussion about the junk fees you might see from lenders. But the junk fees that come from the real estate company are not as much discussed.

Most real estate companies are now charging something called an Administrative Fee or something similar. The amounts of these fees vary widely, but in general are probably somewhere between $200 and $500. How they're structured varies with the real estate company. In some companies, the company sets a fixed amount. In others, there's a base amount and the real estate agent is allowed to tack on extra dollars and keep those in their own pocket. And there are some companies that have no fee, but whose agents can choose how much they'd like to charge and keep that money.

Now, on the buyer's side I can see some justification for this fee. Believe it or not, real estate companies margins are, by and large, pretty thin. And there is a cost for processing the paperwork associated with a buyer's contract. And, the income, in many cases, is less certain on the buyer's side.

However, it seems to me impossible to justify the charge to the seller. How do I say "So, Mr. & Mrs. Seller, that 6% commission is just not quite enough and I'm going to charge you an additional $300." Talk about nickel and diming someone! I've heard all the proposed dialogues on how to present this to your clients. But wrong is wrong and there's no way to justify this fee in my mind. Yes, you'll get some sellers to swallow it. But just because they'll agree doesn't make it right!

Since the company I am currently affiliated with insists on charging this fee, I eat it myself. It seems like the right thing to do for my clients.

So, if the listing agent you're working with is talking about an additional fee on top of whatever their commission might be, it would be a good idea to ask them what it's for!

Choosing A Listing Agent

I'm always interested in why people choose their listing agent. Whether it's me or someone else who gets the business, the decision making process is of interest to me.

I had a listing appointment scheduled for one evening this week and got a call during the afternoon from the sellers cancelling the appointment. They said they'd already chosen another agent. They had originally planned to interview three agents and then choose. But they ended up making their choice after only interviewing one.

Now, if I'm the first one in and you allow me to talk you out of interviewing anyone else, good for me I guess. But definitely NOT good for you!

When I asked the sellers why they chose this agent they said "I think it was because she was just so pushy and she wore us down." That's a really interesting reason to choose an agent! Apparently this agent called them constantly asking why they were waiting to interview other agents when she was ready to go NOW!

To be fair this does show a great degree of enthusiasm and energy. And those are good qualities in a real estate agent. It may also signify desperation, a lack of confidence in their ability to compete against other agents and too much time on their hands!

Sellers should interview more than one agent because there is a lot of difference. I'll do a future blog on what questions you might want to ask in that interview.

I'd consider changing my approach to getting listings based on this feedback but high pressure tactics are pretty much foreign to my nature. I hate pushy salespeople when I'm trying to make a buying decision, especially a high dollar decision. In fact, I've told more than one they could either back off or lose any chance at my business. So, I'll probably continue to rely on my ability to present a compelling rationale using facts to explain why I'm the best agent to list your home!

If you've sold a home in the past I'd be interested in hearing how you made your decision on which agent to use. And if you're an agent are you successfully using high pressure tactics to get listings? Do you think there's any risk to establishing a working relationship that starts out on that footing?

Pulling Equity Out

There's a new company out there called Real Estate Equity Exchange that will help you pull equity out of your home without all the downside of taking on more debt or having to make payments. Or, at least that's what they advertise!

They will give you cash representing up to 15% of the value of your home. In exchange for this cash you give them up to 52.5% of the capital appreciation when you sell your home. In addition, you pay a service charge of $15,000 when you sell the house.

This does not seem like a good deal to me. That seems like potentially a lot of equity to give up for what you get.

This is likely to be most attractive to older owners who would otherwise be looking at a reverse mortgage. The reverse mortgage carries a service charge of $17,000 and current interest rates are somewhere around 6.5%.

The company says one of the reasons that it doesn't sound as attractive is that they are sharing the risk with the homeowner. So, if there's very little appreciation in your home, they make very little money.

While I'm skeptical of this deal it's apparently a big hit in the investment community with people lined up to throw money at the company and invest in these mortgages.

One thing is for sure, the financial options available to consumers are growing increasingly complex and "buyer beware" is definitely a good principle to apply. If you're contemplating any reverse mortgage or utilizing this new offering, make sure you do your homework! AARP has some good information on reverse mortgages. And you'll find some resources on this topic on my web site as well.

If you're unsure, don't hesitate to seek professional guidance from someone who isn't trying to sell you something!

Dominion Power Line Move

I haven't yet written about the proposed Dominion Power lines that were slated to run across northern Fauquier County. And, now they've changed the plan.

Apparently tired of the local opposition, the bad press and the lawsuits, they've decided to move the route south, where it will no go through southern Fauquier, Culpeper and Rappahannock Counties.

I've been skeptical from the beginning about this line. First of all, regardless of the route of this line, I think the plan should be to bury it. I have a hard time buying the cries of poverty by Dominion. And apparently while they weren't willing to spend millions more to bury the line, they were willing to spend millions more on a longer route. The new route would cost an additional $60 million because it's a much more indirect route.

I also haven't heard Dominion doing all that much to encourage conservation to reduce the need for future lines. If the only strategy is just to continue to build more lines as the population grows and demand increases we can look forward to a truly ugly landscape!

This move to a more southerly, more indirect route seems designed to move the fight to a group Dominion believes will be less well organized and less well funded. That's never a good enough reason and in this case I believe it may also be a serious miscalculation.

As always, local activism and organization will have a huge impact in how this turns out. If you're interested in more details on the latest announcement you can see articles on today's announcement in both the Fauquier Times Democrat and the Culpeper Star Exponent or on RappVoice. You can also look at the Piedmont Environmental Council's website for a more detailed report on the history of this project.

Where do you stand on this issue?

Read The Listing

Maybe the weather has made me cranky! But I'm going to rant a little today at my fellow agents. A pet peeve of mine is when an agent calls you for information that is in the listing or the tax records, but they're just too lazy to take the time to read!

I've had calls in the last week asking how to get into a listing. (Duh! The showing instructions say "Vacant, lockbox front door). Yesterday I had a call asking me how long my client had owned the house. (Tax records clearly indicate when posession transferred to him.)

Those are just the latest examples. There have been the agents who called for directions to the house, apparently unable to read the directions in the listing or to use Mapquest or some alternative.

Chances are these are the same agents who, if they write an offer for a potential buyer, will make a mess of it. This business requires an attention to detail that a lot of people just don't have!

With 2006 being a slower year for home sales many agents left the business. But clearly there are still plenty around who either need further education, a kick in their lazy bottoms or to find another line of work!

If you're one of the agents I'm ranting about, feel free to defend yourself here! Rebuttals are welcomed!

OK, spring is surely just around the corner and my blog posts will no doubt get cheerier as that happens. (Or the electricity will go out as a result of this ice and you'll all be spared!)

Pricing Strategy

I've had a couple of discussions with sellers recently about pricing their homes. You're all immediately thinking I'm talking about trying to get them to price their homes lower, but that's not what I'm talking about here today!

People are still thinking they should be pricing their homes at say, $399,000 rather than $400,000. And, there was, once upon a time, a case to be made for that.

But the world has changed and how people look for homes have changed.

With most buyers beginning their search for a home on the internet, they search for homes in a pre-defined price range, generally in $25,000 or $50,000 increments. So, if you price your home at $399,000 people looking at homes between $375,000 and $400,000 will see your home. But those looking at homes from $400,000 to $425,000 will not. By changing the price to $400,000 you've now exposed it to a whole extra group of buyers. Plus, rather than being at the top end of one price range, you're actually on the bottom of that second range, making it more attractive to many buyers.

So, my pricing advice is to do away with the "9s" strategy. That idea is a remnant from another time and another way of doing business!

A Greener Warrenton

Warrenton's mayor, George Fitch, has issued a call for Warrenton to become more energy self-sufficient; to, as the local newspaper put it, "go green".

First of all, I applaud Mayor Fitch for taking this step. A focus by the town on renewable energy resources is a welcome one. Every locality should be looking at ways to reduce our energy consumption and our dependence on sources of energy that are bad for our planet and increasingly bad for our country.

The mayor's focus seems to be on buildng a small scale biorefinery capable of producing ethanol from locally available materials such as corn. The idea of small local refineries that are joint public and private partnerships is, in my mind, a good one. It could be good for the local economy, local farmers and, to some extent, for energy efficiency.

My concern is that ethanol made from corn, which seems to be the cornerstone of the plan is not all that efficient a fuel. Some studies show that more fossil-fuel energy is expended in the production of corn-based ethanol than we would ever save by burning it.

But it's early yet and the idea is just getting off the ground. There's time for fact-finding and, eventually, modification of the original proposal. The Warrenton Town Council has provided $5000 for a feasibility study and I look forward to hearing the results.

I hope that no one is waiting for this to solve our energy dependence problems though! This is another instance where "waiting for the world" is definitely not the way to go! Each of us can be looking at ways to reduce our own carbon footprint. Whether your motives are cost savings, saving the planet or making our country energy independent, there are plenty of good reasons to look for ways to reduce our energy consumption.

Population Changes by County

Dr. Michael Spar from the Weldon Cooper Center at UVA has recently produced a report showing the population changes in the state of Virginia by counties between 2000 and 2006. I love statistics and found some of these numbers very interesting. I thought some of you might enjoy them as well!

There is more detail and nuance in this report than I'm giving you here. It includes detail such as how much of the change is due to nature (i.e. births and deaths) and how much is due to migration.

I've listed some of the counties here. If there are others you're interested in, e-mail me at Julie@JulieEmery.com and I'll be happy to get you the information. Information on large metropolitan areas is also available.

Population Changes by County - 2000 to 2006

COUNTY	NUMBERICAL CHANGE	PERCENTAGE CHANGE
Clarke	1,472	11.6%
Culpeper	9,921	29%
Fauquier	9,473	17.2%
Loudon	100,006	59%
Prince William	88,403	31.5%
Rappahannock	-52	-.8%
Warren	3,509	11.1%

So, now that you've seen the numbers...any of it surprise you? Any Rappahannock residents shocked? Any one want to hazard a guess at what these numbers will look like six years from now?

Buyers Agency

I've received a couple of questions recently regarding buyers agency and I thought it made sense to talk about it a little here. I'm sure the families who are talking to me are not the only ones with questions on this issue.

The first question is should I sign a buyer's agency agreement. This agreement commits you to working with a particular agent to find your home. I believe in these agreements.  You're asking the agent to commit to working to find you your new home. Remember, the agent doesn't get paid until you actually get the home you want! While there are certainly agents who will drive you around endlessly to view homes with no prospect of ever getting paid, many of the best will not. While this is very personal for you as a buyer, it's also a business to the agent. Agents who don't get paid for what they do soon end up doing something else for a living.

Most buyer's agency agreements will be for a specified length of time. If you're unsure that you're going to be comfortable working with this agent, make that time period a brief one, perhaps a week. You can always extend that date later.

Some people are concerned that different agents will show them different inventory. Agents in the same area have access to the same inventory. But it's a good idea to have a conversation with your agent up front about this. You want to make sure they'll show you listings from all the brokers in the area. It's also appropriate to ask about their ability to show you properties that are For Sale By Owner. Understanding what both you and the agent are committing to is key to a good working relationship!

You will also be committing to the agent getting paid if they do their job. In many cases, that commission will be paid by the sellers. But there may be homes listed where that's not the case and again, you should have that conversation with your agent before you ever go out to look at homes. If I show a house where the commission is less than my fee, I make my buyers aware of this up front and talk about strategies for dealing with it should that be the home they fall in love with.

Tomorrow's blog will deal a little more with why a buyer's agent is a good idea and what the pitfalls may be of using the listing agent to write your offer.

Buyers Agency - Part 2

Yesterday we talked about signing a buyers agency agreement. Today I'd like to talk a little bit more about why you might want to have a buyer's agent rather than use the listing agent to write your offer.

A listing agent is representing the seller of a property. A listing agent can never represent your interests. No matter how nice they seem, this is a matter of law!

They can write the offer for you on a property they list and they can do that in one of two ways. They can do it as a dual agent, once they've disclosed that to you and gotten your permission. This means that they represent the interests of both parties. And, while that's what the law states I think that's absurd. The buyer's interest is to buy the property for the lowest possible price and the seller's is to sell it for the highest possible price. Dual agency, in my mind, means no one gets proper representation. The only advantage here is to the agent who makes extra money!

They can also write the offer for you as the seller's agent and with you, therefore, not having any representation. While this is certainly a more honest approach, if you're the buyer you'd be well advised to be cautious. The seller's agent is obligated to the seller and to represent their best interests. That means that potentially every word that comes out of your mouth may be going back to the seller verbatim! You don't even have to tell the agent you can afford more than you're offering it. A good agent will sometimes pick up on subtle signals and sense this and his or her obligation is to share all of this with the seller. No seller's agent is ever going to be able to do a good job for you as an unrepresented buyer. They may be able to adequately write what you tell them in a contract, but you have given away much of your negotiating position.

In my opinion, you will eventually realize that this was a bad decision. It may be sooner or it may be a year or two later! But having a listing agent write an offer on your behalf is always a bad idea!

If you have a buyer's agent you should be talking to them and not to the listing agent. Again, it's not that they're a bad person. But their obligation is to get every advantage they can for their sellers. The good ones take this obligation seriously. I know I do.

If knowing all this you still choose to have the listing agent act on your behalf, don't say you weren't warned! Buyer beware definitely applies here!

Modular Homes

Recently a home inspector commented to me that in many cases he though that modular homes now had superior quality to traditional stick-built homes. That comment surprised me! And I'm sure I'm not the only one. So I've been doing some research on what's new with modular homes and how they compare to their stick-built predecessors.

First of all, I should say that modular homes are NOT the same thing as manufactured or mobile homes. Modular homes are homes built using a system according to the Modular Building Systems Association. Modular homes come in all shapes and sizes including beautiful two story, 3000 square foot colonials! To most consumers driving down the road, you'd never know the difference between the modular and the stick-built homes.

Modular homes have a number of advantages. One obvious one is the time involved. These homes are built in sections in a factory and then shipped to the home site and assembled there. This means that the entire factory process is unaffected by weather and many of the other delays so common on building sites. And despite most of us thinking assembly line means cookie cutter sameness, modular homes are highly customizable. The average time from beginning to end of the process for a modular home is roughly three months. The average time from beginning to end for a home built entirely on-site is 6 months to a year.

Modular homes may also be significantly stronger than stick-built homes. They are typically built with 20-30 percent more materials in order to withstand transport from the factory to the site. A FEMA study following Hurricane Andrew in 1992 found that modular homes in Dade County, Florida stood up to the winds better than stick-built homes.

A side note here: Having lived in Miami when Andrew hit, I would mention that which builder builds a home has a tremendous amount to do with how they survive in a hurricane. Habitat for Humanity homes fared much better than most builders!

The use of more materials typically also means greater energy efficiency. As energy costs, in terms of dollars, environment and national security continue to be an issue, I believe we'll see more modular homes.  Right now modular homes account for only about 7 to 8 percent of all new home sales.

Building the sections of the home in a factory can also be a big help in reducing the cost. This can be money in your pocket. I've seen estimates anywhere from 5 to 25 percent savings. Obviously that's going to vary based on both the manufacturer and the design involved.

If you're thinking about buying land and building your own home, modular may be worth a look. If you live in a modular home now or have in the past, what have your experiences been?

The Good Guys!

I got a call yesterday from another agent. This gentleman has been in the business a long time and is very successful. And yet, he's always eager to learn more and he's open to learning from anyone and everyone. I've always been impressed with this man's professionalism.

He called me because a former client was ready to make a move but was worried about using his services. You see this man is in a business networking group with me and felt bad about not giving me the business. But his family's relationship with this agent goes back decades.

I was touched by the call for a couple of reasons. First of all, the other agent certainly didn't need to call me and see if I was OK with his working with this family. But it was certainly courteous and generous of him to do so. We had a great chat and I was happy to tell him that I'm a firm believer in abundance and that there's plenty of business out there without fighting over it!

And I was honored that his client respected me enough and valued our relationship enough to worry about offending me by taking his business elsewhere. I'd love to have his business, don't get me wrong! But no networking group is going to replace decades of loyalty and good service!

These are two great guys trying to do the right thing, the honorable thing. It's not a quality we get to see every day and I am impressed! The real estate industry could use more people like this! But then, what industry couldn't!

Home Sale Contingency

When someone finds a home they want to buy, but hasn't yet sold theirs, they will sometimes submit an offer with a home sale contingency clause. What this says is that they will buy the home after their home is sold. It provides a number of days in which the home must sell as well as the number of days before it will be on the market. It also contains a "kickout clause" stating that if another offer comes in they will have a defined period of time to remove that contingency or lose the contract on the house.

A contract with a home sale contingency is fairly unattractive to most sellers these days. For one thing, they know the market has been slower. It is likely to take the prospective buyer longer to sell their home as well. And, during that period, their home is less visible to other potential buyers who may not have a home to sell.

Now that should not be the case. But the world doesn't always work the way it should! There are quite a few agents who won't even show listings that are under contract with a home sale contingency, even though there is a kickout clause and they could get the house. There will always be agents looking to simplify their jobs and in their minds they see no reason to show these homes when there are plenty of homes out there without any kind of contract on them.

But that's not really what I wanted to share with you today! I recently received an offer on one of my listings with a home sale contingency. My sellers were willing to consider it except for one fatal flaw in the offer. The home offer was contingent on the sale of a home that the prospective buyers didn't own. This would seem to not require explanation, but you can not contractually commit to sell a home you don't own!

The defense by the agent who wrote the offer was that the home was owned by the parents of the wife. Again, it doesn't matter who owns the house! If the buyers don't, they can't legally agree that someone else has to sell their house!

Now there are legitimate ways in which this situation could have been handled. You could add the parents as parties to the contract to purchase the next home. Or, you could attach a notarized letter from the owner of the home saying that they were selling and that the proceeds would be available as a downpayment on the home that the buyers were purchasing. In that situation I'd also want to see a letter from the lender that they were aware of where the funds were coming from.

So, if you're living in a house owned by Mom & Dad and they're willing to sell it and give you the proceeds to buy a home of your own, just be aware of the extra steps that will be necessary from a paperwork perspective. And, if you have an agent who doesn't understand that you can't commit to selling someone else's home you may want to rethink how qualified they are to help with this purchase!