Secret agent

The Minnesota Department of Commerce requires that real estate agents identify themselves as real estate agents and identify the real estate company they are with, in all advertising.

That includes advertising on social media, or in the newspaper or on a flyer and applies to all agent advertising.

When an agent posts on Facebook that a house is coming on the market soon and provides pictures of the house she is advertising it.

That means she has to identify herself as a real estate agent and identify the company she is with. She can’t just put “text me with any questions” and leave her phone number.

Agents who do not comply with this particular rule usually end up with a fine if they get caught.

As far as laws go this one isn’t as big of a deal as robbing a bank but you have to kind of wonder. Is the agent breaking other laws? Is she aware of what the laws are?

Is her broker providing any supervision or guidance? The broker is responsible for the agent’s actions and can be sanctioned by the department of commerce if one of his/her agents fails to provide the name of the real estate company in the advertisement.

Potential home buyers who are asking questions in the Facebook group do not understand that they are talking to a real estate agent who is representing the sellers.

Real estate agents are required by state law to give consumers an agency disclosure at first substantive contact.

There are home buyers and sellers who love the facebook groups for getting and giving inside information. I think they are a great place to violate fair housing laws and get around state laws too.

Technically there are no secret agents in real estate.

It is alright for homeowners to advertise their own home for sale and answer questions about it.

How much should I offer?

Blazing star
Blazing star

Buyers want to know what to put into an offer that a home seller will accept. They want to know what the seller’s bottom line is.

There isn’t any way to know what a home seller will accept without making an offer. There is no universal percentage of the asking price that makes up an acceptable offer.

Every house is unique and so is every homeowner.

If the home is overpriced an offer for less than the asking price is appropriate but there is no guarantee the owners will accept it.

Sellers almost always accept an offer that is for the asking price but if there are multiple offers they may end up with an offer for more than the asking price.

My best advice to buyers is to make our best offer and if it isn’t accepted don’t look back. Home buyers want to negotiate but they should never assume that sellers want to negotiate because some do not and in a seller’s market they may not have to negotiate.

 

Cheap or inexpensive?

chandelier
light fixture

To me, the words “cheap” and “inexpensive” are not interchangeable. We are all looking for a bargain and that is understandable.

A cheap house might be s split level in the burbs built in the 1980’s. It has 2000+ square feet of finished living space and an attached two car garage.

It may also have the least expensive old furnace made in the 1990’s and floors covered in vinyl or inexpensive carpeting. The kitchen cabinets are made of some kind of a composite and the counter is plastic.

The wood trim might be very thin and the fixtures in the bathrooms are the least expensive faucets, sinks, toilets and tubs found at the big box home repair store.

The word cheap means:  of little account; of small value; mean; shoddy. At least that is what it means to me. 

An inexpensive house might be small and a little run down. It has hardwood floors and a brick fireplace and a newer 40-year roof and high-efficiency furnace.

To me inexpensive means: low-costmodesteconomicalcompetitiveaffordablereasonable, budget or even bargain.

It is a matter of individual taste of course but I strongly favor inexpensive over cheap, especially in housing. As prices keep rising even inexpensive homes are getting more expensive but bargains can still be found.

The word “cheap” is common in Internet-based home searches but I am not going to use it as a keyword in this post.

Artificial deadlines for offers

greek revival
Greek Revival style

Everyone who is buying or selling a home knows that they go pretty fast and some homes sell with multiple offers. In the last couple of days, I have encountered a couple of situations where real estate agents have set a deadline for offers but there were no offers.

If you are a real estate agent or a home seller you need to know that there is a huge difference between someone saying he/she is going to make an offer and actually getting an offer.

Let me repeat it. There is a huge difference between someone saying he/she is going to make an offer and actually getting an offer.

Generally, there is no deadline for making an offer on a home that is on the market. If someone makes an offer and there are other interested parties then there is a reason to create a deadline.  Deadlines are needed when there is an offer on the table or the offerer may decide to withdraw it.

Creating an artificial multiple offer situation can result in no offers because some buyers do not want to compete in multiple offer situations.

Let me repeat this. There are buyers who will not make an offer on a home if others are also making offers.

An agent recently called me to tell me that one of my buyers may be interested in his listing but he has an offer but if my client can look at it right away and make an offer they will extend the deadline for highest and best offer. Nice!

Home sellers can only accept one offer and if it is a good offer they might want to accept it before the offer gets away.

Make sure you list your house with an agent who knows how to handle multiple offers. It could mean the difference between getting multiple offers or not.

The inspection period explained

Ten-day inspection periods are common. The buyer makes an inspection contingent offer on a home. The inspection period starts the day after the final acceptance date on the purchase agreement.  If there is no final acceptance date then I guess the ten-day period could start anytime.

During that ten-day period a few things need to happen:

  1. The buyer has inspections and tests done at his or her expense.
  2. The buyer decides if they will ask for repairs or not.
  3. If the buyer asks for repairs the seller reviews the repairs and responds with a yes, or a no, or a counter of some sort.
  4. Both parties agree in writing to the repairs.

That is why it is important to get the inspection done as soon as possible or ask for a longer than 10 day inspection period. If the ten days run out before there is an inspection then technically the buyer just bought a home.

I do everything I can to make sure no one is buying a home without an inspection no matter which party I am representing.  However, I don’t make up the rules or the laws and it is up to my clients how they want to handle all of this. I can only advise them.

Sometimes the inspection is all done but one part or the other needs to research the repairs and get a price. As I have mentioned before sellers should not commit without knowing if they can get the work done or how much they will cost. Negotiations will need to go beyond the stated inspection period.

If extra days are needed for research the inspection period can be extended if both parties agree and sign an amendment.

Occasionally sellers just won’t respond. In that case, rather than letting the inspection period expire buyers may want to cancel the contract while they can still do so without penalty.

Inspection periods used to be separated. Buyers had X number of days to have the inspection, sellers had X number of days to respond and both parties had X number of days for negotiation. Many of us prefer the old system but it wasn’t perfect either as parties would disagree over which day or period was which and when they started or ended.

Occasionally for houses that are going to sell with multiple offers, the buyer will have an inspection done before making an offer or waive the inspection. I am not a fan of waiving a complete home inspection for any reason. Third party inspections protect buyers, sellers, and real estate agents.

It should be noted that even if the contract states that the sellers can continue to show the house the showings will slow down or stop once the seller has accepted an inspection contingent offer. Sellers can only sell to one party but can collect offers during the inspection period as backup offers.

Screen print of contract with Inspection contingency

Social media and real estate

socialWhen social media and real estate are mixed, what could possibly go wrong?

If you are buying or selling a house be careful about what you post about it on Facebook, Twitter or any other social media site.

Sometimes I find information that helps me negotiate on behalf of my buyers or sellers. My clients also find information that can give them the upper hand during negotiations.

First time home buyers, in particular, will ask their friends, family, and co-workers for advice. Sometimes they put it all out there on Facebook or even on a blog that anyone can read.

People often believe that their Facebook friends are the best source of help when buying or selling a home. They also rely on Facebook when they have medical problems and electrical problems too.

Real estate discussion often ends up in groups where there are people like me who lurk but rarely participate.

Sometimes buyers or sellers will say something unkind about the other party in a transaction on social media. It is much easier to negotiate if we leave personal feelings and drama out of the equation.

Sometimes buyers will let everyone know that they desperately want to buy the home which will weaken their negotiating position if the seller finds out or at the very least sellers will know they have the upper hand.

Sometimes home sellers give out way too much personal information. No one has to disclose why they are selling a home. Being vulnerable and demonstrating a level of cluelessness can attract people who make a living from exploiting others.

While negotiating with buyers or sellers it isn’t a good idea to share too much with friends and family until it is over.

When you work with a real estate agent they can not discuss your motivation for selling or anything else about you without your permission.

Also when getting advice on buying or selling a home keep in mind that real estate is local. Rules, laws and business practices from other parts of the country may be meaningless in the local real estate market. People who are local but have not purchased a home in the last decade may be unfamiliar with current contracts and law.

I see the strangest things on social media from people who are looking for advice. The people who are giving the advice are just as clueless as the people asking for it.