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.

Buyer negotiation strategies can backfire

Blazing star
Blazing star

Sometimes home sellers will not negotiate. In a seller’s market, they have the upper hand.  Home buyers want to negotiate. The most common strategy is to want to go way below the asking price. Buyers believe that starting low is the best way to get the seller to come down on the price.

That might work in a buyers market but in a sellers market the sellers sometimes just say no rather than negotiating.

When there are multiple offers buyers usually get one chance to put in their highest and best offer. If there is any negotiation at all the seller negotiates with the buyer who submitted the best offer. The buyer who goes low never gets an opportunity to go up

It has become a common experience for home buyers to lose out on the first house or two because that is what it takes for them to understand that going too low isn’t the best way to buy a house.

Buyers should do their homework and have an idea of what the value of the house they are making an offer on is. If it is over priced I strongly encourage buyers to make an offer that is below the asking price. Most buyers will not make an offer.

I see overpriced real estate as the biggest opportunity for home buyers to buy without competing in multiple offers.

When making an offer on a home that is being offered at or below the market value the offer should be at or over the asking price.

There is no single strategy that works in every situation for buying a house. There are sellers who do not need to sell and who will hold out for a retain amount even if it takes years.

Having a negotiating plan in your head is fine just keep it in your head as you pay attention to prices and what the sellers strategy. Sellers should keep in mind that buyers really want to negotiate.

Buyers sometimes regret having “won the bidding war” and as a result they back out after the inspection. Sellers who get top dollar for their home should expect the buyer to request some repairs.

Advice from friends and family who bought a home last year or a decade or more ago probably isn’t as useful as the advice from your Realtor®. Choose an agent with experience. There is no substitute for experience.

Businesses don’t like it but some residents do

Parking is always a controversial issue in St. Paul and a good way to get people riled up. I live in an area with permit parking. That means we have to have a permit on any vehicle that we want to park on the street. We have guest permits for visitors. If we have a plumber or electrician stop by we either need to provide off-street parking or give them a guest permit.

Permits are &15.00 a year and they get renewed every August. The city of St. Paul website has information on how to get permits and maps of the permit area. The city likes to move pages around so instead of a broken link I am going to suggest using Google and the search string: “St. Paul Permit Parking”.

I have never had anyone say no to buying a house because of permit parking but it is something that home buyers should at least be aware of before they sign. Permit parking areas tend to be near Universities, hospitals, and areas where there are a lot of businesses.

We would not be able to park in front of our house or even on our block if not for permit parking. The system also makes it hard for a business that got some variances and is located on what used to be a city block that was all residential. In general, businesses don’t like permit parking or parking meters.

The streets where there is permit parking changes over time and is expanding. People just don’t want to pay for parking and will park in residential areas and walk.

The rules in the permit areas are not all the same either. In some areas, there is 24 hour a day permit parking and in other areas, it is just during business hours. There are signs on every block.

The important thing for home buyers to understand is that you may need a permit to park in front of your house but getting a permit does not guarantee a parking space.

Permit parking map

 

 

Your friend isn’t very good at home inspections

I think I have been on a zillion home inspections with home buyers. Sometimes home buyers have a friend or relative who has a background in construction or who is a handyman or contractor conduct a home inspection.

What could possibly go wrong? Usually, these helpful friends or relatives miss a few important things. They don’t check the furnace or the water heater. They miss the fact the garbage disposal doesn’t work or that the new furnace does not have a filter in it.

They might not notice missing window screens or even cracked window glass. They may miss the gaps between the showe

r surround and the bathroom wall, or that the back door lacks any kind of weather stripping.

The helpful and knowledgeable friend does not use a systematic approach nor does he give the home buyer a report with pictures and recommendations. Usually the friend does an incomplete or partial inspection. If they are not familiar with the older houses in the inner city they may not know what some of the common problems are like ungrounded electrical systems and tree roots in sewer systems.

On the one hand, the buyer saves money because professional inspectors will generally charge at least $300. On the other hand, they may end up paying for repairs that they could have had the seller pay for if they had known about them during the inspection period.