We hear regularly about real estate transactions that have gone "sour" and nightmareish accounts of homeowners underwater. In order to understand what we don't want to have happen we need to look at the ingredients of a successful real estate transaction.
First of all, and probably the most obvious, is that both the buyer and seller want to feel that they got what they wanted. Both parties want to feel satisfied. Is this possible? You bet it is... and we should all be striving toward that goal!
There is a fair solution to the majority of issues that come up in every transaction. I truly believe we all have a duty to put on our negotiating hats and strive for the best outcome for all concerned. The real estate bubble that burst years ago is a perfect example of how we all need to work for what is fair and reasonable if our economy is going to survive.
What are the key elements of a fair transaction?
First of all: One must have a sense of market conditions. Selling a home in a market of declining values takes special expertise on the part of the listing agent. I've seen agents advise their clients to upgrade the home to local market standards. This doesn't necessarily make the cut. One has to have an edge to move a property in a declining market. In other words, improve the property a little better than the competition on the market. The property will sell if it has something that the others do not.
Similarly, buying a home in a market of declining values takes a buyers agent who is strong on negotiating skills and recognizes the importance of recommending properties in areas that are the most "recession proof". These two factors will minimize the potential for "loss in value" until the market adjusts and stabilizes.
Number two: One must consider which party has the most leverage and adjust their negotiating skills accordingly. It is an exercise in frustration for a buyer to offer a seller less than a property is worth when there are already 5 offers on the table.
Number three: Its all in the details. Two properties in the same neighborhood are not necessarily worth the same, particularly if one has improvements totaling $175,000 and the other has no improvements to speak of. What is the average cost of a new bathroom? Roughly $5,000-$15,000, depending on the extent of renovations and quality of materials. This upgrade should make a difference in the sales price.
Do these curtains convey? Has the asbestos siding been replaced? When is the last time the outside has been painted?
In addition, its critical to properly account for all items that are supposed to convey in the contract itself. Just because the listing has 2 refrigerators doesn't mean that the buyer will receive them at closing. They must be included in the contract so the settlement attorney can make sure you receive them!
Number four: Unless cash is an option, Financing approval is a must. Approval is not to be confused with being "pre-qualified". Mortgage investors and the government have tightened up on lending guidelines and it is crucial for each applicant to run their approval through underwriting before an approval letter is issued. There will still be many hoops to jump through once a "pre- approval" is received. Many documents from the buyer and and from the sellers' homeowners association (if applicable) will be necessary to secure full underwriter loan approval.
Number Five: Expertise is important. If one party is represented by an experienced agent familiar with the market, contract negotiations and the tricks of the trade this would probably put an unrepresented party on the opposite side of the transaction at an unfair disadvantage. Buying and Selling your properties should be a pleasant experience and you want to come out of the settlement office smiling. So make sure you are on equal footing.
A successful real estate transaction is one in which all parties to a transaction have a sense of fairness, cooperativeness and satisfaction on settlement day. This should be the goal of every real estate professional out there.
There is no need to roll the dice and wonder what direction your transaction is headed.
Talk to a voice of experience and form a partnership with an agent that you feel comfortable placing your trust in.
Have a great day!
PS most photos a courtesy of: http://www.freedigitalphotos.net/
PPS Oh... if you or someone you know would like to buy or sell a home and need an agent with experience, integrity and neogitiating skills...call me today!
I am here to earn your business!