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Article Keys to Representing a Seller Sellers have
plenty of reasons to be emotional during the final negotiation. They are
undergoing change, making huge decisions, and dealing with a transaction
that probably involves a major, if not the most important, investment
they own. Your role in this environment, and the key to your success, is
twofold: Be prepared and protect the seller at every step along the way.
First and foremost, remain calm no matter how high or low the offer
starts. Go through the buyer’s offer carefully and note any key issues that
need addressing. Flag any contract points that merit your seller’s attention, so you
can easily reference them during the meeting. If you’re faxing the
document, also summarize the key points on the fax cover sheet. This way
your seller won’t dig through every line of the contract. That’s your
job! If your meeting will take place by phone rather than in person, fax
the offer to the seller within minutes of your conversation. If your
phone conference is set for 2pm have the documents faxed sometime
between 1:30 - 1:45pm. You don’t want the sellers to spend a few hours
brooding if the price is low, and you certainly don’t want them to call
you with questions, concerns, and panic attacks half a dozen times prior
to the scheduled phone conference.
Protect the Sellers at All Times Require prospective buyers to deposit enough earnest money to secure
your client’s position. Set the earnest money high enough to make it
difficult for the buyer to purchase another home if they walk from the
deal once all contingent conditions are satisfied. You may be thinking
that this advice conflicts with your objective to achieve a win/win
outcome. In fact, it simply requires buyers to uphold their end of the
deal or sacrifice their deposit. Remember, you are representing the
sellers, and protecting your client’s interest is your fiduciary duty. Not many buyers will walk from a deal when an amount like $5,000 at a
minimum is at stake. Yet many agents allow initial deposits as low as
$1,000 or $2,000 to squeak by. The rationale is that the buyers won’t
have the cash available to make a higher deposit, but if the buyers need
$15,000 to close in 30 days, depositing $5,000 upfront won’t kill them. If necessary, consider accepting part of the deposit in the form of a
short-term note. Only do this if there is no other way to increase the
earnest money. If available cash really is a buyer issue, at least get a
few thousand dollars deposited immediately and make arrangements to
receive the balance within a few weeks, securing the latter portion with
a note. Never secure the initial earnest money with a note for more than
24 hours. If you accept a note for the additional earnest money, be sure
it’s redeemed within a stipulated short period of time. Do not accept notes redeemable at closing. If the closing never
happens, your seller will never be able to redeem the note. It becomes a
worthless piece of paper, since the transaction never closed and
technically the note never came due. Even legal action won’t fix this
Agent mishap. Another area of caution is the financing. Require the buyer to provide
proof of loan approval with no conditions. You want proof-positive that
the buyer can and will perform within two weeks of acceptance of the
offer. Lending institutions are notorious for writing loan approval
letters with conditions or weasel clauses that protect both the
institution and the buyers. Make it clear on the counter offer that no
contingencies or conditions will be acceptable after two weeks. The prevailing rule in seller protection is to tighten the language
every step of the way. Remember at all times that your job is to protect
and secure the interests of your client, the seller. The broader the
language you allow, the greater the number of interpretable clauses ¬–
familiarly known as weasel clauses – make it into the transaction, each
one endangering the level of security you can provide your client. |
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