Wednesday, February 25, 2015

This Week in Boulder Real Estate [Tales from the Trenches]

by Osman Parvez

A few quick updates for you. 

1. No Meetup
The Boulder Real Estate Meetup scheduled for tomorrow is cancelled. Unfortunately, I've got a cold. The topic was an in depth review of the bidding wars which have occurred so far this year (all of them). The analysis I prepared for the meetup will go out in next month's research report instead. If you aren't subscribed, sign up here

2. Bidding War Tactics
Sellers - when a listing agent presents you with the Colorado Commission approved Exclusive Right to Sell Contract, read §5.8 carefully.   

It states the following:

"When asked, Broker Will / Will Not disclose to prospective buyers and cooperating brokers the existence of offers on the Property and whether the offers were obtained by Broker, a broker within Brokerage Firm or by another broker."

In a bidding war, there are only a few legitimate reasons you'd not want your listing agent to disclose the presence and details of other offers. If you check the "will not disclose" box, you're forcing potential bidders of your house to negotiate blind folded and you're leaving money on the table.    

At a minimum, have a candid discussion with your agent about strategy. What's their approach for disclosing the presence and terms of other offers? Why? To what degree shall they share or not share information to help you obtain the strongest possible offer?   

If your listing agent claims that offers are always confidential, pretend you're from Missouri and ask them to show you. Here's the truth. Confidentiality is only mentioned under the mediation section of the Colorado Contract to Buy and Sell Real Estate. It's not even binding language, it's only a desired outcome if the you know what hits the fan.  

There is massive value in disclosing the high water mark in a bidding war. Buyers who have confidence that other legitimate offers are coming in will pay a higher premium for the property or remove contingencies to strengthen their offer. Buyers who feel they aren't getting the facts or are bidding against phantom offers will be less likely to offer their true "highest and best."   

Remember, trust is essential to maximizing value and is the single most important ingredient to successful negotiations. Read, Six Ways to Build Trust. p.s. For those agents playing games with non-disclosure and a lack of transparency to put money in your own pocket, remember your reputation is on the line. The chickens come home to roost when you represent future clients in future negotiations. The majority of transactions in Boulder are done by a minority of full time, professional agents. Treat your negotiation counter parties fairly and with respect. 

3. Looking to Buy or Sell?
I'm representing buyers at all price ranges at the moment in Boulder, Louisville, and Longmont - from affordable housing to +$3MM. Most of my buyers are flexible on terms, including the closing date and they're willing to pay a premium for desirable homes. Call me if you're thinking of selling. 
ph: 303.746.6896.   

I also have knowledge of several Boulder properties that will go on sale this year. If you're shopping for a home, feel free to call me as well. I may have a match for you. 

4. Private Sales, Transaction Brokerage and Integrity 
Private sales have a nasty habit of leaving money on the table but for personal reasons (divorce, job changes, death in the family, etc) an owner may want to quietly market and sell their property.   

If the property is a good fit for a buyer, I'll work with them to finalize the deal with the seller but keep in mind that if I have a existing relationship, I won't work as a Transaction Broker. I take exception to the Real Estate Commission allowing the TB status because there is no such thing as a neutral Realtor. It's an impossible burden and unrealistic of how human relationships work. With rare exception, I'm either representing the buyer or I'm representing the seller, exclusively. It's the only way to manage conflicts of interest and remain in integrity. I care about the deal at hand but I also care about the next hundred negotiations. Integrity and reputation matter, especially in a small real estate market like Boulder.

From HBR's Six Ways to Build Trust


In negotiation, as in all aspects of life, your reputation precedes you. A bad reputation can be a deal killer from the start, while a great one can help transcend an impasse. Effective negotiators realize that their reputation is not just a backdrop, but a tool.

5.  Team Building
Speaking of reputation, last year, we were approached by several agents interested in switching to Realty Unique.  

As you might imagine, we're a little selective. If you're an experienced agent looking to join a great team, have significant professional experience, and feel that your values align with ours, please contact us. We'd love to talk to you. 



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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

image:  David Runer

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