Wednesday, March 09, 2016

Top 10 Ways Your Agent is Compromising You [1. Contract Errors]

by Osman Parvez
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Ready for the spring real estate market? Supply is limited, demand remains high. If early sales in Boulder are an indication, it will be another selling season of buyers competing for the best houses, town homes, and condos.  

There's a lot that buyers and sellers don't see when it comes to real estate negotiation. Realtors let down their clients in many different ways, often resulting in money left on the table and lost opportunities. Over the next few weeks, I'll publish a series describing the Top 10 ways Realtors compromise their buyers and sellers. It's based on 13+ years of real estate negotiations, most of which are in the Boulder real estate market. 

This week: 

The offers pile up
1. Contract Errors    

In a bidding war, contracts with significant errors are often disregarded.   

The sad fact is that buyers and sellers have limited experience with the sale process for houses - even if they’ve bought and sold a number of homes during their lifetime. They have little information on which to compare. Meanwhile many Realtors proudly proclaim #1 status, with little to back it up. Others agents are paying Zillow thousands of dollars for advertising. Some agents even pay for fake online reviews. It can be hard to choose. Many buyers and sellers go with a personal friend. The result is often missed opportunities.

Of the many offers we received, several had surprising errors


To point, we recently listed and sold a very nice 2 bedroom condo in South Boulder. We carefully analyzed market conditions before setting our list price and our professional photography brought in the buyers. There was a fierce bidding war. 

Of the many offers we received, several had surprising errors. One included deadlines for private financing, even though private financing was not part of the offer. Another had blanks, unusual deadlines (without any explanation) and completely missed check boxes. A little research into the agents who wrote the shoddy offers revealed their status as part-timers and rookies. 

The race to submit... contract errors
Remember, the seller is effectively taking their property off the market while the buyer completes due diligence and gets their financing in order. If a loan is involved, the time off market is usually about 30-45 days. This has a very real cost to the seller. A well written offer drafted increases the seller’s confidence that the contract will close. 

It’s where the rubber meets the road, when offers are actually being compared, that the difference between the professional and the part-timer becomes obvious. The pro offer is complete, with zero contract errors and unnecessary sections (like private financing) completely removed. All expected items, including lender letters, disclosures, and proof of funds, are included.  



Market Conditions Demand Speed and Execution
In this market, condos and town homes are fiercely in demand, even more so than traditional standalone houses. As of this writing, nearly 70% of condo and town home inventory and 51% of houses are under contract.  At our closing yesterday, the high volume listing agent across the table shared that the majority of his listings have backup offers, many for more than the contract price with buyer #2.  Submitting a sloppy contract is a big mistake. 

If you’re looking to buy or sell, you’re entering a tough market. Choose your agent carefully. 

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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. 


photo credit: John-Mark Kuznietsov and David Marcu

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