13 Blunders Real Estate Sellers Need to Avoid

TABLE OF CONTENTS:

Blunder #1: Selling at the Wrong Time Blunder #2: Paying the “Standard” Real Estate Commission Blunder #3: Paying the “Standard” Seller Costs Blunder #4: Paying Cash Concession to Buyer Blunder #5: Accepting Advice from the Wrong Agent Blunder #6: Entering a Contract with Unqualified Buyer Blunder #7: Entering Contract with Insufficient Deposit Blunder #8: Entering Contract with Contingent Buyer Blunder #9: Including Personal Property with Sale Blunder #10: Guaranteeing Condition of Systems or Appliances Blunder #11: Contract Renegotiation After Sale Blunder #12: What is the Mandatory Property Condition Disclosure Blunder #13: Granting Early Possession to Buyer

IMPORTANT DISCLOSURES:

Buying or selling real estate involves a risk of loss. The following constitutes the general views of Rowe Realty Auctions and Appraisal and should not be regarded as personalized advice. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated herein. The contents of this document should not be construed as legal counsel. Please consult your attorney for legal counsel.

Blunder #1 - Selling at the Wrong Time, or – Following the Herd off the Cliff

Best Time to Sell:

• How many of your neighbors are selling? If a few, it’s the BEST time to sell. People buy property year-round, including holidays. Seasons of the year are not the sole driving factor. Best time to sell is when you’re one of the few, not many. Resist the herd instinct.
• Life has a way of changing; property ownership doesn’t last forever. But residences need repair and taxes keep piling up. Be realistic, if you can’t maintain, afford or just aren’t using it – sell ASAP and don’t look back.

Worst Time to Sell:

• Someone or something panics you. If you can maintain, afford and enjoy your property, keep it. The grass is not greener on the other side of the fence. Stay put, hunker down and weather whatever is bothering you.
• When everyone else is selling; you’ll lose both time and money.
• When the surrounding economy is growing; it’s better for you to wait when possible.

Blunder #2 - Paying the “Standard” Commission

Real estate commissions are negotiable in NYS. Period. The NY Dept of State, Division of Licensing Services handbook states as follows:

“The commission or compensation of a real estate broker is not regulated by statute or regulation, therefore the amount and terms are negotiable.”*

Find the most knowledgeable real estate agent or broker willing to offer the best services, for the lowest price. Ask specifically what marketing will be done and the cost to you, in dollars and cents. Ask and you shall receive.

*NY Department of State, Division of Licensing Services Handbook

Blunder #3 - Paying the “Standard” Seller Costs

Real Estate is generally sold using pre-printed forms, loaded with seller paid costs. Here are a few:

Real estate transfer tax, additional transfer tax, special additional mortgage tax, death certificates, bankruptcy court orders, affidavits, proration of taxes, assessments, municipal charges, rents, common charges, fuel oil, water, pure water, sewer charges, permits, certificates of compliance, certificates of occupancy, utility service continuation, lawn and landscaping care, snow plowing, real estate commissions, updated abstract of title, tax and US court searches, local tax certificates for village or city and a recent instrument survey map.

Take time to review the pre-printed form you’re being asked to sign. Remove any costs you’re unwilling or unable to pay. Any fees you can remove will put more cash in your pocket at closing.

Blunder #4 - Paying a Cash Concession to the Buyer

Real estate agents routinely tell buyers to ask for a “seller concession”. This is picking your pocket to the tune of thousands of dollars.

They usually try to inflate the price of your property. Do not be deceived. The bank’s appraiser will always pick up on this, report this to the lender and they usually shoot the deal down. The agent will try to “renegotiate”, but you’ll lose valuable time and money.

Buyers who don’t have sufficient cash to close shouldn’t be buying. They need to save their money; same way you did.

Blunder #5 - Accepting Advice from the Wrong Agent

“New York State law requires real estate licensees who are acting as agents of buyer and sellers of property to advise the potential buyers or sellers with whom they work of the nature of their agency.” *

The above statement is a quote from the NY Department of State’s handbook. They refer to real estate agents and brokers as “licensees” and divide them into five categories: Seller’s Agents, Buyer’s Agents, Broker’s Agents, Dual Agent and Dual Agent with Designated Sales Agents.

It’s not what you know, but who you know in real estate that counts! The agent you hire represents YOU, with “undivided loyalty, confidentiality, full disclosure, obedience and duty to account”. Everyone else represents the buyer or the buyer’s mortgage lender.

Be careful who you talk to. Make sure your Seller’s Agent is careful what information they volunteer. Loose lips sink ships.

*NY Department of State, Division of Licensing Services, NYS Disclosure Form for Buyer and Seller; DOS-1736a(Rev. 11/10)

Blunder #6 - Entering a Sale Contract with an Unqualified Buyer

A word to the wise: Never sign a Sale Contract without proof the buyer has the cash or qualifies for the mortgage. If cash, demand to see a recent bank statement showing sufficient cash to close in the buyer’s name.

If mortgage, demand to see a recent statement from the buyer’s lender called a pre-approval or pre-qualification. This document should state the lender has reviewed the buyer’s credit and verified cash to close. A serious buyer has this.

Anything other than that, it’s better to keep the property available. A lot of people may want your property, but not everyone can afford it. There’s other fish in the sea.

Blunder #7 - Entering a Sale Contract Without a Sufficient Deposit

Buyers will always try buy your property with the least deposit possible. The deposit, or “earnest money”, is your only guarantee they will close. Therefore, the more the better.

If the deposit check is not submitted with the contract, find out why. Who has it? Where is it? When will it be received? Who will hold it? Where? Ask questions to demand accountability and transparency. Protect yourself; it’s your money.

Blunder #8 - Entering a Sale Contract Dependent Upon Sale of Buyer’s Property

There are two types of “contingent” buyers. The first has their property under contract. The second has no contract. Both pose unique risks to a seller.

The first has a contract likely loaded with contingencies of their own. The second may not even have their property on the market. They are basically asking you to take your property off the market and wait for theirs to sell and close. Sometimes it happens, sometimes not. Best to avoid this whenever possible. It’s a slippery slope with all the risk on the seller’s end, none on the buyers.

Blunder #9 - Including Personal Property with the Real Estate Sale

Real Estate sells with anything fixed to the structure of the residence. A TV wall mount is fixed; your High-Definition HD TV is not. A dishwasher is fixed; your $2000 Whirlpool refrigerator is not.

Buyers will routinely request personal property be included with the real estate. The offer will include a list of the personal property showing a sale for one dollar. Sellers are under no obligation to sell their personal property for one dollar. Personal property, not fixed to the structure, can be sold separately via an on-line auction and the proceeds delivered to you.

Blunder #10 - Guaranteeing Condition of Mechanical Systems or Appliances

Homes and buildings are like people; they are born and live a life. During their life span they age and slip into decline, or depreciate. Unlike people, however, they can be renovated and actually get younger. When selling used, they transfer to the buyer in “As-Is” condition, subject to wear, tear between the day sold and the day of closing.

That is, however, unless you specifically guarantee all mechanical systems, including appliances, to be in working order on the day of closing. If your used dishwasher dies the day before closing, you’re obligated to either fix it or install a new one. Never guarantee the condition of mechanical systems or appliances as of the day of closing.

Blunder #11 - Contract Renegotiation After Sale

Licensed Real Estate Salespeople sometimes ask to “renegotiate” Contract terms and conditions after the sale. The buyer may have received a report from a Home Inspector or Appraiser. The Home Inspector works for the buyer and the appraiser represents the buyer’s bank. Inspections and appraisals are done solely for the buyer’s information, not as a tool to ask for repairs or cash. Never agree to review the home inspection or appraisal report. Just say no; the buyer can still proceed with the sale. Appearances can be deceiving.

Blunder #12 - What is the Mandatory Property Condition Disclosure

The New York State Property Condition Disclosure is a list of 55 questions pertaining to your residence’s structure, legality, hazards, infestations and condition. It was recently revised to be mandatory to complete and deliver to the buyer prior to signing a contract. Seller’s are required to answer ALL 55 questions based upon their “Actual Knowledge”. Answers are: Yes, No, Unknown or N/A. A common definition of actual knowledge is: “Actual Knowledge is direct and clear knowledge where the relevant party knows of a particular item or event that causes a breach; it can be demonstrated through circumstantial evidence and if the circumstances are such that the defendant must have known, an inference of actual knowledge is permitted.”* This Disclosure becomes a part of your Purchase and Sale Contract. So please refer any questions to your seller’s agent or attorney. Better safe than sorry!

*NY Department of State, Division of Licensing Services, Property Condition Disclosure Statement, DOS-1614-f(Rev. 10/15)

Blunder #13 - Granting Early Possession to your Buyer

Short-term circumstances may arise where your buyer needs to occupy your residence, but may not be able to close.  Or, they may have personal property which they wish to store in your residence or garage. This situation triggers unique liabilities to the seller where immediate legal counsel is required. Counsel will assist in navigating dangerous situations such as:

• When does the possession begin and end?
• What compensation is paid to the seller?
• What happens if the buyer suddenly vacates?
• Should the buyer place an escrow deposit?
• What if the buyer damages the property?
• Does the seller have the right to enter to perform repairs?
• Who pays for the utilities, taxes and insurance?
• Whose responsible if there’s an accident, casualty or loss?
• What happens if the buyer fails to close?

It’s obvious that granting early possession to the buyer, without sound legal counsel, is dangerous and should be avoided.

We know how to work with legal counsel, expedite closing and move you smoothly from SOLD to CLOSED.