Monday, September 8, 2014

Sharing some expert real estate advice...

Having been in this industry for over twenty years, I've picked up a few things I feel are important for everyone to know.  They may seem fairly straight forward and many may consider each to be inconsequential until that day comes when one of these issues arises.  So, I’m going to share my thoughts about property surveys, title companies and the appropriate way to respond to an offer as a buyer or seller.

Surveys
How many times have I had a client fuss about having to buy a survey?  The answer is way too many.  The question is, why would you not buy a survey?  A survey certifies what you are actually purchasing in terms of both the boundaries and size of the property.  Contracts now have verbiage which can allow the sales price to be adjusted for differences in size.  It shows you easements, flood plain, improvements and most importantly encroachments, all of which can detrimentally effect the property.  Many people are satisfied with the owner’s previous survey, and an affidavit stating the survey is true and correct to the best of their knowledge.  The surveyors don’t like this, the title companies don’t either and neither will your lawyer, if and when an issue arises.  Typically, the cost of a survey is less than 1% of the cost of the property, and that is the best 1% you will ever spend.

Title Companies
Is it the buyer’s right to choose the title company in Texas? It should be because the insurance is for the buyer’s protection.  However, most listing agents list a title company of choice on the MLS system.  If you are a represented buyer and select your choice of title company, you may be asked to pay for the title policy.  I have personally witnessed such a situation, and I have to question whether the seller or the agent is responsible for the negotiation.  Why would the seller care which title company is used?  The first question to ask yourself would be, what is the purpose of the title company?  They act as the escrow agent, order or prepare the deed, order or run a title search, prepare the settlement statement, close the transaction and most importantly provide the buyer with title insurance.  A quality escrow agent is as important as a good closer, and frankly the vast majority of title companies I have worked with were more than capable at both.  The deed is very important, and is drawn up typically by an attorney.  Leaving the title search, commitment and title insurance, which is a large expense as well.  These are processes of the same item, and in conjunction with the survey protect your ownership interest in the property, far and away the most important aspect to the buyer. So my advice is to do your research and demand your own title company.  


Responding to an offer
When I started in the real estate business delivery was by mail or by hand, then by fax and now we have e-mail.  Back in the day, verbal responses to offers were not common because they were not considered binding.  When you received an offer or counter offer, you discussed the best options with your Realtor, and signed the paperwork.  Deals were clear, and completed rather quickly.  Today, technology has gotten in the way.  Realtors and their clients often choose to respond verbally, and extend their response via a brief e-mail or text. A lot of times it comes from a mobile device which some consider efficient however I would call it too easy. I would hate to think my home purchase was being negotiated while my agent was shopping, at the movie or on the course.  After all, this is one of the largest transactions most people make in the lifetime.  It should be noted that with the rare and few brief exceptions, these responses are still not considered binding.  I demand that all my agents have their offers and counter offers signed by their client.  Why?  I believe face to face or one on one discussions between the Realtor and the client with decisions made clearly in writing provide the absolute greatest opportunity for successful negotiations.  For example, during a transaction, an offer is made in writing and the seller counters in writing.  The buyer reviews the counter, and agrees with the terms.  They sign, all terms are agreed to, and the deal is an effective contract.  Simple.  In the other case, the offer is made in writing, and the counter offer is made verbally being extended via e-mail from the seller’s agent.  The Buyer’s agent discusses with the buyer, and they accept the counter with an e-mailed response.  Next, they receive a call that the seller has accepted a better offer.   Stinks, doesn't it?  What can you do?  Sue, if you have the extra time and money, or move on to another property with a very bad taste in your mouth.  You might be saying, how often does that happen? It is actually becoming a fairly regular occurrence.  I would add that this does not only happen to buyers, but to seller’s as well.  I mentioned previously that I demand all my agents have all their offers signed before presentation to the other agent.  Do we meet this standard 100% of the time?  No, because when there is nothing to sign from the other party, what can you do?  If you draw up new documents and have your client sign, you have extended a new offer as opposed to responding to a counter offer.  This effectively ends prior binding negotiations, and opens the door for other potential offers.


 So, what can you do?  Well, you blog about the importance of this issue, and hope to gain some public awareness about the importance of handling real estate transactions clearly, concisely and appropriately to ensure your highest probability for success.   If successful, people will begin to demand to again respond in writing during real estate negotiations.

Written by Bill Barkley, Broker at River Valley Real Estate

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