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
