Selling and Buying, a primer

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Consider multiple offers. To save commission fees many people want to sell as a For Sale by Owner (FSBO).   The Seller may have a friend or acquaintance that wants to buy their home.  Does the Seller get the most money for their home this way?  While every home is unique and each Buyer and Seller relationship is different, generally, the answer is no. In the current market, viewing multiple competitive offers will usually get the highest sales price and the best terms for both parties. Atomic Realty’s $599 + 4% plan will manage this for you and get you the highest price and terms that best meet your goals.

Price. When marketing your home, Atomic Realty suggests you price your home at a price you would be willing to accept, and no less. Some brokers will have you underprice your home to spark interest and hopefully have a multiple offer situation. In this market we do not believe that underpricing a home is beneficial, or honest to either buyers or sellers. Atomic Realty will help you determine a price you can accept.

Earnest money is money that a Buyer will put down as a commitment to the Seller that they will not back out of the purchase for no reason.  To strengthen an offer, sometimes the Buyer will agree that the earnest money is not refundable for any reason, However, generally the earnest money is refundable if the Buyer’s loan doesn't go through or the inspections do not have satisfactory results. 

Time to consider all offers.  Historically a person puts their home on the market and considers each offer as it is made.  With the current market conditions a common way of doing business is to show your home for a week or two and set a date that you will consider all the offers that have come in. This lets the market decide the value of the home and you decide a price and terms you feel most comfortable with.  With Atomic Realty’s $599 + 4% plan  Atomic Realty will field all the offers and discuss the pros and cons in price and terms of each.

 Escalate or not?  An escalation clause is sometimes part of an offer that increases the offer up to a certain level. Usually these are relevant in multiple offer situations. An escalation clause increases the Buyer's chance of getting an accepted offer and increases the Seller’s sales price. With. Atomic Realty’s $599 + 4% plan, Atomic Realty will manage and advise every aspect of the escalation in an offer. To see an example of this, go to AtomicRealty.net and see this example and many other selling and buying tips.

ATOMIC REALTY’S VIEW ON PRE LISTING INSPECTIONS

Historically, and still common in many markets, a Buyer will make an offer to purchase and if accepted by the Seller there will be a multi  week period when the Buyer can have inspections completed. After the Buyer’s inspections are complete the Buyer can object, no matter how minor or major an issue is,  and request the Seller to resolve the issue by;  lowering the price, accept the home “as is”, or backing out of the transaction completely.   Inspections are not mandatory for either the Seller or Buyer. 

A Seller having a pre listing inspection completed in advance of bringing the property to market, ultimately serves both the Seller and the Buyer by providing everyone important information. For the Seller, it advises the Seller as to what deficiencies are present in the home, it arms the Seller in advance as to what issues Buyers may use as bargaining chips, and it provides the Seller the opportunity to proactively remedy  deficiencies or, alternately, acknowledge the problems and choose not to repair issues. Either way, the Seller is able to become fully informed from the outset, in advance of negotiating with a Buyer. Furthermore, the Buyer isn’t making uninformed assumptions about the condition of the property but is provided with a snapshot on its current state. This is a win-win for all parties.

As a Seller, wouldn’t you want Buyers to have this information upfront before they submit an Offer to Purchase, rather than after making an offer when they could walk away collapsing the deal, or try to hold you ransom for a price abatement?

A pre-listing inspection should focus on proper functionality of all major systems and components of the house such as  heating and cooling; electrical; plumbing; roof and structure; siding; and doors and windows. Simply put, everything from the exterior to the interior will be evaluated. It only takes a few hours for the inspection to be completed. In the end, the inspection will give you a report of all the things noticed during the inspection.

A Seller’s “pre-listing” inspection is an optional step that a Seller may or may not choose to do. However, it may give the Seller an edge in attracting and retaining Buyers. While Sellers may be reluctant to spend the money for such services (often $500-$1000),  In modern markets Sellers often utilize a “pre-listing” inspection” as  there are many potential benefits to both the Seller and the Buyer for such an inspection, such as;

1. A pre-listing inspection can ultimately save money for Sellers in two ways. 
   1. by being aware of and disclosing known property issues and the possible costs of repair upfront, the Seller can make it known that consideration for those items has already been factored into the sales price. This effectively takes this issue off the negotiation table, 
   2. Or, rather than the Buyer choosing an expensive contractor, the Seller can shop what is repaired and who does the repairs, prior to listing. This gives the Seller more control over the repair costs.
2. Does a pre listing inspection give a Buyer Leverage? No Pre Listing Inspection gives Buyers leverage, It Informs both parties of the home’s condition.  If the Seller or their representative doesn’t provide a presale inspection report for all prospective purchasers to view, it puts the onus on each Buyer to enlist the services of an inspector of their choosing. Most  Sellers don’t have issues with this,  yet this decision comes rife with the risk of renegotiation or price or complete collapse of the transaction.
3. Reinforcing the value: A pre-listing inspection can reinforce the Seller’s asking price and higher offers. It enables Brokers to explain the inspection report—plus any repairs made prior to  listing.  It helps substainitate the home’s value.  In a Sellers market where a property is listed at the minimum amount a Seller hopes to get, often all offers are collected and reviewed in a week or so. This allows Buyers to compete and push the price of the home to its highest true market value. Often with a pre-listing inspection subsequent inspections are waived, this eliminates variables which could result in a second negotiation and gives the Seller and Buyer more certainty the transaction will occur.
4. More likely to close and close faster on the property.  Homes that have a pre-listing inspection generally sell faster and have fewer inspection-related issues to negotiate, enabling a smoother transaction. If the Seller’s home is older  – most serious Buyers will insist on the property being vetted by a licensed inspector unless they’re going to undertake substantial renovations or tear the property down entirely.  This is particularly important in a hot market when prudent Buyers are tasked with spending the top end of their budget. While they may still want the property, they will want to know what property deficiencies they may be taking on, both in terms of the investment of their time and the financial costs. 
5. Upfront information: In most cases, Buyers learn of the issues about the property during their inspection period anyway, a pre-listing inspection provides Sellers and Buyers with upfront information about the current condition of their property, which gives the parties a better understanding of possible repairs and that may harm the chances of closing. For many Buyers, being provided forthcoming honest inspection information has both tangible and emotional value. They’re made aware of issues identified in the inspection report, which gives them more facts and clarity on which issues have been or will be resolved.
6. How much detail is necessary?  Should a Seller offer the entire pre-listing inspection report to a buyer or just a summary? This is a situational consideration. The industry has evolved such that it is reasonable to view the inspection summary as containing all of the important need-to-know items found in the full report. Since the real goal here is to ensure transparency and awareness, the summary should be adequate to achieve that. Depending on the length and complexity of the full report, as well as the technical complexity of the issues presented in the summary, A good faith effort to offer more detail could actually cause undue alarm if the Buyer can’t put the information in proper perspective.
7. Does the Seller have to repair all or any items discovered? No. It’s up to the Seller  if they want to work on all the issues, lessen the price of the house in relation to the cost of repairs, or simply not do anything other than disclose known material defects, it is completely up to the Seller.
8. Often Buyers waive additional inspections. Are there any differences between a Seller’s pre-listing inspection and a Buyer’s inspection? No, The scope of the inspection is the same.   It’s a full inspection to better understand the condition of the home. This gives both Seller and Buyer the opportunity to resolve issues in advance of negotiating a purchase agreement and not be caught off-guard in the midst of the transaction. When a presale inspection report is provided by the Seller or the listing realtor, most Buyers will rely on that information rather than spend additional funds to get a second opinion. 
9. Mitigate Seller liability.  Although Sellers are often fearful there may be serious issues undiscovered in their property, the Seller is mitigating (albeit not releasing) their  legal liability by demonstrating that in providing a presale inspection report indicating they were selling the property in good faith and with full disclosure, rather than intentionally hiding defects. Sellers and their agents have a legal duty to disclose to Buyers any latient (Hidden) Material Defects.  For a Seller to not disclose known defects becomes a future liability issue to Sellers. 

Atomic Realty recommends pre listing inspections and supplying them to potential Buyers, but it is entirely the Seller’s  decision as to whether to do so. 

Closing costs - Legally, everything in real estate is negotiable, closing costs included. Often, which party pays them is determined by local convention. As a part of Buyer’s strong offer the Buyer may offer to pay most of the closing costs. 

 Appraisal, in markets where prices are rapidly rising, appraisals often don’t keep up with sales prices, as the appraised value is determined from other prior sales. In a Sellers’ market to strengthen the offer a Buyer will often waive the appraisal.  What this means is that if the bank's appraiser does not appraise the home for the purchase price, the Buyer agrees they will pay the difference between the appraised value and the purchase price.

 At Atomic Realty we are professional, honest FULL Service Real Estate Brokers offering sensible commissions. We are based in Los Alamos and service Santa Fe, Los Alamos, White Rock and Espanola. We use no misleading tactics. We tell you exactly what we are going to do, and exactly what we charge.  We are people you can count on. NO tricks - Whether buying or selling we will honestly assist you. Check out Atomic Realty’s Free selling tips, FAQ’s, and pricing plans at AtomicRealty.net