Safety and Success

One is no more important than the other!

When training new hires, I am reminded of all the pieces that help us become successful REALTORS^®. With the hiring of a recruit recently, I conducted training and again was reminded of the critical importance of REALTOR® safety.

Working with strangers puts us in harm’s way each time we show a property. Meeting an unknown person at a property is like playing Russian Roulette. Here are my tips for a safe sale, both for sales and rentals.

1. Require prospects to show identification.

At my office, we request that prospects initially visit our office in person. During the visit, we make a copy of the prospect’s driver’s license. Part of my office policy is to gather basic documentation on everyone who wants to see a property. Convenience can be a factor oftentimes, and if prospects are unable to visit the office first, meet at another public place, such as a coffee shop. There, take a photo of the license with your phone and e-mail it to your office. People expect an application process; if they object, that’s a red flag.

2. Be aware and cautious when showing a listing.

Never turn your back on a client. Before I lean over to open the lock box, I ask prospects to walk around the property to view the landscaping. This keeps prospects away from the agent at a time of vulnerability. Once inside, allow them to walk into each room while you stay by the door. I hang out in the hallway or in the open living area. When showing the house, always walk behind the prospects. Direct; don’t lead. For example, say, “the kitchen is on your left,” and gesture for them to go ahead of you.

Another super idea is to silence your phone and have an imaginary conversation to give the impression that someone knows where you are and what you’re doing.

My staff knows a code that signals an emergency. When an agent calls our office and says “cancel all my appointments with Mr. Snow,” our secretary automatically knows to phone the police. Make sure your office has a similar emergency code.

3. Trust your instincts.

Mother always told us to follow our instincts and listen to our gut. The top crime against women in real estate is assault. After the fact, most victims state that they did not feel right about a person or a situation but plugged ahead as they needed the sale or rental. We just can’t ignore that inner voice. For safety, you may feel comfortable carrying mace or pepper spray. I recommend talking on your cell phone as a bigger deterrent: if someone hiding in a property hears you talking on your phone, they are likely to remain hidden rather than attack.

Hosting an open house?

While an open house is a great sales tool, it also exposes you to unfamiliar people. Stay safe by practicing these tips:

• Call the local police and ask for a squad car to drive by during your open house hours.
• Check your phone charge and signal prior to the open house. Have emergency numbers programmed on speed dial.
• Determine escape routes. Make sure all deadbolts are unlocked to facilitate a fast escape. Identify escape routes that lead directly out of the property as well as outdoor escapes, such as fence gates or garage doors.
• Turn on lights and open curtains for both safety and marketing purposes.
• When prospects arrive, jot down car descriptions and license plates as well as physical descriptions.
• Notify a friend or relative that you will call every hour on the hour. And if you don’t call, they are to notify the police immediately.
• Inform a neighbor that you will be showing the house and ask if he or she can be observant for the unusual. This safety tip is my favorite as it provides the opportunity to meet someone new.

While making it to the closing table is our ultimate goal, never let it be overshadowed by risking your safety. Stay safe!

With positive growth and record-low inventory levels in many markets, the scenario of multiple offers is once again back in the picture. I was recently reminded of the importance of a backup offer on a listing that is currently showing as “under contract.”

My client and I toured a home I considered a “super buy” — it seemed to be priced below market. The buyer loved it so much that she cried tears of joy and exclaimed, “I always told you that I’d know the best place when I found it, and this is it!”

We made a full-price FHA offer and lost the bid. We were in a multiple offer situation, and someone made a stronger offer. The idea of a backup offer hit me. I can count the number of homes in my town that I have sold this way, so I encouraged the buyer and pushed myself to pursue this route. Once we added an addendum to our original paperwork, I hand-delivered the documents to the listing broker. I did not know her and wanted to meet face-to-face, smile-to-smile.

Surprisingly, she was uninterested in pursuing this avenue; I found myself trying to guide her for the best interest of her seller so that ultimately she could earn her commission and close. Having my offer in a backup position, I explained, gave her seller greater reassurance of a sale. Not only would the seller have the primary contract but would also have a solid, pre-approved buyer as backup. Talk about having your cake and eating it, too!

Having encouraged the broker to move forward, we drafted the paperwork as a legal backup offer in first position. My goal was two-fold: not only did I want to be backup in case the first contract fell apart; I also wanted to be first in line in case other brokers were thinking the same way. I did not want to find myself and my buyer standing second or third in line.

In my experience, buyers are often reluctant to submit a backup offer because they feel it will strengthen the resolve of the buyers in primary position to move forward with the deal if they hit a rough patch, such as a previously unknown inspection issue. And this can happen, but I don’t let my worries overshadow my goal for the buyer of standing first in line should anything happen to the primary contract.

Submitting a backup offer shows good faith by placing money in escrow to demonstrate buyer seriousness. My backups are written the same as my primary offers. I include a provision in the backup position clause stating that the buyer can withdraw at any time until they are notified that the primary offer collapsed and their offer is the primary. If a new listing suits my buyer better, I want that option to withdraw without losing earnest money. I also make sure that language exists to protect my buyer and not allow inspections or money expensed until a written notification states that we are first. My buyer should not spend money until we know we have a chance to own the property.

About 10 days later, the listing broker called to ask if my buyer would still like to buy the home. Of course! I drafted an amendment in which I removed the backup status and placed us in first position as the primary contract for sale and purchase.

Lesson learned: the importance of taking the time to draft a backup offer and get it presented and fully negotiated to help facilitate a transaction for all parties involved. With the high fallout rate in the market, accepting a backup offer is usually worthwhile. Don’t simply wait for first deal to fall apart — be proactive and have someone committed to buy standing in the wings!

Use Your Difference to Make a Difference!

By: Marcus Wally – Published in the September 2012 issue of Wisconsin Real Estate Magazine.

We say we are REALTORS^®, helping people fulfill dreams of homeownership. But to connect with those people, we need to be known. When we chat about sales and marketing, my biggest tip is to be yourself — everybody else is already taken!

Hefty Deposits

A recent experience reminded me why I encourage getting large deposits when negotiating real estate. After being under contract for several weeks, the buyers, who had signed an all-cash offer for $250,000, called their agent to inform him that they did not have the money to fulfill their contractual obligations and wished to forfeit their earnest money deposits. The buyers had $22,500 in escrow.

In Florida, buyers pay earnest money deposits, which are escrowed. One of my tips for ensuring that written transactions have a chance of closing is to always collect between 3 to 5 percent of the contract sales price as your good faith escrow binder. In Wisconsin, earnest money is not typically escrowed but is held in the listing broker’s trust account; the parties may agree to have a third party hold the earnest money. The parties or their attorney should draft the escrow agreement stating the terms of the third party holding the buyer’s earnest money. There is no standard to the amount of earnest money; each firm has its own guidelines, so be familiar with and follow your office’s guidelines. Community standard of practice may also help to establish the typical amount of a buyer’s earnest money.

“Good Faith Sum of Money” is the earnest money that a buyer commits to show the seller that they’re serious. This money is given to bind a contract, for example, an agreement to purchase real property. In my experience, most times, buyers make a small initial deposit and then a more substantial deposit within the next 10 days to two weeks, bringing the total held in earnest money to about 5 percent. This deposit in a Florida transaction is typically an additional amount of money put into escrow and usually is paid after inspections are complete and approved by the buyer, and the additional deposit is a few days after the inspection period and two to three weeks after the contract is signed. Knowing the law concerning escrow monies is critical, as in my state of Florida, an offer to purchase with no binder money down is just as valid as an offer with accompanying binder money.

Earnest money amounts can vary. If the sale goes through, the earnest money is applied against the down payment or as per the terms of the Wisconsin offer against the purchase price. In Florida, if the buyer is unable to purchase, the earnest money is forfeited unless the binder expressly provides that it is to be refunded. If the purchaser of Florida property wants the down payment to be refundable, the agent should insert a clause in the offer specifying the conditions under which the deposit will be refunded. In a Wisconsin transaction, the offer states that the earnest money shall be disbursed according to a written disbursement agreement signed by all the parties to the offer. Review lines 370-394 of the WB-11 Residential Offer to Purchase for the discussion on earnest money.

With signs of improvements in many markets across the country, finding yourself in a multiple offer situation is likely — and this strong likelihood justifies a substantial deposit to ensure that the buyer’s offer is not compromised. Imagine a multiple offer situation and most other terms and conditions in both offers were quite similar, but the one big difference was the earnest money deposit amount. Without coaching the buyers on the importance of showing commitment from beginning to end, they may lose the opportunity to buy. As mom taught us — you never get a second chance to make a good first impression!

It is wise for a seller to require buyers to show a solid monetary commitment if they wish the seller to take their property off the market. Buying a home is a fun and exciting experience, and putting down earnest money is just one of the many steps to get there. Be direct when asking for the buyer’s solid commitment in placing earnest money … you and your seller will appreciate your business approach to this critical element in a real estate transaction.

Wally’s Wisdom is your source for fresh, valuable  information about all things related to Real Estate. Marcus A. Wally is not only the Founder/Broker of New World Realty, but also a motivational speaker and accomplished author. He regularly supplies various publications in the industry with new thoughtful insight into the trends in today’s market.