What value does a REALTOR have in today’s market? Why use a REALTOR?

 

When you think of a REALTOR, what do you think of? Lately We are hearing overpaid, a rip off-- this saddens us as there is a Very Big Difference from a REALTOR and anyone who is licensed to sell real estate in my eyes. There is so much talk about value and what we do or don't do for the public. It is hard to see the differences or what is the benefits of using a Full Time- Full- Service REALTOR.  WE think of negotiating and building relationship, protection for our clients, working hard, educated to what is happening around a specific area and the pitfalls to know about, helping people every way WE can. We think of helping you get to your Whooo hooo!!!! moment, quickly, efficiently and navigating all the obstacles that can be in your path!

 Yes, you can sell your home yourself, use a discount brokerage, or hire a agent/a broker not associated with NAR with the designation of a REALTOR. So why does it matter? What difference does it make? REALTORS have taken an oath and are held to the code of ethics from NAR(National Association or Realtors); they give you a Protection from what you do not know and will guide you to make educated decisions. They have tools to help you stay on track and focused on what is important. We have a Fiduciary responsibility to our clients, to act in their best interest. An I-buyer like Open Door, Zillow, etc., etc., ARE the buyer, their goal and driving force is to buy the home as cheap as possible, so they can resell it back on the open market. They have no duty to the owner of the property or the the Buyer of Open Door's home.... In a nutshell there are your differences.  Now, in the litigious world we live in- you can be sued for anything, mix in the most expensive item most people buy in their lifetime and that puts the general public at risk. As many lawyers, NAR, ADRE and AAR have all said. 

 Today I am listing the top 5 reasons why a buyer needs to work with Team Beery as your BUYER'S Agent!

   #1.  Having someone who has YOUR back. A buyer's agent has a Fiduciary responsibility to make sure you as the buyer understands what is being signed, has all the tools to make the best decisions and  follows the appropriate timelines and procedures.

   #2.  Not understanding what sellers must disclose- material facts or not disclosing important details about the property to potential buyers, in writing. What may seem a small detail to you- could be a very big thing to someone else. One of the only documents that is still valid after the closing is the Seller Disclosure Statement. so just because you closed on the home, does not mean the buyers can't come back and sue if they feel wronged by what you disclosed on the seller disclosure paperwork, sellers are asked a myriad of questions regarding their home including items like any roof or water leaks, termites, or pest issues, plumbing or air conditioning issues, zoning ordinance violations, building code violations, and more. It is vital that a seller makes every effort to disclose past and present issues, even if they have been resolved and even if they happened before they owned the house. If it is a known defect, it needs to be disclosed. Failure to disclose a material fact can certainly lead to a lawsuit. And it can be simple for a buyer to learn a seller knew of a defect. It’s not uncommon for a neighbor to provide a statement outlining a previously known issue.  

#3. In Arizona Real Estate Brokers and agents have the right to write contracts and addendum to the contracts, without using a lawyer. This saves you thousands of dollars in additional costs. Team Beery will also negotiate to get the seller to pay some or all of our fee on your behalf. In doing this, it doesn't hurt your ability to receive other concessions to off set your closing costs or to help buy down the interest rate. 

#4. We have all the tools for you to make educated decisions. We have a ROBUST vendor list for all types of trades you might need. We have a comprehensive list & a  Buyer's Advisory guide to make sure you have information not only about the home you will be buying, but the neighborhood and the city...as when you buy a home you are buying into both the neighborhood and the community... 

#5. We make sure you are following all timelines and appropriate paperwork to keep the transaction in line and  

As We see it this is a big value....  So if you want a great team behind you- contact us to buy or sell a home throughout the East Valley of Phoenix, including: Phoenix, Mesa, Gilbert, Chandler, Tempe, Scottsdale, Queen Creek, Apache Junction, San Tan Valley, Gold Canyon! 602-644-1416.

What buyers need to know about escalation clauses

 

An escalation clause can help buyers gain a crucial edge in today's seller's market, but these offer addendums need to be handled with care. What is it? An escalation clause is a real estate contract, sometimes called an escalator, that lets a home buyer say: “I will pay “x” price for this home, but if the seller receives another offer that’s higher than mine, I’m willing to increase my offer by “Z” to “Y” price. Just be sure you have the cash to back up the offer. 

How does an escalation clause work? While escalation clauses vary significantly, the general escalation addendum has a few basic components:

•             What is the original offer of purchase price?

•             How much will that price be escalated above any other competitive bid?

•             What is the maximum amount that the purchase price can reach in case of multiple offers?

For example, buyer Brown offers $100,000 for a home or piece of real estate. Her Realtor® adds an escalation clause that, in the case of a higher competing offer, will increase Brown’s offer in increments of $2,000 above the competing offer.

Her escalation clause goes up to a maximum of $110,000. If no other offers are submitted, Brown’s offer remains at $100,000.

If buyer Green offers the seller $103,000, then Brown’s offer would automatically escalate to $2,000 above that, bringing Brown’s offer to $105,000. If buyer Orange offers $111,000 for the home, then Brown’s maximum of $110,000 will be exceeded, and Orange will have the top offer.

Will the seller accept an escalation clause?

Some home and real estate sellers simply state that they will not accept an offer with an escalation clause. They would prefer that every buyer submits exactly what they’re willing to pay for the home or real estate.

Sellers sometimes prefer this method, because it motivates buyers to outbid one another on the first try. It also streamlines the contract paperwork and the decision-making process.

Will there definitely be multiple offers? Almost always in the 2021 market so far. Some folks hate to put all their cards on the table upfront- Yes, I get that, but in the market, it does help the seller select the best offer.

Escalation clauses should only be used when the buyer is fairly confident that there will be multiple offers, or when the buyer expects to pay an increased price.

Buyers who submit an offer with an escalation clause are laying all their cards on the table: The seller knows immediately how far the buyer will go to secure the home. If that offer ends up being the only offer submitted, it technically remains at its original price.

A Realtor representing the seller will know, however, to counteroffer to the buyer at a higher, escalated price, since the buyer is clearly willing to pay more. While there’s no guarantee that the buyers will agree to the higher price, it is likely that they will.

A buyer gives up a lot of negotiating power and potentially leaves money on the table when using an escalation clause that goes unmet by a competitor. The only protection they have is the appraisal, and if they chose to waive that, too—they are agreeing to the price no matter what… so be sure you can come up with all the extra money before adding this clause.

Has the seller’s agent clearly stated a one-day review or multiple rounds of offers? In hot real estate markets, a wide variety of offer-review processes can be available. Some might specify, for example, that the property is going on the market on Friday, and that all offers will be reviewed the following Thursday. The sellers and their Realtor will make a final decision that day.

This situation can be ideal for the escalation clause, when a buyer knows it’s an all-or-nothing offer. Other sellers take a back-and-forth approach.

They may collect offers from buyers for one week, and then respond to a handful of the best offers by saying “Send us your highest and best offer.”

This technique is particularly disliked by many consumers and professionals for its lack of clarity, but it’s important to know that it exists. Before writing an offer, a buyer’s Realtor can inquire to feel out the details and make sure the buyer is prepared for the situation.

Writing an escalation clause on the initial offer in a multistage situation could put the buyer in a weak position during the second round. It’s perfectly legal for a seller’s Realtor, with the seller’s permission, to reveal to all potential buyers what the top initial offer is and to ask everyone to beat it.

In this case, the escalation clause would reveal that buyer’s maximum, losing a competitive edge.

Bid with careful confidence, and know that each situation is unique

If you’re considering an escalation clause,  The Realtor’s knowledge of normal practices and probable outcomes in your market will make your offer much more likely to succeed. They will help you see what the downfalls are and explain any advantages. Buyers shouldn’t be tempted to escalate their purchase price above a figure that they would be comfortable paying. At the same time, they should realize if inventory and interest rates are low that aggressively pursuing a good home at a good price is necessary to winning in a competitive market.

Escalation clauses can cause a lot of stress for home buyers, but when they’re boiled down to the basics, they’re fairly straightforward. Remember to be realistic, to be comfortable with how much of a competing bid you’re willing to offer, and to confidently go after a piece of real estate at that price.

Potential buyers who are only looking to get a steal often end up not being buyers at all. With the way homes are going up in value in 2021-- 2 months of looking for a home could potentially cost you $10,000- $20,000… so some buyers are taking that value on at the time of the offer, to hedge their bet. But bottom line, the only protection the buyer has in this situation is the appraisal. Now, that could bite you too- as what if the appraisal come in low—will you have the cash on top of your down payment to make up the difference?  So just tread carefully and know what you are getting into- before you jump in!! 

 Want to know more, Contact Team Beery and we will be happy to help you navigate the in’s and out’s of this market.