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THE 5 COMMON UN-TRUTHS ABOUT REAL ESTATE OFFERS 8/15/2019

9/4/2019
“I got 5 offers within the first 24 hours and all of them were over asking price!”

Have you heard stories lately of homes selling quickly above full price with multiple offers? That is the market we are currently in. While not every listing gets this kind of results, it is not uncommon for homes priced correctly in good condition in the average price range for our market. Many buyers have “lost out” on 4 or 5 homes before finally being the winning bidder on a home.



With activity like this, there is bound to be some confusion and frustration in the offer (bidding) process. Here are 5 common misunderstandings:

1. OFFERS SHOULD BE REVIEWED ON A FIRST-COME, FIRST-SERVED BASIS.

There is no rule or law that requires a seller to look at the first offer before others. It is actually the seller’s agent’s job to get the best offer possible no matter when it comes in. If an initial offer comes in and the agent or seller feel that a better offer may be coming, the seller has the right to wait any length of time for additional offers. Since most offers include a deadline for the seller to respond, there is a risk that a good offer will expire while the seller waits for better offers, but that is a chance the seller is open to take.

2. SELLER'S MUST RESPOND TO AN OFFER WITHIN THE DEADLINE GIVEN.

The deadline given in an offer does not “force” the seller to respond within a certain time period. It only gives the buyer the right to rescind their offer if the seller does not respond in time. This allows the buyer to move on and write offers on other homes without the risk of being under contract if a seller accepts their initial offer. If the seller does not respond within the given deadline, the offer is technically rejected.

3. IF THE SELLER RECEIVES MULTIPLE OFFERS, THEY MUST GIVE EVERYONE A CHANCE TO REVISE THEIR OFFER BEFORE CHOOSING ONE.

Typically, if a seller receives more than one offer, they will notify all potential buyers that they have until a certain deadline to modify their offer or confirm that they have submitted their “highest and best” offer.  Once the deadline has passed, the seller selects which offer, if any, they want to accept or counter. While this is the typical response, it is not required. If the seller receives an offer they like, they may at any time accept it and move on with that buyer without giving other buyers the chance to improve their offer.

4. THE SELLER MUST ACCEPT THE BEST (HIGHEST NET) OFFER.

It is assumed that the seller is going to choose the offer that they feel is best. Confusion occurs, however, when we assume that the highest net offer is the best offer. There are many terms in an offer for the seller to consider besides price and net including type of financing, time to close, and possession. As long as the seller is not discriminating against a protected class, they can even choose the offer from the buyer they like the best. Recently, a seller chose a slightly lower offer because it was from a neighbor and friend who they knew would be easy to work with and would be open to delayed possession.

5. IF THE LISTING AGENT HAS THEIR OWN BUYER, THEY ARE NOT SUBMITTING OTHER OFFERS TO THE SELLER.

Let me just start by saying that withholding any offers from a seller would be against real estate law and our code of ethics and professional suicide. Our code of ethics says that we will put our client’s best interest first and that NO inducement, financial or otherwise, shall interfere with our responsibility to our client. A recent revision to our code also states that a selling agent can request a signed rejection of their offer. We always advise that you work with an agent you know, like and trust. Trust your agent to protect you and do what they can to assure that your offer was in fact submitted.

If you don’t already have an agent, consider a Trusted Real Estate Advisor at RE/MAX Perrett Associates. Our production and reputation speak for itself.

Aging in Place? 5 things to do so you will not get "stuck" in your home. July 24, 2019

9/4/2019

Baby Boomers are expected to outnumber Millennials in Michigan in 2019 despite the national trend being the opposite. This is important to those who are aging in their home without an “exit” plan and their children. 

We had a client whose husband died unexpectedly 5 years ago. He was a collector who managed the finances and maintenance of the home. By the time we were called to help, she was buried under a pile of documents, personal property and delayed maintenance and she was overwhelmed and paralyzed. Her children lived out of state and could not help. When friends offered to help, she didn’t know where to start. On top of it all, she was in poor health.



This is a desperate situation that Realtors are encountering. Thankfully, it can be avoided. Here are the top five things we have found that you can do now to keep from being in this client’s position:

1. DEAL WITH PERSONAL PROPERTY NOW

First, and most important, stop storing your grown children’s belongings! 

For all children who live away from home, tell them you have created a pile of their things and that they have until a certain date to get them. If they have not come to get them (or made different arrangements) by that date, they are not going to. Get rid of it. Don’t store stuff for them that they aren’t willing to store themselves.

Second, develop a system to reduce the things you keep.

            “You spend the first part of your life collecting things…and the second half getting rid of them” – Isabel Allende

Here’s a plan: Commit to a constant rotation of paring down possessions that starts now and never ends. Each month, you pick a room and go through all drawers, closets or other storage and ask yourself this question: Have I used this in the last 12 months? If the answer is “no”, then let it go. 

My sister, Carla is doing the family a HUGE favor. Every 6 weeks, she visits my dad. On EVERY visit, she goes through a dresser, a closet, a cabinet, etc. and is methodically removing anything that my dad does not need on a day-to-day basis. She is giving all of us a chance to claim anything we may want and the rest is getting donated or pitched. Dad is 83. He is happy because he is living in a de-cluttered home. We will be extremely happy when the time comes to move him from his house as everything in it that he cares about will go with him.

Does your husband have a 4 ft. piece of PVC that he’s holding on to because he may need it some day? This is a hard area to tackle.  Just because you haven’t used a wrench in 12 months doesn’t mean you won’t. That is why this is a continuous process. At 78, dad was still using wrenches. At 83, not so much.

2. GET HELP

Your children may have moved away, but they do come see you, even if it’s seldom. The next time your children are scheduled to visit, organize a “work day” and explain to them that you have sorted through things and will need their help getting rid of it. They can help you hold a weekend garage sale, or help cart off donations or items to the local dump. This can also apply to your siblings, cousins, grandchildren, etc.

Maybe you need to consider an estate sale or auction? The first step is to invite a professional in to see if you have enough items with enough value to warrant a sale. Your RE/MAX agent can give you the names of professionals in this area to work with.

If your family is no help and you don’t have enough valuable items to warrant a sale, what about members from your church or a local organization to which you belong? If you are donating items to The Salvation Army or another local charity, they may help you dispose of some things in return for your donation.

3. UPDATE YOUR DEED, WILL, OR TRUST



It’s very simple – if you leave this earth without a valid will or trust that dictates the disposal of your assets, your estate will most likely need to be probated in court. Please don’t leave your loved-ones with this burden. Contact your attorney to be sure you have the proper paperwork in place and update that paperwork every couple of years to be sure it is valid. Things change and your estate planning needs to be kept up. Don’t try to do this part yourself. There are very small details that can make the difference between valid and invalid paperwork. One piece of advice – only leave one person in charge. It can be a real estate nightmare to clear every single decision through multiple heirs. Pick someone. The others will understand eventually.

4. KNOW WHEN TO SELL

This is different for everyone. Some people are very emotionally attached to their homes and have a hard time leaving memories or the comfort of the familiar behind. Here are some signs that it may be time to sell the family home:

  a. Every day maintenance has become overwhelming. Mowing, cleaning, gardening, etc.
  b. Too much space. One person in a 3-bedroom home may be over-kill. When is the last time you were in your basement? 
  c. Gatherings aren’t held at your home any more. Have your children taken over for Thanksgiving, Christmas, or other family holidays?
  d. Stairs have become an issue. Is it time that everything be located on the same level?
  e. You’re never there. Are your winters out of state bleeding into fall and spring? Are you traveling more than you’re home?

Talk to your attorney and accountant before selling. Owning a home can be one way to shelter your assets and prevent them from being used for long-term care before Medicare kicks in. You need to be aware of possible taxes on capital gains.

5. CONTINUOUSLY UPDATE AND MAINTAIN YOUR HOME!

Not long ago, there was a very large, 4 bedroom, 4 bath home for sale on 10 acres that should have easily been worth over $300,000. Unfortunately, it had not been updated in many years. It was an estate and the owner, a widow, was relying on the proceeds of the sale to fund her remaining years. The house sold for $155,000.

Each year, go through your home and identify at least one maintenance project and one cosmetic update to complete. Your home is very likely your largest investment. You must maintain its value.

This advice comes from years of witnessing heart-breaking stories in real estate and I am following this advice myself.

I'm closing on my new home tomorrow but I don't get the keys...wait, what? May 3, 2019

9/4/2019

An agent came to me recently for help in explaining possession to their buyer client.  When their buyer made an offer, the seller asked for possession of the property for 7 days after closing.  The buyer accepted and moved toward closing.  Now that the buyer is ready to close, he is starting to question the possession issue.  Here were some of his questions:


 

  • Why doesn't the seller have to pay rent while they continue to live there?
  • How do I know the seller will leave the home in good condition?
  • What is my recourse if the seller damages the property?  Is there some type of a deposit in place to cover damages?

These are all very good questions.  To answer them, let’s start with a little history:

First, it is important to know that once a buyer closes on a home, they are paying their mortgage payment, taxes and insurance on the property even though they may not yet be living there.  As recently as 20 years ago, it was pretty normal in our area for sellers to maintain possession for 30 days after closing.  However, with the recession came many vacant and bank-owned sales where the buyer received immediate possession.  That market "killed" normal on many fronts including average possession time.  While there is no hard and fast rule, a buyer typically receives immediate possession on vacant homes, but in transactions where the seller is still in the home, it is "customary" to give them 7 to 10 days to get out without charging rent.  Any amount over 10 days usually includes the seller paying rent to reimburse the buyer for the costs they are incurring. 

Now that we've covered possession and rent, let's move on to liability and damages:

Most purchase contracts state that the seller will leave the house in broom-clean condition, remove all personal property and debris, and make any repairs/replacements necessary from any damage or neglect.  When the seller accepts the offer, they are contractually bound by it.  However, buyers must understand that the only real way to enforce a contract is in court.  If either party to a contract (buyer or seller) breaches the agreement, the other party must file suit and win a judgement to enforce the contract.  Even if a deposit is held to cover seller damages, if the seller does not agree with the buyer as to the release of the deposit, they would most likely have to go to court to settle the matter.

In the end, there are a lot of promises made in a purchase agreement and both parties are bound contractually to keep those promises.  It is important that you ask a lot of questions and work with your agent at every step to do your best to protect yourself against possible outcomes but there also has to be some level of trust that the other party will perform per the agreed terms.

Questions?  Call your RE/MAX agent today at 269-968-6101 for Battle Creek or 269-781-8966 in Marshall.

State of Michigan Unclaimed Property Website - March 28, 2019

9/4/2019

"The Michigan Department of Treasury has millions of dollars in lost or forgotten assets from dormant bank accounts, uncashed checks, valuables left in safe deposit boxes and stock certificates."

 

Some of this money may also be un-returned earnest deposits for real estate transactions that “fell through”

When you write an offer to purchase a home, you include an earnest deposit that demonstrates your good faith to the seller.  Sometimes, a real estate transaction is cancelled and that deposit is returned to the buyer.

Why would a real estate transaction be cancelled? – If the home inspection didn’t go well and the buyer and seller couldn’t agree on repairs, or if the appraisal came in low and no resolution could be achieved, or if the buyer’s lender rejected the loan for a reason that was no fault of the buyer’s, the transaction could be cancelled and the seller would typically agree to release the deposit back to the buyer.

BUT – if our office sends that check back to the buyer at their last known address and they never cash it and we are unsuccessful at locating that buyer to return their money, we are required to “escheat” that money to the State of Michigan who then holds on to it until the person claims it.

Try this:  Go to https://unclaimedproperty.michigan.gov/ and under “CLAIMING PROPERTY” enter your last name. (Consider using your maiden name, too).  A list of names will come up of people who have unclaimed property with the State.  The number of people you recognize from your family might surprise you. 

What do you do if you see your name?

 

Once you’ve found the properties that may belong to you, click the CLAIM button, and then click the gray VIEW CLAIMED PROPERTIES button to begin the claims process.  I just recently received a $100 check for an old refund from a cancelled insurance policy!

If you have any trouble with the process, call our offices:  Battle Creek 269-968-6101 or Marshall 269-781-8966 and an agent would be happy to help you through it.

March 6, 2019 - Mineral Rights

9/4/2019
Mineral Rights 3/6/2019


Today an agent had a question about mineral rights. Her buyer was purchasing two parcels of land that they intended to build on.  According to prior deeds, when the current owners split a much larger parcel into smaller parcels to sell, they reserved the mineral rights on all of the parcels.

Mineral Rights are the right to extract minerals from the soil or the right to receive payment for the extraction of minerals.

Minerals may be many things, but generally refer to gas, oil, coal, metals or non-metal minerals.

When you purchase property from someone, you don't automatically purchase the mineral rights with it.  Some land owners will retain the mineral rights in a sale if they feel there might be a future chance to collect on the extraction of oil, gas or other minerals.  Large landowners who sell small parcels off of their land reserve the rights so that they can use them on the remaining acreage and avoid sharing profits.

The reserve of minerals rights should be listed on the deed.  But, just because a seller doesn't list on the deed that they are reserving mineral rights, doesn't mean the buyer is getting them.  The current seller may have bought the property without the mineral rights and never owned them in the first place.

Most buyers are not too concerned about mineral rights especially if they are buying a house on a lot that is 1 acre or less as they don't intend to mine for minerals on the property.

Mineral rights can become a concern on larger tracts of land when the buyer may have had plans in the future for drilling or mining.

If you are buying land, be sure to ask your agent about the mineral rights and read your title policy carefully.

For more information on mineral rights, go to michigan.gov/deq and search "mineral rights", or reach out to your favorite RE/MAX agent

January 2019 - Setting Small Acheivable Goals

9/4/2019
Set VERY small goals that you can actually achieve 12/27/2018

As the year end approaches, once again, we find ourselves thinking about the many BIG changes we need to make in 2019 to be more productive, to make more money, to be more organized, to serve more, etc.

After reading the book, "One Small Step Can Change Your Life - The Kaizen Way", by Robert Maurer, PhD, I have decided to make only a couple very tiny changes toward these ends.

For years I have been preaching to agents to "under-promise and over-deliver" while all the while over-promising to myself with grand resolutions in January that are painfully under-delivered in December.

This year, I will practice what I preach.  Here are some examples of small changes that would be almost impossible not to meet, but could make major changes to your income:

  • Instead of setting a goal to implement a sweeping post-closing follow-up plan, commit to telling each client at each closing, "Thank you so much for your business. Would you be willing to give my name to your friends?"

  • Instead of implementing a complete time-blocking system - promise yourself that you'll call each active seller on Tuesday and give them a 1 minute update.  Do the same thing for all active buyers on Thursday.

  • Instead of trying to double your income this year, make a commitment to put $20 out of each closing into a savings account and then transfer the total into a retirement account at the end of the year.

  • Instead of trying to pick up new buyers and sellers, make a commitment to reach out to one prior client per week and have a conversation about their life.

Wouldn't you rather get to the end of the year and realize that you accomplished all of your goals and maybe even exceeded them?  Isn't it better to make a few small changes than to be paralyzed by big daunting changes?


I would love to hear your ideas of tiny little changes you could make this year for a better 2019.  Please comment on our Facebook page
and use the hashtag #tinygoals.
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