Buyer Tips Archives - Page 10 of 25

Backup offers – a good idea?

August 29, 2021 By Tayson Rockefeller Leave a Comment

This is a contentious one amongst real estate agents. Before I get into that thought process, let’s go over the mechanics.

You’ve listed your home, you had a number of good showings and two great offers. Of course, you can only choose one. The other buyer presents a backup offer with a “backup addendum” accompanying the offer. It’s a short agreement, and it basically states that your agent will give them notice if the first buyer terminates. Things will then commence in accordance with the terms of their offer as soon as they receive that notice. If they have a deadline for an inspection, to deposit earnest money or provide a pre-approval letter, the clock won’t start ticking until that notice of the first position offer terminating is provided. Essentially things automatically roll right into the second offer.

Usually, a buyer’s agent is always an advocate for a backup offer because the buyer can terminate the backup offer up until the notice is given, at any time. Basically, there’s no risk. This is exactly why some agents agree that accepting a backup offer is a detriment to a seller. Why not just go back to the market and potentially receive more offers?

When acting as listing agents, we sometimes get used to increasing markets so it’s easy to make this advice. However, (in my view) there are still a few good reasons to consider a backup offer if a buyer wants to present one.

1) As agents, we try, but don’t always take a seller’s emotions into account like we should. I can tell you that listing a home in today’s competitive market is exhausting. We sometimes field dozens (even hundreds) of calls, texts, emails, social media notifications, the list goes on. It also doesn’t matter the day of the week or the time of the day, and we juggle a huge number of showings and showing requests. With all of the craziness, we sometimes forget that the seller oftentimes endures some of the same challenges. Keeping the house clean, ready for showings, juggling kids, dogs, life. In addition, making decisions can be tough. Good agents don’t tell you what your decision should be (sometimes we try to inform sellers of bad ones), they lay out the options, pros and cons in an organized fashion, answer questions and provide advice. The point is, a backup offer can create a calm environment and segue into a new transaction without going through all of the trouble again.

2) There’s an old saying that your first offer is always your best offer. However, in today’s crazy market it is not unusual for buyers to fire off quick offers with even quicker response times before the “bidding war” begins. In this context I’m not suggesting the very first offer is the best offer but rather the first group of offers is usually your best group of offers – if that makes sense. The more time that homes spend on the market, whether they are available or have an accepted contract, the more buyers assume there is room to negotiate. There are exceptions to every rule and that would include the points above. Of late, we have seen home values rise even during the time of which homes are in contract, but that seems to be subsiding. To bring this full circle to the market today, things appear to be leveling off (not dropping) in this new plateau appears to be a baseline for home and land prices, at least for now. This is all the more reason to consider these points, and to seek good real estate advice with these fast moving and ever evolving markets.

Changing the way we negotiate

May 3, 2021 By Tayson Rockefeller Leave a Comment

I distinctly recall hearing stories from customers in different areas of the country before the recent real estate boom changed the real estate world, particularly in rural areas. Stories about negotiations pushing home prices 10% over the asking price seemed pretty crazy to me, but in some cases, here we are.

It’s important to look at the date on this article, this information is likely going to be accurate only for a few months, but it’s good to earmark where things have been. I’ve got articles from 2014 with much different advice.

Price: Asking prices and offer amounts seem to change weekly, if not daily in this market. With the lack of public sale information and the unknown as to how far things are selling over the asking price this one’s hard to nail down without the advice of an agent that is in the thick of current trends. I have seen sale prices anywhere from $5,000 to 15% over the asking price depending on the sector of the market. We will usually see significant increases over asking on condos and townhouses, but that does not preclude any other type of Real Estate depending on the initial asking price. I should also note that some things are still selling under, it’s all about the tactic of the seller.

Finance and Appraisal: This one has been incredibly tough for buyers looking to get into the market. It’s frustrating and disheartening when a finance contingency is holding up the ability to compete with cash buyers. As a result, we’ve seen buyers agree to waive appraisal contingencies, assuming they have the cash balance to cover the difference. Waiving appraisal contingency and providing a pre-qualification letter with 5% down is difficult, but we haven’t seen too many problems with appraisals. Appraisers seem to be in the know with real estate prices. However, cash is still king, and hard to compete with as mentioned.

Inspection: Fortunately we haven’t seen a shift in our market where buyers have been (or need to) waving inspection contingencies in order to compete. Deposits that are immediately non-refundable are rare, and personally, I hope it stays that way. These are big investments and buyers need the opportunity to vet properties inside and out. This market also produces a number of site-unseen offers (often there is no choice with the quick timing of things) and I believe it would be unreasonable for sellers to expect buyers to waive contingencies altogether as a result.

There are a handful of other negotiating tips and tricks like escalation clauses and the like, and there’s a time and place for different tactics to achieve maximum results. I know I sound like a scumbag real estate agent when I say this, but as mentioned above, it’s absolutely paramount to have a local agent that has a close ear to the ground.

It will be fun to come back to this article 2 years from now!

The Importance of Performance

April 5, 2021 By Tayson Rockefeller Leave a Comment

For those of you who haven’t witnessed this crazy real estate market, things are booming. The market is changing almost daily, and the value of a home a week ago probably isn’t the same as it is today.

With these crazy markets, it’s important to follow through and meet all of the obligations of any agreement that you have, primarily as a Buyer. The purchase agreements we often use are provided by the Idaho Realtors association. These contracts have some boilerplate, key deadlines and obligations for Buyers to meet in most circumstances. In addition, there may be a number of built-in contingencies or Buyer obligations beyond the traditional ones. I will outline a few of the most common examples below.

– Earnest Money Delivery: Depending on how your contract is written, it may be stated that the earnest money is already delivered, or shall be delivered within a certain time frame. As a Buyer, it is your responsibility to make absolutely certain that you deliver these funds in accordance with what the agreement states. For example, if the agreement states that the earnest money shall be delivered in the form of a personal check within three business days of acceptance to title company x, make sure it’s there. If the earnest money is not received in a timely manner, the Seller can elect to terminate the agreement.

– Proof of Funds or Loan Approval: Another common example is the requirement to deliver proof of funds and/or a loan approval letter within a certain amount of time. The agreements are typically written in a way that provides the Seller a few days to cancel the agreement if you don’t deliver these items by the deadline.

– Closing/Loan Funding: This is a big one. It is important to stay in close communication with your lender and remind them the importance of closing on time. Like everyone else, loan officers are busy and it’s easy to set a file aside and pick it up a couple of days too late. Make sure everyone involved in the transaction from real estate professionals to title companies knows exactly who the loan contact is, and try to set up reminders for appraisals and periodic check-ins. Other obligations and contingencies exist, so it’s important to have your real estate representative prepare a timeline with key dates and deadlines. Make sure you pay close attention to the difference between a business day and the calendar day, and understand that business days end at 5:00 Mountain Time. Sellers have obligations too, but in a Seller’s market it usually doesn’t benefit a buyer as much to try to act on these deadlines.

What You Need to Know About Buying Land!

January 31, 2021 By Tayson Rockefeller Leave a Comment

Though the market has changed throughout my career, the same questions always seem to come up. Here are a list of common Questions and Answers:

Q: Is there a time frame in which I need to build?

A: The short answer is, not that I’m aware of. I have seen special circumstances, however. For example, in the unlikely chance that a homeowners association might allow someone to build a guest house before a main house, they might require a home to be constructed within a certain time frame. The valley has a pretty poor track record of actually following through with these types of agreements, and most homeowners associations have caught on.

Q: Do I need to do anything with the land such as maintain it?

A: In general, not much. Most subdivisions have an active homeowners association. The HOA will typically take care of the road maintenance, fire pond testing, and other similar maintenance requirements and tasks. The most common exception is with respect to noxious weeds. While many developments have an agreement with a farmer for the open space or unused areas of the development, some do not. If you receive notice from the county, you may be required to hire a company to spray the weeds such as musk thistle. Even if you don’t, they will, and can assess your tax bill. Fortunately, the cost of weed spraying is usually pretty affordable.

Q: What are the holding costs like?

A: Here again, usually, pretty affordable. There are two primary categories of expense including property taxes and homeowners association dues with the occasional special assessment or local improvement district (LID) fee. The first two are fairly common and obviously vary depending on the location and amount of amenities within the subdivision. Fortunately, most websites (including ours) display property taxes and HOA dues on the listing detail page. Some properties take advantage of an agriculture tax rate in the event the property is being used for ag purposes (and is over 5 acres), in which case the taxes can be extremely negligible. Other fees such as the aforementioned special assessment, LID or other fees are rare, but can come about for road maintenance, utility improvements or other projects usually related to infrastructure.

Q: What can I do with the property before I build?

A: This depends, but the biggest determining factor is whether or not the property is in a subdivision with covenants and restrictions. A big one that comes up is whether or not you can camp on your property. While some associations may allow it, I would think it should be generally assumed that they do not. For properties outside of a subdivision there are still some regulations. I have written several articles that can be found on my blog website related to what you can do with your property, what it’s like to be part of a homeowner’s association in the area, and more.

Q: Tiny Homes, Rentals, Campers?

A: Here again, the subdivision layer is the first step to research. Most subdivisions have a home size requirement in the range of 1,800 square feet, but I have seen them as small as 0 to 600 SqFt and is large as 2,600 SqFt. HOAs can also restrict short-term rentals via the covenants and restrictions. Though the county’s position is subject to change, smaller homes are generally allowed so long as they are permitted and built in accordance with the current building codes. RVs and campers are always a contentious subject, so make sure to follow up with the county or city on that one. To summarize, It’s always a good idea to find a real estate professional that understands the local market. I’ve heard a number of stories about Buyers that didn’t have the resources, tools or professional insight to make an informed purchase and later discovered that the property or the rights associated with the property were not what was expected. We’ve been selling real estate for a long time in the area and have great resources available to our customers when it comes to information about developments, requirements and subdivision documents and would love to help!

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