"Opening doors for buyers and sellers"
for Buyers about Sellers
We have three types of Sellers in our market:
Willing – sellers who agree to showings, will look at offers, yet are holding out for the highest offer. These sellers are reluctant to counter offers unless they are within range of an acceptable price.
Ready – sellers who are priced to sell (reflecting the 30% dip in value); will seriously consider offers and will definitely counter offers; may offer owner- financing or other creative ideas for moving the property; will negotiate.
Anxious – sellers who “have to sell” … financial need is urgent. They are priced near or at break-even point … or they may be in a short-sale situation. They have little room to negotiate.
How do you know which Seller is which? A good, experienced broker becomes invaluable at this point. Often times, an experienced broker knows the motivation before the property is shown. Once a buyer shows an interest, a good broker becomes a guide to understanding which type of Seller owns the property. Remember, now is a great time to be a Buyer.
Please contact me today if you are ready, willing or anxious.
The first step in staging is to de-clutter. The next is putting the property in top-notch condition. The third is to improve upon décor and accessories. Most often using a staging professional is time and money well-spent.
Properties in the most pristine condition command higher prices. With so many properties competing for buyers, the condition of a property matters!
Remember the adage: You only have one chance to make a first impression. Paint, clean, trim, de-clutter (de-clutter some more). Fix, refinish, clean. Add light. Update where possible. All closets and shelves should be mostly empty to show space.
The period between the signing of the contract and the satisfaction of all contingencies is called the “Due Diligence Period”.
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Showings, Offers and Negotiations
All showings will be scheduled through the Aspen Snowmass showings desk. Typically, you will hear directly from either Penney or Rachel, but sometimes it will be the person in charge of the showings desk at our main office. If humanely possible (and appropriate) either Penney or Rachel will accompany the showings.
Showing feedback will be given to you with a few days of the showing. In my experience, showing feedback within the first 24-hours is not as meaningful as it is if the buyer and the broker have a few days to sort out the properties they have seen and prioritize accordingly.
The objective in obtaining feedback is to overcome objections. Therefore, I do not ask showing brokers to fill out a form or send an email response. I prefer to speak with them directly; thus giving the opportunity to overcome an objection. You will hear all the positives and the negatives … and we will address what can be done about them together.
If the property is priced correctly, the first offer is often the best offer. If it is received within the first weeks of the listing, it means the pricing is competitive. Not that the price is too low. The job of the real estate broker is to represent the value of the property accurately, based on objective criteria. For a seller, this means gauging the property correctly at the time of listing. For the buyer, this means the ability to gauge the property prior to submitting an offer.
If an offer is not received within the initial phase of the listing period, low offers (or perhaps no offers) will be submitted until there’s a price reduction. The initial phase of a listing period in a resort market may be determined by the season in which it is listed. Some properties are a better sale in the winter; some are better in the summer. In my view, all offers submitted in writing should be countered. If the offer is not countered, nothing will happen and no negotiations will take place.
When a negotiation begins, remember to focus on the goal. Do not get caught up in small details (like the mirror or outdoor furniture). Using the principles of reciprocity and objective criteria keep the process moving along. Avoid “drawing a line in the sand”. Give-and-take allows for a deal to be made and a closing to occur.
Communication is the key to any successful negotiation. If a negotiation is stalled, information is lacking to one or both of the properties. As long as information is being exchanged and communication remains healthy, the opportunity exists to influence the outcome or to change tactics.
Each person (including buyers, sellers, lawyers and real estate brokers) has their own negotiating style. To be successful, one must pay attention and listen carefully. Listen to what is said as well as how it is communicated. To be understood, you may have to adapt your style of negotiation to accommodate the person with whom you are negotiating.
Splitting the difference works if based on objective criteria. The problem with the splitting the difference is each side has a tendency to keep track of how much (or how many times) each party came up or came down. The justification for making a move becomes something other than reaching a deal at market value. Therefore, I try to avoid it until the last move in a negotiation.
Most residential transactions are complex. If at all possible, explore the objectives of the various parties. It shows respect and understanding. Consider all possibilities. If all the possibilities are laid out initially, accepting some and rejecting others is easier and more likely.
Pressure tactics do not work. The negotiations become an endurance game with either the buyer or seller giving up because they have given away more than they feel they were entitled to. At the first opportunity to negate the agreement or renegotiate, they will do so.
The secrets for listing and marketing a property that lead to a sale
Competitively price properties sell. Overpriced properties languish on the market. Take time to figure out fair market value and price accordingly. List at the highest price which is supported by objective criteria. Namely, relevant market data and comparable sales.
Fair Market Value
Market value is NOT based on what a seller wants to net; investment cost or mortgage balance; or what the buyer can afford. Market value is the amount a buyer is willing to pay and a seller is willing to accept under normal conditions, without duress.
Price high to see if a buyer will bite. Forget it! The theory costs time and money … more days on the market, more price reductions.
“Room for negotiation” theory
Price high to pad for negotiating room. A popular approach to pricing, however, it can be as detrimental as the “test-the-market” theory. Competitively priced properties attract buyers and simulate competition. They also attract more acceptable offers.
List price vs. sales price
The ratio of list price vs. sales price is calculated once the property sells. However, part of the relevant market data in pricing is to consider this ratio in the neighborhood of your property. The ratio is only meaningful as it relates to the last price reduction. Properties are more likely to sell when in this range.
Price per Square Foot
Price per Square foot is an easy number to calculate. Simply divide the price by the number of square feet. Since this is an easy calculation, people may rely on it more than they should. It is relevant when comparing comparable properties. A relevant comparison would be comparing price per square foot of Gants. A not-so-relevant comparison would be the price per square foot of a core downtown condominium with a ranch on 250 acres. The publish statements about price per square foot in Aspen are over-rated in my opinion.
Days-on-market are measured from the day the property goes on the market until the day it closes. Because we are a resort market with active winter and summer seasons and less-active shoulder seasons, days on market can be a year or more. Days-on-market determine absorption rates and may help with pricing. For example, the West End typically has 25+/- listings and approximately the same number of sales each year. Thus days-on-market indicate a 1-year absorption rate. If a property does not sell within the typical time for its location, it may be a price problem.
With the internet, the buyer pool is global in the minds of real estate professionals and sellers. However, the tendency is to overestimate the number of buyers for any one property. This is particularly true if the property offers development opportunities. Dealing with the Building and Zoning codes of Aspen and Pitkin County are a deterrent to many sophisticated real estate buyers.
Sequence of Marketing
Photography; enter in MLS; place sign; Open houses; a series of initial showings. Pay close attention to feedback on condition of property and pricing. Now is the time to make adjustments if necessary.
Under Contract... Now What?
The step-by-step to get you through the transaction
Most important: READ THE CONTRACT.
The contract is organized in an understandable manner with headings for each section. For example: If you are looking for a date/deadline go to Section 3: Dates and Deadlines. Within the chart, the corresponding paragraph in the contract is identified in the column titled: Reference.
A calendar will be created with the actual date and day specified in Section 3 of the contract. (Reminder: days are counted from MEC … Mutual Execution of Contract.) The number of days is converted to an actual calendar. Typically, the calendar is created by the Listing Agent, with agreement from the Selling Agent and attorneys (if needed.)
Ordered by the listing agent on behalf of the seller. The Title Commitment not only verifies the seller has the right to sell the property, but also shows all liens and encumbrances (mortgages, etc.) as well as Requirements needed to close and Exceptions to title insurance.
Unless otherwise stipulated, the Seller completes the Seller’s Property Disclosure. It is completed to the “best of the Seller’s knowledge.”
Other disclosures include the Source of Water Addendum. Both the Seller and the Real Estate Brokers are obligated to disclose any known faults with the property.
Survey is typically paid for by the Seller. The survey is ordered by the listing agent. It cannot be completed until the Surveyor has a copy of the Title Commitment.
The Buyer has a right to inspect the property. The property is inspected by a licensed home inspection agent. The Inspection Report goes to the Buyer. The Buyer may also request inspection by a professional from one of the various trades (plumber, electrician, engineer, etc.) If the Buyer intends a remodel, other inspections may also be requested such as an architect, building contractor, interior designer. This process may involve multiple visits to the property. All will take place prior to the Inspection Objection Deadline. The Buyer may attend the inspection. However, I do not recommend that the Seller be there. The Seller may open the property, but should leave during the inspection to avoid any appearance of conflict or influence.
Per Section 10.2 of the contract, the Seller is selling the property “as is”. In practice, this section of the contract is not followed as literally as one might expect. The reason is simple, the Buyer has the right to inspect and object. The Inspection Objection often includes the Inspection Report (which contains photos) so that the Seller can see the items of concern. The Buyer will either ask to have all the items repaired. Or Buyer may ask for a credit at closing for the cost of the repairs.
The Seller may reject, agree or counter the Inspection Objection. Because of the Section 10.2 of the contract, Seller may reject the Inspection Objection with the understanding the Buyer may terminate the contract. Because termination is the option, most Sellers will try to reach a resolution. Resolutions come in many different forms. For example, if the Buyer asks for items to be repaired, the Seller may agree to fix the simplest items, then gets bids for the larger repairs and offer a credit at closing. In some cases, the Buyer provides those estimates (and Sellers verify them). Sometimes the resolution comes as an adjustment in the purchase price.
Inspection Objection when a loan is involved
In today’s lending climate, Inspection Objections become a red flag. Because objections may be interpreted as a renegotiation of the purchase price, lenders are wary. A lender may ask for a new appraisal (to include the objections) or they may deny the loan. The solution depends on the recommendation of the Buyer’s lender.
Title Commitment Objection
If the Buyer objects to the title commitment, the Seller needs advice from the Title Company and/or an attorney. Very often the objection comes from a simple mistake and is recognized once the title commitment is received and corrected quickly. Other times, it may be a major problem. It needs to be resolved or closing will not occur.
Survey Objections can usually be resolved. Again, an attorney may be involved. Typical objections have to do with fence or landscape encroachments. Sometimes the improvement is outside the building envelope and variance has to be obtained. Survey objections also need to be resolved prior to closing.
The dates pertaining to the loan are specified in the calendar. The approval occurs after the Loan Application has been submitted and after the appraisal is completed. Sometimes extensions may be requested because Appraisers are very busy or because parts of the loan application are hard to complete … or simply because the Lender requests it.
If a lender is involved, the lender arranges for the appraisal. Neither Buyer or Seller or Real Estate Agent(s) are involved in the selection of the Appraiser. In my experience, none of the parties involved should attend the appraisal inspection.
If an appraisal condition is in the contract and no loan is needed, the Buyer arranges for the appraisal.
An objection occurs when the amount of the appraisal is less than the purchase price. When the Appraiser makes an error that can be verified, lenders have been known to seek an additional appraisal, but not always.
If the Buyer requests the appraisal, the resolution is contained in Section 6.2.1.
The closing occurs after all objections have been resolved and after loan approval has been obtained. Or in others words, after the Due Diligence is satisfied.
Note: Penney’s Pointers is a guide as to what to expect when listing a property and once your property goes under contract. It is not intended to cover all possibilities or circumstances that may occur. It is not intended as legal advice or recommendation on how you or your representatives may decide to proceed. It is simply a guideline.
For sellers and buyers alike, Penney's Pointers are guidelines to walk you through each phase of a transaction. Penney gives you an insider's understanding of the real estate process.
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