My House Is Not Selling And I Want To Buy Now!
This is the dilemma I heard from a Broker I was talking with recently who was frustrated with a seller. The seller has an overpriced condo in an area which is not easily accessible from a main street. The seller wants open houses and newspaper ads to ger her condo sold so she can move on to a bigger home. This sounded to me like a familiar problem.
The broker had given the seller the statistics of the sales in the complex and the prices. The seller still did not want to reduce the price of the house.
I shared with the broker the four key factors that sell a home:
As we talked about the property the answer came down to PRICE, as it usually does.
I asked the broker if she had heard of "conditional marketing" and she had not. I then thought this concept might be a great tool for any agent and seller looking to sell now and take advantage of some of the incredible values currently available.
The concept of "conditional marketing" includes listing the property with a contingency clause in the listing which is also included in the acceptance of any offer submitted on the property. It should remove all risk to a seller in a possible move up situation and puts them in the drivers seat in the transaction.
The process to offer a conditional sale:
- The price of the home is reduced to a price which will attract a buyer to make an offer.
- The listing agreement has a clause which makes the sale conditional. Anyone reading this should seek the approval of the Broker or an attorney to make sure you are complying with state and company regulations.
- Possible listing clause to be approved by Broker: "This listing is expressly conditional upon the seller contracting and closing on a replacement home. Closing and possession must coincide and be concurrent or the listing contract is null and void."
- When an offer comes in on the property a"conditional clause" must also be included in the acceptance.
- Possible counter offer clause to be approved by Broker: "This offer is accepted expressly conditional upon the seller contracting on a new home within 10 business days of acceptance of this counter offer. Closing and possession must coincide and be concurrent of the offer is null and void and all earnest money returned to the buyer. Purchaser is aware if for any reason the seller does not have a simultaneous closing arranged on the replacement home this contract will be null and void and all earnest money will be returned to the buyer."
The listing contingency should make a seller feel more comfortable in knowing they are NOT committing to sell their home if they have not found and can close on a replacement property with terms and conditions that makes the transaction work for them.
A good way to explain to the seller the complete control they have over the transaction is to show them a pen and let them know they do not have to sign anything that does not meet their approval with the contingency.
One easy way of thinking about the equity in a home is a pile of money. When looking to move from one house to the next house it is like moving one pile of assets to the next pile. In today's market there could be a seller willing to contribute to the sale of another house in order to put the transaction together. The seller might pay closing costs allowed by law. The seller might do repairs needed to remedy a code violation. The seller might pay additional commission to facilitate the sale on the other end. There are hundreds of ways a transaction can be put together when you have a willing seller and a willing buyer. This concept can work with out of state moves too. It just takes coordination with the lisitng agent and the buyer's agent in the new state.
I had a seller say recently they would NOT pay a buyers closing costs but they would reduce the price $5,000.00 They explained to me it was the "principle" of paying the buyers closing costs they did not agree with. As I sat down and discussed the net proceeds I showed them that the $5,000 in the form or a price reduction would net them the same amount as paying $5,000.00 in buyers closing costs (plus the approx $30.00 in commission). I explained the pile of money concept and that it was the same pile just how it was used and the name it was called. Showing them the bottom line helped them see it was the same net effect. When a seller really wants to sell it is wise to look at all the different ways to put a transaction together looking at the transaction as a whole which is a sum of the parts.
Re-framing the way we think and understanding in today's market we sometimes have to be creative in our real estate transactions. At the same time we have to stay within the lending guidelines and seller contribution regulations.
Communication is the key to the success in trying something different.
Ask the seller:
- Do you really want to sell?
- Are you willing to take a "conditional marketing" approach to a sale?
- Do you understand that you will NOT have to sell if you cannot find a replacement home at price and terms you are happy with?
- Do you realize that the contract will protect you so you don't have to sell if ANYTHING goes wrong with the replace home contract?
- Do you want to reduce the price of the house so we can get in the market now with a conditional offer acceptance on your home and go shopping for your dream home?
The discretionary seller has nothing to lose but time with a "conditional marketing" plan.
The agent has to be willing to take on this conditional type of marketing and work with the seller as a team. I know the plans works, it takes time, communication, patience and trust from all the parties. This type of transaction creates client relationships for life as everyone is involved in putting the real estate dream together in a win/win/win situation.
"Conditional Marketing" can be the key to new listings. An agent can suggest to a seller fearful of today's market the concept of listing the property with the contingency clause and see what happens. Investing a little time and money could result in the perfect buy.