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Dot Your I's and Cross Your T's

July 21 2013

Don't forget the details! Time to double check your contracts and prepare your clients for the multiple offer market we are well into in many parts of the country. Another "back to basics" Monday, but the message is important. Also, don't forget to check out my post on ESIGN and Digital Signatures!

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Dot your Is and cross your Ts. I've had a lot of transactional issues in the last few weeks that could've been avoided if agents were double-checking and making sure that everything was a fully signed and executory--not executable--contract.

One thing that was suggested by one of the folks that I work with--my friend, Brian--said "Let's start looking at each others' contracts." Fine, perfect. So, we're doing that. It always helps to have a second set of eyes because we miss something, whether in our contract it's the loan-to-value percentage, or maybe we have the wrong inclusions. It's very important.

Recently, I had to deal with a situation where a transaction had gone forward without the check being delivered. An inspection was done, repairs were made, and all these other things. Two days before it was supposed to close the seller decided they weren't selling. Guess what? Somebody didn't dot their Is and cross their Ts, so that's what happened--the client didn't get their house.

Anyway, lots of multiple offers out there--it is that kind of a market. I don't know that the media has caught up to that yet, so consumers, of course, are doubting us. So make sure you show your clients the market history. Go to your MLS if you can and show what's gone pending, tell them about what's going on. I've just had clients in a situation with five offers and they were $20,000 over. What are you going to do?

Pull an escalation addendum or an escalation clause out of your back pocket. This is how you play the game of poker. Your client knows what their highest and best is going to be. Fine, make the regular offer. What I have is a multi-use option on an escalation addendum. So what that does is basically let my client say, "Here's my top dollar. You may use this escalation addendum as many times as necessary--$100 dollars or $1 over any other offer up until X--that's the drop-off, that's the top point."

A seller doesn't have to use it, but I haven't had a situation where a seller hasn't accepted it. The difference is that they have to show you the first page or the pages related to the other offer to prove that they actually had that price. So if you think about it as a game of poker, you're calling someone's bluff. But, as I told a consumer recently, there's nobody in this world who's going to tell you that there's another offer on a property unless there really is because that's a double-edged sword. The buyer could go running the other direction or they might decide to go highest and best. Some people don't want to get into bidding wars. Some don't like it, they're uncomfortable with it, they'll walk away. So be it.

You've got to set the expectation with the consumer of what this market is like, especially with the rates going up just a little bit.

Dot your Is, cross your Ts, have a strategy in place, prepare your client.

For more from Maya, see her contributor page or visit her blog at mayaREguru.commayaREguru.com.

Stay tuned next week for more from Maya!