Communicate with the Appraiser

This is a challenging time for appraisers to accurately pin-point the value of a property because of the escalating prices.   The Listing Agent and Selling Agent can, and should, provide information to the appraiser to assist him, or her, with their analysis.  Remember however, an appraiser can only include prior closed sales of similar homes based upon location, size, and condition of the property in their analysis.

The Listing Agent and Selling Agent should provide the appraiser with their Comparable Market Analysis (CMA) they’ve provided to the seller to establish the List Price and to the buyer to justify their Offer to Purchase Price.  If there are comparable homes that are currently Pending, and that will close prior to your transaction, the Agent(s) should provide the details of these Pending transactions to the appraiser.  There may be one or more of these transactions that will benefit the appraisers valuation of the home.

Other information to provide the appraiser include; any Seller concessions to the Buyer, the school district the home is in, the proximity to the County line (ie. King vs. Snohomish), the owner occupancy if it’s a condominium building.  Inquire of the appraiser if there is any other information they need.

An appraiser does not need information contained in the Inspection Report or Form 35R (Inspection Response).

If you have comments or questions about this article, please email me at smeyers@kw.com.

If you would like to read other real estate articles I’ve written and published on-line, go to http://www.ourseattlehome.com/my-articles/

Win in a Multiple Offer Situation

In this competitive real estate market with low inventory and buyers willing to remove some of the contingencies in their Offers there are a number of things that the buyer, and their broker, should do to increase their chances of winning.  The objective is to present to the seller with an Offer that allows the buyer the fewest possible ways for the buyer to terminate the Purchase and Sale Agreement and retain their earnest money deposit and, have the seller execute the initial Offer without requesting any changes.

Your broker should be in communication with the broker representing the seller to build rapport and gather the information to write an Offer that stands above all other Offers.  Their effective communication will give the buyer the greatest chance of winning in a multiple offer situation.

The Offer to Purchase should be completed to benefit the seller with everything properly completed including;

a.)The sellers’ choice of title and escrow companies

b.)The perfect closing date for the seller

c.)The earnest money deposit should be as high as possible.

d.)Shorten the time of the Closing Date on the transaction.

e.)Include an escalation clause the seller cannot refuse.  Escalate between $5,000 and $10,000 above all other Offers and, if there’s an All-Cash Offer, include language that doubles the escalation.

f.) Start the Offer to Purchase price above the list price.

g.)The lender should call the listing agent to assure him/her the buyer has been properly qualified

h.)Include a letter from the buyer to the seller.

i.)Consider paying all of the Title and Escrow charges for the seller.

The contingencies the buyer should consider waiving with their initial Offer to Purchase should include;

1.)Inspection Contingency – Perform a pre-inspection of the property with a qualified inspector to become comfortable waiving any additional inspections.  You may also consider a sewer inspection.

2.)Financing Contingency – The buyer should provide enough information to their lender to be fully underwritten for a loan without consideration of the appraisal of the property.  An addendum can be attached requiring permission to have an appraisal inspection.  The buyer will then come to Closing with the difference between the purchase price and the mortgage provided by the lender

3.)Appraisal Contingency – The Offer to Purchase with a financing contingency should include a Form 22AD (additional down payment) stating the buyer agrees to pay a specified dollar amount above a low appraisal if, the appraisal comes in lower than the purchase price.

4.) Resale Certificate – If this is a condominium, review the Resale Certificate and supporting documents with an attorney and if acceptable, waive the Resale Certificate.

5.)Title Contingency – The buyer and their broker can conference call with the title officer prior to submitting their Offer to review the preliminary title documents.

6.)Seller Disclosure Statement – The buyer and broker should review the Disclosure Statement in detail to identify items that may need further investigation.  If none, waive it.

7.)Paragraph W of the Offer to Purchase – Compare the information published on the MLS and additional documents to what you’ve learned during the pre-inspection.  If everything is similar, waive paragraph W.

Another thing that has enticed sellers to accept an Offer is the release earnest money to seller as non-refundable within 24 – 48 hours of reaching mutual acceptance.

Submit the Offer via email with a well written recap of the Offer within the email message and as the first page of the Offer.  Make sure the Offer is well written and all of the pages are in correct order.

If you have comments or questions about this article, please email me at smeyers@kw.com.

If you would like to read other real estate articles I’ve written, go to my web site at www.ourseattlehome.com and click on the “Articles I’ve Written” tab.

Steve Meyers is a Managing Broker at Keller Williams Realty in Seattle, Washington.  He can be reached at (206) 972-3328 or smeyers@kw.com.

Off-Market Transactions

by Steve Meyers

June 23, 2017

Real estate brokers occasionally receive a request from sellers or buyers to simply “write-up” the transfer of real property on our state approved real estate forms.  This can occur between family members, friends and acquaintances, landlords and tenants, for-sale-by-owners, etc.  Unfortunately, simply “writing-up” the transaction on those forms is against Washington State Rules and Regulations and State Supreme Court Rulings.  This can expose the broker, and agency, to significant liability.  Additionally, the agencies Errors and Omissions Insurance may not cover the defense of, or judgement against, the broker or agency. This is considered the unauthorized practice of law.

Only as a continuation of providing “significant or substantial real estate services” to the seller or a buyer can a broker complete the proper forms for the transfer of real property.  “Significant or substantial real estate services” are not clearly defined by the State.  I encourage you to perform several of these services, at a minimum;

  • Prepare a thorough Comparable Market Analysis (CMA) and deliver it to the buyer and/or seller.
  • Encourage and document your recommendation to have a full Home Inspection of the real property. If there is a full Home Inspection, work closely with the buyer and seller to resolve any issues that may be identified.
  • Work with the seller and the Title Company to resolve any issues that come up with the transfer of the title. Conference call with the seller and the Title Officer.
  • On behalf of the seller, confirm with the buyers’ lender that the buyer has been properly pre-approved for the loan.
  • Provide a Net Sale Proceeds Worksheet to the seller and the buyer.
  • Properly complete the NWMLS Form 47 – Seller Representation Agreement (No Marketing – Sale to Identified Buyer).

As the broker involved, you should provide as many services as possible to the seller and/or the buyer to protect yourself and the agency from future liability.

If you have comments or questions about this article, please email me at smeyers@kw.com.

If you would like to read other real estate articles I’ve written, go to my web site at www.ourseattlehome.com and click on the “Articles I’ve Written” tab.

Seller Disclosure Statement

by Steve Meyers

My 29th, 2017

The Seller Disclosure Statement is a document required to be transmitted to buyers in every real estate transaction in the State of Washington, except if a court appoints an executor of an estate, who has no knowledge of the property.

The seller must answer every question on the Seller Disclosure Statement correctly.  If any question is left blank, the document is not complete and the contract is voidable by the buyer up until the Closing of the transaction and, the earnest money may be returned to the buyer.  The seller must not only answer every question but, some of the answers may require detailed explanation of their response.

The Listing Agent is required to review the Seller Disclosure Statement in detail.  The Listing Agent should assure that every question is answered properly.  Questions that need additional comments should be attached to the Seller Disclosure Statement.  If you, as the Listing Agent, knows an answer to be incorrect, you should ask the seller to make the correction.  If the seller refuses, you can allow the document to be released but, you’re required by Washington State Statutes to communicate your concerns to each buyer as soon as possible regarding that issue if it may be a “Material Fact” or “Material Defect” of the property.  “Material Facts” and “Material Defects” are defined in the RCW’s (Revised Codes of Washington).

Disclaimer:  I’m not an attorney or accountant.  I advise you to seek the advice of an attorney and/or an accountant to review and evaluate the Seller Disclosure Statement and provide you with their professional opinion.

If you have any comments or questions about this article, please email me at smeyers@kw.com.

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or smeyers@kw.com.

Dealing with a Low Appraisal

by Steve Meyers

April 26th, 2017

In this period of escalating prices in the Seattle Area along with the low number of transactions, appraisers are sometimes finding it difficult to locate comparable sales to substantiate the escalated price, as a true market value for the lenders.  When an appraisal comes back that is lower than the agreed purchase price the buyer and seller have 4 options.  First, the buyer can pay for a second appraisal that, if it comes in at the purchase price, the lender must agree to accept as the best appraisal (this very rarely happens).  Second, the seller can reduce the purchase price to the appraised value.  Third, the seller and buyer can agree on a price above the appraised value but below the original purchase price and, the buyer brings in the additional cash.  Forth, the seller rejects the appraisal and the buyer must then bring in the additional cash between the appraised value and the agreed purchase price.  If the buyer and seller cannot agree, the buyer can terminate the transaction and receive the Earnest Money back.

One tactic that buyers are currently employing in this market is to submit a Form 22AD with their Offer to Purchase that states the buyer will agree to pay a specific dollar amount above the appraised value, if it comes in below the agreed purchase price.  An example would be the buyer submits a Form 22AD which states they will pay $25,000 above the appraised value, up to the agreed upon purchase price.  This is a win-win for the seller because if the appraised value comes in below the purchase price, the seller knows the buyer will pay $25,000 above the appraised value.  It may still be below the original purchase price but, it locks the buyer into a specific dollar amount.

This may seem like a small matter but, it’s causing a lot of sellers to accept Offers to Purchase with this agreement attached.  I would encourage agents and buyers to utilize this Form 22AD to strengthen their Offers.  Buyers should confirm with their agent and lender they have the additional cash on hand to close the transaction.

If you have any comments or questions about this article, please email me at smeyers@kw.com.

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or smeyers@kw.com.

Escalation Clauses

by Steve Meyers

March 29th, 2017

In this market where buyers are waiving inspections, presenting Offers without financing contingencies and, signing-off on their review of the Re-Sale Certificates without questions (condominiums), we’re also seeing “Escalation Clauses” that increase their Offers far above the List Price.  I attended a presentation of four of the top residential real estate attorneys last week where they unanimously disliked the “Escalation Clause” because it is fraught with potential for errors and miscalculations. There suggestions were to seek the highest and best Offer from the top two buyers based upon the “Escalation Clauses” but, then cross-off the “Escalation Clause” from the Offer and write-in the agreed upon purchase price on line 6 of Form 21 – Residential Real Estate Purchase and Sale Agreement and, have all parties initial the new purchase price.

The attorneys are seeing more and more disputes with the “Escalation Clauses” and recommend eliminating the Form from the Offer to Purchase, if possible.  A couple of suggestions were to present the “Escalation Clause” from the secondary buyer to the agent for the primary buyer to substantiate the higher price for them to submit / change the existing Offer.  Either cross-off the “Escalation Clause” on the front of Form 21 or Form 28 and then insert the new price with initials by all parties.  An alternative would be to submit a Form 34 with the appropriate language or, the Form 36 – Counter Offer.  However, any changes to the initial Offer to Purchase would be considered a Counter-Offer and would allow that buyer to not proceed with their initial Offer to Purchase.

If you have any comments or questions about this article, please email me at smeyers@kw.com.

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or smeyers@kw.com.

Understanding your Resale Certificate

by Steve Meyers

February 27th, 2017

As the seller of a condominium in Washington State, you’re required to supply the buyer with a resale certificate and all supporting documentation shortly after you enter into a purchase and sales agreement with the buyer.  The HOA’s professional management company will produce these documents for you and you’ll sign to attest to their accuracy.

There will be numerous items in the resale certificate which may cause the buyer to terminate the agreement.  It’s best to learn about these items prior to listing your condominium for sale with a real estate agent and disclosing those items in the listing information on the multiple listing service.  Those items will include whether there is a “Rental Cap”, any special assessments, the minutes of the general HOA and specific B of D meetings, the minimum rental period, pet policy, the amount in the capital reserve account, information in the most recent reserve study, delinquent assessments, FHA approvals, controlling interests, assigned parking and storage, etc.

Buyers want to know if there’s a “Rental Cap” in the building in the event they’re transferred with their company to another area or, they seek employment in a different location.  There are many scenarios for how to qualify for renting your unit so you should understand these may limit the number of buyers submitting Offer to Purchase.

The biggest issue with buyers will be the amount of capital reserves and the information in the most recent reserve study.  Buyers want to know of any additional financial obligations they may have if the current capital reserve account will not pay for all of the repairs and maintenance items that come up in the future.  Low HOA Dues may result in a poorly funded capital reserve account and high HOA Dues may indicate there’s a significant financial obligation in the near future.

Recently, VRBO’s (vacation rentals by owners) and AirBnB’s (air bed and breakfasts) have become popular.  Some condominium Declarations, Bylaws and CC&R’s address the minimum rental periods within buildings but, there are some buildings without restrictions.  Surveys have found that short-term rentals in condominium buildings have a negative effect on condominium values and are an overall negative impact to the community of owners.

If you have any comments or questions about this article, please email me at smeyers@kw.com.

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or smeyers@kw.com.



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