Andrew Wetzel's Musings

April 24, 2021

My Buyer’s Offer Did Not Get Accepted. What Can They Do? Part 2 of 4: The Search

Whether you are starting the process of buying a home, actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is part 2 of 4, The Search.  This is a broad topic with no “one size fits all” answers.  My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.  How a buyer and their agent conduct “the search” will help determine the outcome.  Is the buyer convinced that they are aware of every house that is a potential match?

As I discussed in part one, Planning and Preparation, I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  Once you have hired an agent, spoken to a lender to determine your financial comfort level and thought about your “needs” and “wants”, you are ready to move forward.  There is no guarantee of success but working on those three items can be a real asset later.  All you can do is put yourself in the best position to compete.  The search then becomes the focus.

If you have not already set up a search, now is the time.  If you already have one set up, I suggest you re-evaluate it.  Your search criteria may change so I suggest that you keep your agent informed so that they know what you are looking for.  You may even have more than one search set up.  My point is that you and your agent should be searching for the same properties for you to consider.  Otherwise, you may miss an opportunity.

For many buyers, the initial search results can be overwhelming:  do not get frustrated or complacent with the number of possibilities or how to evaluate them.  You will likely find that many are not real matches so do not think that a high number of search results guarantees accuracy or ensures success.  Some of the houses on the list may already be under contract or close to it:  you are not the only one seeing the information.  On the other hand, there are probably houses you might like that do not appear in your search results.   I will cover this further in part 4 but will tell you that any search results are only as good as the information a listing agent uploads and the criteria a buyer or their agent uses.  This is why searching on your own can be deceiving.

If there are only a few houses in your search results, you can wait to see if any house sales fall through and what houses come on the market.  Or, you can revisit your comfort level or your wants and needs to try to expand your options.  Your time frame and patience will determine what you do.  If there are many houses, you may want to consider adding to your search criteria or prioritizing the list before starting any showings.  Again, do not take comfort in thinking you have many options.  In either case, do not feel pressured into pursuing the best of a number of bad choices.  Buying a house is a major life decision.

Buyers need to stay on top of new and updated property listings.  Again, you are not the only one getting this information.  Where and how frequently you get information are things to consider.  You need to decide which houses to visit unless you are willing to make an offer “sight unseen”.  Showings add a potential new task to the list and it frustrates some buyers.  Let me explain what I mean.

I have shown buyers just one house while I have shown a few buyers as many as 20 or so houses during one tour.  I have found that showing a buyer about 5 houses makes a good tour if there are that many to see.  This allows buyers to take their time and remember what they saw.  A tour should not be a race to get done.  After the initial search results, unless a buyer makes a major change to their criteria, you may only see a house or two on any given tour and that is fine.  Waiting until you have more to see only allows other buyers to get there first.

If there are 5 or fewer houses in your search results, we should try to see them all.  Of course some may already be under contract or our schedule may conflict with an owner’s which can create an issue if you really like one we see but you want to wait to see one or more we couldn’t get in to see.  What do you do?  If you wait, the one you like may be sold to another buyer and you may find that any you waited to see were not right for you.

Suppose there are 10 houses in your search results.  We could try to see them all but let’s assume that we need to go out twice.  If a buyer has prioritized their list from “best to worst”, they may have eliminated some and we can start looking at the best.  Then, if they see something they like during our first tour, they may be able to commit to making an offer knowing that the remaining houses did not measure up to what we saw.  In slower markets you may be able to see a house a second time.  You may want to compare two or more or have someone whose opinion you value take a look.  In hot markets, especially with low inventory, there is little time to waste.

How buyers prioritize their list is subjective but technology has made it easier.  The MLS and Internet allow more pictures and longer descriptions than in the past.  That being said, some agents use far too many pictures while others upload no pictures at all or only a few.  Some delay uploading pictures:  do you wait to see them?  Many listings have pictures of low quality but at least a buyer gets to see more than they could years ago.  The MLS and Internet can really help with eliminating houses instead of wasting your time and effort.  Every day you spend looking at houses that you don’t like could let another buyer get one you would have liked.  Buying Real Estate can be very competitive.  It can be like shopping on Christmas Eve for that new toy.

If there is time, especially if we will need to go out several times to see all of the options, I encourage buyers to drive by houses first so they can prioritize where to start showings.  This is especially true if the pictures or description are lacking.  The initial search results tend to offer the most possibilities which means more drive time than may be needed later.  Future results will likely be fewer in number making this easier.  Some buyers just want to get inside and question why they should take the time to drive by.  When you buy a house, you are buying the neighborhood and a lifestyle.  I have had many sellers tell me they wish they had spent more time looking to see if a better option were available.  Some just wished they had bought a different house.  Their houses tended to be harder to sell and provided lower equity than others they might have bought.

Driving through neighborhoods on your way to see houses on your list will help you learn more about different areas and your potential neighbors, especially if you are looking in unfamiliar areas.  In addition to gathering information, you may even see a “For Sale” sign on a house not yet listed.  I have had buyers add or eliminate areas to their searches based solely only on their driving through neighborhoods.  The better informed and more comfortable a buyer is, that goes back to planning and preparation, the better off they will be when they commit to making an offer.  Hesitation and indecision are not good, especially when there is competition.  Driving by houses is a great way to prioritize the list.  Some buyers may need to consider compromising between the best area and the nicest house.  You can change or update a house but the neighborhood is what it is.

Ideally, when a buyer finds a house they really like, if they have done the planning and preparation and are satisfied with how we have searched for options for them to consider, they will feel more comfortable making an offer.  They may learn something later that affects their decision which is why we have contingencies like property inspections.  Looking online is not the same as walking through a house and, unless you are a contractor, you won’t have a complete understanding of a house after a showing.  Again, this is not retail.  The process has several steps, allowing buyers and sellers opportunities to change their mind.  If there is doubt when making an offer, it can get magnified later.

As I mentioned earlier, house sales fall through putting some houses back on the market and new listings will appear.   Perhaps a price reduction makes a house an option that was not there before.  A buyer can wait, hoping or expecting something better to come along.  Maybe it does; maybe it doesn’t.  If a sale falls through, what happened?  Is there an inspection report available or was there a financing issue?  In general, how is the market evolving during your search?  Are prices rising, stable or falling?  What is the trend in the interest rate?  Any of these can add pressure, especially if you are not completely comfortable with what we are doing.  There is a lot that goes into buying Real Estate!

The simple fact is that there are many variables when it comes to identifying houses to consider buying and how to react to the information you have.  Some are controllable; some are not.  The challenge may seem endless and the “fun” aspect can evaporate.  All any buyer can do is put themselves in the best possible situation to identify and react to any choices they have.  They may or may not have a lot of time to see a house or decide whether to make an offer.  They should not assume they will have a second chance to reconsider how interested they are.

Any buyer can readily get a lot of the data and information from numerous sources but most need a professional to provide the knowledge and insight required to navigate the entire process.  When is it time to stop and make a decision?  Once you think you have identified the BEST house for you, how do you get to own it while protecting yourself if something goes wrong?  In part 3 I will discuss The Offer.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

Delaware County PA March 2021 Residential Housing Market Update

Tri-County Suburban REALTORS and Showing Time have released their March 2021 Local Market Insight report for single family homes in Delaware County Pennsylvania.  The report uses Bright MLS statistics.  If you would like more information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my web site, http://AndrewWetzel.com.  I am only a phone call, an email or a text away!  I respond promptly to all inquiries.

Many areas continue to be affected by the pandemic and resulting economic impact.  As always, your experience may differ depending on your location and how you have been personally affected.  As I always say, the decision whether and when to sell or buy Real Estate is a personal one influenced by a number of lifestyle factors and external variables.  The pandemic typifies that.  Some have not been deterred causing a frenzied sellers’ market while others have decided to delay their plans to sell or buy.

The report compares current year-to-date results to one-year ago, same time period.  It only covers three months and crosses over from pre-pandemic to pandemic time frames so it is not “apples-to-apples”.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary greatly from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate market any more than there is a national weather forecast so, whether you may be thinking about selling or buying, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market as well as provide you with the knowledge and insight to help you decide what works best for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are stale.  This is especially true if you are relying on Internet valuation models which use recorded data rather than up-to-date Bright MLS information.  Even then, while a sale may be reported as having settled or closed recently, the real question is when was the offer negotiated?  Typically, sales can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated.  Up-to-date information, even if not perfect, is important!

As far as the statistics, please remember that these numbers include a variety of single-family homes throughout the County.  There were 811 new listings in March 2021 compared to 667 in March 2020, an increase of 21.6%.  YTD 2021 shows 1882 new listings compared to 1941 in 2020, a decrease of 3.0%.  The 5-year March average is 859.  There were 444 active listings in March 2021 compared to 848 in March 2020 with a 5-year average of 1337.  Low inventory levels continue to affect the market:  the “Months of Supply: is down 62% as compared to last year.  There were 518 closed sales in March 2021 compared to 486 in March 2020, an increase of 6.6% with a 5-year average of 498.  The median selling price was $256,000 in March 2021 compared to $229,900 in March 2020, an increase of 11.4% with a 5-year average of $214,370.

What effect did the large decrease in new listings have on the market statistics?  It created some anxiety resulting in multiple offers, perhaps well over asking price, and buyers taking other actions to make their offers more competitive.  These include buying “sight unseen” and/ or waiving inspections.  The result was a huge increase in selling prices along with a large decrease in the Days on the Market (DOM) which dropped from 43 to 27 and the “Sold to List Price” ratio which rose from 96.8% to 99.5%.  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Do we really have an inventory problem or pent-up demand?  I think we have both and it remains to be seen what happens in the long run.  I expect more sellers will take advantage of the market, even if buying is not an option and they decide to rent to take advantage of current selling prices.   How many buyers can this market continue to generate?  For better or worse, at some point the market will normalize which means two things.  First, many sellers may regret not taking advantage of the market.  Second, activity will slow as we exhaust the number of buyers, many of whom decided to buy early.  That is what has happened in the past.

On the other hand, some buyers may come to regret a hasty decision to get a property under contract at “all costs”.  Buying “sight unseen”, especially without inspections comes with a risk.  Sellers and their agents need to consider how to manage such offers as they may have appraisal issues and/ or be more likely to result in buyer remorse after the buyer gets to learn more.  Given the  expense and complexity of a typical Real Estate purchase, buyers and sellers need to fully understand what they are doing and what can go wrong.  Even with our property disclosure law in PA, many sellers either do not know about underlying issues with their properties or forget to disclose them.  Whatever your feelings about property inspections, they can provide important information to a buyer.  Getting a contract signed is only the first step to completing a Real Estate sale.

What about the properties that did not sellMany came off the market and still remain off the market.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  While buying activity has generally been strong, some sellers are reluctant to allow showings or may have issues holding them back.  Given the statistics, are people making an informed decision or reacting to what they “think” is happening in their local market?  A brief conversation may be very helpful if you have any questions about selling or buying.

Anyone thinking about selling or buying needs to understand their local market and decide how to react to it.  The effects of buying and selling remain for years as does inaction.  These are important decisions and likely require the knowledge and insight that an experienced, trained and educated professional can provide.

I tell my clients that I cannot guarantee that their house will sell if it is on the market but am fairly certain that it won’t if they keep it off the market.  Anyone trying to sell now may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

No matter how good the market may appear, every house will not sell.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”, whatever that means today.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their local market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a property was available to look at or purchase.  Some buyers may make an attractive offer just to control the process only to have remorse later as inspection results are revealed or they see another property they prefer.

Regardless of the amount of inventory, some buyers may not be willing to look at houses priced high compared to the rest of the market:  why try to negotiate a price down when other similar properties are available at more competitive prices or others offer more for the same price?  Many sellers open to negotiating their price will never get the chance.  I will be happy to discuss specifics with you.

Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment unless you are looking to fix and flip it or planning to move within a short period of time.  There are always opportunities out there.  As with the stock market, it is very difficult if not impossible to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  Getting started is easy once you take action.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  Please do not wait for what you think is a better or the best time to start.  Buyers look all year long and can only see and buy properties that are available to see.  If you need to buy in order to sell, let’s have that conversation.  Now may be the best time to start planning.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

April 16, 2021

When Should You Reduce Your Asking Price?

That depends.  Depends on what?  There are several things to consider.  Let me discuss two.

First, pricing is an art and not a science.  No matter what data and information went into determining your asking price, the price is an educated guess at best.  Is it realistic or hopeful?  If there is little or no information to rely on, it might just be a shot in the dark.  Either way, what would convince you to consider lowering it?  Some sellers think a reduction is the same as a loss when it might well be the difference between selling or not.

I suggest that a seller give this some thought at the beginning of the market process.  Their thinking may change but waiting to consider how to react to the market when a house is on the market can be stressful and cause a seller to miss a great opportunity.  Some sellers measure success by showings.  However, a lack of showings may the result of poor or ineffective marketing.  What about a house that gets many showings but no offers?  That is likely a price problem as it suggests that buyers found more for the same price or the same for a lower price.

Second, a listing agent needs to have a discussion about pricing.  The points already mentioned would make a great conversation.  In addition, a market analysis will provide historic information as well as some insight into what is happening now, both of which have a degree of subjectivity and built-in error.  As part of looking at the market and evaluating what the owner is selling, a listing agent needs to know their seller-client’s motivation:  is it time or money?  If the seller is committed to selling sooner rather than later, a price reduction would be more likely to be considered.  Of course, in that instance an asking price might have been aggressive at the start.  If it works, great.  If not, some sellers will think they have already agreed to accept less than the market value.  If they prioritize the amount they receive, they may be reluctant to reduce at all and if they agree, it could take time.  Again, having this discussion early on will save time later and may prevent problems.

Historic sales are just that.  Depending on the time frame you use, they may cross months, seasons and even years.  Even if a property settled yesterday, when was the offer made and negotiated?  It could be weeks or months old and not indicative of the current market.  A look at the pricing for houses under contract, while not providing the number the seller accepted and not being subject to an appraisal, will at least tell you what one buyer found compelling enough to consider.  You may see a trend higher than or lower than the settled pricing.  Of course, any agreed-upon price could be quite different from the then-current asking price and you won’t know that until after settlement.

Depending on the market, I believe that when a new listing hits the active market, it has its greatest chance of attracting interest as there may be more prospects looking at that time than will enter the market in the next few weeks.  It has been my experience that new listings can and should get a flurry of activity quickly and then, if activity or interest has been lacking, the seller has a decision to make.  Generally speaking, activity drops as the supply of buyers reforms, meaning new buyers come on the market, sales fall through or buyers have shopped and are ready to make an offer.

Many think you should give a house a week or two to gain maximum exposure to attract most of the buyers.  That makes sense.  After all, if you are satisfied with the marketing, meaning that agents and buyers will be able to find your property in their search results, a lack of activity generally means that buyers are not interested or they are simply more interested in other properties.  Again, activity is a poor measure if an owner wants a sale.  Showing your house to an endless parade of lookers gets old fast.

If buyers can find houses similar to yours for a lower price, you either need to meet the competition or wait until the competition has been sold.  If they can find houses priced like yours that offer them more, assuming you will not make improvements, you need to re-price to offset what you do not have.  Some sellers will consider making upgrades but that is risky and most will cost you more than they are worth.

The bottom line is that pricing is a tool.  It is used to connect buyers to properties.  However, Real Estate is NOT retail:  the price is generally considered negotiable.  The market helps determine whether the asking price is a “floor” or a “ceiling”.  Ideally, a price should take into account your location, the features and the condition while being competitive with other properties.  Owners determine their asking price and buyers determine the value.  If you believe that the price is the reason people aren’t coming or aren’t making offers, you can re-position your house with similar competition.

The real question is how much do you reduce?  If you are getting showings but not getting any offers or only low offers, the situation may not be as dire and perhaps your agent can contact the buyer agents who have visited to see if there is a price that would work.  A good buyer agent will initiate contact if their buyer-client has interest but not at your asking price.  A good listing agent won’t wait to see if you get any feedback. 

I believe that your first price reduction should be substantial and that you need to review the competition, stay engaged as the market changes and select a price that makes sense from a competitive standpoint and a technology standpoint.  Some houses need more than one reduction either because a house is simply priced too high even after being reduced or because the market changes.  When you pick your price, you pick YOUR competition.  There is no magic to it:  a reduction either changes “your luck” or it doesn’t and needs to be looked at again.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

Is it a Better Time to Sell or to Buy Real Estate in Spring 2021?

As is usual, my best answer is it depends!  Can the answer be a “tie”?  I would like to think that when Real Estate is sold that both people “won” but Real Estate is a competitive process where two people have opposite if not adversarial motives.  No buyer ever said I want to give the seller as much money as possible unless, of course, they know there is competition or they intend to use their successful offer as leverage to negotiate something to their benefit later such as inspection results.  No seller ever said they wanted to give a buyer the lowest price unless they wanted to dump the property or intended to make no repairs.  Most sales happen between those extremes.  Getting to settlement is another matter.

The market today, Spring 2021, is as competitive as I have ever seen and I have been doing this since 1996.  The years from 2003 through 2008 were fairly hectic but that was a true “bubble” fueled by government manipulation to increase home ownership that relied on loose lending standards which financially destroyed many of the buyers it was supposed to help.  Sadly, many who bought were not really qualified to manage the finances and, frankly, many flippers took advantage of the market and sold bad rehabs.  I could go on but my main point is that this is NOT what is happening today.

Today is very different.  The market has been created by a combination of perpetually low interest rates, extremely low inventory and pent-up demand delayed by the pandemic.  Lending standards appear to be solid so buyers are better situated today, at least financially.  That being said, this cannot go on forever.  Interest rates have been rising slightly but there is plenty of money to lend.

Two significant variables are likely to change.  One is the number of buyers.  If this is anything like the “bubble years”, buyers have jumped off and over the proverbial fence and decided to buy earlier than they had been planning.  Sooner or later the market runs low or out of qualified buyers and I hope that does not result in easing lending standards.  The other variable is the inventory level.  My best guess is that the number of properties for sale will rise once whatever is holding owners back changes.  Just as the number of buyers was inflated by a number of factors, I believe that owners have been held back by a number of factors.  These diverging trends produced what we are seeing today.

Real Estate depends on “supply and demand”:  buyers and sellers are on opposite ends of a proverbial see-saw.  The supply of one often exceeds the supply of the other causing prices to rise and fall.  Competition drives prices up; excess inventory drives them down.  External factors like interest rates, the general economy and other variables like a pandemic play a vital role.  So back to the original  question, is it a better time to sell or to buy?  Let me break it down this way.

I believe that the group that has or had the most to gain in the current environment are the owners of properties which they were not selling to buy something else.  I call these “extra” properties.  Whether they are vacant, used for investment or the owners were willing to go into a rental or some other arrangement, those owners only had to focus on getting the most they could for their property.  What they achieve is determined by their understanding of what is going on and their risk tolerance.  Did they sell too soon or did they wait too long?  Many will regret missing the opportunity to “cash in”.

While I value home ownership and embrace the concept of owning compared to renting, I fear that the group who may have the most to lose are the buyers who jumped in without really thinking long-term.  It is nice to talk about building equity and owning a home for almost the same monthly payment as your rent but home ownership is more complicated than numbers.  A home purchase decision can easily become regrettable if one or more of the following happens:  you spend your savings for a down payment and suffer a loss where your savings are needed, you buy without doing the legwork to see if a neighborhood or house fits your lifestyle (having to resell in the short term can be costly), you made an offer you come to regret (did you buy “sight unseen” or waive inspections to make your offer more competitive?).  Long term, Real Estate tends to be a great investment.  However, the short term is more volatile.  Either way, you have to live somewhere but Real Estate is an investment and subject to risk.

Don’t get me wrong, private home ownership is one of the many blessings we have in America.  However, with any opportunity comes responsibility.  Buying Real Estate is an emotional decision justified with logic.  “Normal” markets generally allow a buyer time to really consider whether it is the right time for them to buy and whether a specific house really fits their “wants” and “needs”.  You may have time for a second showing or to have family and friends take a look.  Sadly, I have worked with many sellers who told me they wish they had bought another house.  I have heard many stories of how they made their decision, what they wish they had done differently and how their decision impacted their life.  Where you live affects the quality of your life.  A poor decision can rob you of equity.

The current market does not generally allow a lot of time to think and ponder, let alone compare your options.  It may compel buyers to make unwise offers they may come to regret.  I have heard many buyers respond to being told that a seller accepted another offer by saying “it wasn’t meant to be”.  That is a great response, especially if they meant it.  I have also seen people react as if their world were crumbling.  I try to prepare my clients as best I can and hope that they are ready for the process.  Planning to buy Real Estate requires a serious commitment and can be like a full-time job.

If the last frenzy was any indication, I suspect that 10 to 15 years from now, some of today’s buyers may find that their house is worth about what they paid, no more and hopefully no less.  At least that means that they “broke even”.  You have to live somewhere.  After 10 to 15 years of paying rent you walk away with nothing and, chances are, your rent has gone up dramatically.

On the other hand, unless they are forced to sell, I don’t see sellers reminiscing about a house they sold, wishing they could get it back.  Cars have that effect but not houses.  That is not to say that all sellers succeed.  Their motivation or sense of urgency may cause them to accept an offer that was not the best.  On the other hand, patience is a virtue but it can be expensive.  Contingencies within an offer can cost them money even if the price seemed nice.  A seller needs to be informed about the market just as buyers do.  Are they more focused on the money they achieve or how long it takes to sell?

There is one more group to consider:  the seller who needs or wants to sell one house to buy their “next home”.  In this market, they may be facing an uphill battle especially if they have competition.  That type of contingency can really impact the process.  It also impacts prospective buyers for their house.  I see listing contracts expire or get canceled because a seller wants a buyer to give them time to find a house or they want a short-term rent-back.  Any of that may be a concern for buyers.

If a seller is buying their “next home”, aside from how they manage an agreement with their buyer or the seller of the home they like, they need to compare their market with that of their “next home”.  It may be a great time to sell, convincing them that they may never have another chance to get what this market offers.  However, what will their “next home” cost them?  One of the ironies I have seen a number of times is the owner who expects top dollar for their home and thinks they can get their “next home” cheap.  There is a serious disconnect there.  On the other hand, while the two processes have to be coordinated, I have seen sellers who really needed to reduce their asking price but refused to even consider it.  If a reduction makes buying impossible I understand that but ego can get in the way.  If the seller’s property’s market value is flat or declining and the cost of buying is rising, we have a conflict.  Every day, week or month that passes is costing them more than they are gaining.  Some sellers are willing to rent so that they can sell and, ideally, buy later when prices stabilize, whatever that means.

Buying or selling as a single, disconnected act is one thing.  No one can predict what tomorrow will bring and decisions always look clearer in hindsight.  Tying a sale to a purchase or a purchase to a sale takes the game from checkers to chess and expands the thinking.  The possibilities can be endless!  All you can do is get the best information you can, decide what you want and need to accomplish and know when to make a move or when to hold back.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

My Buyer’s Offer Did Not Get Accepted.  What Can They Do? Part 1 of 4: Planning and Preparation

Whether you are thinking about buying a home, are actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is a broad topic with no “one size fits all” answers.  I strongly believe that planning and preparation will put you in the best position to identify houses that may interest you and, when you find one, maximize your opportunity to own it.  There are many variables in the home buying process, some of which you can’t control.  I encourage serious buyers to control what they can.

My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

Let me start with the premise that a buyer (or perhaps you) made an offer and it was rejected.  If a buyer makes what they think is a reasonable offer and the seller does not accept it, they should have no regrets.  Easy for me to say.  If yours was the only offer, I would assume that you had a chance to negotiate but that you could not reach a mutually beneficial solution.  If you were competing with other buyers, only one offer could win.  Did the buyer have the right expectations about the process and how it might go?  Could or should their agent or the listing agent or the seller have done anything differently?

If the seller was given an opportunity to review all offers and was properly informed of any possible interest that existed and they accepted what they thought was the best offer, there may be no valid  reason to complain about the outcome.  Every signed agreement does not close so you may get another chance, if you want one, but do not assume you will.  In fact, depending on the type of Real Estate market, you may want to assume that you will not have a chance to change your initial offer.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.

I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  The goal is avoid being teased or distracted.  They may not even be consciously thinking about buying a house.  If they are, most buyers want to jump right in.  Frankly, looking at houses and imagining “what if” is the fun part although that can “get old” really fast especially after an offer has been rejected or terminated.  Easier said than done but if they see something they like and want to schedule an appointment or make an offer without really being prepared, the “process” can be frustrating, especially if a better prepared buyer likes the same house. 

So what are the three things?  They are all part of the “planning and preparation” that any serious house hunting requires.  If you fail to plan and prepare, you need to be prepared to fail.  Is failure an option?  What constitutes failure anyway and what happens next?

The order may vary but here is what I suggest doing:

  1. Hire an agent.  You want an experienced, trained and educated agent to protect and promote your interest throughout the process.  Sellers have an agent, so should you.  Hiring an agent includes related topics like understanding agency representation, contracts and the agreement of sale.  We do more than open doors and write offers.  You can find a lot of information about buying and selling Real Estate on my website AndrewWetzel.com.  Having agents you will not hire show you houses can be a problem, especially if you find the right house with the wrong agent.  I understand that committing to one agent, especially at the beginning of the process, seems challenging.  Tell us your concerns and let’s have a conversation.
  2. Get financially pre-qualified with a local, reputable lender.  Local and reputable are important.  I believe that only a live person can provide the information and service you will need.  Be wary of online offers, advertisements and “teaser” rates.  They may be “too good to be true”.  The interest rate is important but what are the total costs?  Do NOT overlook the quality of the service.  A serious buyer needs to know how much they can borrow, what it will cost them and, in some cases, whether they can actually get a loan.  Many buyers learn that they cannot get financing or that they need to do some work to get a loan.  It will be very frustrating if you learn either of these after finding the house of your dreams.  Some buyers may want to get a larger loan so they can buy a house they really like rather than settling for less.  Once you learn how much you can borrow, you need to determine your comfort level in terms of the monthly payment and your out-of-pocket expenses.  Knowing your comfort level will help determine the price range to search.  The type of market will complicate this:  is a seller’s asking price the “floor” or the “ceiling” for negotiating?
  3. Determine your “needs” and “wants”.  What is absolutely NON-negotiable?  Locations, schools, the number of bedrooms and bathrooms and other factors are important for most buyers.  “Quality of life” issues require some investigating and that can take time.  What would be nice to have?  Needs and wants add cost to a purchase.  Some buyers need to consider “trade-offs” or reducing their expectations while others can add to their “wish list”.  Your search criteria may change but you need a starting point to focus your attention.

Once you have managed these three, you can set up a search, start reviewing the possibilities and take action to own your “dream house”.  If there is competition, there is little time to waste getting into houses or making a decision.  Of course, if you have already started looking, you may have a search set up.  Now would be a great time to re-evaluate the search criteria. 

In part two, I’ll discuss the search for your first or “next home”.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

April 5, 2021

My New Audio Course is LIVE on Listenable.io

I received an email from the staff at Listenable.  They provide an online platform that offers “powerful, bite-sized audio courses authored by well‑loved experts”.  They said:  “Congratulations on launching your first course on Listenable!  We’re excited to have you on board!  We sincerely appreciate the work you’ve done to create such an outstanding course and we are proud to have you on the Listenable team.”

I am happy and excited to add my content to their impressive lineup of courses.  The title of my course is “The Basics of Selling Residential Real Estate”.  Why did I create it?

My passion for Real Estate led to my writing blogs and recording podcasts.  Someone at Listenable heard my podcasts and contacted me to ask if I would be interested in creating an audio course for them.  The subject matter was up to me and this topic seemed an obvious choice.

As I have learned over the course of my career as well as through my involvement in various roles within the Real Estate community, Real Estate is not rocket science by any means although many make it far more complicated than necessary.  The process of selling or buying residential Real Estate generally involves a number of basic steps that must be completed in order to succeed.  Hiring a professional should increase your chances for success.  Our experience, training and education can provide the knowledge and insight typically needed to navigate the home selling or buying process.

My course consists of 13 lessons averaging about 8 minutes each.  I break the steps of selling Real Estate down into “the basics” and explain what we do and why we do it.  My goal is to take some of the mystery out of what people think we do and clarify it so that the typical listener will be more comfortable with the process.  I discuss the entire selling process from hiring an agent through settlement/ closing.  I hope that you will listen to it and recommend my course to people you know.

Here are the lessons:  The “Five Steps to Selling Real Estate”; Hiring an Agent; Preparing Your House for Sale; Marketing Your House to Sell; Pricing Your House to Sell; The Listing Contract; Your House is on the “Active” Market; Congratulations, You Have an Offer; Contingencies; Closing the Sale.  I included two “bonus” lessons:  Andrew’s Time-Tested Real Estate One Liners and The Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS.

Here is a direct link:  https://listenable.io/web/courses/380/the-basics-of-selling-residential-real-estate/   To enjoy14 free days of Listenable, use this link:  https://listenable.io/?rf=CMO1BEOO

I have an extensive catalog of blogs and podcasts posted on several websites including my primary site AndrewWetzel.com.  If you haven’t followed them, I encourage you to give them a try.  If you have read and listened to my material, thank you.  I will keep adding new content.

Best wishes and thank you for listening and reading!  As always, I am a phone call, email or text away if you have any questions.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same.

Should a Buyer Agent Represent Two Buyers Bidding on the Same House?

This is a question that most agents and buyers never really have to think about.  How often does this happen?  I like to raise the question in my ethics classes for these very reasons.  Once people do think about it, it can generate a lively theoretical discussion which generates emotion and opinion.  I am not sure there is a perfect answer but I think it has so many aspects to it that it is worth discussing.  Better now than in an ethics hearing.  Let me start with some disclaimers.

First, this is my opinion and not intended as legal advice.  Second, I am in PA where this practice is not considered “dual agency”.  In fact, our contracts specifically allow this to happen which I will discuss later in further detail.  However, it is considered “dual agency” in some states which makes me wonder why, how can that be:  it either is or it is not “dual agency”.  How can it be looked at differently in different states?  If it were considered “dual agency”, which is not allowed in some states, that would at least provide some direction as to how to handle it and remove my concerns.  Third, my intent is not to interfere with any existing business relationships although I would respectfully suggest that buyers should know if this situation might come up so that they can make an informed decision before entering into a business relationship that might not work for them.  In PA many agents refuse to act as “dual agents”.  I wonder how they view this topic?

I am an analytical thinker so I will look at this from several perspectives.  Let’s start with some contract information, meaning some language that a potential buyer-client should know before hiring an agent to represent them.  This assumes that a buyer hires an agent and actually discusses their respective roles.  Of course, if an agent does not follow our rules and regulations, a member of the public may not be as well informed as they should be.  While well over 90% of the public searches online for Real Estate listings and information, I do not believe that most really understand agency representation.  We do more than open doors and write contracts.  Do prospective buyers know what to ask agents they might hire?  Are they resistant when an agent tries to do their job by discussing contracts and agency disclosures?  I am going to talk about this from the perspective of being a REALTOR, not just a licensee.  This means I will refer to out REALTOR Code of Ethics as well as our state’s “standard forms”.

Article 1 of our REALTOR Code of Ethics requires that we protect and promote the interests of our clients above all else.  While we are required to have a business relationship contract with someone to represent them as our client, rather than as our customer, that is not always the case and not having a contract is not an excuse when a problem arises.  What is important is what a buyer thinks of our relationship.  Our conduct may convey a perception that they are our client when they are technically not.  That poses potential problems and it likely means that they know less than they would have had they seen the proper forms.  This Article brings up the topic of fiduciary duties which I will discuss later.  These are owed to a client but not to a customer.

Article 2 states that “REALTORS shall avoid … concealment of pertinent facts relating to the property or transaction ….  REALTORS shall not, however, be obligated to …  disclose facts which are confidential”.  This Article brings up the topic of confidentiality which I will also discuss later.

In PA we have a form called a “Consumer Notice” that all licensees are required to present and explain to any member of the public before having a “substantive” discussion with them, referring to their “needs and wants”, and entering into a business relationship.  It describes the different relationships available as well as reviewing a number of agency/ representation-related issues. 

Under “Buyer Agent”, it says that we “work exclusively for the buyer”, that we “must act in the buyer’s best interest” “and must keep all confidential information, confidential”.  I mentioned a relationship called “dual agency”.  This occurs when an agent or Broker “works for both the seller and the buyer” in the same sale.  As stated in our Code of Ethics, this relationship requires “full disclosure to and with the informed consent of both parties”, meaning in writing, before acting in that capacity.

The Consumer Notice also includes several other important details.  All agents “must disclose, as soon as practicable, all conflicts of interest”.  A dual agent may not take any action that is detrimental to either party.  In a typical seller/ buyer scenario that is perhaps best explained by saying that a dual agent cannot disclose how low a seller will go or how high a buyer will go in their efforts to sign an agreement of sale or negotiate details later such as inspection issues.

Based on what I have presented so far, my non-legal but educated opinion is that representing two buyer-clients bidding on the same house seems like “dual agency” to me.  Again, I do not understand how some states see it that way while others, including PA, do not but I think that there is no harm in treating it as “dual agency”.  I have never heard a client complain that their agent over-protected their interests, have you?

Now let’s discuss “fiduciary duties”.  Working with a customer, meaning there is no contract, has requirements.  Working for a client expands that list as there is agency representation and six fiduciary duties.  The list includes:  obeying a client’s lawful instructions, being loyal to their purpose or goal, disclosing what you know that could help them succeed, keeping their information confidential, being accountable for keeping them on track with what they need to do throughout the process and providing reasonable care and diligence in your representation to protect them.  There is much more to these duties but imagine representing two buyers with similar intentions.

In a “dual agency” relationship two of these fiduciary duties are compromised or negated:  you cannot disclose to one party what the other party wants kept confidential.  This does not refer to “material facts” that must be disclosed if known.  It does refer to things that could hurt someone’s negotiating strategy.  A critical question is what is meant by confidential?

A listing agent can share details about an offer presented to them by one agent with another agent.  Many agents and consumers do not know that.  This is another topic that gets my classes going!  Absent a previously signed “confidentiality agreement”, such as is often used in commercial listings, the details of an offer are not inherently private and can be “shopped” to get a better offer.  Of course, this does not include the buyer’s name or personal information.

That being said, some people are very private and consider things “confidential” that others may not.  Learning this is part of getting to know your client.  Do you see how this can impact having more than one buyer client interested in the same property?

In PA we have two different buyer representation contracts, one is “exclusive” while the other is “non-exclusive”, the difference being whether a buyer works solely with one agent or has more than one agent assisting them.  That alone can present issues but is not my point here.  Unfortunately, some agents do not present either form to their prospective clients or they do so at the point of creating an offer on a property.  Better late than never!  I know that some clients are resistant to signing contracts or they may be willing to be a customer rather than committing to one Broker/ agent and getting the benefits of full representation.  However, there is important information they need to know and an executed contract proves they were at least informed of this information.

In both the exclusive and the non-exclusive contracts, there is the same language regarding issues related to conflicts with two clients.  They both say that a “Broker may not take action that is inconsistent with a buyer’s interest”.  They both say that an agent “may show the same properties to other buyers and may represent those buyers in attempts to purchase the same property that a buyer wishes to purchase” and that doing this is not a “breach of duty”.  They both say that “It is a conflict of interest when a Broker … cannot put a buyer’s interest before any other”.  “Unless permitted by a buyer or required by law, a Broker will not knowingly reveal or use any confidential information of a buyer”.  However, it does not specify what the word “confidential” mean.  It does talk about not treating the “existence, terms or conditions of any offer as confidential unless there is a confidentiality agreement” but the sentence ends with “between a Buyer and the seller”.  I guess the word “exclusive” only works one way, meaning that the buyer is restricted to one agent but the agent is not restricted to one buyer.

Then both contracts go on to say that “it is a conflict of interest when a Broker or licensee … cannot put a buyer’s interest before any other”.  The section concludes by saying that if there is a “conflict of interest, the broker will notify the Buyer in a timely manner”.  How does all of this sound to you?

These are not guidelines or suggestions, they are rules.  How do you accept all of these rules and properly manage the home searches of two buyers who want to pursue the same house?  Of course, if two or more buyers are looking in different areas and price ranges this may never be an issue.  But buyer’s plans change.  Many buyers end up buying a house vastly different from what they said they wanted.

I am not an attorney but these sections seem to conflict, don’t they?  Wouldn’t having more than one buyer interested in making an offer on the same house be about as conflicted as it gets?  While the rules say that an agent must mention having a conflict, it does not elaborate.  Do I need to do more than say “I have a conflict”?  Can I say what the conflict is?  Here is the best part:  to whom do I mention the conflict and what is the remedy?  Do I tell both buyers?  Can I just end my relationship with one of the buyers and keep working for the other?

That raises an interesting question:  who is allowed to terminate a contract?  While I could have another agent take over with one buyer, I think that poses a problem as I would still know information about that buyer that I would not normally know and that could harm them.  In fact, when agents encounter problems with seller/ buyer dual agency, I suggest that they completely remove themselves from both client relationships to avoid any perception of problems with disclosure or confidentiality.

As with all Real Estate paperwork, the buyer contracts do encourage the prospective client to seek the services of an appropriate professional, such as an attorney.  While that makes sense, is there time to do that?  If a buyer has done as I suggest, all of this would have been taken care of before I showed them any houses.  Conflicts that arise after that may not be able to be undone and it could impact a buyer’s opportunity to make an offer and get it signed.

Let’s drill down further to the real issue.  Aside from whether one agent can truly best represent the separate but conflicting interests of two different buyers, remember that only one buyer gets the house, does the agent have the right to tell each buyer-client about the other’s interest in the same house?  Does doing that conflict with the fiduciary duties owed to each buyer-client?  What is the goal?

I have had agents tell me that they want to be “fair”.  Really?  Who gets to decide what is “fair”?  What does that even mean?  The REALTOR Code of Ethics used to have that word in Article 1:  it said that, while we had a duty to protect and promote the best interests of our clients, we had a duty to treat people fairly.  If you are a sports fan, what is fair?  Is a pitch a ball or strike?  Did a referee miss a penalty or make a bad call?  The word, however nice it sounds, is confusing because it is unclear.  Do any two people, especially those working on the same sale, define the term the same?  Again, only one buyer can win.  Perhaps neither buyer will succeed but that does not mean that all is well.  Anyway, the Code of Ethics was amended years ago to say that we have to treat people honestly.  I’ll leave that alone but telling two buyer clients about the interest of the other is not a measure of honesty to me.

Years ago I had an agent in my office show one of my listings.  They brought me an offer which was negotiated, accepted and signed.  When I called to tell them that it was signed by my seller-client they made a very unusual request of me:  they asked if I would enter my name in the MLS as the buyer’s agent.  I asked why and was told that this agent had sent the same property listing information to four different clients but only one seized the opportunity and quickly got the house under agreement.  The agent was concerned that the other three would blame them for not telling them what had happened.  I commended this agent for what they did!  I can’t imagine what might have happened had they shown the house to the other clients and written and negotiated multiple offers on the same house.

The question then becomes what happens next?  Let me explore a couple possibilities.

  • If neither buyer gets the house, there may have been no harm done but the question of whether our actions are ethical or professional is based on our conduct and not the outcome.  “No harm, no foul” is not the measure.  Did our actions possibly cause both buyers to lose a sale?
  • Suppose one of your two buyers wins.  Did they improve their offer because they knew they had competition?  If so, did they spend or do more than they really had to and might have done if they did not know?  Did the other buyer hold back or drop out because they felt they could not win?  Some people want to compete, even if they overdo it, while others will not compete even if they might succeed.  Saying that both buyers knew that other agents had interested buyers does not change my opinion.

To conclude, there is a lot to what seems like a simple question.  Ultimately, it “appears” that our forms and contracts allow us to represent more than one buyer interested in buying the same house but I am not sure there is sufficient guidance as far as what to do when this situation comes up.  I have disclosure and confidentiality concerns.  I think each client should be allowed to make that decision.  I would guess that both would like to know about the other even if wanting their own interest kept quiet.  Suppose one cares and the other doesn’t?  Is it fair for one to know but not the other?  There is that word again, “fair”.  Trying to work this out once the situation comes up is too late. 

Let me add two thoughts.  First, this is not the same as a listing agent sharing the details of your client’s offer with another agent or having them let you know that other agents have made offers on a property that interests one or more of your buyer clients.  You must tell them that information.  However, you have no fiduciary duty to the listing agent, the seller or any other agent’s buyer clients.

My second thought is more of a question.  Suppose you write and present an offer for one buyer-client and it is rejected or countered without leading to having a signed agreement of sale.  Do you have the right or authority to tell another buyer-client the details?  While telling them what did not work with one buyer-client seems to make sense, perhaps that offer would work now if no one else has made a better offer.  Seller expectations do change.  Does telling another buyer how the seller countered an offer accomplish anything?  There is no guarantee that the seller would still be interested in that amount with a different buyer-client and, if the market is competitive, your current buyer client may only get one chance to make an offer.  Suppose you tell them a number and they lose.  An offer is more than the price and two buyers offering the same number may have very different terms and conditions.  Suppose the buyer-client whose offer failed decides to make another offer?

I am not trying to scare anyone but, if nothing else, I hope that people who read or listen to this will better understand how Real Estate works.  It is not retail where everyone is able to buy a product for a known price and there is ample supply.  Again, we do so much more than open doors and write contracts.  Real Estate requires experience, training and education.  It is not for everyone and it can get more complicated than it needs to be at any given moment.  Life would be easy if sellers would just accept their asking price or if buyers would just offer the asking price when they make an offer.  Of course, both of those statements are unrealistic if not ridiculous.  If they were true, you wouldn’t need a professional!  This is EXACTLY why I end my blogs and podcasts like this:

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

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