8 Common Mistakes When Selling Direct to a Developer
1. Your neighbor next door or across the street sold to a developer 18 months ago. You call your neighbor friends for a phone number, and in no time, you sign an agreement to sell without contacting an agent, other interested parties or other developers.
2. You become very attracted to the words "fast close," "as is," "all cash," "no commissions" and "no closing costs," but you end up selling for a lower net dollar than you would have if you had gone to a competitive open market.
3. You become very attracted to the words "We will assume your tenant"; "Your neighbors won't even know"; "no signs"; "no open houses"; "no lookie-loos"; and "Stay an extra 3 months for free."
4. You accept an offer with the words "nominee" or "assignee" written on the purchase agreement next to the purchaser's name. This is often a sneaky way for a middleman scam buyer to assign the sale without closing first at a higher price, the difference going into his pocket, not yours.
5. You accept an offer with contingencies and a floating closing date. You find out later the buyer is trying to line up investors and make arrangements on your time, and at the last minute, the buyer either pulls out of the deal, losing nothing, or tries to significantly renegotiate the price.
6. You accept an offer from a developer subject to conditions, such as receiving a zoning change, obtaining adjacent parcels or obtaining a variance of some sort. You are likely tied up and ultimately may be giving the buyer a reason to renegotiate.
7. You give a buyer a long due-diligence period and suddenly find the buyer asking for extensions or concessions.
8. You answer a note in your mailbox or a letter in the mail from a total stranger who claims to be qualified by showing you an old bank statement or a bank statement from another individual.
The best way to avoid regret is to take your time, use common sense and have any offer you receive reviewed by someone who has your best interest in mind. Never accept a proposal without putting the offering out to the open market or to a minimum of three to five developers first, to benefit from multiple offers and the obvious elements of competition. To discuss further, please call me.
First-Time Buyers Need a Lot of Care
If you are a first-time buyer, you are already totally consumed by the online availability of homes for sale. After spending several days online, it's easy to feel like an expert with so much information at your fingertips. Agents are so willing to respond quickly, and some are even willing to kick back money from their commission for a commitment from you to work with a total stranger. It's so easy to think, "I can do this all by myself." You can go online and see virtual tours, drone photos and virtual staging, and even set up appointments by a click here and a click there.
Think now about the negotiating process; the disclosures; running an analysis for value; dealing with the choice of loan programs; the appraisal; requesting contingencies; dealing with dates and time periods; physical inspections; requesting repairs on negotiating credits; retrofit issue; home protection insurance plans; seller rent-backs; walk-through inspections; loan documents; seller nonperformance issues; changes in market conditions; locking in an interest rate; removing loan pre-funding conditions; mold issues; or other issues that require additional bids and investigations, vendor referrals and remodel cost analysis.
Are you prepared to do this all yourself? Did you consider all of these issues when you said, "I'll just shop online and find someone to do the paperwork and is willing to offer the best kickback"? Think twice before making the wrong choice.
For more information, please call Ron Wynn at 310-963-9944, or email him at Ron@RonWynn.com. To find out more about Ron and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.
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