In Today’s Market – Mistakes Are More Costly Than Ever

Are you the kind of home buyer who wants to deal directly with the listing agent? Do you believe you’ll get a better deal if there is only ONE agent in the transaction? Have you bought and sold a few homes – and now consider yourself an "experienced" home buyer?

I suggest that even experienced home buyers can make some costly mistakes. Today’s case in point is a new home that I had under contract with a client back in December. The home was originally listed eighteen months earlier for more than $450K, but had been dropped to $385K when we first saw it.

Our contract price – minus closing cost – was a little less than $350K. My client, due to a change in finances, could not complete the transaction… and the home was brought back on the market.

For some unknown reason, the listing agent jacked the price up to $440K – which is quite a shock, since our real estate market has not improved over the last few months. And then it became obvious, as the home went under contract.

By raising the price, the listing agent could "get the buyer a great deal", as there would be lots of room for negotiation.

So I have patiently waited for the listing agent to show the listing as SOLD so I could see what the final sales price was. After several weeks following the proposed closing date, I checked the tax records to find that the home did sell – and sold for $430K.

To make matters worse, the buyers not only overpaid for the property – they put more than $80K down on the purchase… and they still need to sell their existing home (which seems to be overpriced, as well).

I could have saved this buyer more than $70K - which would still be in his bank account – if he had come to me before calling the listing agent.

To recap – the listing agent represents the seller. When you deal with a listing agent without representation – you can lose a great deal of money.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

New GAR Rental Agreement Not Without Some Big Surprises

When most consumers review real estate documents, they assume that the pre-printed language is set in stone – and that everyone must agree to those portions of the agreement or you will have no agreement…. not unlike the Terms of Service you must agree to before using most software or certain websites.

In our last incarnation of the Georgia Association of Realtors Residential Lease Agreement, I find a pre-printed section that defies my best logic. Section 20 states:

Upon 24 hours advance notice to Tenant, Landlord shall have the right Monday through Saturday for 9:00AM to 8:00PM to access Premises of Property to inspect, repair, maintain the same and/or to show the Property to prospective buyers. In the case of emergency, Landlord may enter Premises or Property at any time to protect life and prevent damage to Premises and Property. In addition, during the last ___ days of the term of the Lease, and during any period when Premises is being leased from month to month, Landlord may also place a "for rent" or "for sale" sign in the yard or on the exterior of any dwellling on Property, may install a lockbox and may show Premises to prospective tenants or buyers. In the event a lockbox is installed, Tenant shall secure jeweelry and other valuables and agrees to hold Landlord harmless for any loss thereof. For each occasion where the access rights described above are denied, Tenant shall pay Landlord the sum of $_______ as liquidated damages; it being acknowledged that Landlord shall be damaged by the denial of access, that Landlord’s actual damages are hard to estimate, and the above amount represents a reasonable pre-estimate of Landlord’s damages rather than a penalty.

Since this is in the pre-printed portion of the agreement, it appears to be normal "boilerplate" language that the tenant might presume is applicable to all who rent property.

May I submit to you that it is NOT.

I would never allow a client to agree to this language before they fully understood the ramifications of this section.

First, let me say that I am not an unreasonable person. I understand that the Landlord needs provisions to protect his or her property… but this language can be used to destroy the quiet enjoyment that a tenant should expect to receive when leasing a home.

For example, this provision allows the Landlord to make daily incursions – without limitation – six days a week, eleven hours a day… marching prospective buyers (also known as strangers) through the home.

Keep in mind that the subject property is not the Landlord’s home… it is the Landlord’s HOUSE. It is the Tenant’s HOME.

If the Landlord wishes to market the property and conduct tours of the premises with prospective buyers – then maybe they should look into getting a House Manager, who will keep the property in showing condition and pay a substantially reduced rate of rent for the inconvenience.

A compromise that can help the Landlord sell the property while protecting the Tenant from unreasonable disruptions from quiet enjoyment is by writing language into the lease that provides for showings only to those buyers who have placed the property under contract, subject to an inspection contingency.

I would encourage anyone who is entering into a lease or purchase agreement to seek the advice of an experienced broker or real estate attorney.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.