Sunday, September 27, 2015

When Selling Real Estate in Carolina, Understand Due Diligence

     Almost all real estate contracts written by Realtors in North Carolina have a "due diligence" clause.  This is a clause that states that the buyer has a period of time (fill in the blank) to investigate the property and the transaction.  Then the buyer can decide IN THE BUYER'S SOLE DISCRETION, to proceed with or terminate the contract.

     The buyer pays a fee to the seller called the due diligence fee. This fee is paid to the seller at the time of acceptance of the offer.   How much?  If you are the potential buyer making an offer, a hundred bucks sounds good.  If you are the seller, that means that, if after fill in the blank days, the sellers get to keep the hundred bucks.  During the "due diligence" period, the buyer, IN THE BUYER'S SOLE DISCRETION, could back out on the transaction.

     Let's take a really close look at this.  You have your $300,000 house for sale.  You have a $200,000 mortgage at 5% interest.  Your taxes are $1500 per year.  Your insurance is $800 per year.  Your HOA dues are $600 per year.  Just to make sure the story is interesting, let's assume you have moved out and the house is vacant.  Every day that you own that house costs you money.
Ron Climer can be reached at 828 755 6996 in Hendersonville, N.C.

     How much does it cost you to own that house per day?  Your interest is $27 per day or $821 per month.  Your taxes are $4 per day or $123 per month. Your insurance is $2.20 per day or $65 per month.  Your HOA dues are $1.65 per day or $50 per month. 

     You receive an offer that is acceptable to you with a hundred dollar due diligence fee. If you accept the offer, you get to keep the hundred bucks no matter what.  The due diligence time is thirty days in this contract. The amount of time and the fee is negotiable between the buyer and the seller.  This is the deal we made in this example.  Twenty nine days later, IN THE BUYER'S SOLE DISCRETION, your buyer decides not to buy your house.

     Let's see.  Mr. Seller, You have paid 29 days interest ($783) while your house was not for sale.  You have paid taxes($116) while your house was not for sale.  You have paid insurance ($63) while your house is not for sale.  You have paid HOA dues($47) while your house was not for sale.  You have probably paid water and electricity while your house is not for sale.  It has cost you about $1250 to sit and wait for the. buyer to make a final decision.  Your Realtor has not advertised your house.  Your house has not been for sale in the MLS.  No one has shown your house. Now you are back to square one.   The good news is you get to keep the hundred dollar due diligence fee.    Your $1250 that you have paid on your not for sale house is wasted.  What is the solution?  Get a larger due diligence fee from your buyer.  The amount of the fee is negotiated between buyer and seller.  You can't be mad at the buyer for offering you a hundred dollars due diligence fee.  You can only be mad at yourself for not demanding enough due diligence fee to cover your cost of ownership while the buyer is having his inspections done and applying for a mortgage. In our example, that would be $1250.  If the buyers state that they only feel comfortable paying $500 due diligence fee, that is no problem.  We can shorten the due diligence time to ten days.  Get a due diligence fee that will cover your cost of ownership during the due diligence period.  All of these terms are negotiable before you sign the contract.  They are not negotiable after you sign the contract.  

     If the buyer backs out for any reason or no reason during the due diligence period , the North Carolina Association of Realtors contract says they get their escrow deposit back.  The deal is off.  If the buyer doesn't like the home inspection.  He doesn't get approved for his loan.  He loses his job or his company transfer him to Dallas.  His wife leaves him for a better looking guy.  No matter why the deal dies during the due diligence period, the buyer gets the escrow deposit back and the seller can keep the due diligence money.  If the due diligence money is a hundred bucks, the seller will be annoyed.  If the due diligence money is enough to cover the ownership costs, that will seem fair to most sellers. If the due diligence fee is $5000, the seller will be glad the buyer backed out.

     How do we determine the due diligence fee?  We determine it by negotiation between the buyer and the seller.  When the seller receives an offer with a hundred dollar due diligence fee, the seller just counter offers with a $1250 due diligence fee. If your listing agent tells you that is a bad idea, show him this article.

     Do not confuse the"due diligence" fee with the escrow money deposit. They are not the same thing.  The due diligence fee check is handed to the seller at acceptance of the contract.  That money belongs to the seller no matter what happens next.  If the deal closes or does not close, the seller keeps the due diligence money.

     The escrow deposit is another item.  The earnest money deposit is held by an escrow agent, the listing Realtor or an attorney.  The purpose of this money is for the buyer to let the seller know that he is earnest and sincere with this offer.  If the buyers do not get to closing for some reason that is not excused in the contract, the buyers forfeit that money to the seller.  If the due diligence period is ten days, after ten days, the sellers keep the due diligence money. Closing does not occur until thirty days after the due diligence period is over (in our example).  The buyers are bound to close.  If they do not, they forfeit their earnest money escrow deposit.   How much should the earnest money escrow deposit be? Who decides that?  It is decided by negotiation between buyer and seller.  The larger the earnest money escrow deposit, the fewer problems the seller will have .  Insist on a large deposit.

     Picture this.  The buyers have entered into a contract to buy the seller's house.  The buyer's have put up a $1250 due diligence fee and a one thousand dollar earnest money escrow deposit.  The due diligence period has come and gone.  The inspections have gone well and the buyers are approved for the loan.  One week before closing, the buyers find a house that they like muuuuuuch better.  They forfeit their earnest money  escrow deposit and go buy the other house.  If the sellers had insisted on a $25,000 escrow deposit, this would not have happen.  If it did, the sellers would not be too mad.  Get a large earnest money escrow deposit.

     As you read this article, you need to consider your position.  Are you a buyer or a seller?  As a buyer, a hundred dollar due diligence fee looks good with a $500 earnest money escrow deposit.  If you are a seller, you, at least, want the due diligence fee to cover your cost of ownership during the due diligence period just in case the buyer does not proceed with the transaction.  Understand this.  The due diligence fee does not cost the buyer anything if the deal closes.  When the transaction closes, the seller gives the due diligence fee back to the buyer as a credit on the closing statement. It only costs the buyer if the transaction doesn't close.  It is going to cost someone if the transaction does not close.  Likewise, the earnest money escrow deposit does not cost the buyer anything if the deal closes.  If the buyer backs out the day before closing just as the seller is closing the door to the moving van, the seller will be crying.  The seller needs to be certain that the escrow deposit is large enough to assuage the pain. In the listing agreement that most North Carolina  Realtors use, the contract states that, if the earnest money escrow deposit is forfeited, it will be split fifty fifty between the seller and the Realtor.  The real estate listing agent should be agreeing with the seller that a large deposit is a good thing.  

     If you have property for sale in western North Carolina near Hendersonville or Asheville or Tryon or Saluda or Columbus or Arden or Mill Spring or Lake Lure or Bat Cave, contact me.  I can help you with that.  If you are interested in relocating to the most wonderful place on earth, call me.  If a vacation house sounds appealing, contact me.   That is how we got here.  We bought a vacation house here in Tryon, North Carolina ten years ago.  Last year, we moved from Orlando, Florida into that vacation home.  Here is a video about the best kept secret in Carolina.  Check it out.                 

Saturday, September 19, 2015

You Can Learn To Tell A Joke

     Zig Ziglar says it doesn't matter if you use humor in your presentation unless you hope to be invited back to speak again.  I have just spent two days in a required continuing education class.  From nine to five for two days without a single joke from the instructor.

     If you are a speaker, trainer, instructor, teacher, you need to learn to tell a joke.  Why?  Humor recharges your audience's attention span.  No matter what subject you are teaching, your audience's attention span wears out.  If you will stick in a joke or humorous story about every hour, it gives the audience an opportunity to rest from absorbing your wisdom. Why would a speaker, trainer NOT learn to tell a joke?  Can there be any doubt that a humorous speaker is better than a humorless speaker?  Even at a funeral, a little humor relaxes the audience.

     I believe that the reason many speakers never learn to tell a joke is fear.  They are afraid that their joke will not be funny.  They believe that would be embarrassing.  There are some ways to diminish that fear.

     Here is a good way to tell a joke with no fear of embarrassment.  I learned this about  a year ago.  I was at a continuing education seminar presentation put on by the Department of Business and Professional Regulation in Florida.  The speaker was covering some very technical, very dull material.  He was a dull speaker.  He knew he was a dull speaker.  On his slide presentation, he had a bullet :  Insert joke here.  When he got to that bullet, he explained that his presentation lacked humor but he was not good at telling jokes so he had one minute movie.  He played it.  Spontaneous applause!  He had three one minute movies in his two hour presentation.  Every movie drew applause.

     Another way that you can assuage your fear that your joke will bomb is to credit it and telling it to someone else.  I once had a real estate instructor that worked for me.  Whenever she told a joke, she told the class that I required her to tell a joke every hour.  As time went by and she knew her joke would get a chuckle, she probably quit blaming me.  There is nothing wrong with blaming someone else that you have to tell this joke.

     Know this.  Your jokes don't have to be funny.  If you tell a joke and no one laughs, so what?  Many speakers, because they fear their joke will not be funny, don't tell jokes.  That is a bad solution.  A better solution is to practice telling a joke.  Maybe your first joke with your first audience is not funny.  Find another joke.  Tell a joke to three or four of your friends.  If they laugh, an audience of fifty will laugh.

     How can you get started?  Find a joke.  Tell that joke to an audience.  If you have a hard time remembering the joke, write it down and read it to the audience.  If it is a hit, tell it in your next class.  If it is a bomb, don't tell it in your next class.  This is a great test for jokes and stories.  If they are funny to one audience, they will be funny to another audience.

     Is there a best way to start a joke or funny story.  There is no perfect way.  Many speakers have a clue for the audience.  Zig Ziglar used to say,"There was this old boy down home that ....."  Whenever you heard that phrase, you knew there was funny story coming. You could create such a "trigger" phrase or you could sneak up on your audience  so they don;t realize there is a joke coming until  you are about halfway through the story.  I usually start my stories with,"I heard a story about a guy that..."

     Many speaking experts  advise us not to tell a joke in the first person.  It happen to me.  When, truthfully, it didn't happen to me.  It is an old joke that some members of your audience may have heard before.  Many experts believe that this brings your credibility into question. I personally disagree with that.  Sometimes the story is just funnier if you tell it as if it happen to you.    

     Which brings me to my next point.  Be careful who is "the idiot" in the joke.  If you are "the idiot", that can be funny.  If you are speaking to the Banker's Association, do not tell a joke where a banker is "the idiot". Never,never,never tell lawyer jokes.  They are not funny.  They are always offensive to someone in your audience.  This article is not a do and don't list but I just felt compelled to mention that.

     Where can you find good jokes and stories?  Can you find them in old Reader's Digest , joke books, or best of all, ask your friends?  Tell your friends that you need a joke for a presentation that you are giving next week.  You are bound to hear a winner.

     Get over that fear of your joke not being funny.  It is not a matter of life and death if the joke is funny or not funny.  Your joke not being funny can be funny.  I once heard a speaker tell a joke.  No one laughed. He looked at his notes.  He stared blankly at the audience.  He said,"It says here in my notes, pause for laughter.".

     Relax a little.  Let your audience relax with you.  Tell your audience a joke or funny story.  If they laugh, use it in the next presentation.  Put a joke or two in your next presentation.  You and your audience will be glad you did.                    

Saturday, September 12, 2015

Your Choices Determine Your Destiny

     We all make choices constantly.  You choose what time you get out of bed.  You choose whether or not you will jog before breakfast.  You choose whether or not to call some prospects this morning.  You choose how you dress.  You choose who you eat lunch with and what you eat for lunch and whether or not you eat lunch.  You choose whether to listen to rock and roll on the radio or a podcast that will help you be more creative.    You choose whether to prepare for that sales presentation or just "shoot from the hip." You choose to spend less money than you make or to spend more money than you make.  You choose to create blogs and You Tube videos to enhance your on line reputation or you choose to let your online reputation take care of itself.  You choose who you marry.  You choose how you treat that spouse.  You choose what you teach your kids.  They will learn what you teach them.  You choose to set goals and achieve them or just let the chips fall where they may.  You choose to plan your life or just go with the flow.

     Every day is a choice.  It is your choice/  You can choose to believe that .  Choose success.  Know that you have a choice.  Choose wisely.    

Monday, September 7, 2015

Why Is It So Hard To Find Your Dream Home In Hendersonville?

     Many people complain that finding the perfect house is hard to do.  It should not be difficult.  It should be easy.  Just as you would not walk into a grocery store with no idea of what you want or how much money you have, you need the same approach with your house hunting efforts.    

     Answer all of own questions about mortgages and payments and down payments before you start to look.  You know how much money you have.  Ask an expert (mortgage officer or Realtor), if you can buy a house with that much money.  You know how much payment you can afford.  Ask your expert how to convert a payment to a purchase amount.  If you do not understand  income ratio, here is a link to video with an   explanation.

     If you can afford a $300,000 house,why would you want to go look at $400,000 houses.  You wouldn't. You would want to look at $300,000 or less houses.  We all understand payments.  If you can afford to make a $700 monthly payment, at 4%, that is about  a $146,000 mortgage. If you can afford a $1000 per month payment, at 4%, that is about $209,000.  If you can afford a $1500 per month payment, that is about a $250,000 mortgage .

     The reason things get so complicated and difficult is that there is more to a mortgage payment than just the payment to the bank.  The payment to the bank is principal and interest.  We also have to pay taxes on the property and keep it insured.  Usually, the bank will insist that the borrower pay one twelfth of the taxes and one twelfth of the insurance to the bank as well.  We call this a PITI payment (principal, interest,taxes,insurance).

     It is not possible to know exactly how much are the taxes on the house that you are going to fall in love with.  Mr. Expert or Ms. Expert has to guesstimate that number.

     You talk to the expert and he tells you that you can afford a $300,000 mortgage.  You have $60,000 cash available for a down payment.  You can afford a $360,000 house.  You can buy a $300,000 house if you like but you can not buy a $400,000 house.  You don't have enough money for a $400,000 house.  Do not over complicate this.  Keep it simple.  Lets use this analogy.  
If you need a house in Hendersonville, North Carolina, call Ron Climer

     If you went to the grocery store with fifty dollars in your pocket.  You are there to buy four steaks for dinner tonight.  The store has four steaks for $10 per steak.  They also have four steaks for  $12.50 per steak.  They also have four steaks for $14 per steak.  You can not buy four steaks for $14 per steak.  You don't have enough money.  Can you buy four steaks for $12.50 per steak?  What about tax?  In real estate, we call it closing costs.  It has to be considered.

     If you want all the steaks to be alike, four ten dollar steaks is your best bet.  You could get two ten dollar steaks and two $12.50 steaks.  You could get two ten dollar steaks, one $12.50 steak and one $14 steak. This is where it gets complicated.

     We know we can afford a $360,000 house.  Do we want the big bonus room or the nicer neighborhood?  Is the high school we want imperative or just kinda important?  Decide this stuff in advance.  Share this information with your Realtor.  He can not guess what is important to you.  You have to tell him.  To make your house hunting adventure as simple and easy as possible, tell your Realtor as much information as possible.  The more he knows about your situation, the more he can help you.

     If you are looking for a good Realtor in western Carolina, contact me at


Fail More Succeed More

     You decide that you are going to be a merchant.  You are going to buy low and sell high.  That is your plan.  You buy a widget for a hundred dollars.  You advertise it for sale for $150.  Nobody buys it. You lower the price and lower the price.  You polish it.  You advertise it more.  It gets dusty on your shelf.  You dust it off.  Finally someone offers you eighty dollars for it.  You sell it.
You will learn more failing than you will ever learn in a classroom

     Maybe you should abandon your plans to be a merchant and go get a real job with a paycheck every Friday.  OR maaaaaybe, you should take that eighty dollars and go offer someone fifty dollars for that widget that they have been dusting and polishing for too long.  Then sell it for eighty dollars.  You have spent the time and effort and money to figure out what widgets are worth and not worth.  Failure is the best way to learn.  Do you think there is a book you can read,"What Widgets Are Worth" by Mr. Widget Expert.  There is no such book.  Fail more.  Succeed more.  You have to fail first.

     Failure is the seminar.  Attend the seminar.  Failure is not the only way to learn.  It is the best way.  It can be expensive.  Not knowing is also expensive.  Those checks on Friday never seem like they are enough.      

Sunday, September 6, 2015

Find A Bargain At An Antique Auction

      The first thing you have to do to find a bargain at an antique auction is show up.  You can't find any bargains sitting at home.  Show up.  Most auctions have a preview of what is for sale before the auction starts.  Show up early so you can look at what is being auctioned.  Look for cracks, dents, chips, missing parts and other flaws.

     Almost all auctions are governed by "caveat emptor", which means let the buyer beware.  If you are thinking of bidding on an electric tool, plug it in and be sure it works.  If you can't plug it in, caveat emptor.

    Decide how much you are willing to bid now.  Don't wait until the bidding starts.  If you are willing to bid $100 for an item, when the bidding reaches $100. shut up.

     If you are a novice dealer, trying to learn what stuff is worth, there is no cheaper way to learn than going to auctions.  You decide that an item is worth $100.  That is your maximum bid.  You notice that that item sells for $180.  After a short while you will learn what things are worth by watching what other bidders are willing to pay.  Those others bidders are real people bidding with real money.  Pay attention.  It is free education.

     Always drive your largest vehicle to an auction.  You have to take these bargains home.  Big stuff is often a bargain at an auction because your competitive bidder is driving a Volkswagen.  They don't bid.

     As you are looking at items at the preview, ask questions of your fellow bidders.  Listen to their answers.  This is more free education.  Ask your fellow bidder,"How old do you think this widget is?".  Often, they will tell you how old it is and how they know that .  You will know next time.  Ask questions and listen to the answers.

     Get to know the auctioneer if possible.  When you bid, you want to be certain the auctioneer sees your bid.  Bid quickly if you want  something.

     Be sure that you understand what is being offered.  Often auctioneers sell  two items as a pair.  They might sell two (or more) items as choice.  That means if they have two lamps, be sure you know if you are bidding on both or your choice of one.  If in doubt, ask.  This is no time to worry about being embarrassed.

     Listen to the auctioneer's announcements before the auction starts,  He will usually explain these things at that time.

     At an auction, you own the item that you bid on as soon as the gavel drops. There is no changing your mind.  If you win the bid, you owe the money.  Auctions are a fun way to find some bargains and at the same time, learn about the value of things.

     In the old days, department stores used to have "bargain basements".  This is where the super bargains were.  An auction's equivalent to the bargain basement is the last hour.  As the auction grows to an end, the super bargains appear.  Most of the merchandise is gone.  Most of the audience is gone also.  At noon, you were bidding against  a hundred people with a pocketful of money.  At 2:30, you are bidding against twenty people that have already spent more than they intended to.  Most people that go to an auction are there for one or a few items.  Once they have bought or been out bid for what they came for, they go home.  Near the end, the auctioneer brings up an item that you are interested in.  There is no one there to bid against you.  You buy it cheap.  Life is good.  Stay until the end.  You have already done the hard part.  You showed up with your largest vehicle.

     Check out an auction in your area.  To find an auction in your area, go to .  You will be glad that you did.  If you have an antique or two that you want to sell and you are anywhere in western Carolina,   contact us at   or 828 755 6996 .