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.  https://www.youtube.com/watch?v=8XzOw95TQ0E                   www.ronclimer.com        

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.  https://www.youtube.com/watch?v=Wy1Y7zDO3M4

     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 www.ronclimer.com

      

Nine Things You Can Do To Get Your Hendersonville House Sold Faster

     As a Realtor in Hendersonville, North Carolina, I often speak with people that have there house listed with a Realtor.  Sometimes, they wish the sales process was going faster.  Do not leave the entire burden of getting your house sold in Hendersonville entirely to your Realtor.  There are some things that you can do to speed up the process.

     The number one, best, easiest, most important thing you can do to be sure that your Hendersonville house sells quickly is to be sure it is priced right.  Be certain that your house is not listed with a Hendersonville Realtor for more than it is worth.  How can you be certain?  Order an appraisal from a professional appraiser.  You don't have to ask your Realtor if it is OK.  Just do it.  Google appraisers in Hendersonville, North Carolina.  Pick one.  Order an appraisal.  It will probably cost about $300.  Mr. Appraiser is not trying to impress you.  He is not trying to list your house.  He is a licensed expert.  You pay him $300 for his expert opinion.  This is money well spent.  If your house is worth $300,000 and you have listed it with a Realtor for $339,000, don't start packing.  Once you have paid Mr. Expert for his expert advice, believe him.  If he tells you your house is worth $300,000, call your Realtor and lower the price.

     The second thing you can do to get your house sold quickly is clean up, fix up, spruce up.  When potential buyers look at your house, the buyers can not see beyond the sellers saying  "excuse our mess".
 If the house is spotlessly clean, that is what the buyers see.   If the house looks like Good Housekeeping magazine has cancelled your subscription, that is what the buyer sees.  Buyers have no imagination.  They perceive that it will look messy when they own it.  Buyers can not imagine something repaired.  If the window is broken, fix it.  Mr. Buyer can not imagine it repaired.  Many  of the houses listed in the Hendersonville MLS  have too much furniture. Less is more should be the watch word of home sellers everywhere.  Get rid of big bulky furniture.  The smaller your house, the more you need to read this paragraph twice.

     When you listed with Great Big Realty, Mr. Salesman probably promised to advertise your house here and there and everywhere.  That is fine.  That is great.  Feel free to advertise your house yourself.  Any free advertisement that you can do will help.  Mention on your Facebook that your house is for sale.  If you blog, write a blog about your house being for sale.  Write a blog about how wonderful your neighborhood is.  Put one of those "make me sell my house" ads on Zillow  Craigslist is free.  Put an ad on Craigslist.  Put your address and your Realtor's phone number .  I can not imagine any Realtor objecting to that. Advertise your house in your church bulletin.  Send out post cards to your neighbors.  Any good Realtor has already done that but do it again.  Tell ALL your friends that your house is for sale .  Don't be a secret seller.  The more people that know your house in Hendersonville is for sale, the faster it will sell.

     Another very important thing that you can do is be super co-operative with other Realtors that want to show your house.  Since most showings are through co-operating Realtors through the Hendersonville MLS, be cordial and knock yourself out to let them show your Hendersonville house when they want to show it.  Mr. co-op Realtor is usually responding to the whims and desires of the buyer.  If Ms. Realtor wants to show your house at 9:30 on Sunday morning.  That is just unreasonable.  You can say no.  You can, but if you do say no, that buyer that is only in town for the weekend and has to make a decision before the plane leaves at 6 on Sunday night is not going to see your house.  Ron says, if the buyer wants to see your house during halftime of the Super Bowl, let them.  The more cooperative you are with showing agents, the faster your house will sell. 

     Another thing that you can do to make your house sell faster is to raise the commission.  If you have agreed to pay your Realtor a six per cent commission, he has put your Hendersonville house listing in the Hendersonville  MLS offering a three per cent co-op fee to the showing real estate company that helps him find a buyer.

     Ho Hum  There is your $300,000 Hendersonville house in the MLS with a 3% coop fee just like all the rest of the ten Hendersonville houses that suits the buyer's needs.  What if you paid your Realtor a seven per cent commission?  Your Realtor advertised a three and a half per cent co-op fee to the showing agency.  The co-op agent would show your house first and most enthusiastically.  I don't want you to get the impression that Realtors are money motivated.  Remember that Realtor that wanted to show your house on Sunday morning at 9.30.  That Realtor is money motivated.  I am certain of that. 

     Here is another thing that you can do to get your house sold quickly.  Encourage offers.  If a co-op agent shows your house, let them know that you are ready to move. There are all kinds of laws and ethics and customs that restict what Realtors tell each other.  You, Mr. Seller are not bound by any of that.  Tell the co- op agent that you want an offer.  You don't have to sound desperate.  Just let them know that you are tired of keeping the house clean as a pin twenty four hours a day.  A common practice among Realtors is for the showing agent to report "feedback" to your listing agent.  Tell your listing agent to tell the co-op agent that we want an offer.  I would rather be offended by a low offer than have no offer at all.  If you followed my previous advice and have your house properly priced, this might seem unnecessary.  It is necessary. Encouage offers.  If you are asking $300,000 and the buyer offers $299,000, would you take it?  If you received a $275,000 offer, do you think your Realtor could negotiate and acceptable price from there?

     The next thing I can suggest to help you get your house sold quickly is to remind you that objectivity is good for business.  Emotion is bad for business.  We want the buyer to get emotional .  Mr. Seller, get your emotions out of this business transaction.  This is strictly business.  Mr. Buyer does not care about all the pleasant memories that you have attached to the house.  He is not going to pay an extra $1000 because your daughter got married in the house  five years ago.  Mr. Buyer does not care that you made $10 a month payments for thirty six months on that avocado green  refrigerator in the kitchen back in the seventies.
Take the emotion out of this business transaction.  Your house will sell faster.

     Another thing that you can do to make your house sell faster is make financing easy for the buyer. Through the years, I have had sellers tell me that they don't want to sell their house with a VA (Veteran's Administration) mortgage because it is too much trouble.  When you consider that a military veteran can buy a $400,000 house with not one penny down payment, that is a group of buyers that I would not want to avoid.  Anything that you can do to make financing easier for a buyer, The faster your house will sell.  You might even consider holding the mortgage yourself.  Where else can you get any interest in today's market. Watch this video about that.  https://www.youtube.com/watch?v=pRyWo--Wg0I  Anything you can do to make financing easy and affordable is a good thing and will make your house sell faster.  Ask your Realtor to make a chart of the three easiest ways to finance your house and attach it to the brochure that he left in your foyer.  The easier it is to finance, the easier it is to sell. It is axiomatic.

      My next suggestion is be honest with yourself.  Be honest with your Realtor.  I have been selling real estate for thirty years.  If someone asked me,"What is the most common lie you have heard in your real estate career?", my answer would be sellers telling me ,"We don't have to sell."  Sellers tell me this when their house is being foreclosed on.  Sellers tell me this when they are in Chicago and they are making payments on an empty house in Hendersonville, North Carolina.  Sellers tell me this when they have three kids and are living in a thousand square foot two bedroom house and one of their kids in sleeping in the garage.  Why do people lie to themselves and say," We don't have to sell"?  Be honest with yourself.  Tell yourself and your Realtor," Our life will be much more pleasant when someone else owns this house."

     Get your house sold.  If I can do any thing to help you sell a house near Hendersonville, North Carolina, contact me at 828 755 6996 or www.ronclimer.com   or www.hendersonvillekw.com

Today's New Homes For Sale In Hendersonville, North Carolina

     Today is January 21, 2015.  There were nine new homes that showed up in the Hendersonville, North Carolina MLS this morning.  These new listings are:

192 Amble Lane in Fletcher, North Carolina.  The price is $188,000
165 Mountain Laurel in Fletcher, North Carolina.  The price is $449,000
2 Heath Lane in Mills River, North Carolina   The price is $110,000
136 Woodhaven Drive in Hendersonville, North Carolina  The price is $349,000
750 Polly Mountain Road in Saluda, North Carolina  The price is $247,000
117 Westpointe  in Hendersonville, North Carolina  The price is $549,000
876 Big Willow Road in Hendersonville, North Carolina  The price is $159,000
236 Barber in Zirconia, North Carolina   The price is $389,000
286 Red Oak Farm in Hendersonville, North Carolina   The price is $209,000  

     If you are looking to buy a new home in Hendersonville, North Carolina and you are going to finance it, interest rates are lower than low.  If I can help you find your new Hendersonville house, call me, Ron Climer, at 828 755 6996. Whether you are just moving into Hendersonville or just need more space, call me.  If you want to see the entire Hendersonville MLS, go to our website at www.hendersonvillekw.com  If you have a house in Hendersonville that you are ready for someone else to own, call me .  I can make that happen for you.

     www.ronclimer.com

Hendersonville, North Carolina New Homes For Sale

     Today is January 18, 2015.  Every day, as a member of the Hendersonville Board of Realtors and the Hendersonville, MLS, I receive a list of the new houses that were entered in the Hendersonville  MLS yesterday.  I thought if you were looking to buy a Hendersonville house, sharing this information with you would be a help.  I started a habit about six months ago of posting a positive quote on Facebook for my friends every day. Come be my friend on Facebook and you will receive this positive quote every day. My Facebook name is Ron D. Climer I thought posting this information would be a good habit to start.  I am a real estate Broker at Keller Williams Realty on Main Street in Henderson ville, North Carolina.  If you want to own one of the new Hendersonville houses that you see posted here, call me, Ron Climer, at 828 755 6996.  You can see all the Hendersonville houses for sale in the  MLS by going to our website at  www.hendersonvillekw.com

Ron Climer can help you find a Hendersonville house for sale

The houses newly for sale in Hendersonville, North Carolina today are:
1627 Greenville Hiway in Hendersonville, North Carolina  $219,000
164 Walnut Crest Road in Fletcher, North Carolina   $317,900
194 Long John Drive in Hendersonville, North Carolina   $349.900
133 Flynn Court  in Lake Lure, North Carolina    $359,000
252 Hickory Nut Drive in Mill Spring, North Carolina   $49,500

Call me at 828 755 6996 or www.ronclimer.com if I can make your Hendersonville house hunting adventure easier for you.  If you have a house in Hendersonville that you are tired of owning and would like someone else to own, call me. I can make that happen.  If you have any real estate questions about Hendersonville or foreclosures or short sales or exotic financing or real estate investment, call me or just leave a comment here and ask your question.  I will write a post about it.  Read some of my other articles here.