Wednesday, April 16, 2014

New Year’s game plan for buyers and sellers

From page C3 | January 11, 2013 | Leave Comment

Looking back, my New Year’s resolutions have been pretty much a failure. They were well-intended at self-improvement like losing some weight, exercising more, spending more quality time with my wife Vicki and being more organized. But life happens and those good intentions get displaced by the moment. We often fail early at our resolutions because they are too absolute or uncompromising, not allowing for the unexpected. Perhaps, if we replaced resolutions with our New Year’s Game Plan we would feel less guilty when stuff happens and we stray off course. The Ten Commandants were resolutions to live by, the rest of life is often adapting as best we can.

Coaches have game plans for their teams. Their goal is to win the game by employing strategies designed to maximize the team’s effectiveness. In football, the game plan may be ball control by primarily employing a running attack or when a team places a greater emphasis on passing, the strategy is often referred to as a West Coast Offense. If you’re goal is buying or selling real estate this year, think of me as your real estate coach with a few play strategies that might help achieve your goal. OK, let’s take the field.

Homebuyers this year will need to do a lot of work on financial conditioning if they plan to make the playoffs. Being pre-approved for a mortgage used to be an easy “chip shot” but the competition today for a limited number of playoff spots requires buyers to kick it up a notch. Get a copy of your free credit report from each of the three big credit reporting agencies — Experian, Equifax and Trans Union. The reports are free but pay the extra for your credit score. If the average score is less than 670, the point spread is against you. FICO credit scores can be improved, often by making small financial adjustments. Get with your trainer, a mortgage professional, who will work with you to ensure peak performance.

The last several years, buyers have won the house hunting game by playing ball control. They were able to win by controlling the situation. After the snap, boom — their offer was accepted. Another play and boom — the seller agreed to pay closing costs. Buyers shoved sellers all around the playing field. That’s not happening this year. This year buyers will need to play the “spread offense.”

The strategy of the spread offense is to open up multiple vertical seams for both the running and passing game to exploit. For buyers, it means they will need to maintain maximum speed and flexibility in order to win the house hunting game. With so few houses available they must employ the “hurry up offense.” Get up to the line of scrimmage quickly with an offer. If you don’t connect on that play, get off the ground and try another.

Buyers making offers on REOs will need to run the play option pass. Dropping back in the pocket and qualifying for a loan with a single receiver of choice is no longer an option. Scoring on an REO will require pre-qualifying with a designated loan originator. Every REO seller has their preferred lender in “man-to-man” coverage. Buyers must get through that defense before becoming an eligible receiver.

This will be the first year in the last six that sellers have had the chance of going to the playoffs. To get there, they will need to play the “prevent defense” designed to ensure that the offense doesn’t hurt them on a deep pass. There are a number of things that could prevent sellers from making the playoffs.

Here are a few:

Over-confidence. The market has improved, with a shortage of homes for sale and rising price,s but our continued recovery is dependent upon a number of favorable economic trends continuing, including: low interest rates, job creation, taxes and demographics. Sellers must play the game that’s currently on the field. Price accordingly and get professional assistance.

Mistakes lose games. Sellers must minimize fumbling the ball and watching their sale slip away. Pre-sale inspections and handling major repairs before listing a home have up-front costs but are worth the investment. Key players are paint, carpet and de-cluttering.

Penalties can be costly. “Illegal formation” happens when sellers fail to adequately disclose property defects that may affect the value of their property. It is the leading cause of after sale litigation. A home is “Offside” when it is listed for sale before it is market ready. “Unsportsmanlike conduct” is not responding timely to offers.

While buyers are all over the field looking for the big score, for sellers it’s all about ball control. Football is a game of inches. Sellers who maintain control of the field of play don’t need to risk an interception or being sacked behind the line of scrimmage. A good solid “cash offer” with a quick closing date but less than the listed price is still good for 10 yards. Having a buyer accept the already completed home inspection report is another 10 yards. Having all buyer contingencies accepted and resolved during a reasonable inspection period, another 10. Keep it moving forward and sellers score touchdowns.

Naturally, no team gets to the Super Bowl without a good coach. Both buyers and sellers should look to be represented by local experienced agents who understand how the game is played. OK, hut 1, hut 2, hike!

Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his Website at


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