By Gary S. Mueller, Three Rivers Association of REALTORS® Attorney
I hope this finds all well. As I write this, summer has officially started! Seems like summer started about three weeks ago and then the rains began!
I always consider July as the month that projects what we can expect for the remainder of the calendar year. For 2018, this July may be especially vital to our industry. The Fed has just announced an interest rate increase and the promise of more before the end of the year. Couple that with our current seller’s market, and we may see an even greater uptick in sales in our market. According to the most recent facts and figures on the subject, the average time it is taking for new listings in the area covered by Three Rivers Association of REALTORS® to go under contract is 16 days. Most other areas outside Three Rivers coverage are closer to double that timeline. To me, this suggests that we have quality work being done by our agents in terms of pricing properties correctly and competitively and we have buyers who are truly motivated to get into a home----whether due to various housing grant programs or rising interest rates or limited inventory or some combination of all three. Continue to work hard and stress to buyers that, based on our current market, best offers may be needed sooner in the negotiation process to secure an executed contract. Also, there truly may be more situations of multiple offers on the same property. I anticipate that some buyers may feel this approach is an agent (or even an attorney) pushing to get a contract signed, but the facts tell the true tale----new listings are going under contract in a mere 16 days.
With that said, now is a really good time to familiarize (or to re-familiarize) yourself with the ethical requirements of multiple offer situations. When I attended the special session for attorneys at the IAR Convention in Chicago, a portion of the discussion dealt with multiple offers and how to make sure that the seller remains informed, and the limits of communication and discussions with potential buyers about multiple offers while at the same time maintaining the confidentiality of each deal.
Further, so that you are aware, there has been a great deal of discussion at the 7.0 Multi-Board Committee meeting about inspections. There has been interest expressed in inserting verbiage into the contract to encourage sellers to obtain a pre-listing inspection as well as strongly recommending that buyers, before even submitting an offer, secure an inspection of the property being considered. While I, personally, support the idea that sellers obtain a pre-listing inspection (if for no other reason than to get a truer picture of the condition of the home), I am reticent to support the concept of buyers paying for an inspection on properties that are not even under contract. Though this appears to be an up-and-coming practice in places like New York City, I see concerns on both sides---buyer and seller. Even if a buyer has a home inspection done, what keeps the seller from selling the property to another buyer since there is no contract? In this instance, buyer has now paid for an inspection of a home that he/she/they will not even be able to purchase. For the seller…why do I want to allow inspectors into my home to complete inspections when there is no contract? Additionally, what if a potential buyer completes an inspection, fails to secure a fully executed contract with the seller, and then sends the inspection report to seller (perhaps out of spite for not getting a signed contract). What obligation does seller have with this inspection that seller did not pay for and seller did not end up pursuing with an actual contract buyer? These are the points I am stressing. I hope my points are ones you share. If you do not, please let me know your views so that I can ensure my comments reflect your thoughts as well.
Finally, a practice point/request----our office reviews its fair share of contracts throughout this area. I personally have noticed that the final page of the contract bears less and less information. Most specifically---concerning a home owner’s association and a management company. Please make the time to insert as much information as you can. Especially in light of the often extended and extraneous information and documentation that is now required in order to secure the property Association documents (and the ever-growing practice of charging a “rush” or an “expedited” fee if one orders documents fewer than 21 days prior to a closing!). We are finding the lack of information on the contract often pushes the retrieval of these documents to the “rush” or “expedited” timeline which might be avoided if more info is provided within the contract.
We are truly blessed and fortunate to be in this industry at this time and in this area. Remain relevant! My best to all.