Mastermind for November 09. Excluding a Buyer From a Listing, Pre Listing Inspections
Our Mastermind session this morning was really amazing. We had one of our biggest crowds to date. The Queen Street Mastermind meeting is completely different from the other two that happen at our company and no offense to our other managers but….ours is the best. So, if you missed it, here is what we talked about;
Okay, so you have done a listing presentation on a couple’s house. They have called you and said that they have decided to list with you but there is one little hitch. The neighbour down the street would potentially like to buy the house for themselves, so the seller has asked that you exclude them from the listing. Can you actually do that? Yes. Do you really want to? Not if you can help it. Think about it for a moment. If a neighbour wants to buy the house privately, maybe there is a chance that others will want to buy it too. I don’t know if you heard but there is a shortage of properties on the market. That in itself should be all the argument that you need, but in case you are looking for more, it may be worthwhile telling the Seller that you will have to make a note on the listing often called a Collateral Agreement or Exclusions. Collateral Agreements can cover a lot of topics like commissions, lease details or other side agreements, but agents will call you and ask what it entails and you will have to tell them that the neighbour has the opportunity to buy it privately. The Buying agent will relay that information to a potential buyer who will most likely wonder why they should put an offer on a house if someone else has (essentially) first right of refusal. Time to move on. Of course, selling to the neighbour might be the simplest and fastest solution, and often that is the main motivation. However it is important to fully explain the downside of excluding a Buyer on a listing. At the very least you should advise the Seller to provide a date for receiving an offer from the neighbour. It is kind of like calling the neighbour’s bluff. If they are interested, great, but if they are hemming and hawing, it is safe to assume they were never completely serious.
Next up; Pre Listing Inspections. There are a lot of professional agents out there who have home inspection’s done on the home prior to putting the home on the market. There are three good reasons for this. One, the Seller has an understanding of the home’s shortcomings and may repair them. Second, a Buyer can read the report, have an understanding of what needs to be attended to and can make an offer based on that. It should also be added here that armed with a pre listing inspection there is not an opportunity for the Buyer to renegotiate the sale price after a home inspection (also known as an Abatement). Finally, a Pre Listing Inspection can help you validate the pricing of the home.
As a Listing Agent who has made available a pre listing home inspection, we caution our agents to include, in their schedule, a clause that simply states that the home inspection is for information purposes only and should only be a guide for the Buyer. As a Buying Agent, there is a duty to take extra caution. At the very least you should insist on your own home inspection. Remember, you are hired by the Buyer to provide thorough and honest service and at the end of the day, a second opinion never hurt. The question came up about situations where there may not be time to organize your own inspection such as in a bully offer scenario. What then? The best answer here is to tell it like it is. Explain the situation fully. Yes a home inspection exists. There is no time to have another one done. There is a potential that the other offer(s) are using the existing inspection. Ask the Buyer what they want to do. Do not insist that they rely on the existing home inspection. And remember, get it in writing.
Have a great week.