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Are you using a Seller's Net Sheet?

Florida real estate broker 407-873-2747 In the comments of my recent post "Real Estate Negotiating...It's Not Rocket Science" I was asked if I had written an article on using the Seller Net Sheet. I had. And here it is. I hope it helps.

How many of you guys are using Seller Net Sheets as part of your listing presentation? Did you know if used properly they can be the key to you getting the listing? Sounds to simple doesn't it? Well....it is. Let me expand on this.

First, if you are not giving your Seller a Net Sheet at time of listing you are missing the boat AND doing your Seller a disservice. Here's why they are so important. The only figure that should make any difference to your Seller is how much money is left over after all is said and done. Purchase price, commission, closing costs, Seller contributions and who pays for what should make no difference at all to your Seller. Your job is to get them to understand this.

How many times have you had your Seller tell you "I ain't paying no closing costs for the buyer!" or "I'm not paying you x% to sell my property!" My answer is always the same, "Why not? What difference does it make to you? Let me show you the figures and what your Net is. Isn't that really all you care about?"

It also important to remember that the Seller may have no clue what costs he is responsible for. We have to make sure they know this. Not when an offer is received or when we are reviewing the HUD prior to closing but at time of listing. This is very important stuff.

When I'm at a listing appointment and I've done my walk through and gone over my CMA with the Sellers the next thing I do is say, "Now let me lay out my pricing plan to get your property sold." This is when I prepare my Seller Net Sheet.

My Net Sheet is very simple and I have a preprinted form so I can just fill in the blanks while I am sitting with the Seller. It looks like this:

Estimated Net Sheet prepared for Mr. and Mrs. Need T. Sale

For 123 Callme Dr. on 8 November 2007

Recommended Range Price	$190,000 to $210,000
Target Sales Price	$ 200,000
Real Estate Com. 10%	( 20,000)
Doc. Stamps(tax	( 1,400)
Title Insurance	( 1,500)
Misc.	( 100)
	--------------
****Estimated NET	$ 177,000
	=========

***This NET does not include payoff of any liens, mortgages, HOA dues, property taxes or repairs that may be owed or required. It may vary slightly at closing.

That's it! Short, sweet and simple. I then lay it in front of them and we start talking about the NET figure. At this time I also want to know how much they owe and whether or not they have a prepayment penalty. By doing this I now have them concentrating on what is important to them, how much money they will put in their pocket at closing. My commission, being above the NET line is now not a factor. This NET sheet needs to be signed or initialed at time of listing and attached to the top of their listing agreement copies.

Now, the NET Sheet comes into play again when we receive an offer. This is what I do. First, I am NOT an attorney and I am not required to or qualified to go over a purchase offer line by line. What I do is prepare a summary of the offer and attach another NET sheet to it. My summary usually goes like this:

Attached, please find the purchase offer received for your property. The terms in a nutshell are as follows: The Buyers are offering $195,000 and have placed a $2,000 deposit with First American Title in Kissimmee. They have been pre-approved by Countrywide Mortgage (letter attached) and the sale is subject to satisfactory inspections(within 15 days), appraisal, survey, clear title and final mortgage approval(within 21 days). The closing will be on or before 31 December 2007. The Seller will contribute $5,000 towards the Buyer's closing costs and provide a Homebuyers Warranty at a cost of $350. The Seller will be responsible for structural repairs not to exceed $1,000 and termite/wood rot repairs not to exceed $1,000.

Your estimated NET will be as follows: Insert new NET Sheet here including the costs the Buyer has requested. Please review the purchase offer and let me know how to proceed.

That's it. I have given them the information and the contract so they can take time to digest it before we get together to decide the way forward.

OK, the NET Sheet comes into play one more time. Once we have negotiated and have an accepted offer, I make copies of everything and attach another NET sheet on top. It will have all the costs just as the others did. I NEVER include tax pro-rations, HOA dues, liens and mortgage payoff data. Why? Because I cannot control these costs. I only include costs where I know the exact amounts.

Now the final NET Sheet has an additional paragraph at the bottom. This too will be signed. My final NET Sheet has this in BOLD print:

This NET is an estimate and may vary slightly at closing. This is a legally binding contract. Please feel free to have your Attorney review the paper work. It is quite normal for closings to be delayed. Please do not make any major financial decisions based on the proceeds of this sale until the transaction is closed and the check is in your hand. Do not place any deposits, on anything, that are not refundable should this transaction not close.

Now folks, as you can see, not only are my Sellers extremely informed about what's going on but I have assured that there will be no surprises that come up on the HUD statement. The Seller cannot say I didn't tell them this or that.

So that's it, Broker Bryant's crash course on the importance of the Seller Net Sheet and Transaction summary. It sure makes my life easier. I don't like surprises and neither do my Sellers. How about you?

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://CentralFloridaShortSales.com

http://ShortSaleSuperStars.com

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Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 09/10/2009 06:00 PM

Comments (83)

net sheet, educational

Originally posted at: BrokerBryant.com: Are you using a Seller's Net Sheet?

83 Comments on Are you using a Seller's Net Sheet?

SEP

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Hi BB - This is an excellent post, and every agent should learn how to make up a simple net sheet if he or she doesn't already know how. This really helps a client understand what they are evaluating. Sometimes when I know the seller wants to list at one price and I know it will sell for a lower price, I can show them a net sheet for each and show them that the net is not that much different - especially when they may have to wait months to sell at the higher price, if at all, and that will mean that many more house payments (not to mention the headache of keeping their home showroom ready for all those months).

Well of course, for goodness sake.

I cannot understand how a listing agent would not do a Seller's Net Proceeds Sheet.

Nor do I understand how a buyers agent would write a Contract of Sale offer without doing a Buyers Estimated Closing Cost Sheet.

But, then, I know that they do.

Bryant - I am out of practice with all these short sales :) nothin' to net!

A seller with with money left over when all is said and done???? Good one BB!

All kidding aside, a seller's net sheet is a must and I find my sellers are very thankful when they see all the numbers layed out for them.

I love the simplicity of your form and will have to see if I can't do a little changing to our office form.

I can't for the life of me figure out why an agent wouldn't give a net out sheet at the first meeting with a potential seller, then follow up net sheets with offers. Your example is why it should be done each and every time.

My sellers seem to appreciate this.

I like to calculate and give sellers an "estimated seller's closing costs" sheet when working on a possible listing. I include: title policy, escrow fees (here it is standard for this to be split 50/50), recording fees, real estate commission, other misc fees. I calculate these costs on the projected sales price and show them what their net will be. I tell them they will still need to deduct their mortgage payoff, prorated property taxes and interest. I also disclose on my form that this is an estimate only and final costs may vary.

BB, can you imagine talking with a seller, and NOT providing a net sheet? What could the possible outcome of a seller meeting be without this info????

I am ashamed to say that I have neglected this area, but, will not from now on. I did one a few times, here and there, but stopped for some reason. It is not a widely used practice here, don't know why. But, as always, you have shown me something that will become invaluable to my business and I thank you.

I had to but my big girl pants on to admit this by the way, having read the other comments. Just so you know...

BB: believe it or not - a sellers net sheet just became a required form in our state. We really use it as a guide but it is now a required form..

I sometimes use three, one for the low end of the projected selling price range, one for the top, and one for the middle.

I always use them for presenting offers. Great tool.

A seller's net is a part of my listing presentation. If the seller hasn't bought or sold a home in some time; it serves as reminder of his/her cost to sell their home. It let's the seller know that I know what's going on in their area and it makes me look even more professional.

I use it all the time.

All of my sellers receive one. What some agents forget to do is revise the sheet when they get an offer that is different from the net sheet originally given when the listing was first taken. I do make it clear to the seller that it is an estimate and not an exact document. But I do my best to be as close as I can to the costs that the seller can expect. Of course, some items can be exact, the commission, tax on the deed, etc. So far I have received no complaints. But as I said, I know of several agents who do not remember to redo the sheet when they receive a lower offer and present it to the seller. It is my belief that the seller has the right to have an idea of what their net will be on any offer. After all, one of their main concerns is the bottom line, what they will net in the end.

BB: There on page 1 I saw your lovely face again. OMG I really need some plastic surgery in order to get on page 1.

Don't know if you have any Fidelity National Title reps in your neck of the woods but . . . FNT just came out with a free program called BottomLine that not only does the seller's net sheet for you, but seemlessly allows you to incorporate information from the seller's net sheet into your HUD-1 for the short sale package. If you haven't seen the program yet, you may want to check it out!

Our net sheet here has two columns, so we can show a range of options -list price, expected sale price, or an aggressive price and moderate price, etc. I also use the double columns to show the difference between list net and 1st offer net, and then again to show the counter offers progressions in net. It's a required form here to do it at listing, and recommended practice to do it at every offer and counter.

Love the disclaimer on yours, need to add that! Especially the reminder on delays and not to plan your proceeds!

Bryant...

I use a net sheet at the listing presentation and again when an offer is presented. This has always been a part of selling real estate but so much more so today when many sellers may fall into a negative net situation.

BB - Not only is it done on a listing appointment, when I get an offer on the listing, too because 9 out of 10 times the seller does not remember all the cost or can't find the net sheet.

Same for buyers as well.

Net sheets give the seller an idea of what they may be getting into their back pocket

I can't imagine taking a listing with out a sellers net sheet.

forget the net sheet - you get 10% commission across the board??????

Bryant - It's nice to get this out of the way up front, no surprises later on.

I keep a pretty similar net sheet up on our website along with a listing presentation checklist. Makes it easy for sales associates. I'm all for keeping it simple. All that really matters for sellers is the bottom line anyway. Are any sellers walking away with proceeds anymore?

I use the seller net sheet but I really like some of the wording you used when sending the offer to the clients before you meet with them. Good advice!

HAHAHA, I'm with Liz...But seriously, good information. I honestly hadn't thought of providing the net sheet at the listing presentation. See I learn something new everyday. :)

This is a very simple and pure form of the net sheet. I like it! I always have used a net sheet at listing and when an offer was presented. Just like you, I don't include taxes and payoffs because I can't know what they will be. Thank you for sharing not only your version of the net sheet but also your strategy in using it effectively!

BB, I'm with Liz, 10% commission? Wow, you're good! I loved your simple net sheet, especially about your commission being above the net line. My company has a preprinted net sheet, but it has way too much stuff. Prorated taxes, broker fees, mortgage payoff, and all kinds of title stuff. Simple is way better.

Do them every time. I do include payoffs but the Sellers are aware that the net sheet is called An Estimated Net Sheet. Amazingly I have always been very close and they always receive more than I estimated which makes me the good gal in the end. :)

Bryant ... Thanks for this good post and encouragement for us Realtors to use Seller Net Sheet at time of listing presentation, and again after each offer. I will work to improve our net sheet draft and use it more often.

All my potential Seller clients get one. I think it's so important to them to see the final estimated walk-away figure in order to decide to sell or not. Otherwise, it's just a waste of everyone's time. With every offer, I also include a net sheet again to show the impact of the offer. Anything else we counter thereof would be better. Until my sellers see the net, it's hard for them to understand.

Seriously, I have done almost all short sales so 'net' is usually to the lender.

Great explanation of why we should all be using net sheets for our sellers. I'm sure there are many agents who can learn a thing or two from a Broker Bryant crash course.

BB, I thank you very much for this post. I always do one for the file but I have never used one in a listing presentation and will do so from now on!

BB, very informative. I will follow your guide. I usually do one or two net sheets, but like your way and makes a lot of sense.

Bryant, we use Net Sheets - and have started using several to show them what the costs would be at different sales prices. We definitely do another one at contract, and if they are buying also, we do a buyer's cost sheet to show them what it will cost them to move into their next home.

Sharon

Good post,,,BUt why would any one not do a net sheet,,, I do one at the listing and at the time I present any offer, This shold be taught before a agent ever hits the field

Bryant - A net sheet is a must and my sellers appreciate it. I really like your simplified version of the net sheet.

Hi Bryant -- Good stuff. There is a local title company that does it all automatically. We plug in a few details such as the amount of outstanding liens, sales price, etc., and it calculates all the variable and fixed title escrow fees, estimated lender fees, tax prorations, it's pretty accurate almost to the point of a HUD-1 and I can turn it into a PDF. It can even do three columns with estimated sales prices so the seller can easily compare the sales scenarios.

Hello Bryant, we use net sheets as well. As always, you have elements we will most certainly incorporate. I like the practice of filling it out during the presentation -- it must engage the seller more completely than just using an already completed printout. Thanks! John

BB - great stuff here. I use them at the listing presentation, when an offer is presented (and of course with buyers, too). Ours takes a little pre-planning since we have to get escrow and title information from the escrow company - it is no longer a simple calculation.

Jeff

Sellers do need to know this! I had one a few months ago that I gave this too and they still were mad about the NET in the end and I pulled the signed net sheet out and showed him he know what was up...BOX.

Bryant,

Thank you for the crash course about seller Net Sheet. I do the seller net sheet when I when listing a regular sale. Now for five short sale listings I closed I get one regular sale. I agree with you do not forget to prepare your Net Sheet when doing a listing presentation. Thanks

This makes it simple and clear for the seller to see what comes from the offer.

BB; I agree not including the payoff into the net sheet.. This number can vary pending the actual amount your seller may not have with the payoff fees.

Bryant- Of course we use seller net sheets. I was amazed when I moved to Florida to find out that agents did not use seller net sheets! I was first licensed in CA and there it was mandated to have a sellers net sheet back in the day. In WA is was also par for the course and no agent would think twice about submitting one to the seller.

Now with most short sales, it is a mute point. But if we know we can maybe get the first paid off, then we show a full HUD provided by our title company to the seller so we can negotiate the first to be fully paid off and the second to be the only one shorted. We are working on one like that right now.

Thanks a lot for reminding us, the net sheet does help a lot...

Even though everything here is either an REO or a short sale it works great for negotiating on the short sale with the negotiator.

SEP

I have always done net sheets for sellers and buyers - amazed at the many agents who say, 'oh, they will get that later from the escrow company.' That would be like asking someone to sign a blank contract.

With buyers, too, I usually start with the net sheet, then write the offer. I never put loan payoffs either, and I put title and escrow fees exactly, if I know who the title company will be.

Good summary for an offer - thanks, I will use that in the future, just makes sense.

I DO use a Net Sheet but you have provided EXCELLENT additional CYA details. Thank you!

Very similar in principle to a mortgage broker providingf a Good Faith Estimate to a borrower. They need to know the cost of their transaction - just as a seller should.

Bryant, I love the simplicity of your net sheet approach--even though two of our local Title companies make fill-in-the-blanks net sheets available online, for both Sellers and Buyers. Very smart tools. But chalk up another one for Liz' comment: 10%???? Puhleeze do another post on that item.

Broker Bryant- Like a few more (above) have stated, I too have become lazy re: Net Sheet when it comes to Sellers b/c most of my appts now are Short Sale Sellers. I actually had to drag out my company-generated Net Sheet from the Internet prior to going to a typical sale/typical Seller listing appointment last week! Thanks for the reminder that it's important for every Seller. :)

Broker Bryant- We always use the net sheet, but I really like your twist on it with the verbage for attorney review and other points. You're correct, the bottom line is what is important. And may I add here that it is great that your son and his family are coming home (read TLW's post),

I have used Seller net sheets at most on most of my listings and you are right, they take all the mystery out of the numbers and make things easy to understand. I do like the paragraph that you throw in at the end of the last one and I may incorperate it into my own.

Thanks for the tip.

Hi, Bryant.

This is so very well stated; simple, direct and clear. You're right, it does focus the seller on what they will be getting and not on what they will be losing...that's the part where the commission is above the net line.

I had to laugh when I read Andrea's comment; I feel like that alot when I read other comments but that's how you learn. The only stupid question is the one you didn't ask!

This could definitely be a good thing. I remember when I was trying to sell my house and was shocked about all the cost!

Great points ! Our state(PA.) actually requires us to present the Seller's Net Sheet at time of listing and before executing offers !

I always have a net sheet in my listing presentation. Only thing missing is their pay off. Mine is a simple Excel Wroksheet, which I also email to them. I start off with a suggested list price them reduce the price by $1000, 15 times. Seller simply enters their estimated pay off and can quickly see what their estimated net will be.

This is good practice and makes sense to do.

Not everyone does it, but it's an extra tool.

Patricia Aulson/portsmouth nh homes

Bryant, you're the best! I have been intimidated by net sheets, but am getting better at preparing and presenting them, using an Excel spreadsheet from the title company I usually work with. I love your easy form and your reasoning. I'm going to try slipping that 10% commission in there, too.

Happy TGIF!

Robin

BB, great basic common sense stuff. Why should a net sheet intimidate a listing agent? The costs are the costs and there is nothing you can do about it. Buyers set the price, title company sets the title, etc. Sounds like we've got a bunch of chickens out there?

I do use a net sheet for every deal.Thanks for sharing.

Bryant – Show me the numbers! Or as Gerry McQuire said: “Show me the money!” I use Chicago agent software to create a personalized and customizable net sheet. Would never not provide one to a buyer or seller.

I like a simple net sheet like this........but the best part of yours is that 10% commission! Yes, I prepare one at the time of the listing, and with each offer, counteroffer and finally when a contract is reached.

I use the net sheets on every transaction. I had an excel spreadsheet I use that does the calculations for me instantly. At a presentation, I can sit with a laptop and portable printer the size of a hardback book (canon ip90) and can quickly print out net sheets with various sale prices.

It is very effective and has been a great help to me and my clients.

Hi Broker Bryant, I find that I don't like unpleasant surprises. Neither do my clients. Net sheets tend to prevent unpleasant surprises especially when they're done properly. They facilitate pleasant closings. Excellent post on a necessary subject. I especially like the postscript at the bottom. :)

I'm going to be very irked, BB, if my local competition reads and acts upon this post! Having competed for several listings, I know others do not discuss net much less document it.

Because I can access liens in our County database, my net sheet does factor them in. Sellers can then give me the current balance for an update.

Literally, 2.5 hours ago, I used my net sheet with one of my sellers to discuss an offer. Especially with Seller Concessions in a contract, the net sheet is critical. I also do multiple columns with potential counteroffer prices. Today, my seller clearly saw what would go in her pocket. And looks like we have a deal!

Just being cautious, I would not bandy about that specific commission amount too much. Exact amounts mentioned in at least 3 comments could possibly be problematic if someone were looking for an issue to take on. Just a thought.

Hi Bryant. I provide whenever I have a listing appointment. We also have something similar on the bottom of each net sheet :-)

I am covering for an agent who is on vacation and her SIGNED net sheet is going to be the pivotal evidence in a contract that has some big issues that came up today. Excellent way to lay it out for your sellers, Bryant. We must keep our clients informed and be sure they acknowledge the decisions they make by getting their signature on the net sheets.

Hey guys. Sorry I have been absent from my own post. I had to show properties today. That's not something I do very often and it wore me out!! My hat's off to all you buyer agents that do this every day. Your job is a whole lot harder than mine.

OK the 10% commission is HYPERBOLE. I used a crazy number on purpose to keep us off of a commission discussion.

It looks like most of you use the net sheet and some of you are now going to start. That's a good thing. Not only is it information the seller needs to know but it's a very simple yet very effective tool.

As always I appreciate you stopping by.

BB that is so timely. I counseled an agent today to concentrate on the seller's net, not the price or seller's concessions or terms. Just the net. Sellers do get caught up in "paying fees" for buyers. THey cannot think straight!

I have always used a net sheet but not in the way that you do. I think your way is better.....I will try to implement this into my buseiness. Thanks.

My broker won't accept a listing unless the Seller's Net is attached. I calculate the Net at list and probable sales price.

Glad to hear the 10% commision was hyperbole. I was beginning to think I was missing the boat, somehow. I appreciate your post and plan to make better use of the seller net sheet.

SEP

too easy

I was recently perplexed when I saw a new entry field in our MLS that is box that can be checked for short sales: unknown. It would seem that obtaining the loan balance and any liens would be part of the net sheet calculation (as you demonstrate)- maybe I'm missing something! Still haven't taken the short sale plunge, but am seeing more and more come to fruition. BTW- await the next session- whether we move ahead or not, your grip on the process is non-negotiable learning.

SEP

This is a great worksheet, but if you wanted to do something similar online, Closing.com just released a pretty tool to do this. http://www.closing.com/Home

SEP

Why, Yes, I am...in fact everyone in my company does! It is REQUIRED...and it should be! Thanks for bringing it up BB!

If the sellers don't know how much they are walking with (or paying) - how can they make a decision? (and how could you ever know you can actually sell it for that price!)

SEP

Hi Bryant! How the sellers will even know what they can negotiate when they do receive an offer, is beyond me, if they don't have one of these. When I'm negotiating for myself, I KNOW my bottom line and will not go below it! I've heard sellers talking at the closing table that they thought they would get more--it's as if their agent had not even reviewed the HUD-1 with them, muchless a seller net sheet! When did they explain tax revenue stamps, Deed prep and Title search charges with their clients? I guess they hadn't! And, to think that there are seriously agents out there who do this and get away with it just amazes me!

Okay, I'm off my soapbox now! Have a wonderful Wednesday...

From the desk of David Dee,

BB,

Great post with simple and easy Net sheet to create. I like the fact that the commission is above the Net number. Very clever indeed.

SEP

Bryant-Great post indeed!

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