How many times have you had a 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 2012
>
|
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:
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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:
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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 made sure there will be no surprises that come up on the final 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?
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