When bad things happen in a real estate transaction Part 2
San Francisco Real Estate involves a lot of money which can cause real estate clients to react in unpredictable ways.
REAL LIFE STORY (Names have been changed)
Lucy approached me a few years ago in Yoga Class asking for some real estate advice. She had just bought a house which she and her husband, who was a contractor, were going to develop. She wanted to know if I felt she got a good deal. The house was on the border of Noe Valley, was on a double lot and had a spectacular unobstructed view. It was one-of-a-kind San Francisco property and I told her so. It was a bit of a stretch for them to buy, but they had a lot of equity in their current home which they would sell as soon as this project was done. After that initial conversation Lucy and I started conversing a lot after class and became close. She would periodically update me on the progress of her development project and whenever I could help with real estate advice I gave it freely.
So I was very pleased when Lucy wanted me to meet with her husband to give them a real estate market analysis on the home they would be selling. Although initially opposed to staging, they finally agreed to my advice, after we previewed some San Francisco real estate currently on the market—some staged, some not. They also decided that, Yes, I was the real estate agent for them!
One of my most important pieces of real estate advice I gave them was that they needed to change the entry when showing their home. Their house was on a corner of a steep hill which was nearly impossible to navigate. Instead visitors came through their back door on the second level where the study and bedrooms were. This confusing entry would not work for buyers when showing the property.
Prospective real estate buyers decide within the first 30 seconds whether they like a home or not.
It is absolutely essential that the more important living areas are shown first. I reviewed our options of which there was only one other. There was an older dilapidated exterior side staircase which led to the main level. Lucy and Jim, my Real Estate Sellers, would need to have it rebuilt. Again, they resisted, but as their agent I was firm. We got several contractor bids and this work was done along with replacing some failed window panes, extensive landscaping and painting the exterior and decks over a period of about five months.
Since Lucy and I were so close and, since she told me many times and introduced me to others as her real estate agent, and since we were still 3 to 6 months before the house would go on the real estate market I had not yet gotten the real estate listing signed. Big Mistake. A few days after the New Year I got a call from Lucy and Jim saying a prospective buyer had contacted them directly and wanted to know if they were willing to sell. (The buyers probably saw all the work being done on their house).
Would I represent them at a reduced real estate commission?
Of course, I agreed, because marketing and labor costs would be minimal. I was willing to represent them at just 2% from the standard 6% which I felt was a great deal for them. When they wanted to negotiate even further, I explained that a lot of the cost was because of the liability our real estate company would take on should there ever be a lawsuit. This is not uncommon in litigious California, especially when the real estate market goes down. Luckily our real estate company had Errors and Omissions Insurance which was for the firm extremely expensive, but a necessity for real estate clients as it would protect them should something ever happen.
My clients said they would think about it. I described that there were dozens of pages of real estate disclosures which were legally required for all real estate transactions and I would help them through all that as well. Again Lucy and Jim said they would think about it. I felt a knot in my stomach. I had worked on getting their San Francisco home ready for almost six months and these Real Estate Sellers might be thinking of ditching me?
Stay tuned. Read next week’s real estate blog to see what happens.
Be aware that any clients names have been changed to protect their privacy. Furthermore, Paula Pagano does not accept any liability for the content of any Blogs and this Website or for any actions you take or resultant consequences of actions taken based on the information provided in this communication. Any advice is my opinion after being a 35 year experienced real estate agent in San Francisco.