“Bundle of Sticks” — and a Club

At least in Minnesota (where I sell real estate), Sellers who aren’t moved out by closing — and thereby risk derailing the deal — occurs much less than you’d expect.

In fact, in 13 years in the business, I’ve never had a closing postponed or even delayed by a Seller who wasn’t out of the house yet.

(Which is not to say that there haven’t been some VERY close calls, and a deal or two where the Seller made arrangements, post-closing, to retrieve some items, often from the new owner’s garage or basement).

My guess is that there are two reasons for that:

One.  One of the good things about “Minnesota Nice” is that people are conscientious about deadlines, cleaning up after themselves, etc.

Conversely, leaving a dirty, debris-strewn home would qualify as an extreme example of “Minnesota Not-Nice.”

Two.  The Buyer-now-owner has some serious leverage over a Seller who dawdles or is otherwise delayed moving out.

“Bundle of Sticks” — & Clubs

The most potent (albeit heavyhanded) club is the right to exclude the former owner.

As first-year law students (including me, once upon a time) learn, property rights are best conceived of as a bundle of sticks, including the right to:  use and enjoy the property; alienate it (give it to someone else); mortgage it; and exclude others.

Implicit in that last right is the right to change the locks — not a bad idea in any case.

Sellers who don’t want to risk losing access to their personal property have, shall we say, a strong incentive to claim it before that happens.

Other Scenarios

But what if the concern is not just that the home isn’t empty, but (also) that negotiated repairs are incomplete, condition is problematic (dirty premises, wall and floor damage, debris, etc.)? See, “Final Walk-Thru Checklist for Home Buyers.”

The Buyer’s three options would seem to be:

One. Delay closing.  Safest for the Buyer, but risky if their loan lock is due to expire.

Two. Do what’s called a “dry closing”:  everyone signs all the paperwork . . . but the Seller doesn’t get their money until later.

Obviously, Sellers usually aren’t thrilled about that option.

Three.  Close as scheduled, but create an escrow (holdback) that is only released once the Seller satisfies any agreed-upon conditions.

Given the associated costs and red tape associated with creating an escrow, Sellers are better-advised simply to do what’s necessary to be out on time.

Which the vast majority (somehow) manage to do.

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Is it Really a 3-Car Garage? How to Tell

by Ross Kaplan on May 28, 2015

garage

1 Picture = 1,000 Words

Not every garage billed as a three car garage on MLS comfortably accommodates three cars.

Perhaps to dispel any Buyer skepticism, the listing agent included the photo above.

Certainly looks like a 3-car garage to me — with some extra overhead storage, to boot!

See also,That Garage is HOW Big??”; and “How to Hide a 3-Car Garage.

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CenturyLink — or “Weak Link??”

by Ross Kaplan on May 27, 2015

“You Couldn’t Make This Up” Department, or
How to Make Misspelling Into a Profit Center

[Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.]

Based on my less-than-satisfactory first three months as a new CenturyLink customer (to say the least), I have a proposed nickname for the company:  “Weak Link.”

Traps for the UnWary

Glitch #1 was the $75 “reserved number charge” on our first bill.

CenturyUnh-unh.

Phone companies are supposed to port over customers’ numbers for free.

After three phone calls — and 45 minutes “on hold” — I finally got through to a company rep who reversed the charge.

Strike #2:  Spring-loaded Fees

Six weeks later, I spotted a $10 bump in our monthly bill (Glitch #2).

It turns out the item was for something called “CenturyLink @Ease,” that was bundled in our original package (without our consent), but was hidden by an offsetting “promotional credit.”

Temporarily.

When the promotional credit ended, the full charge was added to our bill.

trapI’ve got a hunch many CenturyLink customers never catch this, or, if they do, despair of investing the necessary time to correct it.

Which is presumably why the company does it.

Is That Spelled “C-A-P-L-I-N??”

Glitch #3 actually dated to when our account was first opened, and the sales rep misspelled our name.

Again, more calls to customer service, followed by more wait time, until I finally succeeded in getting through to a company rep who made the correction.

A couple weeks later, guess what was buried in our most recent monthly bill?

A fee titled, “Listing Change Charge.”

Unfortunately (and infuriatingly), I’m not kidding . . .

P.S.:  Good thing I know how to productively use downtime waiting on hold.   :-)

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Discounting for Condition: How Much?

by Ross Kaplan on May 27, 2015

Three Key Factors Besides Price Tag, Scope of Work

Discounting for a home’s “vintage” condition is inherently subjective.

discount2Some Buyers don’t want to tackle anything more challenging than painting a Bedroom (if that).

Others — especially if they have contracting skills (or access to them) — are up for remodeling the Kitchen, Bath’s and anything else that needs attention.

How does a prospective Seller (or their agent!) put a number on everything?

Five Steps

Step #1 is to tote up the things that the average Buyer would want, priced at the going (retail) rate.

Then add 25% to 50% for the hassle factor to tackle everything — and being able to see past the current, tired state (“step #2″).

That number will at least get you in the ballpark, assuming the Buyer is an owner-occupant (vs. re-seller; see below).

Phase 2

To fine-tune the number, however, one must take three additional things into account:

One. Price Point.  First-time Buyers have less money . . . for everything.  After scraping together earnest money and a down payment, many of them don’t have anything left for remodeling.

Or have the time for it.

As a result, $50k of remodeling on a $200k house (at least in the Twin Cities) is a much bigger deal — and requires a commensurately bigger discount — than $50k of work on an $800k house.

Two. Absolute Cost of Project.  In my experience, fixer-upper’s (the people, not the houses) divide into two types:  amateurs and pro’s.

Or if you prefer, part-timers and full-timers.

priceOnce the total updating budget gets north of, say $100k, the number of retail Buyers shrinks dramatically.

Which leaves the pro’s, who subscribe to “buy low, sell high,” and need enough upside to pocket a profit at the end.

That often means a steeper purchase discount once the total project cost trips six figures.

Three. Market Conditions; Inventory.  Like anything else in real estate, market conditions trump — or at least influence — practically everything.

So, in a Seller’s market, the discount for a tired home can shrink dramatically if there’s nothing else for sale and Buyers are desperate.

Meanwhile, in a Buyer’s market, the discount typically has to be especially mouth-watering to entice reluctant (or financially conservative) Buyers.

In other words, it’s all about supply and demand (no surprise).

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“Can I Hold Your New Listing Open?”

May 26, 2015

Retail vs. Wholesale Open Houses One of the best, early omens for a new listing is when agents leaving the Broker Open casually toss off compliments like “nice listing,” “good job!,” or simply “congratulations.” What’s another? When several newer, less experienced agents contact you, asking if they can hold a weekend open house at your […]

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Today’s Broker Tour Rained Out?

May 26, 2015

“Three Strikes & You’re Out!” Even under the best of circumstances, today’s deluge over much of the Twin Cities would have kept down attendance on Broker Tour (held each Tuesday from 11 a.m. to 1 p.m.). However, combine that with the first day back after a long holiday weekend (strike #2); and the fact that […]

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Memorial Day in Southeastern Minnesota

May 25, 2015

“Living in Harmony” (Harmony, Minnesota) One of the first things that hits you spending Memorial Day in Southeastern Minnesota (variously known as “Bluff Country,” “the trout fishing capital of Minnesota” — or “the sticks”) is all the flags on display. Not just at the Courthouse and City Hall, but in front of virtually every store and […]

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Former Yale President Richard Levin’s $8.5 Million Smile

May 24, 2015

Not Biting the Hand That Feeds Them: Academe’s Deafening Silence on Runaway Pay “Yale President Richard Levin could have been in investment banking, he could have been in venture capital, he could have run a corporation. Obviously, if he’d gone into other fields, the compensation would be orders of magnitude greater.” –John Pepper, Yale compensation committee; […]

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