Sunday, April 6, 2008

Homeseller's Guide Part XIV

Choosing an Escrow Agent or Title Company

You will want your transaction to go off without any hitches. A smooth closing is essential. Therefore, use care in choosing who will act as your closing (escrow) agent.

Your first consideration would normally be to consider only those who are experienced professionals would good references. Spend some time talking with them, asking questions, such as their experience with FSBO transactions and discovering the ease with which they work with you. In short, you not only want a knowledgeable pro, but one you feel comfortable with, because you will be spending a lot of time with him - escrow can take from 30 to 90 days. If the you and the agent "hit it off", talks in terms you understand, and his references speak highly of him, that is the one you want.

Whereas you will likely make numerous trips to the escrow agent's office, it should ideally be within a comfortable distance from your home. Long trips to an agent's office can add more stress, and you don't need any more of that.

You will also want to discuss the agent's fees. Fees can vary. Get answers on what his fees are, who will be responsible for which those fees (buyer or seller). You should receive a breakdown listing and describing each fee, and which party is responsible for it.

Escrow agents take care of most of the paperwork, ensure all terms of agreements are complied with and distribute the funds accordingly. They will also:

* get instructions and loan documents from the buyers lender
* order the preliminary Title Report
* secure payoff demands from existing lenders, requesting full reconveyances of any deed of trust or mortgages to be paid off at closing
* obtain documents necessary to clear any and all outstanding liens on the property
* issue receipts for deposits and hold those deposits in a separate escrow account
* prorate taxes, rents (if any), interest etc.
* prepare escrow instructions per buyer & seller
* determine the date that escrow will close
* obtain Title Insurance on behalf of the buyer or his lender
* assuring timely transition of fire insurance
* record all necessary documents, such as deeds, reconveyances, powers of attorney (if used)

Depending on the terms of the agreement(s), the escrow agent may perform other tasks necessary to execute the terms of those agreements.

When all is said and done, closing - or settlement - can occur. At this time, you and your buyer will sign your names so many times, on so many documents that your hand will get tired.
Note that most escrow agents will require that checks brought to closing for down payments, escrow fees etc. Be in the form of a cashier's check. Most will not accept personal checks, so make sure your buyer is aware of this, to prevent unnecessary delays.

If either party, for reasons unknown, shall be unable to attend closing, that party can issue a Power of Attorney to have someone else take his place at closing, and sign all papers. Another method is to have the escrow agent send the documents ahead, to be signed in advance of closing.

Closing documents that you will be required to read should be examined carefully, preferably before closing, to check for any errors in the wording or the math.

NEXT: Seller's Checklist

Thursday, April 3, 2008

Homeseller's Guide Part XIII

Negotiation Tactics

A big part of your profits will be directly proportional to your negotiating skills. Sharpen them by following and practicing these tips. Use them in everyday dealings with people, whether buying a suit or trying to convince an associate that you are right. Practice, practice, practice!

* A sophisticated buyer will try to gently and subtly poke holes in your expectations. Owners tend to get used to the flaws in their properties, and no longer notice them. Your job is to make sure that you do notice them, and not allow him the position of power he would otherwise hold if you had not noticed these flaws beforehand.

*Often the best negotiation tactic is silence. Silence tends to make the other party a bit nervous, and almost forces him to speak, just to break the tension. In speaking, he will often say something that will cost him.

*Act a bit disinterested. Make sure he understands that, while you certainly want to sell, you do not have to sell today, that you have time to find a buyer who will pay close to your price.

*First one to mention a price loses. Except for your original listing price, never, NEVER be the first to mention a lower price.. If you are the first to mention a figure, you will lose in the negotiations.

*Meet on your turf, preferably in the home. A seller has a distinct advantage meeting with buyers at his home or office. Home court advantage, you know. It may be psychological, but it is still effective. Meet on YOUR terms.

*NEVER involve emotion in your negotiations. If the buyer even thinks you are anxious and motivated, the price will go down, accordingly.

*When face-to-face and the buyer mentions a price, do not counter-offer with a higher one. Just keep silent and look at him as though you are waiting for him to say more. In many cases, he will go up of his own accord, out of sheer uneasiness. Again, silence can be your strongest asset.

*Never insult a buyer, by word or deed. The friendlier you can be, the less likely he will see you as an opponent. Avoid being blunt and bold, but do be honest and straightforward. Let him know that if he buys, it is your intention to help overcome whatever problems he may have and to make this a "win-win" deal. Listen intently, and listen as well to what he is not saying.

*Before talking money, just get him talking - about his family, his hobbies. In a short time, he will subconsciously accept you as a friend, and this will make it more difficult for him to negotiate effectively.

*While letting him talk, you are learning more about what motivates him, and what his priorities are (see "Speaking the Buyer's Language"). This gives you an edge in negotiations.

*Always write terms into your agreement that you really don't want, or expect to get. Then, you have something you can "give up" in exchange for things that you DO want, like a higher price, stricter terms etc.

*Never give up dimes for dimes. Give up nickels for dimes. For example, if the buyer comes up $2,000 in price, you should only go down $500-$1000 in your counter offer. If you give up the $300 power mower, make sure you get something worth more to you in return, such as the buyer paying part of your closing costs.

*When meeting with a buyer, do not dress up to the point where you look like a cold businessman. Dress casual, but nice. He will feel more comfortable, and be more apt to deal .

*If the buyer is in a bad mood, postpone negotiations until a later time.

*Whatever you do, do not get so tied up in a deal that you let the buyer talk you into terms you can't live with. If you cannot get the terms and price you feel that you need to, let him know that he is working too far below what you will accept.

*Determine beforehand the minimum price you will accept and the maximum terms you will offer. Hold to them. If you cannot make this profitable for you, forget it. There are other buyers.

* Be honest and ethical. A Straightforward approach that shows respect and a true desire to help the buyer as much as possible will pay big dividends. I cannot stress this point enough.

Note, too, that while customs, and even state laws may dictate who is responsible for various closing costs, these costs can still be negotiated between buyer and seller. In other words, if the custom or law states that buyer shall pay a certain cost, you can agree to pay it on his behalf.

Splitting closing costs which are often the responsibility of the buyer can often result in a signed agreement. If you want to share your non-agented savings with the buyer, this is a good way to do it, since it requires less cash out of his pocket at closing, making it easier for him to close.

NEXT: Choosing An Escrow Agent or Title Company