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Buyers: Let’s Talk About Escalation Clauses

Buyers: Let’s Talk About Escalation Clauses

Having been a full-time real estate agent in Northern Virginia since 2005, I have experienced more than the intense seller’s market of 2020-2022. Seller market conditions had been present in 2019, but the market was not as difficult to navigate as it became in 2020 and 2021 for buyers. Escalation clauses became very commonplace in the last two years and right now, they are still present in the market. Unfortunately, the market conditions, while still favoring sellers, is chilling out a bit. Competition is still present, but more limited and buyer actions more deliberate. What concerns me is the buyer and buyer agent perception of how escalation clauses actually work.

When you write an offer with an escalation clause, you are writing an offer that can speak in your absence. I have written about the appropriate use of escalation clauses before which focuses on situations that would call for them. This post is not to rehash that, but to talk about how shifting market conditions are chaning how sellers react to escalation clauses.

The risk to a buyer in writing an escalation clause is that they are showing the seller exactly how much they are willing to pay for a property. In the absence of other offers in hand, a seller is well within their rights to remove that escalation addendum and counter at a higher price, possibly to the max of the escalation addendum. Buyers and their agents tend to think that is not fair, but I am here to tell you that fair has nothing to do with it. When you have shown your upper limit, you need to be prepared for the consequences.

Just in the past month I have represented two sellers who had escalation clauses in offers. Neither had anything above list price when the offer with the escalation addendum arrived. One had multiple list price offers, the other no offers, but lots of traffic. Both buyers were stunned when the seller countered removing the escalation addendum and countering their offer. Cries of, “You can’t do that,” and “That’s not fair,” were made. Well, the seller can and who said life was fair. Mind you, in the ultimate act of fair negotiations, both sellers went midway between the max escalation and list price with their counters. Yet, the buyers were left feeling taken advantage of.

These buyers didn’t seem to understand, that in a market with not enough inventory, sellers still have the advantage. What sense does it make to say you would pay twenty thousand over list, but only if someone else was willing to pay a little less? Do you want the house? Do you want to lock down the deal before a better offer comes in? Especially on properties that you know will get other offers, it is a dangerous game to say no to a counter at a price you would pay otherwise. And if a buyer in this situation has not waived appraisal, there is no way they are going to be forced to pay above appraised value. From even a buyer’s agent perspective, it is hard to see rejecting a counter offer at a price a buyer would be willing to pay.

There is risk to a seller in removing an escalation addendum. Once a buyer’s offer is countered, the first offer that buyer made is no longer valid. It has been altered. This is very important for buyers to understand because their offer with a escalation, once countered by a seller, is not automatically going to best another within a certain range.

Understanding that bold statement above, let’s say Buyer A made an offer at list price, escalating above other offers in increments of two-thousand dollars to a max of twenty-thousand above list. Seller counters Buyer A removing escalation addendum with a sales price of ten-thousand above list price. What is wise for Buyer A to do? If Buyer A was worried that other offers may get higher than that since their original escalation was twenty-thousand above, they would be wise to take the counter. However, if Buyer A wants to counter the seller one escalation above list from their original offer at two-thousand above list, meanwhile Buyer B enters the scene at five thousand above list, Buyer B is now the highest offer. If the seller takes Buyer B, Buyer A will be kicking themselves that while they wasted time trying to get a few thousand lower, they could have locked in a deal still well below their max escalation.

When representing buyers I always make sure they understand the worst that could happen when including an escalation clause in their offer is that they get countered to their max escalation. And common sense says that if they were willing to pay that to begin with had other buyers been present with offers on the table, why wouldn’t they want it in a counter offer?

As far as I can tell from the listing side, buyers seem to think escalation addendums are a way of playing a real estate version of The Price is Right Showcase Showdown. They can best another buyer and be minimally out of pocket. Sellers are under no obligation to take the highest offer. In fact, sellers often times will take the buyer that appeared the most serious from the beginning, even if it costs them one-thousand dollars. An example would be Buyer A bringing in an offer at twenty-thousand above list with no escalation and Buyer B bringing in offer at list, escalating five-hundred above another to a max of twenty-thousand five-hundred above list. Buyer A swung for the fences with their offer. They didn’t need to know another buyer wanted it for just as much. That speaks volumes to a seller.

If you are serious about a home and you are worried enough about other buyers wanting it to include an escalation, try reframing a possible counter from a seller as a positive thing. You may just lose the house you wanted because your perception is that there are no other buyers interested. Better yet, write the max offer you are willing to make without an escalation and get sellers to act vs. waiting a day or two for an offer to escalate you. Buyers are still facing markets with not enough homes to go around.

Under Contract in Fairfax

12907-A Lee Jackson Memorial Highway Listed for $269,000 on May 27th

Under Contract in Fairfax

It is no great surprise that I am sharing my seller’s success of getting under contract quickly at 12907-A Lee Jackson Memorial Highway When we first met regarding the sale of her home at the beginning of the year, she had some choices to make. The biggest choice was to sell the home strictly as-is with many deferred maintenance issues and outdated finishes or to update the condo and hit the market for more.

The choice became easy when the projected sale prices of were put in a spreadsheet, along with the cost of the renovation, to determine if the hassle of renovating was worth the additional money. Boy was it ever. Selling as-is is not a profitable easy button. It is simply an easy button. A buyer who takes on as-is properties and then fixes them up is most definitely looking for a profit margin or at least some additional consideration in a lower price for taking on the pain of renovation. They are also taking on the risk of additional, undisclosed problems discovered during renovation. Let’s face it, anyone who watches home improvement shows knows there is always something additional discovered during a renovation.

In the case of this Grays Pointe condo, my seller hired a fantastic contractor to do the work. Amazingly, despite three additional discoveries that needed work during the six week renovation, the project was over budget by less than four hundred dollars. Everything in the condo was replaced except for the tub. All the flooring, lighting, electrical, appliances, counters, tile and water fixtures. Even the water heater got replaced (one of the unforeseen issues.) The screened porch was even fixed up and the HVAC brought to normal working order when it started to have issues.

After some staging and professional photos, the market was certainly excited about this condo. Memorial Day weekend is not typically busy for the real estate market. You would not have known that from the showings on this condo.

Two offers and one ratified contract later, the seller was under contract on Monday morning. Settlement will be early July. Stay tuned for the final sold price. In the meantime, if you have been thinking of selling your home, I would love to help you increase your bottom line. Contact me to find out how.

Just Listed: Renovated One Bedroom Fairfax Condo for $269,000

12907-A Lee Jackson Memorial Hwy Listed for $269,000 on May 27, 2022

Just Listed: Renovated One Bedroom Fairfax Condo for $269,000

The wait to share this Grays Pointe condo in Fairfax is over. I have been anxious to share the finished product since renovations started over a month ago. Allow me to present 12907-A Lee Jackson Memorial Highway, priced at $269,000.

Step down to a lower level condo that feels like a DC loft. LVP (luxury vinyl plank) floors take you throughout the entire space. The variation of grays and beige allow for any decor to work here.

Enjoy a Wood Burning Fireplace in the Living Room

Accessible Beige by Sherwin Williams has been freshly applied to every wall. All the trim has been whitened. Even the fireplace has been white washed and given a custom wood mantel. Living and dining areas are open to each other and now enjoy the right light of LED lighting, as does the rest of this unit.

Be still my heart. That kitchen! Warmer toned granite counters are the perfect complement to the shaker style, soft close kitchen cabinets and bright white back splash. Under cabinet lighting is the finishing touch. Enjoy brand new appliances that even includes a new disposal and water heater.

Sparkling White Quartz counter in the bathroom atop a new vanity are among the new additions to the bathroom. In fact, the only thing original in here is the bathtub. The toilet, lighting, mirror, faucet, tile and even the washer/dyer are all brand new.

The bedroom easily fits a queen size bed. LVP flooring even goes into the two closets that have been renovated to include new shelving and most importantly, lighting so you can see your wardrobe.

A screened porch existed on this unit before renovations began. Renovations just spruced up the paint, rebuilt the door and trimmed away some of the shrubs. What a great outdoor space.

HVAC has been recently serviced and brought to normal working order with a new motor and new capacitor.

This Grays Pointe condo, minutes from the Fairfax County Parkway and only one block from shops and dining at Greenbriar Town Center, is ready for its next chapter. This unit also comes with one assigned parking spot. Make your appointment to see it today. It won’t last.

The Highest Price The Greens at Wescott Ridge Has Ever Seen

The Highest Price The Greens at Wescott Ridge Has Ever Seen

The Greens at Wescott Ridge are a collection of condos that are structurally stacked townhouses. Two days before Christmas I received contact information for sellers at 11620-B Cavalier Landing who were ready to talk to a listing agent then and there. Two hours to get ready with market comps, I was there to meet the sellers. They were being relocated out of the country for work and needed a reliable agent to handle the listing and sale of their home. After some brief conversation and a look at market comps, my abilities to help them became apparent. Shortly after Christmas, they reached out to officially hire me.

Listing outside of spring was concerning them. While they shook their heads affirmatively when I told them about the powers of the end of year and beginning of the New Year markets, I could still sense anxiety. When their condo was cleaned and staged and had professional photos that I shared, their nerves eased. The home looked great.

Priced at $489,800, we hit the market as planned on February 25th (2022.) Within hours of hitting the market, they had an offer. That buyer’s agent had phoned ahead of her showing to see if a pre-offer inspection was okay. My sellers agreed. So when the offer from that buyer rolled in, they were overjoyed. Not only did it reach the coveted $500,000 mark, but went beyond.

Because they were traveling to their new overseas home during that weekend, we agreed to talk on Tuesday the 3rd of March. By then they had four offers and all were above list price. One other offer came in a tad higher than the first, but they stuck with the buyer that had already had it inspected and knew what they were buying. That sale closed today for $515,000. And despite waiving appraisal and being willing to pay above a suspected low appraised value, the home appraised at sold price. That’s because I gave the appraiser comps, the multiple offers and a list of updates. The buyer had zero regrets about purchasing this lovely condo for $515,000 on March 22nd, which is a new record high in The Greens at Wescott Ridge.

Are you ready to sell your Greens at Westcott Ridge condo? I would love to talk to you about maxing out your take in this seller’s market. The market alone isn’t where success like this comes from. Proper preparation, professional marketing and skilled negotiation are the keys to success in any market. In a seller’s market, it means that much more money in your pocket. Get in touch for a confidential consultation today. There are certainly more buyers looking for homes in your neighborhood.

Under Contract in Fairfax After Four Days

11620-B Cavalier Landing Court in Fairfax Listed for $489,800 on 2/25/2022

Under Contract in Fairfax After Four Days

It was clear that the weekend of February 26th (2022) was going to be a busy one. Listing 11620-B Cavalier Landing Court in Fairfax on February 25th and 7664 Duneiden Lane in Manassas on February 26th meant the phone would be ringing and text notifications beeping all day. Forget about enjoying a slow morning or having dinner with family. In the seller’s market dominating the suburbs of Northern Virginia, having two listings is a lot of work for a Top Producing Listing Agent.

When it came to this Greens at Wescott Ridge condo, it was only a matter of hours on the market before the first offer came rolling in. The buyers had requested permission to have a pre-offer inspection. Their desire to come in with a clean offer was strong, but being first time buyers they still wanted the assurance of an inspection. Asking the seller if they would oblige the request, the sellers were happy to sign off on the inspection. A walk and talk home inspection to ease a buyer’s mind prior to making an offer is better than even a Right to Void Only Home Inspection. A walk and talk inspection is a quick run through the house with a licensed home inspector who can give you ideas of the age of systems and give information after a visual look at the major components of the home. It allows the buyer to offer without an inspection contingency at all.

After four days on the market, and an open house that had probably three dozen sets of buyer through, I was shocked that the sellers had only four offers to choose from. Perhaps the geo-political uncertainty that was looming had buyers being a bit more cautious. That or the offers waived off that were simply not going to be competitive would have put us at double that amount or more. No sense building up the field with buyers that are not competitive.

Tuesday morning came and the sellers and I looked through the four offers. There were two that stood out immediately. The first and one of the last. There were very similar. That left a tough decision. The sellers chose the first offer. It was straight forward and had no escalation clause. That buyer went all-in with what they could do and had already invested in the inspection conducted Friday morning. The third offer started their bid at list price and went up in an escalation clause. They also had no contingencies, but with no condo documents in hand, they had an open ended right to void until we could close that loop.

You will have to stay tuned for the final sold price on this Greens at Wescott Ridge condo. If you are an owner in the development thinking of selling, there is more demand and prices are going up. Hit it while they are high! Get in touch for a no obligation consultation and let’s see if a sale feels right for you in 2022.

Coming Soon in Fairfax for $489,800

11620-B Cavalier Landing Court in Fairfax , Listed for $489,800

Coming Soon in Fairfax for $489,800

An end unit, stacked townhouse condo facing wooded common area is likely to garner interest no matter the location. In the case of 11620-B Cavalier Landing Court in Fairfax, the condo is in a community adjacent to Wegman’s, with a convenient paved trail between the community and the store. Just a couple blocks away are more shops and restaurants. And this Fairfax location is minutes to Route 29, Route 50 & Route 66.

Inside live comfortably on two levels. Main and upper levels are done in hardwood flooring. Living room is expansive and separated from dining room by a double sided fireplace. Kitchen overlooks the dining room and sun room, both with south facing windows that provide a tremendous amount of light on sunny days. Conveniently tucked away before you trek upstairs, is a main level powder room.

Upstairs the owner’s suite provides a generous amount of space with two walk-in closets. Two windows facing the wooded common area are window nooks that allow for a person, or pet to enjoy. Attached owner’s bathroom has recently been updated to include granite counters, dual sinks and a new vanity. Ceramic tile floors and updated light fixtures are a gorgeous sight.

Not to be outdone, the second full bathroom is also sporting a new vanity, new light fixture, granite counter top and ceramic tile floor. Cut outs for shampoos and soaps were included in the tub/shower combo.

Second and third bedrooms also have window nook seating, but enjoy that southern exposure. They are located on the opposite side of the hall from the owner’s suite with the second bathroom and laundry room between them.

Attached garage parking for one car enters on into the unit below the first floor. There is a storage nook under the staircase.

Condo fee is includes water, trash removal, snow removal, exterior building maintenance, road maintenance and also covers the HOA fee. Recreational amenities include a pool and tot lots.

No offer will be reviewed on this condo before Tuesday morning, March 1st (2022.) Stay tuned for open house information. If you have specific questions, get in touch with me.

Slowing Down for Christmas?

Slowing Down for Christmas?

Normally I am extremely occupied this time of year with my real estate business. The fact that I had not one, but two closings this week is a testament to what I believe the yearend market has to offer. I was actually a little bummed that things had seemed to grind to a long pause as I woke up this morning and sat at my desk pondering non-real estate related activities to busy myself.

It didn’t take long for an incoming seller lead to hit my mailbox. He wanted information about the sale of his home in Fairfax in a rush. Rush? Hmm. I called and spoke with the seller. He needed an idea of market comps and process. His move date for work was end of January and he wanted to be entirely out of the home with his family sometime in February. I didn’t want to assume rush to him meant today, but I did ask. Sure enough, it did.

In a matter of a couple hours, I had put together market comparables and was meeting him at his home. I know plenty of agents that would be putting that appointment off until after Christmas. Not me. I understand that real estate needs are of the utmost importance. And frankly, I was thrilled to be able to show how serious I do take my duty in representing my clients.

Christmas is a magical season and it adds to the season for me to be able to share my time and talents with someone in need. When the time comes to sell your home, I would love to share my time and talents with you. I welcome your call any time of year.

Another Year End Sale in Fairfax City

10640 Maple Street Sold for $411,000 on November 19, 2021

Another Year End Sale in Fairfax City

Last December I was pleased to be sharing with you the sale of a Fairfax City duplex in Ardmore. This year, as we approach the year end holidays, I am excited to share another sale of a different Fairfax City duplex in Ardmore. The most recent sale was 10640 Maple Street.

On October 8th (2021,) I brought 10640 Maple Street to the market, priced at $405,000. Having grown up in this neighborhood, these homes are very special to me. Last year’s sale at 10646 and this year’s at 10640 were owned by my neighbors. These were my mom’s best friends. It is fitting that both sold at the end of the year because one of the things I miss most about growing up in Ardmore was the walking up and down the street between neighbor’s houses on Christmas Eve. Neighborhoods are as good as the people that live there and the folks on this particular stretch of Maple Street got along very well. They understoood what being a good neighbor was all about. You watched out for each other in good times and bad. You celebrated together and helped those in mourning.

The daughter of the original owner, who had been the owner for years since her mom passed away, hired me to help her sell the home after having some frustration as a For Sale By Owner. We listed at her same FSBO price, $405,000, but the marketing was kicked up several notches. Professional photography made all the better with some light staging created the all important buyer enthusiasm. Within four days on the market there were four offers, but only one of those buyers were serious enough to make the deal that got them the home. They paid $411,000 and asked for nothing more in repairs or any other concessions.

Today, November 19th, 10640 Maple Street started a new chapter in its life with new owners. As I knocked on the door to get my lockbox I let the buyers know just how special that house was to me. And it wasn’t a line. I learned to make gingerbread cookies in that house. I also learned to wrap Christmas gifts in the smallest bedroom when I was twelve. That was the year that my mom’s back went out . She had no choice but to trust me with her secret stash of presents at the neighbor’s house. Mom may have been convinced I peeked into those gifts, but I never did. Doing the right thing has always been my style, it’s just done on a different stage where the stakes are much higher these days.

When you are ready to sell your family home, get in touch with me for a no obligation consultation. You will benefit from my listing preparation advice, top notch marketing and superior negotiation skills. You will also never feel as though you are just a number. Selling a home is my business, but I never forget it is personal to those who have lived there.

The Second Key to Max Profit When Selling Your Home

The Second Key to Max Profit When Selling Your Home

There are two major things a seller can do, even in a seller’s market, to max out their bottom line. The first I wrote about in detail and is all about creating buyer enthusiasm. This is essentially putting the shiniest, most attractive bait on the hook to the get the best and/or most buyers acting on the listing. The second key is what takes place after a buyer is under contract and it is just as important. It just involves different tasks. Simply put it is:

Maintaining Buyer Enthusiasm and Seller Profit

Neogtiations after a contract sales price has been agreed upon by the seller and buyer can be just as tense as the intial negotiations, if not more so. Buyers can feel they have a seller by the shorts and want to create points of renegotiation along the way. The first point of renegoation is home inspection. Having an idea of how to prepare for a home inspection is so important. Sellers can easily overlook simple things that can cause big panic. Or buyers can feel so entitled they overask. How should a seller respond to an an over indulgent buyer? An experienced, skilled, full-time professional agent knows how to deliver “no” without losing a buyer.

Appraisal is the second hurdle many buyers need to cross as a contingency to a sale. Even if a buyer has waived an appraisal contingency and is willing to eat any difference between appraised value and contracted sales price, there can be a buyer’s remorse issue if the divide exists at all, or is what the buyer considers too big. Not every listing agent meets an appraiser with a package of information to support the sales price. Whether the buyer has an appraisal contingency or not, I know that part of maintaining buyer enthusiasm and my seller’s profit is meeting the appraiser every time.

One of my favorite success stories about meeting an appraiser comes from having a less updated home sell for more than a very updated home of the exact same floor plan. I met the apprasier and though we still appraised low, we sold for more than the updated home. Turns out that discount broker didn’t meet the appraiser and relied on the home to speak for itself, leaving $15,000 on the table. (That was way more than the updated home’s seller would have paid by hiring a non-discount broker.)

In a seller’s market, getting through HOA void periods quickly is important as well. Having an agent that prepares for that ahead of time and doesn’t wait until the seller is under contract is just leaving the right to void period open for a buyer. And that’s not the only pitfall regarding HOAs. Did you know if HOA or condo violations are not corrected before settlement a buyer maintains a right to void under the title paragraph of the contract? Professional, local agents know the most frequently seen HOA violations and can help a seller prepare for their HOA resale inspection before the home is ever listed.

Details abound in the contract to close period of a home sale. Getting the major points of negotiation handled before there is an issue is a major part of that. Hiring a professional agent to lead the way is always the path to the highest profit. Again, it may seem intuitive to cut commission to save money, but he best don’t work for less. If a seller wants the best result (highest bottom line,) the agent they hire matters.

The First Key to Max Profit When Selling Your Home

The First Key to Max Profit When Selling Your Home

Getting the maximum profit when you sell your home, even in a seller’s market is not as easy as you think. A seller can’t assume that any old agent that is willing to cut their commission because “it is so easy to sell houses in a seller’s market” is going to wring every dollar they deserve out of their home sale. Max profit doesn’t start with hiring the cheapest agent a seller can find, even though it is an absolute fact that the largest closing cost is agent commission. Reducing the largest line item paid in your closing costs may seem like a natural win, but as my father used to constantly remind us, You get what you pay for.”

No matter the market conditions present when you are selling your home, the first key to success lies in three words:

Creating Buyer Enthusiasm

In one of the hottest seller’s markets on record, I have met two For Sale By Owners (FSBO) who had cut their commission line item in half by going it alone. What were they lacking? Besides buyers willing to write offers despite enough buyer interest to get it done, someone on their side to help them see their home through a buyer’s eyes and present it to the market in a manner to lift buyer enthusiasm. That is what generates higher prices, and in a seller’s market, bidding wars. Despite popular opinion on FSBOs, neither one was priced higher than the market would allow. They just had no clue how to create buyer enthusiasm and get legitimate offers. That’s where a professional marketing agent is worth their weight in gold.

Adding towels and color to a bathroom makes it more inviting.

Once I was hired as the professional listing agent, the focus shifted from how much could be saved on commission to how to get buyers to want this listing before they have even seen it in person. In each case, that involved staging, but not to the degree you might think. Simple rearranging of furniture to show a floor plan’s utility or larger amounts of space. Placing punches of color to draw attention to the home’s best features. Getting buyers to see how they would live in the property vs. seeing how a seller is currently living in a property. How someone lives every day in a home is not how they sell.

Once the stage is set, a professional listing agent knows to hire a professional photographer. Just like a seller who wants to cut commission believing it will net them more money, I fought hiring a professional photographer for too many years. Looking back, I can’t believe I ever took my own listing photos. The professionals in any field can not be matched and are a huge component of success. And naturally, the biggest compliment I get from my top notch photographers is that they love taking pictures of my listings because they are always primped for photo day and make great subjects. I like to say they are smiling and saying cheese when the photographer arrives. Still, it is unbelievable to me that a lot of listing agents don’t worry about what they photographers are taking pictures of if they are just professional.

Even the tightest kitchen is welcoming with a bit of color and fluff.

While words used in describing a listing are also very important, they are a second to photos. Listing preparation and staging are vital to making sure your photos leap off the screen of the buyer’s phone, tablet or keyboard and plant that fast growing seed of buyer enthusiasm. Making sure the home presents the same in person to build on that level of enthusiasm is where all the preparation a seller did and maintains throughout showings is important. Making beds, clearing clutter, emptying litter boxes daily…you get the idea.

As I tell all of my sellers, the minute a buyer slumps their shoulders or sighs at clutter, condition, painting projects, old carpet…whatever…you have lost the chance at a full price offer. The cash register in the buyers head is running and they are overestimating the cost to get the home to look the way they want it. And the reality is that getting a home to look they way most buyers want is not as difficult, or costly, as a seller may think. Listing preparation is critical to buyer enthusiasm. Skipping it all together and relying on a hot market to bring you tremendous results is costly mistake.

Both of my FSBOs listed at the same price they had gone it alone and both got multiple offers and ended up selling above list price, which paid for the fee they had tried to avoid when unsuccessfully listing alone. However, it wasn’t just as simple as making sure the home looked great. That’s where we come to the second key to max profit when selling. Click the link to find out more.

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