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The Golden Rule

Homes are sold based on market values.  Sellers that believe their home is worth way more than similar ones in the area are dreaming.  Buyers do consider countless variables when shopping for a home.  However, some where way back in their brain there is a space/price function that may not even be in their awareness.  Call it what you may, box, square feet, cubic space, whatever; they compare the size of the home to the size of the pile of money.   

The Irresistible Offer and The Golden Rule work hand in hand to help sellers successfully sell their existing home and buy another one by acknowledging the buyer’s size/price ratio.  You can call it quality/price if that is easier to accept.  What ever it is called, a prospective buyer will compare your home to others in the neighborhood/area. 

It is important to recognize a little secret in the comparable sales figures your Realtor® may furnish when listing your property.  Those sale prices are gross numbers; they do not reflect how much the seller paid on behalf of the buyer.   

This is extremely important to all sellers, especially those selling a home priced within FHA loan limits.  Currently FHA allows the seller to pay funds that would normally be a buyer’s expense, closing cost, pre-paid items like tax escrows and points.  Often these items are negotiated during the offer/counter offer process.  In many cases the seller contribution is not a negotiable item for the buyer, especially if they are a first-time home buyer.  They simply do not have enough funds for the down payment AND closing costs.

I learned this a very long time ago, it does not matter how much the buyer loves your home if:

 1. They do not have enough cash to close the deal

2. They can not afford the payment    

 The Irresistible Offer addresses these items and moves the property up the desirability chain.  Once a buyer expresses interest and requests the details of the offer they also learn The Golden Rule.

 The Golden Rule in real estate is simple, “He who has the gold makes the rules.” 

If the seller’s Irresistible Offer contains funds to help the buyer purchase the home, the seller can require the buyer to use their lender.  In my case that puts the seller in the loop by virtue of The Transparent System.

This is very important because most (all) loan officers try to be very user friendly and will issue pre-approval letters based on a credit report and information verbally provided by the buyer (I refuse to do that).  These letters all contain a weasel clause if the support documents do not match the information in the loan application or contain other information that would cause the application to be declined. In other words, they may give off a warm and fuzzy feeling but they are not based on information derived from the required support documents.

Many sellers have thought their existing home was sold, put in an offer to buy another one only to discover much later that the loan application of the buyer on their existing home was rejected.  Home inspections, appraisals and good faith deposits can be expensive mistakes if something goes wrong. 

The industry believes financing is totally the buyer’s responsibility.  Partly true, but this does not mean the seller must be kept totally in the dark. Especially if the seller is contributing funds to make the buyer’s loan possible.  Is that not seller participation in the process?  Of course it is. 

The seller’s contribution towards the buyer’s closing cost are not an upfront expense; they are deducted from the sale proceeds at closing. If the sale does not close the seller owes nothing. 

Chances are the seller will be totally in the dark regarding the buyer’s loan process if they do not practice The Golden Rule.

What if the buyer is already pre-approved with another lender?  “No” is a full sentence.  If they want your gold they follow the rules.  I have closed over a thousand loans where the seller used The Irresistible Offer to market their home.  If the Offer is what attracted the buyer, chances are The Golden Rule will not mess it up.  I have financed homes where the buyer was not all that excited about the home but could not pass up the Offer.

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