Monthly Archives: March 2012

The Importance of Earnest Money

earnest money check

When writing an offer, there are many factors that are considered to be important, such as price and closing dates. One of the often overlooked items that appear in the purchase agreement is earnest money, the topic of today’s post.

DO YOU REALLY NEED IT?

First off, earnest money, or good faith money is not required in Ohio. However, it is a way to convey your commitment to purchasing a home and is expected by local sellers. Sometimes it can even make a difference in whether or not a seller accepts an offer.

Buyers always ask us how much they should offer. There is no set rule on this although we do recommend at least 1-2% of the purchase price. So, for example, earnest money on a $300,000 offer would be $3000-$6000. Again, there’s no set rule on this and you could certainly go above or below this threshold if you’d like, it’s just a gauge we use.

Some buyers, especially first timers, are always a little reluctant to give any money up front because they often don’t understand how it works. There is actually very little risk in offering earnest money. The money is held by a third party, not given directly to the sellers. If for some reason the deal doesn’t work out for a legitimate reason, the money gets returned to the buyers.

IT CAN MAKE A DIFFERENCE

Earnest money is a way to show your commitment and can actually be a deciding factor. I have been on the listing side of a transaction where we received two offers that were similar in price. The sellers felt that the buyer who offered a significant amount of earnest money was more serious and chose to work with them.  This may be a rare case, but is something not to be taken lightly.

When all is said and done, price is likely the most important thing to a seller. However, showing your strength as a buyer can make a difference so it’s worthy to discuss earnest money with your agent.

 

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About The Authors

The above information is compliments of The Schuman Team, Amy and Dan, of Howard Hanna Real Estate Services.

They can be reached at 216-346-3235 or 216-403-9189 or via email, danschuman@howardhanna.com or amyschuman@howardhanna.com.

The Schumans service the following Cleveland area suburbs: Bainbridge, Bay Village, Beachwood, Bentleyville, Chagrin Falls, Cleveland Heights, Gates Mills, Highland Heights, Hunting Valley, Lakewood, Lyndhurst, Mayfield Heights, Mayfield Village, Moreland Hills, Oakwood Village, Orange, Pepper Pike, Shaker Heights, Solon, South Euclid, University Heights, Westlake, Woodmere.

Beware of Home Search Sites is the property of The Schuman Team and may not be duplicated or used without their written consent.

Beware of Home Search Sites

Everyone knows that one of the best places to search for homes is on line. While some folks still look at the newspaper,  a majority of buyers take to the net for their home search. With such easy access to homes comes numerous pitfalls, and today’s post will discuss this.

Before getting into the main problems of some home search sites, let’s start with a little history lesson. Back before the internet was in existence, most data relating to homes was only available at the local real estate office. For example, if you wanted to buy a home in Gates Mills, you would  have to sit down with an agent in a Gates Mills office to see the inventory.

The Multiple Listing Service then came into play making it easy for agents to share data with each other, but consumers did not have access to this information.  They still had to go through an agent to see the inventory.

Now, all listing information is readily available on line for everyone to see. In fact, sites that show home listings are among the most popular in the country, receiving millions of visitors every month. What has happened over time is that non real estate companies saw the power of having all of these visitors and wanted to “get into the game”. The main problem is that many of these companies are not giving consumers accurate information.

Some companies, like Realtor.com, do offer accurate information as they get their data feed directly from the original source.  Others, however, do not. On many of these secondary sites, the information is simply wrong. Prices are getting changed, square footage is off and the status of homes is not up to date. It is not uncommon to see a home advertised that is no longer on the market. Home sellers are also getting angry when seeing their personal home being misrepresented on line. Basically, brokers have begun to lose control of their data.

Once on line, it is nearly impossible to have information corrected. That is why so many real estate companies nationwide are considering not sharing their listing information with anyone else. Until everything gets sorted out, consumers are paying the ultimate price by being subjected to bad information.

WHAT SHOULD A HOME BUYER DO?

Be careful about where you search for homes. We recommend a site that provides the most up to date information. Our personal home search tool gets its information directly from our local Multiple Listing Service and is the most accurate data you will find. You can find it by clicking the “search for homes” icon on the top right hand side of this page or go to the home page of our website, www.schumanteam.com. Here is what it looks like:

Once here, you can see current listings, create your personal home search and get homes emailed to you automatically. Or, you are welcome to contact us, let us know what you want, and we can create a personal home search for you.

Also, if you find a home on line that you really want to see, it is best to check with your agent to make sure it is still “active”. I couldn’t tell you how many times I’ve had buyers ask me about a home they saw somewhere on line and it was no longer available.

In the end, information will always be a valuable commodity and having a knowledgeable agent to help with your home search will definitely make a difference.

 

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About The Authors

The above information is compliments of The Schuman Team, Amy and Dan, of Howard Hanna Real Estate Services.

They can be reached at 216-346-3235 or 216-403-9189 or via email, danschuman@howardhanna.com or amyschuman@howardhanna.com.

The Schumans service the following Cleveland area suburbs: Bainbridge, Bay Village, Beachwood, Bentleyville, Chagrin Falls, Cleveland Heights, Gates Mills, Highland Heights, Hunting Valley, Lakewood, Lyndhurst, Mayfield Heights, Mayfield Village, Moreland Hills, Oakwood Village, Orange, Pepper Pike, Shaker Heights, Solon, South Euclid, University Heights, Westlake, Woodmere.

Beware of Home Search Sites is the property of The Schuman Team and may not be duplicated or used without their written consent.

A Busy Market Requires High Sense Of Urgency

Are The Tides Changing To A Seller's Market?

We are happy to say that the real estate market here in Northeast Ohio is picking up. Inventories are low, the weather has been unseasonably warm, and the buyers are out in full force.  The rush of activity is good news to everyone, including home sellers.  However, the influx of buyers making offers has created a different set of challenges that we haven’t seen in a long time.

SLOW MARKET = NO URGENCY

Over the past few years when the real estate market was slow, the buying and selling process often took a long time. Buyers were afraid of overpaying and sellers were unwilling to accept what the market was willing to bear for their home. Basically, there was gridlock and an overall lack of urgency on all parties to get anything done.

Buyers, until recently, had been in control. The general attitude of most was that a seller would be lucky to get an offer from them. Plus, if things didn’t work out, they would just buy another home. Their level of commitment was suspect as well with some buyers preferring to just make a verbal offer instead of putting it in writing.

Negotiations also dragged out over days and sometimes even weeks. Getting parties to agree to terms was near impossible and getting all parties to sign and date the documents was more of an afterthought.  Now,  a shift in the market has taken place and those not prepared are getting burned.

TAKE QUICK ACTION OR LOSE OUT

Today’s increased activity is causing things to happen at a much faster pace than many are used to, including some agents. Anyone approaching the process in a lackadaisical manner will end up learning the hard way, when the home they want is taken by someone else.

We are not saying that buyers should make hasty decisions. We are simply recommending  that once you know what you want to do, do it quickly. Make an offer, work out the details, and get all parties to sign and date the documents as soon as possibly. This is even more critical if there is heated competition for a particular home.

NO SIGNATURE, NO DEAL

A last bit of advice. Understand that until all required paperwork is signed, dated, and/or initialed by all parties, there is no deal. We have heard many stories lately of negotiations being verbally agreed on by both buyer and seller, and then another offer comes in out of nowhere before all documents are signed. This can create havoc on an already complicated transaction and sometimes lead to costly litigation.

In the end, you need to be prepared for today’s changing market and having a great agent by your side will certainly make a difference.  Otherwise, the American dream could turn into a nightmare for you.

 

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About The Authors

The above information is compliments of The Schuman Team, Amy and Dan, of Howard Hanna Real Estate Services.

They can be reached at 216-346-3235 or 216-403-9189 or via email, danschuman@howardhanna.com or amyschuman@howardhanna.com.

The Schumans service the following Cleveland area suburbs: Bainbridge, Bay Village, Beachwood, Bentleyville, Chagrin Falls, Cleveland Heights, Gates Mills, Highland Heights, Hunting Valley, Lakewood, Lyndhurst, Mayfield Heights, Mayfield Village, Moreland Hills, Oakwood Village, Orange, Pepper Pike, Shaker Heights, Solon, South Euclid, University Heights, Westlake, Woodmere.

A Busy Market Requires High Sense Of Urgency is the property of The Schuman Team and may not be duplicated or used without their written consent.

Note: The Schuman Team are not licensed attorneys and nothing contained in this post should be construed as legal advice. We recommend that all buyers and sellers have legal documents reviewed by a qualified real estate attorney before moving forward on a real estate transaction.