WE AREmatchmakers, hunters, visionaries, writers, and sometimes magicians. We thrive when we meet people who are enjoying their life’s journey and are blessed to be a part of it. We strive to inspire and respect those who are faced with a life-changing event. Hope can be fueled with a friend. Our work is a wonderful bonding experience that is sure to bring many smiles along the way.
FOX & RILEY is always trying to be better than your best friend, who was always trying to fix you up. You thought you preferred blondes until you met a thrilling brunette. You thought you needed a 3 Car Garage until you saw your dream pool.
You thought you wanted tall, dark, and mysterious until you were swept away by a smiling ginger prince charming. You thought you needed a 2 story, until you experienced your instant connection to a mid-century ranch.
FOX & RILEY lives our motto that THE HUNT IS ON… The jungle of opportunity is not limited to the multi-list or broker websites. We strive to hunt for off-market and market to sellers for unique homes. Whether this is a property debuting shortly or a seller who will entertain a one-time showing, we thrive in an aggressive market. We have decades of professional relationships throughout the metro area. Our competition is a valued partner. Real Estate is a team sport among respected professionals who share the pulse of the market. The majority of home sales occurs with a cooperating brokers.
FOX & RILEY strives to intervene when the property’s current look doesn’t blend with your desires. We can imagine the home beyond its current lack of appeal. We share the possibility of a minor change that may elevate this property closer to your dream home. This can be attainable, affordable, and a potential treasures investment.
There are times when the home is magic. The first property you tour… The drive down the lane… The first glance… Love at first sight... It happens more than you think. Many times, it is not the home you thought you wanted. Like the lyrics in a song – “Sometimes, love just sneaks up on you.”
FOX & RILEY takes pride to be your guide, your advisor, and champion for your next chapter.
THE HUNT IS ON...BUYER REPRESENTATION
THE GOAL OF THE FOX & RILEY BUYER CONSULTATION
The FOX & RILEY MARKETING CONSULTATION is designed to prepare the buyer for success in the marketplace and aid the buyer in maximizing their options as a buyer. The discussion of the provisions to reduce the buyer’s risk in a transaction is essential before beginning the process. The consultation allows the buyer to determine the buyer’s comfort level with being represented by the FOX & RILEY agent. Contrary to many other states, Missouri requires a “Written Buyer Representation Agreement” before the agent may represent the buyer. In most states the consumer who is in buying mode, can assume that the agent is representing them. This is “Assumptive Agency” and does not require a written commitment from the broker or the buyer. FOX & RILEY understands that this is a critical decision to select your representation. It is our sincere desire that the in-depth consultation will ease any anxiety the buyer may feel about representation. FOX & RILEY never wants a buyer to feel forced to make a decision. The time must be right for them to be comfortable with a decision. The representation agreement can be tailored to the buyer’s comfort level.
THE HUNT IS ON...PERSONAL PRESENTATION
CREATING YOUR BUYER PROFILE
“Love Letters” vs Objective Narrative. The Love Letters, personal photos, pet photos, could potentially assist in a discriminatory decision, when sellers compare offers. Offers should be compared on their ability to meet the seller’s transaction goals and the offer’s illustration of the buyer’s strength and the buyer’s ability to close the transaction in an objective manner. The terms of your offer and the packaging of your offer must be developed to illustrate your buying power and motivation, while protecting everyone from unwanted potential discrimination.
THE HUNT IS ON...REDUCING OBSTACLES
THE ROLE OF THE PRE-APPROVAL
The pre-approval serves two purposes. It allows the buyer to move forward with confidence that they can receive a loan for the property being considered, as long as the property meets the appraisal requirements of the lender. The second use of the pre-approval is to illustrate to the seller that the buyer has been approved for the sale price of the offer. In the past, some brokers would request that lenders issue approvals for the exact amount of the offer.
Today, the pre-approval can be used to enhance the strength of the buyer. The power play occurs when the offer is below the buyer’s pre-approval maximum. There can be a very positive reaction of a seller when comparing two offers with identical purchase prices. Offer Number One has a sale price of $500,000 with a pre-approval at $500,000. Offer Two also has a sale price of $500,000 but has a pre-approval amount of $600,000. When the seller reviews the loan pre-approvals, which offer appears to have the stronger buyer?
THE SELLER GUARANTEE
In addition to the standard pre-approval, there are lenders who offer a seller guarantee that the transaction will close. They complete the entire processing of the loan with just the added piece of the appraisal. If the property appraises, they will guarantee the close. The lender offers a $5,000 guarantee for the seller, if the buyer is unable to close the loan.
TODAYS CHALLENGE FOR THE VA BUYER
There is so much misinformation among people regarding the VA Loan and the VA Loan process. FOX & RILEY tries to position our VA buyers to compete with conventional buyers. The only additional cost that a seller incurs with a VA buyer is the cost of the termite inspection. There have also been incidents of VA appraisers, without experience in a specific market, producing low opinions of value. While these stories may be few and far between, they continued to be replayed by the public. There is also another piece of information that an additional inspection is completed by the appraiser. This has been illustrated by loan predications. The majority of VA predications would also appear on a conventional appraisal, but are labelled as notes, rather than predications. In a very strong seller’s market, it has become more difficult to obtain an accepted contract with VA funding primarily due to misinformation continuing to circulate among the public. FOX & RILEY strives to support our veterans by making sure that all parties understand the VA process and broadcast our success with many VA transactions.
THE HUNT IS ON...PLAY SAFE
THE HOME INSPECTION
FOX & RILEY believes that it is always best to have a complete home inspection in every transaction. This is the strongest risk reduction for buyers and sellers. Our experience has continued to reinforce this as a commitment for all transactions. We have seen buyers of relatively new homes discover major issues during the inspection discovery period that should be addressed. These items can be a major financial burden for potential buyers and were possibly not apparent to the seller. Nothing can compare to the “Peace of Mind” that a professional complete inspection can deliver.
COMPETING AGAINST CASH BUYERS
FOX & RILEY believes that the Cash is King mentality is often paired with an attitude that CASH allows the buyer to secure the property at a lower price. FOX & RILEY has experienced that the higher price often wins over a cash contract, at a lower price. Whether the cash arrives from a lender’s wire or a Brink’s truck from the buyer, it has no impact on the seller. Other conditions have more concern for the seller.
THE HUNT IS ON...DEFINE THE SEARCH
REALITY OF THE MARKET – PAIRING FEATURES AND MARKET REGIONS
A quick reality check is determined by looking at all categories of properties that meet the feature demands within the region the buyer is considering. Many times, the feature demands can restrict the market regions the buyer wants to pursue. For example: A client had a simple need of a 2 car garage, 2 full baths and 3 bedrooms. Their price range was a maximum of $450,000. Their first-choice region to tour has one property that met the feature requirements and was within their price range. For the entire last 12 months, there was just one home. When the associate shared the sale stats, the property was an “As Is” sale with much deferred maintenance and the buyer being responsible for occupancy requirements. When further looking at the specific market region, the next lowest sale of a non “As Is” home with a 2 car garage was $525,000, $75,000 beyond their max budget. There were many 1 car garage homes within their price range. This is an example where the buyer concedes a feature and investigates the market’s 1 car garage homes in that region. If they do not want to concede on features, there are many alternative markets with all their features within the metro area.
DEFINING YOUR GEOGRAPHIC MARKET
Will it be school district boundaries, municipal boundaries, zip code boundaries or specific neighborhoods? It is always best to experience the areas being considered and consider commuting distances and proximity to other requirements of your lifestyle.
SELECTING A GEOGRAPHIC STARTING POINT
FOX & RILEY encourages clients to select the area they would like to start searching. There are so many interesting areas of the city, small towns, and suburban centers
within the Metro Area. This gives the buyer the opportunity to center on the neighborhoods that have the greatest appeal for their life.
THE HUNT IS ON...STARTING THE SEARCH
It is always best to experience the property with a private personal tour rather than a public event. This allows the buyer to experience the home without the distraction of other buyers. The buyer needs to see how this home will impact their daily lives. This is difficult to do in a standing room only setting.
In contrast to FOX & RILEY’s position on private showings, many sales associates are shooting for the masses to visit the home. FOX & RILEY is centered on attracting a committed audience, without the chaos of neighbors and curiosity seekers. It may be necessary for time constraints to see homes during a public open house. If at all possible, with Buyer’s interest, FOX & RILEY would encourage a follow-up private showing.
PROPERTY STATUS – SALES DURING COMING SOON
The coming soon allows the public to know that a home is scheduled to come on the market. That technically does not guarantee that it will be debuting with time to view. In an aggressive market, the property could go under contract without the buyer ever setting an appointment. We have seen next door neighbors, prior guests at the home, vendors at the home come forward with an offer without setting a showing appointment, during the “Coming Soon” phase of the marketing.
COMING SOON - BLIND BUYING
Coming soon simply announces the future opportunity for the home to debut on the market. There is nothing to prevent the buyer or seller from negotiating an offer during the coming soon period. The Blind Buy Practice is often used by investors, relocation buyers, and escalates with a high demand property in a high demand area. It is possible that someone writes a firm offer or someone writes an offer contingent on viewing. Everything is possible in this time frame. FOX & RILEY stress full market exposure is most likely to deliver the best results for the seller. Some aggressive sale prices have been secured with blind buying.
PROPERY STATUS – ACTIVE
Active status are properties that are available on the market for sale. This does not guarantee that you will be able to tour the property. This status usually remains while the buyer and seller are negotiating a deal. It is highly possible that the status could change before the completion of your personal tour. It is best for the FOX & RILEY agent to determine if there are any offers before the appointment time. To divert your entire tour route for one property, only to discover there are 30+ offers on the table can be extremely frustrating in a fast-paced market.
PROPERTY STATUS – ACTIVE CONTINGENT
Properties that are under contract with contingencies to be satisfied before the transaction is firm. This status can be in place when properties have not completed the building inspection phase of the transaction, are waiting for an appraisal, or waiting for loan approval, as well as other potential contingencies that could be contained in the current offer.
POSITIONING – ACTIVE CONTINGENT STATUS – “with kickout”
This is a property that potentially may be bumped out of play by another offer. This is a property with contingencies to be resolved, possibly the sale or closing of another residence. If the seller chooses a new offer, there is usually a time frame of allowing current buyer to satisfy or waive their contingencies. If the current buyer does not satisfy the contingency the new accepted offer becomes the primary contract. This seller is usually open to new less-contingent offers or possibly higher priced offers.
POSITIONING – ACTIVE CONTINGENT STATUS – “Looking for Back-up”
The difference between the kick-out position and the “Looking for back-up offer’s position” is that the Seller is looking for another offer, but they cannot bump the current contingent offer. The new offer could be accepted during this time frame but conditioned on the previous offer not being able to close or satisfy its contingency constraints. This could go on up until the scheduled closing date of the current offer. The back-up offer usually contains the ability for the new buyer to continue their home search and be released if they find another home. In a market where buyers are stretching with bidding wars, the frequency of buyer’s remorse has certainly increased.
PROPERTY STATUS – Back on Market
The most common occurrences for coming back on the market are the inability to resolve the building inspection, the property not appraising, or the buyer’s inability to obtain loan commitment. In a bidding war setting, buyer’s remorse can certainly be a common cause. These properties can be great alternative sources for the buyer. This seller may not want to play the bidding game again and are usually positioned to be serious sellers.
THE HUNT IS ON...DRAFTING THE OFFER
IDEAL CLOSING AND POSSESSION
In an aggressive market, it is best to position the time constraints, if possible, to the person in prime control. In a seller’s market it is always best to consider if the buyer can accommodate the seller’s desired time frames. In a buyer’s market, you may be able to craft all the time frames for the buyer’s ideal dates.
REMOVING OBSTACLES – THE APPRAISAL RIDER
The appraisal rider was originally crafted for individuals, primarily cash buyers, who were seeking a third party’s approval of the contract price. In an aggressive market of highest bidder takes all. The “Big Dog Bidder” become a “Pup” who needs to have another opinion of the value behind their bid. The buyer is seeking to kill the deal if the property does not appraise or negotiate the deal down to the lower appraised price. There is typically no advantage for the seller if the appraised value is higher than the sale price of the offer.
On contracts that require financing, transaction that that are less than 20% down typically must appraise and the use of the rider could be contract “clutter.” The Appraisal Rider can be used with larger down payment loans to have a third party’s blessing of the purchase price.
COMPETING AGAINST CASH BUYERS
FOX & RILEY believes that the “Cash is King” mentality is often paired with an attitude that CASH allows the buyer to secure the property at a lower price. FOX & RILEY has experienced that the higher price often wins over a cash contract, at a lower price. Whether the cash arrives from a lender’s wire or a Brink’s truck from the buyer, it has no impact on the seller. Other conditions have more concern for the seller.
WHAT IF IT DOESN’T APPRAISE?
In the event of a purchase price beyond the appraised value the buyer may have the ability to complete the transaction, even when the property does not appraise. There are rare occurrences where the strength and assets of the buyer, may have a lender accept the low appraisal and complete the transaction. In most cases, the buyer may have to make up for the appraisal gap in value. This is the difference between the appraised value and the purchase price of the contract. The buyer is not obligated to make up for the appraisal gap.
APPRAISAL GAP GUARANTEES
In an aggressive market of escalating prices, many buyers have considered that the appraisal gap may happen, but the buyer stills want to complete the transaction, even when the property does not appraise. These are the real “Big Dog Buyers” who do not turn into “Pups” after the contract is accepted. The appraisal gap amount can be guaranteed by the buyer.
For example: The loan requires a 20 % down payment computed on the appraised value. The property was under contract with a buyer for $500,000 with a 20% down payment of $100,000. The appraised value was $475,000. The buyer’s 20% down payment would be $95,000 plus the gap between the appraised value and the sale price. In this case, the buyer would need to come to the closing with $120,000, rather than the original $100,000 and complete the transaction.
APPRAISAL GAP STARTEGY
FOX & RILEY has a form approved by counsel that provides for a buyer to commit to a closing with assuming a portion or the entire appraisal gap. This allows the buyer who must have an appraisal to compete with offers that are not going through the appraisal process. Research is essential to the appraisal process, but always remember the data is the past. Today is a different movie, with an ever-changing story that could be better or worse.
REDUCING RISK – COMPLETE HOME INSPECTION
FOX & RILEY commits that limiting the liability of our client is always considered in the document preparation and closing the transaction. Any “As Is” transaction could be an open door to future liability. The highest risk transaction is one where there is not a complete seller disclosure and where the buyer does not hire a qualified inspector. This is also the highest risk transaction for a Missouri seller, where any adverse material facts regarding the property must be disclosed prior to accepting an offer.
REDUCING RISK – SELLER DISCLOSURE REVIEW
FOX & RILEY believes that a thorough review of the Seller’s Disclosure Statement is an important and crucial step in drafting a purchase offer and later in choosing the scope of inspections. Any deal breaker items that must be replaced for you to consider the property should be included in the purchase offer, if the buyer is concerned about investing money in inspections and the seller choosing to not address the “Deal Breaking Item.” If a buyer is seeking to improve their appeal to the buyer and are willing to accept seller disclosed defects with the property, it can make the buyer’s offer more appealing to the seller by including acceptance of the defective items in the purchase offer.
REDUCING RISK – WELL CRAFTED INSPECTION NOTICE
FOX & RILEY’s critical next step after reviewing the inspection reports is a concise clear Inspection Notice. This notice should be written with the requested remedy clearly spelled out with who, what, and when the items will be completed. The scope of work can never be too clear.
FOX & RILEY does not commit to list of failing items from a report. To have a report stating the dishwasher does not operate. This has nothing to do with the meeting of the minds of the buyer or the seller regarding the remedy of the issue. The seller may be thinking his uncle will install a new timer and the buyer may be thinking this 20-year-old dishwasher will be replaced. If the buyer wants a new dishwasher, it should be stated as such. If the buyer is happy with Uncle Joe putting in a new timer, let the buyer and seller agree to this in writing. Never leave the remedy up to interpretation. FOX & RILEY strives that the Inspection Notice must be remedy oriented and clearly written.
REDUCING RISK – HOME WARRANTY
The Home Warranty is available from several alternative firms in the region. The Home Warranty can be included as an item in the contract or an item in the Inspection Notice. The warranty can be paid by the seller or the buyer. Frequently properties are offered with warranties in place for the seller and an additional time frame for the Buyer Coverage. This is a great tool for a seller and buyer to reduce the cost of any unforeseen covered items failing during the listing or after the closing for the buyer.
REDUCING RISK – PRE-CLOSING WALKTHROUGH
FOX & RILEY considers this to be an essential part of the closing process for the protection of all parties. Ideally, the Inspection Notice items should contain dates for items to be completed prior to the pre-closing walkthrough. The pre-closing walkthrough does not require the property to be vacant. It is possible that there will be personal belongings, packing materials etc. at the time of the walkthrough. The purpose of the walkthrough is two-fold. The property needs to be in the same condition as it was at the time of your contract. The other purpose is to verify that the items requested in the Inspection Notice have been completed and paperwork has been delivered or is present at the home regarding the repairs. In addition, the buyer has the opportunity for the inspector to review the repairs to attest to their workmanlike manner and satisfaction of the Inspection Notice demands. If any items need to be addressed, these items are addressed in the FINAL WALK-THROUGH Form and immediately delivered to the seller’s agent to address with the seller.
TIME FRAME RESTRAINTS
There are many time constraint items in the sale contract that could be tailored to increase the buyer’s potential appeal to a seller. Consider that the default language for the Building Inspection is 10 days and your inspector can be there tomorrow. Having a 3 day discover period could be much more palatable to the informed seller who has an offer with a buyer not conducting inspections. The informed seller knows the no building inspection transaction can be ladened with future liability and the shortened time frame can be more appealing to the seller.
Any time frames that can be altered to increase the buyer’s appeal to the seller are items to consider, as long as the time frames remain functional for the buyer’s protection.
THE HUNT IS ON...THE NEGOTIATION STRATEGY
SETTING THE STAGE
Negotiations begin at first contact with the listing agent. FOX & RILEY has experienced that this can be an opportune time to assess the climate around the sale, the expected outcome, the ideal terms, and occupancy the seller is trying to achieve. The FOX & RILEY reputation for closing transactions in a professional and timely manner has been proven to be a benefit for sellers and cooperating agents. This professional teamwork benefits all parties.
COMPETITION – Time Constraints
FOX & RILEY believes there are advantages and disadvantages to placing arbitrary dates on contract presentation and acceptance. Recently, we have experienced more properties publishing an offer acceptance date and contract submission deadlines followed by” We have the right to accept an offer at any time.” Even without the posting, they had the right to accept an offer at any time. The danger occurs when agents and buyers rely on the published statements and believe they have ample time to submit an offer, only to discover the property being sold prior to the published dates.
LAZY NEGOTIATORS – Highest and Best Strategy
There is nothing more dangerous than the common practice of going back to all offers and telling everyone to come back with their “Highest and Best Offer”. FOX & RILEY warns buyers and sellers that this strategy has a basic assumption that all offers should be treated the same and buyers assuming that none of the offers were acceptable to the Seller, after the Buyers were informed to come back with your highest and best. This is a practice that was employed during market downturns with foreclosed properties and investors. This practice was used by agents and bankers who did not want to take the time to compare, counter, or accept the best offer on the table.
Consider that you are the highest offer of all the offers submitted. You placed the highest value you could on the offer and had another property as a possible back-up. You need to buy a house. You assume that the offer you made wasn’t good enough for the seller. You could simply take your offer off the table and move on to house number 2 that you could really buy, without playing games. During one of these situations our buyer simply did just that, they directed us to pull the offer and move on to another house. When we called to inform the listing agent of the withdrawal, there was an audible gasp. Followed by, “You are the highest offer!” Our response was “We are sorry that wasn’t acceptable to your seller.” In minutes, the seller wanted to accept our original offer.
PRETEND AUCTIONEERS – Highest and Best Strategy
Auctioneers must be licensed auctioneers in Missouri. Selectively informing agents the amount of the current highest offer is a questionable practice. An uninformed broker shared their negotiation strategy with FOX & RILEY on a very desirable FOX & RILEY listing. The agent, who was writing an offer inquired, “What is your highest offer?” Shockingly, we responded with,” all offers are under consideration.” He then openly shared that he always tells what the highest offer is when people are considering submitting an offer. We inquired, “If we were your highest offer, would you inform us that you were sharing our price with all the interested parties?” The answer was simply “No”, because we were the highest offer. We believe that with the seller’s permission you could employ the highest bid strategy, but also believe that you should also consider obtaining a Missouri Auctioneer’s license. This is simply intending to auction, without the credentials.
LIMITING THE BUILDING INSPECTION
The building inspection is an essential tool in limiting the buyer and seller risks in the transaction. The inspection provisions can be altered to reduce the fear of a seller and still protect the buyer. This can be a critical element to a seller choosing the buyer’s offer over other competing offers.
For the seller who is worried about the inspection resulting in a laundry list of “Honey Do” items, the buyer could consider limiting the inspection to single items beyond a certain cost. The Inspection Notice is to be used for individual items of $500 or more, etc.? If you know you will be replacing the roof, the windows, etc. consider eliminating them from the scope of the Inspection.
If you are satisfied with a working. safe, and functional furnace and air conditioner, accept that must be functional and safe, but you are not requesting them to be replaced due to age. If you are going to replace the appliances, consider accepting the appliances in their “As Is” state and exclude them from the scope of the inspection. Consider excluding all cosmetic items from the inspection. If you are willing to accept any or all disclosed defects, consider making their acceptance part of your contract to enhance your contract’s appeal to the seller.
ESCAPE CLAUSE POSITIONING
You have the perfect home - A Perfect Home Inspection. You completed your municipal inspections. What do you have to worry about? FOX & RILEY looks carefully to see if the escape language is in play with the offer. Tucked into the Building Inspection Section of the contract is the “Escape Provision.” For no reason, the buyer can walk away without a penalty after completing inspections. They can walk, even with a perfect inspection with the entire earnest money.
We believe the concept of escape by the buyer, will be seriously considered by the seller, when comparing offers. This can be especially risky to the seller in the blind buy. If you intend to ask for remedies of items, if something is wrong, rather than to escape. To increase your appeal to the seller, you might consider eliminating the escape provision. If you might consider escaping without reason from the transaction, this provision should remain in the contract.