Serious Buyers: Top 10 Signs

"You Know One When You See One"

[Editor's note: this post is a companion to "Unserious Buyers: Top 10 Signs" and "Is the Buyer Serious? Here's One Clue"]

"The race is not to the swift, nor the battle to the strong -- but that’s the way to bet.”

--Ecclesiastes (with an assist from Damon Runyon)

For the benefit of non-Realtors, here's a "Top Ten" List of ways that Realtors know that a home Buyer is serious.

10. They're represented by a good, experienced Realtor (vs. their part-time Realtor buddy . . . or no one).

9. They've been qualified by a lender, and know what their budget is.

8. They ask germane questions ("How old is the furnace?" "What work has the homeowner done to the house?") vs. irrelevant ones ("where did the owner get their artwork?")

7. The Buyer's home search has "traction": their home search progressively tightens around a specific location, style of home, and price point.

6. They adjust their schedule(s) to learn the market in a concentrated time period, and block out 2-3 hours, minimum, to see multiple homes per outing.

5. All ultimate decision makers are "on board" and present for showings (vs. partners who are reluctant and off playing golf -- or shopping -- while their significant other looks).

4. They set up a second showing to test their initial (positive) impressions, and to learn the house better.

3. They ask for and study all relevant Seller's disclosures, municipal inspections, and Realtor marketing materials.

2. They take careful notes as their Realtor shows them properties.

1. They buy something.

Not every serious Buyer exhibits all 10 of the above signs, and more than a few actual Buyers display few or none of them (the vaunted "serendipitous Buyer" of Realtor urban legend, for one).

But . . . Damon Runyon's quote is more accurate than not.

P.S.: One more sign (#11.) that the Buyer really is serious: their life circumstances -- new job, baby, expiring lease, etc. -- dictate a change in housing.

"As Is" Misconceptions

Realtor, Layman Definitions

To home sellers, "As is" usually means that they're not going to do any updating or staging to get ready for market.

So, the dated carpet, scuffed hardwood floors, and out-of-fashion interior paint . . . are going to remain dated, scuffed, and out-of-fashion.

All fine, by the way -- as long as the price reflects those things.

Realtor Definition

By contrast, "As is" to Realtors means something entirely different.

Namely, that the Seller is waiving the disclosure requirements, and that the Buyer is assuming responsibility for any and all needed repairs -- of which there are usually several (if the Seller knows of material problems, they're still obliged to tell Buyers).

That's in addition to the Buyer assuming responsibility for any items ("repair or replace") required by the city inspection, if the municipality has one.

To take the risk, time, and money to address these problems, Buyers understandably expect a hefty discount.

Guilt by Association

Which is why Sellers whose homes are dated but are otherwise in good repair are usually ill-advised to sell "As is."

Instead, it's almost always in their interest to tackle any minor repairs, complete the Minnesota Seller's Disclosure . . . . and then let the home's condition speak for itself, without the stigma of selling "As is."

P.S.: selling a perfectly good (but dated) home "As is" is like electing to take a college course "Pass/Fail" when you would have gotten an "A-" (something I actually did years ago, which says more about the (fluffy) course than it does about me).

Most Important Question on Seller's Disclosure?

Sellers Who Don't Know the Condition of their Homes

What's the most important question on the Seller's Disclosure? (in Minnesota, a 9 page, single-spaced document with perhaps over 100 of them)

At least in my opinion, the one asking whether the owner has continuously lived in the home the last 12 months.

That's because the answer to that colors all the other answers.

Legal Standard

Critically, the responses on the form are to the best of the owner's knowledge; if they've spent 9 of the last 12 months at their Sun Belt condo, they may not know that the roof has sprung a leak, there was water in the basement after a particularly heavy rain, or that the fridge's compressor is suspect.

Of course, a good Buyer's inspection should reveal all those things.

But if they don't, and the Buyer is adamant that the Seller's disclosure was deficient, the legal standard for recovery is proving that the owner knew or should have known about the problem.

Exhibit A in the owner's defense to any arbitration action or lawsuit is likely to be the line in the Seller's disclosure indicating that the owner hasn't continuously occupied the home the last 12 months.

P.S.: Of course, an owner who's truly unaware of the condition of the property -- say, because they've rented it for several years -- is better advised to tell Buyers that, and either sell "as is," or pay for a third party inspection.

Suicide and Seller Disclosure

Disclosing, But on a "Need to Know" Basis

[Editor's Note: thanks to Henry Brandis, Edina Realty Senior Vice President, for providing background on this post.]

Currently under Minnesota law, home Sellers have no obligation to tell prospective Buyers that a suicide occurred on the premises (originally, there was no disclosure requirement; then there was; now there isn't again).

Yet experienced Realtors will often advise Sellers to disclose that fact, anyways, for two reasons: 1) the Buyer is inevitably going to find out; and 2) given #1, it's better for the Seller to get ahead of the issue, and defuse it.

"Need to Know" Basis

So, what is the preferred strategy?

Given the sensitivity of the subject, the most appropriate way to handle it is to wait until a prospect shows serious interest in the home -- typically, when they do a second showing.

Then, the listing agent will provide the prospective Buyer with an informal but written disclosure, and ask them to initial it.