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  • Writer's pictureDana Cohen

Trying Out My Client's Shoes

Updated: Jul 1

At some point early in my career I received sage advice... “to be successful in business, you need to put yourself in your customers shoes”. Admittedly, it was much easier to do so when I was selling men’s accessories rather than selling multi-million dollar homes. Yet, a few weeks ago I represented myself and my husband with an offer for an investment property outside my local area of expertise. I’ll start with the punchline… we were the lowest of three offers and lost out to someone with an all cash offer, 28% above the list price. As disappointing as the outcome was, it was the process itself that reminded me of just how nerve-wracking it is for a buyer in today’s marketplace.

In our situation, we flew in that morning from the east coast and immediately rushed to the open house. Arriving late, we only had 45 minutes to examine the house. A discussion with the listing agent revealed that multiple offers were being reviewed in two days. The available disclosure reports identified several areas of concern but had limited information about the potential cost to rectify the issues. In addition, the home was being sold by a trustee who had no information to share about the nature of the home. So, like many of you, we were going to need to make the biggest financial investment of our lives with less than 2 days’ notice and with little to no information about what we would discover if we were handed the keys… a true leap of faith would be necessary.

With no time to spare, we only had time to contact one lender with whom I had the highest degree of confidence could perform on such short notice. He was amazing and had us ready in time for an offer. Admittedly, the last time we had a mortgage the rate was around 3%, so at today’s rates of closer to 7%, the estimated monthly costs were staggering. Yet, with the hope of lower rates in the future and the opportunity to refinance later, we pressed on.

The more uncertain detail was whether we could secure insurance on the home. With one day left before we would likely need to make a non-contingent offer, we were racing to find insurance because a loan can’t be funded without it. We rapidly reached out to four different sources and luckily found one local agent who said he could “probably” bind insurance as long as we had no history of an insurance claim in the last 5 years. We swallowed hard and began counting back to a claim we made related to a dishwasher leak several years ago. Phew, it was 5 years and one month ago. It could be insured, but it wouldn’t be cheap.

Surprisingly, we had “offer day jitters”. In my line of work, I routinely guide clients through the mass of paperwork an offer requires. Yet, my husband was somewhat overwhelmed with the degree to which the legal documents had grown since our last home purchase. By the time he finished the process, he wondered why anyone would want to try to purchase a home without using an agent to guide them. Our offer was indeed non-contingent, which would mean that we would have little to no way out if we changed our minds. And then there was the price… what was the price at which if we won, we would not feel like we overpaid, and if we lost, we would not be disappointed that we didn’t do our best. Even I felt a twinge of anxiety.

What I found most entertaining was my husband’s approach to determining a price. He is a finance guy, as is my son-in-law. Like so many of my clients, they put together a spreadsheet of recent sales comps to support a price. From their perspective, the winning offer would be the result of a rational valuation and negotiation process. This was somewhat at odds with my process where I consider the level of activity, a feeling about the quality and uniqueness of the location, the trends in the neighborhood and to some extent, past sales. In the end, we were both wrong. The reality is that prices paid for homes in a market where there continues to be a lack of listings often defy logic.

So why am I sharing my journey with you? Buying or selling a home is complicated and stressful, even for an industry expert. The properties are different, the locations vary street by street, the disclosures are confusing and often require further analysis, the process is fraught with landmines and the potential to overpay on or over-list a home can have a material impact on your financial condition. Your chosen representative should be equal parts therapist and expert, strategist and realist. It should be someone who you believe treats your money as if it were their own. You should expect that the value that they create will far exceed their compensation. Recently, there have been a fair amount of news stories questioning the value of real estate agents. I would argue that they just haven’t found the right ones.

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