When you are selling your home, you want to get the best price you can for it.  Most of us have the greatest portion of our net worth tied up in our houses and we usually feel that we should get as much as the market can bear when we put our homes up for sale.  Of course, the big question is how much is the right asking price for your home?

When selling, you’d better think like a buyer.  Your potential buyer right now is looking on the internet for homes for sale and then they are cruising the different towns to see what homes are in their price range.  Today’s home buyer may be looking at 25 or more homes before they buy and they have a very good idea of what they expect to find in each price range.

So, that is why you need to look at the other houses for sale in your proposed price range.  If every other home in your price range has granite countertops in the kitchen and you still have formica, you won’t get your asking price.  You may not get any offers.  If the other houses have newly finished hardwood floors and you have tired carpeting, again, you are at a disadvantage.  Your choice is either to do some work on the cosmetics of your home or lower your asking price.

When you look at your competition, you are not just relying on comparable sales and the word of your real estate agent.  You are seeing for yourself what you are up against and what your potential buyers are seeing when they are house-hunting.

So, make the effort and take the time to understand how to price your house.  Check out the competition and see if your asking price gets buyers what the other houses in your price range get them.

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If you are thinking of opening a new business or you have a business right now, you know that without customers, you only have a hobby.  Customers are what defines a business.  It doesn’t matter how good a product or service you are providing, if no one wants to buy what you want to sell, your business will not make money.  The mantra from “Field of Dreams” – “Build it and they will come” – doesn’t work in the business world.

If you are still in the business planning stage, you need to do some research to find out whether you will find a clientele.  You must talk to people you know (who may be kind and not give you their true opinion) and total strangers who may be more honest about what they think about your proposed product or service.  If you are not creating a totally new product or service, you must be able to articulate why what you are proposing for your business is different from other businesses with similar ideas.

When you propose to do marketing, what will you be able to say about what problem you are solving, what need your product or service fills, or what benefit your clients will get from your services or product?

If you own an existing business that is looking for new customers, think about trying something different from what you have been doing.  Also, think of putting your eggs into several baskets.  Try online methods and offline methods.  Track how new business is coming to you by asking every new customer how they found you.  Talk to existing customers (if you have any) to find out what they like best about your product or service and what they wish you could change about your product or how you deliver your service.

Every action you take as a business owner should be driven from the idea of your customers and what they want or need from your business.  If you don’t have enough customers, you will never have a thriving business.

Most people know about writing a will and have decided either they don’t want to deal with it or they have already signed one.  But many people don’t know what a health care proxy or an advanced health care directive is and they probably don’t have one of those documents.  Do you have yours written out?

If you watch medical shows or listen to the news, you will hear stories about people who collapse or otherwise become unconscious and the people around them don’t know what medical care to start.  A health care proxy is someone we appoint to make medical decisions for us when we are unable to do so for ourselves.  An advanced health care directive tells the doctors and other medical professionals what treatment we do or don’t want in certain medical situations (living wills usually just discuss end of life situations).  We never know when we might be in a car accident or have a heart attack so no matter how young or old you are, once you turn 18 years old, you should have a document that appoints a health care proxy for you and also gives written instructions about what medical treatment you want.  An advanced health care directive can’t cover every possible scenario but the more instructions you put into writing, the easier the doctors and the courts (if necessary) know what your wishes would be in similar scenarios.  It gives guidance to the person who will be making medical decisions for you when you can’t make them for yourself.

It’s important to appoint a health care proxy who will actually carry out your wishes, even if they differ from the wishes of your agent.  It could be a spouse, son or daughter (if over age 18), or a trusted relative or friend.  You should also appoint a back-up health care proxy, in case you are in the same accident as your health care proxy or the person you appoint can’t or won’t accept the responsibility of acting on your behalf.

With respect to treatment options, it may be hard to guess what you would want done in different situations.  You may need to think through your values of whether life should go on at all costs or whether you want a quality of life that would not be met if you were in a persistent vegetative state.

Get as much in writing as you can think of.  Your estate planning attorney will help you work through these different scenarios until you reach a decision or decide to leave the decision to your health care proxy.  But, it is important to have a signed advanced health care directive which also appoints a health care proxy.  You don’t want your loved ones to be guessing what your wishes would be when a crisis hits.  And crises hit people of every age.  If you don’t have your advanced health care directive already signed, get it done immediately.  Do it for your loved ones.

You’ve finally reached the closing on your purchase of your dream home.  You sit down with your lawyer and she points to a stack of documents and says that you will need to sign them.  What are all those documents?

The bulk of the documents will be the paperwork from the lender for your mortgage (assuming you have one).  There should be a promissory note (the promise to repay the loan), the mortgage itself (which will be recorded and let the public know that your lender has a security interest in your property), certain documents required by federal law (e.g., Truth-in-Lending Statement, Initial Escrow Account Statement, and the typed loan application), and the other documents required by the lender.  Each lender has its own additional documents and some have more documents in their packages than others.  Although these documents cannot be changed, your attorney should be explaining to you what each one is.

You will also be asked to sign numerous copies of a HUD-1 Closing Statement.  This Statement details all of your closing costs, from the lender closing costs, the title expenses, your lawyer’s legal fee, the surveyor fee, the adjustments for real estate taxes, any repair credits from the seller, and gets you to the total amount due at the closing.  The seller’s costs are also detailed.

Additionally, your real estate attorney will have prepared an Affidavit of Title, in which you swear that you have no judgments against you that can attach to the property that you are buying and that you have done nothing to cause a lien to be on the property.  Your title company and mortgage lender require this Affidavit.

Signing all of this paperwork should take you anywhere from 20-45 minutes, depending on the number of documents that your lender requires.  Assuming that everything was fine during the final walk-through of the property you are buying, at this point, your lawyer should be handing you the keys and congratulating you on your purchase.

Many business owners do not budget for legal expenses, figuring that they can’t afford to spend scarce dollars on unnecessary expenses.  Yet, somehow, when they get sued, they seem to find the money.  Lawsuits are very expensive so I’m here to remind you that an ounce of prevention is worth a pound of cure.  Do as much as you can to avoid a lawsuit.

How do you do that?  Sit down and think of every reason for which a business gets sued.  You should have come up with breach of contract with a supplier or a customer, disagreements with your partners, employee problems, products liability (if your business is selling a product), auto accidents if anyone drives as part of your business, failure to get paid, and regulatory issues.

Most potential problems are solved with well-drafted contracts.  Sit down with your business attorney and have her/him review every contract in your office that he/she has not drafted or reviewed in the past.  It is too late now to change any existing contract but you should be aware of all potential issues.  If you don’t have a contract for a potential problem, have your attorney draft a contract and get it signed by the other party.

If there are any customer complaints that you are aware of, address the issues that the customers raise.  They may go away or they may go to a lawyer and sue your business.  Making disgruntled customers happy goes a long way to head off a lawsuit.

Are your premises safe for your customers and employees?  Take a careful walk through your offices, warehouses, factories and make sure there are no safety concerns (dim lighting, badly stored chemicals, carpeting that can become a tripping hazard, slippery floors, etc.).

Know the employment laws and make sure all of your managers know them too.  You do not want to get sued by an employee for sexual harassment, hostile work environment, or discrimination by yourself or by a manager,

If your business is regulated by any government agency, municipal, state or federal, make sure you know the rules.  If someone has to be licensed, make sure he/she is licensed and complies with all licensing renewal requirements, including continuing education.  If you need a permit from a government agency, make sure you get that permit.

Be proactive and spend a little money now.  Although you can’t totally insulate yourself from all lawsuits, by consulting regularly with your business lawyer, you will save yourself a lot of money and aggravation by heading off most litigation.  But, once you get sued, it’s too late to fix the problem.

Posted by: Robin Gronsky | February 28, 2013

What Defects Should A Home Seller Repair?

You just received the home inspection report and a letter from the buyer of the repairs that they want you to do.  Which items should you take care of and which should you ignore?

Most contracts of sale have a paragraph or two that address this issue.  Those paragraphs usually say that if there are any physical defects or environmental conditions that the sellers have a certain number of days to notify the buyers whether they will repair.  If they do not choose to repair, the buyers can either accept the property in the existing condition or cancel the contract.

What does this mean in practical terms?  When we were in the middle of the real estate bubble, sellers only repaired major defects, such as leaking roofs and termites.  This is because no lender would approve a mortgage if there were major defects in the house.  When the real estate bubble burst, buyers demanded that sellers repair everything on their list, including cosmetic problems, or they would walk away from the deal.

Negotiations are more balanced now, but they are still a game of chicken.  If the buyers really want the house, they will agree to fewer repairs or a smaller credit against the purchase price (instead of having the sellers make the repairs).  If the sellers really want to close the deal, they will still agree to make some or all of the more minor repairs or give a credit for some of those minor defects.  If there are fewer houses on the market, the seller is in a better position.

So, if you are the seller, you need to know whether your local real estate market favors sellers or buyers when you are trying to decide which repairs you will make.  You should address the most major defects and get estimates for the cost of repairs to those repairs plus a few of the less major problems.  And then start negotiating.  It is unusual for buyers to immediately walk away from the deal with the first offer from the sellers but it has happened in my experience.  But, negotiations are all about who is willing to give up more to get to the closing.  It’s a delicate balance for you to know how much to repair before the buyers get cold feet that you are not fixing everything on their list.  However, that’s where your real estate agent and lawyer come in to help.  They have the experience to know how much it takes to usually close the deal.  Listen to their advice. And remember that if this contract is cancelled by the buyers, you need to revise your Seller’s Disclosure Statement to include the defects that the buyers found and your next buyer will also find these defects and request that you repair them too.

I advise my business clients that they should have a team of professional advisors.  The team should include an attorney, an accountant, an insurance broker, a banker, and a financial advisor.  Each of these professionals has a place in keeping you and your business functioning properly.

I include a financial advisor because a good one helps you integrate all of your financial needs.  Your largest asset will be your interest in your business.  However, depending on the type of business you have, you may need a retirement plan separate from the sale of your business (your business may not sell if you are the sole person providing a service.  A smart financial planner will also help you with retirement benefits for your employees, which will help you recruit the best talent out there.

A good financial advisor will also have connections to good mortgage brokers, for when you want to buy a new home or refinance your existing mortgage.  He/she will also know asset-based lenders who can give you a loan using your business equipment or receivables as collateral.

Finally, a financial advisor, working with your other team members, will help you create a plan for your exit strategy from your business.  Whether you want to sell your business to your children, to key employees, or a third party, or you want to just walk away from your business with as much cash as possible, you want to take a few years to plan this all out.  You don’t want to face the situation that business owners in 2008-2009 faced where no one was paying top dollar for a business.  Or you don’t want to get suddenly ill and need to leave your business in a hurry.

All of your team member professionals should work together, knowing all aspects of your business and much of your personal life (since the personal side usually impacts the business side) so both aspects are integrated for maximum wealth.

Posted by: Robin Gronsky | February 26, 2013

Estate Planning When You Remarry

Posted by: Robin Gronsky | February 21, 2013

Can An Unhappy Home Seller Switch Listing Agents?

Typical sellers do not do a lot of research about the real estate agent who will list their home for sale.  They usually go with a name they have seen around town or a recommendation from a friend.  They do even less research before they sign the listing agreement which details what the commission you will pay will be, how long the agreement lasts, and whether you can cancel the agreement before it expires.

The terms of your listing agreement will define what you can and cannot do if you are an unhappy home seller.  All contracts are negotiable including the listing agreement.  Therefore, it is in your best interest to read the listing agreement, consult with a real estate attorney about its terms, and negotiate the clauses that are not favorable to you.  At the very least, you should negotiate a short timeframe for the listing (maybe 3 months).  You should have some language in the agreement to allow you to terminate the agreement if you are unhappy or if the listing agent does certain things or does not do certain things that you think the agent should do.

There are plenty of reasons that you may be unhappy with how the sale of your home is going (or really how it is not going).  You may think that the listing agent is not doing enough to market your property, maybe the agent did not hold a broker open house, or maybe you do not get any feedback after a prospective buyer comes through your house and does not put in an offer.

If you are unhappy with your listing agent, talk to her/him.  Maybe the fault in on your side (you are making it difficult to have the house available for prospective buyers to come at times that are convenient to them or you disagree with your agent about how to best showcase your home).  Maybe the fault is with the agent – you don’t see enough being done to get market your house or she/he is not responding to your questions.  If you can get the agent to make the changes that you want or if you understand what the agent (who is supposedly the expert that you chose) needs from you so you change your behavior, you may not want to switch listing agents.  But, what if you cannot come to an agreement about changes?

Ask the agent if you can terminate the listing agreement before it expires.  Many agents do not want to work with unhappy sellers and will allow you to terminate.  If you cannot cancel the listing agreement, you can try to shorten the termination date of the agreement or get some understanding between you as to some changes that one or both of you will make.  Do not just stew over your unhappiness, express your dissatisfaction politely and explore whether both sides can come to a new agreement.

If you do change listing agents, make sure you understand if there are any obligations to the listing agent that you have fired.  Do you have to wait a number of days before you can re-list the house, do you have to pay the old listing agent if the buyer is someone who saw the house while the previous listing agreement was in effect or are there any financial penalties you need to be aware of?  Read your listing agreement and get any changes in writing.  If you are not sure what to do, consult with a real estate attorney to go over your rights and responsibilities under the listing agreement.

Posted by: Robin Gronsky | February 20, 2013

Diversify Your Client Base

There is nothing more exciting to a business owner than landing a big client, one who will buy a lot of product or use a lot of your services.  You can just see how your bottom line will be increasing and it is a fantastic feeling.

Less wonderful is when a big client stops doing business with you, for any number of reasons.  It could be the big client found someone else who does what you do better or cheaper.  It could be that the big client goes bankrupt or changes its business so it doesn’t need your products or services anymore.  Or your big clients want to cut your billing rate or ask for more product at lower prices.  All of these scenarios happen to small businesses all the time.

The solution is to diversify, either your client base or even your industry.  If you have been happy with who your customers are, try to get more of them.  If you don’t like your customers, think of who you would ideally like to have buying your products or services and go after those target clients.

You can change your geographic base of customers, you can change the size of company that you are working with, you can look at related industries.  By adding staff or joint venturers with different areas of expertise, you expand who you can market to and add as your customers.

We all learned the hard way from the Great Recession that our best customers could go bye-bye without warning.  If one client is dominating your revenues, get more clients.  Or you could be the business going bye-bye forever.

 

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