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Virtual victorian negotiation planning document

28/04/2021 Client: muhammad11 Deadline: 2 Day

Virtual Victorian General Information and Confidential Information for Seller By Wendi Adair, Gaylen Paulson & W. Trexler Proffitt Jr. This exercise involves the sale of a house, agents, and electronic mail ("email"). The buyer and seller are physically distant from the property, and have both engaged a real estate agent to represent their interests. 1 During the negotiation, buyer and seller exchange offers through their agents to complete the transaction. A home sale contract specifies terms of the transaction and the closing date. The closing date is the day when the transaction will occur, and is typically from 30 to 60 days from the date of the signing of the contract. 2 Elements of a sales contract may be contingent on certain events taking place, for example, the buyer is able to finalize mortgage arrangements, the seller completes any required repairs, and so forth. Background on Housing Transactions Common Reasons for Using Agents Residential housing is the largest component of personal wealth in the United States and the most expensive asset most families will ever buy or sell. The amount of money involved in the typical residential real estate transaction is well in excess of the annual household income of either buyer or seller. As a result, the transaction is usually leveraged with a long-term loan, called a mortgage, which obligates the buyer to pay regular installments at prevailing rates. Home buyers usually make a down payment, perhaps equal to 10 percent of the sales price of the home, and a mortgage covers the rest of the sales price. Mortgages come in many shapes and sizes, with borrowing capacity primarily a function of the buyer's household income. 85% of home transactions involve a professional agent. Some of the most commonly cited reasons for enlisting the help of an agent are: Overview of the Exercise Property transactions involve legal overhead as well. Questions of ownership transfer, taxes, and various forms of insurance must be resolved for the transaction to be completed. The expenses associated with securing a loan and transferring ownership may be collectively referred to as “closing costs.” These costs routinely amount to about 3% of the sales price. 1 There are formal licensing and accreditation distinctions between brokers, realtors, and real estate agents. For simplicity, we use the term “agents” generally. Work and Effort Selling a home takes work and time. Sellers’ agents advertise, hold "open houses," put up signs, and facilitate tours of the property.33 They may also coordinate preparatory repairs that make the house appealing to potential buyers. Buyers’ agents identify properties the buyer will like, canvass recent sales to gauge the accuracy of the list price of the properties, and accompany the buyer to view the properties. In short, agents do much of the work that makes the transaction happen, leaving the buyer and seller free to pursue other, more productive uses of their time. Advocacy Agents represent the buyer and seller in negotiations. Typically, they do all the negotiating. 2 This ceremony is often called the “closing” or “escrow” date, although terminology varies somewhat by region. 3 “Open houses” are special tours of the houses that are advertised by the agent in advance. The agent usually places an ad in the local paper announcing the open house, puts up special signs to guide prospective buyers to the house, and then waits at the house to show it. Agents also arrange special showings just for other agents. © 2002-2016 Dispute Resolution Research Center (DRRC), Kellogg School of Management, Northwestern University. All rights reserved. DRRC/KTAG teaching materials are protected by copyright law. DRRC requires a per person royalty for use of its exercises. Each purchase of an exercise authorizes copying or electronic distribution of that exercise equal to the quantity purchased. Access DRRC/KTAG materials at www.negotiationexercises.com Contact DRRC at drrc@kellogg.northwestern.edu serving as both the seller’s agent and the buyer's agent, he/she avoids having to divide the commission with any other agents. If a second agent must become involved, the seller’s agent would obviously prefer to split the commission with someone in a position to return the favor later. Because of this structural incentive, about 30 percent of buyers purchase a home listed with their agent's firm.

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