The term “Buyer’s Premium” is used in the Auction Business to add a percentage or a flat fee added to the contract price to be paid by the highest bidder/buyer.  For example, If the highest bid is $100,000 for a parcel of real property and there is a ten percent (10%) buyer’s premium, the buyer or winner of the bid would pay $110,000.   This is a method utilized by the Auctioneer to shift the burden of the commission payment from the seller to the buyer.

conjunction with the sale of personal property and/or real estate Auction and indicates the amount of commission and/or percentage charged to the buyer over and above the sale price of a personal property item or a parcel of real property. For example, if the bidder/buyer won the bid at the auction and bid $100,000 plus a 10% buyer’s premium on a parcel of real property, they would actually pay the auctioneer, who represents the seller, $110,000 at closing.

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In the State of Georgia, as in most states throughout the United States, the average prospective home buyer(s) will usually select a licensed real estate agent who represents a licensed real estate broker in their neighborhood who will begin searching for a home in a particular location and/or subdivision. The real esate agent and the buyer(s) will usually meet and determine what type of home they are interested in, the price range and the location.  The real estate agent will begin the new home search by utilizing the buyer’s criteria and applying it to a wide variety of multiple listing services.  In some cases, the buyer(s) may initiate their own home search and actually find their new home for the real estate agent, who will then prepare the offer to purchase and represent the buyer’s interest in the negotiation process with the seller’s real estate agent. Unfortunately, the buyera(s), who is usually not able to pay all cash for the home, must first apply to a bank, mortgage broker, credit union and/or lending institution and file an application for a mortgage loan.  The mortgage lender will immediately check the credit status of the buyer(s) with the three credit repositories and determine, based on the mortgage lender’s criteria, exactly how much the buyer(s) may borrow and what the monthly mortgage payments shall be based on the rquired down payment and the longevity of the loan.

Assuming the buyer(s) qualify for the mortgage loan and the sales agreement is signed by all interested parties, the mortgage lender shall select and/or hire a residential real estate appraiser to determine the fair market value of the buyer(s) newly selected home, which shall represent the collateral for the loan and will protect the financial interest in sales transaction. The selected residential real estate appraiser will be responsible for determining the fair market value of the subject property utilizing three approaches to value: the market approach, the cost approach and the income approach.  In most cases the market approach and the cost approach would be most applicable since the new home is not an income producing property.  The real estate appraiser, utilizing his/her electronic data sources, would select four comparable property sales located within approximately one mile from the subject property for the appraisal report that are similar to the subject property in age, utility and design.  The real estate appraiser would make an appointment to conduct an on-site inspection for the purpose of inspecting the subject property utilizing an Inspection Form and/or the Uniform Residential Appraisal Report Form. During the physical inspection of
the subject property, the real estate appraiser would analyze, thorougly inspect and profesionally administer the following tasks:

1.  Describe the Neighborhood
2.  Read Planned Unit Development (PUD) Documents, if Applicable
3.  Site - Secure Plat of Survey
4.  Description of the Building/Structure
5.  Calculate the Replacement Cost of the Building/Struture
6.  Select Comparable Sales and Administer Monetary Adjustments
7.  Research the Property’s Sales History for Two Years
8.  Reconcile the Fair Market Value Based on Research and On-Site Inspection
9.  Make a Complete and Detailed Sketch of the Building/Structure
10.Comment on Required Repairs and/or Replacements
11.Photograph the Building/Structure and all Comparable Sales

It if hard to believe that the residential real estate appraiser is required to complete all of the above tasks and produce a complete, accurate and comprehensive twenty (20) page written residential real estate appraisal report for a fee of $300-$350.  The residential real estate appraiser must purchase errors and omissions insurance, specialized software, residential cost manuals, property data research time and spends hours in the office and in the field and and receives a fee of $300-$350 for each residential real estate appraisal report. The real estate appraiser provides the most important function in the real estate sales transaction and receives the least amount of monetary compensation for their efforts. The buyer(s), the
seller(s), the real estate agent and the mortgage lender all depend and rely on the fair  market value determined by the residential real estate appraiser and yet no one wants to properly compensate them for their professional efforts and expertise-WHY?  The reason is, that residential real estate appraisers in America have no legislative power and have no one to represent them in the Congress of the United States. Residential real estate appraisers in American will always be at the bottom of the pecking order until they are able to organize and assimilate the legislative power necessary in Washington, D.C. so that they may be properly heard and represented.  We can not continue to blame the residential real estate appraiser for all of the fradulent residential real estate transactions in the United States.  The residential real estate appraiser must be properly represented as a professional in the United States and receive adequate monetary compensation for the important work they perform for the buyer(s), seller(s), real estate agents and mortgage lenders.  Once again, the residential real estate appraiser does the most for the least in each real
estate sales transaction.

God Bless America!

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If you really want to sell your house in the worst market in the history of the United States, you must be sure that you are doing all of the right things at the right time.  It is readily apparent that you are in a competitive fight with a large inventory created by many overly aggressive home builders. In most cases, if you are a home seller attempting to sell your existing home that is several years old and may need minor repairs, the builders will usually be victorious  because the prospective buyer will, in the majority of cases, prefer a new home over a home that has been lived in and in need of minor repairs.  In addition, builders who are in a precarious financial position and near of edge of bankruptcy, will just about do and/or offer the buyer many benefits that you the average home seller can not and do not wish to offer.  For example, the builder will offer to pay the buyer’s mortgage closing costs and may allow the buyer to buy down the mortgage interest rate just to make the sale.  Just these two benefits offered by the builder will allow the buyer to save thousands of dollars on the purchase of the home.  In addition, the builder may offer to enclose the deck, add a half-bath or even install drywall in the basement, just to perpetuate the sale. This is a “Buyer’s Market”, which allows the buyer to be highly selective and very discriminating when it comes to making a value judgment on which home best fulfills their domestic needs and desires. As you know, a house is a major purchase and is probably the largest single investment the buyer will make during their life time, with the exception of their mortgage loan. If you were to secure a $100,000 mortgage loan, with a 30 year fixed rate at 10% annual interest rate, you will have paid approximately $316,000.00 over that period of time.  You may be wondering why anyone would want to pay all of that money for a home, right?  The answer is that your home will be the biggest and best investment you will ever make in your entire life and all you have to do is live in the home and mantain it.  Your home will repay you many time over with wonderful tax
advantages awarded to you by Uncle Sam and will usually appreciate many time over what you originally paid for it.  How can you not afford to buy a house? I think it is safe to say that this “Buyer’s Market” in the real estate business will not last too much longer and is an integral part of a cyclical process that provides our national economy with periodic readjustments.  We may want to make the analogy with the New York Stock
Exchange, when the “Bull’s Market” gives way to the “Bear’s Market”, which occurs on a periodic basis due to a cyclical readjustment in the national financial market place.
In closing, please remember that your house will sell for the fair market value when the housing market, the economy and the financial cycle has run its course and has made all of the necesssary market readjustments. Always be patient, whatever goes up must come down and visa versa. Good luck on sale of your beautiful home.

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