Putting house sellers at ease Long & Foster, other Realtors guarantee homes will sell

Rate lock also offered

Program assists those who want to buy another dwelling

July 21, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Hoping to coax hesitant buyers into the housing market, Long & Foster Real Estate Inc. last week announced a new service to guarantee the sale of homes, giving clients greater bargaining power.

In the latest hybrid of a guaranteed-sale program used by other area agencies, Long & Foster also will allow buyers to lock in loan rates through its mortgage subsidiary.

The program, open to those with homes listed for sale through Long & Foster, gives buyers an edge in negotiating for another house, said Jack Riggle, guarantee program director for the Fairfax, Va.-based company.

"You are going forward on a home purchase as a non-contingent or cash buyer, so the seller of the next home knows he has a deal," Riggle said. "You've got the price locked in, the financing locked in, the time element locked in. You've taken all the contingencies out of the sale."

The program is similar to one competitor O'Conor, Piper & Flynn Realtors has offered for three decades, said James P. O'Conor, chairman.

"It's a wonderful peace-of-mind type of thing," O'Conor said. "It's used when people just want the absolute assurance they will be able to settle on the house they're buying when they're ready to."

Long & Foster's program grew out of a similar type of guarantee the realty firm had offered on the sale of new homes.

Now, buyers working with Long & Foster agents can apply regardless of the age of the home -- as long as the property lists for $300,000 or less, Riggle said. The company will not guarantee custom or one-of-a-kind homes.

When a seller enters the guarantee program, he and the broker agree to a sale price, as well as price cuts that kick in at 30 and 60 days. The agency suggests list prices based on asking prices of similar, nearby homes.

If a home hasn't sold in 150 days, the company advances the seller his equity and assumes all obligations on the property, paying mortgage and utilities. The company sells the home at a later date, typically at the final adjusted price, less selling costs, which include the Realtor's commission, transfer costs and a risk insurance fee, Riggle said.

Anyone selling his home through this program should expect to pay about 1 1/2 percent more than he would selling in the conventional way, Riggle said.

Long & Foster has combined its program for the first time with a guarantee through mortgage subsidiary Prosperity Mortgage Co. to lock in interest rates for 180 days.

More than 100 sellers in the mid-Atlantic region used Long & Foster's guarantee program when buying new homes last year. VTC Almost 100 sellers have signed up so far this year, Riggle said.

Those properties stayed on the market an average 56 days, Riggle said.

"Our objective is to get the house sold ahead of time," he said.

In the Baltimore region, homes that took more than 90 days to sell made up 36 percent of the 10,436 sales contracts signed during the first six months of the year, according to the Greater Baltimore Board of Realtors.

Contracts signed in 32 to 60 days made up the second largest group, the board said.

O'Conor said his company's guarantee plan has gained in popularity with buyers of new homes and with senior citizens selling homes to move to retirement communities.

"If the market gets slow, people are much more inclined to take the guaranteed sale proposal," he said.

Under his company's program, the agency calculates a home's market value -- less commission to resell the house -- then discounts it 10 percent.

The seller must agree to that price up front.

"It is not a profit-making thing for us," O'Conor said. "We do it at cost to facilitate the sale."

For instance, if the company buys a house for $80,000, then re-sells it for $84,000, it refunds $4,000 to the original owner, O'Conor said.

Pub Date: 7/21/96

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