Introducing PRISM – Increase Listings and Get More Offers
PRISM, an acronym for Producing Inventory in a Stalled Market, is a negotiation and contract writing strategy designed to increase housing inventory in real estate markets that have an insufficient housing supply.
As you know, limited inventories in several areas of the country are driving up prices, creating affordability issues for many home buyers. The low number of homes for sale can also be intimidating to would-be sellers and lead them to stay put, versus listing their homes. I’ve seen how sellers don’t want to risk selling too quickly, because they believe that they won’t be able to find a new residence that meets their needs and budget. These factors work together in a circular fashion to worsen the existing inventory problem.
PRISM is a simple strategy developed by Bruce Jordan, a licensed real estate attorney and Cherry Creek Mortgage branch manager, that can be used to address these market forces to the benefit of both sellers and buyers.
In a nutshell, this strategy requires you to add terms into the sales contract* that protect the seller from selling their home before they’ve found a replacement. This simple change to the way you write your contracts can give sellers the confidence to engage with the market. Plus, PRISM gives your buyers a new type of bargaining chip when it comes to getting their offers accepted – one that doesn’t require offering thousands of dollars over asking price!
So how does PRISM work?
A seller who uses PRISM language when they list their home simply states that they require a specified number of days to secure their next home once their current home goes under contract. If the seller cannot secure their next home within the timeframe, they can either renegotiate the contract timelines or choose to terminate the contract and reimburse the buyer for all incurred costs (e.g. earnest money deposit, inspection fees, appraisals, etc.) up to a specific dollar amount.
Buyers can also benefit from PRISM. In highly competitive markets, buyers want the ability to secure their new home for a fair price without giving away important contractual protections such as home inspections or appraisals. PRISM allows buyers to offer fair market value for a home while providing the seller a grace period of typically 45-60 days to secure their next home before being obligated to sell their current home. This unique approach to writing the purchase offer can help it stand out to sellers who are worried about purchasing their next home.
What PRISM is NOT.
PRISM is not a Post-Closing Occupancy Agreement (PCOA)/60 Day Holdover/Rent-back program. PRISM allows the seller to secure their replacement home BEFORE being obligated to sell their current home. As any seller who has been burned before understands, a PCOA does not guarantee that they will be able to find their next home. A PCOA simply starts the clock assuming they will find something in time, with no recourse if they don’t.
PRISM appeals to the interests of both buyers and sellers and creates a smart, harmonious, and successful real estate transaction. Ultimately, I hope that PRISM will help get your business - and your market - moving in a positive direction. I believe that if enough real estate professionals engage with PRISM, the impact will help us to be BETTER TOGETHER.
Visit the PRISM page on our website to learn more about this concept for moving the market. You’ll find some informative videos, along with other valuable content.
To learn more about Bruce Jordan, visit his website.