Archive for April, 2008
Tips for Negotiating a Low Offer on your Home
Selling a home is generally a nerve racking experience, even in a good market. In a bad market, the difficulty in selling a home doesn’t stop with longer days on the market. The negotiation phase is longer, too. Smart buyers know the tables have turned in their favor and they negotiate for deals like never before.
Smart sellers recognize the present environment and are anxious to negotiate a mutual agreement with any qualified party. They are not offended by low offers, even if they seem ridiculous at first glance. They keep their cool and realize that negotiating is a necessary, first step in the journey to sell their home.
Lowball Offers:
A lowball offer is one that is far below the home’s fair market value. If your home is fairly priced at $250,000 and you receive an offer of $150,000…you have been low balled. There is a huge difference between submitting an offer on the low end and lowballing.
For the most part, low ballers are generally tire kickers, not serious buyers. Many are graduates of “Get Rich in Real Estate for $1.00″ seminars. They place often ridiculous offers in hopes of finding a deal, not unlike the Antiques roadshow personality that finds a Monet painting at a garage sale.
When dealing with the lowball offer, the seller has options, but they should recognize the game and see if real interest exists.
- Sellers can reject the offer, which stops the negotiation in its tracks.
- Sellers can opt to hardball and scruntinize every term of the offer, but the result is usually no progress, just hard feelings.
- The seller can choose to return a full price counter-offer, or one that is slightly less than full price, in hopes of continuing the negotiation.
- The seller can counter offer with a lower price and request that the buyer provide the comparable sales data used to arrive at the first offer price.
Note: Seller’s should always request a letter of pre-qualification, if one was not provided with the first offer. It is a waste of time and patience to deal with a buyer that wasn’t qualified to buy in the first place.
If you have received a disappointing, lowball offer, try to find out as much as you can about the buyers and why they offered the price they did. Before you show them the door, hand them a smart counter offer. Not only will it keep the deal in play, you will learn more about negotiating with the next buyer.
- Real Buyers don’t Play Games: Real buyers often make an offer on the low end of the homes price range and see how the seller reacts. Generally, sellers list at the high end of the price range, creating a gap. The win-win for this situation to fire back a serious counter-offer that closes part of the gap, with sales data to back up your position. Do not counter back with your bottom line price. Buyers in this market will need to negotiate back and forth to feel they won a good deal.
- Is the Low Ball Offer a Reality Check??: An low offer is not a low ball offer, if it accurately reflects current market values. Many sellers do themselves a huge injustice by overpricing a property and leaving too much room for negotating price. If your house has been for sale for months, or other homes like yours are selling, the “low ball” offer you receive may be one you seriously should consider. Again, know your market like the back of your hand and price your home in line with your competition.
- Old Comp’s and Sales Data are Worthless: If your home has been on the market for some time, you may need to revisit the current market value. In a weak, declining market, prices keep declining. If your house has been on the market for a long time, review all recent sales prices, before you reject any offers that appear low at first glance.
- Keep Your Cool: Selling a home is an emotional experience for most of us. Remember that as long as an offer is based on actual sales data, it isn’t insulting. If you have an interested, qualified buyer, remain calm, patient, well informed and willing to pursue a deal. Remember that the first offer is a fact finding mission and is not intended to insult. The cooler head will prevail and close the deal.
- Take the Focus off of the Price: Provide a list of ammenities included with your property. Does your price include new appliances, granite counters, security or sprinkler systems that the buyer may not be accounting for in their offer? Are you willing to help with the closing costs or work with them on the move in date? Have you made improvements that save on energy bills? If so, provide copies of your utility bills with your counter offer. Have you remodeled or upgraded your home? If so, provide warranties, contractor contact information, etc.
- Throw in a Freebie: Many first time buyers don’t own lawn maintainence equipment, washer/dryers or kitchen appliances. If you won’t be needing yours or don’t want to move them, throw them into the deal. This often works real well with items like outdoor patio furniture, gas grills, storage buildings, hot tubs, etc. that are too expensive and too much hassel to move anyway.
- Play to Cash Strapped Buyers: Often, buyers are tapped out by down payments, moving expenses and closing costs. Smart sellers can possibly net more money by leaving the sales price higher and offering to pay some of the out of pocket expenses for the buyer. Consider a counter-offer for the cash poor buyer that includes paying their closing costs or costs of repairs to the property.
- Low Ball Offer or Wake Up Call: Many buyers heavily discount from the list price if the property is dated or in need of repair. They often slash the offer price because they are uncertain how much money it will cost to update or repair the problem area’s. Smart sellers can offer to take care of the fixes and repairs, so the issue of “how much will it cost” is off the table.
- They’re Back: Treat all real buyers with respect, regardless of how offended you may feel. Many buyers will return to a home, even if the first deal didn’t work, if they like the owner and feel they are willing to work it out. Be nice even if the deal falls apart, they may be back after some more house hunting.
In conclusion, whether the sellers reaction to a low offer is despair, anger or rage…it pays to remember there is more than one way to negotiate. Consider all offers as serious and work from there.
Qualified buyers should not be taken for granted in a weak, declining market. Do yourself a favor. Even if you can’t make the deal work out, calmly, stay in the game. Use the experience to learn as much as you can before the next offer is presented.
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Tips for Presenting Lowball Offers
Qualified home buyers are a scarce commodity in the housing market today. And, much like fine wine, antiques, oil or gold, their rarity makes them much more valuable and clearly places them in the drivers seat when they begin to negotiate terms for a home purchase.
Shrewd buyers have the power to cut a deal like never before, if they negotiate with finesse. Finding a seller who will accept a low ball offer takes strategy, knowledge and time, but the payoff can mean thousands of dollars in your pocket now and later.
Tips for Presenting a Low Ball Offer:
- Present a Clean Contract: Dot your I’s and cross your T’s. Present a complete, tidy offer and make sure everything is signed and initialed in the proper place. Don’t ask for things that are not customary. Shorten inspection deadlines. Reduce or waive contingencies.
- Back up that Squeaky, Clean Contract with Facts: Appear strong, qualified and ready to close. Provide a pre-approval letter for the financing, when you submit your offer. Provide the comparable sales data to back up your offer, so the seller can see why the offer is lower than the asking price.
- Learn what motivates the Seller: Price is not the only factor when buying or selling. Knowing the motivation behind the sale can save you money. For example, a seller who has school age children may accept a lower price, if they could lease the property back until the school year was over.
- Don’t add insult to injury: If you are presenting a low ball offer, chances are the price will be insulting enough. Most sellers are emotional about their home. Don’t do further damage by criticizing the seller’s tastes with comments like “we will certainly have to get rid of that wallpaper” or by pointing out small problems like “the caulk in the shower is discolored”.
- Play on insecurity, but cut the negative comments: Try to avoid negative comments about the house or condition unless someone asks you. Great questions which raise doubt without raising tempers are “how many offers have you received?” “how long has your home been on the market?” “how many houses are for sale in your neighborhood?”. These type of questions create urgency without offending the other party.
- Consider hiring a buyers agent: Buyers often call the listing agent for property information, falsely thinking they will get a better deal. Nothing could be further from the truth. The listing agent, by law, must do everything possible to get the best offer for the seller paying the commission. A buyers agent has only a duty of fairness to the seller, but their fiduciary obligation is to the buyer. Additionally, Redfin and other buyer broker agencies kick back up to 2%, so you earn money while they do the dirty work for you.
- Plan on Making Multiple Offers: If wheeling and dealing for a great price is the goal, expect to make offers on at least 10 properties. The odds of finding a desperate seller who will entertain your low ball offer increases with the number of sellers you present offers to.
- Time is of the Essence: Include a time deadline of 24 hours on any offer you present. In addition to alerting the seller that you are prepared to walk away, a time deadline creates a sense of urgency and compels a response to your offer. It also limits the time sellers can shop for a better offer before they respond to you.
- Take the Focus off Price Only. Sweeten the Pot. When I present low ball offers, I always ask the buyer to give up something else to entice the seller. Consider offering a larger than normal security deposit. Waive inspections or repair clauses. Pay your own closing costs. Move up or delay the closing date. Accept imperfections and shortcomings in the property condition.
- Expect a Counter Offer: Rejection is a normal part of negotiating. Don’t make an offer that you think a seller will accept and don’t be upset if the seller turns you down, flat. All sellers feel their home is worth more than the one next door. When presented with a counter offer, always respond back, if you want to buy the home. As a general rule, I always hope to make the seller say “no way” at least twice before I feel the deal may be falling apart.
- Let The Seller Sit: Be prepared to walk away, if negotiations are at a stalemate. Most sellers will negotiate further after more time on the market with no sale. Keep your original files on any home you have made an offer on, but always update your data before going back to the seller again. If the market has fallen further or is expected to fall further, you may find that your offer now looks a lot better than the “one in the bush”.
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Best Scenario’s for Low Ball Offers
Home Buyers are in the enviable drivers seat when shopping for a home. Big savings can result from lowball offers, if they are presented and negotiated smartly.
The Best Case Scenario for Lowball Offers
- The property has been on the market for at least 120 days.
- The sales price has been reduced 3 or more times.
- At least a month has passed since the last price cut.
- Sellers have a compeling reason to move such as death, illness, divorce or job loss.
- Homes advertised as “all offers considered”, “willing to negotiate” or “must move.”
- Neighborhoods with an inventory glut and heavy competition.
- Sellers who have owned the property for over 5 years.
- Homes that are back on the market, after being under contract.
Tommorow we will look at presenting and negotiating a lowball offer.
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Housing Relief Act of 2008 – Summary of Terms
In an effort to soften the sharp housing downturn, the Senate recently passed a $150 Billion Bill to provide relief for homeowners, in theory, for homebuilders, for certain.
The “foreclosure relief” bill, which now moves to the House for approval, sounds helpful, but falls shamefully short on solutions or assistance for homeowners losing their houses. In fact, the only set aside for those facing foreclosure is a $100 million in counseling assistance, which possibly makes sense to prevent over-borrowing, but accompishes nothing after the fact.
Relief for Homebuyer’s received a mention in the bill, but the real help offered was for the benefit of bankers, developers and builders.
The bankers and builders receive a $25 Billion Dollar Tax Rebate and plans to steer buyers to their foreclosed properties, with the lure of a $7000 future tax credit. The bill provided a $0.00 tax credit, if homebuyer’s purchase a home owned by anyone else.
Translation: Homeowners, who are paying their mortgages on time, will suffer an immediate $7000 loss in home value, as they attempt to compete against lenders, builders and developers when selling their property.
In Conclusion: The $150 BILLION Dollar Relief bill harms taxpayers and homeowners, and does little for families in financial trouble. The only “help” offered is for the politicians, banks and the powerful, cash laden, National Association of Home Builders, who threatened to stop handing over millions of dollars in campaign donations, unless they were cut in on the taxpayer give away. The result. When the votes were counted… the money counted more. The Senate sealed the deal by a 84 to 12 margin.
Question: Have we had enough, already??? Don’t you think if the US Congress really wanted to help the housing market, they would simply offer a $7000 tax credit to anyone who buys a home that they intend to live in (ie: no investors), no strings attached??? Instead, homeowners and buyers are penalized in favor of the banks and builders who likely created this mess in the first place.
Action: I urge everyone who cares about their home to immediately write their State Representive in protest, before this bill is passed. We don’t have millions of dollars for lobbiest or bribes to get their attention, but we do have numbers and the power of the pen on our side.
The Painful Truth about the US and the Top Ten Worst Housing Markets.
Good news for Homeshoppers. The nation is bracing itself for a wave of new, mortgage defaults, as early as June.
The Fed estimates that 1.7 million subprime loans, originated in 2005 at the top of housing boom, will reset in early summer. The Fed goes on to say that without loan modifications, 1.4 million of those loans could become a problem, spelling more trouble for an already burdened market.
The truth is that foreclosures are only beginning to accelerate, leaving a wake of suffering in their path. Until the inventories move and owner’s occupy now vacant property, we will likely face further price declines of more than 20% by next year.
So, who among us will suffer the most?? Simply, the regions and states with the highest foreclosure rates.
The Top 10 Foreclosures States:
- Nevada
- California
- Florida
- Arizona
- Colorado
- Georgia
- Ohio
- Michigan
- Massachusetts
- Maryland
While the news pundits, scholars and politicians debate whether the US is actually in a recession, the hard-working US citizen has no doubt. We are in a recession and only bottom we see is the one in our empty pocketbooks.
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It’s Spring. Freshen Up Your Home Photo’s
If the seasons have changed and your home is still on the market, do yourself a big favor and update your photographs. There is nothing that turns off buyers and screams “Stale Listing” like the picture of a snowy lawn in the height of spring.
The spring selling season is the kick off for home shoppers who are sick and tired of winter glum. Play to your audience and replace those dismal, gray, outdoor photo’s with ones of bright flowers, blooming tree’s and green grass. And, if your area hasn’t welcomed spring yet, fudge a little and use ones you took in prior years.
Please don’t forget check your interior shots, too. Replace any of those that are dated or make your home look cold and uninviting. Buyers don’t find those photo’s of Christmas decorations, snow on the patio or roaring fires inspiring in mid-April.
Changing your photo’s at www.InfoTube.net is easy and quick. Stage your shots and upload them to your computer. Be sure to name and number them so you remember what each photo is and the order of appearance. (Note: Watch our 2 Minute How To Upload Photo’s Video) Then, log into your desktop and click Edit Photos. Replace all the dated pictures and congratulate yourself on going the extra mile.
Remember, our business is helping you sell your home and we want you to look good. Nothing attracts buyers like a good picture, so do your best and happy spring!!!
3 of 4 Consumers Want to Buy Real Estate
According to a poll by Housing Predictor, originator of the most heavily watched studies in real estate, 3 out of 4 consumers polled want to buy real estate within the next 2 years. After a two year housing slump, this is certainly welcome news.
Ironically, record foreclosures are at least part of the reason for the real estate fever. It seems many consumers are willing to jump back into the housing game due to slumping sales, falling prices and interest rate cuts which make buying more secure and affordable.
To date more than 2 million homes have been foreclosed and the number of homes in the process of foreclosure are still increasing. Forecasts call for 5.6 million foreclosures through 2010 unless the Fed intervenes in a widespread manner, which is unlikely and possibly ill advised.
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Bad Photograph Examples of Homes for Sale
The 60’s music group “Bread” coined the truism that..”a picture paints a thousand words…” and whether you remember the song or not, the words are as true as the day they were first penned.
Photograph’s are a representation of your home and a vision of an imagined lifestyle for the home shopper. They can immediately paint a picture of a home that is well maintained, or not; light, dark, cramped, or spacious, bright and inviting.
When selecting a photograph to represent your home, view it objectively and ask yourself what picture are you painting? What words come to mind when you look at the snapshot? Is this a picture someone would excitedly forward to their friends, co-workers and family? If not, stage the shot and update the photograph.
Below is a collection of photo’s that conjure words, but are the words ones that encourage a sale or stop interest in its tracks????
Deer hunter, dark, rustic, rural
Cramped, no storage, clutter, small
I’ll go if you will; dark, scary, what’s the point
Eddie Kruger, Halloween, Only the Shadow Knows…
Have a chuckle, but do take a look at your photographs. Photographs sell houses…and don’t. What picture do your photo’s paint????
Thank you for visiting www.infotube.net If you have some funny real estate photo’s, please send them our way!