Jan 3, 2010

How to make counteroffers to the seller

Pricing negotiation process begins when the seller lists the house on the market. A buyer observes the details and makes an offer to the seller along with a deadline for response. There are hardly any cases when the seller accepts the buyer’s offer as it is. Both parties have to contribute for making a successful deal.

Once a seller receives the offer, he goes through it and makes the necessary amendments in writing. He highlights points that he does not agree with or which he doesn’t want as a part of the deal. He sends the agreement back to the buyer with a deadline. Other hindrances could surface in the buying process from the seller’s side such as the seller’s can’t leave the property unless their children complete school year, they want to keep the appliances for themselves, the gas grill you noticed could be an anniversary present from someone special, the birdbath could have sweet memories attached, the reasons could be infinite.

The buyer then may drop off some things from the list such as the birdbath or the gas grill but he would want to have an earlier closing date or the appliances or both. The agreement would again be sent to the seller for reviewing along with a deadline. The process goes on until both parties agree on common terms. Both parties have to be willing to let go off certain things to make the deal possible.

All the other negotiations are understandable but what happens when it comes to price? What if the buyer is maxed out? In this case, the seller can loan money to the buyer. For example, the seller prices the house at $105,000 but the buyer can manage only $100,000 there could be a problem. The deal cannot fall apart because of $5000. The seller lends the money for a 5 or 10 yr term at an interest rate agreeable by both parties. If you agree on such kind of purchase, be sure you hire an attorney for taking care of all the paper work.

You can put in a lot of creativity by thinking about various things when negotiating for a purchase deal. The negotiations are bound to continue unless both parties come to common terms or one party decides to quit the agreement. The realtor will play a key role in initiating the negotiations so be sure you make the right choice. If you have any suggestions, please post them below in the comments section.

Dec 30, 2009

Lowering remodeling costs

Remodeling the entire house all by yourself isn’t worth the time and efforts. However, there are some things that you can do to save yourself some money without getting into the project. But before that, you need to be aware of your own limitations. Don’t do things that you’re really not comfortable with just to save some money. You may wind up with a remodel that isn’t done very well and face some problems down the road. Just do what you’re comfortable with and what you’re good at. Hiring professional is really worth the money. You will observe the difference between your work and a professional’s work eventually.

Taking care entire remodeling project isn’t necessary or advisable. You can hire a contractor and save on remodeling costs simultaneously. The first thing to do is to know what you want. If you finalize a design for remodeling, the contractor will know exactly what needs to be done. When the contractor knows this, he will be able to provide correct estimates for the house. Contrarily, when you do things by yourself, there are chances that you may miss certain aspects when preparing the estimates. This may dig a hole in your pocket. Furthermore, I would recommend you not to begin other unplanned improvements in the middle of the project. This will delay the project unnecessarily and cost you time and money.
You can lower the remodeling costs by preparing the remodeling area. If you take care of the demolition part, the contractor will be able to build the household directly. You can break down the kitchen wall or shift the appliances. Additionally, you can do some work at the end of the project such as painting but be cautious that it doesn’t spoil your household items.

Finally, a good way to lower costs on remodeling is to prepare a remodeling plan and stick to it. This will help you stay within your budget. If you have any suggestions or questions, please post them in the comments section below.

Dec 28, 2009

Why listings expire

In today’s blogpost, I would like to discuss why listings expire on the market and what could be the possible solution. Firstly, we must have a clear understanding of what an expired listing is. An expired listing is a listing that was on the active Multiple Listing Service (MLS) being viewed by potential buyers or their agents before the expiry. The listing expires as the contract exceeds pre-defined date for listing between the listing agent and the seller. Listings expire for a number of reasons. Let’s narrow down to just a couple. Mostly, it comes down to pricing or condition of the home.

What I typically find is that many homes expire because the seller is dictating the agent what the home should be priced at. Overpricing enters easily especially because of the seller’s emotional attachment to the house. However, you make good business decisions only when you keep your emotions aside and have relevant information for selling the house in today’s market. All the relevant issues need to be addressed when listing the house. Price can cover almost anything. If the seller does not want to spend the time or money to get the home into good condition, they need to look at the current price, and adjust it realistically.

Sellers are often unable to sell their homes because they are misinformed. The agent can play a crucial role in determining the home price. He must be brutally honest with the seller and say that here’s the situation and here’s what your home value is compared to other homes. The seller must be informed about what’s going on in the market, the recent sales in the area and comparison of their pricing with others. The seller must be informed about taking an unbiased approach towards assessing the current inventory of homes in the market and the competition. The agent must educate the sellers that people looking at their home will see other homes too. They will observe the materials you have used, the size of the rooms, carpets, furniture, walls, and practically everything. The agent must make the seller consider all the aspects that the home is strong or weak in and then finalize the price.

Dec 23, 2009

Tips for homebuyers to make the right choice

Home buying can be a cumbersome process if you don’t have your expectations aligned well. You have to deal with the contractors, get the right realtor, search for the best properties, choose a suitable location, estimate realistic prices, define requirements, get loans approved and the list goes on endlessly. You can facilitate the process by following simple steps.

Here are some good house hunting tips that I’ve collected from my years of experience in the industry:

• Calculate your current household expenses and income and get prequalified for a mortgage. Prepare and plan before buying a home so that you do not receive any major surprises later on.

• Determine your family’s requirements. What do you want in the rooms? Do you want large bathrooms or compact ones? Do you need a garden? Do you need home gym or swimming pool, etc?

• Map the location that fits your requirements and mark the houses that you are going to visit.

• Realtor is the mediator between you and the seller. He will play a crucial role in getting you the right deal. Always check the years of experience in the business, number of clients served and your own specific requirements before choosing the realtor. You can search for realtors through local builder associations or Better Business Bureau.

• Before visiting any house, just pass by to see its appearance form the outside.

• Never let your emotions get in the way of home buying. Be as realistic as possible by doing a thorough research before buying the house.

• Prepare a list of observations in the home that you have visited so that you can compare them with other homes easily.

• A good idea would be to rate the houses based on your family’s wish list. Note down 10 priorities that your ‘dream house’ must have and rate them in the range of 1 to 10. If you are married or have a family of three or four individuals, you can make singular ratings and combine them. Later on, you can select the top three houses that you have rated and bid for them.

• Prepare a purchase agreement and send it to the seller. Don’t be taken aback if your deal if the seller doesn’t accept your deal in the first go. Negotiation is a part of any deal and it will take time before the deal finalizes.

• When the offer is accepted, have a licensed home inspector check the house thoroughly and review the report along with your realtor. The real estate agent can help you make each step of home purchase easier.

Thus, you must do your research well and consider all the parameters before moving to a new house. If you have any suggestions or would like to ask questions related to the buying process please post them in the comments section below.

Dec 22, 2009

Five Ways To Identify A Fake Seller

I was recently in escrow with a young couple. We ended up cancelling the escrow because so many things were going wrong. It was very frustrating to them that the sellers were missing contract deadlines and they became strangely non-cooperative. I knew exactly what was happening. We were working with fake sellers! Today I’m going to share with you five tips on how to spot a fake seller. If you need to get out of escrow or before you even open escrow, you will know exactly what’s happening.

Tip #1: Unrealistic
The most common reason the house doesn’t sell is because of the price. If the sellers say they can’t sell their house, what’s really happening is that they’re testing the market condition. They’re not real sellers. Real sellers may initially overprice their home but very quickly (generally within 5 days) bring their price back to the realistic market value.

Tip #2: Not motivated
Motivation is going to look like a wedding, a baby on the way or job transfer. A real seller will always be motivated which will show up front.

Tip #3: Don’t have timelines
Fake sellers don’t have a timeline. If there’s a job transfer they have a timeline, if a school is starting they have a timeline, if they’re closing escrow on their next home, they have a timeline. But, if you’re working with a seller without a timeline, you may not be working with a motivated seller.

Tip #4: Not forthright
Fake sellers are not forthright. They try to hide things. Real sellers, on the other hand, are extremely forthright. In fact, they are disarmingly candid about the condition of the home, the area that you are buying into, and even the neighbors next door.

Tip #5: Non co-operative
Fake sellers are non-cooperative as they have no reason to co-operate with you. Real sellers will be co-operative as much as they possibly can. They want the transaction to go smoothly, they want to work with you to solve problems. They have a ‘let’s make things happen’ attitude.
So, if you’re suddenly running into inconsistent behavior, having a lot of surprises, you may be working with a fake seller. You may decide to run and not walk away from such transactions.