Negotiations: Where Will They End Up?

When you make an offer on a property, you never know how it's going to turn out.

It's important to find out as much information about the property and the seller's situation and motivation prior to making an offer, so that you can focus on their HOT buttons and hopefully get a better price and terms.

It's not always only about price, even though that's usually the case. Sometimes the timing of a closing is more important to a seller than getting top dollar.

In today's market, where the housing inventory levels are much higher than years past, sellers are often more willing to look at offers and bring them to a successful close. But some sellers still think we're in the early 2000's when it was a seller's market.

Now, don't think that every seller will just unload their property at any price.

There are listings that have been properly priced and showcased in top-showing condition, like a new home model. Those listings will sell for more than most and they are sometimes even getting multiple offers on them.

There are also HUD, VA, Fannie Mae and bank foreclosure properties, where you'll find that you're in competition with 2,3, 4, or more other bidders, because of where the properties are priced low compared to their true value.

It's also still common for some properties in various communities to be sold quickly and for top dollar, because there is a supply shortage of properties in a certain price point and area at a specific point in time.

As we are in the spring market right now, don't forget that there are numerous other home buyers out there looking at the same properties as you and they are deciding which properties like just like you are doing. You're not in a vaccuum.

If you get in a multiple offer situation, understand that you may only get one shot at making your proposal to the seller, so figure out what's the most you would spend for the property and if your bid didn't get accepted, you knew you gave it your best shot.

There are sometimes where you and the seller are far apart in price. Tell them the reasons why you're bidding the way you are. Show them the recent, comparable sale prices of other properties that are in the area.

Tell them a little bit about yourself and which features of the property you like most. Try to connect with the seller on an emotional level. It doesn't always work, but it's worth a shot.

People always ask me "How many times do sellers and buyers go back and forth with their offers?" I tell them that it can once, it can be 2 or 3 times, or more. The best piece of advice is to keep the lines of communication open. Not usually, but sometimes it can take a week. You should try strategies to get the seller to see why it's to their benefit to accept your offer.

In the end, most of the time you and the seller will come to an agreement and you'll have a new home.

Multiple Offers Even In A Buyer's Market!

Even in a buyer's market, you will sometimes find yourself up against other buyers making a bid on a home the same time as you. I've had it happen a few times recently to my clients.

You need to understand that in a buyer's market the best listings will still stand out and be sold. Properties all over town are still selling...now not at the premium prices that they were a few years ago, but they are still be sold. Not every home will sell right now, but many will.

Don't into the trap of thinking you're the only buyer looking at various properties in a given point of time. There are still many buyers out in the market...especially now that it's spring time.

It's still best to have your pre-approval letter in hand when you make an offer. All lender-owned and foreclosure properties normally require a pre-approval letter and earnest money deposit when submitting an offer.

If you write an offer and find out that you're in multiple offers, understand that your offer may be compared to the other bid and the seller will ask you if you want to increase your bid or change any other terms of your bid. One strategy to consider is at what price would you be comfortable paying for the property, but if you lost out, you knew you gave it your best shot. Many times in a multiple offer situation, you may only have one shot at getting the property, so part of the equation is determining how much you like it.

So as you view properties, understand that you're not the only buyer looking and when you find a home that you're attracted to and want to make a bid on, don't wait too long.

Short-Sale Listings Abound!

As I continue showing homes and condos in our current real estate market, I'm finding up 50% of the properties are listed as foreclosures or short-sales.

What does this mean to you, the buyer?

Timing, for one thing, can be widely varied.

In many foreclosures, where the lender has already purchased the home, the normal time frame from accepted offer to closing is usually 30 - 45 days. With foreclosures, you're also buying them in 'as-is' condition, even though you can have inspections to see if you still want the property. Fannie Mae also requires the buyer to pay around $125 for changing the locks through their approved contractor. Even though we're out of winter time, many properties are still winterized and lender are requiring the buyer to pay for that expense too - around $250 - $300.

In short-sale listings, nobody knows in the beginning when an actual closing can take place. I wrote an offer this weekend, where the listing agent told me that the lender may take up to 45 days before approving the short sale amount. That's not uncommon right now. It can even be longer than that too.

A 'short-sale' is where the homeowner is in a financial distress situation and in order to sell the property, must sell it for less than the outstanding mortgage that's on the property. The homeowner must show that they don't have the ability to continue paying the mortgage or that they don't have the assets necessary to cover the difference between a sale price and mortgage amount.

So, if you don't have a lot of time to make a move, most short-sale properties are not going to work for you. The other thing is you're in limbo from looking at other homes, because you have a signed agreement with the seller that is subject to the lender approving the short-sale amount.

Now is a great time for home buyers to invest in real estate, because interest rates are good and housing inventory is high.

But do be aware that there are sometimes price points of properties, where the inventory is low and it may be tougher to negotiate if you get in a multiple offer situation. I've had that happen twice in the past couple of weeks. With many homes in foreclosure or short-sale situations, they are usually not in very good condition and will take some TLC & cash on your part to fix up.

If you have any questions on these types of properties, give me a call or drop me an email.

At your service,

Dan

What questions do you have? I'll gladly answer them at: dan@danweis.com.

Tell a friend about my next Free Home & Condo Buyer Class - April 23rd!

Are you ready to find your dream home? Contact me for a Free Consultation: (513) 615-1890 or dan@danweis.com

Put Your Spending Habits Into a Deep Freeze!

Once you apply for a mortgage, put your spending habits into a deep freeze for the next 30 - 45 days, just until you close on your new home.

An important factor you need to know about during your mortgage approval process is your active credit situation. DON'T make any major purchases...credit or cash or lease a car or apply for a new credit card. Don't buy an item to put it layaway. You need to freeze your spending habits except for normal purchases, like food and gas, etc.

It used to be that mortgage lenders would only check your credit history once when you appled for a mortgage. Now they will check it 2 or 3 times and the last time could be the day of or day before your real estate closing. So don't do anything without checking with your mortgage consultant. You don't want your credit score to go down or have your cash reserves and other assets change until after your closing.

At your service,

Dan

What questions do you have? I'll gladly answer them at: dan@danweis.com.

Tell a friend about my next Free Home & Condo Buyer Class - April 23rd!

Are you ready to find your dream home? Contact me for a Free Consultation: (513) 615-1890 or dan@danweis.com