Uncategorized February 8, 2017

LET’S GET READY TO RUMBLE!

In the past several months I have been involved with several bidding wars on homes, representing both buyers or the seller. Most of the are in the price range of $250-400,000.  Is it a good sign – yes? Is it the sign of the times – maybe (at least for the immediate future).

The good news to report is that many (not all) sellers are pricing their homes to sell (or under-pricing their homes to produce bidding wars) and all the owner-occupant buyers on the fence are coming off the fence, as well as investors and flippers. The competition is fierce.   They see value in the right priced home as well as finally taking advantage a favorable interest rates, fence-sitters become fence (and house) buyers, whereas, the investors are paying cash.  Conversely, inventory is low, driving prices up a tick and multiple offers on the little inventory there is, ticking them even higher.

Getting back to bidding wars, both sellers and buyers need to know what to do if you as a seller is lucky enough to have your house as the subject and the buyer is unlucky enough to be involved in trying to attain the home.

Seller. Without a doubt it is exciting to have your home as the subject of a bidding war. It is obvious that your home was fully marketed to enough of its target market through various Multiple Listing Sites (more than one), a slew of web sites, blogging, social and business networking, mailers, newspapers, etc., as well as pricing either at market value or just below it (yes, just below as it brings about many bids and sell for what market value is).

Because a seller has the upper hand in a bidding war, the seller can control the outcome of the final price and conditions. Seller should beware of the highest bidder. The highest bidder is not always the best of the bids and a seller must use their head and not their pocket to decide which offer to accept.

Multiple offers can come in at anytime during the selling process and actually by law, can be presented to a seller up to the moment they close with a buyer. However, in most cases, multiple bids come in when a property is first listed. When they do occur, the seller with their Realtor (and hopefully one who has had experience with them), should review each offer carefully. Do not get caught up in the hoopla as it is a business decision you must make to take the right offer.

Specifically speaking, with your Realtor, review the conditions of the contract: price; mortgage amount vs. all cash; down payment; closing date; items included in the sale; home inspection time limit; and additional contractual conditions, which may include a house to sell contingency, or the like.

From there go back to the bidders with a counter-offer, or ask them to enhance their offer. Try to avoid asking them to come to their highest and best as in my experience, there really is no such thing. It is better just to come back with a counter. If the offers are at full price, revert back to enhancement or you can actually, come back with a price that is higher than the asking price (just be wary of what it is as it may just turn all your bidders away).

The respondents will either not budge from their price, come up to a price, or just walk away to avoid the hoopla. Some may ask for the other offering prices, and although the Realtor Code of Ethics (if you are using a Realtor), with written approval by the seller, requires that the existence of other offers are present be disclosed, it does not require that the other offering prices are. As a moral and ethical standpoint, I believe that the prices be kept quiet. At that point the counter-offers are presented to the seller.

Once that has been done, revisit the contracts for a second time. If they are close, take the second highest offer – not the highest. In many cases, when the highest bidder wins they will either back out because they believe they may have paid too much, what is known as buyer’s remorse, or they will do what they can to make up the difference of what they wanted to pay, through the home inspection issues. And then there is the issue of the home appraising for that highest price (of which we are finding to be a stopping point for a good number transactions today).

Whereas, by choosing the second highest, the buyer is more apt to stay with the purchase and not ask as much after the home inspection. Giving the seller more control on the buyers requests. It must also be noted to the buyer that they already had an equity increase in the home they went into contract before they even close, as someone was willing to pay more, resulting in a higher value than their purchase price.   Plus, the appraisal process becomes more affable.

When the seller has made their choice, I advise that they keep the other offers as back-ups just in case the negotiations fall through.

Buyers. The buyer is most stressed, especially if this is “The House”. Some buyers have to buy 3-4 homes before they actually get a home  However, it is a lot simpler. Make your initial offer, look at the seller’s counter-offer, and come back to them with yours. Then do not let the hype take over and make your final price one that is not over your head.   be sure to get the assistance of a Realtor who will give you comparables of like homes in the area and in many instances, keeping you grounded.  This will give you the information for an intelligent decision. You can ask your Realtor for assistance of a purchase price but keep it in a range instead of a definitive price. (Remember, although they know the market, they are not buying the home, therefore, the value is in the buyers head more than the Realtor).

I suggest you add a letter of praise to the sellers and desire to purchase their home, to be included with your offer. There have been some buyers that have used video to let the seller know they love the home.  The video may hurt more than help as the seller may not like what they see in the video.  (It sounds wrong but people still do discriminate) If you win the bid, good for you. If you do not, leave your offer as a back-up and keep looking. It may have not been meant for you anyway or the other offer may fall through and therefore, you still have a chance.

Overall, multiple bidding can be stressful for both sides and getting the assistance from a Realtor will keep your emotions in check while giving you a representative that will work hard for you and your real estate goals

Uncategorized February 8, 2017

Buyers are Liars & Sellers are Yellers

Ever since coming into real estate (1985 for me), my colleagues have always warned me, “buyers are liars and sellers are yellers.” Some still believe it to this day.  My take is completely different “buyer are buyers and sellers are sellers”.  Pretty simple.

BUYERS ARE LIARS?

“Buyers never tell you exactly want they want.  They do not want a townhouse and they buy a townhouse from another agent.” “Buyers tell you they are qualified to purchase at a certain price point when suddenly after making an offer,  they do not exactly qualify for their purchase.”  “They want just a certain town or neighborhood and would never live in that area and yet they end up buying in that area”

Those statements have been said by agents for years and years and yet it is not the buyer that is the liar, it is just because the buyer just does not always know where they want to live, how they want to live, or may have a misperception of where they can afford to live.  It really takes a Realtor working closely with their client and cares enough about their client to go through a discovery period to decipher all the parameters of that client.  A Realtor must ask the right questions, and show a smattering of houses and areas.  It also takes the buyers to be honest with themselves and their Realtor, to understand what they can buy at the time.  A buyer cannot expect the perfect house nor the perfect location, but they should not feel they have to settle for a house either.

A good Buyers Agent realizes that buyers can be a fickled bunch when they begin but in the end, with a Realtor that listens, really listens, the buyer will find the home that they want, not what the Realtor assumes what they want.

SELLERS ARE YELLERS?

“My agent is doing nothing!”  “My agent does not bring anyone to my house!” My agent doesn’t advertise enough.”  “My agent over (or under or mis-)priced my house!” “My agent never calls me!”

Valid thoughts from the seller?  More perception than realty in most cases some and totally correct in a much smaller percentage. One statistic has held true – 70% of sellers whose home listing expires, do not re-list that same agent, instead vies for another agent and agency.  The main reason why has nothing to do with the home not selling, but rather how the agent approached the entire process.  A bad agent will love a seller to get the listing and leave that seller after they have secured it; otherwise the majority of the agents do what is necessary to get a house sold.   However, in most cases the seller has no idea what the heck their agent is doing unless they happen to stumble upon an ad in the paper or a posting on a website.

The majority of home sellers’ biggest complaint is that the agent never communicated with them.  The key to a great listing agent as well as their obligation to the seller, is that they keep in constant contact with the seller at least once per week and stick to it.   That weekly call should include market updates, showing follow-ups, what actions the agent has taken to promote the property, and a frank discussion of where all of it relates to the subject property.  And that communication should happen even if nothing happens that week.  If an agent can keep to that discipline, the yelling very rarely happens.  If you can find an agency that guarantees it or they will be fired, even better.  (ask about the Coccia Performance Guarantee).  Accountability is the key to success.

REALTOR OF YOUR CHOICE

In either case buyer and seller, choose your Realtor wisely.  Interview several Realtors, even if you know someone in the business. Your relationship with a Realtor first and foremost should be a business decision.  Make sure they understand your needs and conversely, listen to what they are saying to you.  They are the experts and they represent your best interest.  Together you should be able to accomplish your real estate goals.