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Low Balling Offers-Why Do Buyers Do it?- It's really important for Buyers to understand how and why they make their offers. Often I find buyers make offers based upon what they've always been told buy their parents or others. For example: "Always go in with your offer at least 10%(or what ever formula they were given) under what the seller is asking".

The problem with this is that there is no real basis for this "formula" other than "low balling for the sake of Low Balling Offers". I can see if the property is overpriced to begin with, but that's just bringing the seller down to earth on their overpriced home.

I completely understand everybody wants the best deal they can get. Of course, who wants to over pay for a home?So really, the questions buyers need to ask themselves is why am I buying a home?

Ask yourself this:

Am I buying because I intend to live in my home for 5 or more years, interest rates are great and I can afford the payments?

                     or...

Am I an "investor" or "trader" who intends to "flip" the property for a quick profit?

Both of these Buyers make their offers differently because they have different motivations and are looking for different types of homes.

An Investor is typically looking for "distressed" sellers and homes that need a great deal of improvement. Investors often are contractors or can do the work themselves and save a lot of money doing the improvements the home needs with the intention of putting the home back on the market for a quick profit. These are the investors are in a position to make "low ball offers". They don't care if they get the house or not, it's all about the numbers.

on the other hand...

If you are the buyer looking to purchase because you want to live in the home for 5 or more years, your motivation is completely different. Believe it or not, although price is important, terms may be MORE important.

For example:

• Are the payments acceptable to you?
• Will the seller take your FHA offer?
• Do I want the seller to pay my closing cost?
  
• Is it better to buy something that is "turn key" or close to "turn key"rather than find a great deal and pull $30K out of the 401K and have no money left for an emergency?

Your Stratagy Should Be Different

• Write Offers Based on Market Value: If there are NO offers, there may be some "wiggle"room in the price. If there are multiple offers, be prepared to go "at or above" asking price.
• The more concessions you want (closing cost, repairs etc..) be prepared to write a stronger offer.
  
• If you are going with FHA, be prepared to write stronger offers.

The bottom line here is if you are a buyer who intends on living in your home, make fair and reasonable offers that are a "win-win" for you and the seller. I've seen many people "low-ball" themselves out of homes that would have otherwise been PERFECT for them.

And remember this: If you are in fear of overpaying, then Fear Not because you are protected by the appraisal. If the appraisal comes in “under value” renegotiate or move on!

Copyright © 2010 By Stephen Munson,Munson Realty,homes for sale pasadena ca*Low Balling Offers- Why Do Buyers Do it?*

 

Your short sale was approved?  Wonderful.  The buyer’s lender under-appraises the property?  Not so good.  What do you do? 

Do you call the short sale lender and tell them their comps were wrong?  Do you scream "the market is still going down, take the new price or the seller will file bankruptcy"?  Do you say "You’ll never get another buyer for this home”? 

The short sale lender has heard all that before.  Normally, they don’t care.  You’re just another whining real estate agent.  But there is a way to get a value changed if the circumstances are right.  How?  Factual errors.  Here is an example.

I recently had a Fort Walton Beach short sale approved for $117,000.  The house was a bit unusual.  It had a 350 square foot detached apartment.  The main home was 1350 square feet.  The property appraiser’s office considered the home 1700 square feet - the total living area.  Guess what?  That is not what the buyer’s FHA appraiser thought.  He only gave marginal value to the guest quarters, and primarily considered the home 1350 square feet.  Thus, his value was only $99,000. That is 15% less than the contract price and approved short sale amount.  That is all the buyer could get a loan for. The appraisal looked flawless to me.  I knew the BPO agent likely relied on the property appraiser’s total square footage, though, and that is how I planned my challenge.  Here is an excerpt:

Dear Sir or Madame:

1.     FHA/HUD appraisal for this property has found a sizable square footage error that was not reflected in your BPO Value.

2.     Public records states property is 1700 square feet, however, FHA/HUD appraisal measures home at 1350 square feet.

3.    This difference is 350 square footage less than your BPO value and public records.

4.    The actual and correct square footage brings the property value to $99,900 per current FHA/HUD appraisal.

5.    Please consider the revision of your value to $99,900 to coincide with FHA/HUD correct measurements

The short sale lender, Green Tree, submitted my challenge to Fannie Mae.  Two weeks letter they issued a revised approval for $99,000.  The seller was thrilled.  The buyer was ecstatic.

So next time you have a value-related issue on a short sale, and you are confident you are right, do your research.  If you can find a factual error in how you think the BPO was done, you may very well save your sale, and your seller from foreclosure.

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy: itswendy@rulnickrealty.com

Fort Walton Beach FL Real Estate

Fort Walton Beach Short Sales & Pre Foreclosure Help.

Read Wendy's Fort Walton Beach Florida Real Estate Blog

Wendy is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". Call Wendy Rulnick, Broker/Owner,to list and sell your home or condo on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County-  Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. 

This is an open letter to all the folks who sit on HOA Boards or live in a community that has an HOA. This is written by a person who is on the front lines to sell your homes as quickly as possible because it is common knowledge that the longer a house is on the market the lower the resulting sale price will be.

WE ARE IN A DECLINING MARKET. YOUR MANY RULES TO PROMOTE EXCLUSIVITY IS REDUCING THE VALUE OF EVERY HOME IN YOUR COMMUNITY! 

Here are the top items you need to address so that we can sell your homes.

1. THE GATE: First of all we need to have access. It should not take an act of Congress when we represent the seller, who might be a bank, to get authorization to come into the community. If you need to have us register fine, then give us a temporary pass code, that would go very far to give us access quickly to begin marketing the property.

2. THE GATE PERSONNEL: Need to be friendly and cooperative to outsiders coming to view the property for  open houses. Sending people from gate to gate is not acceptable and it is a tactic that leaves a first impression of being an unfriendly place.

3. SIGNAGE: 28% of sales are due to signage. Not allowing signage on a property, condo, etc. only reduces the market of potential buyers by 28%. People driving a community respond to the signs and this is a given. Not allowing any "unsightly signs" only blocks out about a third of your potential buyers.

4. COORDINATING SIGNAGE: When you do allow signs that must be of the same style, fon'ts, colors that has been approved by your board....do you realize that they BLEND IN to all your other signage and defeat the point of having the house for sale  get noticed. I have to look for house numbers when I'm in your communities because I'll drive right past my own listing because these types signs do not ATTRACT NOTICE.

5. YOUR HOA'S DOCS AND REGULATIONS- Why not put these online and keep them updated? Do you really need to charge $50 for poorly printed, blurry papers that look like they were done on a mimeograph machine from 1960? How about scanning them and making them available, online, with your community website?  

6. YOUR OFFICE PERSONNEL- We Realtors are not your enemy. We are here to sell your homes quickly and professionally. So often, finding out the community's requirements regarding procedures for: a. approving a new owner b. giving the current owners the first right of refusal is like playing a game of "GO FISH". If you could prepare a package of information that is given to us upon first contact that explains your process, we wouldn't have delays in closings, or NO CLOSINGS AT ALL.

7. LOCKBOXES- Not allowing a lockbox on the property means that agents have to go out of their way to show your communities listings. They must make an additional trip to the listing agent's office to sign out the key, then they show the property...then they must return the key. This is an amazing inconvenience and expenditure of time that we don't have in a non-productive way. Many agents will just remove this kind of listing from their list in showing properties. Do you realize how stiff competition is today? For every listing there are probably 30 more that will be easier to show and be located in a REALTOR FRIENDLY ZONE. In our business, time is money.

8. THE VOTE: Waiting till next month's meeting means that you are delaying potential closings by up to 30 days. In a declining market this means that the property's value will have declined by (in our area) 1.5-2%. That means that your vote just cost the seller 1.5-2% of the sale price in value. It also means that IF AND WHEN THE PROPERTY SELLS....IT SETS THE NEW LOW SALES COMP FOR YOUR COMMUNITY! ALL THE HOMES IN THAT COMMUNITY ARE NOW DEVALUED.

Do you see what is going on here? You are shooting yourselves in BOTH FEET!

We are in a tough market and that is no secret. We need everyone to do everything they can to make it easier to sell homes instead of maintaining the status quo.

There are no exceptions- I have a listing that is $1,200,000 that is a bank foreclosure. Three houses north of this home is another foreclosure. All sectors of our society is affected.

NO ONE AND NO COMMUNITY IS IMMUNE FROM THIS FINANCIAL CRISIS.

So let me be the first to suggest that at the next meeting, that you take this list and read it to your members. Please evaluate your procedures and put in a contingency plan that will make showing your properties easier for the troops in the trenches- THE REALTORS- to sell these homes.

If you have questions or need a consultation I would be more than happy to speak to your HOA. If you are a REALTOR reading this, I suggest that you take this post and forward it to every HOA member you know. If you have more points to add, please share them here on Active Rain.

We are in a war here and everyone loses as they see their home's value decline. We must do everything in our power to fight the decline.

 

 

 

 

 

Janet Fetterman, Broker Associate/Owner

Veteran REO Agent, CDPE

Concord Real Estate-Sellstate Concord Realty

132 Canal Street, New Smyrna Beach FL

386-299-6393  

To see our real time bank owned inventory go to:

http://concordtopteam.com/Public/inventory.aspx 

 reoqueen@Concordre.net

Lots of real estate agents want to know what's the next thing that's on the horizon for real estate. The savvy agents want to jump on that bandwagon and ride the road to easy riches. This morning, thanks to inspiration provided by Broker Bryant's excellent blog,  I would like to share my thoughts about the matter.

I look at the real estate market in Sacramento like an analyze-it-yourself medical chart. You know, the ones that say if you have a cough and a fever, you can diagnose that condition yourself. The option 1 arrow points to an increased consumption of liquids and plenty of bed rest. Or, option 2, ignore those symptoms and go out to party like there's no tomorrow. The illustration following option 1 shows a happy woman being hugged by her husband and kids. The illustration from the option 2 path might show a bare foot with a toe tag on it.

With that in mind, here's what I think will happen in real estate, not only in Sacramento but throughout the country. Eventually, interest rates will rise. That's pretty much a given. Qualifications are already much more stringent than they were a few years ago. When interest rates go up, a home buyer's purchasing power will go down. In flat markets like Sacramento, we probably won't see a lot of appreciation over the next few years.

So what will be hot? I'll tell you. Sellers who have assumable FHA loans. If you're taking out a conventional loan today to buy a home, you might not be able to sell your home down the road. First-time home buyers might not want the conventional or FHA rates offered a few years from now and may be unwilling to take out a new loan to pay off your existing loan. But they'll be drawn like a moth to the flame to those available loan assumptions. Why? Because those interest rates range from 4.5% to 5.5%. They are fixed-rate mortgages. And they are assumable.

If you're a homeowner who has an FHA loan with a low interest rate, you could be sitting on a gold mine.

I already have my plan in place. Down payments will need to be in the 7% to 8% range to do a cash-to-loan transaction. If there is equity leftover, sellers will need to offer owner financing. That means either carry a second mortgage, do an all-inclusive trust deed or a land contract. Those financing instruments are saleable to investors. The agent who has the source of funds to buy those financing instruments will have an edge in the marketplace.

See, I am not only a Sacramento real estate agent. I am also a veteran of real estate from the 1970s and 1980s, back when we used to create paper (a second trust deed) and use that as a down payment on another home. I understand how this type of financing works. I also realize that now agents could be deemed arrangers of credit and, as such, subject to all sorts of laws and regulations. I ask agents: are you guys ready for this? Are you ready to do business in year 2013?

 

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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.

The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.