Monthly Archives: May 2018

Ask the Realtor: Why the highest offer isn’t always the best one

Home-For-Sale-Sign-Real-Estate
Sellers should ask their realtor to create a spreadsheet to compare offers more easily. Adobe Stock

You are ecstatic because you have received seven offers on your home, many of them over the asking price. Your initial reaction is to choose the highest, but wait. The highest offer isn’t always the best one. You should scrutinize every bid before you make this important decision.

For example, if you receive an offer well above the asking price but the buyer has only a 5 percent down payment, this could become a problem if the bank does not appraise your home at the proposed purchase price. If the buyer can’t put more money down to bridge the difference between the offer and the appraised value, the deal could fall apart or have to be renegotiated — at a lower price. A slightly lower offer with a bigger down payment could be more appealing.

Have your agent show the components of each offer on a spreadsheet. Here are some conditions, other than price, that you will want to consider and possibly renegotiate:

■ Closing date

If closing at a particular time is important to you, make sure the date on the offer aligns with your desired one.

■ Inspection

You may find that one buyer wants one, but the other has offered to waive it. What do you do? This is something to discuss with your agent, but it’s often in your best interest to take the lower offer without the home inspection contingency. If the inspection is waived, there will be no further negotiation prior to signing the purchase and sale agreement. If it is not waived, but you see the phrase “inspection for informational purposes only,’’ the buyers still will be having an inspection, but are using language to suggest that they will not try to renegotiate afterward. This however, is not always the case, and creates uncertainty for the seller. Also, by the time this happens, your property could be off the market for up to 10 days.

■ Cash or no financing contingency

Most sellers believe a cash offer is much better than a financed one, and many times it is. A cash offer may come in lower, however, because some buyers rationalize that if they are paying cash they can offer less. With a cash offer, your agent must make sure that the buyers submit a proof of funds, such as a recent letter or statement from a financial institution.

In my opinion, waiving the financing contingency can be just as attractive as a cash. This has become quite common. Most buyers cannot afford to pay cash, but they know their financing will be approved, and they want to do everything they can to make their offer as attractive as possible. This also means that they would forfeit their second deposit (typically 5 percent) if the financing does not come together.

Waiving this contingency also includes forgoing the bank appraisal (unless they have stated otherwise). If you decide to accept one of these offers, your agent should call the buyer’s lender to make sure the buyer has secured financing if the appraised price comes in lower.

■ Escalation clause

Such a clause states that a buyer will pay a certain amount over the highest bona fide offer that does not contain a home sale contingency. Not all agents use these, but I think they are a great way for buyers to ensure their bid stands out in a competitive situation. It’s also a way for a seller to make more money. Let’s use $5,000 as an example. Once all offers are reviewed, the seller’s agent contacts the agent who submitted an escalation clause, forwarding him or her the highest offer (and redacting all personal information). The buyer has a certain amount of time, normally half an hour, to accept or reject the highest bid, plus the $5,000 escalation. So if the highest offer is $525,000, the buyer must agree to $530,000. An escalation clause also permits the buyer to say no if the highest offer is too high.

Whatever you end up doing, remember that every term is negotiable — and as a seller you are in the driver’s seat in this market. A sharp seller’s agent will compare and leverage all offers to achieve your desired pricing and terms. This is the fun part, so enjoy.

Original Source: http://realestate.boston.com/ask-the-expert/2018/05/10/why-the-highest-offer-isnt-always-the-best-one/

Original Date: May  10 2018

Original Author: Marjorie Youngren

Spring is Here: It’s Time to Put Your Home Up for Sale

If you’re thinking of putting your home up for sale, now is the time to do it. Spring has always been known as the best time to sell a home because buyers are eagerly looking to make a purchase that allows them to be settled before summer is here. The weather is warm but not hot, people are out and about and are much happier than any other time of year.  This makes it an ideal time for buyers to look for new homes during this time of year. The real estate market is a year-round thing, but spring really sees a lot of movement in terms of interested buyers. Here are a few more reasons why you’ll want to put your home up for sale this spring:

The Newness of Spring Makes Your Home Look Better

A huge reason why you should put your home up for sale in spring is the fact that the warm weather, the green grass and all the flowers are blooming so potential buyers really see the beauty in your home. Spring’s many factors really set up a pretty view of your home that ups the curb appeal and attracts buyers.

The Days are Longer and There Is More Sunlight

Because there’s more sunlight during spring, which means potential buyers have more time to view your home than in winter. You can have home eyeballs look at your home throughout the day and this only increases your chances of selling your home fast!

Closing Corresponds with The End Of The School Year

If you have kids, chances are you want them to close out the school year at their current school. If you sell in the spring, you’ll most likely close right around the time school finishes, which mean no interruption in their school studies. And they’ll be able to start the new school year at a new school.

Tax Returns Lend to Higher Down Payments for First Time Buyers

Spring is usually a time when first-home buyers start looking for home since they’ve just done their taxes and have more money to use for their down payment.

More Buyers Equals Possible Bidding War and Higher Prices

Selling in spring will increase your chances of getting the most bids for you home with the highest prices. There are been plenty of research that shows the first two weeks in May have higher returns on houses than any other time of year.

Learn more about C21 Lady of the Lakes Realtors and the numerous services they offer including: buying a new home, selling a home, or renting a home at www.ladyofthelakes.com.  To contact one of our real estate agents call 734-426-6060 today.

 

 

When Should You Make an Offer Below Asking Price? 5 Clues It’s Time to Take a Gamble

Homes are expensive, and getting even more so every day. (Also, water is wet and the sky is blue!) Making an offer over asking price—sometimes by absurd amounts—has become a harrowing norm for today’s buyers.

But even as the market rockets upward, there are always those buyers. You know the type: You visit their new home for a dinner party, and halfway through the meal, they lean over to whisper in your ear.

“We got a killer deal,” they say. “Under list price.

Then you proceed to silently hate them forever. Because. Homes. Are. Expensive.

But getting an awesome deal on a house isn’t impossible, even in a hot market. If you learn to read the signals, you just might find sellers who are amenable to an offer below asking price.

To be clear: Real estate pros warn against extremely lowball offers (typically more than 15% below listing price) because you might offend the sellers—even if the home’s been on the market for months. Strategize with your agent to determine both how far under listing price you’re comfortable going, and what you think the sellers might respond to.

Not sure where to start? These five signs will help you determine when the time is right for a low offer.

1. When the seller wants out

Not every seller wants to wait for an over-the-top, so-much-money-it-takes-your-breath-away offer. Some homeowners want to sell quickly, and they’re willing to accept lower offers to do so.

“Submitting a lowball offer has more to do with circumstances than the actual property itself,” says Than Merrill, a real estate investor in San Diego. Lowballs “grow increasingly attractive to homeowners the more desperate they become to sell their property.”

A little bit of sleuthing by you and your real estate agent can go a long way in figuring out the sellers’ motivation: Have they recently gone into default on their loan? Are they trying to move to a new state for a job, or to take care of elderly relatives? Did they inherit the house but don’t have any interest in the real estate game?

“If you can identify what the seller really wants or needs, you may be able to negotiate a better deal,” Merrill says. “You never know until you ask.”

2. When the home is blatantly, obnoxiously overpriced

Just because a home is expensive doesn’t mean it’s overpriced—it might be worth every penny. But sellers do often get an inflated sense of their home’s value. And those homes can languish on the market.

Enter: You and your below-asking offer.

Work with your agent to look at the comps for your area, and find out what other homes are selling for. If there’s one that makes you say they’re out of their damn minds, it might be ripe for a low offer.

“You may in fact be the only offer this frustrated and anxious seller has seen yet,” says RJ Winberg, an agent in Orange County, CA.

3. When you’re not picky

Maybe you have a flexible wish list. Two bedrooms, three bedrooms—more space is great but you really need only one, right? Perhaps you care only about how your house looks on the inside. Or maybe you’re planning a full renovation no matter what you buy.

If all you care about is price, don’t feel bad throwing below-asking offers left and right.

“Most buyers are going all-in and looking for their dream home, but some buyers are more concerned about whether or not they’re getting a good deal than how ideal the actual house is,” Winberg says. “If you go around making lowball offers on every home you could conceivably see yourself living in, chances are you will eventually find a seller who will entertain your offer.”

4. When the home has hopped on and off the market

Keep your eyes peeled for a home that’s been on the market, then off, then on again. This home might be a prime candidate for your low offer. After all, imagine the seller’s irritation: Listing a home can be an arduous process, filled with open houses, surprise showings, and negotiations—only to have the buyer back out at the last minute.

“This often means that the seller is getting frustrated with the process of being on the market and may be more open to accepting a lower offer, just to get through the process,” says Klaus Gonche, a Realtor® in Fort Lauderdale, FL.

But before you make an offer, see if your agent can get some intel: It’s possible there’s another reason the sellers are listing and relisting their house—such as they don’t actually want to sell.

5. When the home is outdated

Elizabeth Gigler, an agent in Naperville, IL, has three requirements for going in low: First, the home must have been on the market for more than 60 days. Second, the home must have old mechanicals. (Updating a vintage HVAC system could cost thousands of dollars—meaning that a low offer is entirely justified.) Third, the home “is completely outdated,” she says.

That ’70s-era burnt orange shag carpeting isn’t anyone’s style these days. The sellers might presume they’ll get full asking price without swapping in something more neutral; however, they might change their tune after a few months on the market without any offers.

That’s when you swoop in with a low offer—and get yourself a killer deal to brag about at your next dinner party.

Original Source: https://www.realtor.com/advice/buy/when-to-make-offer-below-asking-price/

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Published Date: May 17, 2018

Spring is in The Air: What to Look for When Buying a Home

Spring season is house-hunting season. It is time we leave our wintery slumber and decide to get going.  The sun is shining, the ice is melting, and everything appears shiny. If you are considering buying a home during the spring season, know very well what problems tend to show up after a long winter before making that offer.  It is crucial that buyers looking for a new home seek out the assistance of a real estate agent.  A professional realtor assists throughout the buying process in a number of ways including a pre-check for damage prior to the offer and inspection process.  Real estate agents are helpful in spotting common issues that can appear in homes after the spring thaw including:

Water Damage:

When snow melts the running water often can enter into basements, crawlspaces, or cement foundations.  If this occurs, it usually shows up in the form of yellow patches on inside walls or bulging paint patches.  These are not often spotted by excited homebuyers however real estate agents are well trained in finding these smaller issues that can easily be covered during the viewing process.

External:

It is crucial to thoroughly examine the exterior of the home when viewing homes.  Peeling paint, cracks in the siding, and an abundance of mold can be indicators of structural issues throughout the home.

Out of Sight:

Real estate agents will always have homeowners check out the crawlspace, attic, basement, and utility rooms.  These are the areas within a home that often conceal water and mold issues because these areas are often given less care when sellers are getting a home ready to sell.  However, the bones of the home need to be examined.  It is important to take a deep breathe in each of these areas to make sure that you are not catching notes of musty smells that can indicate moisture is getting into the foundation framing and insulation.

Roof Inspection:

Snow, sleet, and rainwater can cause havoc on roofs, especially when shingled with asphalt shingling. Although it may seem just a little silly, a set of binoculars should be used by a real estate agent or home buyer when going for a home viewing.  These can help you get an obvious look at the situation above the gutters. Cracks and curling could indicate the shingles need to be replaced.

Knowing potential trouble spots when buying a home before making an offer, paying for an inspection or worse yet moving in will help to make sure that home buyers make the best buying decision possible.  This is one of the reasons it is so important to use a real estate agent when buying or selling a home.

Learn more about C21 Lady of the Lakes Realtors and the numerous services they offer including: buying a new home, selling a home, or renting a home at www.ladyofthelakes.com.  To contact one of our real estate agents, call 734-426-6060 today.

Fact or Fiction? 6 Down Payment Myths You Should Stop Believing Immediately

If you’re thinking about buying your first home, that pesky down payment has probably kept you awake more than a few nights. We get it—while a pre-approval is crucial for determining your buying power, it’s the down payment that shows you mean business.

But saving up is hard. In a study conducted by NerdWallet, 44% of respondents said a lack of a down payment was the roadblock keeping them from buying a home.

Making things even worse? Your well-meaning friends and family have probably given you at least one piece of well-meaning, but ill-informed advice, leaving you in more of a blind panic than you need to be.

We’re not saying that saving for a down payment will be a cake walk, but separating fact from fiction can go a long way. Here’s the truth you need to know.

Myth No. 1: You need 20% down

In the NerdWallet study, 44% of respondents also believed you need 20% (or more) down to buy a home. For decades, this was standard, but it isn’t always the case anymore.

“It really depends on the type of buyer you are,” says Robert Garay, a broker associate and team leader of the Garay Group at Lifestyle International Realty in Miami.

For instance, a Federal Housing Administration (FHA) loan only requires 3.5% down. If either you or your spouse served in the military, you’re likely to be eligible for a Veterans Affairs (VA) loan, which can be approved for 0% down. The same goes for United States Department of Agriculture (USDA) loans.

And if you’re a qualified buyer, you can get approved for a conventional loan with less than 20% down, but there’s a catch: You’ll be on the hook for private mortgage insurance, or PMI. PMI is paid directly to your lender, not toward your principal. Think of it essentially as insurance you pay to prove to the lender you won’t default on your loan.

Myth No. 2: Paying mortgage insurance is smarter than paying a bigger down payment

Perhaps that mortgage insurance seems like a small price to pay in order not to deplete your bank account and win the house. So what if you make some additional payments for a while?

It might not be a big deal, but you’ll want to calculate what you’ll pay in the long run. Take, for example, conventional loans. If you put less than 20% down, you’ll get stuck with PMI, but only until the principal balance reaches 78% or less of the original purchase price.

FHA loans, on the other hand, require mortgage insurance for the life of the loan. That means you’ll be paying an extra monthly fee for as long as you live in the home (or until you pay off the mortgage).

Before you brush off mortgage insurance, compare your options—and know that paying less upfront could mean paying much more over the life of your loan.

Myth No. 3: Cash is king

If you’re shopping in a competitive market, you’ve likely heard horror stories about first-time buyers getting snubbed over investors or all-cash buyers. If you’re working with a loan and a small amount down, it might seem like your chances of getting picked over the other guys are slim to none.

There is some truth to this belief. Cash offers offer one big benefit to a seller: They’re guaranteed to close on time with no loan approval hiccups.

But on the flip side,“That myth assumes that sellers care most about a fast and certain close, and that’s not always true,” says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

Often, if you make the bigger offer, or you write a killer personal letter that resonates with the seller, you stand a better chance of getting approved over an all-cash offer.

Fleming’s seen it happen: “I’ve actually beat out all cash offers with 10% down because our offer price was a little higher,” he says. “I’ve also had deals where we were competing against a higher cash offer and the seller took ours because the buyers were a young family wanting to raise their kids in the home—and that meant something to the seller.”

Myth No. 4: Down payment assistance is easy!

We hate to burst your bubble—or discourage you from trying to get down payment assistance if you qualify—but finding, applying, and getting approved for help isn’t always easy.

First, there are no national, or even many state-run, assistance programs.

“Pretty much every program is locally run, sometimes by county or even by city,” Fleming says. You can check the Department of Housing and Urban Development’s website for a smattering of state-run “homeowner assistance” options, but you’ll have to do some digging.

And then there’s the other rub. “You have to be under a certain income to qualify, usually the median income in the county,” Fleming says.

Some programs may make special exceptions—say, for single parents—but in general, income is going to be a big factor.

For example, to be eligible for down payment assistance in Grand County, CO, applicants must work a minimum of 32 hours per week in the area and meet income limits. Nevada’s “Home Is Possible Down Payment Assistance Program” has a cap on income, credit score requirements, and the cost of the home bought. In Tamarac, FL, applicants must meet income requirements, wait until an open enrollment period and then get picked from a lottery system.

Still, if you think you might qualify, call your local housing authority office—it can usually point you in the right direction.

Myth No. 5: You shouldn’t put more than 20% down

Let’s say you’re lucky enough to have saved more than 20% down. Odds are good some well-meaning friend is going to tell you to put only 20% down—no more, no less. After all, now that you’ve successfully avoided PMI, why fork over more cash than you have to?

A couple of reasons, Fleming says: First, a higher down payment could signal to your lender that you’re a trustworthy borrower and get you a lower interest rate on your mortgage. Plus, the more you pay upfront, the less you’re borrowing—which means lower mortgage payments.

But you’ll have to put down at least 5% more to see that difference, according to Fleming.

“Your interest rate drops a little more with 25% down, and even more with 35% down,” he says.

Compare your options to see if it makes more sense to pay the extra down or to keep that money in investments that can work for you.

Myth No. 6: You can take out a loan for a down payment

Truth: There’s nothing wrong with getting help with your down payment, but it has to be a gift. If a lender suspects the money might be a loan, repaying said loan will be factored into your mortgage approval amount and you’ll qualify for less than you might have wanted.

In order to prove it’s a gift, you’ll have to get a letter from the gifters, swearing that they don’t plan on asking for the money back. And don’t try to game the system—lying on a mortgage application is a felony.

Original Source: https://www.realtor.com/advice/finance/down-payment-myths/

Original Author: Angela Colley

Original Date: April 26 2018