Wednesday, October 28, 2009
Selling Strategies for Today’s Market Conditions
Dear Sue,
Because I plan on selling and buying within the next couple of months, I found the offer strategy that you wrote about last week to be very interesting. I want to be able to write a “winning” offer when the time comes.
I need a strategy to attract multiple offers. I have heard that the price is often “driven up” in multiple offer situations. In fact, I believe that you reported that in some price ranges the offers were as much as 5-6% above the asking price.
What strategies can I implement to push my price up?
Strategic Sam
Dear Sam,
No one has ever asked me that question before. I find your question to be very interesting and fun to think about.
A very smart strategy that the banks have been using is to price their foreclosures significantly below current “market” value. The strategy has created multiple offers. The agents representing the lenders are then asking each buyer to bring in their “highest and best” offer.
The highest offers are almost always above the asking price but the best offers are cash. The lender chooses the offer that they like best. Keep in mind that it is not the bottom line as much as it is the certainty that cash can provide.
Another strategy commonly used in many areas is pricing the property below market value and then offering the property for sale for a specified period of time in order to accumulate offers.
Lets say that the last comparable sale for your property was $300,000.00. You decide to list and market your property for $289,000.00. Your agent advertises and announces in the multiple listing service that the offers will be presented in 10 business days.
The hope is that many buyers vying for your property will go into an offering frenzy and bid your property up over the $300,000.00 mark!
Regardless of what strategy you use you must remember that we are in a declining market. The best strategy for a successful sale is to price your property at or below the last comparable sale price.
Your agent will tell you the right things to do to put your home in top show condition. Keep a tight rein on your budget because you are not likely to recoup expensive improvements. Putting your home in top condition will serve to make it more desirable and sell faster. In a declining market the faster your home sells the more you will net!
Keep your home tidy and make your home accessible at all times. If your home isn’t easy to show a potential buyer will cross your home right off the show list.
Exposure to as many potential buyers and agents as possible will create the most competition for your home and get you the highest sales price in the most reasonable amount of time! Our local market requires that Internet advertising and print advertising are a must!
Implementing today’s marketing strategies for today’s market conditions is a matter of good Home $$’s and Sense.
Visit me at:
www.seehometown.com
Because I plan on selling and buying within the next couple of months, I found the offer strategy that you wrote about last week to be very interesting. I want to be able to write a “winning” offer when the time comes.
I need a strategy to attract multiple offers. I have heard that the price is often “driven up” in multiple offer situations. In fact, I believe that you reported that in some price ranges the offers were as much as 5-6% above the asking price.
What strategies can I implement to push my price up?
Strategic Sam
Dear Sam,
No one has ever asked me that question before. I find your question to be very interesting and fun to think about.
A very smart strategy that the banks have been using is to price their foreclosures significantly below current “market” value. The strategy has created multiple offers. The agents representing the lenders are then asking each buyer to bring in their “highest and best” offer.
The highest offers are almost always above the asking price but the best offers are cash. The lender chooses the offer that they like best. Keep in mind that it is not the bottom line as much as it is the certainty that cash can provide.
Another strategy commonly used in many areas is pricing the property below market value and then offering the property for sale for a specified period of time in order to accumulate offers.
Lets say that the last comparable sale for your property was $300,000.00. You decide to list and market your property for $289,000.00. Your agent advertises and announces in the multiple listing service that the offers will be presented in 10 business days.
The hope is that many buyers vying for your property will go into an offering frenzy and bid your property up over the $300,000.00 mark!
Regardless of what strategy you use you must remember that we are in a declining market. The best strategy for a successful sale is to price your property at or below the last comparable sale price.
Your agent will tell you the right things to do to put your home in top show condition. Keep a tight rein on your budget because you are not likely to recoup expensive improvements. Putting your home in top condition will serve to make it more desirable and sell faster. In a declining market the faster your home sells the more you will net!
Keep your home tidy and make your home accessible at all times. If your home isn’t easy to show a potential buyer will cross your home right off the show list.
Exposure to as many potential buyers and agents as possible will create the most competition for your home and get you the highest sales price in the most reasonable amount of time! Our local market requires that Internet advertising and print advertising are a must!
Implementing today’s marketing strategies for today’s market conditions is a matter of good Home $$’s and Sense.
Visit me at:
www.seehometown.com
Friday, October 23, 2009
Strategies for a Winning Offer
Dear Sue,
I am so frustrated!
I am a first time (trying to be) buyer. Believe it or not I am in my second year of looking and making offers for homes that are ultimately bid right out of my price range.
It’s not that I am wasting any time. I signed up on one of those listing notification sites. I sometimes know about the new listings before my agent does.
I have been pre-approved and my down payment is in the bank.
In spite of everything it looks like I will miss out on the $8000.00 federal tax credit which I understand is due to expire at the end of November. I don’t seem to stand a chance. Any ideas?
Disappointed Dan
Dear Dan,
Properties listed in Placer County below the $300,000.00 price point are flying off the shelf! Other first time homebuyers looking for the tax credit, as well as investors who think that the market has hit bottom are jumping on every new listing in this price range.
Before making any offers I would suggest that you have your agent pull the most recent comparable sales. The most important statistic to analyze is the percentage of list price to sale price. If a $100,000.00 property sold for $105,000.00, the percentage would be 105%. If the sale price on a $100,000.00 asking price was $100,000.00, the percentage would be 100%.
My suggestion would be to offer approximately 1% above the average. i.e. the sales comparables indicate that the properties are actually closing escrow 5% above the asking price. Try offering 6% above the asking price.
I would also suggest that you keep your offer as clean and straight forward as possible. If the property appears to be in good condition make your offer “as-is” subject to your inspections and independent investigations.
If during your inspection period you find a defect that you just can’t live and the seller is unwilling to correct, you will not be contractually obligated to close the escrow. Many people believe that “as-is” means that you are obligated to go through with the sale no matter what turns up during the inspection period. Not true!
These strategies could be a matter of good home $$’s and Sense
For more Real Estate news and listings go to:
www.seehometown.com
I am so frustrated!
I am a first time (trying to be) buyer. Believe it or not I am in my second year of looking and making offers for homes that are ultimately bid right out of my price range.
It’s not that I am wasting any time. I signed up on one of those listing notification sites. I sometimes know about the new listings before my agent does.
I have been pre-approved and my down payment is in the bank.
In spite of everything it looks like I will miss out on the $8000.00 federal tax credit which I understand is due to expire at the end of November. I don’t seem to stand a chance. Any ideas?
Disappointed Dan
Dear Dan,
Properties listed in Placer County below the $300,000.00 price point are flying off the shelf! Other first time homebuyers looking for the tax credit, as well as investors who think that the market has hit bottom are jumping on every new listing in this price range.
Before making any offers I would suggest that you have your agent pull the most recent comparable sales. The most important statistic to analyze is the percentage of list price to sale price. If a $100,000.00 property sold for $105,000.00, the percentage would be 105%. If the sale price on a $100,000.00 asking price was $100,000.00, the percentage would be 100%.
My suggestion would be to offer approximately 1% above the average. i.e. the sales comparables indicate that the properties are actually closing escrow 5% above the asking price. Try offering 6% above the asking price.
I would also suggest that you keep your offer as clean and straight forward as possible. If the property appears to be in good condition make your offer “as-is” subject to your inspections and independent investigations.
If during your inspection period you find a defect that you just can’t live and the seller is unwilling to correct, you will not be contractually obligated to close the escrow. Many people believe that “as-is” means that you are obligated to go through with the sale no matter what turns up during the inspection period. Not true!
These strategies could be a matter of good home $$’s and Sense
For more Real Estate news and listings go to:
www.seehometown.com
Monday, October 19, 2009
Negotiate When Property Doesn’t Appraise
Dear Sue
I am in escrow on my first home. Many people find this hard to believe since I am almost sixty years old!
Since I was competing against another buyer, I upped my offer to more than I wanted to pay. My real estate agent prepared a market analysis that indicated that I offered about $10,000.00 to $15,000.00 more than the property is worth.
I don’t want to do anything foolish, but I love everything about the house. The location and floor plan are perfect. It has all the charm that can only be found in an older home and it has been beautifully updated. I have been looking for two years and this is the only home that I can see myself living in!
My Realtor said that the lender would not lend on the property if it doesn’t appraise. She said that I would have to come up with the cash for the difference or cancel the escrow.
I have always been told that value is based on what a willing buyer is willing to pay and what a willing seller is willing to take. In other words, the property would appraise for the sale price. If that’s not the case, and the appraisal doesn’t come in at the sale price, will I be forced to come up with the cash? Unfortunately, I don’t have any extra cash so that isn’t an option.
How can I be sure that I am protected? I want the home but I don’t want to overpay. What should I do?
Fretful Frank
Dear Frank
Ask any homebuyer. Your situation is not uncommon. Today’s low interest rates, near bottom pricing, and tax credit incentives create competition for properties. Many buyers have been out bid on more than one occasion forcing them to up their offers. The winning offers are all cash because they are generally made without an appraisal contingency.
The first page of the California Residential Purchase Agreement, Line 2, Item J, defaults to an appraisal contingency. “Unless otherwise checked, a buyer is not obligated to buy if the property does not appraise at the specified purchase price.”
Obviously, your offer was accepted with the appraisal contingency in place.
Appraisers are very conservative in today’s climate. The collapse of the financial industry and decline in property values has created an extra level of caution when it comes to appraisals. An appraiser is not going to push the value up in a declining market unless the property warrants it.
You will not be “dead in the water” if the property doesn’t appraise. One can always renegotiate with the seller.
Buyers and sellers have been known to split the difference between the offer price and the appraisal value. If the buyer is short on cash, it is possible to trade personal property or write a secured or unsecured note.
I would definitely discuss the note option with your Realtor and lender because some lenders prohibit secondary financing by the seller.
Finally, the seller may agree to reduce the price to the appraised value. In any case good luck and don’t be afraid to negotiate. It could be a matter of good Home $$’s and Sense!
Check out more real estate news, information and listings at:
HomeTown Realtors
I am in escrow on my first home. Many people find this hard to believe since I am almost sixty years old!
Since I was competing against another buyer, I upped my offer to more than I wanted to pay. My real estate agent prepared a market analysis that indicated that I offered about $10,000.00 to $15,000.00 more than the property is worth.
I don’t want to do anything foolish, but I love everything about the house. The location and floor plan are perfect. It has all the charm that can only be found in an older home and it has been beautifully updated. I have been looking for two years and this is the only home that I can see myself living in!
My Realtor said that the lender would not lend on the property if it doesn’t appraise. She said that I would have to come up with the cash for the difference or cancel the escrow.
I have always been told that value is based on what a willing buyer is willing to pay and what a willing seller is willing to take. In other words, the property would appraise for the sale price. If that’s not the case, and the appraisal doesn’t come in at the sale price, will I be forced to come up with the cash? Unfortunately, I don’t have any extra cash so that isn’t an option.
How can I be sure that I am protected? I want the home but I don’t want to overpay. What should I do?
Fretful Frank
Dear Frank
Ask any homebuyer. Your situation is not uncommon. Today’s low interest rates, near bottom pricing, and tax credit incentives create competition for properties. Many buyers have been out bid on more than one occasion forcing them to up their offers. The winning offers are all cash because they are generally made without an appraisal contingency.
The first page of the California Residential Purchase Agreement, Line 2, Item J, defaults to an appraisal contingency. “Unless otherwise checked, a buyer is not obligated to buy if the property does not appraise at the specified purchase price.”
Obviously, your offer was accepted with the appraisal contingency in place.
Appraisers are very conservative in today’s climate. The collapse of the financial industry and decline in property values has created an extra level of caution when it comes to appraisals. An appraiser is not going to push the value up in a declining market unless the property warrants it.
You will not be “dead in the water” if the property doesn’t appraise. One can always renegotiate with the seller.
Buyers and sellers have been known to split the difference between the offer price and the appraisal value. If the buyer is short on cash, it is possible to trade personal property or write a secured or unsecured note.
I would definitely discuss the note option with your Realtor and lender because some lenders prohibit secondary financing by the seller.
Finally, the seller may agree to reduce the price to the appraised value. In any case good luck and don’t be afraid to negotiate. It could be a matter of good Home $$’s and Sense!
Check out more real estate news, information and listings at:
HomeTown Realtors
Wednesday, October 7, 2009
No New 21- Day Turnaround/ Everything has Burned Around My Home in Escrow!
According to the California Association of Realtor’s legal team, the recently enacted Senate Bill 306 does NOT require a 21-day turnaround for short sale approval. The new law, according to CAR, requires that the “pay-off demand” be provided within 21 days from short sale approval.
Under the new law lenders are now required to contact certain borrowers to explore alternatives to foreclosure. The contact must be made at least 30 days before filing a notice of default.
There are other technical changes. The full text of Senate Bill 306 can be read at http://www.leginfo.ca.gov.
Dear Sue,
I was in escrow on a beautiful home that was located right in the middle of the North Auburn fire. Even though the house made it through the fire without being damaged I came very close to not purchasing it because I couldn’t see myself living in the middle of all of that devastation and destruction.
My Realtor supported me in whatever decision I made. She did say that if I decided to close the escrow I would eventually end up living in a brand new neighborhood but the ultimate reason for my choosing to close the escrow was my love for the property. I wanted to make it my home.
My brother later told me that if I chose not to buy the house that the seller could have sued me to perform. I was under the impression that I didn’t have to buy it because of the fire. Who is right?
Curious Bob
Dear Bob,
I checked with the CAR legal department. California’s recent firestorms have made this a very hot topic. No pun intended!
Q 1. May a buyer get out of a purchase contract under the Uniform Act if the damage or loss caused by fires to the property is minor?
A Probably not. The Uniform Act implies that the seller may still enforce the contract if the damage is not material. However, a purchase agreement may require the seller to repair such damage. For example, Paragraph 7A of C.A.R.'s Residential Purchase Agreement requires the property to be maintained in substantially the same condition it was in on the date of acceptance. Under this language, a seller could be obligated to repair fire-related damage to his or her property.
Q 2. May a buyer get out of a purchase contract under the Uniform Act if the damage or loss caused by fires to the property is major?
A Yes. To repeat, if (1) neither legal title nor possession has transferred from the seller to the buyer, and all or a material part of the real property is destroyed by fire, and (2) no express contract provision to the contrary exists, then, under the Uniform Act the seller cannot enforce the purchase contract and the buyer may cancel and recover any portion of the purchase price already paid. (Cal. Civ. Code § 1662.)
Q 3. If the damage is not severe, does the timing of the fires (whether they occur before or after an inspection) affect the right to cancel?
A Yes. If the damage occurs before the buyer has removed an inspection contingency in his or her purchase contract, the buyer can, of course, exercise any inspection, disapproval, and cancellation rights provided by the contract.
If the damage occurs after the buyer has removed his or her inspection contingency, the buyer generally does not have an automatic right to re-inspect the property and approve or disapprove of its condition under most purchase contracts (including C.A.R.'s Residential Purchase Agreement). However, the seller may be obligated to repair the property. See Question 1.
A purchase agreement may, however, require a seller to disclose fire-related information, which in turn may give a buyer a right to cancel a transaction, even if he or she has already removed contingencies. For example, Paragraphs 5A(3) and (4) of C.A.R.'s Residential Purchase Agreement provide that if, prior to the close of escrow, the seller becomes aware of adverse conditions materially affecting the property, the seller must provide a subsequent or amended disclosure or notice, which then gives the buyer a right to cancel the agreement.
I hope this helps. My recommendation is to ALWAYS seek legal advice. It could be a matter of Good Home $$’s and Sense.
For more real estate news and Home $$s and Sense articles go to:
HomeTown Realtors
Under the new law lenders are now required to contact certain borrowers to explore alternatives to foreclosure. The contact must be made at least 30 days before filing a notice of default.
There are other technical changes. The full text of Senate Bill 306 can be read at http://www.leginfo.ca.gov.
Dear Sue,
I was in escrow on a beautiful home that was located right in the middle of the North Auburn fire. Even though the house made it through the fire without being damaged I came very close to not purchasing it because I couldn’t see myself living in the middle of all of that devastation and destruction.
My Realtor supported me in whatever decision I made. She did say that if I decided to close the escrow I would eventually end up living in a brand new neighborhood but the ultimate reason for my choosing to close the escrow was my love for the property. I wanted to make it my home.
My brother later told me that if I chose not to buy the house that the seller could have sued me to perform. I was under the impression that I didn’t have to buy it because of the fire. Who is right?
Curious Bob
Dear Bob,
I checked with the CAR legal department. California’s recent firestorms have made this a very hot topic. No pun intended!
Q 1. May a buyer get out of a purchase contract under the Uniform Act if the damage or loss caused by fires to the property is minor?
A Probably not. The Uniform Act implies that the seller may still enforce the contract if the damage is not material. However, a purchase agreement may require the seller to repair such damage. For example, Paragraph 7A of C.A.R.'s Residential Purchase Agreement requires the property to be maintained in substantially the same condition it was in on the date of acceptance. Under this language, a seller could be obligated to repair fire-related damage to his or her property.
Q 2. May a buyer get out of a purchase contract under the Uniform Act if the damage or loss caused by fires to the property is major?
A Yes. To repeat, if (1) neither legal title nor possession has transferred from the seller to the buyer, and all or a material part of the real property is destroyed by fire, and (2) no express contract provision to the contrary exists, then, under the Uniform Act the seller cannot enforce the purchase contract and the buyer may cancel and recover any portion of the purchase price already paid. (Cal. Civ. Code § 1662.)
Q 3. If the damage is not severe, does the timing of the fires (whether they occur before or after an inspection) affect the right to cancel?
A Yes. If the damage occurs before the buyer has removed an inspection contingency in his or her purchase contract, the buyer can, of course, exercise any inspection, disapproval, and cancellation rights provided by the contract.
If the damage occurs after the buyer has removed his or her inspection contingency, the buyer generally does not have an automatic right to re-inspect the property and approve or disapprove of its condition under most purchase contracts (including C.A.R.'s Residential Purchase Agreement). However, the seller may be obligated to repair the property. See Question 1.
A purchase agreement may, however, require a seller to disclose fire-related information, which in turn may give a buyer a right to cancel a transaction, even if he or she has already removed contingencies. For example, Paragraphs 5A(3) and (4) of C.A.R.'s Residential Purchase Agreement provide that if, prior to the close of escrow, the seller becomes aware of adverse conditions materially affecting the property, the seller must provide a subsequent or amended disclosure or notice, which then gives the buyer a right to cancel the agreement.
I hope this helps. My recommendation is to ALWAYS seek legal advice. It could be a matter of Good Home $$’s and Sense.
For more real estate news and Home $$s and Sense articles go to:
HomeTown Realtors
My House Isn't Selling!
Dear Sue,
I have had my home on the market for over three months. My agent has had Broker tours but no open houses and very little advertising.
I have not had a single showing. I am even more frustrated because I haven’t talked to him since my property was listed. I think that it’s because I wanted to list my house for a higher price than he wanted to.
Is there anything that I can do?
Grumpy Gail
Dear Gail,
Don’t just be grumpy. Pick up the phone and call your agent! Express your frustration.
Ask him to do an updated market analysis and be sure to tell him that you will listen this time. Insist that he be factual about it. Tell him that a realistic evaluation of your home will not offend you. Let him know that you aren’t blaming the market on him. Tell him that you are not one of those sellers that wants to find an agent who will tell you what you want to hear, however unrealistic.
I assume that you realize that we are still in a declining market. Short sales and bank owned properties are dominating. Our local market is losing between 1-11/2 % in value per month. Pricing your home competively in order to sell it quickly will save you money in the long run.
I am sure that your agent will be happy that you want to revisit your listing price. In my opinion, overpricing is the number one reason that homes linger on the market. This market requires aggressive, competitive and up to date pricing!
A realistic market analysis can be a matter of good Home $$s and Sense.
visit us at:
HomeTown Realtors
I have had my home on the market for over three months. My agent has had Broker tours but no open houses and very little advertising.
I have not had a single showing. I am even more frustrated because I haven’t talked to him since my property was listed. I think that it’s because I wanted to list my house for a higher price than he wanted to.
Is there anything that I can do?
Grumpy Gail
Dear Gail,
Don’t just be grumpy. Pick up the phone and call your agent! Express your frustration.
Ask him to do an updated market analysis and be sure to tell him that you will listen this time. Insist that he be factual about it. Tell him that a realistic evaluation of your home will not offend you. Let him know that you aren’t blaming the market on him. Tell him that you are not one of those sellers that wants to find an agent who will tell you what you want to hear, however unrealistic.
I assume that you realize that we are still in a declining market. Short sales and bank owned properties are dominating. Our local market is losing between 1-11/2 % in value per month. Pricing your home competively in order to sell it quickly will save you money in the long run.
I am sure that your agent will be happy that you want to revisit your listing price. In my opinion, overpricing is the number one reason that homes linger on the market. This market requires aggressive, competitive and up to date pricing!
A realistic market analysis can be a matter of good Home $$s and Sense.
visit us at:
HomeTown Realtors
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