Wednesday, August 26, 2009

Is it worth rolling the dice when you flew into town to find a home?

Whether working with sellers or buyers,I often get the comment,why don't we "try this list price and see what happens" or "let's try this offer and see what happens".

I will listen to the home seller's/home buyer's logic and reasoning for any price they want to offer. I will gather as much information about the home,the community and any "inside information" that may impact the price point....such as if another like home is coming on the market/I was told that another buyer looked at that home and also registered an offer. Whatever my client wants me to list their home for sale (or rent for) or purchase (or rent for)I will do and at the same time will tell them to temper expectations if the number is not consistent with the market/the inside information I have.

I took a client in town from Florida,relocating to the area for a job. I contacted a listing agent to register my client's offer on a home in Silver Spring just off of University Blvd. that we were going to write and that the offer was about $10,000 less than the asking price. When I talked with the listing agent, he told me that 2 other offers were coming in.
I conveyed this to my buyer to show that there was obviously other people interested in this beautiful home,with the home being on the market only a few weeks and receiving multiple offers,there was a chance that one offer would be full price. There is also a chance that the other people will make lower offers and/or not look as strong financially in which case the offer could be accepted. So,did my client want to re-think his offer or was he happy with his offer?

My client told me to roll the dice and stick with his offer,which was a pretty good offer, and if they come back with a counter offer we'll go from there. He flew back to Florida to resume packing with his wife and family for the big move. I got a call last night from the listing agent that one of the offers was full price and that the person was strongly qualified,so the owners will work with that offer and thanks for my efforts.

My client was let down,but ready to move on to the next home. So he is going to fly back into town next week. Will his next offer be full price? I don't know. It depends if the place is priced well. I'll show him the comparables,talk about what happened last time and see how he wants to play it.

Wednesday, August 19, 2009

The bonding of buyers and sellers can be worth thousands in negotations.

Today was truly a wonderful day. I wrote an offer for the proud parents of a new born and presented the offer.

A week and a half ago one of my clients had a baby who is cute as a button.

Amazingly,having the baby increased their focus on finding a home immediately,when more often I have found people changing and postponing their plans while enjoying their new child. And,this is their first child,so I thought they would put the search on hold for several weeks.

On Monday we visited several homes in Frederick County,including one where the sellers were home. So we had an opportunity to establish a rapport. We had scheduled an appointment to see the house last week but it got cancelled because the mother went into labor that day. So my clients and the sellers were delighted to see the baby and we talked about family how the sellers raised their children in the house. The sellers even told us that they were moving to be closer to their grandchildren, one who is 6 months old.

The sellers were proud to show us around the home and the house projects they did over the years. There was a very good connection. As a real estate agent I often think it is better for the potential home buyers to look around a home while the sellers go out because:
(1) you may lose a negotiating advantage if either party sees how much the other wants to buy/sell and they will factor that into the offer;
(2)buyers don't always feel comfortable walking around a home,taking notes and evaluating if the home is for them or not;
(3)sellers may not want to be around just in case they come across as desperate to sell and lose a negotation
(4)it is hard talking about the home you are touring and comparing it to other homes while the seller is there or in the next room.

In this situation I knew the sellers were going to be around (one of the sellers doesn't move around too well) and I was able to tell my clients,the buyers to take mental notes and to not say anything in front of the sellers other than niceties and talking about the baby.

I met with the buyers,wrote an offer on these sellers' home and included an cover letter,as I always do to discuss the market,why the buyers like the house and work that needs to be done and the terms. I truly believe that terms due include intangibles,such as whether the buyer and seller relate to each other and if they can even see themselves walking through life in the other's shoes.

In this case, because of the connection we made with the sellers I was able to write a letter that really touched the sellers and they are seriously considering the buyers offer,which is lower than the asking price. While the sellers want their price,I really touched their hearts and that could be worth a few thousand,maybe over ten thousand dollars to the buyers.

Below is an exerpt from my cover letter. Due to the sensitivity of the sale,I am not mentioning the home address,the buyers or the sellers:

"...The Sellers and the buyers had the pleasure of meeting on Monday, along with the buyer;s new baby, "X" when I was helping them find a home to begin the new chapter in their lives. As I mentioned, we had originally planned on seeing the home last week, but little baby X was determined to be part of the house hunting process and mom went into labor the day we had originally scheduled to tour. We have looked at many homes over the last couple of months and hope that the search ends here. The buyers have been renting a home and look forward to enjoying pride in ownership and taking advantage of the benefits of first time home buyers. The sellers have obviously loved and taken care of their home for many years and the buyers will love the home every bit as much. The buyers and sellers have a mutual interest in buying and selling the home: family considerations. The buyers want to move into a new home as soon as possible for themselves and the new baby and the sellerswant to move as possible to be closer their grandchildren,including a 6 month old."

I feel very proud of this cover letter and am proud of how I represented my clients.
The sellers may end up accepted a lower offer than they would have otherwise if a personal connection wasn't made. We shall see.

Thursday, August 13, 2009

The small world of real estate

I've been working with one of my buyers on finding a home in Silver Spring, Maryland and one of the homes we looked at the other day is listed by one of my good friend's mothers. The home has 3 bedrooms,a nice kitchen and gazeba plus great curb appeal. The owner has taken great care of it.

I haven't crossed paths before with my friend's mother businesswise, but she remembered her son mentioning that I am a realtor. Her son and I went to high school together,were roommates for a few months in Israel,have maintained a friendship and gave each other honors at our weddings.

It was a wonderful opportunity to catch up with my friend's mother and engage in positive networking. Transactions work out so much more smoothly when agents as well as the buyers and sellers in the transaction have a good rapport. The only question is if this is the home of my buyer's dream or not and if we can come to a meeting of the minds on price and terms. Time will tell.

Friday, August 7, 2009

Terms of an exclusive listing agreement

When you put your home on the market for sale,you can have an exclusive listing agreement with a realtor for any time frame which you mutually agree to. I believe that a 6 month listing agreement is fair. My practice is to look at the average days on market for homes that have sold in or around the neighborhood,in or around the price range where my listing would be. If it has taken more than 6 months to sell other homes in the neighborhood,then I would ask for a longer listing period. I also look at how competitively priced the person's home is and if it shows well or not. If the home isn't priced above market,I also think it is fair for a real estate agent to ask for a longer listing. If the seller is adament about a certain time period for the listing--let's say the seller says he/she will only sign for 60 days and either extend or not extend when the time is up,then the listing agent has to decide whether it is a good business decision and expense to take on a short term agreement. That decision comes down to first and foremost whether he/she thinks the home will get sold or under contract in that time. Secondly,if he or she doesn't believe the home will sell that quickly,then he or she would have to consider whether having the listing agreement would be good exposure and generate more business leads,if the house he/she lists doesn't sell. He or she also has to consider how much money to invest in the listing if it were what he or she considered to be a short term.The listing agreement has a place to write down where the agreement begins and ends. You can always use a listing addendum to extend the listing. Most listing agreements have a clause stating that with X days (you and agent fill in)of written notice,you can terminate the listing agreement.

The labor of short sales,foreclosures and third party approvals

One of the first things I discuss in my buyer consultation is that you can potentially be waiting for weeks or months for an approval by a lender (and sometimes two lenders)if the home of your dreams is a short sale,foreclosure or a third party approval. One of my buyers, who wants to live in Baltimore or Columbia is experiencing this hurry up and wait to hear from the bank.

In addition to the stress of wondering whether the bank is going to approve their offer,counter the offer or reject the offer, my clients are,G-d willing,expecting a baby in mid to late September and their goal is to be in a home or at least have a fully ratified contract before the baby arrives.
So, yesterday when I talked with my buyers they told me that they want to start looking at homes again that aren't short sales or foreclosures . And, they are willing to increase their budget if necessary in order to find a home that meets their criteria. Fortunately I found some homes in the same price range we have been looking at and we'll visit them next week. Hopefully they will fall in love with one of the homes and we can have a quick,smooth settlement before the baby arrives.

Tuesday, August 4, 2009

Real estate market confidence meter

Whether you have owned a home for several years or for only several days now, you will be thrilled to hear that, according to data from the Case-Shiller index,the monthly value of homes increased for the first time in nearly 3 years.

If you have been on the fence about buying a home because you were concerned of your home/your investment going down in value after your purchase,I would encourage you to start house hunting (again). Let's talk about the market and your purchasing power! Oh,by the way, if you are a first time home buyer,there is still time to take advantage of the first time home buyer tax credit.

More great news for home owners and home sellers: the U.S. Department of Commerce reported that new home sales jumped 11%,the larget increase in more than 8 years.
If you are considering selling or just curious about what your home is worth, let's get together and talk about your local market. I am here to help.

It is a great day to be a home buyer or a home seller.

When "house hunting" you should definately meet the neighbors

Last Sunday I held an open house in Mount Pleasant, Washington DcC. I finished setting up early,so I introduced myself to the neighbors. The neighbors were very nice and appreciated my efforts to sell a home in their community.

One of the people who I talked to is the president of the community's home owner's association. We had a great conversation and I learned so much about the community's history, which I shared with people who visited my open house. For example,I learned that even though the unit I am selling doesn't currently have a washer/dryer in it,that the home owner's association just approved owners' installing washer/dryer units. This was great information to share with buyers who would have ruled the unit out because one of 'their needs' was private laundry and not a community laundry room. I also learned that the association just changed property management companies. Part of a home buyer's due diligence should be finding out as much information as possible about the homes they are searching,the community and the property management company (if there is one)managing the property. There are some great property management companies and some who are not so much.

So next time you visit a home,make a point of saying hi to people you see walking the neighborhood and strike up conversations with them. They love meeting the new potential neighbors and are happy to help you.

What a great real estate month July was!

My office had 42 revenue units in July,which is our best all year!
New home sales were up 11%.

The absorption rate in Montgomery County is 2.79 (2.79 months of real estate inventory on the market),which is the lowest it has been since we began keeping track of this statistic last September. Buyers are taking advantage of the interest rates and first time home buyer tax credit (which ends in a few months). Homes that have been priced well,marketed well and also have showed well have sold.

It's a great time to buy and sell.