Real Estate Corner…

      Q.    We Are Considering Purchasing A Home And Are Uneasy About The Negotiation Process.  Can You Help?

       A.     The goal of a positive real estate negotiation is to result in a win-win agreement.  This is an agreement where both the seller and buyer feel they have received an equitable deal. 

      Here are a few simple tips to help ensure that you negotiate fairly. 

• First, make sure that you offer a fair price.  Nothing turns a seller off faster than a “low-ball” offer.  Likewise, don’t get into negotiations on a grossly overpriced home.  This can leave you feeling taken advantage of and exhausted.  Both the asking price and your offer should be based on current and factual comparable sales in the area. 

 

• Second, always respect the priorities of your counterpart.  Try to identify the other side’s motivations.  Then, examine your own.  If some items prove to be a sticking point in negotiations, offer to meet half way.  This may require you to pay half of some expenses or modify your closing date, but in the end you will feel as if you have fairly compromised.  If you have addendums to your main agreement, it may be helpful to solidify the purchase agreement and then deal with the addendums later.

• Finally, using a third party on your behalf will keep you focused and emotionally disconnected—resulting in a much better outcome.  Look for a CNE ~ Certified Negotiation Expert. I’ve made the art of successful negotiation the cornerstone of my business.  I work hard to understand the needs of both the seller and the buyer in the transaction, and can put these years of experience to work for you. 

If you are thinking of selling or buying soon,

be sure to interview your Real Estate Professional...

how do they overcome objections,

how do they negotiate.

If I can assist you further, please call me at 405-820-1740.

rhonda@rhondasrealestate.com.

3 Things To Consider Before Listing As FSBO

If you’re looking to sell your home in the near future, you may feel inclined to list it as a For Sale By Owner (FSBO) before working with a Realtor.  For many, this is considered one good way to cut back on costs and possibly earn a little more profit on the sale. 

However, there are certain aspects you may want to consider before going down this path.  Statistically, over 80% of FSBO’s end up being listed with a Realtor at some point.  Therefore, it pays to take the time to fully assess whether or not this is the right plan of action for you.

Properly Marketing Your Property

First of all, listing a home for sale can be a very time consuming and difficult process.  Unfortunately, this typically is not as easy as posting a sign in the yard and setting up a classified ad in the local newspaper.  There is certainly a lot more than meets the eye.

For instance, many FSBO websites will tout that you can obtain a wide exposure to buyers nationally, but this pales in comparison to the results that you can expect from big named sites like Realtor.com, which only agents can post to.

Next, your agent will have a lot of expertise with implementing online real estate marketing strategies that will gain you a ton of locally targeted searches.  And in fact, nearly 90% of all searches for real estate related inquiries start online.

Realtors will also have a strong network of both agents and buyers that they work with on a regular basis.  This is a business where it pays to network.  More contacts equals greater exposure.

Asking Price & Showings

For starters, a lot of FSBO’s will start at the wrong asking price.  This is by far one of the most important factors that goes into marketing your home, so you want to do this properly off the bat.  But, without being fully invested in your local market and understanding the current trends, it can be difficult to price the home accurately.

As alluded to in section one, selling a home can be a lot of work.  Most individuals these days have to juggle a full time job, family obligations, recreational activities, household chores, etc.  Where do you find the time for fully investing into the sale as well?

When the opportunity would arise for interested parties to view your property, you would need to schedule individual showings, open houses, inspectors, appraisers, etc., while also trying to stage and maintain your property’s appearance.  Miss out on a good opportunity for matching schedules and you can quickly lose interest.  

Negotiations & Contracts

If you get to the point where you negotiate with a buyer, it is much more difficult to handle this aspect without a qualified agent.  Selling your home can be a very emotional undertaking, so it is easier to set unrealistic expectations, or to even concede on more than necessary when you don’t have a 3^rd party buffer.

During most real estate transactions, both the buyer and seller will typically have a set of concessions and contingencies.  For a majority of buyers, they will expect to have some type of a financing, inspection and/or termite contingency. 

This is set up for their protection, in order to complete their due diligence on the home before moving forward to closing.  If other issues are found, this may even been grounds for further negotiation or eventually walking away from the deal.

Or you will be expected to lower the price, fix the issue or offer a concession on something else in order to alleviate the problem.  Likewise, you want to ensure that the buyer is not overstepping their boundaries or that you are pressured into giving away more than is reasonable. 

In summary, it’s worth taking the time to carefully consider these 3 areas before making any final decisions.  If you still decide to take the FSBO route, I sincerely wish you great success.  Also, please feel free to share this information with a friend and to bookmark this page for future reference as well! 

How To Do a Short Sale

Why Would a Lender Accept a Short Sale?

A short sale in real estate is not always a pleasant transaction.

There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:

·         Obtain legal advice from a competent real estate lawyer

·         Call an accountant to discuss short sale tax ramifications

As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

·         Call the Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.

·         Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:

·         Property Address

·         Loan Reference Number

·         Your Name

·         The Date

·         Your Agent's Name & Contact Information

·         Preliminary Net Sheet
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.

·         Hardship Letter
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.

·         Proof of Income and Assets
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.

·         Copies of Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.

·         Comparative Market Analysis
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:

·         Active on the market

·         Pending sales

·         Solds from the past six months.

·         Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not to report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.

Real Estate and Divorce

While it isn't a fun topic, it does come up, it does happen, there are questions, and no one seems to want to ask. Unless you've been through it, most people don't understand it and it does or can be complicated.

Real estate a couple owns can be a real stumbling block to divorce. Property problems won't keep people together, and they might even drive people apart who have in­compatible investment philosophies.

Splitting up the equity can be particularly difficult when there isn't cash available to one marital partner or the other. There are options. Let's start with the simplest and common case of the couple that only owns their home.

1. "Sell the house" is the first advice that friends and attorneys usually give. A sale has the advantage of helping the couple make a clean break. When the transaction closes there are only cash proceeds to divide. A 50-50 split is common.

2. "Keep the house." The husband or wife may prefer to continue to live there, at least until after the divorce is final. When one party wants to stay and there is an outstanding balance on the loan, the best solution is for the home to be refinanced in their name to be the responsible party. Oklahoma is a 50-50 state, meaning equity would be split equally.

In these cases the first step is to determine the equity in the home. What would be the proceeds of an outright sale, after all costs and the mortgage balance are paid off?

The mortgage lender can quote a payoff and real estate companies can state their marketing fees. Title companies can quote figures for title insurance and other closing costs. The only other usual seller costs are the appraisal and survey.

What's less clear are the costs that might have to be incurred to get the property to qualify for a buyer's financing. The type of financing the buyer chooses affects the standards that appraisers and lenders will apply.

Estimating the equity that a couple could split if one keeps the house is also something to consider. 

Hire an appraiser (about $400) to help establish value and note the items that lenders look for. Hire a home inspection service (about $250) to look for repair items that buyers might say must be fixed or they won't go through with the transaction. Finally, hire an engineer approved by the Municipality to test the well and septic system (about $500, plus pumping and Municipal fees).

If any of these reports show a need for corrective action, get contractor bids. These figures can be deducted from the equity that the couple plans to split. The work doesn't have to be done: the one who winds up with the house can assume the respon­sibility for taking care of these items later, having been "paid" by the divorced spouse by a division of a smaller equity.

From the time of the divorce forward, the spouse with the house assumes all the risks and responsibilities of home ownership. At least the risk of surprises is minimized.

After agreeing on the equity, what if the spouse who is keeping the house doesn't have the money to buy out the spouse who leaves? This is a common problem.

It may be possible to balance the books through the rest of the property settle­ment. Considering cars and other personal property it may be possible for the spouse who leaves to end up with enough of these items to balance what the "house spouse" keeps as equity.

The other answer may be for the "house spouse" to give the departing spouse a note secured by a deed of trust recorded against the house. The payments can be negoti­ated to fit both parties needs and capabilities. The items to consider are the term of the note, whether the remaining balance is due at any particular future date, the term, inter­est rate and payment. Simple financial calculators can provide these answers for spouses who are doing their own dissolution.

There are so many other things that can be considered as trade offs, but this is the short version of what to consider if you should find yourself in this situation.

10 Simple Tips to Take the Stress Out of Home Buying Process - Focus on the Positives!

Tip 9: Negotiation in Real Estate.

Whether you're a buyer or a seller you want to succeed in the real estate market. That's natural and reasonable, but what are the steps you need to triumph?

Negotiation is an important part of the real estate buying process. It's a complex matter and all transactions are unique. Negotiating too much...trying to get an extra low price, or even refusing to budge on your offer may cost you the home in the end.

Both sides—buyer and seller—want to feel that the outcome favors them, or at least represents a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take, and neither party gets everything they want.

 

So how do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are five basic keys which will determine who wins at the negotiating table.

 

• What does the market say?

At various times we're in a "buyers" market, a "sellers" market, or a market where housing supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique—it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with only a few sales, you may be able to get a better deal than elsewhere. Or, if you're a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

• Who has leverage?

If you're on the front page of the local paper because your business went bust—and the buyer knows it—you have little going for you in the bargaining process. Alternatively, if you're among six buyers clamoring for that one special property, forget about dictating an agreement—the owner can sit back and pick the offer which represents the highest price and best terms.

• What are the details?

A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $3,000 of the buyer's closing costs. The second owner made no concessions.

 

In this example, the first house was actually sold at discount—the $275,000 purchase price less the value of the roof repairs, closing credit, and other items. If you're a buyer, this is the deal you want! If you're a seller, you would prefer to be the second owner and give up nothing.

• What about financing?

Real estate transactions involve a trade—houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:

1. Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available—a loan application can be declined because of appraisal problems, title issues, survey findings, and other reasons.
   But, buyers who are "pre-qualified" or "pre-approved" (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.
   The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it's possible that the transaction could fail because the buyer can't get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.
2. The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand...good news for sellers.
   Alternatively, high rates or even rising rates may drive buyers from the marketplace—and that's not good for anyone.
3. It used to be that downpayments were a major financing hurdle—but not anymore. For those with good credit, loans with 5 percent down or less are available. Reduced downpayment requirements are good for both buyers and sellers.

• Who has expertise?

Imagine you're in a fight. The other guy has black belts in 12 martial arts—and you don't. Who's going to win? Who do you want representing you at the bargaining table?

Successful negotiation depends on give and take, so make sure you are being fair in your requests. Work with a Realtor who has the negotiation skills to make the transaction come together...one with collaboration, competitive, and compromise knowledge and expertise that comes with being a Certified Negotiation Expert.

Tip 10: Buyer's Remorse After the Purchase.