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Category Archive: ‘Why You Should Hire Jim as your Buyer’s Agent’

Home-Price Negotiations

price-negotiations

When it comes down to the last 2% to 4% on price negotiation, why is there so much trouble putting a deal together?

It because the participants had no strategy going in – they just start making offers or counter-offers without regard to where it will lead.

Without a specific strategy, it’s too easy for either party to throw their hands up and say, “I don’t know how I got here, and I don’t like it!”.

This is another reason why we should adopt the auction format to home-selling.  The auctioneer has a very specific strategy on price, and the increments of change – all the buyers have to do is say yes or no.

Until the auction format takes over, what can we do?

My ideas on offer/counter-offer strategy:

  1.  Keep It Simple – Negotiate in 25-50-75-99 increments, they are easier for the receiver to compute the differences.  It also helps to give the other party a strategy for their response – if they are paying attention.
  2.  More Simple – If you can’t get on a 25-50-75-99 track, then sellers’ counter-prices end with a nine ($879,000), and buyers end with a zero ($850,000 or $860,000).
  3.   Buyers – Have your initial offer reflect the days on market. If you offer 5% under the list price on a house that has been listed for 3 days, you won’t get a response.  Make the same offer 3 months later and the seller should be happy to engage.
  4.   Velocity – Make a big price move with your first counter-offer to encourage the other party (heck, they might be so happy they just sign it), but then pull back on the second round.
  5.   Don’t Go Longer Than Two Rounds of Counters – Parties get tired of playing, and burnout sets in quickly.
  6.   Expect to Split the Difference at Some Point – it’s a win-win solution.
  7.   Know the Other Agent’s Level of Competence – If the other agent sells less than one house per month, they are likely to willy-nilly the process. Your agent needs to help them along.

If you are the buyer, it would be nice to pick up some signs along the way to assist with setting a price strategy, and lay out your expectations mentally.

Signs of seller motivations, and what a buyer can expect:

  1.   How difficult it is to see the home.  If the listing agent blows you off for a day or two, or wants to show the house at their convenience, not yours – then you can expect tough sledding ahead.
  2.   How quickly they responds to your offer/counter.  If the sellers doesn’t respond within 24 hours, it means they don’t understand buyer’s remorse – and don’t care.
  3.   How close they stick to list price.  The closer they stick, the more (over)confident they are.
  4.   Who the seller picked for a listing agent will tell you just about everything you need to know about your chances of success.  If they select a reputable, experienced agent, then you will know because the house looks sharp, it’s easy to see, and the price is attractive. If they picked a loser, then the photos are terrible, the house looks like crap, it’s hard to see, and the price is 10% higher than comps, or on a goofy range.

Remember that it takes four things to make a deal – the right house, the right list price, the right seller, and the right listing agent.  If any of those four are out of whack, then a deal is unlikely.

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Posted by on Oct 11, 2016 in Auctions, Jim's Take on the Market, Listing Agent Practices, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

‘Soft’ Market

I showed 20-25 properties to buyers over the weekend, which always makes me cringe because I know what will follow – those incessant ‘feedback’ requests.  In a hot market, they come by email – listing agents don’t care what you think then, because they know the property will be selling any minute.

But these days you get phone calls.

The calls usually come from assistants, and, for the most part, they don’t care what the feedback is, they just need to write something down.

But occasionally the actual agent will call, which hopefully means somebody has some real motivation over there.  I like to turn these into two-way conversations and ask questions to see if the agent might be realistic.

Agents love to gush about how many showings they’ve had, and as a result, how a sale must be right around the corner.  You and I know that a lot of showings but no offers means a lot of buyers not interested – at least not at this price.

But most agents are slow to accept that reality, so I’ll follow it up by suggesting that the market must have turned soft and see what they say.  You can’t assume that it’s obvious to everyone, even those in the business.  Besides, after the run we’ve had, most realtors think the market is soft if they don’t get multiple offers in the first week!

But what is a ‘soft’ market?

From Investopedia:

DEFINITION of ‘Soft Market‘ – A market that has more potential sellers than buyers. A soft market can describe an entire industry, such as the retail market, or a specific asset, such as lumber.

This is often referred to as a buyer’s market, as the purchasers hold much of the power in negotiations.

The market will feel ‘soft’ to sellers and agents who are getting showings but no offers.  They will blame the ‘market’, as if the problem is outside of them.

But we know what the real problem is – sellers got a little too enthusiastic about their list price, and buyers are now balking.  For example, see below.

sept

Most agents are reporting no offers on their listings, and you can see why.  There isn’t enough pricing momentum to propel buyers to keep paying more.

How soft is it?

Probably 5% to 10% – but do you deduct from today’s lofty list prices, or from the last comps?  Results may vary!

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Posted by on Sep 8, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Fall Buying Season

Image result for fall leaves color

The last third of 2016 starts on Thursday!

From Trulia:

http://www.trulia.com/blog/best-things-about-fall-real-estate/

For the first time in recent history, October surpassed June as the most popular month to get married. And these autumn-loving brides may be on to something: Although the spring months are notoriously the best time to buy real estate (as well as have a wedding), fall may be the new ideal season to buy a home.

Here are seven insights on why you should buy a home during the fall season:

1. There’s less competition

Competition for houses drops off in the fall, a time many people consider to be off-season in real estate. But there are still homes for sale — and in some cases, there’s just as much inventory as there was during the spring and summer. “[Fall] means new inventory and repositioned old inventory that did not sell in the prime season,” says Wesley Stanton, a New York, NY, agent with The Stanton Hoch Team.

This puts you in a great position to negotiate. “Fall homebuyers should consider making lowball offers, followed by more aggressive negotiation,” says Brian Davis, a real estate investor and director of education at Spark Rental. Davis points out that many sellers are very motivated to sell before the holidays. If possible, buyers should let these sellers know that they can close before Thanksgiving or before the school winter break.

2. Sellers are worn-out

Some sellers who put their homes on the market during the prime selling times of spring and summer might have been a tad overconfident by listing their homes for more than buyers were willing to spend. After months of no action, these sellers are often ready to make a deal.

“Sellers who were unrealistic earlier in the year about price will now be more willing to reduce the price come fall,” says Thomas Miller, a Washington, DC, real estate agent. “Because there [are fewer buyers] and because the sellers are now eager to sell, they are more inclined to take the low offer than wait another six months for spring to come around.”

3. Sellers are serious

Not all homes on the market in fall are summer leftovers. Some people need to sell in the fall because the timing is right. Maybe they were having a home built, and it’s now ready. Maybe they need to move because of a job. “The sellers with houses on the market in the fall tend to be serious,” says Sam Heskel, president of Nadlan Valuation, an appraisal management company in Brooklyn, NY. “That means sellers could be more open to negotiating and accepting a lower offer.”

4. You can take advantage of tax breaks

First-time homebuyers, take note: Although you can’t escape paying income tax, you can make a dent in what you owe when you become a homeowner. “Property tax and mortgage interest are both deductions you can take for your whole year’s worth of income, even if you closed on your home in December,” says David Hryck, a New York, NY tax adviser, lawyer, and personal finance expert. “Any payments that are made prior to the closing of the loan are tax-deductible. This can make a serious difference in the amount you owe the government at the end of the year.”

5. Fall is a safer time of year

Did you know that burglars have peak seasons? They do, says Sarah Brown, a home safety expert for SafeWise.com. “July and August are prime months for burglaries to take place,” she says. “Waiting until the fall [to buy] gives you an advantage when learning about a home and the neighborhood.” You’ll be settled in your home and can take precautions — like setting up that new alarm system — before the next burglary season rolls around.

6. You’re the center of attention

Because spring and summer are ideal times to buy a home, real estate agents are usually busier then. And that could mean you might not always get the attention you want. This is also true for other professionals you’re working with to buy a house. “Service providers, such as mortgage lenders and title companies, are moving out of the summertime sales swamp and can often respond more quickly,” says John Lazenby, president of the Orlando Regional Realtor Association in Orlando, FL.

The same goes for movers. “Because summer is peak moving season, people often experience more delays and service issues, such as moving companies reaching capacity and running out of trucks to pick up shipments,” says Jack Griffin, president and chief operating officer of Atlas World Group. “The probability of experiencing a delay goes way down in the fall season.”

7. You can take advantage of end-of-year sales to outfit your home

There are bound to be improvements you’ll want to make after buying a house. You’ll also probably need to buy items to maintain your home, and if appliances weren’t part of the deal, you’ll need those too. Wouldn’t it be great to coordinate your home purchase with sales on items you’ll need? According to Consumer Reports, the calendar determines when it’s a good time to buy all sorts of consumer goods. In particular, September is a great time for buying carpet and paint. October means lawn mowers go on sale, and appliances and cookware are cheaper in November.

http://www.trulia.com/blog/best-things-about-fall-real-estate/

Posted by on Aug 29, 2016 in Jim's Take on the Market, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Buyer Survey – May 2016

buyer survey

Here are Zillow employees discussing with realtors their May survey of homebuyers.  Because Zillow depends on realtors buying advertising, their presentations are increasingly centered around why consumers need realtors.

I only made it to the 25-minute mark – the material is dry and somewhat dubious; maybe it gets better?  But the stat above was note-worthy.

Seven homes?  That’s it?

Posted by on Aug 6, 2016 in Jim's Take on the Market, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 0 comments

More on Millennials and Home Buying

tt

The lightweight reporters who nibble around the edges don’t ever get to the point.  It doesn’t matter who wins the election, rich people are taking over.  Millennials and others will have to find a way to buy a home, or be at the mercy of rich people for the rest of their lives.

http://www.npr.org/2016/07/26/487470787/fewer-young-people-buying-houses-but-why

Trevor Burbank is single, 27 years old, and has been house hunting in Nashville for the last year.

“My rent’s going up in August, so I have to figure out what I’m doing,” he says.

The last time Burbank looked for a place was five years ago. He decided to use his down payment to start a business instead.

“There was a house that I really liked that was going for $60,000, and I saw the house being sold in the past few months for just shy of $300,000,” Burbank says.

There’s a big debate in real estate over where home ownership rates are headed, and whether Millennials — people who came of age around 2000 — will get into the housing market the way generations before them did.

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Posted by on Jul 27, 2016 in Jim's Take on the Market, The Future, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 7 comments

Lowball Strategy

typical agent

Have you seen a home sale close at a surprisingly-low price, and you said,

“Geez, I would have paid that!”

Usually the house has been on the market for months, and everyone else has forgotten about it. The seller doesn’t want to lower the price, but tells his agent, “Just bring me an offer”.

The agent revises the MLS remarks, adding gems like ‘Extremely Motivated’, and ‘All Offers Considered”.  A buyer who saw it earlier with another agent decided to approach the listing agent directly with an offer 20% below list – take it or leave it.

With visions of two commissions twirling around in their head, the agent tells the seller this is the best they could do. The seller really is motivated, so after months of failure at a too-high price, frustration sets in and he signs it.

If any seller is tempted to take a lowball offer – more than 10% below list – they should instruct the listing agent to immediately lower their list price to the midpoint between the offered price and current list price.

Let’s see who else is out there!

Watch how many you see that close at 15% to 20% below list and the listing agent represents both parties.  It isn’t enough to change the market, but a notable strategy.

You shouldn’t burn your old agent though – there are enough listing agents who are wimpy about dual agency and prefer that you have your own agent anyway. It is the same net to the seller, so he won’t care either.

Posted by on Jul 20, 2016 in Ideas/Solutions, Jim's Take on the Market, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

One-Story Premium

cabela

On June 11th we noted two single-story homes for sale in Carlsbad.

This 2,726sf single-story house in SW Carlsbad listed on June 9th for $1,149,999 – and it had the extras like a good yard and view.

They received multiple offers, and it closed for $1,165,000, or $427/sf!

http://www.sdlookup.com/MLS-160031583-6678_Cabela_Carlsbad_CA_92011

How do two-story homes compare?

This is asking $278/sf nearby and unsold:

http://www.sdlookup.com/MLS-160022454-1365_Cassins_St_Carlsbad_CA_92011

Asking $299/sf with ocean view:

http://www.sdlookup.com/MLS-160030800-6393_Ebb_Tide_Carlsbad_CA_92011

Base-grade tract house at $286/sf:

http://www.sdlookup.com/MLS-160026464-1672_Fisherman_Dr_Carlsbad_CA_92011

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Posted by on Jul 18, 2016 in Jim's Take on the Market, One-Story, Why You Should Hire Jim as your Buyer's Agent | 0 comments