Nov 222011
 

Wow, 27+ years as a Mortgage Banker! I have seen the occasional short appraisal! I started in November 1989 because I wanted to become a Homeowner so I chose a path which would get me there: Mortgage Professional.

Times were tough back in that market.  Interest rates were high and property values had dropped dramatically.  The employment picture for many Americans wasn’t very promising.  There were a lot of foreclosures and homeowners had a hard time refinancing their mortgages due to lost equity.  Sounds very similar to our recent post-meltdown market with the exception of the interest rates (11% in 1989!!!).

I received a valuable part of my education early on in my career as I dealt with purchase transactions where the appraisal came in for less than the purchase price.  Buyers, Sellers and their respective Realtors are all “IN IT TO WIN IT” and make the deal happen.

How you see your house!

I carry that education with me to this day when my HomeBuyer clients ask me at application time, “What happens if the appraisal comes in for less than the Purchase Price?”   I know many HomeBuyers may think it’s a NO-BRAINER: the Seller will automatically reduce the price.  But that is NOT the case right out of the gate.  Here’s what I learned all those years ago about appraisals that come in short:

How the Appraiser sees your house

When the bank appraisal comes in for less than the contract price

there are FOUR ways to proceed with the transaction.

 

  1. The Purchaser comes up with the difference in cash. If the appraisal is less than the Purchase price, the Seller basically assumes the Purchaser wishes to buy the house according to the terms of the contract, including the agreed upon Purchase Price. Therefore, the Seller assumes the Purchaser will come up with the cash necessary to complete the transaction.
  2. The Purchaser and the Seller meet in the middle. The Purchaser comes up with some cash but the Seller also agrees to reduce the price enough to meet the Purchaser somewhere “in the middle.”  Both sides want to complete the transaction and so they work it out.  This is compromise at its best.
  3. The Seller reduces the Purchase Price to equal the Appraised value. This is the least likely scenario, but not an impossible one.  Sellers often want to complete the purchase transaction on the original terms of the contract, including the price. But a determined Purchaser working with a great Realtor, by digging in and working hard to negotiate can often make it happen.
  4. Nothing happens and the deal is cancelled. The Purchaser either cannot or will not come up with the extra cash and the Seller refuses to reduce the price completely or even a little bit to meet the Purchaser.  In this case the transaction is cancelled, the Down Payment is returned, and everyone goes home unhappy.  The Purchaser has to begin all over again and the Seller has to put the house on the market and try to find a new Purchaser.

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day.  Those motivations drive everyone to find a solution and get the deal closed.  Or not.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

May 222011
 

I once worked two real estate open houses on a gloomy, rainy, Sunday. To call the day “gloomy” is probably too kind a description considering how many rainy, gray, miserable (and yes, SNOWY!) Sundays I work with First Time HomeBuyers or Open Houses.

Here’s the surprising thing about Rainy Sundays:

HomeBuyers are coming out looking at homes.

There is a pent up demand for homes. You can see the proof not only in the surprising turnout for open houses in bad weather (I once did an open house on the Sunday after a 14″ snowfall and with temperatures in the teens with our best turnout of four open houses), but also in the preparedness on the part of the Buyers: many Buyers have taken the important first step in buying a home and have been Prequalified for mortgage financing. Both these factors clearly demonstrate that there are many serious HomeBuyers, and a substantive demand for homes.

I think the long-standing problem in the housing market can be found in

what I think HomeBuyers really want.

They want a home they feel they can afford. It’s not enough they are qualified for a mortgage loan for X amount of dollars: they want to pay a monthly mortgage payment they are comfortable making, and that might be for a lot less than the bank says they are qualified for.

Economic uncertainty from the great recession drove a painful lesson home:

Don’t spend more than you can afford, and don’t overextend yourself.

And take very good care that you don’t over pay for a house.

The Buyers I meet—at open houses and in my seminars and prequalification meetings—want homes at lower prices. This is “What Buyers Want.”

They want lower prices for homes. Sellers aren’t willing to give it to them. Realtors aren’t willing to undertake the hard work of making this market work the way it’s supposed to.

The reality of this marketplace is that too many home Sellers haven’t “hit the wall” yet. They are not willing to lower their prices to a level where it meets the demand of “What Buyers Want.” But that’s not happening in our housing market; prices remain beyond the “comfort zone” of most Buyers. Sellers just won’t tip themselves over the edge and bring their prices down to where they can find supply/demand equilibrium with the pent up demand from Buyers.

You can point to several factors for this lack of equilibrium:

  • A glut of foreclosed homes and short sales on the market presenting enticing alternatives to Buyers (until they get a good look at the condition of the house or the time it takes to wait for a short sale approval)
  • Sellers unable to find the new housing situation they are comfortable with (many Sellers are Buyers too!)
  • Occasional yet infrequent “good news” from Realtors indicating prices are going up (they are, but only slightly)
  • Media “experts” predicting the exact date when the market will hit bottom and that it will go back up (thus creating a false optimism on the part of Sellers: sound familiar?)

Forget all those factors because they are not important to you if you are a Buyer trying to make it happen NOW.

If you are one of those “pent up demand” Buyers ready to pounce on the right house at the right price, what do you care about the reasons why Sellers haven’t lowered their prices?

You need to find the right home at the right price.  

I propose this to Buyers: the right house at the right price DOES indeed exist today. You can find it out there in the marketplace by undertaking two simple yet effective home-shopping techniques. I have personally used these techniques to buy my first home and I have witnessed these techniques work for my clients (even in the BOOM market!).

  1. Shop A LOT. Going out for two hours on a Sunday visiting three open houses or going out once every three weeks with your Realtor does not constitute shopping a lot. When I shopped for my first home over 23 years ago, I looked at homes constantly. Thursday evenings, Saturday and Sunday afternoons, Wednesday afternoons and evenings. In the end I got exactly what I wanted, a great house at a great price.
  2. Make offers, lots of offers. Shopping frequently isn’t enough; you have to make offers. If a Seller accepts your offer you are NOT locked in to the deal. That doesn’t happen until after your home inspection and after you sign the contract of sale with your attorney. No, making offers helps you find that right house at the right price. If the house “list” price is considerably higher than what you are willing to pay, what do you have to lose by making an offer based on your comfort level? The worst that can happen is the Seller says, “No.” Focus on what you, the Buyer, wants, not on what the Seller wants. You may find the ONE Seller who says, “Yes.” Next thing you know, you’re buying a home at a price you feel comfortable with.

That first house of mine is a prime example of the effectiveness of this method. I had shopped aggressively in one town on Long Island; that’s where I wanted to live. I found a “FSBO” or For Sale By Owner home one Sunday afternoon. I offered $190,000 within minutes of looking at the house. The asking price was $268,000.  I was NOT making a “lowball” offer. I was serious, I wasn’t fooling around and just tossing my fishing line in the water without any bait.  I had already negotiated on the house right next door a few weeks before and I knew what the final price on that house was. That house was a far better house. For “bait” I made my offer with the assurance I was preapproved for the mortgage (I worked for the bank). Sound familiar?

The Seller laughed and politely declined my offer. I shook his hand and left the house. Six weeks later I raised my offer to $210,000 and he dropped his price to meet my offer. In the intervening weeks I had constantly called and worked my negotiations with the Seller.

That’s how a Buyer gets what a Buyer wants.

  • Shop a lot and make a lot of offers.
  • Shopping frequently gets you out in front of more Sellers.
  • Seeing lots of houses lets you make lots of offers.
  • Making lots of offers leads you to a Seller willing to meet your offer.

On Rainy Sundays, Buyers are clearly expressing “What Buyers Want.”

Realtors and Sellers need to take heed.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

 Posted by at 6:25 pm
Feb 042011
 

Sellers are “hurtin’ for certain” right now. Between the bad weather, the lengthy marketing times, falling prices and the lack of Buyers, Homeowners who want to sell their homes NEED YOU, The First Time Homebuyer NOW more than ever!

Not that you can “steal” a house, but you can certainly swoop in and get the deal you want on the home you want at the price you are willing to pay.

Get your “Thick Skin” on, get out there and Shop for the home you want and MOVE ON when the Seller or their agent gives you a hard time. There are plenty of homes and plenty of Sellers ready, willing and able to agree with you on a price.

If the Sellers and their Realtors seem extremely happy to see you, well, THEY ARE!!!

Use that happy moment to your advantage.

But don’t approach your shopping for a home in a haphazard way. No sir. Get all your “ducks in a row” before you brave the elements this weekend. Have your Mortgage financing lined up, your attorney in place and your Home Inspector ready to roll at a moment’s notice.

While it’s great that you as a Buyer are showing up to the (rather dull) party, you still need to demonstrate that you are SERIOUS about buying. That’s going to help you in a big way when you negotiate with the Sellers.

My pal Phil Faranda recently blogged about making offers in writing. He was writing mostly for fellow Realtors, but his words hold a lot of weight for you First Time Homebuyers, too.

I’ve posted a primer on the Five Steps To Making An Offer here on tcurranmortgage.com before.

 Posted by at 11:58 am
Apr 092010
 

There is a deliberate process to making an offer. I include step-by-step instructions on how this works. My instructions will help you get the house you want, even if you are dealing with a difficult Seller, a Bank-Owned property, or if you are competing against another Buyer for the same house.

I have seen these methods work many times over with my clients over my almost 28 year career as a mortgage professional.

My basic methodology here is one of making your Offer a very formal proceeding. When you take these formal steps you are demonstrating to everyone involved in the transaction just how serious a Buyer you are. You will set yourself apart from the crowd. I have seen this method work time and time again for my Homebuyer clients.

5 Steps To Making An Offer:

STEP 1. Always make offers in writing. Yes, it is absolutely true that offers can be presented verbally. Don’t do that. Put your offer in writing every time. Even if you are in a situation where you and the Seller are sending counter offers back and forth, every new offer should be in writing.

When your offer is in writing, you come across to the Seller as serious. Think about it, anyone who is taking the time to go in to the real estate office and sign the form is serious about buying a home.

Include the following into your written offer:

  • * The amount of your “earnest money deposit” or “good faith deposit.” That is the amount of money you’ll put into escrow with the Seller’s attorney upon signing the contract of sale.
  • * The amount of your mortgage financing. Of course you’ll back this up with a prequalification letter, but you must include the amount of your mortgage in the offer.
  • * Items included in the sale. If the appliances and the chandelier in the dining room are to be included in the sale, make sure they are written in to the offer. This shows the homeowner you were paying attention when you inspected the home and asked, “What’s included in the sale?”
  • * Attorney Information: the name and complete contact information for your attorney.
  • * Anticipated contract date. Always make this date within 48 hours of your offer. Present the assumption the Seller will accept your offer and immediately forward a contract to your attorney.

Again, this demonstrates to the Seller how serious you are. You are in effect saying, “I am so serious about buying this home I want to sign the contract immediately!” Imagine how many other Buyers out there are delaying things like signing the contract (and potentially changing their minds).

  • * Anticipated closing date. This is an interesting point for the offer. I always recommend putting the closing date for an offer within thirty days of the contract. The fact is most closings take place within 60 days of contract, and your attorney will most likely change that date in the contract, but if your offer says “thirty days,” once again you demonstrate how serious you are about buying the home.

STEP 2. Prequalification letter. Your mortgage professional should be available to fax a prequalification letter within hours of your making your offer; even on Saturdays or Thursday evenings.

STEP 3. Mortgage pro phone call. I think a phone call from your mortgage professional to the Listing Agent is a home run. When the Listing Agent hears from the mortgage person directly how eminently qualified you are, imagine how that raises your profile in the mind of the agent and the Seller!

STEP 4. Home Inspection ready to go. When you sign your offer, be sure to tell your Realtor that you’ve already spoken with your Home Inspector and you can have the inspection done tomorrow. Whoa, that’s really the mark of a serious Buyer!

STEP 5. Get ready with your counteroffer. If you offered less than the asking price, then you need be prepared with your counter offer if the Seller either declines or counters your opening offer. All of the steps above should be repeated with the new price replacing the original number. Organization and swift responses rule the day! Oh, you may not want to counter offer. That’s okay, too.

Close-up shot of keys in the lock of open door. One key is in lock another hanging on the ring

Unlock the door to homeownership with this method

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

I welcome Comments for all my blog entries.  I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com.  If you wish to Comment on any entry, please do so and I will quickly review and approve.

Good luck and Happy House Hunting!

 

Apr 092009
 

I like to share my professional and personal experience with HomeBuyers. To that end, I created this blog four years ago. I’ve written extensively about the experience of buying a first home, especially with regards to negotiating with Sellers.

As the Spring Buying season gets underway (and it is DEFINITELY doing so as witness recent activity within my market), I thought I might Re-Post one of my blog articles about how-to make an offer to buy your first home. There is a definite process to making an offer as you will see in the article. Not only did I present information from the “old-fashioned” way of buying a home through a Realtor, but I seeded the article with much that I had learned as a mortgage professional. In my experience, this is a technique that is tried and true and it WORKS.

When Buyers ask me, “Hey Trevor, how do I get a sense what the Seller’s “real” price is?” I respond: “MAKE AN OFFER!”

When Buyers like a house but realize it needs updating, or, the house location is great for their needs but the house itself isn’t quite right, thus leading in both instances to a desire to pay substantially less than the asking price, I recommend those Buyers, too, use the Offer technique described in my article.

Too often Buyers look at homes they really like but walk away without making an offer. In New York State, until you sign a contract of sale, you can make as many offers on as many houses for whatever prices as you like without being committed to a danged thing. Use the Offering technique to get what YOU want. In today’s Buyer’s market this technique is useful to get unrealistic Sellers shaken loose from the idea that their home is still worth what it was in 2005.

Try it and you’ll find you get results when you are dealing with what I consider to be “serious” Sellers and Realtors. The method also helps you weed out unrealistic Sellers from your search for a home. It’s true, there are Sellers out there who aren’t serious. By using my offer method you discover quickly and avoid wasting your time dealing with them.

Let’s talk about Realtors for a moment. With the market in such disarray, many, many Realtors have departed the real estate business; they could not earn enough to pay their bills. They have moved on to take salaried jobs elsewhere. You would think this cleansing process would leave only serious real estate professionals, those who are earnest in their desire to adhere to professional standards and ethics. Too, you would think the part-time Realtor, the “dabbler” if you will, couldn’t possibly survive. In both cases your thinking would be wrong. I’m sorry to report that I’m still coming across situations where Buyers are working with less-than-professional-Realtors. Unfortunately, this can affect a Buyer because you don’t get the high quality of professionalism that you deserve. In a difficult market where Sellers are unsure of their course of action the results can be disastrous. The Realtor’s role is to bring Buyers and Sellers together. A seasoned professional does so ethically and with quality sales techniques. The Pro doesn’t use sales “mumbo-jumbo” instead adhering to the idea that a good salesperson listens to the needs of the customer/client and finds a way to satisfy those needs. The Seller wants the best price in a “Buyer’s Market” and the Buyer wants the home they love without over-paying. Quality Realtors make that happen.

My experience with many part-time Realtors is they don’t have the resources to find the right home for their Buyer. Neither do they have the time nor the inclination for lengthy negotiations.

Many of those “Boom-Time” Realtors who made a killing selling homes to anyone with a pulse just don’t care to understand the finer points of being a good salesperson. In an attempt to survive they are still using the methods that sold homes four years ago. For example, I had a Realtor tell one of my clients at an open house that he had “…better hurry up and make an offer because there are 3 other really good offers on the table.” WHAT!?! In this market that cannot possibly be true. That’s “Boom-Time” selling, not Buyer’s Market professionalism.

My Buyer tested the waters using my offering technique. The offer was neither accepted nor countered. We do not believe the Realtor even presented the offer to the Seller, a violation of New York State law. My client’s offer was very reasonable considering the market conditions, their seriousness as qualified homebuyers, and the fact the house needed $30,000 of updates. The Buyer used the offering technique to discern if the Seller was serious about selling the home. Clearly the Seller was not, or, as I suspect, the Seller’s Realtor was a substandard salesperson. The house is still on the market a month later. I guess the other “really good offers” just didn’t work out (if they existed at all).

My client, on the other hand, has gone on to find a superb and experienced Realtor after using my offering method to walk away from a good house with a bad situation.

Check out the article and you, too, can get the home you want at the price you want to pay. As I have often said around the internet after posting advice on one forum or another, “Hope that helps!”

Oct 042007
 

The methods used to determine asking price on any given property are so wildly varied as to defy clear definition. Especially as emotion plays such a large part in the ultimate decision.

In this market, in my opinion, the Buyer should set their own price.

A Buyer who worries while shopping about asking price and list price is missing the bigger picture of how to negotiate the [tag]purchase of a home[/tag].

The [tag]Realtor[/tag] doesn’t control you—and you should never let them, either!

1. Create your wish list for the home you want.
2. Identify the neighborhood(s) you like.
3. Get out there and shop, shop, shop (that means: do NOT sit at home looking at internet listings; all you’re seeing are ADVERTISEMENTS, not homes).
4. Being out there you gather personal data to compare/contrast against your wish list.
5. Being out there you develop your own personal “gut-feeling” of [tag]market price[/tag].
6. Make offers. That’s how you, the Buyer, determine the market price. (btw: I gave the SAME advice during the boom).

If a Seller is truly interested in selling, you and the Seller will work out your differences on price (in other words: your opening bid is almost NEVER your maximum price, nor is it the Seller’s bottom price) and find that equilibrium wherein both parties are happy and there occurs a “meeting of the minds.”

If a Seller is unrealistic, you will walk away from the [tag]house[/tag] because no amount of patient negotiating is going to convince that Seller of the “true” market price.

This isn’t rocket science: it’s just patience and a realistic appraisal of the market for [tag]home buying[/tag].

[tags]Word Press, Technorati, appraisal, SimpleTags[/tags]

Your personal market value “divining rod”

 First Time Homebuyers, How-To Negotiate  Comments Off on Your personal market value “divining rod”
Aug 142007
 

There is long-standing folklore about those interesting people who walk around with a divining rod searching for water and the best place to dig for a well. Those folks call themselves “dowsers.”

“Dowsing is as strictly defined the claimed ability to discover underground sources of water or metals by means of a ‘dowsing rod.’ Another term used is ‘divining.'”

While that may be myth, there’s something to be said for developing your own ability as a “dowser” when shopping for a home. Especially in these crazy times when Sellers stand firm on prices from 2005 and refuse to price the house to sell. The fact is, without Buyers driving the market prices down, those prices won’t change on their own. And there are not many Buyers walking the streets these days.

If you have decided that you must own a home now—regardless of market craziness—then you’re obviously going to be out there on the streets looking for a home to buy.

With reluctant Sellers and a dearth of Buyers, what’s a person to do?

I say, “DOWSE!” (is that actually a verb?)

Your “divining rod” as it were, is your own personal market value indicator. You create this divining rod by researching property values in your chosen neighborhood.

1. Research the values using internet tools. The ‘net resources available for this are many and varied: propertyshark.com, zillow.com, MLS.com, and Realtor.com are good starters. But the internet is not the be all and end all for information about the home you wish to buy. Don’t fall into the trap of relying solely on the ‘net for your research.

2. Get out there and look at [tag]houses[/tag]. There is no substitute for visiting houses in person. Whether you do this on appointments with [tag]Realtors[/tag] or just by visiting open houses on the weekends (I recommend BOTH methods), you must undertake this important facet of your research for a home.

When you are looking at lots of homes—both online and in person—you will soon develop your “divining rod” and you’ll be a home-buying-dowser!

You will get a sense of the features of different homes at different price points.

You will learn the quirks of the people selling homes and how it is possible for someone to have a ridiculous expectation of what their home is worth.

You will get to see yourself more clearly—in your mind’s eye—in the [tag]home of your dreams[/tag].

Most of all, you will develop a personal perspective on prices and thus market value in your desired neighborhood.

With that experience, you will be a better negotiator on price. Because you will have developed a “gut instinct” (or divining rod!), you can better set a maximum price you’re willing to pay for any given home. You can see past ugly wallpaper and ancient carpeting; you can better understand when a Seller is being completely unreasonable.

Get ready to go out there as a “dowser” to learn about homes in your chosen neighborhood. You will determine market value better than any Realtor or appraiser or homeowner because you will have been comparing homes, compiling features versus price, and meeting Sellers.

Dowse away!
[tags]WordPress, WordPress Plugin[/tags]

Aug 042007
 

Is there a “best” time of year to buy a home?

Is there a time of year when Sellers are more willing to negotiate because they are more desperate?

When is that time? When?

If you trust your fundamentals, if you know that buying a home is the right thing to do for your own personal reasons, then YOU make the time. YOU determine the “when.”

Maybe it’s because I teach my clients how to negotiate like piranhas.

Maybe it’s because I’ve been looking at (and dreaming of) real estate since I was in my twenties living in an apartment in Astoria.

Maybe it’s because of my eighteen years in the mortgage business working all year ’round through all kinds of markets.

Whatever my reasons, I will say to you this: YOU make the time because YOU get out there and find, force and MAKE the deal that you’re happy with.

The “when” is not based on the market; rather YOU determine the when by shopping and finding and making your deal.

I believe in negotiating hard and tough and forcing a price. I believe in getting up and walking away from the table.

I believe the “dream house” exists in our minds, therefore you can never truly “fall in love” with a house.

I believe you, as a Buyer, truly control your own destiny and I believed that even when the market was overheated and Sellers were insane. (In my long experience, Sellers are ALWAYS insane! You just have to search until you find one who’s willing to be a bit more reasonable than the rest!)

Maybe it’s because I believe it’s all up to YOU.

Aug 032007
 

So you know you definitely want to buy your own home. No matter the market conditions, interest rates, or status of A-Rod’s quest to hit Home Run #500, you have your reasons.

If that’s the case, how then to find a house at a price you’re willing to pay?

There is a glut of homes available for sale, but you can be pretty sure there is also a glut of Sellers out there with unrealistic expectations as to the price they’ll accept. And those expectations might very likely be out of line with your personal viewpoint on market value.
Back in Economics 101 we were taught about Supply and Demand, and how one affects the other, especially regards price.

I say, chuck the economic theory out the window. If you are ready to buy a home—for your own reasons—then it’s time to make your own economic theories and make ’em stick.

Here’s how, then, to find the Supply of houses you’d be willing to buy and thus meet your own personal Demand.

1. Determine a monthly payment you’re comfortable with.

When you are prequalified, your mortgage professional will calcluate for you the monthly payments on a maximum loan based on your income. If the maximum loan you’re qualified for has a payment beyond your comfort level, then ask your mortgage pro to “step it down.” You’ll have a payment you’re comfortable with and you’ll know, based on the new calculations, your maximum price.

2. Shop, shop, shop.

Create your own “gut-sense” of market value. You do this by looking at homes—in person—in your chosen neighborhood and learning the price points of different houses with different amenities and sizes. Look at a lot of houses.

When you are out shopping for a home on a Saturday and a Sunday, make offers. In New York you can make as many offers as you like; until you sign a contract of sale with your attorney, you’re not committed to anything. This is a good way to get at the essence of a Seller’s mindset: are they serious about selling, and what price do they really have in mind? At worst you’ll find out just how unrealistic a Seller is with price expectations. When you meet those kinds of Sellers, it’s time to move on, and you haven’t lost much time “falling in love” with that house!
While negotiating offers, determine the maximum price for any given house. You set that price by trusting your “gut sense” of market values because you’ve been out looking at lots and lots and lots of houses.

When you negotiate offers, first with your opening price and then up to your maximum price you create your own opportunities for “corrected prices” by seeking out the Homeowners who will sell to you at YOUR price.


3. Trust your “stuff.”

In baseball, when a pitcher is a bit flummoxed, the catcher or coach will come out to the mound and say, “Trust your stuff.”

When you’re shopping for your home, the “stuff” is all that homework you’ve done by looking at homes in your chosen market, developing an instinct as to true market price.

The second ingredient in your “stuff” is the knowledge of your personal “fundamentals.” These fundamentals exist with you, not out in the ether expressed on some internet site somewhere as an unfathomable variable in a real property valuation equation. YOU are the equation: your instinct, and your fundamentals. Taken together, it’s your “stuff,” and you should trust it!

The fundamentals are very simply:

-Do you want to rent or own?
-Can you locate a house at a price you’re comfortable with?
-Will you own that house for a long enough period of time to make sense considering how much money you’ll invest to make the purchase?
-Are there intangible benefits to owning that you want to realize, and that you absolutely cannot obtain by renting?

Those are the fundamentals.

A lot of people think there should be some baseline, some pre-defined “bottom” of the market and a condition of economic equilibrium at which point it makes sense to buy a home. They think there is some fixed equation like the Pythagorean Theorem when it comes to real estate market prices and timing.

Umm, no. There’s no such thing. Take it from someone with 18 years professional and 21 years personal experience with real estate.

Homeownership is what you make of it, quite literally. It starts with a dream, continues with your comfort level with the numbers, and finishes with your decision as to your own personal fundamentals.

Nov 062006
 

When you make an offer to purchase a house you are opening a dialogue with the Homeowner. You want to buy the home at the price you’re willing to pay; that doesn’t always equal the listing price. I think it’s important to view the offer as a process and not the be all and end all of the transaction. Often Buyers feel “constricted” by the offering process. It is perfectly understandable that you might feel impatient with the process of shopping for a home. Too, some Realtors might try to make you feel as if you must make your “best and highest” offer.

I encourage you to discard that oppressive feeling. Liberate yourself and use the offer as a way to get what you want: the home you like at the price you’re willing to pay.

Follows is a process I recommend to my clients on the “How-To” of making an offer. I hope you find it useful in achieving your goal of homeownership.

In my view of the offering process, I want my clients to present themselves as the best Buyer for a home the Homeowner has ever seen. Everything you do within this “How-To” creates that sense in the mind of the Homeowner.

I know from personal experience these methods work. Many of my clients have had offers accepted by following my advice. Realtors have told me, “We had another Buyer offering $10,000 more than your client, but your client impressed us and the Homeowner as clearly being the ‘better Buyer.'”

1. Always make offers in writing. Yes, it is absolutely true that offers can be presented verbally. Don’t do that. Put your offer in writing every time. Even if you are in a situation where you and the Seller are sending counter offers back and forth, every new offer should be in writing.

When your offer is in writing, you come across to the Seller as serious. Think about it, anyone who is taking the time to go in to the real estate office and sign the form is serious about buying a home. Seriousness counts big time.

Put the following into your written offer:

-The amount of your “earnest money deposit” or “good faith deposit.” That is the amount of money you’ll put into escrow with the Seller’s attorney upon signing the contract of sale.

-The amount of your mortgage financing. Of course you’ll back this up with a prequalification letter, but you must include the amount of your mortgage in the offer.

-Items included in the sale.
If the appliances and the chandelier in the dining room are to be included in the sale, make sure they are written in to the offer. This shows the homeowner you were paying attention when you inspected the home and asked, “What’s included in the sale?”

-The name and telephone and fax numbers for your attorney.

-Anticipated contract date. Always make this date within 48 hours of your offer. Present the assumption the Seller will accept your offer and immediately forward a contract to your attorney.

Again, this demonstrates to the Seller how serious you are. You are in effect saying, “I am so serious about buying this home I want to sign the contract immediately!” Imagine how many other Buyers out there are delaying things like signing the contract (and potentially changing their minds).

-Anticipated closing date. This is an interesting point for the offer. I always recommend putting the closing date for an offer within thirty days of the contract (check with your mortgage Lender to be sure this is possible). The fact is most closings take place within 60 days of contract, and your attorney will likely put that in the contract, but if your offer says “thirty days,” once again you demonstrate how serious you are about buying the home.

2. Prequalification letter. Your mortgage professional should be available to fax a prequalification letter within hours of your making your offer; even on Saturdays or Thursday evenings. The prequalification letter should match your offer, not display a higher loan amount. You don’t want to give away your negotiating position by showing the Seller you can afford more than you’re willing to pay.

3. Mortgage pro phone call. I think a phone call from your mortgage professional to the Listing Agent is a home run. When the Listing Agent here’s from the mortgage person directly how eminently qualified you are, imagine how that raises your profile to the agent and the Seller!

4. Credit Scores. Your mortgage person should be prepared to disclose your credit scores. While you don’t want your credit report released (that’s not allowed, anyway), many times the Listing Agent wants to know the credit scores.

5. Engineer ready to go. When you sign your offer, be sure to tell your Realtor that you’ve already spoken with your Home Inspector and you can have the inspection done tomorrow. Whoa, that’s really the mark of a serious Buyer!

6. Get ready with your counteroffer. If you offered less than the asking price, then you need be prepared with your counter offer if the Seller either declines or counters your opening offer. All of the steps above should be repeated with the new price replacing the original number. Organization and swift responses rule the day! Oh, you may not want to counter offer. That’s okay, too.