New thoughts on selling and buying strategies

Here are some ideas that a broker friend of mine shared with me. I thought you might be interested in considering them if you run into similar situations:
I just had a lengthy conversation with a seller who had used an agent from another company on their last full-priced listing. The listing expired 4 days ago. We discussed the following which I want you to be aware of:
1. The agent told him that he can not do any allowances to the buyer as the lender will not allow it. I told the seller to take a non-refundable earnest money check after due diligence and do the allowance that the buyer wanted 2 days before closing. Carpet for instance: they could go pick out the carpet or get a carpet place from Dalton to send the samples and the seller could have the carpet installed 2 days before closing. Same with paint, kitchen, bathroom etc…

2. We talked about him giving the agent and buyer a large plasma T.V. and to put up a sign where the T.V. would go.

3. We also talked about the fact that creative financing programs still exist and that he needs to find some and take down the conservative lender’s sign that is next to his for sale sign. Sellers today in certain price ranges and areas must make the deal work and that takes finding the lenders that offer 100% financing on down. They still exist, they just have to be found.

4. Then we talked about when he finds the lender to post his ad and the creative financing offer on Craigslist everyday.

Offers coming in still tend to be low. However, consider this: if you are planning to buy another home after you sell, you should seriously consider negotiating as best you can, but accepting an offer that is lower than what you would like. Why? Because if you can get freed up to sell now, you might well make up MORE than the difference in the low low purchase price of the next home you buy. It would be a shame to miss the buying opportunities out there now because you couldn’t come to an agreement over a few thousand dollars. And remember, you’re saving thousands with your Crawford Realty listing already, and if you use us as your buyers agent on your next home (assuming you’re staying in the area) you could potentially earn back 1to1.5% of the purchase price of your next home, which we would pay you out of our commission, if it’s a property that’s listed in MLS or a for sale by owner willing to pay a 3% commission. Please call us for details on this incredible program that no other real estate company in the state is offering.

Common Closing Costs For Buyers

From “Realtor.org”

You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:

• Down payment
• Loan origination
• Points, or loan discount fees, which you pay to receive a lower interest rate
• Home inspection
• Appraisal
• Credit report
• Private mortgage insurance premium
• Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording
• Title insurance policy premiums
• Land survey
• Notary fees
• Prorations for your share of costs, such as utility bills and property taxes

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6^th of the month. You would owe the gas company for only the days from the 6^th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

How does your home measure up? What buyers want…

What’s In, What’s Out

Each year, Mark Nash of Coldwell Banker Residential Real Estate in Chicago asks subscribers to his e-zine what buyers want most. His most recent poll shows:

IN

• A reduced carbon footprint: How your home and you impact the earth matters to more buyers who want a home that lets them save energy and lessen their contribution to global warming.

• Outdoor living: Massive fireplaces, outdoor kitchens, and under-patio heating to extend the season are not just for the Sun Belt anymore.

• Fully concealed appliances: That wood-printed cover for the fridge is not enough any longer; now appliances are hidden behind hinged doors.

• Floating homes: Not your father’s houseboat, these nonmobile homes are basically ranch houses sitting on stationary barges in a lake or river.

• Home elevators: Even builders of mid-priced homes are adding this essential for boomers wanting to age in place.

• Pet showers: Clean pets mean clean homes, and who wants to mess up the bathtub when this feature can be a part of the garage or mudroom?

• Freestanding bathtubs: These oversized soaker tubs, or “bath thrones,” have supplanted whirlpool baths as the must-have bathroom centerpiece.

• Bathroom suites: Whether it’s multiple flat-screen TVs or a mini fridge and cappuccino maker, you’ll soon have a whole home inside this one room.

(This information was re-printed from realtor.org)

Buyers…things to know, if you’re considering buying a new home this spring:

There is good news and bad news in the current real estate market.  February numbers are in for the Birmingham market, and the average sales price, compared to a year ago, has dropped from $186,311 to $178,600, although “DOM” (days on market) has also dropped from 113 to 90, indicating brisker sales, according to Dave Mace, at the Birmingham Association of Realtors.  He also said that total sales in the Birmingham MLS in February were 979, compared to 1,250 in February, 2007.  The median home price has stayed the same.  Homes in lower price brackets tend to turn over faster than the $300+ price points, in my experience.

NOW IS A GREAT TIME TO BUY.  The selection is amazing, in both new homes and re-sales.  Interest rates remain low.  The limit on FHA loans has increased to just over  $178,000, and, while subprime loans and other risky mortgage products have all but disappeared, more buyers will have access to these safer FHA loans and other lower-interest rate loans in high-cost areas, according to Mace.  On the other hand, by the end of March, 100% financing will virtually disappear.  We have heard the new max will be 97%.

Yet many buyers seem to be holding out.  For what?  Are they expecting further dramatic decreases in home prices?…more desperate sellers trying to dump their homes at any cost  hoping to avoid foreclosure?  (well, yes, there’s always some of that going on…)  Wayne’s personal experience has been that buyers have so much to choose from right now that they are looking…looking…looking…for exactly what they want (or for a fire sale on something close) but remain very slow to make offers.  Frequently the offers they do make are so low that sellers, realistically, can’t even consider them, so they are, essentially, a waste of everybody’s time, and never result in a binding contract.  Other Realtors® have said to me that they think buyers’ expectations may be somewhat unrealistic, in terms of what they can get for the money.  Sellers who are anywhere short of facing impending foreclosure may be willing to reduce their profit, but are not going to suffer a loss on their property.  While it may be that sellers don’t really expect full price offers in this market, it is so competitive that many have cut their asking price to very near their bare bones minimum.  To take much less could mean a loss, and if they DO have to take a loss, it won’t be a very big one. 

Bottom line?  There will probably not be, in the foreseeable future, a better time to buy than now.  Inflation, rising costs of construction, and the state of the economy (are we in a recession?) are all still pushing up the cost of housing over time.  Who knows where interest rates will go, but they probably won’t go a whole lot lower.  Good, safe loans are out there for those who qualify.  The selection is way more than adequate.  So IF you are serious buyer, now is the time.  But be realistic when you make an offer, whether to a re-seller or a builder.  The myth that you’re going to get something for half of what it’s worth is…at least 98% of the time…just a myth.  The standard for sellers a few years ago was to seriously consider an offer down to 97% of asking price.  It may be lower than that now, maybe 94-95%.  But sellers have already come way off the price they want, and have less room to dicker.  Birmingham is NOT Detroit, South Florida, Las Vegas or Silicone Valley.  We never really had a real estate bubble, and the bubble has not burst.  Our home  price appreciation over the years has remained realistic, at an average 3-5% per year, not 3-040%; so housing here is not dramatically overpriced, even for today’s market.  So buyers AND sellers have to use reason in cutting deals that can actually work. 

Come “off the sidelines” and Buy something.  You’ll be glad you did.  So will I.!  And, by the way, one way to get an even BETTER deal on the home your buying is to take advantage of the unique Buyer’s incentive program that we offer our buyers.  Check it out on our website.  We can, literally, put THOUSANDS of dollars back in your pocket when you close on your next home.