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Q: |
Is a low offer
a good idea? |
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A: |
While your low
offer in a normal market might be rejected immediately,
in a buyer's market a motivated seller will either
accept or make a counteroffer.
Full-price offers or above are more likely to be
accepted by the seller. But there are other
considerations involved:
* Is the offer contingent upon anything, such as the
sale of the buyer's current house? If so, a low offer,
even at full price, may not be as attractive as an offer
without that condition.
* Is the offer made on the house as is, or does the
buyer want the seller to make some repairs or lower the
price instead?
* Is the offer all cash, meaning the buyer has waived
the financing contingency? If so, then an offer at less
than the asking price may be more attractive to the
seller than a full-price offer with a financing
contingency. |
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Q: |
What
contingencies should be put in an offer?
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A: |
Most offers
include two standard contingencies: a financing
contingency, which makes the sale dependent on the
buyers' ability to obtain a loan commitment from a
lender, and an inspection contingency, which allows
buyers to have professionals inspect the property to
their satisfaction.
A buyer could forfeit his or her deposit under
certain circumstances, such as backing out of the deal
for a reason not stipulated in the contract.
The purchase contract must include the seller?s
responsibilities, such things as passing clear title,
maintaining the property in its present condition until
closing and making any agreed-upon repairs to the
property. |
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Q: |
How is the
price set? |
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A: |
It's very
important to price your home appropriately relative to
current market conditions. Because the real estate
market is continually changing, and market fluctuations
have an effect on property values, it's imperative to
select your list price based on the most recent
comparable sales in your neighborhood.
A comparative market analysis provides the background
data on which to base your list-price decision. Study
the comparable sales material presented to you by the
different agents you interviewed initially. If the
analyses are more than two or three months old, have
your agent update the report for you.
If all agents agreed on a price range for your home,
go with the consensus. Watch out for an agent whose
opinion of value is considerably higher than the others.
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Q: |
Are low-ball
offers advisable? |
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A: |
A low-ball
offer is a term used to describe an offer on a house
that is substantially less than the asking price.
While any offer can be presented, a low-ball offer
can sour a prospective sale and discourage the seller
from negotiating at all. Unless the house is very
overpriced, the offer will probably be rejected.
You should always do your homework about comparable
prices in the neighborhood before making an y offer. It
also pays to know something about the seller's
motivation. A lower price with a speedy escrow, for
example, may motivate a seller who must move, has
another house under contract or must sell quickly for
other reasons. |
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Q: |
Are interest
rates negotiable? |
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A: |
Some lenders
are willing to negotiate on both the loan rate and the
number of points but this isn't typical among
established lenders who set their rates like large
corporations set the prices on their goods.
Nevertheless, it pays to shop around for loan rates and
know the market before you go in to talk to a lender.
You should always look at the combination of interest
rate and points and get the best deal possible.
The interest rate is much more open to negotiation on
purchases that involve seller financing. These usually
are based on market rates but some flexibility exists
when negotiating such a deal.
When shopping for rates, look for published rates in
local newspapers or check the growing number of Internet
sites that publish such information. |
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Q: |
Can you buy
homes below market? |
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A: |
While a
typical buyer may look at five to 10 homes before making
an offer, an investor who make bargain buys usually go
through many more. Most experts agree it takes a lot of
determination to find a real "bargain." There are a
number of ways to buy a bargain property:
*Buy a fixer-upper in a transitional neighborhood,
improve it and keep it or resell at a higher price.
* Buy a foreclosure property (after doing your research
carefully).
* Buy a house due to be torn down and move it to a new
lot.
* Buy a partial interest in a piece of real estate, such
as part of a tenants-in-common partnership.
* Buy a leftover house in a new-home development.
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Q: |
Can you
negotiate the price on new homes? |
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A: |
It can be
difficult to negotiate the sales price with a developer
because they may claim their prices are based on fixed
construction costs. But it doesn't hurt to try.
Experts say builders more likely to be flexible on
price at the very beginning and the very end of a
development project. Early on, most developers want to
move people in quickly so the project picks up momentum.
Later, developers may be more inclined to accept lower
offers when only a few units remain.
If negotiating the price doesn't work, buyers
commonly negotiate for better amenities (upgrade carpet,
light fixtures, etc.) or lot location. Experts say a
developer will rarely pass up a deal over a couple
hundred dollars' worth of carpeting, for example.
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Q: |
Who gets the
furnishings when a home is sold? |
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A: |
Fixtures, any
kind of personal property that is permanently attached
to a house (such as drapery rods, built-in bookcases,
tacked-down carpeting or a furnace), automatically stay
with the house unless specified otherwise in the sales
contract. But you can consider anything that is not
nailed down negotiable. This most often involves
appliances that are not built in (washer, dryer,
refrigerator, for example), although some sellers will
be interested in negotiating for other items, such as a
piano. |
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Q: |
What do you
think of get-rich-quick real estate schemes?
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A: |
Most real
estate experts say there is no such thing as getting
rich quick in real estate. But there are no end of
get-rich-quick programs presented to the public as
alternative methods of buying real estate.
Some are reputable while others depend on your
financial circumstances to work. A handful are simply
scams.
Many get-rich-on-real-estate programs offer advice on
how to buy government foreclosure properties and
participate in other government programs. Most of this
information can be obtained by calling the government
offices involved directly.
Anyone interested in real estate investments would be
wise to explore a variety of sources. Most investors
view real estate as a long-term investment. Deals that
sound too good to be true often are. |
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Q: |
What is the
best time to buy? |
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A: |
Because many
buyers prefer to move in the spring or summer, the
market starts to heat up as early as February. Families
with children are anxious to buy so they can move during
summer vacation, before the new school year begins.
The market slows down in late summer before picking
up again briefly in the fall. November and December have
traditionlly been slow months, although some astute
buyers look for bargains during this period.
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Q: |
What are some
tips on negotiation? |
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A: |
The more you
know about a seller's motivation, the stronger a
negotiating position you are in. For example, seller who
must move quickly due to a job transfer may be amenable
to a lower price with a speedy escrow. Other so-called
"motivated sellers" include people going through a
divorce or who have already purchased another home.
Remember, that the listing price is what the seller
would like to receive but is not necessarily what they
will settle for. Before making an offer, check the
recent sales prices of comparable homes in the
neighborhood to see how the seller's asking price stacks
up.
Some experts discourage making deliberate low-ball
offers. While such an offer can be presented, it can
also sour the sale and discourage the seller from
negotiating at all. |
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Q: |
What repairs
should the seller make? |
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A: |
Most sellers
like to make all minor repairs before going on the
market in order to seek a higher sales price. In
addition, nearly all purchase contracts include a buyer
contingency "inspection clause," which allows a buyer to
back out if numerous defects are found. Once the
problems are noted, buyers can attempt to negotiate
repairs or a lower price. |
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Q: |
What is the
difference between list price, sales price and appraised
value? |
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A: |
The list price
is a seller's advertised price, a figure that usually is
only a rough estimate of what the seller wants to get.
Sellers can price high, low or close to what they hope
to get. To judge whether the list price is a fair one,
be sure to consult comparable sales prices in the area.
The sales price is the amount of money you as a buyer
would pay for a property.
The appraisal value is a certified appraiser's
estimate of the worth of a property, and is based on
comparable sales, the condition of the property and
numerous other factors. |
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Q: |
What is the
first step to buying a home? |
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A: |
Finding out
what you can afford is one of the fist steps, which can
be done by pre-qualifying for a home loan. This step
will help you narrow your search for both a neighborhood
and particular houses. A pre-qualification is a simple
calculation that considers several factors, but
primarily your income. There are no guarantees with a
prequalificaiton, but it will be expected of you when
you make an offer on a home. |
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Q: |
Should I
include an inspection contingency in my offer?
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A: |
An "inspection
contingency" protects you as a buyer in a purchase offer
by allowing you to cancel closing on the deal if an
inspector finds problems with the property.
As soon as the seller accepts a written offer, the
document becomes a legally binding contract. The
purchase contract can be written to include a
contingency for any repairs found to be needed or
related items the seller must take care of before
closing. If these are not dealt with, and you have such
a clause in your contract, you can delay or possibly
cancel the closing. If it's not stated in the contract,
you could face losing your deposit. There also may be
costly legal implications stemming from backing out of a
contract.
You usually will have the right to choose the
inspector (and be responsible for paying for the
inspections). In addition to an overall inspection for
structural soundness, you can request a satisfactory
pest control inspection report, roof inspection report
or contingency for no potential environmental hazards
such as asbestos or radon gas.
Contingency clauses should satisfy the concerns of
both the buyer and seller. Buyers also can protect
themselves by inserting additional necessary
contingencies. Indicate which items like curtains and
appliances are to remain with the house. Then stipulate
you have the right to personally inspect the home 24
hours before closing to make sure all is in order.
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