6 Tips for Choosing the Best Offer for Your Home

July 20, 2010 | Author: Eric Deeter

photo credit: spaceamoeba

Article From BuyAndSell.HouseLogic.com

By: G. M. Filisko
Published: February 10, 2010

Have a plan for reviewing purchase offers so you don’t let the best slip through your fingers.

You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers.

1. Understand the process

All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

2. Set baselines

Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a prequalified or cash buyer.

3. Create an offer review process

If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

4. Don’t take offers personally

Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

5. Review every term

Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures-such as appliances, furniture, or window treatments-to be included in the sale that you plan to take with you?

Is the amount of earnest money the buyer proposes to deposit toward the downpayment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.

Have the buyers attached a prequalification or pre-approval letter, which means they’ve already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can’t get a mortgage, and they’ll take their earnest money back, too. Are you comfortable with that uncertainty?

Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?

With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

6. Be creative

If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.

G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

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Fielding a Lowball Purchase Offer on Your Home

July 15, 2010 | Author: Eric Deeter

photo credit: rightbraining

Article From BuyAndSell.HouseLogic.com

By: Marcie Geffner
Published: June 10, 2010

Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.

You just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond? Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal.

Check your emotions

A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer

Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits.

A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you.

Consider the terms

Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps

Ask your REALTOR® whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer’s comps

Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps.

Get the agents together

If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer.

Don’t signal desperation

Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s listing describes you as a “motivated” seller, you’re signaling you’re open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you’re motivated, the next purchase offer you get might be more to your liking.

More from HouseLogic

6 Tips for Choosing the Best Purchase Offer for Your Home (http://buyandsell.houselogic.com/articles/6-tips-choosing-best-offer-your-home/)

6 Reasons to Reduce Your Home Price (http://buyandsell.houselogic.com/articles/6-Reasons-To-Reduce-Your-Home-Price/)

Marcie Geffner is a freelance reporter who has been writing about real estate, homeownership and mortgages for 20 years. She owns a ranch-style house built in 1941 and updated in the 1990s

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Negotiating with a Contractor – Part 3: Have a Conversation

July 10, 2010 | Author: Eric Deeter

photo credit: centralasian

The best way to get a better price from a contractor is to let him know that you want to work with him. Ask him if the price you received is the best he can give. Ask if there are ideas he has to be able to be more efficient or use other materials or fixtures to save costs. Ask these questions in a friendly way so that you aren’t creating an adversarial relationship. You want your contractor to feel like you’re treating him as an ally or partner to find a workable solution for your project.

Another way to approach the negotiation is to give your contractor your budget. If you’ve found your contractor by way of referral, you might want to do this up front. The conversation then centers around the scope of the work and how you can get the best value for the money.

My wife, Brenda, and I saw this first hand in our faux painting business. The clients who called and gave us their budget got more for their money than those who just had us give them a bid proposal. Brenda could take a working budget and match it to the finish that gave the best result. Sometimes she could adapt her technique to give a similar look in 1 layer instead of 2.

And speaking from a contractor’s perspective, a client that starts a conversation and treats us as a partner is easier to work with than those who start off with confrontation and making demands. The good clients will get extra services and things done for free.

Remember to ask for references and follow up. But once you find a contractor you want to work with, give him a budget and let your negotiations be a friendly conversation.

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Negotiating Price With a Contractor – Part 2

July 3, 2010 | Author: Eric Deeter

Everyone loves a bargain. I always try to get the best price I can. But I’ve found that sometimes it costs more to pay less. Clothes at Wal Mart usually won’t last as long as the ones you buy from LL Bean.

Money magazine had a recent article about how to haggle with a contractor. I talked about the pitfalls of getting 3 bids in a previous post. In this post I’ll discuss the idea of offering incentives.

The Money article suggests 3 strategies. The first has some advantages. The second is a bad idea & the third might save you some money.

Paying the subcontractors directly:

You may want to ask about this, but not because of any cost savings. The theory is that you’ll save money because the contractor won’t add his markup on to what the subcontractors charge. however, some contractors will ask the subs to add on a percentage and kick it back to the contractor. I know that for some clients this seems to be just wrong. But you will likely save a little money with this arrangement. The contractor needs to make a profit and if he has to handle the payments to the subs he will likely charge more than if he lets you pay the directly and asks for percentage from them.

If your contractor will allow you to pay the subs directly you may want to consider it for a different reason. If you pay the sub directly they will receive their money sooner & as a result may be more diligent and eager to do quality work. If you do pay the subs directly be sure to ask the contractor how many jobs they’ve done for him. If he can’t vouch for them, screen them the same as you do the contractor–ask for references.

Ask the contractor to negotiate a lower price from his subs:

When I worked as a contractor and people asked for a lower price I wanted to reply, “What part of the project to you want me to leave out?” In a construction project there are countless ways to cut corners. Just tune in to the popular Holmes on Homes show to witness some of the nightmare tales of shoddy work and the problems it can cause.

You can ask the contractor if there are less expensive materials. For example, you can buy $150 kitchen faucets and $400 kitchen faucets. Ask questions to find out if the price is based on better quality or merely a trendy look. It’s a good idea to ask your contractor about the specifics of the products and methods he plans to use. If you’re dealing with a knowledgeable professional you should be able to determine the best value for your project.

Be flexible about timing:

Exterior work is often cheaper during the fall. You might get a better price on interior work in July and August. But if your contractor does both interior & exterior work you might offer to let him stretch out your project and work your job in between the lag time between other jobs. The danger with this offer is that the cost savings might not be worth the hassle of living in a construction zone for an extended period.

In the end, it’s often worth the money to pay for a job done right and finished on time.

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