Should you Make an Offer on an Overpriced Home?

If you are actively looking for a home, you've seen them. Probably a lot of them. Overpriced homes for sale. But what if you like that house? Will the seller ever negotiate to a reasonable price on that home you want to buy in Connecticut?

You won't know unless you have the right agent on your side, and unless you try. It's important to have a good understanding of the different  types of seller motivations that influence listing prices and the amount of negotiations that seller is willing to consider, in order to arrive at the decision as to whether to place an offer on that particular house or not.

Sellers have their own pricing mentality, or level of motivation, that can pretty much be summed up into three categories:

CLEAR CHOICE SELLERS Have to or Must Sell – This homeowner absolutely must sell the home, and the asking price  clearly reflects that. These homes are generally the best deals out there, and have an excellent chance to sell in any type of market. They attract more qualified and realistic buyers, and sell at higher list price to sale price ratios.

THE MAYBE SELLERS Should sell, but want top dollar  – This homeowner does have a real need to sell, but has not priced the home correctly for one of many possible reasons. They may feel as if they have to "net" a certain amount, and can be stubborn about it, until enough time passes wher it becomes more urgent. They may also feel that they can test the market at a higher price to try and get more money, and gradually reduce it. They may also try and mask this  to their own agent  by insisting to put "negotiating room" in the listing price.

SLIM CHANCE SELLERS If I get my price, I'lll Sell – This type of homeowner doesn't really need to sell the home, but if they can get their price, they will.  If not, they will just stay in their home, and not be too concerned about their house not selling. There is a strong probabilty that this type of homeowner will not sell their home in today’s market, so home buyers who actually view this type of property are just wasting time. This listing will most likely end up as an "Expired"

So how is a buyer to tell which type of seller is which?

Truly, that's your agents job.Your agent should have the skillsets to "read between the lines" of the listings that are most likely to interest you, and discuss  whether the seller appears motivated or not BEFORE you even go look at the house. That could be in the form of getting you prepared to make an offer on a house that looks like a great deal, or preparing you for a house that meets your needs and wants but is priced too high for the market.

Market time, showing availability and prior listing history on the  house, including how many times it has been listed, what the price reductions were and when, and also public records search are all useful in determining seller urgency

I am always of a mind to try and negotiate with any type of seller, even if it's a "Slim Chance or a Maybe".  Circumstances for that seller could have changed this morning or even yesterday, and that seller might be willing to listen to an offer today that they would not have even dreamed about considering just last week.

The Slim Chances and the Maybe's have egos to contend with, but we would be remiss if we didn't consider their agent's egos as well. So now we have yet another fly in the ointment that has to be handled delicately, if it's going to be at all effective.
 
I remember  one particular negotiation that I knew would be a tough one based upon pricing and the agent's ego. It was an estate property, so the bottom line for the sellers was the money, period. I called a meeting with the sellers agent and sellers, and explained to the agent that we were bringing in an offer that was significantly less than the asking price, and I wanted the opportunity to present it in person, rather than the by the standard back and forth via phone or  fax. He agreed.

We met at the house, and I came prepared with about an inch and a half of comparables, statistics, and the like- never once disparaging the listing agent for pricing the home so improperly. The sellers agreed that after going through all of my statistics that  my pricing was correct. I took all of the heat off that agent for presenting what was considered a low offer, the agent was grateful for saving face, and we put the deal together. The sales price to list price ratio on that house was 71 percent. I'm proud of that, and that's not the only one. So it can be done. If it's the right mix, the right negotiations and the right house, it doesn't hurt to try. The right agent representing you doesn't hurt, either- and I just happen to know someone..... (me!)

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

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Connecticut Mortgage Rates and Financing Update November 25, 2011

Nearly one quarter of October home sales are attributable to investors. Spurred by a strong demand for rental housing and low property prices, investors are buying more houses according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.  

The report says that investor purchases represented 22.3 percent of closed transactions for the month of October, the third straight month that investors have held a share greater than 20 percent.  The October figure is considerably higher than the 18 percent investor share reported earlier this week by the National Association of Realtors®.

Just as the value of a share should reflect future profits that a company is expected to earn, house prices should reflect the expected benefits from home ownership: namely the rents earned by property investors (or those saved by owner-occupiers).

Average house prices are 8% undervalued relative to rents, and 22% undervalued relative to income.  Some 4 million foreclosed homes could come onto America’s market, which may hold down prices.  Lower interest rates for mortgages usually justify higher prices because buyers can take out bigger mortgages, but low rates need to be balanced against the fact that tighter credit conditions make it harder for home buyers to get mortgages. 

Today's Mortgage Rates

30 year fixed - 3.875% + 0% cost points for rate
20 year fixed - 3.750% + 0 % points for rate
15 year fixed - 3.250% +  0% points for rate
10 year fixed - 2.99%  + 0%  points for rate
5/1 ARM - 2.50%  +0 points for rate
7/1 ARM - 2.750 %  + 0 points for rate
10/1 ARM 3.250% + 0 points for rate

FHA/VA
30 year fixed - 3.875% with +0 % points for rate
5/1 ARM - 2.75%  with + 0 points for rate
7/1 ARM - 3.25 with +  .625 % CREDIT  point for rate

Jumbo - over 576,000 (in Fairfield County, CT)   to 2,000,000
30 year fixed - 4.625  % with 0 points  for rate
15 year fixed - 4.125% with +.250% points for rate
5/1 ARM - 3.375% - 0 points for rate
7/1 ARM - 3.875 % - 0 points for rate
10/1 ARM - 4.375% with 0 points for rate

Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.
   Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.
   Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
    She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949

Jennifer Buchanan- Your certified expert
 on mortgages offering Free Unbiased
recommendations based on your needs.

Happy Thanksgiving From TheCTrealtyBlog, and Thank You

I would like to extend a warm thank you to

my family, friends, clients and followers

and wish all a Happy and Safe Holiday.

Get The Seller to Pay Your Closing Costs on Your Connecticut Home

Tip of The Week:  The Seller can give a credit for the Buyer’s actual costs, but the credit cannot exceed those costs. Additionally, the amount of that credit depends upon the type of loan program that the Buyer has chosen. Here are some examples:

FHA LOANS:   
• The Buyer must put down a minimum of 3.5% of the purchase price. 
• The Seller can contribute a credit toward closing costs for the Buyer. 
• The Buyer is limited by law to a six (6%) percent cap on contributions from the Seller and those contributions must be put towards "actual costs" of the loan. 
• See the link from US Department of Housing and Urban Development on buying a home by clicking here.

VA LOANS:   
• There is no down payment minimum for a VA type loan.  The Seller’s contribution or “concession” is limited to a four (4%) percent cap.   
• Please notice that with a VA loan the Buyer is not allowed to pay for the termite report, the Seller must pay for this directly.     
• See the link from the Department of Veterans Affairs by clicking here.

CONVENTIONAL LOANS:  
• When a Buyer is getting a conventional type loan and putting less than 10% down, the Buyers are limited to three (3%) percent cap on contributions from the Seller.
• Again those contributions or credits must be put towards “actual costs” of the loan.

Remember, There are numerous types of loan programs -- so please make sure you have consulted a loan professional before having your agent ask the seller for a credit toward closing costs.

The weekly Tip-of-the-Week* is supplied by Only Closings --

a law firm devoted to real estate closings.

      - Our closing staff is made up of seasoned, experienced real estate attorneys.
      - Close where it is most convenient for the client (home, office, job or bank)
      - Very competitive closing fee and no hidden fees!
      - No fee consultations.
      - Personalized, responsive service from all of our attorneys and paralegals

  To learn more about Only Closings and how they can help you quickly close a property transaction, call them at 203-563-9677 or visit them online at www.OnlyClosings.com

*The content within the "Tip-of-the-Week" is strictly for informational purposes and not intended to be interpreted and/or used as legal advice. Only Closings and OnlyClosings.com is a service provided by Tamara L. Peterson Attorney at Law LLC.

Buyers and Sellers- How to Prevent a Failed Building Inspection on Your Home

Nobody's too happy when the house doesn't pass a building inspection.  In fact, everyone has to start from square one all over again....The seller, the buyer, and both agents that are involved. Everybody begins their tasks all over again- and that should ALMOST NEVER be the case.
 
A failed inspection would only occur rarely in the market if agents educated their clients during the process.

It is extremely rare  that my clients have had to endure a failed building inspection, and that's whether I represent the seller or buyer- and I have sold hundreds of properties. ....So what makes such a big difference for my clients as opposed  to everyone else?

Education and disclosure. Those two factors will prevent over 99 percent of failed inspections.

Education:

For Buyers: Look closely at the home before you place an offer in on it. My buyer clients get a kick out of looking at houses with me, because I perform mini-inspections as we look at homes, and educate my buyers as to what potential problems there may be if any. I knock on tiles, stomp on the floors, and poke wood that looks like it needs poking.  I am not a building inspector, and do not have that specialized knowledge, but I have attended EVERY home inspection for EVERY home that I have ever sold. If some knowledge hasn't rubbed off on me to impart to my clients, then I wouldn't belong in the business. A couple of very good things result out of this practice- One, if the house doesn't pass my mini-inspection, there is no need to put an offer in on the home and spend money for an inspection that won't end up on a positive note, or, Two- the buyers make their offer knowing that there are some issues that will need to be addressed and are not blindsided by the building inspection.

For Sellers: When you decide to put your home on the market, you  pretty much have a good idea as to whether there may be issues, which could or would break a sale. Tell Your Realtor!  Once you are lucky enough to have a sale, you don't want to needlessly lose it. As a listing agent, I do that same mini-building inspection that I do for buyers when I list your home, and try to find the most common deal-breaker issues that may arise so that we can address them prior to putting the home on the market.  If I see something that looks like a specialist is needed, I'll say so. It's much easier to fix it now rather than fix it later, AND risk a sale because of it.

Disclosure

For Buyers: When buyers disclose found issues prior to the formal building inspection and adjust their offering price because of it, sellers are more likely to accept that offer given that they would have to address items with any future buyer as well. It gives the owner some peace of mind that they won't be nickeled and dimed at time of inspection, which seems to be a common occurrence these days. ( I do not subscribe to the last minute nickel and dime tactics. )

For Sellers: Disclose your known issues, or your suspected issues. By the way, it is the law. Besides that, the little items that wouldn't normally mean a thing to buyers become amplified when there are bigger issues to address, and  they can feel like there might be a lot of hidden problems that the inspector hasn't even found. What happens then is the proverbial straw that breaks the camel's back, and it's hard to keep the deal together or even renegotiate if that's the case.

If buyers have a good idea what they are getting into right from the get go, they are less likely to "walk" after a poor inspection report. They will already be aware of most of the issues. If sellers feel that the buyers have been honest with them, they are more likely to negotiate, or renogiate as the case may be.

Simply put, your agent has to have well rounded skills- marketing, negotiating, and good solid knowledge of a home and its components. You deserve nothing but the best.

When you're ready to buy or sell, contact me. It's my job to keep everything running smoothly, and especially when it gets rough- without worrying you about it unless absolutely necessary.

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