Archive for the 'Home Buyers' Category
Guide to Successful Low-ball Offers
October 1st, 2008 categories: Home Buyers, Home Sellers
Robin Stansbury wrote this article for Sunday’s Hartford Courant on low-ball offers, quoting yours truly.
Here is an excerpt from my earlier post, The Anatomy of a Failed Low-ball Offer, with some concrete things you can do to improve the odds of getting your low-ball offer accepted:
How to Win with a Low-ball Offer
Present a complete offer and explanation. Asking a seller to come down significantly on their price requires a leap of faith on their part. Sellers need to know why the offer is lower than the listing price - is it because the comparables say so, the market is declining, the buyers are well qualified but can’t go higher.
Back it up with facts. If the comparables show a lower price, I’ll forward them to the listing agent. I won’t be obnoxious about it - I’ll just say, “here’s what I used to come up with a value, so you can tell your client.”
Play on insecurities without making negative comments about the house. I ask questions that remind the agent that the house has been sitting on the market like ”how many offers have you received on the house?” “how long has it been on the market?” (even if I see on the listing sheet). I may also comment on how many houses are on the market in the area or price range. I try not to say anything negative about the house or condition, unless the agent asks.
Make the offer otherwise sweet. When I’ve presented successful low-ball offers, I’ve asked the buyers to give up something else to entice the seller. For example, I would ask the buyer to put a larger security deposit, have the inspection faster than normal, have the commitment faster, close earlier or later (depending on the seller), for example. Low-ball offers also work best when the buyer doesn’t have anything to sell.
For additional posts on making offers, read the following:
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Not Everyone Deserves to Own a Home
September 30th, 2008 categories: Home Buyers, Real Estate Market
Amidst all the coverage on the bailout bill, I can’t help but think about what got us here in the first place.
I don’t want to discuss the legislative or regulatory failures because there are plenty of people out there doing a much better job than I ever could. Read Barron’s A Memo Found in the Street for example.
I think the crisis is much simpler than that and a direct result of the flawed belief that everyone deserves to own a home and certainly the flawed practices by government and businesses to promote the heck out of homeownership as the attainment of the American Dream.
Prior to 2008, Realtors, mortgage lenders and elected officials alike (see Business Week’s article on the Clinton administration’s National Homeownership Strategy) reveled in the glory of record homeownership levels - 69% at the peak in 2004-2006 - and made every attempt to make homeownership easier via 100% downpayment programs, tax breaks and lax lending standards (see Wall Street Journal article from 2005 Mortgage Lenders Loosen Standards - note that they mention Countrywide and Washington Mutual). I, too, am guilty of the above.
The chart below is courtesy of Hoover Institution:
I won’t deny that homeownership is very fulfilling and can be financially rewarding.
A Joint Center on Housing Studies report in 2001 reviews studies that show that homeownership has many positive effects on society but also predicts that making homeownership more accessible may have the unintended consequences of increased rates of foreclosure which would be more detrimental to society.
“Public policy that encourages homeownership has often been justified by claims that it has a variety of benefits both to both individuals and to society. Considerable, although not irrefutable, evidence exists for several of those claims. Given these benefits, there is justification for public policies that encourage and support homeownership.
The research on the impacts of homeownership also suggests that these benefits may not accrue to all homeowners. The possibility of these negative impacts suggests that those involved in promoting homeownership should be careful not to oversell homeownership, particularly among those who are less likely to be successful homeowners.
Recent public policy has been focused on making homeownership available to lower-income families. Although this is clearly an important and worthy goal, not everyone is capable of becoming a successful homeowner. Homeownership counseling may help lower-income homebuyers be successful homeowners, but at this point there is very little research evidence on this topic. Caution should be exercised in encouraging homeownership among those with a relatively low probability of success. Encouraging persons to buy homes that they end up losing would do them a great disservice.”
But the reality is that many people aren’t financially, physically or emotionally capable or responsible enough to own real estate.
Merriam-Webster’s Online Dictionary defines the word “deserve” as follows:
“to be worthy, fit, or suitable for some reward or requital”
It’s time that we return to the belief that homeownership is a reward for hard work.
Rather than making it easier for people to buy homes by lowering the bar, how about we try to help people reach the bar by promoting saving for a downpayment, promoting good credit behavior, or talking about alternate entries to the market such as buying a multi-family.
For related posts:
It’s Those Mortgage Guidelines, Stupid
The New Housing Bill’s Impact on Home Buyers
Just How Did We Get Into This Mortgage Mess?
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How to Avoid Beer Goggling Your Next Home Purchase
September 22nd, 2008 categories: Home Buyers
You’re up late one night, cruising the Internet on Realtor.com. After looking at house after house, one in particular catches your eye.
You forward the listing to your agent and demand a showing the next day - “I must see this house!”
You walk through the home and the online pictures don’t do it justice.
A gracefully bending stone driveway, new “period” custom kitchen cabinets, master bathroom tile that actually sparkles it’s so clean and the living room furniture is perfectly arranged with a soft cashmere throw tossed neatly across the sofa. The fireplace invites you home with its crisp crackle.
The house even smells good - not Glade Plugin or potpurri good - but fresh, airy, clean people good.
You decide to write up an offer. A good offer - not full price but pretty good.
Almost teasing you, the home sellers counter at a slightly higher price. You don’t want to appear too eager so you think about it for an hour and accept.
The perfect house is yours…almost. All that stands between you and perfection is the inspector.
While you accompany the inspector through the home at least a week after your first encounter with it, you and he discover some flaws. A crack here, a missing GFCI outlet there, a CAIR system that doesn’t actually cool.
Like waking up after a long night at a bar with a hangover, you slowly come out of your mania induced haze to realize the person sleeping next to you is not quite as attractive as you remembered or hoped (I do not speak from personal experience).
Welcome to reality. And for many home buyers, reality can be frightening and stressful when they’ve just found out their “perfect house” has a few zits.
No home is perfect. Not even new construction. Not a home lived in by the most meticulous of individuals. Period.
When you take off a home’s makeup - the decor, the ambiance, the lighting, your mood, and the subtle persuasion by a skillful agent, a home looks very different under the microscope of a home inspection.
The only way to avoid the shock and disappointment is to prepare yourself early on and bring along an agent with a critical eye.
At your first rendezvous with said “perfect house,” avoid looking at the makeup. While it feels better to fall in love with your home, a more prudent approach would be to walk through it looking for potential areas of concern, such as:
Are the mechanicals up to date and have they been serviced recently?
When were the major items last upgraded? Roof? Septic? Siding? Windows?
Any dampness in the basement? Or minor evidence of water leaks?
Do doors and windows open and close properly?
Any major cracks in the foundation?
Has the home been vacant for any period of time?
Many of these answers can be found in the home’s disclosures but some may only be answered with a closer look.
Don’t wait for the inspector to reveal that your home may have some flaws because you may be setting yourself up for some heartache.
For related posts:
Home Buying 101: Get a Home Inspection
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Reporting on Property Tax Reform Forum at the Capitol
September 19th, 2008 categories: Central Connecticut News & Information, Home Buyers
The Connecticut Association of Realtors sponsored a discussion yesterday abouth the State’s property tax system, heard on WNPR’s Where We Live.
Panelists included: State Rep. Brendan Sharkey; State Rep. Larry Cafero; Fred Carstensen, Director of Connecticut Center for Economic Analysis; and, writer/public policy researcher, D. Dowd Muska.
You can hear audio of the show in case you missed it at the WNPR.org Web site.
One thing the panelists seemed to agree on was that property tax reform is desperately needed. The current system, which dates back to colonial days, assessed taxes based on property values because it was once true that owning property equaled wealth. With more and more people owning their own homes, property wealth does not translate to the ability to pay. Furthermore, cities where property values are low have the highest property tax rates.
Fred Carstensen stated that the current property tax system creates “perverse incentives,” driving towns to develop retail over housing (keep the kids out!), discourages affordable housing, and drives residents out of cities in favor of lower tax suburbs and exurbs. The result is concentrated wealth and concentrated poverty. The Two Connecticuts.
All of the above is either causing or exacerbating the single most important issue facing our state - the lack of economic growth.
It’s more expensive to do business in CT.
It costs more to live in CT.
Affordable housing is difficult to find.
18-34 year-old, college educated people are fleeing the state.
Jobs are hard for businesses to fill.
Unemployment is more prevalent (State’s Jobless Rate 6.5%) and any job growth has been in the public sector.
We’re expected to have 80,000 fewer students in K-12 public education while the percentage of seniors is expected to increase significantly.
Clearly, we need a solution. Is it a property tax cap? Is it cutting back on public spending? Is it creating more affordable housing? Is it lowering the corporate tax rate (CT ranks 38th on the Tax Foundation’s list of states according to business tax climate)? Is it regionalization?
Unfortunately, the program spent only a few minutes discussing the actual solutions, where the true debate exists. I wanted to hear more about where we go from here. I don’t think enough elected officials are paying attention to this - but why would they? They’ll be out of office before we really have problems.
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HUD Homes For Sale in Hartford County
August 28th, 2008 categories: Home Buyers, Investors/Landlords
There are a number of HUD properties for sale right now in Hartford County.
HUD owned homes are those that the Department of Housing and Urban Development foreclosed on after an owner defaulted on an FHA-insured loan.
Any HUD registered broker can show you a HUD listing (My office is a registered broker and therefore I have access to these listings). You do not have to contact the listing agent directly.
Here are some of the properties:
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