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Negotiating - Q & A
| Q: |
Is a low
offer a good idea? |
| 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 is the
difference between market value and appraised value? |
| A: |
Appraised
value is a certified appraiser's opinion of the worth of a home at a
given point in time. Lenders require appraisals as part of the loan
application process; fees range from $200 to $300.
Market value is what price the house will bring at a given point in
time. A comparative market analysis is an informal estimate of market
value, based on sales of comparable properties, performed by a real
estate agent or broker.
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| Q: |
What
contingencies should be put in an offer? |
| 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? |
| 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: |
What is the
best time to sell your house? |
| A: |
In
addition to supply and demand, and other economic factors, the time of
year you choose to sell can make a difference both in the amount of time
it takes to sell your home and in the ultimate selling price.
Weather conditions are less of a consideration in more temperate
climates, but most of the time, the real estate market picks up as early
as February, with the strongest selling season usually lasting through
May and June.
With the onset of summer, the market slows. July is often the slowest
month for real estate sales due to a strong spring market putting
possible upward pressure on interest rates. Also, many prospective home
buyers and their agents take vacations during mid-summer.
Following the summer slowdown, real estate sales activity tends to
pick up for a second, although less vigorous, fall market, which usually
lasts into November when the market slows again as buyers and sellers
turn their attention to the holidays.
Sellers often wonder whether or not they should take their homes off
the market for the holidays. Generally speaking, you'll have the best
results if your house is available to show to prospective buyers
continuously until it sells.
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| Q: |
Are low-ball
offers advisable? |
| 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: |
Do I have to
consider contingencies? |
| A: |
If
you are a seller in a seller's market, in which there is more demand
than supply, you probably won't have to entertain too many
contingencies. But if you are selling in a buyer's market, when buyers
are few, prepare to be very flexible. Granting contingencies also
depends upon what kind of price you want to get and on the condition of
your property, most experts agree. Remember, contingencies are written
into the contract and are negotiable during the negotiation phase only. |
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Copyright 1999 Inman News Features
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