| 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
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.
|
|
| 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: |
Are interest
rates negotiable? |
| 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.
|
|
| Q: |
Can you buy
homes below market? |
| 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. |
|
| Q: |
Can you
negotiate the price on new homes? |
| 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.
|
|
| Q: |
Who gets the
furnishings when a home is sold? |
| 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. |
|
| Q: |
What do you
think of get-rich-quick real estate schemes? |
| 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.
|
|
| Q: |
What is the
best time to buy? |
| 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.
|
|
| Q: |
What are
some tips on negotiation? |
| 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.
|
|
| Q: |
What repairs
should the seller make? |
| 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. |
|
| Q: |
What is the
difference between list price, sales price and appraised value? |
| 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.
|
|
| Q: |
What is the
first step to buying a home? |
| 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. |
|
| Q: |
Should I
include an inspection contingency in my offer? |
| 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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