What To Do When A Buyer Wants To Renegotiate The Sale
By · CommentsThe seller and buyer just signed the deal for a fair price. Everyone was happy, but suddenly the buyer wants to renegotiate the sale. What’s a seller to do? Should they fold and give in? Stand their ground and not yield? Try to bargain?
In a slow market that favors buyers, some may attempt to renegotiate the sale. Their reason may be warranted, or may be an unfair attempt to pressure for more. In either case, it can be frustrating for the seller and their real estate agent.
Even a relatively easy real estate transaction contains several conditions and contingencies that cause the buyer to consider whether to proceed. These milestones can be used as an opportunity to renegotiate the sale. At these points, the seller will need to ascertain the buyer’s motivation for the request and their motivation to sell.
Ultimately, renegotiating comes down to both the buyer and the seller’s willingness to proceed with the sale. The seller needs to consider how far they will accommodate a buyer. The best negotiators see the big picture and predict different outcomes. For instance, if the seller stands firm on an item, will the buyer withdraw and the seller get a lesser offer or none at all in the future? Effective negotiators are willing to make small concessions to achieve bigger goals. Use a Certified Negotiating Expert to sell your home.
Coming Tomorrow: 4 Renegotiating Milestones
Townhome backs to tree line for privacy
Priced $20,000 less than the last closing, this Cambridge Townhome in Bothell is a fantastic deal and investment. If you’ve thought about having a home that is minutes to Kirkland, Bellevue and the wineries, you’ll want to check this one out.
We’ve priced this to sell and is the lowest price you’ll find in Cambridge. Unlike other townhomes, this one backs to a tree line for quiet privacy.
A 2 car garage, 2 bedrooms, 2.5 baths and a modern layout make this a compelling value at $223,950. More details and pictures here.
Medical High Rise Coming to Bellevue
By · CommentsA new high rise is coming to the Overlake Medical District in August 2011. Via the Bellevue Reporter:
The building will house mostly independent practitioners, but is sized to provide space for staff from Overlake Hospital, according to Amy Poley, vice president of real estate investments at Healthcare Realty.
Poley said she is confident the complex will be full, despite a down real-estate market.
“We’re very bullish on the Puget Sound in general, but definitely Bellevue and the Overlake campus,” she said.
There is quite a bit of vacant office space in Bellevue, but this will most likely fill up because of it’s medical use. Medical offices have unique requirements that don’t always allow them to locate in any building. The close proximity to Overlake Hospital and Group Health will also be quite attractive too.
Photo: Bellevue Reporter
Expenses to Expect When Selling a Home
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It is important to know that when you sell your home you will have some expenses. Most expenses are paid at closing, but some are up front such as sprucing up the home. Below is a list of some of the most common costs that come with selling your home.
Closing Costs: Closing costs is a category that includes several different sale related expenses and there is no exact definition. For this article, it includes title insurance, escrow fee and county recording fees. The seller is also expected to pay the property taxes and insurance up to the date of the closing, even if they’re not due yet. If you are selling a condo, a resale certificate from the home owners association is required. The certificate is typically about $150.
Excise Tax: Washington State has a 1.78% excise tax placed on the sale of your home. That’s $1,780 additional expense for the seller for every $100,000. Even banks that sell their bank owned properties have to pay the excise tax.
Brokerage Commission: Typically there’s a 6% commission on the sale price of the house if you opt to go with an agent. Usually this rate is split 3% for the seller’s agent and 3% for the buyer’s agent. The Cascade Team provides Full Service Brokerage services for a total of 4%! More Details HERE.
Sprucing Up: A few dollars spent prior to selling can pay dividends in the form of a faster sale and possibly a higher price. Fresh paint, some colorful plantings and a good top to bottom cleaning is all most homes need. Staging and rearranging furniture also helps and in many cases is free.
Home Inspections: Although the buyer pays for the home and pest inspections, it’s a good idea to get your own inspection before putting your house on the market. This way you’re aware of any hidden problems before selling.
Prepayment Penalty: Some mortgages have prepayment penalties if you pay off the mortgage early. Be sure to examine your mortgage agreement and read the fine print.
A Nice Perk: There are several expenses, but there is a nice financial perk. With any home sale you are eligible for a tax write off of up to $250,000 gained in the sale of your home for a single owner, and $500,000 for married couples. Check with a tax professional to get all the details of any tax credits that may be available to you and your situation.
Will new short sale guidelines help buyers and sellers?
By · CommentsWill new short sale guidelines from the federal government help the market and struggling homeowners? These guidelines are intended to create a standard framework for short sales. They could if (and this is a big if) lenders follow these voluntary guidelines. That remains to be seen since previous voluntary loan modifications programs did not seem to spur lenders into making effective modifications.
The short sales guidelines are part of the government’s new Home Affordable Foreclosure Alternative Program, known as HAFA, which is an add-on to the Obama Administration’s more wide-reaching Home Affordable Modification Program launched in early 2009. The idea is that if borrowers are eligible for the modification program but are unable to work out a plan to stay in their home, they—and their lenders—have a well-mapped route for executing a short sale or a deed in lieu of foreclosure.
Currently, short sales are anything but short. It can take weeks and months to get a bank to respond to an offer and many end up rejected. If the bank accepts, they throw out all kinds of roadblocks during the transaction and will even take a competing offer at the last minute. Time and money are lost on these issues. Both the buyer and seller are left frustrated. These issues are leaving a lot of willing buyers on the sidelines.
The only way this will work is if lenders stick to these new guidelines, have the staffing to handle the requests and are actually willing to follow through. It will probably take several months for the lenders to implement these new rules:
For starters, lenders will have a financial incentive to get these deals moving. Servicers get $1,000 to cover their costs, and subordinate lien holders get up to $3,000 through a matching arrangement in exchange for relinquishing their lien. In addition, borrowers receive $1,500 to defray their moving costs.
The guidelines also include standardized forms, procedures, and timelines—and allow the borrower to receive preapproved short sale terms prior to the property listing.
Also, the HAFA rules require that borrowers be fully released from future liability for the debt. That will be a relief to home owners in recourse states who would otherwise remain liable for debt collection. Slightly fewer than half of the states are recourse states.
Help may be on the way to clear out this inventory of distressed homes.
XXX Root Beer Issaquah 2010 Car Shows
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Photo via Triple X Root Beer
XXX Root Beer, the legendary Issaquah burger joint, has their biggest schedule ever for car shows this year. 38 out of 52 weeks in 2010 will have a show.
If you like reading about successful local businesses like I do, check out their history page which chronicles XXX back to it’s start in 1930.
If you go, try the Chevelle 396 or the 49 Woody with root beer of course.
One last thing, make sure you get the URL right or you’ll go to a naughty site. It’s www.triplexrootbeer.com
FHA Loan Requirements Changing Soon
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Requirements for FHA loans will soon be changing. While some changes will affect many FHA buyers, other changes only pertain to those with credit scores under 580. The changes are driven by the need to reduce risk for the agency on delinquent loans and build up it’s reserve fund for loan losses.
The change getting the most attention is the up-front mortgage insurance premium. The premium which is assessed at closing increases from 1.75% to 2.25%. Practically speaking, this won’t increase buyers closing costs since most will roll it into the financing, but that will bump the monthly mortgage payment slightly.
To now qualify for a 3.5% down payment, buyers will need to have a credit score higher than 580. For sub 580 buyers, the down payment requirement increases to 10%. I’ve seen reports that the average FHA buyer has a credit score of 693, so the increased down payment may only affect a few.
The other major change deals with seller paid closing costs. Under previous rules, the buyer and seller could negotiate for the seller to contribute up to 6% of the sale price to the buyer. Going forward, 3% will be the maximum contribution allowed by the seller.
Finally, there will be closer monitoring and public reporting by the FHA on lenders that offer FHA mortgages.
While these changes could increase costs for buyers and may put a home out of reach for a small percentage of buyers, they don’t seem that drastic and hopefully the market will handle it in stride.
Update: The changes start April 5th, 2010.
Interesting fact I saw in the Seattle Times year end real estate review regarding King County:
If you bought a King County home in 2002 you’ve still had a 27% return on investment as of today. That is even after a 16.5% decline since the peak of the market in 2007.
2002 Median Price $278,198; 2007 Median Price $455,000; Jan 2010 Median Price $380,000.
In other words, even after a couple years of declines and market pain, long term owners of real estate profited from their investment.
The Seattle Times analyzed January’s year over year figures from the NorthWest MLS. They report that sales are up, but prices are down on the East Side. However, Seattle has both sales and price increases.
The last time Seattle — or any other area in King County — saw a year-over-year increase was in February 2008.
While prices rose 3.8 percent in the city in January, they fell 6.5 percent on the Eastside, 8.5 percent in Southeast King County, 11.1 percent in North King County and 11.2 percent in Southwest King County.
The suburban declines pulled the county’s overall median price into the red, down 2 percent from January 2009
In terms of sales, the percentage gains are great to see, but they’re off of very low numbers the year before. Prices are still declining the further you get from Seattle, but check out that East Side median price. Price declines on the East Side are getting better with January clocking in at 6.5% lower. Previously, declines had been in double digits for quite some time.
April and later will be the true test for a firming market. The tax credits will go away and the Fed will have wound down buying mortgage backed securities that have supported low mortgage rates.
Bottom anyone?
Northwest MLS: 28% Pending Sales Increase From Year Ago
By · Comments“More certainty” and “more stability” in the market contributed to a boost in activity during January, according to officials from Northwest Multiple Listing Service. Brokers reported an increase of nearly 27 percent in pending sales (purchase offers made and accepted, but not yet closed) from December and a 28 percent jump from twelve months ago.
Two other indicators of activity fell — inventory and sales prices. There were 3,915 fewer active listings of single family homes and condominiums in the MLS system compared to a year ago, a drop of about 10.3 percent. Sales prices area-wide for January’s closed sales declined about 4.8 percent from year-ago figures. (The NWMLS service area covers 21 counties.)
“We anticipated there would be improved sales in the first-time buyer market and are encouraged to see activity gaining ground in the higher price ranges as well,” observed NWMLS director Joe Spencer, the president and COO of John L. Scott Real Estate. He cites historically low interest rates, great affordability, and the home buyer tax credits as factors for “helping push us into a more stable market,” and noted he expects to see this momentum continue in the coming months.
NWMLS members added 11,206 new listings to inventory during January, including 9,269 single family homes and 1,937 condominiums. With those additions, the selection at month end totaled 34,256 listings, down more than 10 percent from a year ago. The inventory of single family homes shrunk 11.5 percent, while the condo selection declined by 3.7 percent.
Members tallied 5,579 pending sales during January, improving on the year-ago total by 1,226 transactions (up 28.2 percent). For the four-county Puget Sound region (King, Kitsap, Pierce and Snohomish), the number of pending sales jumped nearly 35 percent, led by King County’s increase of 47.4 percent.
Currently, there is about a 6.1 months supply (ratio of houses for sale to houses sold). Economists consider a supply of 3-to-6 months to be a balanced market. Read More→
