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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:
n 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.
n 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?
n 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.
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.
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.
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:
n Buy a fixer-upper
in a transitional neighborhood, improve it and keep
it or resell at a higher price.
n Buy a foreclosure
property (after doing your research carefully).
n Buy a house due to
be torn down and move it to a new lot.
n Buy a partial interest
in a piece of real estate, such as part of a tenants-in-common
partnership.
n 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.
Copyright
1999 Inman News Features
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