How to Handle Low Ball Offers

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If your house has been on the market for quite a while (3 to 6 months), you may have already dropped your price and now you’re waiting for the buyers to rush in and make wonderful offers on this now-priced right property. And then it happens.

The lone buyer does appear, like a bandit in the night and offers you even less than what you just agreed to. Quite a bit less — about 10 percent less. So on your $350,000 house, that you just dropped to $324,000, you now have an offer for $299,000. With a seller subsidy request of $5,000. At this point, your net is $294,000.

So how do you handle such a low-ball offer. Well, first of all — don’t panic, get angry or lose sleep. Especially, don’t reject the offer right off the bat and tell them to come back when they’re serious. Remember, it’s now a negotiation game and the buyer IS serious or he or she would not have made an offer.

Several things have happened before this offer came in. The buyer, with his agent, has researched the market, walked through as many as 30 or 50 properties, conducted a study on the value of the property and written an offer for your house. Remember, you just won the lottery. They could have written on any other house, but they selected yours. So let’s get busy.

First of all, do an analysis of your own goals and needs. How much do you really need to come out of this house to meet your goals of moving to your next home? What could you really live with and what amount are you going to counter. Remember this last point — what are you going to counter? This is assuming that you’re not rolling over and that you’re going to stay in the game.

Next, conduct a comparative market analysis of the house once again. What’s happened in the market to get this buyer to offer such an offer (notice I didn’t say ‘low’). It might be that your house is now worth that amount. And if it is — that’s okay, because it probably means the house you wanted to buy up into is also worth less. At the worse, you’re going to take away less money. The best thing to look at, however, is that now you’re going to buy up with a smaller down payment because the buy-up property is also less.

Now, let’s start the negotiation. Keep in mind, this is for the long haul. Keep it alive as long as the buyer will keep it alive. Give up a little bit at a time. If you reduced the house to $324,000, expecting an offer of $319,999 with closing costs of $10,000 — then start there. You’re already willing to accept a net of $309,999, so you’re not really that far off. Understand you’re not going to get top dollar with no seller subsidy. So come down to $320,000 and give them their closing costs. So now, your net has come up to $315,000.

Hey — you’re actually ahead of the game if they accept. Oops — they don’t. Now they’ve countered to $309,000 and still want the $5,000 in closing. (Now our net’s at $304,000). Great. Just think. When you started, you were $324,000 apart (remember, you had NO offer at all). Now, you’re only $5,999 away from the net you were willing to accept in the first place.

We’re almost there. Now, before I go much further, here’s a negotiation tip — keep this civil. Use a lot of complements about the offer, the buyers and the agent. “What a great offer. Thanks so much for writing. We are very excited about selling this house to you.”

You want the buyer agent and his/her clients to know you’re wanting to work with them. You’ve been waiting six months for this day (negotiation day) and you want to keep everyone engaged in the process to get your goals met — sold and on your way to your new home in the country.

Now offer your final counter (or maybe next to final). You definitely want to use the complements at this point: “We are so close.” “I can’t wait till we wrap this up, then we can all celebrate.”

At this point, you know the buyers want to buy and your sellers are ready to start packing, so emphasize that you’re very close. Use a dialogue like this: “We are so close. We have some goals to meet, just like you do. And I hope we can bring this together to get us both where we want to be.”

This is when you make the final offer and stick with it. If you offer $314,000, they definitely get what they need and you get closer to your final net — which at this point would be $309,000 — just $999 off of your initial goal. Then you know if it goes forward or you’re back on the market. However, don’t be so stubborn that you lose the lone buyer because of $2,000 or so.

If the buyer is stretching and this won’t work, this is when the honesty comes out. The agent may tell you, If we can’t do $309,000, it’s just not going to work. It goes too far beyond their qualification.” Then you can decide whether to keep it on the market (hoping you don’t have to drop the price again), or you cut the loss and move forward with settlement.

Be patient with the process. Don’t get upset, remember, they’re trying to meet goals just like you are. By working together, both can get what they want.

 

Written by M. Anthony Carr

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Sellers Could Lose Waiting for Buyers to Make Offers

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One of the biggest mistakes sellers make in a buyers market is trying to price their houses with a “cushion” in the asking price for negotiation room. In the current market where most sellers find themselves, it’s all back to price, condition and location.

Pricing the house from the start is the first offensive strike the seller possesses in his arsenal. The best way to determine price in our market is to start looking at two categories of real estate: solds and actives.

Properties that have sold in the last 30 days provide you a picture of what price range pulled in offers 60 days ago. By looking over those properties, you’ll know if you’re headed in the right direction with your price. Then, after seeing what’s pulled in offers, look at where the competition is priced — and price lower than the lowest price. If the trend is headed downward over the last 12 months the motivated seller will get in front of that price trend and sell for less than everyone.

This can be an emotional ordeal for sellers. The seller who approaches the sales price of a house like the asking price of a used car — where negotiation and give-and-take is expected — will also be calling the movers sooner and get through the transaction with the least amount of emotional turmoil.

Condition is the second part of this equation that sellers have control over in today’s market. Folks — it’s got to look new. Period. Here are the steps that MUST be taken for a successful sale.

  1. New paint. Everywhere. Don’t leave one room unpainted. Paint is the cheapest, yet most effective way to give a house a face lift.
  2. New carpet/flooring. This addition along with No. 1 makes people drop open their mouths with, “Wow.”
  3. Replace the small things. It’s the attention to detail that can make a big difference for the buyers. New faucets throughout, new hardware on the doors, and new switches/plugs/plates take the house from just “cleaned up” to new.
  4. Deep clean. I always have to mention this because a lot of sellers still just don’t get it. It’s still amazing to me how many people will leave a house in the “un-” condition. Unvacuumed, undusted, unwashed. Invite friends over for a deep cleaning or hire it out. This is a must, no questions asked.
  5. Do you do windows? Well, somebody better. Get all the windows cleaned and caulked. The house may look great from the inside, but if you can’t look outside because of the dusty film over the glass, steps 1 – 4 could be for naught.

Finally, location is what buyers are looking for. I saw a listing the other day that was obviously connected to a realistic agent and seller. It was a lot of house for the price with the 1-plus acre lot — and it was “priced for location,” because the house backed to a very busy 4-lane highway. The comps in the neighborhood were nearly $100,000 more.

While you may not be able to do anything about the location of your listing, you can definitely spin the benefits of where it’s located. Near commuter routes means the house is next to big highways, but for some shoppers they just want to get home quick after work and this is going to be a benefit — but only if you market it that way.

Sell the lifestyle of the house as much as the amenities of the house itself. With prices dropping in some areas, headlines such as “Quit Commuting,” “Walk to Everything,” and “Cut Your Gas Bill” are becoming more and more enticing. The third- to one-acre lot doesn’t look as good after the 75-minute commute. Some commuters are looking to move back in to the work centers.

Market to buyers outside the community who would find your neighborhood attractive. It’s amazing how many buyers don’t mind a busy 2-lane street — when they’ve been overlooking the Beltway for years. Remember to market the benefits that you liked about the house when you bought several years ago.

Written by M. Anthony Carr

Don’t Be a Staging Stooge

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Products sell faster and for more money when they are properly showcased, or as those of us in the real estate business like to call it, “staged.”

Auto dealers wax and polish a car and detail the interior before parking it on the lot. Department stores meticulously dress their manikins to flaunt the latest fashions. Yet, when some Realtors and homeowners put a $100K+ home up for sale, they completely overlook the staging process, cheating themselves out of potentially thousands of dollars.

As a Realtor, you can’t force your way into your client’s house and start rearranging the furniture and decluttering the kitchen. You have to sell them on the value of staging and then teach them the techniques and tips they need to do it right.

First, convince your clients of the need to stage their home. A brief visit to any of the top staging company websites can provide you with the facts and figures you need. In about ten minutes of searching the Web for “staging a home,” I learned that a professionally staged home sells in half the time for seven to ten percent more than a comparable unstaged home.

Given those numbers, a home that would normally take two months to sell at a price of $500,000 would sell in a month for $535,000 to $550,000 with professional staging! With the housing bubble quickly deflating and competition to sell homes heating up, those numbers are enough to drag even the most unenthusiastic homeowners out of their recliners to start cleaning house.

Once you have a motivated homeowner on your team, the next step is to educate that homeowner on how to properly stage the property. Hiring a professional stager is one option, but most homeowners are quite capable of staging their own homes for a fraction of the cost. Staging is not about spending a lot of money. It’s about clearing the clutter and creatively rearranging the stage. Here’s a guide to help homeowners cover the basics:

Landscaping: Mow and edge the lawn, pull weeds, fix any cracks in the pavement, and sweep up after yourself. Lay fresh mulch and plant fresh flowers (if in season).

Entryways: Sweep the porch and stairs, lay down an attractive new doormat, fix the screens, wash the windows, polish the doorknobs, and clear the clutter out of the entryways. Make sure the doors open and close with ease.

Interior: Scrub and shine the house throughout. Hide family photos, religious icons, or political paraphernalia. Prospective buyers need to envision themselves living in the house, and this stuff clutters their minds.

Kitchen: Clean and polish everything and clear off the counters, especially knife racks, dish drainers, towels, and soap. Clear out and clean the inside of the refrigerator, oven, and dishwasher; people do look inside.

Living room or den: Clear the clutter and dust everything. Rearrange the furniture and place excess items in storage. If your furniture is an eye sore, you may want to rent something that’s more attractive and tasteful and that makes the room look larger.

Bathrooms: Empty the trash, scrub down the tub or shower (especially any mildewy areas), keep the toilet seat down and covered, and get those toothbrushes off the vanity.

Bedrooms: The master bedroom should have a good-sized bed and a small dresser. The other bedrooms should follow suit or be empty.

Just before showing: Do a final walkthrough to tidy up the place, turn on all the lights, and open the windows to let the fresh air in. Most stagers recommend against using heavy air fresheners, scented candles, and potpourri. Instead, set out a bouquet of fresh cut flowers to bring the outside in.

The best way to get a first-hand look at a properly staged home is to visit a builder’s model home. You will quickly notice that the model is impeccably clean, sparsely furnished (though not completely empty), and tastefully decorated. That’s your goal. With a modest investment of time and effort and very little money, you significantly boost your chances of selling the house fast and for top dollar. Don’t be a staging stooge.

Written by Ralph Roberts

Where to Advertise Your Home For Sale

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It’s been ages since the days of the town crier delivering important news. Just as that method evolved to faster, easier, and more reliable vehicles — newspapers, radio and TV — now, even those powerhouses are losing advertising dollars to the lighting speed of the Internet.

“We believe that some of the advertising has migrated from the print newspaper publications to online either free classified or other types of online mediums for classified ads. So what’s uncertain is the extent to which the advertising has moved online and away from newspapers,” says Mike Simonton, Senior Director at Fitch Ratings.

He estimates that 30 percent of help-wanted classified advertising is now publicized online. The real estate and auto classified advertisements are significantly lower — Simonton says somewhere around 15 to 20 percent — but will soon likely catch up to the help-wanted classifieds.

“Obviously there is a correlation between the cyclical problems going on in these particular markets because the markets that have the highest decline in home starts are also having the highest decline in real estate newspaper advertising,” says Simonton.

Interestingly, the inventory of unsold homes in those markets has continued to go up since the beginning of the year. Simonton says it is likely that real estate classifieds are still appearing somewhere for those homes, but it seems newspapers aren’t the vehicle of choice anymore. Instead, just as more buyers are doing their homework and researching for their next home online, sellers also are turning to the World Wide Web to get their home noticed.

Companies such as Tribune Co., Gannett Co. and McClatchy Co have all reported significant declines and big losses in California and Florida. Of course, a downward spiraling real estate market may also have triggered a weak advertising slump. But that’s likely only part of the problem.

“There are some obvious benefits to some of the online search tools that are unavailable in a print product,” explains Simonton.

He says things such as being able to target geographic locations, target price range and the features they want make searching online for a home easier and faster. Ultimately, consumers can filter out homes they don’t want and search specifically for what they do want “in a much more sophisticated way than you’re able to do in a print product,” says Simonton.

The ink isn’t running dry in just the newspaper advertising world, “We’ve definitely seen an acceleration of advertising dollars toward the Internet and that’s going on across different mediums. The mediums that have been hurt the most are newspapers for sure, and then radio, broadcast television, Yellow Pages. Anything that’s traditional advertising has been hurt,” says Simonton.

However, real estate advertising in newspapers in some smaller local markets has not yet been affected but Simonton says the clocking is ticking.

“We think that as more people in these local markets use broadband some of the trends that we’re seeing in the larger markets will show up in the smaller markets in the future and it’s not so much that [the smaller local markets] are immune to these changes but these changes haven’t reached them yet,”

He says that means that there is actually some lead time for newspapers and other mediums in the small markets. If they address the declining advertising revenues and start to move their content online they can help offset the loss in revenue by replacing it with a more real-time approach to advertising.

“Overtime they will need to have a very established online position in order to deal with the fact that most of the consumers in the market are using the Internet to get their information about what’s available in the local market,”

But, what about the old faithful glossy magazine? If you’re advertising your high-end home in a nice luxury magazine, you may still be putting your advertising dollars to good use.

“Magazines have been less hit than newspapers have been. People still seek those out because they’re less frequent and typically have more content related to what they’re looking for. I guess you could say it’s a more targeted medium,” explains Simonton.

Regardless of where you decide to advertise your home, know that having several venues and lots of good ol’ fashion word-of-mouth advertising will create an opportunity to be seen by many.

Written by Phoebe Chongchua