NEGOTIATE LIKE A PROFESSIONAL – TRUCKEE REAL ESTATE

Bonnie Jessee 530 412 3984

Either working alone or working with your Realtor, negotiating can make you want to ‘get away’.  The seller’s may feel the same way, as might your Realtor!

However, in the goal of a successful purchase and closing, we can learn from the problems encountered during our first situation and negotiate a deal that leads to a satisfactory conclusion for all involved. Good negotiating is certainly not about ‘beating’ up the other side; rather it is about knowing and understanding the seller’s motivations and your own motivations, and concluding a deal that satisfies you both.

Beginner’s potential mistakes and how to avoid them.

Price is the only concern
Terms can matter more than pricing!  One might negotiate quite a bit of value into a contract besides the purchase price, so think about the best closing date, determining who would be motivated to pay closing costs, any personal items you might like the seller to leave behind, and options or upgrades for a newly constructed home – as well as any other thoughts on timing or additional terms.

Time is of the essence
Have your financing in order from the start of your house-hunting, and be ready to write immediately on the home you want. Make a firm, direct and clean offer to a motivated seller, including in your offer a time limit for a response, and you might get precisely the terms you asked for.

The immediate response
Yes, you want to move swiftly, however, never respond verbally to an offer or counter offer. Ask for it in writing, and respond in writing.

Lowball offers ‘just to see’ where the seller is
If you want a seller to reduce your purchase price, have factual reasons besides the amount of money in your bank account. For example, the market is down, the roof and carpeting needs replacement, or perhaps other similar homes in the neighborhood sold for substantially less than the current asking price on your choice. Increase your negotiation position by being prepared to justify your request.

Making the assumption the price is as asked
You might have heard, for example, that there’s no price negotiation room on pricing for new construction. Or you might think that there’s no way the seller would leave behind that fabulous grand piano. Not always so! Ask for what you want and be willing to be flexible on other requests.

Making it “personal”
The seller reacts to your offer by getting frustrated and yelling,  or oozing condescension and calling you honey or;  pretending he doesn’t understand it "Did you really mean this number right here? This must be a mistake."

Some experienced negotiators will try to set you off guard on purpose; others may just be rude. But stay calm and be consistently direct. Ask the seller to be specific about any terms he or she might not be comfortable with and to make sure you understand exactly what he means, ask questions!  If the seller appears to be totally uncooperative, be prepared to walk away from that particular house. Your philosophy so always be ~ This is business, and there are other houses from which to choose.

Waking, sleeping and totally focusing your being on this purchase
Of course you are working hard at negotiations and you should keep your cell phone on.  However, remember to take care of your physical and emotional self as well.   Staying calm, under control and consistent will assist to make this a smoother transaction and a pleasant experience for all.

Down Payment Assistance Planning Bonnie Jessee, Realtor

Truckee Real Estate

530 412 3984

We have all been taught to follow the rules that it is best to put down 20(%) percent on the home you are buying (or the loan you are obtaining). With a 20 (%) percent down payment, you will secure a loan on the best terms, without paying private mortgage insurance (PMI) or the FHA equivalent of PMI, also known as MI, and typically obtain a lower monthly or annual interest rate.

And as housing prices stabilize in most states, coming up with that kind of cash can be difficult for first time buyers.  Most first-time buyers don’t have 20(%) percent to put down on a home. Many buyers are attempting to get in to a property with as little as 3(%) percent to 10(%) percent.

While getting a 100 percent loan (no down payment necessary) is still possible, it can be difficult to find a good lender who will do it at a reasonable cost. And we know that getting that 20(%) percent down payment is important.

In conjunction with saving as much as possible for that 20(%) percent down payment there are other options to consider:

401K MONIES. If you work for a company that offers a 401(k) plan, it’s in your best interest to fund it to the maximum allowed for your income. Not only will you be able to tap into the power of compounding (and have your money work harder for you), but you’ll be able to more quickly build a sizeable nest egg for your retirement. When it comes to borrowing from a 401(k) plan, not every company allows it. Check with your plan administrator to see if your company will allow you to borrow, if there are limitations on what you can do with the cash, and what the interest rate will be on the money you borrow. You should also be aware that you’ll typically need to repay this cash within 5 years. But if you should leave the company, or be fired, you’ll need to repay the cash within 60 days, or it will be considered a withdrawal (and you’ll owe federal income taxes on that money along with a 10 percent penalty, if you’re under the age of 59 1/2).

IRA MONIES (UP TO $10k).  If you have an individual retirement account (IRA), the IRS allows you to withdraw up to $10,000 for the purchase of a first home. (For those of you who have purchased a home before but haven’t owned a home in the last 3 years, you’re considered to be a "first-time buyer" for this specific purpose and can make a withdrawal). When you withdraw cash at any time from a tax-deductible, tax-deferred IRA, you’ll owe federal income taxes on the amount you’re withdrawing at your current marginal tax rate. However, if you’re withdrawing for the purchase of a first house, you will not owe the 10 percent under-age penalty if you’re less than 59 1/2 years old.

Gifts. If you’re buying a house, your parents, siblings, other relatives or friends can give you a gift of funds to be used toward your down payment. However, for a lender to accept that this is a gift, and not a loan, you’ll need your friends and family to sign a gift letter that states that this cash is a gift and does not need to be repaid. That letter will become part of the documents that you provide to the lender who will be approving your loan.

Rent-to-own or lease/options. If you don’t have enough cash in your IRA or 401(k), and you can’t get your lender to give you a 100 percent loan, you might put your plans to purchase on hold for a year or two and find a seller who is willing to do a rent-to-own or lease/purchase arrangement for his or her property. Often, the seller will provide down payment assistance by giving you a credit for a portion of your monthly rent payments. In a year or two, you can easily build up a 5 to 10 percent down payment, depending on how much of a rent credit you’re given. For example, if you pay $1,000 per month, and the seller gives you a 20 percent credit, $200 per month will accrue toward a down payment on the property. After a year, you’ll have $2,400 for your down payment. If you’re going to go down this path, be sure to work with a real estate attorney who can help you negotiate the fine print. You may want to negotiate the purchase price of the property upfront, and you will definitely want to include the down payment credit terms as part of the lease.
 

TRUCKEE REAL ESTATE~INTEREST RATES ARE DOWN

HOME SALES ARE UP

Bonnie Jessee, Realtor

530 412 3984

Mortgage interest rates are down, while sales of existing homes are up - a welcome eventuality for consumers and real estate professionals. The awaited increase in sales is an important event, carried by all major news media. At this writing, the average rate for a 30-year, fixed-rate mortgage is 5.85 percent, down from 6.13 percent just a week ago. Last year at this time, the average interest rate was 6.16 percent. Borrowers pay an average of 0.4 points (percentage of loan).

"Mortgage rates fell as various actions were taken to improve market liquidity," said Frank Nothaft, chief economist for Freddie Mac, a major government-sponsored buyer of existing mortgages. "Also, the inflation report from the Consumer Price Index reflected weaker price increases than expected. It reported no change in February, including food and energy costs. That’s the first time the CPI did not report a monthly increase since November, 2006."

The lowering of rates sparked a sharp increase in the number of mortgage applications for home purchase transactions and refinances, according to a report from the Mortgage Bankers Association. "The Federal Reserve acted to bring stability to the mortgage-backed securities market and we saw an immediate impact with a drop in mortgage rates," said Jay Brinkmann, MBA’s VP of research.

Existing home sales, including single-family homes, townhomes and condominiums, rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February. That’s up from 4.89 million units in January. "We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing," said Lawrence Yun, chief economist for the National Association of Realtors. "Buyers are taking advantage of higher loan limits for both FHA and conventional mortgage, thus unleashing some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year."

About half of the nation’s metro areas are now showing home price increases, with healthy gains in some markets, he added. "In some areas, a recent rapid price decline has induced buyers to come into the market, and sales are now rising. The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers." Sales of existing single-family homes increased 2.8 percent in February, while sales of existing condominiums rose by 3.7 percent.

COURTESY OF SIERRA MOUNTAIN MORTGAGE, TRUCKEE, CALIFORNIA

TRUCKEE REAL ESTATE~THE "DON’TS" OF NEGOTIATION FOR BUYERS!  WHAT A BUYERS REPRESENTATIVE WILL TEACH YOU AND WHAT YOUR BUYERS REPRESENTATIVE SHOULD NOT DO!

Bonnie Jessee, Realtor

530 412 3984

Don’t Make Negative Comments

 Don’t even bother trying to justify a very low offer.  The sellers and their listing agent already know the negatives of the property and have priced it accordingly.  If it hasn’t been priced properly for the location, lack of amenities and required repairs, your buyer’s agent will probably not even have shown you the property in the first place.  Negative comments will not get a lower price!

Don’t Consider What the Sellers Paid or How Long in Residence

Market value is what it is at the time the property is listed for sale.  It is of no consequence to you the buyer how much the seller might be making (or losing) on the home. When you decide to sell the very same home, you will not be willing to take less than your home is worth due to appreciation would you?

Don’t Disregard the Seller’s Desires~When Reasonable

Your buyer’s agent should know the hot buttons – timing, pricing, and lack of contingencies.  Your buyers agent will assist you in making a fair and reasonable offer based on your position that including the position of the seller.  You should know that considering the sellers wants and needs, can make a huge difference in an offer being accepted or rejected.

Don’t Bother With an Extremely Lower Offer

What I mean is that extremely low~balling the seller of a fairly-priced property can be a waste of everyone’s time.  And; if the property is overpriced you would be working against a seller who is unreasonable (and uneducated) and chances are that they will not accept your lowball offer in any case.

Don’t Be Inflexible

How severely does it really affect you if the seller needs a rent-back or needs to close a little bit early or a little later? Will it make or break the deal for you?  Be considerate and do consider all the options.  You aren’t ‘losing’ the game because of a few annoyances but you could lose the home!

Don’t Disregard Ethical and Normal Practices

 You want your buyer’s representative to present you, the buyer, in the best light as a sophisticated and knowledgeable buyer.  This prepares the way for a smooth transaction between buyer/seller and agents. If you know your offer will be out of the ordinary for the area, have your agent call the listing agent ahead of time to explain that they understand the terms might be unusual and/or why you need the unusual terms why your offer should be accepted despite being somewhat unusual. 

Don’t Assume Your Deal is “IT”

It isn’t your property until your initial offer has been accepted, regardless of how good the offer might be.  Don’t assume you are done until such time as you are completely done with the transaction!

Don’t “Haunt” the Property

If this home/property is meant to be yours, you and your agent will make it happen.  My advice is not to ‘haunt’ the home, Open Houses, and never ‘haunt’ the listing agent. If you need to haunt anyone, haunt your own buyer’s agent~Realtor. She understands the situation and that is part of the job your buyer’s agent does for you, the buyer!

Happy Home Hunting and Have Fun!

TRUCKEE REAL ESTATE

Contingencies Your Realtor Should Always Plan For!

Bonnie Jessee, Realtor 530 412 3984

When you are about to write a contract with your Realtor, as you are planning on buying a home, the best plan is always to buy the home on the terms in the original contract. Secondarily the plan is to buy the home after renegotiating some of the terms. The final part of your ‘system’ is the contingency plan. Perhaps there is an insurmountable flaw in the condition of the home or the home doesn’t appraise for the purchase price, or your lender refuses to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than the money you’ve spent on inspections) so long as you have the appropriate contingencies in place. Learn this, contingencies equal the right to cancel the contract and walk away.  This is where having an educated Realtor representing you is imperative!

When you’re in a hot seller’s market, or there are multiple offers on a property, you might feel pressured to make an offer with no contingencies, or one with no appraisal or loan contingency. If your agent suggests this I would definitely rethink your position. It is not a wise Realtor who would be consider having no back-out plan on a purchase in the hundreds of thousands of dollars for you, their buyer client. This is unprofessional behavior to consider a purchase of this magnitude without your contingencies in place, at least until your due diligence into the condition and other considerations of the property is completed.

The results of the home inspections (don’t forget the pest inspection) will assist in your decision making process as to whether you need to cancel a home purchase. Typically properties that appear well maintained will have no deferred maintenance.  Sellers, who tend to the basic maintenance of their homes and keep things well dusted and clean, also often maintain the items that do not appear to the eye of a buyer.

In short, don’t dismiss these sorts of properties that appear to require the ‘handyman’ either. My point is that with any property looks can be deceiving.  

The best suggestion is always write your preliminary contract with the following contingencies:

1. Financing (loan contingency) 2. Inspections (home/pest) 3. Appraisal contingency

Home buying should be a serious, yet joyful experience!  Enjoy!

SELL THAT FIXER FAST~TRUCKEE, CALIFORNIA REAL ESTATE

Bonnie Jessee, Realtor 530 412 3984

Buyers typically want to purchase a home that is in move-in condition.  And because of that, sellers often invest a great deal effort into prepping their home to place on the open market to gain the largest profit from the sale. However, is it worthwhile to fix a property up before selling if it is in a poor condition?

It can be worth your time and effort to fix up a slightly needy property in an excellent location that has potential and can be improved considerably with minor “cosmetic” improvements. The reason why it makes sense to go through the effort is that most buyers do not possess the imagination therefore they cannot envision what a house might look like with minor repairs or new paint or carpets. They basically don’t see past the surface!

For example, last year I sold a fixer in Truckee to an out of town buyer. Neighbors went came out their homes the moment the for sale sign went up to view the home.  The neighbors all had the same idea – buy, fix and market! The neighbors themselves could not see past the improvements that would bring the pricing up to level with the surrounding area and no neighbors made an offer.   The property stayed on the market for just a few months before that savvy buyer appeared, checked out the location/views and ‘bones’ of the home and purchase the property. . The transformation was stunning.  Subsequent to his renovation, he re-listed the property for sale and made a tidy profit!  He had the vision; however, those buyers might be few and far between. The property sold over the asking price.

TIPS FOR THE SELLER:  There’s a tip to be gleaned from this experience that’s relevant to all sellers. Don’t let a prospective buyer look at your home until it has been prepared for sale, unless your intention is to sell as a fixer.  Give the buyers the opportunity to note this fact and you will attract the appropriate buyers.  In other words, market it as a fixer.

We have found sellers might resist the notion of calling their property for sale a fixer-upper. However, it can make good marketing sense. A portion of the market is looking for fixer properties that can be improved to increase value. Even though you might get lucky and sell that fixer house for more than you thought was possible, don’t lose sight of the fact that you’re marketing to a smaller group of buyers.

To attract a fixer buyer, make sure you provide for extensive marketing exposure. It is always a good idea to have inspections done ~ prior to listing the property for sale. Reports should be readily available to buyers to review.   If the potential buyer is fully aware of the problems associated with the ‘fixer’ property prior to the sale, it will not become an issue that may cause the sale not to occur.

So the decision is yours, as a seller, to spend the time, money and effort to repair and correct to gain top dollar for your property or promote the property as a fixer.  The decision should be made based upon several factors:

1. LOCATION       

2. AGE OF BUILDING         

3. LOCAL REAL ESTATE TRENDS     

4. PROFESSIONAL ADVICE FROM YOUR LOCAL REALTOR

Bonnie Jessee, Dickson Realty

Truckee~North Tahoe, California

Information You Need to Succeed in Your Real Estate Investment

You are ready to purchase your dream vacation home.  It could be your first or second vacation home; and you insist on making it a wise investment property. It’s a very exciting time, but it’s also a very serious time. Given that a real estate investment will be the largest purchase most of us will ever make be certain you prepare properly.

• Do I know how to get the best property at the best price?
• Do I know a Realtor® experienced and knowledgeable in the area?
• Do I know what to look for to make a wise real estate investment?
• How do I reduce home-buying aggravation and stress?
• What do I do to avoid costly home-buying mistakes?

The Buyer’s Guide was designed specifically to make you knowledgeable and to keep you focused, so that you have the advantage when purchasing real estate. Believe it or not, the mistakes that seem negligible end up costing you significantly over time. If you buy the wrong property, you won’t be happy. 

Real World Information

One of the reasons the Buyer’s Guide is effective is because of the local expertise behind it. This Buyer’s Guide focuses primarily on Truckee and also provides valuable information on locations; inspections; insurance; and the many documents you will encounter during the buying process.

So that you can read and review at your own pace, My Buyer’s Guide empowers you with real-world skills so that you know:

• What home features are most important to you
• What neighborhoods are the best suited to you and family
• How to identify hidden traps when selecting a home
• How to identify the perfect location for you now and in the future
• The keys to identifying and evaluating specific home characteristics and qualities best suited for your requirements and future sales

My Buyer’s Guide is full of information you’ll need to succeed in your next real estate transaction. And it’s compact, so you’ll be able to acquire the information you need quickly and easily.

Give me a call today or email me at bjessee@dicksonrealty.com for your copy!