Home search Vol. 101 Issue 10
How to find the best deals! Page 7
Negotiating the best price
Long Island
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Where to find foreclosu res Page 8
Page 6
See what Realtors see Page 7
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WHATS INSIDE How to find the best deals –Page 6 ii. Negotiating the best price- Page 4 iii. See what realtors see-Page 7 iv. Finding foreclosuresPage 8 i.
Home search
Long Island
Vol. 101 Issue 10 www.HomeSearchLongIsland.com
Negotiating the Best Price
Negotiating the Best Price It takes a keen understanding of the homebuying process to be good at negotiating. Be sure you have it down before you make any offers on homes Be sure you have the process down before you make any offers on homes. Here are tools and information the best negotiators use:
CMAs — Comparable market analyses Once you’ve found a home you want to buy, the first step in negotiation is to assess the fair value. CMAs show what similar properties in the area have sold for. Your real estate agent will have access to CMAs and can share them with you.
Generally, CMAs list houses in a particular location that are currently on the market, have sales pending, have expired from the market or have sold. It is the "sold" properties you need to look at because the list price and the offer aren’t necessarily the best indicators of what the house will sell for. There can be a big discrepancy between the two figures.
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The CMA often gives you general information about the houses being compared: number of bedrooms and baths, square footage, the listing price and the sold price. Make sure you focus on houses similar to the one you’ve selected — both in description and location. The more recent the data, the better.
Condition Once you have the CMA, drive by all of the properties listed in the sold column. Condition has a lot to do with the ultimate selling price of a house. Does the home in which you’re interested shine above or fall below those sold? Make a realistic comparison of condition, then adjust your thinking up or down according to what you see.
Extra amenities Does the house you’ve chosen have more or fewer amenities than comparable homes? Although amenities won’t affect the value as much as location or condition, they can be a factor. Be wary, though. An outdoor hot tub may have been a major motivating factor in your choice of a house, but it won’t add much to the value of the property when you resell.
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Motivation A good negotiator gathers as much information as possible on the house and the sellers. The owner’s reason for selling is at the top of the list. Does she have to sell? Want to sell? Just throwing it on the market at a high price to see if it’ll move? If your agent representing you in the transaction is a buyer’s agent, they can try to secure this information for you. If you’re working with an agent representing the seller, they typically can’t disclose this information without the seller’s consent.
Preparation Great negotiators always prepare themselves. The most important factor is your frame of mind. Never let emotions override common sense during negotiations. Set a realistic limit and stick to it. If the price isn’t to your liking or is outside your budget, walk away. In addition to your emotional frame of mind, your finances should be in order. An offer carries more weight if there are no dangling financial problems and if you’re prequalified for a mortgage.
Realism Make a realistic offer. Nothing turns a seller off more than a low-ball offer on a house that is fairly priced. Often, negotiations will stop, rarely to be revived again. An example: Mr. and Mrs. Buyer find the perfect house after looking for months. The house is listed at $155,000. Mr. and Mrs. Buyer have a CMA that shows average selling prices in the neighborhood to be $148,000 to $153,000. Ignoring the CMA, they offer $120,000. Mr. and Mrs. Seller, annoyed at the low offer, counteroffer at full selling price, $155,000. The Buyers, still wanting to steal this house, make a second offer of $125,000. The Sellers, very frustrated, don’t move from their $155,000 price. Suddenly, there is word that another offer is forthcoming from the Smiths. The Buyers up their offer to $154,000 and the Sellers accept.
A first offer in the $150,000 range (remember, the CMA showed $148,000 to $153,000) may well have been accepted by the Sellers. If this is the case, the Buyers have paid $4,000 more than necessary. THIS MAGAZINE IS INTERACTIVE
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WHERE ARE THE BEST DEALS
Where are the best deals? Have you been looking for a home recently? Have you made an offer and had numerous sellers not willing to negotiate or only come down in price slightly even in a buyer’s market? Yes it is a buyer’s market but you have to do your research to find the best deals, some sellers are more motivated than others. If you narrow your search to include only homes with motivated or distressed sellers you will get a great deal. If you like the best home in the neighborhood, you had better be willing to pay for it because every other buyer looking in that neighborhood, at that price will also want that home. Here are a few pointers to ensure you are not wasting time and help you focus on the true deals: Don’t be afraid to have a little work done, the price of updating a home is just a fraction of what the finished product will cost. Homes that need paint, flooring, carpets, landscaping etc, tend to stay on the market longer. Most buyers want to move right in, take advantage of this and make a low offer. Look for homes that have been on the market for a long time, sellers get discouraged after 8 months or so. You may not have that information but your Realtor does, or log on to www.HomeSearchLongIsland.com and sign up for a free home finder account which tells you this information. Keep in mind that a home may have been listed with another company and expired; your Realtor can check public records for that information.
Look for listings that are about to expire, listing agents may be motivated to urge the seller to negotiate if the agents commission is at jeopardy. Bank owned homes tend to already be priced low. The banks are not very negotiable beyond that price. Be prepared to do some work since most of these homes have been abandoned or ransacked in some way. Be careful, most lenders require the utilities to be in working order and must be tested by the appraiser, and REO properties are winterized and the utilities are shut off. Short sales are always a great way to get a good deal. Be prepared to wait at least 30-45 days to find out if the lender will take your offer, during this time the offers will still be taken, so be sure to offer a reasonable price and don’t be prepared to lose the home to another buyer if your offer is too low. A rule of thumb is to offer anywhere between 85-90% of market value. The bank is usually owed well over the market value.
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FINDING FORECLOSURES
The days of going to town hall to look up Lis Pendens are over. With today’s technology, distressed properties are available on the web or through companies who sell these lists. This access to information has created a buying frenzy through out the nation with investors, and even end users. Jus t because the home is in foreclosure does not mean it is run down, or in need of serious repairs. The only problem is, not all homes in foreclosure are for sale! It is a full time job working these lists and finding the homeowners who are willing or able to sell. Do you really see yourself going door to door? If so you may find a great deal, or you can leave the dirty work up to a Realtor who specializes in distressed properties. There are many types of deals out there:
Shortsales: These are homes that are usually in foreclosure but the owner owes more than the home is worth. Therefore, the lender must accept a lower amount then what is owed: Bank owned or REO: These homes are already owned by the lender and usually priced to sell! Auctions: These properties are being sold by the lender at public auction. Check local listings for these events.
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