How much should you negotiate on your home?

This may seem initially vague,  but that answer will be different for everyone. Four factors play a major part in the ultimate selling price of your home, and those four factors together will determine the negotiating guidelines that are right for you.

• what is the market value is on your home

• how much is your home listed for

• how much structural or cosmetic work is needed

• how badly you want to sell.

1. What is the market value of your home? If your home's value is estimated from your Realtor  to be at  $600,000, for example, and you have an offer on the table that is substantially less, there may not be any room to negotiate, or any need to , for that matter. If your offer comes in at $620,000 for example, you may just want to accept it right then and there, or just try for a little more. (It never hurts!)

2. How much is your home listed for? Let's say that your home that is valued at $600,000 is actually listed for $650,000, because you wanted to leave room for negotiations. If someone came in with an offer under $600,000 does it mean that they are trying to lowball you? Absolutely not. They just want to get you to accept an offer on your home that is much more in line with market value.  Optimally, you should never put in "negotiating room" on your asking price. Your home  will end up  being labeled as overpriced, and you will not be able to compete properly with the homes in your expanded price range.  Buyers buy on emotion. If they really want your home, they will pay your price, as long as its within market reason, and they have the financial wherewithal to buy it.

3. Does your home need any structural repairs or obvious cosmetic updates? If a repair costs $2,500, subconsciously most buyers will end up doubling that and reduce their offering price by the doubled amount. It might fare better that you acknowledge that the home needs some structural or cosmetic repairs, and state clearly that you have already accounted for that in the price, do you don't get hit in the wallet  twice for one repair.

4. How badly do you want to sell? If you are not getting a lot of offers, or getting very few, that saying "A bird in the hand is worth two in the bush", is much more relevant to you. Just for one quick example, think about each monthly mortgage payment you make, and how much it costs you to maintain your home while it is on the market. If you are sure that the risk of not selling is less than the perceived financial loss of selling, then hang on and wait for another buyer.  But remember to look at your actual bottom line- that is your net proceeds after your expenses.

If the bottom line in your mind is that you won't selll for a dime less than $600,000, your mortgage is $4,000 per month and you have already waited four months to get an offer of $585,000, you have actually spent $16,000 to get to that point (four months worth of mortgage) for a net of $584,000.  If you end up waiting yet another four months and settle for $595,000, you have spent $32,000 to get to that point.
That $595,000 is worth less than the $585,000 just 120 days ago. So it is important to look at your actual net, after you take into account all of your expenses.

But truly, the answer to how much you should negotiate falls squarely on your shoulders, taking into account  these four items, and it is your decision. Let no one talk you into or out of anything. What is best is that you have someone experienced (like me!) give you the best advice  possible. Contact me anytime. I am ready to assist you with all of your real estate needs.

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Why a Home's Market Time is Crucial for BOTH Buyers and Sellers

Short and simple. Market time usually translates into money saved or money lost, depending on which side of the transaction you are on. It can also give you a clue to urgency.

The definition of "Market Time" (MT) or "Days on Market" (DOM)  is the length of time that a home is available for sale or the amount of time a particular home takes to sell, and is measured in days.

Market time is always on Realtor's listings, however some Realtors opt to remove that field from the public handout they give to buyers. You can find it on most any MLS sheet by looking for "MT" or "DOM", but only if it has not been removed from your data sheet. The one small glitch is that if you do see it on your MLS handout (if you can find it) is that the market time that is listed is only for that listing. If the home was on the market previously, you won't see an accumulated market time for that home, which is very important.

Some Realtors will cancel a listing, and put it back on the market immediately to hopefully attract buyers. It is against our MLS regulations, but agents do it anyway. The market time would not be accurate in that instance. Then again, some homeowners switch Realtors after their home failed to sell. That listing would come up as "new", and with a short market time which would also not be accurate.

Realtor.com shows Market Time  information on listings as "Days on Site", which can be a few days off, but you still get the general idea. Zillow also shows this figure as "On Zillow" which is also approximate, and "Yahoo Real Estate" shows you the listing date, but none of these sites accumulate market time for prior listings on the same property. Your Realtor must do the research on this. Incidentally, you won't find Market Time information at all on Trulia.

The Money Factor and The Bottom Line:

The newer the listing, the less likely it is that the seller will negotiate on price and/or terms. Remember to have your agent perform a Property Listing History report so that the information on DOM or MT is accurate. The longer the home has been listed for sale, the more probability there is for increased negotiations. Sellers- this is one VERY good reason to price your home properly right from the start!
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Sellers: Don't dismiss that lowball offer just yet.

Don't get discouraged if you just received a "lowball" offer on your home.  Always try and maintain a postive attitude, even when your home isn't getting shown as much as you would like, and those very low offers come in. Although you might be angry or disappointed at what an initial offer comes in at, remember, it's just an initial offer. Everyone has different negotiating styles, and they may not mirror yours.

I certainly know how frustrating and disappointing it can be to finally receive an offer, and then to realize it is far below what you would even consider. Sometimes, an offer can come in so low that you might be angry that the buyers had even put it in writing, and wonder how they even had the nerve to submit such an offer. Then you might think, why would my agent even tell me about this offer? I

There are a few things that you should know, and think about if and when you receive  one of those lowball offers

1. That buyer really likes your house-even if they submitted a lowball offer. They took the time to write up a bid, sign paperwork, disclosures, get a pre-approved, AND write a check for an initial deposit. Would you do that if you really didn't want to buy a home?.... I think not- so try and hold back the emotions,  it's just their negotiating style.

2. Your agent must inform you of all offers, period, no matter what they are. They should never force you to accept an offer, but they absolutely must tell you about any offer that comes in, verbal or written- so don't shoot the messenger.

3. Some buyers just need to "try" and submit a low offer for their own peace of mind. It has nothing to do with your home, and it's not intended to be an affront to you. In the buyer's mind, they can say to themselves, "Well, I tried, and I wanted to see what they would say. A response from you, no matter how bg or small, is all they need to go forward, and to negotiate further. You may be surprised how many lowball offers can turn into a negotiated deal, as long as it's handled well. So don't give up before the ink is dry on that initial offer.

4. The buyer may have a list price to sales price percentage in their head, and they figure that if they start the bidding at a particular number, they will fall right in line with those averages. For example, the average sales price to list price ratio hovers around 94 to 95 percent of the list price.So some buyers want to come in at 90 percent or less of the asking price just to make sure that they don't exceed that "average" number. It's not a smart idea on the buyers part to negotiate that way, as some homes are overpriced by a significant amount, and even 90 percent of the asking price is way too much to purchase the home for, but they still do it. (Buyers, if you are reading this article, take a look at the article that discusses the importance of a market analysis when you are purchasing your home.)

5. And yes, there are those lowballs that won't go anywhere. Still, it is very important that you treat EVERY offer like it's going to result in a sale. Maintain a good attitude, and don't "get your back up" .

Right now, we are NOT in a sellers market, and if you have an offer on your home, your agent should "work that offer" to get it to be the very best deal that they can get for you. THEN decide whether or not you want to accept it.

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Should you buy that less than perfect house?

The answer to that question has to, and will be different for everyone. If your opinion of less than perfect means that you don't particularly care for the landscaping, that's one thing. If it means that the house is missing one room for your needs, that's another. So how do you decide if this "less than perfect" house is the right one for you?

First of all, do not let ANYONE, including a spouse, significant other, friend, family member, (or heaven forbid) your agent talk you into purchasing something that you do not want, or are not quite sure that you want.

What are your wants and needs for your new home? Are they realistic within your price range?

When I meet new buyer clients for the first time, I sit down with them and ask them a number of questions to ascertain what is important and what is not so important. I also want to find out what is an absolute "NO",  no matter what. Sometimes, it's hard for a buyer to figure out what is truly important, what they can live with and what would be unacceptable.

A little give and take depending on the importance of whatever criteria you have can be crucial to  finding a great house.  Let's look at a few examples:

You want a remodeled kitchen.

Well, that's fair enough. It can be a major disruption to remodel a kitchen, and that's not even taking the cost into account. Have you looked at the kitchen closely? If the cabinets are in good shape and the color of those cabinets is acceptable, what about changing the hardware and/or changing the countertop? The cost of that can surely be negotiated with the seller (although we wouldn't necessarily tell them that)

You do not want a  house on a main road.

Reasonable, too. By the way, what is your definition of a main road? A road divided by "double yellow lines", one that has a State Route number attached to it, one that has commercial development down the street, or maybe something that doesn't fit into any of those categories? Well, okay... you can't change a location. But if the house sits far back enough, would that make a difference to you? If it doesn't, then don't bother looking at homes on main roads, and make sure that your agent knows your personal definition of a main road.

The walls need painting, the carpet needs replacing, the floors need refinishing, or other  minor cosmetics.

Some buyers just don't want to be bothered with doinf any cosmetic work at all. And that's fine too.
If you knew that a home had everything else that you wanted, but needed the floors refinished in a few rooms, would you still say no to it?  What if the cosmetic work was completed prior to closing with the contractor of your choice ? Would that make a difference?

The house has everything you want, except it has a pool and you don't want one.

Also reasonable. Let me ask you this-  If the pool wasn't there, would you want to buy that house? If so, we can always ask the sellers to remove it. Simple as that. And, yes,  sellers have done it.

What I am trying to get at is that sometimes we want certain things that may not seem so obviously attainable if we don't ask, or try and figure out an easy solution that you can live with.

Certain things can't be solved to your satisfaction. But lots of other things can. Sometimes it takes imagination, but one thing is  for certain. If the house is that close to what you want, there must be a way to make it work. A great agent can make it happen, and I just happen to know someone! You can send me an email and we'll get started anytime you like.
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I want that house! How many offers has it had?

There are many reasons you might want to find out how many offers a home has had if you are interested in placing a bid, and many reasons why an agent won't tell you. That doesn't mean that you shouldn't ask, or that you won't find out. If you are interested in a home, probably the most relevant question to ask is, "Are there any offers on the home right now?"

Bear in mind that the listing agent has no fiduciary duty to you, or your agent, and doesn't have to tell you if there are currently any offers on the house. In fact, it's the sellers choice. A seller doesn't even have to tell you that another bid came in while you are negotiating your offer. That seller can accept another bid right under your nose and not give you an opportunity to revise your offer, and that is perfectly acceptable. (not to you of course, but there are no laws against it.

Reasons to ask about previous offers:

If the home has been on the market for a short time, and you feel strongly that it's a good deal and would like to make a bid, its a good idea to find out if there have been offers already that were rejected, so you can place your bid accordingly.

If the home has been on the market for a while, and it seems reasonably priced, you might also want to find out if there was any offers on it. Could it be that the sellers are pretty much non-negotiable? hard to deal with? are there problems with the house? or has it been reduced from a higher price to fair market and it just appears that there may be a problem?

If there were offers that fell apart after the building inspection, what was the issues(s) and were  they rectified?

If you can find out the price and/or terms of the offer(s), you will already know what the seller will accept, and it may be less than you were willing to pay.

... and reasons why you may not find out if there were any bids:

Once word gets out about what an accepted offer was, that seller may not get that price again. (see this prior post on keeping quiet about the sales price)

If the home has had a number of offers and is new to the market, you might take either of two ways, and the listing agent has no way of knowing which- 1) you may want to just bow out because you don't want to get in a bidding war, or 2) you may think that the seller is unreasonable and won't negotiate at all. Let's remember that the seller may not want to get in a bidding war, either.

If the home has had a number of offers and has been on the market for a while, the agent may not want to tell you because it may look like the seller is hard to deal with, even if its not the case.

There is some differing opinions on whether or not it should be disclosed that there were building inspection issues that caused a deal to fall apart whether you SHOULD know what they were, and if they were addressed.  Have your agent look into this as much as possible, and delicately extract whatever information they can from the listing agent.

...or, there may not have  been any offers on the house.

It's definitely worth the effort to try and get as much information as you can prior to placing a bid on any property. Always do your best to try and obtain whatever background you can,  and have your agent delve into the property and listing  history. They really should do this without you having to ask. I know that  I always get whatever helpful information that I can for my buyer clients. When you are ready to become one, contact me.  I take pride in my profession and exemplary service.

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