Seven Times? Can you be serious?

I have been working with a couple for the last 4 months. They are sweet and happy and ready to find a home and move out of their small condo. They are not limited to a certain town, as their are no children and school district is not a concern to them. I have showed them about 5 homes per week, during the last few months. That's a lot of houses! Oh yeah, I forgot to mention, I have put in seven offers, which have all fell through by means of becoming out bid or by other circumstances.

I can only imagine how frustrated they must be. I am lucky that they have decided to stick it out with me, in hopes of finding the right place for them eventually. I believe that everything happens for a reason, but this is getting ridiculous!

I have heard the horror stories, from other Agents, along similar lines. What my Client's can't believe is how the market is responding to them. In the media, its a buyers market, but at the same time, the mortgage industry has made it much harder to qualify for mortgages. My Client's interpret that as lots of homes and limited Buyers...........not so much, at least in my area.

My Clients have been outbid in at least 3 of the offers. They have been left out to dry on the homes owned by banks. It is not unusual for an offer to sit for 6 months on the door of an REO, or bank owned home. I believe that this kind of time line is ridiculous and it is not the way to sell a home. The Buyer's get frustrated and end up pulling their offer out, only to move onto another one, which is what my Buyer did. But they haven't exactly found their next one. Well, the did find 6, but the market has been competitive, despite what the media is telling everyone. It is a different kind of competition than it was four to six years ago. Folks are not competing for the junkers, the fixer uppers and the ones that need work. These are the ones with INSTANT EQUITY, where a Buyer can come in, revamp it and sell it later on for profit.

Basketball Hoops Bring Down the House Value

I was raised on Long Island, on the "Gold Coast", which was peppered with old money real estate that stretched from Manhattan to the Hamptons. A playground for the rich and famous surrounded affluent but "normal" communities that make up the majority of the Island. Of course, "normal" is subjective. A started home (A.K.A. Dump) runs around 300k and the bedrooms are usually so small, you can't fit a king size bed. I know this as my Brother is currently trying to get into the market with one of these "starter homes".

Anyway, My Dad, who was very concerned with Aesthetics, never let us have a basketball hoop. We would ask for one and he would always respond "it brings down the value of the home". We must have heard this line 50 times. We never had the hoop, so our home's value must have been through the roof!

It wasn't until later that I began to realize that my Dad's own little words of wisdom weren't often scientifically based. I wonder what my Dad would think of the "homemade basketball hoop" in this picture above? It's purpose is to be a hoop, although it made up of nothing more than a milk crate nailed to a tree.

I suppose if this type of hoop was on the "Gold Coast", then it may very well bring down his house value. But it wasn't there, it was in a low income area and may very well be boosting the homes value in the area. You know? Hoop implies recreation which may in turn implie children which implies fewer drive bys...............

Misinterpreted House

This week I experienced the art of communication, or should I say misinterpretation? I have been working with a Client for a few months now and we have had two offers in on two different homes. The first home was a short sale and Their offer was in for 4 weeks and still no answer from the bank. This was frustrating the heck out of my Client and rightfully so! I shared in the annoyance of having to work within a banks time frame-slow! They ended up withdrawing the contract and we moved on to another home.

This next home was grand. It was a bank owned home that was huge and the price was great. We put out offer in and a few days later, the listing Agent asked if my Client would fork over a non refundable 5k deposit (the bank was asking all buyers who had submitted offers that week, there were multiple). My Client agreed and stated that he could get the check in a few days. In turn, he interpreted this request as "your offer was accepted" (which it was not.)


I hadn't spoken those words or indicated that this was the case. I thought we were fine. A week went by and I got an email from the other agent stating that another offer has come in for the house and the bank would be decided today. I forwarded the info to my Buyer whom immediately called me.
"What does this mean"
"There is another offer on the house and the bank will decide today" I say
"Another offer? Why are we getting the check then?"
"The bank has requested deposits in the amt of 5k from all the Buyers....." then it hits me. The Buyer has interpreted the request for $5k as an acceptance of the contract.

Contract in CT need to be in writing to be valid and true. If the bank, or any Seller, accepts an offer, they need to sign the contract. This way when both parties have signed the contract which becomes a legally binding agreement.

We didn't have a signed contract from the bank or even the words "the bank has accepted their offer".

I had to reiterate that we still didn't have word from the bank yet and we would be hearing from the Bank that day. Frustrated and annoyed, the Buyer hung up the phone in what I can only assume was a long day of waiting and anxiety.

I ended up getting the word around 8pm that same night. "The Bank went with a higher offer" the Agent told me. I sent a quick email out stating the info in writing, then I paced. I walked back and from the kitchen thinking about how I was going to phrase it to the Buyer. He had been waiting all day for news that he thought he already had. I phoned him and cringed. I made nervous faces in the reflection of my microwave.

"hello"

"Hi, I heard from the Agent, they ended up going with a higher offer". There I said it. It was hard but I just had to delicately spit it out (is that possible?). He was disappointed and I told him that I was sorry since I new he really wanted it. He didn't express any hard feelings.

I reflected over the past week and wondered how I didn't pick up on his misinterpretation? I have come up with a few thoughts and ended up talking with some co-workers about it. Sometimes its best to be ridiculously clear about any information. Spell it out for folks and don't assume that they know what is going on. Get their point of view on things to find out where they are coming from and what they believe is happening. I think it feels silly to have to ask these basic ideas but its worth it in the end. Will this Buyer work with me again? Not sure since it's only been a few days. But I hope so.

What if I Owe Less Than My Mortgage?

I got a Buyer's lead from my Broker about a condo the other day. It was a women who was interested in downsizing from her house to a condo. She was asking some questions about the property which I promptly answered after looking up the listing on the MLS.

When I asked her if she wanted to see the condo, she told me that she wasn't sure yet, since she didn't really know what she would be doing with her current home. She informed me that she would consider selling it, if she could cover her mortgage. I asked her if she was behind in payments, she told me "no". She ended up asking me "What happens if the house is valued at 180k and I owe 200K Do I have to pay that back?"

I tole her that if that situation was true, then she would have to pay the mortgage company back the 20k at the time that the property conveys. If she was behind in her mortgage payments, then she would qualify for a short sale. We would then negotiate with the bank to get them to take less than what is owed. The downside of this option is that she would no be able to qualify for a mortgage for at least 3.5 years.

What to do in this situation is a popular discussion topic of today. According to Suze Orman and Clark Howard (amongst other financial Gurus of today), stay in your home and ride it out if you can. Don't create a bad credit situation unless you ultimately can't avoid it.

A Few Things Before Selling a Home

There are a few things that a Seller can do to act as a "quick fix" to making their home look presentable. First things is, get rid of clutter and all personal items. As a Buyer, I personally can get distracted and side tracked by too much of this stuff. I will often find myself looking at the family photos instead of the water damage in the corner of the room that is hidden by an overstuffed arm chair with great upholstery. Personal items or too much furniture can make a room feel too busy or stuffed. This leads the Buyer to conclude that the room is too small and they ended up not being able to picture their own furniture in the space. So box up some of that stuff and don't bring it out until you have moved into your new place.

Painting is also another inexpensive way to give your home a face lift. Take a look at your walls. When is the last time that they have seen a paint brush? Are their smoke stains from burning too many candles? Do you have soot trailers from forced hot air heat? Clean it up and paint it. It makes the room feel as if it was "re done" in a Buyers mind and they won't have to do it when they move in.

Remove any old or offensive carpeting. Do you have orange shag? Cat smell in the carpet? Rip that puppy up, tack strips too. You might be surprised to find that you have hardwoods under them. Buyers LOVE this, plus wood floors are hypo allergenic, since they don't hold onto allergens. Don't have hardwoods? Put down some inexpensive neutral Berber for a clean, updated feel.

Overgrown shrubs in the front of a home can mask windows and entry ways. Trim those bushes to give the outside appearance a tidy looks. Bushes that are large and in front of a window can darken a room on the inside. Aesthetically trim those bushes and watch the offers come in.

Lastly, if you are stumped on what your house needs, invite a neutral third party in to give you their honest opinion. Make it a delivery guy, a friend who loves to dish "reality checks" or the mailman. It doesn't matter. Ask them to identify the top 5 things that stand out to them as offensive. It will be painful to hear, but your Buyers will be seeing what they see and end up not making good offers because of it.

Garbage, Cat Urine and the Low Offer

I had a short sale listing last year. The owners, who were filing bankruptcy, had some issues with pricing. It was 2800 sq feet, on a busy road and in an ok area. They had taken all the equity out of their home 5 years ago, did a major renovation and couldn't pay the monthly note. They owed almost 400k on it, but with a short sale, it is negotiated with the bank for less than what they own. I worked with the husband on the listing, as his wife had moved out west. The Seller stated that he felt my list price of 250k was adequate. I felt it was a good price to start out with after running comps in the area. His wife felt otherwise. She wanted me to list the house in the 300's, which I did, knowing that the number of house showings would not support a house of this cost.

The house was on the market for approximately 5 months before it generated some serious interest. I had worked hard for 5 months, carefully getting the sellers to agree to drop the price little by little. In a short sale, time is of the essence, and we don't have time to dilly dally with the price point.

There was also the condition of the home. The Sellers had moved out and left a ton of stuff behind. When it was finally at the price which warranted many showings, the Agent's feedback was all the same…."The place is a mess", "garbage is left everywhere" etc. I sighed, and shook my head. The Sellers had taken such a long time getting to the right price; they failed to mention that they moved out but left most of their junk. The house is an hour away from me, so I haven't been since they moved out. I had only the Agent's words to go by. I thought about paying for garbage removal, but with the lost time due to the pricing, I wasn't confident that it wouldn't get foreclosed on.

We ended up getting our offer a week after we dropped the price to somewhere that was appropriate. Only problem was that the offer was considerable less than asking price. We have forwarded it to the bank and are presently awaiting their answer.

A Big Price

I am always being asked my opinion on the market. So much that in fact, I know I have blogged on it before. If I honestly knew what was happening in the market, I would be rich. This blog would be funded by countless advertisers and I would be sitting pretty in my huge home complete with staff.

Ha! As I am sure you know, the market it flooded by homes short sales and REO's. This has created a wonderful opportunity for investors and first time home buyers, if they can qualify that is. There are a number of investors out there that can buy a home with cash or hard money. There are also some first timers rolling around, but qualifying is even harder than it was 2 months ago.

New construction homes are even coming chock full of added bonuses just so the builder can get them off their hands since they have carrying costs too. I am frequently asked "what should I offer" when a Client is thinking about putting in an offer on the home. I tell them that I cannot tell them what to offer, as it is a personal decision. They should know what their limits are and work from that. A client, who had recently seen a 650k home, asked me what to offer. It had been on the market for 2 years and had already come down in price by 200k. It was new construction and the Seller had been trying to ride the coat tails of a trailing market and had never priced it right. I informed My Client that he needed to know what his limits were. What did he qualify for?

At the present time, homes are being priced more realistically than ever. The right price is what sells a home. It used to be location, location, location…now its price, price, and price.