Negotiating the Deal

In southern Wisconsin, as in much of the country, we are experiencing a buyer’s market. We simply have far more homes for sale than we have buyers buying.

We’ve seen housing prices fall, inventories remain high, interest rates drop to historic lows, and incentives offered to first-time home buyers to encourage them to buy.

Naturally, buyers are feeling confident when they enter into negotiations on a property. They’ve all heard stories from friends or family members that they can get properties for a steal. Play hardball, and the seller will break under the pressure. What else is he to do if he needs to sell his home?

Many buyers believe they can and should submit a lowball offer in order to secure the best deal from a seller. Here are some reasons why that’s not the best strategy:

1. Current home prices already reflect the drop in housing values. Buyers should ask their agents for a brief market analysis, showing sales and active listings for comparable properties in the area. They should also seek the sales history on the property they wish to purchase. This preparation will help them determine the appropriate price to offer for the property.

2. When presented with a lowball offer, sellers will often counter back higher than they would have if the offer was more reasonable. In a proper negotiation, both parties benefit. Anger is never good for a negotiation, so buyers are wise to remember that they are actually dealing with human beings on the other end of the transaction.

3. Price is not the only factor to consider when writing an offer. What else is the buyer asking for? Closing costs? Appliances? A home warranty? An allowance for new paint or carpeting? Is the buyer hoping to ask the seller to leave behind some of the personal property, such as the pool table, riding lawn mower, or outdoor furniture? Buyers are more likely to succeed in securing a lower price if they are not asking for more than that from the seller, AND if they bring something of value to the table: a quick closing date, pre-approved financing with a reputable lender, an amount of earnest money appropriate for the value of the property, and so forth.

4. REALLY IMPORTANT: Negotiations do not simply end with an accepted offer. Suppose the property inspections reveal that some major repairs are needed. Going back to the seller who was lowballed, to ask that he foot the bill for the repairs, may result in a lost deal. Yes, the seller will need to disclose any “defects” to future buyers that were found during the initial inspection. But that may not deter a seller from walking away from a deal that left him unhappy from the start. He may opt to make the necessary repairs and hold out for a better offer from a more reasonable buyer.

5. It often pays to be nice. Sellers are usually kind enough to provide buyers with information about the community, neighborhood, and unique workings of the property. This can be very valuable information to have – and is easy to obtain if the seller feels favorably toward the buyer. Another challenge that occurs more often than one might think: the closing gets postponed at the last minute, and now the buyers are homeless, with a truck full of belongings, and new appliances to be delivered that are already enroute. There are remedies to such situations, for which the seller may play a significant role. Power can shift in a transaction at any time.

It’s important to keep in mind that home sellers are neighbors. They are members of a community to which buyers hope to belong. Great deals can and should be negotiated where both parties walk away winners.

Don’t Ignore Décor

Make no mistake - what makes a house a home is its décor. The paint colors, flooring, lighting, window treatments, and furnishings – collectively, they transform a space, giving it character and life. A house is practical. A home is emotional. That’s why selling a home can be so challenging for a homeowner, and it’s typically how buyers decide to write an offer on a property.

So, buyers – do not spend all of your money on your mortgage. Too often, I’ve seen nice properties overshadowed by their shabby furnishings. Décor is part of the investment you make in buying property – and most of it you get to take with you. Do not underestimate what good décor will do for you when you eventually seek to sell your home.

First-time home buyers, you have a great opportunity to invest in good décor, with the help of the $8000.00 tax credit you may enjoy this year. For a great way to stretch your dollar and purchase some fantastic furniture, seek out consignment shops in your area. The furniture is gently used – often looking brand new – and is substantially less expensive than what you’ll find at new furniture stores. Also check out garage sales, flea markets, and thrift stores for unique pieces that might simply need a little clean-up, a small repair, or a fresh coat of paint to bring them back to life. You could literally save yourself thousands of dollars, while infusing your home with great character.

Current homeowners, I know times are tough and money is tight, but there’s much you can do to improve your property – for little to no cost. Decluttering every space in your home will cost you nothing – and now is the best time to tackle that. Clothes, books, movies, games, lamps, furniture, artwork, knick knacks – if you no longer use it, need it, like it, or have space for it, get rid of it. Hold a garage sale to get money for what you can, and then give away the rest. Use the money from your sale to make additional improvements to your property.

Paint is one of the most inexpensive ways to make an enormous impact on your home – whether inside or out. And the beauty of paint is that you can always redo it if you have a change of heart about the color – and you won’t break the bank. Many paint manufacturers offer tools on their websites that allow you to experiment with color, so you have an idea of how various colors will look in your own home. Click here and here for examples.

A note of caution: the color you see on your computer monitor/screen may be different from the actual paint swatch at the store. Before making the leap to purchase, collect a variety of paint swatches at the store, and then return to the website on your computer for comparison. (Make sure it’s the same computer, as computer monitors vary too.)

If you’re planning to sell your home soon, complete as many "necessary" projects as you can before listing your property for sale. Take care of any peeling paint, loose stair railings, and any other repairs. Declutter the garage, closets, and rooms; pack up family photos and collectibles so they don’t distract buyers; give walls a fresh coat of paint if you haven’t painted for many years (use neutral tones – preferably warmer tones); thoroughly clean your home, inside and out; and tend to any yard work that could add to your home’s curb appeal. Furniture a little outdated? Consider slipcovers. They’re an inexpensive way to give old furniture a new look – and you can take them with you to your new home.

The more you do to prepare your home for sale, the greater your opportunity to sell sooner than someone who didn’t.

Homeowners, if you’re waiting for inspiration to strike before choosing a project, pick up a few magazines related to home décor, organization, and landscaping. You’ll find an abundance of ideas that will help spur you into action. It’s never too late to improve your home’s décor, and it’s never too soon to get started.

Open Houses - Still Worth Consideration

Open houses are not appropriate for all properties. They’re best used for homes that will attract a broader number of buyers in a given market. Today, they are increasingly being debated for their current value and relevance. As technology offers more online photos, virtual tours, and videos to millions of buyers at any hour, actual open houses are losing their original appeal.

Many real estate agents have lost their enthusiasm for them – especially if they’re standing around in homes for two hours, without any foot traffic.

A growing number of sellers are opting out of open houses. They’re aware that home sales rarely result from open houses in most areas, and are more of an opportunity for agents to meet prospective clients – be they buyers or future sellers.

Open houses also attract curious neighbors and looky-loos, who simply want to see inside the home or collect decorating ideas.

Open houses may soon follow print advertising as a largely extinct form of effectively marketing properties. Until then, here are some reasons to continue to hold them:

For sellers: Having agents host open houses gives them the opportunity to point out features and answer questions about the property. The more people who see your property, the better – be they actual buyers, neighbors, looky-loos, or other agents. You never know when even a looky-loo encounters someone for whom they realize your home may be perfect.

For buyers: If you haven’t selected an agent to represent you yet, open houses are a great way to observe and meet a variety of agents in what should be a low-pressure environment. Open houses allow you to quickly move through many properties of different price ranges to learn what you really get for the money. Photos, virtual tours, and video can only do so much. There is no substitute for seeing a property, a neighborhood, and an entire community with your own eyes.

For agents: Depending on the location, open houses continue to be an opportunity for you to get in front of buyers in a more relaxed setting. They allow you to answer questions buyers may have about the property, or about home buying, in general. You also have the chance to ask questions – to stay on top of what buyers are seeking. Meeting neighbors and looky-loos may provide you with some unique information about the area that would be helpful in your marketing efforts. The more we can interact with the public, the better our odds for achieving success in our business.

All Agents are NOT Created Equal

It’s a common misconception that all real estate agents are the same. People assume that since we all carry the same basic licensing credentials, that we all practice real estate the same way. Of course, that’s as silly as suggesting that everyone with a driver’s license practices the same driving habits. So, how might you go about choosing a real estate agent to help you with the all-important business decision of buying or selling a home?

Here are some tips on how to find the agent who’s right for you.

1. Spend at least one day attending open houses – not necessarily to see the houses, but to meet the agents hosting the open houses. This will give you a feel for the variety of agents out there, and how they present themselves. Get a business card from agents you wish to research further online.

2. Ask friends or colleagues for the names of agents they would recommend, and research them further online.

3. Select several real estate companies located where you’re looking to buy or sell, and review the company, as well as the agents on their websites.

Typically, agents share information about themselves and/or their expertise in the “About Me” section of their website. If they haven’t written anything about themselves, or it’s riddled with misspellings and grammatical errors – move on. You want an agent who makes use of all available resources, and cares enough to pay attention to detail. Legally binding contracts and the processes of buying or selling a home are all about the details.

If an agent passes the “About Me” test, take a look at the agent’s listings next. They should also appear on the agent's website. Pay particular attention to the photos and worded description of the properties. As a consumer, you know what marketing grabs you. Photos rank #1 in importance for marketing a property. How does the agent measure up?

As you narrow down the list of agents who peak your interest, be sure to look at their company’s website. This may tell you a lot about the resources the company offers its agents, as well as its customers.

Finally, select at least three agents to interview. Before contacting them to set up appointments to meet, make a list of everything that’s important to you in an agent. This will help keep you focused as you make your final decision. Also, write up a list of questions in advance, so you’re sure to have all of your questions answered.

It may seem like a lot of preparation, but keep in mind the financial significance of what you’re looking to buy or sell.