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.

Should you "Pool" your Resources?

For many southern communities throughout the country, a swimming pool in the backyard makes sense. The pool and all its trimmings can be enjoyed year-round. And, in some neighborhoods, it can be difficult to sell a home without one. But travel further north and people begin to ponder the wisdom of adding swimming pools or spas/hot tubs to their properties. Are they a wise investment in colder climates? Well, ask yourself a few questions – and be honest:

1. How many days per week will your pool or spa actually be used?
2. How many months of the year will your pool or spa be eligible for use?
3. Will the benefits of the pool or spa outweigh the time and financial cost of maintenance, added insurance, and safety measures that may be required, such as a gated fence?
4. How much of your yard will be consumed by the pool or spa?
5. How long do you plan to live in your home?
6. How important will it be for you to sell your home quickly when the time comes?

A swimming pool on a property can be a strong deterrent for buyers in Wisconsin, as most do not want to deal with the time and costs associated with maintenance. This is because we have too few months when we can actually enjoy it. And if we get a cold or rainy summer, that narrows the enjoyment window even further, but does not diminish the maintenance window.

Still, if you know you’re going to be in your home for at least 7-10 years, and/or swimming is an important part of your life, then go for it. Be aware of the challenges you might face when you wish to sell, but you should feel comfortable making your home what you want and need it to be.

If much of your yard would be consumed by a pool, then consider installing an above-ground pool, as opposed to an in-ground pool. That way, when you prepare to sell your property, you can even offer buyers the option of removing the pool, if they wish.

Spas are far less of a deterrent for buyers in Wisconsin for this very reason – they can be removed fairly easily. They can also be used throughout much of the year – whether kept inside or out. Safety is of little concern, since many come complete with a cover to keep curious little children out. Plus, they serve the added purpose of easing the ache of sore muscles – which can certainly occur year-round.

If you decide to take the plunge, do plenty of research online first. There is such a variety of styles and amenities available when it comes to pools and spas. Set your budget and stick to it, and, as always, have a plan. Now is the time to dive in if you hope to be splashing around your own backyard this summer. Enjoy!

Backyard Bliss

Here, in Wisconsin, we’ve got colder temperatures for at least 6 months of the year – and I do mean cold. So, when the weather finally warms up, we like to spend as much time outdoors as possible – working, relaxing, entertaining, playing. And that’s why outdoor living space is just as important in colder climates as it is in warmer climates. We pack a whole year’s worth of enjoyment into a handful of fleeting months. And with the current state of our economy, it makes good fiscal sense to invest some vacation money quite literally in our own backyards.

So what does that mean – “outdoor living space?” Well, what began as a simple deck or patio, is taken a bit further. Main living areas that you find inside your home – such as a kitchen, dining area, and living room - are given their own distinct spaces outside. Just as you use design and décor to create a certain ambiance in your home, extend that sense of comfort, beauty, and utility, to your backyard. You’re not just a home owner, you’re a property owner – and that includes your backyard. It, too, is part of your investment, and becomes all the more valuable when you add value to it.

Outdoor living spaces can be simple or elaborate, small or grand, sophisticated or casual. One thing they should never be is boring. With so many options for decks, patios, plants, fencing, privacy screens, pergolas, arbors, gazebos, furnishings, lighting, and more, your backyard can be transformed from boring to blissful.

Now, whenever you consider a home improvement project, keep in mind the range of property values within your neighborhood. You may have elaborate plans, but a modest neighborhood may not allow you to see big returns on your investment when you eventually prepare to sell. If you have questions or concerns about over-improving your property, consult with an experienced real estate agent. We can give you an idea of your property’s current market value, both with and without your planned improvements.

And remember, you don’t have to complete every project for your backyard dreamscape this year. Create your overall plan and take steps to achieve it, one mini-project at a time.

Curb Appeal is Real

You know them when you see them. Driving around any neighborhood, there’s always at least one property that stands out from the others. Perfect lawn, great landscaping, fantastic looking home… You wonder if the inside looks as amazing as the outside. Well, sometimes it does and sometimes it doesn’t, but the point is that you’re curious about the inside because of the outside. And that could help you attract buyers, when it comes time to sell your home.

So, it’s not just a gimmick. Curb appeal is real. HGTV introduced us to the concept years ago, but people seem slow to catch on. Perhaps we’re too busy to achieve all of our property enhancement goals. Or perhaps we’re intimidated by trying to wrestle Mother Nature in full view of our neighbors. Money is often a factor, but it needn’t be. Much improvement can be made with little financial investment.

As with any home improvement project, it’s best to have a plan. But first, begin by writing down general ideas about how you want your property to appear from the outside.

Would you like to see more lighting?
More flowers, but fewer bushes?
Or different bushes – fewer evergreens?
Do you envision trees in your yard?
Does the exterior of your home need painting?
Perhaps some shutters or flower boxes to add some charm?
What about the front entrance? How can it be more inviting?
New door, new hardware, new lighting, mailbox, or address numbers?
How could you liven up the front walkway?
How does the garage door look?
Could your driveway use some work?

Sure, your list could grow to be very long, but that’s okay. Just pace yourself. You don’t have to do everything at once, and not all of your projects will cost you money.

Pruning trees, trimming bushes, pulling weeds, edging lawns, cleaning up plant beds, raking up remaining leaves – yard clean-up can be a workout, but it’s free and it makes a big difference. If you’re looking to create new plant beds or enhance the ones you have, most communities offer free mulch/wood chips to anyone willing to haul them away. Check with your community’s Public Works Department to see if and when this is available where you live. And check with your community’s sanitation department to see when they will haul away yard waste in your neighborhood. Communities typically offer this service twice a year – in spring and fall.

I always say it’s best to know your limitations. Don’t take on major projects without seeking advice or help from an experienced friend or professional. And don’t start many projects at once, or you could quickly become overwhelmed and lose your enthusiasm. If you don’t have a green thumb, ask your local greenhouse about plants, flowers, and bushes that would be best for your skill set, as well as your yard’s conditions. Is yours a sunny yard, or is there lots of shade? Sandy soil, or is it more like clay?

Also, seek out landscaping elements other than plants, such as wood, brick, stone, or decorative concrete. Pergolas, arbors, gates, and fencing can be beautiful additions to your yard. Landscaping is not just about plants.

If instant gratification is what you need to keep you motivated, you’re in good company. Here are many improvements you can complete in just one day.

So go ahead, get started, and give everyone something to slow down and admire as they drive past your home.

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.

To Buy or Not to Buy

It’s not complicated. If you have employment, good credit, money saved, and a desire to own a home, the stars have aligned to make this the best moment to buy – particularly if you’re a first-time home buyer. Interest rates are at historic lows, home prices have fallen – so you’ll get more for your money, and there continue to be a wide variety of homes for sale.

Plus, the new stimulus plan provides a tax credit of up to $8000.00 for first-time home buyers - or those who haven’t owned a home in the last 3 years. Yes, you’re actually being offered money to buy a home NOW. This tax credit is only good for purchases of primary residences made between January 1, 2009, and December 1, 2009. So, the clock is ticking.

For a quick breakdown of the tax credit, click here. For more thorough information, click here.

Now then, if all you have is the desire to own a home, but you don’t have any money saved for a down payment, and you’re not sure what your credit looks like – or even if you know it’s poor – desire is still a very valid place to start.

Seek mortgage loan officer recommendations from people you trust, and then give them a call. See if they take the time to answer your initial questions, or if they just try to hurry you along. Of course, if you leave a message, and your call is not returned in a timely fashion, move on to someone else. The last thing you want is someone who is unavailable when you’re in the process of buying a home.

Once you decide on a loan officer, set up a time to meet in person, if possible. At that time, have a detailed conversation about what you need to do, financially, to meet your goal of home ownership. Leave the meeting with a clear plan of action.

It is more difficult to buy a home now than it was just a few years ago. Borrowers have to jump through higher hoops – but that’s a good thing. The improved measures for lending money are actually there to protect you, as well as the lender, investors, and the general public. After all, we’re still trying to swallow the multi-dimensional pill that caused the current housing crisis.

You may miss the boat for the tax credit, interest rates may increase, and fewer homes may be on the market when you’re ready to buy, but such is life. Buy when you’re ready to buy – when the stars align in your life, and it makes good sense to do so. Forget the Joneses. They’re presently facing foreclosure.

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.