Category: Writing an Offer

Sharing a Terrific Article on 4 Ways a Buyer Can Compete In Today’s Market By Dian Hymer

Hello Blog Readers.  Sabrina here –  had to share this right away.  I’ve been meaning to write my own blog update about our local real estate market when I can came across this article.  Please enjoy – Dian is spot on for the SF Peninsula Real Estate market.

Enjoy, Sabrina

 

4 Ways Buyers Can Compete In Today’s Market

Don’t be intimidated by all-cash offers

By Dian Hymer

Inventories of homes for sale are dropping in areas where they’ve recently been high like in Oakland, Calif., Phoenix and Miami. Interest rates are approximately 0.75 percent lower than they were a year ago. It seems like a good time to get off the fence and into the action if you can find a house that reasonably matches your wish list and you don’t find yourself bucking other buyers who have the same idea.

Months’ supply of inventory is an estimate of how long it would take to sell all of the homes in a given market at the current sales pace. A six-month supply of unsold inventory is thought to represent a balanced market.

In California, there was a 4.2-month supply of inventory in April 2012, down from 5.6 months a year ago. When buyer demand increases, the unsold inventory drops, and multiple offers often enter the picture — sometimes in a big way.

In the hills above Berkeley, Calif., buyers are chasing too few homes for sale. But not all homes are coveted. The best homes that are priced right for the market are drawing attention. The multiple-offer activity can be fierce. Recently, a home that was perhaps underpriced for the market was bid up significantly with 17 offers. Four of the top offers included no contingencies.

The first step to successfully compete in a sizzling market is to know the inventory. Pricing low to generate multiple offers is a strategy commonly used in a low-inventory, high-demand market. You need to be familiar with how much listings in your area are selling for in order to determine if a listing is priced at, above or below market value.

HOUSE HUNTING TIP: You might have only one opportunity to grab the sellers’ attention, which means that your first offer may need to be your best. You need to feel confident that the price you’re offering — particularly if it’s significantly over the list price — is reasonable in terms of your long-term housing needs and in light of the fact that the current uptick in many segments of the market may not be a sustained recovery.

Before writing an offer, find out how many offers the agent anticipates. If you can barely afford the asking price and there are seven offers, you might reconsider and wait for an opportunity that will allow you to move up in price, if necessary.

It’s hard to compete with an all-cash offer if you need to qualify for a mortgage. Make sure to get preapproved for the financing you need. Some sellers will accept an offer with a loan contingency from a well-qualified buyer over a cash offer if the price is higher. A large cash down payment makes your offer more attractive.

Make the cleanest offer you can without taking on too much risk. Offers made contingent on the sale of the buyers’ home have little chance of being accepted. In the example above, four buyers were willing to make offers without any contingencies. That’s as clean as it gets.

In this case, the buyers preinspected the property. In 2005 and 2006, buyers waived inspection contingencies to compete. Sometime negative consequences such as drainage or foundation problems were discovered after closing.

But if you’re willing to pay to inspect a home before the sellers have accepted your offer, you can gain the information about the property’s condition before moving forward. Be sure to ask for the sellers’ permission before preinspecting their home.

It’s always a good idea to find out as much as possible about the sellers’ situation. This may allow you to offer a perk that could swing the deal your way. Recently, buyers of a Piedmont, Calif., home offered the seller 30 days to rent back at no cost.

THE CLOSING: This clinched the deal.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

I read this article at:  http://lowes.inman.com/newsletter/2012/06/13/news/190914

Got Questions? – The Caton Team is here to help.  Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Offer Subject to Inspection – What Does That Mean?

As a Realtor I have a whole dictionary for just real estate jargon.  One of the most confusing terms, and often buyers will get the wrong idea about their agent, is “offer subject to inspection.”  So allow me a moment to explain what on earth this means.

“Offer subject to inspection” is a typical hurdle for buyers to overcome when shopping for homes that are tenant occupied.  The term means – the buyer can physically go in and SEE the home AFTER an offer is accepted.  Sounds a little backwards right?

And no – your agent is NOT trying to strong arm you and force you to buy a home without evening seeing it!

Generally this clause is for homes which are tenant occupied.  In order to preserve the rights of the tenant to have the quite enjoyment of their home – the tenant has the right to refuse prospective buyers to come in and see the home.  That is – until an offer is accepted by the seller, then the buyers has the right to inspect the home.

How does this work you ask?  The buyer must write a REAL offer since the terms are binding once accepted.  When the seller accepts the offer, the buyer will have a certain amount of days which is written into the contract to actually go in and see the home for the first time.  If the home is to their liking and the buyer wants to proceed with the contract – they do.  If the home is NOT to the buyers liking – for just about any reason – during the agreed upon days – the buyer will have the right to cancel the deal and walk away without any harm to both buyer and seller.

So you found a home you like – how do you write an offer?  If there are inspections available before hand – it makes our job of writing the offer a bit easier since we have a good idea of what the condition is.  If there are no inspections, and we haven’t seen the home, we drive by and gather as much info as we can with our eyes from the safety of the car.  We write the offer as best we can with the information provided and once the buyer has seen the home and had inspections we proceed with the new information – either by moving forward or discussing the new information with all parties and find a common and suitable outcome for all parties.

As strange as it seems – it happens more than you know.  For some buyers, they cannot imagine writing an offer for a home without ever seeing the home.  For investment buyers, this very typical and generally have no issues writing up a fair offer to get in.  Of course, what happens after a buyer gets to see the home is a far different story.  I have experienced both follow throughs on the contract and recessions – so truly we cross that bridge together when we get to it.

Which is truly at the root of what us Realtors do.  We are the buyers and sellers guides through Real Estate – what can The Caton Team do for you?

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

The Home Seller Love Letter – why a buyer should buy YOUR house…

Found another great article from Inman News that I had to share.  A new twist on setting your home to shine on the market.

6 elements of a compelling home seller love letter

Recent reports suggest that the real estate market might be picking up. That said, sellers from coast to coast are still doing everything within their power to differentiate their home from the scads of other competitive listings.

As someone who has been inside probably thousands of homes with buyers over the years, I’ve always thought there was one super-simple, vastly underrated marketing technique for homes that are having a hard time standing out from the rest of the market: the seller love letter.

A seller love letter is a note, personally written or typed up by the home’s seller. Among other things, it expresses the love the seller’s family has had for the home, and explains the facts and events underlying that sentiment.

I’ve seen these be as short as a single page, and as long as a binder containing a 10-page letter and a collection of supporting pictures and other documents.

If the power of staging lies in depersonalizing the property so buyers can picture their own family living out their own lives in the home, the power of a seller love letter is that it leaves buyers with a warm feeling that the home has a positive energy and history, which is especially desirable on today’s distressed property-riddled market.

Here are six things smart sellers should consider including in their love letters about their homes to their buyers:

1. Fond family memories. Now, there’s no reason to get all “TMI” (too much information) about it, but the fact is that buyers do love to hear sweet, fond family memories about a property. I’ve watched with my own two eyes as buyers who liked a 100-year-old home fell desperately in love with it as they read about the seller’s parents’ building the home, and then raising a flourishing family there.

Even much newer homes can have their own endearing stories, whether they be about a hard-charging professional bachelor who is moving out of a loft to start a family; about retirees who raised their kids there and are now moving to downsize and be near their grandkids; or about a smart, single woman who was the first person in her family to own a home.

The goal here is to create warm fuzzies while you satisfy the buyer’s craving to know why on earth anyone would want to move from such a lovely place. And if you can tell a happy story, you can kill another bird with a single stone – distinguishing your place from all the tragic stories and sadness surrounding the short sales and foreclosures with which your home is competing.

2. Favorite neighborhood vendors and local businesses. One reason people dread moving so much is that it forces them to find new vendors for everything, especially for the practicalities and minutiae that can derail our schedules and lives if they don’t run well. If you have neighborhood businesses you love, making a list of them and including them with your love letter is very much appreciated by buyers.

Take care to include things like: dry cleaners, house cleaners, landscapers, carpet cleaners, produce markets and butchers, and especially restaurants that have great take-out and delivery services.

You get extra points if you know the proprietor and authorize the buyer to drop your name, or you include menus with your list of restaurants that deliver to the property address.

3. Lifestyle amenities that map to local buyer wish lists. Give some thought to the sorts of things people looking to buy a home like yours might be looking for, from a lifestyle perspective, and include notes about any of those amenities in the neighborhood that you and your family or housemates have especially enjoyed. Things like dog parks, playgrounds, running trails, yoga studios, libraries and bookstores, museums and outdoor recreational opportunities make great fodder for this list.

4. History of upgrades. Of course, your state-required disclosure forms will include a pithy section for relating the repairs and upgrades you’ve done in the time you owned the property, but you can take that to a new level in your seller love letter with a free-form description of the work, color commentary (if it makes sense) around why and how you had it done, and a little appendix that includes any relevant plans, permits warranties, receipts, service contracts and the like.

(Obviously, you don’t want to include the originals of these items if this love letter document will be left out in the property during showings.)

If there are any issues or repairs that are likely to come up in the buyer’s inspection reports that you want to explain in more detail, the love letter can give you your chance to do just that.

5. Property details and tricks. If you have a detailed landscape plan that identifies all the plants and trees in your yards, tricks for how to work the heating and cooling timer or the tricky downstairs doors, details on when the neighborhood trash pickup happens, or info about your alarm, termite or other service contracts, prospective buyers will feel well taken care of if you compile and include all this information with your love letter and let them see it before they even make an offer.

6. Neighbors. If you have particularly close and friendly relationships with any specific neighbors, or there are block parties, online or email Listservs, homeowners association (HOA) or neighborhood watch meetings or other favorites, ones with kids, block party, watch meetings, other things being planned/organized, let the buyers know.

You see, a good seller love letter is equal parts lovey-dovey and logistical, but the care that goes into preparing it and the love that is evident in its content can be a significant selling point to buyers weary of dealing with bank sellers or stressful short-sale situations.

Whatever you do, if you decide to write a seller love letter for your home, review your plans and thoughts about what to include with your local agent first. You want to make sure not to run afoul of any equal opportunity housing laws or disclosure laws.

As well, waxing rhapsodic about all the weekends you invested in the terrible mural on the wall might be more concerning than compelling to buyers who think they could live in your home easily — assuming they paint over the mural on day one as the new owners.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

3 ways Homebuyers kill their OWN real estate deals…

Hello  again!  Below is a great article I read in Inman News that I thought I would share.  I truly see this often….

Got questions – the Caton Team is here to help.  We are a click away – email us at Info@TheCatonTeam.com

 

3 ways homebuyers kill their own real estate deals

Mood of the MarketBy Tara-Nicholle Nelson

I recently bought a couple of spa treatment packages for a friend’s birthday (as much as a gift to myself as to her, to be sure). The package included a pedicure and a massage for the price of the massage, but had a bizarro restriction that required I pick the gift cards up at least one day prior to spa day.

The problem: The spa was across a bridge from my town. Despite my very best calculations, I hit unexpected traffic and it took me an hour’s drive just to pick them up.

It’s a good thing for the spa that I was literally stuck on that bridge, unable to turn around; otherwise, that would have been an undone deal. I was very clear that the value of my hour far exceeded the value of those two “pedis.”

In the end, the conditions I had to surmount to take advantage of the bargain negated the value of the deal — and then some.

And that happens much more frequently than you’d think in the world of real estate. Today’s ridiculously low prices and interest rates, combined, seem like the perfect storm for finding a great deal.

But some buyers run into — or even unwittingly create — circumstances in an effort to cash in on the bargain that deactivate or diminish the full value they otherwise stand to gain from buying at the bottom of the market, for both home prices and interest rates.

Here are three ways homebuyers are defeating their own deals in today’s market:

1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers.

Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues.

As a result, it is not at all bizarre to hear homebuyers today say they’ve been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion.

Alternatively, it can cause you to settle for whatever house you can get, even if it doesn’t actually meet your needs — then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted.

Both of these outcomes negate and deactivate the bargain you stood to score.

To avoid house hunting too long, it’s uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust.

Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you’re likely to both find homes that will work for your life and be successful in your efforts to obtain one.

2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers — offers sellers couldn’t afford to take if they wanted to — can have the very same result.

Buyers who think they can operate strictly on the basis of buyer’s market dynamics — without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home — are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal.

Note to “lowballers”: If you don’t actually secure the home, the superlow price you offered is no deal at all.

3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer.

Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges.

Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market.

This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time).

The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike.

Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making.

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

How to Write a Great Offer on Bank Owned Homes (post foreclosure)

Point Blank – Writing a good offer is writing a good offer.  Price is most important, then close of escrow, contingency terms and then buyer qualifications.  Just about in that order.  So when a buyer is faced with writing an offer on a Bank Owned home – it is just about as easy as writing an offer on a home where the buyer is working directly with the seller.

The Caton Team Realtors, will provide the buyer with comparable market information – homes of similar condition and size – and what they are selling for.  Armed with this info, the buyer can decide a fair market price to offer.  Since the home is bank owned – the bank is very aware of the homes market value and has elected to sell the property in the open market instead of an auction – most likely because the bank will get more money in a normal sale versus an auction.  So our advise to a buyer – be realistic in your offer price.  Too low and the bank will move on, there can be some back and forth counter offers – but generally it is cut and dry or the bank will hold onto an offer till a better one comes along.  (At least that is how it feels to the waiting buyer.)

Next are the terms.  A bank owned home can move MUCH faster than a short sale.  A buyer will want to keep their property and loan contingencies tight – 10 – 17 days and generally a 30 days close of escrow is acceptable – if not shorter since the home is already vacant.

The downside bank owned homes – no disclosures except for the CA State Mandatory Disclosures – but those pertain more to the area than the actually home.  Why?  The bank has NEVER lived in the home and cannot disclose if there are neighborhood nuisances, or if the downstairs bathroom floods every years.  So it is more buyer beware – however – once a buyers offer is accepted, they will have their contingency time frames (stated in the offer) to conduct any and all inspections they want and to make sure the home appraisals for their loan.

Sounds like any offer right?  Right.  Bank Owned homes are like normal sellers.  The turn around time for an offer response in a couple of days – a week max.  Meaning, when the buyer get’s the offer accepted phone call – the clock starts ticking for contingencies and in 30 days I hand them the keys 🙂

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/