Mistakes you can make with a lowball offer

Yes, yes, I know.  It’s a buyers’ market.  So much inventory, low housing prices, so the buyer gets their pick at the price they want.  But not so fast.  Yes, lots of inventory, lower housing prices.  However, there is still power to negotiating.  And you don’t want to insult the seller with a lowball offer and lose your dream home because of it.  Here are some mistakes that can be made with a lowball offer:

1. Not knowing the market.  And each one is different.  What may be a more acceptable offer in one market won’t be the same in another.  There could be an area where sellers are pricing homes more aggressively; therefore, they’re sticking close to their asking price.  Another neighborhood might be mostly made up of foreclosures and short sales, so the bank wants to get rid of the home ASAP and are willing to accept less.  So you’ll need to do your research with the help of a qualified Realtor (see #2)

2. Not picking the right Realtor.  They have the experience and the background and know the area you’re looking to purchase, so they’re your best asset going into a negotiation.  But you have to make sure they’re solid negotiators, since they are working on your behalf.  They’re not going to tell you not to present a really low offer, but they might say the sellers will reject it offhand so you might want to consider raising it by X amount or offering to waive one of your contingencies.  Trust their advice.  You’re working as a team and you want to make sure your agent also has your best interests at heart.

3. Not knowing what you’re willing to pay.  A lot of people these days in this market are focused on getting the best price.  But you have to be careful.  You have to know what your limit is so you don’t overpay.  And sellers will know what they need to walk away from the closing table or they won’t be able to make the sale.  No matter how wonderful the home is and how perfect your furniture will look in it and that you can see yourself having your morning coffee on the deck overlooking the pond, there comes a point where no deal is worth it at a certain price. Know that before you start negotiating or you’ll let your emotions get the better of you.  

You can also lose your positioning power by being too hard a negotiator at the beginning.  Don’t make your first offer your final offer and then start negotiating.  The seller will know that you aren’t serious and has the ball back in their court.  Make your offer one that you’re willing to negotiate and have your Realtor tell the seller you want to work with them and make the deal happen.

This MSN article has a few more mistakes that can be made and how to avoid them.  My Web site has some other great articles and tips for buyers.  Have a great week!

Paint your home to sell

First things first.  You all know how important it is to keep your home in showing condition when you have your home on the market to sell.  No clutter, messes, dirty laundry, etc.  But it’s also important to make your home look the best it can in order to move quicker and to get you a good return on investment.  Paint color is key.  

Let’s start with what not to do.  No wallpaper.  I know it’s hard to remove.  I know it matches the bath towels that you special ordered along with the custom faucets.  But it just doesn’t work for most people.  And the buyers that want move-in ready homes don’t want to deal with it, either.  So if you have wallpaper, you’re probably going to benefit the most from this blog post.  I suggest removing it and painting.

No white paint.  This might sound surprising given that it’s neutral.  But having all white walls can make your house look very sterile and not lived in.  It also can appear too bright.  You do want to keep the colors neutral.  So if you’re going to be painting, I suggest light beige or light yellow.  

Don’t go crazy.  I am completely serious when I say that I’ve shown homes where one room is orange, another turquoise, another dark purple, etc.  It looks hideous.  If you have this in your home now and you are planning on selling, you’ll want to paint all the walls neutral to match.  And remember that dark colors make a room look a lot smaller.  So for those of you with navy blue bathrooms, now is the time to go neutral.

Here’s what does work.  Make sure that there are no noticeable scratches or marks on walls.  Touching up paint is very simple to do and can make a huge difference.  It shows buyers that your home is well maintained and cared for.  According to this AOL blog, “Karen Dembsky, president of Peachtree Home Staging LLC and Georgia’s Real Estate Staging Association, as well as a Pro Stager of the Year nominee, has the first and most important piece of advice before even tackling the issue of color.

‘A seller should always make sure that their paint has a fresh appeal, no dings, no marks. If there are any, it should be repainted or touched up because it gives the feeling of a well-maintained home,” she said. “The color has to be livable and appealing, you want a color where the buyer will come in and say that it’s not their first choice but they can live with it.'”

Dembsky suggests food-related colors for the kitchen, such as yellow, red, or orange.  But this is not permission to go out and paint your kitchen bright orange.  You still want to keep it soft and light.  She doesn’t recommend bright colors for the bedrooms because people view bedrooms as a place to sleep and relax, so light and neutral is best.  Dembsky recommends beige and light tan for bathroom walls.  If you’re dying for a bit of color, play it up with colored hand towels, bath mats, and fun soaps.  She does say that you can go for darker and richer colors in a home office, especially to play against a dark wood desk.

I’d love to hear your thoughts on this.  Please leave me a comment or visit my Web site.

Home improvements that turn off buyers

I’ve written multiple times on the home improvements that add the most value and the areas you want to focus on to attract buyers.  I found a great article on what could possibly turn buyers off, those improvements or features that might cause your home to sit on the market for a lot longer than you expected.  So if you do need to make one of these changes, consider your market and possibly try to convert it back prior to listing.  I’m focusing on a few that may affect more Chicagoland buyers.

1. Inserting a motorized stair lift.  Of course, this may be a necessary feature for someone who can no longer climb the stairs.  But for buyers that do have disabilities and are looking for a home, most buyers are looking for a ranch-style home, and they often search for homes that have a first floor master  bedroom and full bath.  You may also be competing with communities that specialize in low-maintenance living and those for ages 55 and over.

2. Converting a bedroom to a home office.  I’m not saying not to do it.  Trust me, I have one myself.  I’m saying that if you do, you could hurt your resale by not converting it back for showings.  If you have a 3-bedroom home and only 2 of your bedrooms look like bedrooms, many buyers may be turned off.  It’s best to put your desk and computer away and put a bed back in.  Now some people really upgrade a home office with flat-screen televisions, custom lighting, etc.  This would hurt your resale value a lot more, especially if it’s taking up a bedroom space.  If this is a location in an area of the basement that isn’t taking up a space meant for something else, you should be fine.

3. Converting a room to a hobby room.  This is a similar scenario to having an office in a bedroom.  I’ve come across lots of bedrooms that are now knitting rooms or scrapbooking rooms or pottery rooms.  Again, move that space somewhere like a basement, where it’s not taking up a bedroom.  Your home could sit on the market several months longer because of this.  

4. A home theater.  This I’ve seen quite often.  Oh, they’re nice features to have.  I’ve even seen mini movie theaters complete with theater chairs, popcorn machines, etc.  While it may not turn off a ton of buyers, it can put the home out of budget for many that weren’t expecting that feature to begin with.  You may price your home higher to recoup the $8,000-$15,000 it cost to install, but it will be hard to make that money back on a sale.

So if you are considering a major home improvement or upgrade, it’s best to consult with a Realtor prior to spending any money, just to get an opinion on resale value and how much you can expect to recoup when it is time to sell.  If you need to reach me, find me via my Web site.

Advice to women: Shop more

 

It’s been a while since I wrote anything about the difference between men and women in regards to real estate.  But then I came across a very interesting article.  It turns out that there’s a reason that 32% of women were likely to get a subprime mortgage than men, according to a 2006 study.  They don’t shop enough.

I know, I know.  I am just as surprised as you are.  In fact, when I’m dealing with clients purchasing a new house, it’s often that the women take longer to find something because they want to make sure they’re getting the best deal and are in love with their new home.  So what’s going on here?  It actually makes sense.  Women tend to rely on the instincts of their emotions, trusting a recommendation on mortgage rates from friends, rather than shopping for the best deal.  Men, on the other hand, shop around for the best rate, and, therefore, they generally pay lower rates.  

This was all determined by a 2006 study in Journal of Real Estate Finance and Economics.  According to the article, “It makes sense to Daily Finance columnist Laura Rowley. ‘It’s not surprising, because mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision,’ says Rowley. ‘But this is one area where you don’t want to get by with a little help from your friends.'”

Rowley suggests that everyone should get at least three written estimates, generally from two mortgage brokers and one direct lender, like your bank.  You’ll want to explain that you’re planning to buy a house in your general price range that you’ve predetermined along with the percentage you’re willing to put down.  And remember that interest rates can change multiple times a day.  So if you find a low rate, you might consider talking to the lender about “locking in” that rate while you search for a house so it doesn’t go back up.  It’s worth everyone’s time to figure out the best rate and the best type of loan in order to save the most money.

If you need a recommendation for a great mortgage broker, please contact me via my Web site.

Finding a home that won’t lose value

Given the current state of the economy, for all of you home buyers out there, I’m guessing that, when you do find a home you’re going to purchase, that you want to find one that won’t lose value.  You’ll want to look for features that will appeal to a seller when you do go to sell, whether that’s in one year or 20.  Here’s a quick list of features in homes that won’t lose value in a recession.

1. Choose a single-family home.  Sure, you may be starting out and want something small, preferably a condo.  However, in a worse economy, condos and townhomes lose their value more quickly than a single-family home.  So ask your Realtor to help you find a smaller detached home.  I have sold many first-time buyers one- or two-bedroom single-family homes, which was just the right size for their needs.

2. Keep carrying costs low.  When you do go to buy, make sure you find a property that is well-maintained and one that doesn’t require a lot of work over time, especially if you don’t plan to stay long.  New buyers get scared with all the costs of a mortgage, taxes, insurance, and maintenance, so whatever you can do to keep costs low will help you in the long run.  Here’s another tip.  If you see a problem, such as water dripping from the roof, make sure to take care of it BEFORE it turns into a large hole, which will just cost you more money because you waited.

3. Know your market.  Certain markets will never lose much value because they are important to certain segments of the population.  For example, a home within walking distance of the Metra in the Chicago suburbs is a great feature for commuters heading into the city.  A home with a swimming pool is going to sell quicker than one without in Arizona.  

4. Keep your kitchen and bathroom up to date.  As I have mentioned in the past, if you’re going to update or remodel any room in your home, these are the two to focus on.  These are the biggest rooms that “sell” a house.  Try to include appliances if you can.  Many first-time buyers don’t have these at their disposal, and it’s another thing that will help keep their costs down.  If you must take yours with you, consider offering an appliance credit instead.

I hope these tips help both potential buyers and sellers.  And to all my readers, have a very Happy Thanksgiving!  Visit me online.

Landlord tips in between tenants

I just ran into a past client of mine.  She was who I had helped rent out her prior home while she bought a different one.  She just had her tenant of one year move out, and now she’s searching for a new one.  She was telling me what was going on, and it got me thinking about certain items landlords need to take care of in between tenants.  I thought this would be important information to share with you.

1. Make sure the tenant returns all keys, garage openers, and any other items that belong to you or your property.  You’ll also want to collect all spare keys so that you don’t need to change the locks.  If you won’t be able to be there when they move out, make sure you designate an appropriate spot for them to leave these items, such as a drawer in the kitchen or bathroom.

2. Switch over your utilities.  This is a big step that a lot of landlords forget to take.  You’ll want to contact your electric company and gas company to make sure that you receive the bills for these.  You’d hate for the tenant to have cancelled the power and go to show potential tenants to find out you have no lights or that your pipes freeze in the winter because you have no heat.  Some companies, like ComEd, even offer a landlord service that you can sign up for.  This is just in the interim between tenants.  Once your new tenant moves in, they can take over the utilities again.

3. Do a thorough inspection.  Make sure the property is left in the same condition as when the tenant moved in.  All problems, such as carpet stains, holes in the walls, etc., caused by the tenant can be taken out of the security deposit.  Make sure you review your lease to find out the deadline for returning the deposit back to the tenant.  You can be held liable if it’s not returned in time.  If there’s any argument about something the tenant causes, it’s a good idea in the future to take “before” pictures and “after” pictures so that you have physical proof.

4. Get a forwarding address.  You’ll need this for the security deposit.  But there’s a good chance that not all mail will make it to the forwarded address and you’ll still be receiving some for the tenant.  This way you can get them any important mail by forwarding it appropriately.  

I’d love to hear any more tips you have either via a comment or by contacting me on my Web site.

Get those buyers in before winter

As the cooler and colder weather is starting to breeze through the midwest, we’ve reached the part of the season that might be the end of regular home showings through the holidays.  If you have your home on the market to sell, here are some tips to get it shown and sold prior to wintertime, according to this AOL article.

First of all, the number one tip this article stresses is that, if you don’t have to sell over the winter, don’t.  If you’ve ever sold a home before, you know that you’ll get a lot less showings in the winter because of the weather and the holidays.  People don’t want to go out traipsing through snow and sleet to look at homes unless they have to.  So if you don’t have an urgent need to sell, you might consider taking it off the market until after the holidays or early spring.  We always say after the Super Bowl is a good time to get it relisted.

 1. Keep your photos updated.  Just like it’s important when your home is for sale during June to remove the pictures of the snow-covered driveway, it’s equally important to do the opposite.  If you’ve been listed since April with a green lawn and trees in full bloom, you’ll want to switch photos to that showing some snow and the way the interior looks with the light on.  You don’t need to make it obvious through your photos how long your home has been on the market.  You might also want to consider updating your remarks to reflect upon the new season and the holidays, such as, “You’ll love winter mornings nestled in front of your gas fireplace.”

2. Target your specific buyer.  Is your house just a few-minute walk to the local elementary school?  Consider advertising in a PTO or PTA bulletin.  Located 3 minutes from the commuter train station?  Post a flyer there.  If you have farmland with horse stables, you might want to advertise in an equestrian magazine.  Built a home gym in your basement with a steam shower?  Post a flyer at the local gym.  You get the idea.  Think outside the box.

3. Make your home accessible.  Keep driveways and walkways clear of snow, ice, and leaves so that buyers can easily reach the front door.  Keep the heat on and turn the lights on.  And as I always stress, try not to turn away any showings for any reason.  You never know if that buyer will get a chance to come back at another time.  And they could be the future buyer of your home!

If you have any more tips, I’d love to hear them.  Please leave me a comment or visit me online.

Your online activity could cost you a home deal

With the influx of people using social networks today, such as Facebook and Twitter, it’s very common to know all the going-on of your friends and family.  It’s great to find out where everyone is when, and share important news stories and photos.  However, when it comes to real estate, it’s best to be cautious with what you post.  Here’s why:

In a recent MSN article, a real estate agent mentioned how her client lost a house.  She was looking in a particular neighborhood and went online and posted something like “We found out dream house in XYZ neighborhood!”  Well, one of her friends saw the post and shared it with another friend who was looking in that same neighborhood at the one house for sale.  That person went and offered more money and ended up buying the home.

I’ve always told my clients never to give out information until a deal is closed, especially the price paid, because if something happens before you get to closing, now someone has information on what the seller was willing to take and could offer a better price.  This is also why real estate agents never share what a home goes under contract for until it sold.

You also have to be careful when posting pictures because other people may be able to recognize the home.  But not all social network activity surrounding buying or selling a house is bad.  Here is when it’s okay to post.

1. You’re the seller and want people to know your house is available.  The more people that know about it, the more potential buyers you’ll see.

2. Asking what people know about a certain town in terms of schools, activities, etc., especially if you’re new to the area

Otherwise, you can figuratively stick your foot in your mouth by posting something that other people shouldn’t know.  And for security reasons, never post that you’re going to be viewing open houses or out looking at houses because then people know you’re not at your home!

I’d love to hear more thoughts on this subject.  Please leave me a comment or visit me online.

 

Getting the best deal on a contractor

Chances are that in the time you live in your home you’ll want to get at least one home improvement project done where you’ll need to hire someone.  Whether it’s a new roof, new floors, new windows, paint, or a complete gut rehab, you’ll want to find a contractor at the best price to do the best work.  Here are some tips to save you money and get a great deal.

1. Get at least three estimates.  You really won’t have a great idea of how much your improvement costs until you speak with at least three people.  And by talking to more people, the better idea you’ll have of what goes into the project and how much it really does cost.  On that same note, don’t go with a bid that’s way below what everyone else is charging, especially if it’s someone new or an amateur.  You could end up with poor work that needs to be redone.  So make sure the contractor you choose is licensed and bonded and gets all the appropriate permits to do the job.

2. Ask friends and neighbors for recommendations.  They’ll know from personal experience who to hire and who to avoid like the plague.  Also, it’s common when you mention that you got their name from so and so that the contractor may be willing to work out a discount, especially if you pass their name along in the future for a job well done.

3. Negotiate.  Let’s say you hire the contractor that came in at the highest.  Tell him you got two other bids lower than his but you went with him because of his reputation.  Is he willing to match the lower bid?  Will he go down in price if you pay in cash?  Let’s say you went with the contractor that did have the lowest bid.  Did he know that you chose him out of 3 contractors because you liked his estimate the best?  Would he be willing to finish 2 days earlier than you were planning?  It never.hurts.to.ask.  This is not someone you plan to become best friends with.  It’s a business arrangement.

4. Make sure everything is in writing and know what it says.  True story: My relatives had hired someone to fix the roof and had a written contract.  Fast-forward one year later when they had a bad rainstorm and they now have a huge hole in their ceiling because the roof is leaking.  So they contact the roofer who specifically states in his contract that he is not responsible for interior damage.  Um, red flag?  Does he do this because of a previous problem?  My relative is an attorney and even missed this clause.  So make sure you thoroughly go over the contract and understand it before signing anything.  Now they have no recourse and have to pay for fixing their ceiling on their own.

Do you have any other great tips for getting a good deal?  I’d love to hear them.  Please leave me a comment or visit me online.

New construction home inspection checklist

My loyal readers know how much I believe in the importance of a home inspection once a home goes under contract or prior to closing.  It lets you take a look at the state of the current appliances and utilities and lets you know what repairs are necessary or to be expected in the future.  What you may not realize is how important an inspection is when you’re purchasing new construction.  You figure since the home is brand new that everything is perfect.  I’ve had clients buy new construction only to move in and find the air conditioning doesn’t work or they have leaky windows.  And given the current economy, it’s possible that some home builders are paying less to find subcontractors who in turn are doing poorer work.

It’s also very important to make sure you hire an inspector that’s not affiliated with the builder.  You’ll want an unbiased independent inspection to make sure everything is working the way it’s supposed to.  Here’s several items that you’ll want to look at:

1. Open all the windows.  Make sure the latches work, nothing is leaking, and that there is no broken glass.  If they have screens, make sure nothing is torn.

2. Check all light fixtures.  Make sure the switches operate and you know what light they turn on and off.  

3. Check all the floors.  Carpeting should be tightly fitted without gaps.  Tile and vinyl should not be cracked or chipped.  

4. Countertops should not be nicked or scratched.  Make sure all toilets are properly secured to the floor by sitting on them.  The tub should be free of scratches, as well.

5. If you have a basement in your new home, check to make sure you don’t see any water damage on the walls or any cracks.  Find out where the water heater, furnace, and air conditioning unit are located and how they work.  

More great tips can be found here.  It’s important to read over your contract to make sure of the period that you’re allowed a home inspection and final walk-through to look for these items.  Some contracts state that any problem you find after closing are not the responsibility of the builder, so make sure to be thorough in your inspection.

I can be reached online with more questions.