Wednesday, July 7, 2010

Get Real!

Back in my teenage years, we coined (and used) the phrase, "Get Real!" It was oftentimes used sarcastically in response to someone who made an erroneous or ridiculous remark.

With the offers that buyers are making these days, it's time to pull out that old phrase and start using it all over again. To help buyers avoid the "Get Real" glance or remark from their agent, here are some tips for making an offer:

1 - When making an offer, look at the UPGRADES that the home offers. If two houses are about the same square footage in the same general area, but the list prices are $5,000-$10,000 apart, ask yourself what upgrades the more expensive home has. What would it cost for you, as the buyer, to install all of the upgrades in the lower priced home? If it costs more than the difference in price to install all of the upgrades, then the higher priced home may be the better bargain.

2 - It is natural for buyers to NOT want to pay full price for any home in today's market, but when making an offer, be realistic in price. Ask your agent to show you comparables in the same general area with similar square footage and upgrades as the home you're interested in. Base your offer on those comparables.

3 - When making an offer on a foreclosure, understand that the bank has ALREADY DISCOUNTED the price of that home. For a bank to foreclose on a home, it costs them about $40,000 - $50,000, so they want to sell it as quickly as possible to get it off of their books. An offer just below that list price is best, especially if making the offer in the first 30 days after it's listed. Banks will typically lower the list price of homes every 30-40 days, so if you want that house, you'll need to act on it quickly. If you decide to wait until the bank drops the list price, you may have missed out on the house.

4 - Short sales are more common today than ever. If you're interested in a short sale home, you need to understand that type of loan that the seller has on the home will dictate what the seller's lender will approve for a purchase price. Each type of loan requires a sale price at a certain percentage of the current market price of that home. Also, unless already approved, expect to wait a while for a response from the seller's bank. If two loans are involved, then it may take even longer than anticipated.

5 - In ALL situations, real estate deals have to be WIN-WIN! Buyers are being told that THEY determine the value of a home, but that is true ONLY if the SELLER AGREES to the buyer's price, terms and conditions. To assume that a seller is obligated to take a low-ball offer that a buyer makes is unrealistic. Continuing to make low-ball offers on properties brings nothing more than frustration and wasted time for everyone involved in the negotiation process.

If you're looking for an agent who can help navigate you through the home-buying process, give Jack Jernigan a call. He understand the market, dealing with foreclosures and short sales, as well as sellers in general. He can be reached at 615-373-3513 or through email: