How to handle a low ball offer on your house

April 17, 2013 by

How to handle a low ball offer on your house

How to Handle a Low Ball OfferYou just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond? Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal.

1. Check your emotions

A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

2. Counter the purchase offer

Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits.

A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you.

3. Consider the terms

Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

4. Review your comps

Ask your Realtor whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

5. Consider the buyer’s comps

Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps.

6. Get the agents together

If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer.

7. Don’t signal desperation

Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s listing describes you as a “motivated” seller, you’re signaling you’re open to a low offer.

Courtesy of the Taylor Realty Group

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John Marcotte

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Things to consider before buying an investment condo

April 13, 2013 by

Things to consider before buying an investment condo

Highlights:

  • House lawyer provides tips on buying investment condo.
  • Condo bylaws, declarations and house rules are crucial.
  • Beware of poor or tyrannical management.

By Harvey S. Jacobs

Special to InsideRealEstateNews.com

Buying and renting out a condo may be the way to go for people who want to invest in property but don’t want the responsibility of owning, renovating and maintaining a single-family house.

Before buying a condo, there are three things you should learn about.

First, you should have a professional home inspector examine the unit’s components and systems.

Second, you need to study the condominium’s financial statements. This examination is designed to determine if it is solvent on a day-to-day operating basis. The financial exam should also assess whether the condo’s reserve account will be sufficient to handle any scheduled and unscheduled repairs and replacements. If the condo does not have sufficient reserves, there is likelihood that you will incur a special assessment. Special assessments can seriously cut into your profits.

Third, you should carefully review the legal documents — including the declaration, bylaws and house rules— that govern your condo unit’s use and ownership.—

The declaration will detail the condo unit’s legal existence and describe the unit’s dimensions.

The declaration also will identify the common elements (such as hallways, lobby, stairway which are used by all condo-unit owners), and limited common elements (such as storage units, parking spaces and balconies, which are generally for one unit’s exclusive use). The declaration also will spell out the percentage interest each unit possesses in the condo association. The monthly condo fees are assessed in proportion to each unit’s percentage interest. The declaration also will reveal if there are any restrictions on your unit’s sale – whether the association has the right to purchase your unit.

The bylaws outline the condo association’s rules of operation for annual meetings, voting, officer elections and the board of directors.

Bylaws also specify whether a unit can be rented, and if so, under what terms. It is critical that you confirm that you are able to rent the condo unit before you buy it. Many condo associations restrict how owners can rent. These restrictions often are approved by unit owners to comply with a Fannie Mae requirement that no more than 50 percent of the units can be investor-owned for one to qualify for financing. Fannie Mae guidelines also require that, to qualify for financing, the association not have too many delinquent condo fees.

The house rules are binding on owners and tenants. They cover things like pet policies, move — in and move-out policies, penalties for noise or other nuisances. You need to become familiar with the house rules. You also need to attach the house rules to your lease and make sure your tenants agree to comply with them. It is a good idea to add a clause to your condo lease that makes your tenants responsible for any fines the condo association imposes on you for their violations.

One of the main benefits of investing in rental condos is that you are only responsible for maintaining the condo unit’s interior. All other systems and components such as the roof, basement, HVAC, commercial plumbing repair, and electrical systems are generally the condo association’s responsibility. You are still responsible for those systems that are contained within your unit.  Another advantage is that when those systems need repair, the board of directors is responsible for making them. Granted, they make those repairs using your condo fees. But you are not necessarily the one who has to find, contract and supervise the repairs.

There also are drawbacks.

When analyzing whether your investment will generate a positive cash flow each month, you have to factor your condo fee into your mortgage principal, interest and taxes and all other expenses. Another potential negative is that a distress sale in the building can negatively impact all the other units in the condo. So if only one or two owners have financial reverses and have to sell their units at a discount, they will drive your unit’s price down as well. There is always the risk that your fellow owners will vote to prohibit or severely restrict renting the condo units. If that happens, you may have to sell at a time when the market conditions may not be favorable.

Finally, condos often suffer from poor or tyrannical management. Therefore, if you decide to invest in Boulder rental condos, you should strongly consider becoming actively involved in their governance. You should get to know the other owners, consider running for the board and at a minimum, attend every condo meeting.

Harvey S. Jacobs is a real estate lawyer in the Rockville office of Joseph, Greenwald & Laake. @Harvey S. Jacobs 2013

John Marcotte

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Luxury home sales soar 50%

April 11, 2013 by

Luxury home sales soar 50%

Highlights:

  • Well-heeled buyers snapped up 50% more luxury homes in March.
  • The most expensive sale last month was for $7 million.
  • Total dollar volume is up 46.4%

This 19,555-square-foot home in Cherry Hills Village last month sold for $7 million.

This 19,555-square-foot home in Cherry Hills Village last month sold for $7 million.

Luxury home sales in the Denver area soared by 50 percent in March, compared with March 2012, according to a report released today by Kentwood Real Estate.

The report shows that 48 single-family homes priced at $1 million or more, closed last month, compared with 32 a year earlier.

The total dollar volume was $76.114 million, 46.4 percent higher than the $51.994 million in March 2012, according to the analysis, which used Metrolist data for sales in the “core” counties of Adams, Arapahoe, Broomfield, Denver, Douglas, Elbert and Jefferson counties.

“It was an awesome month,” said Sandy Weigand, a top broker in the Kentwood-DTC office.

“It was a good month for closings, and not just under contracts.”

Weigand said she thinks well-heeled buyers increasingly are becoming comfortable with the idea of buying their dream home.

“I think people are finally saying, “Enough is enough,” Weigand said. “There is a lot of pent-up demand. People are feeling more secure in their jobs right now and big companies and corporations are making money again.”

Also, buyers want to take advantage of historically low interest rates, she said.

“A lot of buyers are paying cash and putting loans on their homes later,” Weigand said. “However, the $2 million to $3 million buyers are not going to buy their new home until they sell their less expensive home and have the cash to move up”

However, with an increase in homes priced in the $1 million range, “It has a good snowball effect on homes in the $2 million to $3 million range.”

Indeed, Weigand said she is starting to see bidding wars for the home in the $1 million to $2 million range, although they are not as fierce as in the lower price range.

While the overall market is suffering from the lowest inventory of unsold homes on record, it is not as pronounced at the high end, she said.

 

Another look at what $7 million buys in today’s market.

“It was my listing that bought it, although we had one other party interested in buying it that came very close to putting it under contract,” Weigand said.

Weigand decline to name the buyer.

Public records, however, show it was bought by Dale Francescon, an owner of Denver-based Century Communities, one of the largest home building companies in the area.

In 2010, his brother, Rob, paid $7 million for a nearby home that previously had been owned by Mike Shanahan, the former coach for the Denver Broncos.

Weigand said custom home builders are not yet constructing spec homes in that lofty price range.

“What I am seeing is that some customer builders who own lots are now placing signs on their property saying they will do build-to-suits,” she said. “That is a move in the right direction.”

Kentwood reported there are 523 single-family homes priced at $1 million or more are currently on the market. Of those, 125, or 23.9 percent, are under contract.

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Home Price Growth at 6-Year High

March 31, 2013 by

 

Home Price Growth at 6-Year High

home_price_growth Data through January 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1Home Price Indices, a leading measure of U.S. home prices, showed average home prices increased 7.3% for the 10-City Composite and 8.1% for the 20-City Composite in the 12 months ending in January 2013.

All 20 cities posted year-over-year gains with Phoenix leading the way with a gain of 23.2%. Nineteen of the 20 cities showed acceleration in their year-over-year returns. Despite posting a positive double-digit annual return, Detroit was the only city to show a deceleration. After 28 months of negative annual returns, New York came into positive territory in January.

“After more than two years of consecutive year-over-year declines, New York reversed trend and posted a positive return in January. The Southwest (Phoenix and Las Vegas) plus San Francisco posted the highest annual increases; they were also among the hardest hit by the housing bust. Atlanta and Dallas recorded their highest year-over-year gains.

“Economic data continues to support the housing recovery. Single-family home building permits and housing starts posted double-digit year-over-year increases in February 2013. Despite a slight uptick in foreclosure filings, numbers are still down 25% year-over-year. Steady employment and low borrowing rates pushed inventories down to their lowest post-recession levels.”

As of January 2013, average home prices across the United States are back to their autumn 2003 levels for both the 10-City and 20-City Composites. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 29-30% through January 2013. The January 2013 levels for both Composites are approximately 8-9% from their dip in early 2012.

Additional content on the housing market may also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com

Boulder homes sales continue to be on the rise!

 

John Marcotte

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Suburban Blight & the Affordable Housing Conundrum

March 29, 2013 by

Suburban Blight & the Affordable Housing Conundrum

As the urban revival in some American cities pushes out lower-income earners to the nearby suburbs, many of those edge cities are struggling to redefine their purpose—and identity—in a new economy.

According to the U.S. Department of Housing and Urban Development, nearly half (47 percent) of the nation’s 1,700 “first-tier suburbs” are vulnerable, meaning the area’s poverty rate is rising while its population and property values are declining. In a sense, these first-tier suburbs are experiencing what many urban centers experienced in the 1960s and ’70s as higher earners moved away and were replaced by lower-income families.

At the National League of Cities’ Congressional City Conference in Washington, D.C., last week, officials from such distressed suburbs said one of their biggest struggles is with low-income and public housing. It’s the easiest type of housing to build from a federal grant perspective, but some local officials say they’re becoming oversaturated with it. Additionally, social services in these suburban communities are struggling under the weight of the new population as more lower-income residents move in.

“The rise of suburban poverty in the suburbs…really deepens our challenge at a time when we are fiscally least prepared to deal with it,” David Sander, a councilmember in Rancho Cordova, Calif., a suburb of Sacramento, told a room packed with his counterparts from across the country.

Providing enough affordable housing for lower-income earners isn’t the only challenge that suburban communities face. An Urban Land Institute study on Baltimore and Southern California suburbs found a strong correlation between new affordable housing and communities that continue to decline economically.

“One of the conclusions [of the study] was, if you are a first-tier suburb interested in turning yourself around, be extremely cautious about adding too much affordable housing,” Sander said.

Several conference attendees, however, pointed out that federal housing grants for suburban communities tend to be geared toward low-income housing, making it difficult for cash-strapped communities to build a variety of housing that attracts all income levels. John Zanmiller, mayor of West St. Paul, Minn., said his town was recently denied a federal housing grant.

“We met the existing target with market-rate, affordable housing but we hadn’t enough public housing,” he said.

But there are ways to combat a declining median income, according to Sander. Although it’s a “fallacy” to assume a city or town can develop its way out of a problem, he said creating a sense of place is vital to attracting new residents. The focal point of a community doesn’t have to be a 10-block main street but it should have some major draw — whether it’s a theater, museum or major employer. Many communities, for example, are embracing the arts and doing so in a way that reflects the increasingly diverse population of first-tier suburbs.

Liz Farmer is a finance writer for Governing Magazine. You can view this original post at Governing.com

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Price, Proximity to Work and Design Are Key Concerns for Home Buyers

March 25, 2013 by

Price, Proximity to Work and Design Are Key Concerns for Home Buyers

Price and proximity to work are key concerns for first-time home buyers, while trade-up buyers tend to be most focused on the design of the home and the neighborhood, according to “Characteristics of Home Buyers,”an analysis of the recently released 2011 American Housing Survey (AHS) by the National Association of Home Builders (NAHB).

The biennial survey, which is conducted in odd-numbered years by the Census Bureau, covers about 6.8 million home sales that occurred in 2009 and 2010. NAHB’s analysis additionally compares the homes that buyers purchased with what they say they want using results from “What Home Buyers Really Want,” a new consumer preference survey published by the association.

“Among first-time home buyers, price was the most frequently cited reason for selecting a particular house, with a 38 percent share. At 30 %, proximity to work was the most frequently cited reason for choosing a specific neighborhood,” says David Crowe, NAHB’s chief economist.

“The majority of trade-up buyers (36 %) cited the design of the home as the primary reason for selecting a particular house, with 28% citing the looks and design of the community as the reason for choosing a specific neighborhood.”

More than 90 % of the sales reported in the 2011 AHS were existing homes, a significant increase from previous years. “Sales of new homes were very low in 2009 and 2010 due to the unique circumstances surrounding the Great Recession and the housing market crisis. We expect that situation to turn around as the housing market recovery takes hold,” says Crowe. “More than half (55 %) of the people surveyed for “What Home Buyers Really Want,” NAHB’s consumer preferences study, said they would prefer to purchase a new home rather than an existing home.”

There’s good reason for that preference. New homes provide buyers the opportunity to choose finishes, fixtures, flooring and more. And they are apt to have the other elements that buyers want including open design, up-to-the-minute kitchens and baths, and features such as a laundry room and walk-in pantry that help with organization and storage.

There is also growing interest in single-story homes, and energy efficiency continues to be a concern. In fact, nine out of ten buyers surveyed would prefer to purchase a home with energy-efficient features and permanently lower utility bills rather than to buy a home without those features that costs two to three percent less.

New homes today definitely fit that description, and as a group are the most energy- and resource-efficient homes ever built.

“No matter what their preference for location or style, financially qualified buyers are likely to find a new home with the features they most want,” says Crowe. “The housing market is strengthening in most areas of the country, and home builders are eager to help buyers achieve or further their homeownership goals.”

For more information, visit www.nahb.org

 

John Marcotte

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February – 2013 Real Estate Market Update

March 10, 2013 by

February – 2013 Real Estate Market Update

Inventory Levels

Entire MLS (All Areas)

Residential Highlights:

  • 19.5% increase in the number of closed sales year-over-year
  • 18.5% increase in the number of closed sales year to date
  • 23.6% decrease in average days on market (81)
  • 31.4% decrease in active listings
  • 11.7% increase in average price – sold
Condo Highlights:
  • 16.8% increase in number of closed sales year-over-year
  • 22.1% increase in number of closed sales year to date
  • 27.7% decrease in average days on market (73)
  • 37.9% decrease in number of active listings
  • 8.8% increase in average price – sold

Click here for Full report of entire MLS

 

Courtesy of Land Title

 

John Marcotte

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What Do Home Buyers Really Want?

March 6, 2013 by

What Do Home Buyers Really Want?

homebuyers_young_couple_inside Many in the housing industry are wondering not only what today’s home buyers really want, but also what they are ready to leave behind in light of current economic realities. A new study recently released by NAHB, What Home Buyers Really Want , was designed to answer these questions, and more specifically, to provide the most current and accurate information on buyer preferences so that NAHB members can deliver the home (and community) that today’s buyers want and are willing to pay for.

So what do home buyers really want? The first answer is energy efficiency. Four of the top most wanted features involve saving energy: 94 % of home buyers want energy-star rated appliances, 91% want an energy-star rating for the whole home, 89 % want energy-star rated windows, and 88% want ceiling fans.

The second message buyers are sending is they want help keeping their home organized. The laundry room is wanted by 93 % of buyers; in fact, 57 % consider it essential and would be unlikely to buy a home without it. This shows that most buyers want to keep the dirty laundry contained in a room and away from plain view. Moreover, nine out of ten buyers want a linen closet in the bathroom to help keep towels and toiletries organized. Space in the garage to store bikes, sports equipment, or gardening tools (that can be bought from these websites) also ranks high on the buyers’ wish list: 86 % want it. And a walk-in pantry in the kitchen is something most buyers care a lot about as well (85 %).

More than half of all buyers also discard the option of having only a shower stall in the master bathroom with no tub (51%), and many are saying ‘no’ to two-story spaces as well. About 43% of buyers do not want a two-story family room and 38% feel the same way about a two-story entry foyer. Many buyers now consider these large, open spaces as energy-inefficient – the last thing they want for their homes. A complete outdoor kitchen is not a very important priority to many buyers either, as 31% flat out discard the possibility of washing dishes, cooking, and keeping food refrigerated outdoors. For most buyers (62 %), an outdoor grill will suffice.

For more information, visit www.nahb.org

 

John Marcotte

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Existing Home Sales Hit 5-year High in 2012

March 1, 2013 by

Existing Home Sales Hit 5-year High in 2012

sold_home_agent_couple Sales of existing homes ticked down in December from the month before, while the total for 2012 hit the highest level in five years, according to data released Tuesday by the National Association of REALTORS®.

The pace of sales fell 1 percent in December to a seasonally adjusted annual rate of 4.94 million, according to NAR. For all of 2012, existing-home sales hit 4.65 million, the highest level since 2007 and up 9.2 percent from 2011.

“Record-low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” says Lawrence Yun, the NAR’s chief economist.

The rate in November was revised to 4.99 million from an earlier estimate of 5.04 million, which was the highest rate since November 2009. Economists polled by MarketWatch had expected a rate of 5.1 million for December, with buyers eager to take advantage of relatively high affordability in a housing market that is gaining steam.

Buyers’ concerns about the “fiscal cliff” may be at least partially behind December’s sales decline, wrote Millan Mulraine, macro strategist at TD Securities, in a research note.

“Given this, we anticipate that sales activity could rebound in January following the tax deal, given the very supportive buying conditions and the increasing incentive for first-time buyers (who are currently sitting on the fence) to slowly move into the market as prices begin to firm,” Mulraine wrote.

By region, it was a mixed bag. December’s existing-home sales fell by 5.9 percent in the Midwest and by 3 percent in the South, compared with the prior month; sales rose by 5.1 percent in the West and by 3.2 percent in the Northeast.

Sales in each of the four regions were up from same period in the prior year.

Despite the decline in December, existing-home sales are up 12.8 percent from the same period in the prior year. The median existing-home price rose 11.5 percent from the prior year to $180,800.

Inventories fell 8.5 percent to 1.82 million units in December, representing at the current sales rate a 4.4-month supply, the lowest supply ratio since 2005. It’s typical for inventories to decline in winter. But Yun warns that persistently low inventory could lead to too much price growth in 2013.

“We don’t want to see a rapid appreciation in prices,” he says.

Meanwhile, the median price reached $176,600 in 2012, up 6.3 percent from the prior year for the highest annual growth since 2005.

Other recent housing data have also shown a market gaining strength but still has far to go.

A report on home-builder sentiment showed that confidence is holding at a more-than-six-year peak. Separately, a report showed that new home construction jumped 12 percent in December to the highest rate in more than four years, rushing past Wall Street’s expectations.

©2013 MarketWatch
Distributed by MCT Information Services‘

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Fannie Mae and Freddie Mac Help More Than 2.5 Million with Foreclosure Prevention Actions

February 27, 2013 by

Fannie Mae and Freddie Mac Help More Than 2.5 Million with Foreclosure Prevention Actions

Fannie Mae and Freddie Mac completed more than 134,000 foreclosure prevention actions in the third quarter of 2012, bringing the total foreclosure prevention actions to more than 2.5 million since the start of conservatorship in 2008 with nearly 1.3 million of those actions being permanent loan modifications. These actions, which have helped more than 2.1 million borrowers stay in their homes, are detailed in the Federal Housing Finance Agency’s third quarter 2012 Foreclosure Prevention Report, also known as the Federal Property Manager’s Report.

The quarterly report has information on state delinquencies and an updated, interactive Borrower Assistance Map for Fannie Mae and Freddie Mac mortgages, with information on delinquencies, foreclosure prevention activities and Real Estate Owned (REO) properties.

Also noted in the report:

• Year-to-date, Fannie Mae and Freddie Mac have completed nearly 411,000 foreclosure prevention actions.
• Nearly 38,000 short sales and deeds-in-lieu were completed in the third quarter, up 4 percent compared with the second quarter.
• 45 percent of troubled borrowers who received loan modifications in the third quarter had their monthly payments reduced by more than 30 percent.
• More than one-third of loan modifications completed in the third quarter included principal forbearance.
• The number of the Enterprises’ delinquent borrowers has declined 9 percent since the beginning of 2012.

REO inventory continued to decline as property dispositions outpaced property acquisitions during the third quarter.

For more information, click here

 

John Marcotte

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