Things to do in Washington DC: July 2010

Negotiating a Contract with a Builder ~ To Be Built Homes vs. Inventory Homes

This market has certainly given buyers the upper hand when it comes to negotiating a contract with owners of re-sale houses or with builders of residential houses.  As a buyer's agent, the negotiating strategy may end up being different depending on if you are looking at re-sale homes or at new built homes or even a bit more different when looking at to be built homes. 

Seller Mindset for Re-sale vs. New Construction

The owners of a re-sale will definitely consider the amount of equity that they have in their home.  The amount of equity is an important factor to determine the purchase price that the owners can afford to accept.  The sellers may also need to clear a certain amount of money so that they will be able to purchase their next property.

For a new construction builder, the sales price will need to equal the material & land cost, marketing cost (usually 5-6%), overhead, plus any builder profit.  A typical profit for a builder is around 8%.  In this market, builders are not producing the huge profits that most buyers think they are making.  If all of the builder's costs are set, the only room they will have to negotiate is off of their profit margin.  I have heard a few builder representatives in and around Charlotte mention that they are doing "market deals"...I take this to mean that they are willing to accept a lower percentage in profit to sell the property. 

Negotiating Strategy when Dealing with To Be Built vs. Inventory Homes

If you are looking at To Be Built Homes, know that the builder may not negotiate as much off of the price.  The price that they have offered to you will already be adjusted to fit what is comparable in today's real estate market.  In this scenario you will have better luck focusing on the incentive money that the builders are offering.  The builders will put a markup on the upgrades and options that they offer to the buyers with incentive money.  If the builder gives you more incentive money, this will not affect his bottom line as much as a price reduction.  Plus the higher price will help to keep the values in the neighborhood higher.

If you are looking at Builder Inventory Homes, then you should have more luck getting the builder to accept a lower offer.  Builders have a set overhead cost (the amount that it cost them to hold the property on the market) and if the property has been sitting for a while they may have run through the amount they set aside for carrying the house.  Every day that the house is on the market is eating into their profit so they may accept a low offer.  Putting in a low ball offer may not be your best move.  Instead you may want to ask the builder to come back and customize your house, or add a deck/screened porch, or to do extra landscaping.  The builder will want to work with you on this because it will help to keep the values in the neighborhood up and in the long run will help both you as buyer and the builder.

            Understanding Short Sale Transactions | A Guide to Short Sale Facts & Myths

                                                                                                                                                        

A short sale unfortunately has become a common buzz word in the Real Estate industry. For those that have been hearing the term "short sale" and don't quite understand what it means, a short sale is a legal lender approved solution designed to assist a home owners who is financially strapped to get out from under their mortgage debt.

A short sale is negotiated through the mortgage holder of an owners home where by the mortgage holder agrees to take less than what home owner owes on the property.

A quick example of a short sale would be if a home owner owes $400,000 on their current mortgage and their home is only worth $350,000. The lender in this example would agree to take a short fall of $50,000 at closing.

In some cases the mortgage holder may completely wipe out the debt and the home owner does not have to repay the 50,000. Many lenders may require a seller to sign a note and repay the debt over a certain amount of time. Typically the debt will be reduced and the owner may receive favorable repayment terms of the short fall.

There is quite a bit to know about short sales from both a buyer's and seller's perspective. I have been successfully been completing Massachusetts short sales over the last three years. In fact (knock on wood) I have never had a short sale that did not get approved! Successfully completing a short sale is about understanding the process.

Many consumers make extremely poor choices by working with Real Estate agents that don’t have a lick of experience with getting short sales approved.  Picking a good short sale Realtor is critical to your success.

The following is a number of specific topics about short sale transactions that you would want to be aware of if you are planning to either buy or sell one of these types of distressed properties.

 

Stop making mortgage payments during a short sale? ~ Whether or not a home owner should continue to make mortgage payments is a common question that many sellers want to know when considering a short sale. The most common answer to this question is YES, however it really depends on the lender! Click the link to understand all the considerations.

Picking the right short sale Realtor ~ Picking a Realtor to work with in a short sale is very different than a traditional transaction. You want to work with an agent that has experience successfully closing this type of transaction. Remember as a seller you could potentially be facing a foreclosure. There are many mistakes that are made by agents handling short sales. Don't get caught with your pants down!

Questions to ask a short sale listing agent ~ If you are thinking about buying a short sale there are some specific questions you can ask the listing agent to determine the probability that the short sale will be approved or not. These short sale questions will also help determine if the Realtor handling the short sale knows what they are doing!

Acceptable hardships for a short sale ~ On many occasions when doing a short sale the lender is going to require some kind of hardship on the part of the seller. Short sale hardships however, have become less rigid recently and some lenders are becoming more concerned strictkly on whether the short sale would benefit them more than a foreclosure sale.

Short sale tax consequences ~ Understanding the tax consequences in a short sale is one of the most important considerations for a home seller. Whether the short sale home was a primary residence or an investment property can have different tax implications.

Getting short sale debt released ~ Getting the debt released on a short sale is obviously a very big deal. Many Realtors that are working with short sales don't have any knowledge of how to get the debt released. A seller needs to pay particular attention to this detail as you can expect to be hearing from a collection agency without it!

When to do a short sale home inspection ~ This topic is important to understand from both a buyer's and seller's perspective. A home inspection should be done before short sale approval and NOT after. Read the article to understand why it benefits both the buyer and seller to do so.

Strategic default vs short sale ~ There are many home owners who are deciding just to walk away from their homes. Fannie Mae has started to crack down on this practice and is now penalizing borrowers from getting a mortgage for up to seven years! A perfect alternative to a strategic default is a short sale.

These articles were published on my Massachusetts Real Estate blog where I talk about numerous topics that are important to consumers who may be thinking about buying or selling Real Estate.

I am successfully completing short sales through out the Metrowest Massachusetts area. So far, knock on wood, I have a 100% success rate for short sale approval! If you need to complete a Massachusetts short sale please feel free to get in touch.

If you are outside of the Metrowest Massachusetts area and need to do a short sale please give me a call or email and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

___________________________________________________________________________________________________

About the Author: The above Real Estate information on understanding short sale transactions was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise!

For Metrowest Massachusetts Real Estate and homes see Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service short sales in the following towns in and around Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Northboro, Shrewsbury, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Framingham and Douglas MA.

Click here to view Bill Gassett's Real Estate profile.

 

Subscribe in a reader

 

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 24 years.

Over 10 years ago before I became a Realtor® in Long Beach, CA, I came across something that utterly shocked me!  While home shopping with a friend in a hilly area of west Los Angeles, we came across a neat row of large model homes.  There was a lot of foot traffic and activity and it looked very festive with balloons and flags as the home builder was celebrating their last phase. 

As we parked across the street and got out of the car, we were immediately handed a florescent green flyer by a resident standing in their front yard.  Whoa!  It was a very detailed complaint sheet.  Just behind him lodged in a picture window was a matching large florescent green poster stating in handwritten letters, "Do Not Buy Ask Us Why!"  I then noticed there were similar posters positioned in the windows of a few nearby homes that faced the model units!  One person even had a flyer box (the kind agents use) on their front lawn filled with what looked to be the same florescent green complaint sheets!  These people were serious!  

HELL HATH NO FURY LIKE A HOME BUYER SCORNED!

The list detailed what some of the previous home buyers stated as being egregious and flagrant faulty building and cheap products used by the home builder!  This didn't list just a few things, this was a double-sided sheet of paper listing problems that ranged from sparking outlets, entire kitchen islands shaking when the garbage disposal was turned on, to major water leakage from bay windows and even foundational issues!

In addition to that, the home buyers in what I guess was a preemptive strike to keep the home builder from claiming the issues as isolated incidents or standard home settling, used a chart listing addresses with a checkmark next to each problem.  I recall seeing more than one issue in which all participating addresses had a checkmark for the same problem. Now thinking back, I can't help but wonder how many of the angry homeowners used a Realtor® and had a professional home inspection performed prior to purchasing?  Were they under the misconception that because it was new it didn't need an inspection?  Did they also forget that the pretty or handsome home sales consultant working in the air conditioned model home office worked for the home builder and seller?  If only they had a Realtor®, a professional property inspection and knew What Questions to Ask A Builder.

EVERYTHING THAT GLITTERS ISN'T GOLD

My friend and I felt slightly guilty when crossing the invisible picket line as we ventured inside the model homes out of curiousity.  The interiors of the homes were absolutely gorgeous!  There was one beautifully appointed feature after another!  But as we toured each room, we couldn't help but to recall that some of those same impressive features were heavily checkmarked on the list.   

EYES WIDE OPEN

It was a great lesson to use professional representation when purchasing a  home!  Do not allow incentives to cloud your judgment on one of the most important decisions of your life.  In the home buying process, whether it is for a brand new home or a previously owned home, the buyer does NOT pay a commission or a fee to their Realtor® or agent.  The agents on both the buying and selling side are paid out of the proceeds of escrow by the home seller/owner or those acting on behalf of the builder.  Why not have professional representation? Call a Realtor® when purchasing a previously owned home or before registering with a new home builder or community.  Make sure it is an agent who will not leave you on your own, but one who will assist you by being readily available to answer any questions you may have, review documents with you, coordinate inspections and follow up with you throughout the entire process until closing. 

 

If you are interested in purchasing a home new or previously owned, do not hesitate to call me at 310-508-4354!  I look forward to working with you!

_______

First posted new home photos courtesy of Creative Commons

This work is licensed under a Creative Commons Attribution 2.0 Generic License.

____________________________________________

               Prudential 24 Hour Real Estate Direct: (310) 508-4354 ~ Alternative (562) 726-ANDI  ~ Fax (562) 861-0285  Email:  andi@andigrant.com    DRE # 01728424

If you or your clients are looking for a saavy Realtor® to assist with any real estate needs in the Greater Los Angeles area including Long Beach, Downey, Lakewood and its surrounding communities, do not hesitate to call me at 310-508-4354. 

HAPPY CLOSINGS!  

www.AndiGrant.com

 

For some people the idea of owning a home is a distant dream.  With so many people struggling with job challenges, economic instability and fear of the future the glimmer of hope seems far away--until now.

Many of us (consumers and professionals alike) are aware of FHA's 203k Program.  This special FHA financing program allows the borrower to build the cost of renovations (up to $35,000) into their mortgage.  The result is a win-win situation for everyone from the buyer to the local community. The renovations can include anything from new paint to carpet, well and septic, new appliance, etc.

Do you have a dream of owning a home?  How about a multi-unit dwelling where you rent out apartments and make some rental income?  Well here is the good news...

RE-buildUSA^TM  is an organization founded to help real estate professionals introduce the American public to a new concept in home ownership. At the same time it affords new business opportunities to lenders, as well as the home renovation industry.

RE-buildUSA partners with Lowe's Home Improvement and leading mortgage lenders.  Are you thinking about buying a home for you and your family?  Have you thought about buying a four-unit apartment building and renting out the other three units for additional income?  The goal is help the public fulfill their dream of owning a home while at the same time re-building communities and re-shaping our economy.

Are you interested?  Check out the FHA 203k program guidelines and ask yourself this question, "Do I deserve to have a great home, in the perfect area and updated with the latest design trends?

Continue on. . .

FHA 203k Benefits

RE-buildUSA allows you to more easily enjoy the following FHA 203k benefits:

•Only 3 1/2% down payment required, which can be gifted by family members

•More flexible qualification requirements allow those with less than perfect credit to purchase a home at competitive rates

•A single loan for both purchase and improvement of your home means you make only one loan application and pay one set of closing costs - saving you time and money

• FHA loans are assumable and there are no prepayment penalties

•An FHA Energy Efficient Mortgage (EEM) can allow you to qualify for a larger mortgage to add additional improvements that will lower your utility expenses.

•By including cost of renovation in your home mortgage, you pay for these improvements over time at a much lower interest expense than conventional alternatives

•Rather than paying a premium for a home in "perfect" condition, take advantage of the great prices available on foreclosures or other homes on the market that are in need of repair or remodeling

•Instead of paying for previous owners improvements you may not desire, invest instead in exactly the features, colors, styles, etc. that suit your tastes and needs

•Enjoy the opportunity to live in an up-to-date home in a great location closer to work, shopping, cultural activities and more

If you or anyone you know is interested in learning more about RE-buildUSA please call Linda Kemp at 630.688.5121.  This program is only available to consumers who occupy the property or non-profit organizations so investors will have to take a pass on this.  Why not start building your future right here in the present?  It is my pleasure to help you achieve your goal today!

www.SuccessGroupHomes.com