Mistakes Homebuyers Make with Low Ball offers....

For some home sellers, 2011 was a long year without a home sell....that means some buyers are smelling desperation & may feel that they can get in and get the deal of a lifetime.

Before you decide to put in a LOW BALL offer, don't risk your chance of getting an acceptance by avoiding these errors:

1. Not understanding the Market

Your Real Estate agent should do a comparative market analysis (CMA)to determine the Fair Market Value (FMV) of the home. I always give my buyer clients a clear definition of FMV which is "the most likely sales price of this home, in the current market". Once you determine the FMV, you compare that to the list price of the home. There is no secret formula to what to offer....i.e. The 90% Rule. I have heard many times from buyers "your first offer should be 90% of the list price" or some other percentage. You don't want to offer 90% of the list price if the list price is 20% higher than Fair Market Value...I also wouldn't hesitate to advise a client to make an aggressive offer if the price is at or just above FMV.

2. Not picking a good agent or picking one that is a terrible negotiator

Some agents caution buyers on making an offer so low that could offend the sellers & halt negotiations. My opinion is this: I always try to prepare & PRESENT and offer so it well-received by the sellers...no matter how low it is. Most offers I prepare for buyers are accompanied with a cover letter or sometimes an email that may address why we are offering what we are offering & always include positives about the home. I feel I am really good at this part of my job!

3. Not backing up your price

Again, this is all about how an offer is presented & providing back-up for you offer price is critical! If you don't back up your price with comparable sales in the neighborhood...you are making a mistake and could certainly start negotiations off on the wrong foot. Sellers want to know why you are offering so low. There is no better way to back-up your offer than to show cold hard facts or SALES.

4. Not Knowing what your walk away number is

Today's buyer have a strong desire to not pay too much & get the best possible deal due to fear of home values falling even more. Sellers also have limits which is usually determined by loan payoff and/or amt of equity they have in the home. A buyer should have limits but, try not to put limits on your first offer by saying "highest & best" when you are in fact willing to go up a few thousand dollars. Don't say highest & best unless you mean it!

5. Not making a clean and easy offer

When you make a low offer, you want all the other elements to be attractive to the seller: little to no contingencies as possible, have finances in order before you offer (provide a loan commitment letter or proof of funds statement w/ your offer) & don't ask the seller to pay fees & closing costs outside of the norm.

6. Cash is NOT always KING

Don't assume that the seller is going to accept your low offer b/c its cash. Today's seller (even banks) want more money for the home. I have certainly experienced with my cash investor clients, they are getting beat out by homeowners who are getting mortgages and paying a bit more.

Bottom Line is make sure you are well-advised when putting in low-ball offers. Your relationship with your real estate agent is so important, so pick a good one!

Half Marathon Training Starts TODAY

Last year I ran my first Indianapolis Mini Marathon (which is a half-marathon: 13.1 miles). Despite feeling like I was going to die and not finish from miles 10-12, I signed up again. After the Mini, I really didn't run a whole lot and don't think I have ran over 5 miles since...Today, I started training for the 2011 Mini. Not to mention, I'm getting married in July and one of my goals is to lose 20 lbs for the wedding and to keep it off until we go to Jamaica in October. I'm thinking that training and losing weight will go hand in hand, right?? Last year, I think I lost like 8 lbs while training. I workout 4-6 times a week and you would think I would be fit & trim....I also LOVE to eat & drink..I have told people that I workout so hard so I can eat. Anyway, I'm focused on being in better running shape this year than last and hopefully not feeling so bad during those last few miles and not getting so burned out after the race. Plus losing weight and looking the best I possibly can when I walk down the aisle is all the motivation I need. So today, I officially started training.... 2 miles....just have to work up to 10+. More blog posts on my running progress to come......

Economics...Your Realtor's POV

As a graduate of the Kelley School of Business, I took my share of Economics Courses which I actually enjoyed. (They were far more interesting than accounting or HTML programming, yuck!) Anyway, I have been recently thinking about the very basics of Economics...Supply and Demand, Law of Supply/Demand, Excess Supply/Demand, and Consumer choices & costs..etc. etc., and how it related to my industry and my business, Real Estate. I THINK there is certainly a demand for housing...its a great time to BUY, rates are at ALL time lows. People WANT to buy a house if they are currently in the rental market (can pay less on a Mortgage than rent), and there is a group of people that are either in a MOVE-UP or MOVE-Down Market....sooo, what are the issues:

1. The Lending Environment is still rather hostile.
2. Sellers who want or need to move owe more than they can sell for.
3. Even though the Rental Market is favorable, lenders make it difficult to "rent" out your current home so you can buy another (in a Move-up Situation) EVEN if you qualify w/ required debt-to-income ratios.

AND, the Supply is still rather high in Most Areas...

but, really its all relative to what neighborhood you are looking at & living in...

I live/work in the Zionsville, Carmel, Indy Northside...although, sales have been down, prices actually improved in Hamilton & Boone Counties.

Its really a good idea, if you have any inclination of Selling your home or buying a new one, consult a REALTOR, like me, to tell you what is going on in YOUR neighborhood. TRY NOT TO LISTEN TOO MUCH TO THE MEDIA--usually the statistics they give are on a National or Regional level, and things may actually be different in your backyard. Also, websites such as trulia.com & zillow.com often have dated and inaccurate info as well.

FOR MORE INFO ON YOUR NEIGHBORHOOD, give me a call or email : sshoup@taktotucker.com or 317-339-6141 cell/text.

Sometimes I think that the media has invented the "double dip recession concept".