Real estate question for Brad Johnson

[Brad Johnson]

They're doing the "10% off and negotiate" thing.  Meet them in the middle and don't budge.  Move even a penny and they'll think you'll go a dollar.  If you set a price that's reasonable and don't back down you have all the power.  If the price is in line, they know it.  They're fishing to see how low you will go.  Set the amount and don't back off (nicely, of course.  "We appreciate the offer.  We can't do that but we can do $X.)  If you stick to your guns you're much more likely to get what you ask.  Don't be surprised if they ask a couple more times, and with a coupld more prices.  Stay firm and they know you are serious.  Drop a single cent and they will keep trying.  If they say "no" they were on a fishing expedition to begin with.  It's unfortunate but it happens.  Part and parcel with the gig.

Also, never justify a counter with anything.  No "we did this" or "we have this much money in...".  A price, nothing more.  Make sure the agent knows that, too.  Some agents will kill a deal by trying to justify things.  They think they are soft-shoeing the counteer.  What they are really doing is shooting YOU in the foot.  A simple "This is what we will do" will suffice.  Don't be surpised if they come back with all kinds of reasons why they "can't go that high".  Also don't be surprised if some of the reasons seem insulting.  Everyone has their own subjective criteria for things.  Don't take it personally.  If you do, they win.

Brad

[Monkeyleg]

Thanks, Brad. I realize that saying, "but we did this and this and this" is not a way to counter. However, their agent didn't even tell them, or maybe even didn't know about, all of the upgrades we've done. Isn't that something the buyers should be made aware of, somehow?

My agent keeps talking about this being a buyers market. I understand that, but I know what the homes in the area have sold for, and ours is not a $160-something house. The agent is splitting commission, so $165 vs. $178.5 is just $450 for him, but it's a hunk of money for us.

I'll tell him to come back around $174 and stick to that.

Other than the lowball price, the offer is good. They're already approved, they're not asking for us to pay closing costs, and they have no contingencies.

[Jamisjockey]

We sold a house in Utah when the market was still good.  First offer we got was insultingly low.  So, we countered.
For sale price, $262,000
Offer was about $210,000.
counter offer?  261,999.   

[Monkeyleg]

JJ, I think your buyers were

[Brad Johnson]

If the market in your area was that heavily skewed to the buyer you wouldn't have gotten an offer in a week, especially when your listing price is admittedly top of the market.  The price is right or you wouldn't have an offer sitting in hand unless the buyers just HAVE to be in that neighborhood, which is unlikley unless you live in some uber-exclusive place.

Pick a price you can live with and stick to it.  Be tactful and diplomatic but don't budge one iota. 

Some peope just don't get the fact than an insulting offer is the worst thing you can do.  It turns the seller against you, setting up an adversarial relationship at the outset.  That usually results in them paying a far higher price than if they'd picked a reasonable price to offer.  Unless they can get blood from someone they don't feel right about making the deal.  They're so proud of the money they "save".  They conveniently never mention all the time they wasted on all the deals that fell through because of their arrogant stupidity. (According to them it's my fault their rediculous offer didn't work.)

The fishing for half off is happening a lot right now.  People see the news and presume the market is as still as bad everywhere as it is/was in the few locations hand-picked to make headlines.  They think everything is fire-sale priced because "haven't you watched the news!?".  You can show them all the market data you have and it won't change their mind.  It's those idiots that can sometimes make the job a severe PITA.

Brad

[sanglant]

or very entertaining if you know how to make them jump.

[Chester32141]

Brad ... I don't mean to hijack this thread but I have a couple questions for you.


My wife has a house for sale priced at what the realtor recommended based on comps ( Jacksonville, Florida ) ... she has only held it open twice in six weeks and doesn't return calls etc. ... when we signed with her she said that the contract could be cancelled at any time prior to finding a buyer ... Is there a downside to canceling w/ her and going w/ someone else ?  Could we just contact her manager and ask to have a more dedicated salesperson assigned to the place ?  It's w/ Watson, a large realty company in this area but it seems to me that a realtor with only 3 listings should hold a house open more often than twice in six weeks ... Assuming we keep her is there anything we can do to show the place ourselves ?  It's my wife's house, we live 100 miles away, but I suggested to my wife that we drive up and hold it open any weekend that she isn't showing it ... The house is still furnished and in a great neighborhood ... We did a great job of cleaning prior to listing it.  If I were a realtor it's the kind of place I'd want to show because it should make them look good as it's an upscale house in an upscale neighborhood furnished in very high quality furniture from around the world (wife is retired navy).  Other than holding it open ourselves, is there any way we can help sell this house ?

She did have one other realtor bring a client thru and then never called the realtor for follow-up ... said it was up to him to call her to let her know what his client thought about the house ...  

Thank you, your input will be appreciated ...

[Brad Johnson]

I wouldn't worry about open houses.  I'd be more concerned with the general marketing. 

Sellers tend to camp on the open house issue because it's a tangible commodity.  They can see it happen.  The result is a concern far in excess of its actual importance in marketing the home.  In the decade-plus that I've been an agent (11 years May 5th) I can list on one hand, with fingers left over, the number of my listings that have sold as the direct result of an open house.  Buyers have tons of information these days, mostly via the internet.  If they are interested they'll call an agent and schedule a tour (that's why pics and descriptions in the marketing docs are so incredibly important).  The sad truth is people visiting open houses "out of the blue" are usually doing so out of idle curiousity.  If a buyer is serious and wants to see your home they will whether it's held open or not.

One thing a lot of folks don't realize is that open houses are more a marketing item for the agent.  They do open houses to get more buyers.  Spend a couple hours at an open house and you might get two or three new buyer prospects.  It might take a couple of days on the phone or several hundred dollars in print/mail marketing to have the same effect.

There's also the security issue.  Open houses are an "open invitation" for unsavory types to take a freebie tour of your home.  That alone is enough for me to counsel sellers to give serious consideration before insisting on an open house.  I don't want that liability, and I certainly don't want my sellers putting themselves in that position.

All that to say I wouldn't be concerned about the abundance/lack of times your home has been held open.  There are much more important marketing steps.  As long as those steps are being dealt with appropriately, I wouldn't be concerned with the open house issue.

Brad

[Chester32141]

Thank you for your input Brad ...

I can see your point about the downside to an "Open House" ... is there anything we can do to help with the sale of the house ... we're both retired and willing to spend time trying to make it happen ...

General marketing appears to be under control ... a virtual tour was done and the photos look good and it's MLS listed ... not sure what more could be done ...

[Monkeyleg]

a virtual tour was done and the photos look good and it's MLS listed

I'm having something of an opposite problem with my agent. I did good, professional photos of all of the rooms using a combination of existing light and strobes, then color balanced and retouched them. I gave them to my agent, but only six of the twenty are showing on any websites. He keeps saying that they need to download from the MLS site, which makes no sense to me.

I'm accustomed to viewing a dozen or two dozen photos online of homes, not six. Also, the virtual tour doesn't have all of the rooms, and it jumps around, from the living room to the kitchen to the half bath then back to the kitchen then back to the living room, etc. I wish he'd just give the file to me.

[Brad Johnson]

Thank you for your input Brad ...

I can see your point about the downside to an "Open House" ... is there anything we can do to help with the sale of the house ... we're both retired and willing to spend time trying to make it happen ...

General marketing appears to be under control ... a virtual tour was done and the photos look good and it's MLS listed ... not sure what more could be done ...

Price reduction.

Selling a home is, in concept, very simple.  There are three basic factors - condition, location, and price.  If the house is in great condition (which it is), in a good area (which it also is), and properly marketed (which it seems to be) the only remaining variable is price.  Time is money, so to speak.  If you want a shorter sale time you can, quite literally, buy it with a price reduction.

Before anyone chimes in with the "all realtor say that", I'll stop you right there.  It's a tired, worn out, and overused excuse to keep a house priced too high.  Any home will sell provided it is properly priced for the condition and location.  If it's not getting shown then the agents think the price is too high for the condition and location (or it's not showing up at all in their searches because of the buyer's price limitations).  If it's getting shown but not sold, the buyers think the price is too high for the condition and location.

Brad

[Brad Johnson]

I'm having something of an opposite problem with my agent. I did good, professional photos of all of the rooms using a combination of existing light and strobes, then color balanced and retouched them. I gave them to my agent, but only six of the twenty are showing on any websites. He keeps saying that they need to download from the MLS site, which makes no sense to me.

Depends on the web sites and how the pics are getting pushed to them.  Are the pics showing up on the agent's site and in the main MLS search engine, but not on third-party sites like Trulia, Yahoo Real Estate and Realtor.com?  Third-party search sites use use "pushes" from the local MLS for their data.  In other words it's not directly loaded to them by the agent or broker, it's picked up by the third-party site via an info push from the source (although some sites now allow the agents to set up accounts and load pics manually.  Costs to do that, though, so many brokers still don't do it).  The agent can load all the pics they want and have them available on their site and in the MLS search engine, but the third-party sites may only have a few because of limits in number or size (or the MLS may have a limite on the number of pics they provide to outside sources).  We've run unto that, too.  It's a PITA.

Brad

[Chester32141]

Thanks Brad ... as for lowering the price I've been gently trying to nudge my wife in that direction ... she needs about $12,000 less than the asking price to break even but as I've tried to explain to her each month she owns it, it costs her a little over $2000 ... wait 5 months to sell and she'll be another 10 grand into it plus the market could get worse ... if it was my house I'd list for the break even point and hope not to have to go any lower ... but being as it's her house all I can do is nudge ... 

Thanks again, your assistance is greatly appreciated.

Chester

[Monkeyleg]

Are the pics showing up on the agent's site and in the main MLS search engine, but not on third-party sites like Trulia, Yahoo Real Estate and Realtor.com?

So far they're showing on the realtor's site and on the MLS site. Nothing yet on the third-party sites, though.

If I do a Google search for "Milwaukee real estate," I'll see a link to Remax. If I do a search by price and number of rooms, etc on the Remax.com site, I wind up on Remax100.com, which is a site owned by another agent. I have no idea how that works.

I met with our agent this afternoon, and he suggested we counter with $176,200, an odd number that may throw them off balance a bit. I know it's not what you suggested, but he wants to get them in the 170's so they're more comfortable going to the mid-170's. If they get into the 170's, then he wants to counter with a firm number and not budge any more.

He's also working on their agent to work on the buyers. She's actually a co-agent for us, not the buyers, so it's in her interest to convince them their offer is far too low.

I hate playing these games.

Thanks for all of your advice. You should be charging by the word here.

[Brad Johnson]

Interesting that the buyers went without representation.  That's... dumb.

Go with your agent's recommendation.  He knows the market and sounds like he's given you pretty good advice so far.

Brad

[grampster]

I've not wanted to intrude in this, but.....

Brad, our place is on a lake and I'd like to use our pontoon boat and two boat lifts as a possible negotiating point.  How would one insert the boat and the equipment into the mix.  Do we include it as part of the listing price as in "House for sale for $xxxxx includes pontoon and two boat lifts?  Or list the price, and mention as an aside that boats and lifts as well as other recreational property are negotiable.? Or not mention anything at all until an offer results that's perhaps a bit low and the boat and equipment can be thrown in on a counter offer.

[Brad Johnson]

I'd get an appraisal from someone who's familiar with lake properties, then do like you mentioned and simply add the boat and lifts to the description (with pics, of course).

The only thing that might throw a wrench in the works is the boat being a non-realty item.  The lifts are part of the property, being "built in" and all.  With all the mortgage reg changes, non-realty items may end up being a big issue.  I'd call a lender and see how that's going to impact your ability to include it as a package.  You may well end up having to sell it as a seperate item.

Brad

[grampster]

Thanks.

[Monkeyleg]

Well, the plot thickens. We got them up to $172, and that's where it ended. We accepted, although I'm skating on thin ice by accepting.

The mortgage company in AL said that, based upon the information I provided, there should be no problem with approval. I sent them: personal and corporate tax returns for 2007-2009, W2's for my wife and for me from 2007-2009, business and personal checking and savings account statements for January and February of this year, pay stubs for the last month, and some other stuff I'm forgetting right now. Probably about 40 pages.

They won't use my wife's income, as she won't have a job when we move there, so they're just using mine. That should be fine. Well, should have been.

On last two year's corporate tax returns, I showed profits. Last year my accountant used a five-figure net operating loss carry-forward to offset taxes due, so I didn't have to pay. The underwriter wants to use this carry-forward to reduce my personal income. My accountant tried to explain that the carry-forward is a loss from a prior year, not a loss for last year, and didn't reduce my income, only my corporation's tax liability. I don't know if the underwriter will come around on that.

Now they want a profit and loss statement for the two full months of this year, a letter from my accountant certifying that the 2009 tax returns we gave them are what have been filed, and a letter stating that moving to AL will not change the nature of my business.

Duh! If I owned a business that needed to be in Milwaukee, would I just up and move to Alabama? The switch from photography to an internet business was done so we could move.

The mortgage broker started calculating the debt to income ratio, and included my wife's charge card payment. I said, "wait a minute. If you can't use my wife's income, you can't use her debts." The broker agreed, but I wonder if that will pop up again. It's almost as though they want to deny the mortgage.

Our buyers dictated that the closing would be May 1st, which means we have to get the pre-approval done ASAP and get down to AL and put in an offer. As it stands right now, we won't have a home on May 1.

My stomach is in knots.

Thanks for listening to my rant.

[charby]

Why don't you rent in AL?

[grampster]

Close on the house, get your money, go to Ala., rent a place if you have to and relax.  Life is good.  It's all good.  Time will pass and you'll grin again.

[Monkeyleg]

We may have to rent, but I hate the idea of packing, then unpacking, then doing it all over again. Besides, now that we've taken less than I would have preferred for our house, there's always the possibility that the housing market will pick up, and then we'll get less house. Right now buying a house would be moving sideways, or even getting a similar house for slightly less. Throw the $6500 tax credit into the mix, and waiting could cost a lot.

It's always been a pain for the self-employed doing a mortgage or refinance, but I've never seen it this bad. It's ironic that we've always paid our bills on time, never got in over our heads, yet people who spent too much are getting bailed out by people like us while the banks twist us into pretzels.

[sanglant]

just a thought. there is always the option of buying land and building, a trailer or even a camper(you just bought the land to set it on ) won't depreciate much during that time.

[grampster]

Monkeyleg, the quintisential Liberal.  Never happy! 

[Brad Johnson]

Thanks for listening to my rant.

Pretty much the bottom line is...

If you move you better be moving into the same job, or taking your business with you.

If you are self-employed, the tax tricks that help minimize your taxes also help minimize the amount you can qualify for no matter what your gross income.

In other words.  If you can't show income, they can't use it in the DtI calcs.  If you're moving and taking on a new job, they can't use that as the new employment is an unknown.

Sucks, but that's the way it is. 

Brad