Armed Polite Society
Main Forums => The Roundtable => Topic started by: Monkeyleg on February 25, 2010, 11:38:49 PM
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Brad, I hope you have time to reply to this.
We just interviewed our first realtor for selling our house and, as I suspect a lot of home sellers are doing, I'm questioning whether the realtor is right about pricing.
In February of 2008, our home appraised for $170K for a refinance. After that we remodelled the upstairs bath ($5K), put on a new roof ($4500), had new interior drain tile and sump pump installed ($4500), had new furnace and AC put in three weeks ago ($5K), had the chimney rebuilt ($1K), upgraded electric ($1200), and a whole slew of cosmetic things that ran another few thousand.
In August of last year a neighbor's house sold for $166K from an asking price of $169,900. The house is smaller than ours, doesn't have a formal dining room as does ours, and has two bedrooms instead of the three that we have. The realtor brought that one along as one of the comparisons. The other homes he brought were comparable in size, but were in neighborhoods not as desirable as ours.
Our neighbors have been saying we should be able to get $200K or better for our place, but I thought $180K would be about right. The realtor says the market has gone downhill since August of last year when our neighbor's house sold.
Is he right on that? He's suggesting we price it just below $170K. He said we could try $178K or so for a week or two, but no longer than that.
I'd sure appreciate your input.
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Glad to help!
Have the agent show you the comparable properties they used to determine the est market price. That's the only true measure. Have them go back a year. Fall/Winter is traditionally a slow time for real estate and only going back 3-6 months doesn't give you an accurate picture. You're coming into what is traditionally the hot real estate season, spring and summer. You want to know where to position yourself for that.
As for what they neigbors say, well... if they were a buyer it would matter. They aren't so it doesn't. They might be real nice folks, but they aren't market specialists. They're a bunch of people running off at the mouth, regurgitating heresay, supposition, and contextual incorrect comparisons.
Another good method is pop the couple hundred bucks to get an inedpendent appraisal for MARKET value. You're refi appraisal is, unfortunately, worthless in that respect. Totally different dynamic involved. In your case I'd strongly recommend getting one.
By the way, you mentioned refi. As of this morning the local rates were 4.25 for 15yr fixed and 4.875 for 30 yr fixed (no points, no buydowns). If you have a 6.5% rate from a couple years ago you can refi on a 30 yr and save appx $100 per month per $100k financed. Go the 15 year and the payment increase by roughly $115 per $100k financed, but you knock a full two-thirds off the total interest paid over the life of the loan. If anyone is interesed drop me a line. I can hook you up (no, I don't get a commission on it. It's just a favor for the folks here on APS).
Brad
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Thanks, Brad. Why would a realtor try to lowball the price on a home if he's making a commission? Would he be trying to do a quick sell to get an easy commission?
The guy impressed me with his marketing. Rather than do still shots for the internet, they do videos, which they have on their website and other sites, and also on DVD's that they put in a box next to the box of flyers with the For Sale sign. I've seen that sort of thing before, but not for low-priced homes.
He showed us many comparables, although none are similar enough to our house to be easy to compare. There are no two homes that are remotely the same in our area. Every one is different.
We have another realtor coming tomorrow. It will be interesting to hear what she has to say.
BTW, I'm guessing that we have the best shot at selling our place before the tax credit expires on April 30. After that I would think the market might go flat again. Yes? No?
Thanks again.
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Brad knoweth what he speaketh.
If I were you I'd interview a minimum of 3 realtors. More if you want to. Throw out the guy(s) that gives you the highest recommended listing price (if it's by a significant margin - if the high guy says $170k, and the other two say $169-169.9K then whooopie). He's just trying to tell you what he thinks you want to hear, not what the market reality truely is.
It does you no good to list for $200k if the market value is really $165k. All that will do is result in your house languishing on the market for far longer than it otherwise would.
Remember that past values, and the work you've done to the place are not additive when determining the value. All that work adds value, but not as much as you spent, and it only adds to what the value would have been today had you not done that work.
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I understand what you're saying, Sumpnz. Given the selling prices I've been seeing right in my neighborhood, though, I have to wonder.
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Why would a realtor try to lowball the price on a home if he's making a commission? Would he be trying to do a quick sell to get an easy commission?
That is certainly possible. When we were selling our house in Tucson we had several realtors that wanted us to price at $170k or even less. We listed it at $189.9k and it sold in 4 hours. Those other realtors obviously didn't have a good handle on the market and thought they could still make a quick buck.
But you're assuming that the realtor is lowballing. He may well be giving you his best professional estimate of what it would take to actually get you house to sell within a reasonable timeframe. He could price at $1.7mil, and as long as you were willing wait 100 years eventually it would sell. Or he could price it at $170k and get it sold in 90 days. At $17k it would sell in about 90 nanoseconds. The higher you price it the longer it will take to sell, so pricing is more a matter of how long can you tolerate the sale to take than anything else (all else being equal anyway).
The guy impressed me with his marketing. Rather than do still shots for the internet, they do videos, which they have on their website and other sites, and also on DVD's that they put in a box next to the box of flyers with the For Sale sign. I've seen that sort of thing before, but not for low-priced homes.
Marketing bling is great, and has its place. But more than that what you want to know is how many homes has he sold in the last X months, how long were they on the market before getting under contract, and what was the ratio of asking/selling prices. And of the unsold homes in his current inventory what is the distribution of days on market? How does all of this compare to the local averages?
He showed us many comparables, although none are similar enough to our house to be easy to compare. There are no two homes that are remotely the same in our area. Every one is different.
Not that unusual. What he needs to do is take all the homes that have sold in the last X months that are within +- 20% of your size house and with comperable size yards and average the $/sq ft for those homes. That number times your sq ft would be a reasonable starting place for determining listing price after making some adjustments based on how old some of those comperable prices are and other applicable local factors. If you can get a large enough sample it'll capture homes that are fancier and in more desirable neighborhoods to balance out the ones that are less fance and in less desirable neighborhoods.
We have another realtor coming tomorrow. It will be interesting to hear what she has to say.
Good. Get at least one more.
BTW, I'm guessing that we have the best shot at selling our place before the tax credit expires on April 30. After that I would think the market might go flat again. Yes? No?
Maybe, maybe not. There are some people wanting to buy now before that expires. Others (like I would be if I were in a position to buy) might be waiting until after then in hopes of a price drop. In my case I wouldn't qualify for the credit as it's been less than 3 years since we sold our Phoenix house. Other people possibly waiting on the sidelines would be investors. Whether or not prices drop after that tax credit expires will depend on how many start buying after vs how many are buying now becuase of the credit. I would tend to think though that prices would decline at least a bit.
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Well, crap. My nice, carefully crafted response just vaporized. So, basically, what Brad and sumpnz said. And, yes, from what I've seen, it's not unusual for a realtor to price at the lower end to sell quickly, especially if they have a lot of listings and need to keep things moving. If they're only getting an extra $300 to get you 10k more, but it takes twice as long to sell, they're losing money. It does sound like the comps are little off. If it would make you feel better, spend a few hundred on a good appraisal. In your position, I probably would.
[Does anyone else keep getting "Sorry, you cannot post topics on this board" messages when trying to post a response?]
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That is certainly possible. When we were selling our house in Tucson we had several realtors that wanted us to price at $170k or even less. We listed it at $189.9k and it sold in 4 hours. Those other realtors obviously didn't have a good handle on the market and thought they could still make a quick buck.
Just to add to that paragraph, when we were selling our Phoenix house it was in the decline about a year after the overall peak in prices. We got probably the best overall realtor in the greater Phoenix metro area. He worked hard and earned his commission. I felt like he did an awesome job to sell that house in just under 90 days. However he flat out refused to even accept the listing if we went anything over what we did finally list the house for. We rejected 2-3 other realtors that suggested significantly higher listing prices. When it sold we still had to take a $20k reduction from asking price, but it still sold. Had we refused to budge we'd be sitting on a house now worth 60% of what we had sold it for.
When you're in a declining market it is vital to price your house aggressively from the start. Otherwise you're going to just chase the market down and that is a loosing proposition. You want the house to list for no more than 105-110% of what it should actually sell for within 90 days. That way it will sell in a reasonable time frame without you having to do a price drop. And if the market starts to rebound you're not leaving too many dollars on the table.
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Thanks again for the replies. As I mentioned, the comparables weren't entirely comparable. Ours is a very desirable neighborhood (given that it's the south side of Milwaukee), and he had a couple of homes from our neighborhood in the dozen or so comparables he brought.
One of those was the house I mentioned that sold for $166K, and was smaller and not as nice as ours. I was in it, so I know the house. The advantage they had was that the house had a two car garage, where ours is a one car. That's the drag on our house.
Another house he had was a little over a block away. It was a bit larger than ours, but was very plain. I saw this place, too. It sold in the 170's.
He had another house two blocks away that is a bit nicer than ours and slightly larger. That one sold for $199K last year.
What he didn't have was a house on the next block that looks to be the same size as ours, but maybe not as nice (I didn't see the inside). It sold last year for $209K.
If I go with the 105-110% multiplier, and assume that we're going to get the $166K or so this realtor says, then we could be asking 174 to 182. He suggested that we try this if we want, but only for a week or so. All of his sales seemed to be within $3,000 of asking price.
Time to call him back.
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Note that that I said "no more than 105-110%" of expected sale price. So if you needed to go less than 5% over expected sale price, there's nothing wrong with that.
You mention some homes that sold "last year". How long ago did they sell? If it was closer to this time last year than it is to now you'll need to look at the other, less comperable homes homes in the area to determine the trend for pricing and use that to adjust the truely comperable homes.
When deciding on how to price your home one thing to keep in mind is that you have try to think like a buyer and not as a seller. You have to look at your house as though you were thinking about buying it and what you would use to try to justify getting the best deal on that house that you could.
If I see you house listed for $175k, and then I look at another home that recently sold in the area for $166k that was about the same size and similar curb appeal I'm not going to want to pay more than $166k for your house. I'll either pass on your place as overpriced or I'll offer $166k (or less if I think the market has declined since then) and refuse to budge. That your house is way nicer on the inside won't matter as there's no way for me to know how nice that other house was on the inside.
Mind though, all of those numbers are hypothetical. Get the real ones via your chosen realtor.
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If I go with the 105-110% multiplier, and assume that we're going to get the $166K or so this realtor says, then we could be asking 174 to 182. He suggested that we try this if we want, but only for a week or so. All of his sales seemed to be within $3,000 of asking price.
That's the guy you want. He's letting you try it your way, but on the condition that you re-examine and re-evaluate if your way doesn't work. From the comps it sounds like the guy has done his homework, making reasonable adjustments to the comparable values before applying them to your property.
Brad
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We interviewed two more realtors today, and they both said the house should be priced closer to $180K, with a sale price somewhere from $170 to $177. Both said that all of the new "hardware" made the house worth a bit more than some of the comparable homes that have sold.
Both of these realtors have years of experience, so it's not like they're newbies. One wanted to start at $184, but I thought that crossing the $180 mark would be a mistake.
I'm thinking that the first realtor may have wanted to sell quickly for a commission, even if it's a few hundred less. He was very organized, but I really sensed that he was pushing us into the $160's even though our house is nicer than homes that have sold in that range. One of the realtors we talked to today said that, if we priced the house that low, it would sell in a day.
I know that, for some folks here, $170K is the price of a good garage, but it's a lot of money to us.
Thoughts?
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I'd still take the agent telling you the lower price. Sounds like the other two are trying to tell you what you want to hear, not what you need to hear. Take the advice. Put it on in the 170's for a week, then make adjustments based on showings and feedback.
Brad
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Put it on in the 170's for a week, then make adjustments based on showings and feedback.
I was careful to tell the agents that I had no idea where I thought the house should be priced. However, one of the agents today suggested doing just as you did, and seeing what happens after a week or so at $177K.
The agent from yesterday frustrated me a bit by comparing our house--which is in a desirable neighborhood--to homes that were in far less desirable neighborhoods, and were comparable only in numbers of rooms, size of garage, square footage, etc.
It's unusual to have our assessed value be higher than what a realtor is recommending as a sale price.
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If you're not comfortable with the comps or the way they were figured, don't use them. You can tell if the comprabable property is just that, comparable. You've put a ton of money and effort into your home in the last few years, something that tends to skew the judgement of even the most level-headed and analytical among us. It will take a conscious effort to back off and be objective.
Concentrate on actual marketing, not just the fluff. Even a so-so agent might be a better investment if their company does a better job of marketing. An agent can know every figure, every fact, give you all the right information, and be spot-on with their comps, but if there company has a crappy marketing strategy then they aren't the best choice.
As for the assessed value, it's not surprising. The only relation to market price is that most state laws stipulate that assessed value cannot exceed market value. Assessments are made on the basis of taxation, not market price, and then progressivly increased based on whatever calculation the taxing authority chooses (most use local COLA indexes or have someone do spot comps around the community, average the findings, and apply it community-wide)
Brad
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$179,990 =D
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$179,990 =D
I'll give you $179,989.99. Thats my final offer.
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Going once, going twice... :D
Brad, I was thinking we'd be able to sell in the 180's. Just to be absolutely sure, I've asked another realtor to come on Monday. I didn't let him know any of the prices that have been discussed. He looked at "comparables" on the phone and was talking about pricing in the 190's. One realtor from yesterday started there, too, and I said that was a mistake.
I'm not just going for a fourth realtor for price estimates, though. The first guy worries me, at least for now, because of him wanting to sell in the 160's. The second guy was dressed in a Green Bay Packer jacket and smelled strongly of smoke. The woman whom we met with last evening didn't seem quite on the ball.
I've taken less time to decide on a surgeon. ;)
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Go with your gut. If they don't seem very professional or up to speed on the market now, they sure won't be in the future.
Brad
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I went with my gut, Brad. The guy I met with today was more professional in all respects, had at least as much experience as any of the others, didn't smell like smoke, and is very pleasant to deal with.
He also said $178. Three out of four must be right.
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Well, we signed up last Thursday with the realtor. We've had three showings since, and the couple that looked at the house today is going to write an offer tomorrow.
They were only in here for half an hour. Their agent told our agent that they're going to look at ten more homes this weekend, which will bring the total for the overworked agent to 35 homes.
An offer this soon makes me think that we shouldn't give up a lot on price. Of course, I'm the worst person to make deals.
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Good news!
See what they offer first. You never know 'til you have paper in hand. As for giving up on the price, consider that it might be better to take a few bucks less now than to stick to full price and risk it being on the market for a while and racking up all the extra insurance, taxes, payments, etc. Most of something is often better than all of nothing. But, again, wait until you get the offer and make your decision then.
Brad
Brad
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Thanks for the advice, Brad. I'll wait to see what their offer is.
Any time I've had something sell very quickly, I've regretted doing so later on because I realized I priced it too low.
I don't think I'd write an offer on a house after spending just 30+ minutes in it.
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Some will, some won't. I've had people write offers after less than ten minutes in a house. Others have been back three or four times before they did. To each his own.
Brad
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Well, they came in with an offer of $165K, and my agent is all hot about it. This was one of the three agents who said the house should be in the upper 170's, and shouldn't be in the 160's.
Now he's saying that the offer is 92% of what we're asking, and making it sound like it's a great deal. The buyers were only told about the new furnace. They weren't told about the roof, basement drain tile, sump pump, A/C, electrical, etc. If I wanted $160 I could have skipped all that.
I hope this guy isn't going to try to talk us into accepting $13.5K less.
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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
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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.
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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. >:D
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JJ, I think your buyers were
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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
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or very entertaining if you know how to make them jump. =D
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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 ...
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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
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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 ...
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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.
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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
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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
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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 ... :-X
Thanks again, your assistance is greatly appreciated.
Chester
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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. ;)
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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
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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.
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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
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Thanks.
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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.
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Why don't you rent in AL?
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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.
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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.
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just a thought. :facepalm: 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 =D) won't depreciate much during that time. [popcorn]
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Monkeyleg, the quintisential Liberal. Never happy! =D :lol: :P
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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
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Sheesh, Brad at 10 bucks an answer you could almost afford to take the wife out for dinner. =)
We had a realtor in last fall, his suggested price was way, way low.
Turns out he was with a quick sale bunch - I want to sell this place but not give it away. Anybody looking to move to Minnesota?
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I owe Brad a dinner, at the very least.
I am taking my business with me. It's an internet business, so I'll continue to run it down there just as I do here. I could move almost anywhere and still have the business.
If you can't show income, they can't use it in the DtI calcs.
I have my W2's. I have personal income. The corporation had a couple of years of losses, and losses that are unused to offset taxes paid for one tax year can be carried forward and used in another tax year. The corporation ran a profit, but the accountant used the carry forward to eliminate the tax liability. The same is/can be done with profits.
As my accountant explains it, if the corp showed a loss, then the mortgage company should deduct that loss from my personal income, and vice versa for a profit. The carry forward shouldn't affect income, as it is a loss from three or four years ago.
Monkeyleg, the quintisential Liberal. Never happy!
No, the quintessential conservative, not wanting to pay taxes. ;) (Liberals love taxes as long as they're not paying them).
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As my accountant explains it, if the corp showed a loss, then the mortgage company should deduct that loss from my personal income, and vice versa for a profit. The carry forward shouldn't affect income, as it is a loss from three or four years ago.
In practice, yes. In reality each underwriter has their own unique criteria for how it will be handled. Corporate income is a tricky critter and sometimes underwriters simply don't want to deal with the hurdles it takes to make all the adjustments. They want simple, straighforward numbers. They pick a number, usually something like AGI or Business Profit/Loss (Sched C) and as their benchmark. Those numbers also have a direct impact on how much income tax an individual pays and people try to minimize them. Yes, you pay less in tax, but you also have less "income" to show as a qualification for a mortgage.
First thing I'd try is another mortgage broker. Some brokers simply aren't aware of all the ways income can be calculated. They have their little formula and stick doggedly to it. If you want to try someone else and see if they can do a better job, PM me and I'll give you a local guy to call. Their interest rates are right on the national averages, and with no points or buydowns. Total fees run about $800 for a conventional. (If you end up going jumbo then all that goes out the window, of course).
Brad
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Thanks, Brad. What's happening here is that the underwriter is guessing what the mortgage company's investor will want to see so they can sell the mortgage.
Someone at the accounting firm made a minor mistake and put my net pay in the Compensation of Officers column, and put the withholding I'd deducted in with other taxes. It's a wash, but what's in the compensation column doesn't match my W2. If that requires filing an amended return, then I'd ask the accountant to not take the carryforward so everything will be cleaner, if that's what it takes.
I went through the corporate returns this morning to find any errors, and figured out where the compensation error came from. If I can figure it out, I don't know why an underwriter can't. Anyway, I called my buyer's agent in AL, and he's going to hook me up with a banker on Monday. The banker is who the agent sends clients to when they have complicated finances.
Further complicating things, my accountant's mother died Thursday evening. He's wrapped up in funeral arrangements and dealing with the estate, not to mention tax crunch time. He told me he can't do anything for me until after the 15th of April, which is too late for us to get an approval and close by May 1st.
As I said, going down there and renting will mean I don't get the $6500 tax credit, which would be the first time in my life I would ever get anything from the gubmint. I haven't even ever collected unemployment insurance. Add in another $1000 for moving from a rental home to whatever home we'd eventually buy, then add in any appreciation that might happen to home prices by 2011 and we could lose $10,000+ by waiting.
If it gets any more complicated, I think I'm just going to say screw it and stay where we are for another year.
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I went through the corporate returns this morning to find any errors, and figured out where the compensation error came from. If I can figure it out, I don't know why an underwriter can't.
They may not have a choice. It doesn't matter how innocent or obvious the error, they may be forced by underwriting (or new federal) requirements to use the information in very specific fields of your tax return. If that's the case then there's not a thing you can do except file the amended return.
As for the tax credit, all you have to do is have something under contract by April 30. You have until June 30 to close. If you can't get the main mortgage issue settled by then, look into a bridge. Obviously there will be an expense (two sets of closing costs) but it would get you in a home house and qualified for the rebate. The cost should be less than the rebate so you still come out ahead, just not quite as much.
Brad