Posts Tagged ‘buyer advice’

5 Things to Try When Buyer’s Appraisal Comes in Low

Friday, March 3rd, 2017

Home buyers these days have many hurdles to jump through in order to finally purchase a new home, from finding a home, to making an offer in possible multiple offer situations, to actually getting to closing without other issues. One such issue is appraisal – with inventory so low and prices climbing to meet demand it is not out of the ordinary for an appraisal to come in on the low side. But have no fear – there are a few things you can do to keep the sale moving along.

1. Renegotiate price/ compromise. If the home does not appraise there is always an opportunity to renegotiate price with the seller. Either the price can be negotiated down to the appraisal price, or the buyer and seller can agree on a compromise (for example, if the appraisal comes in $10,000 under contract price the parties can split the difference – buyer pays $5,000 more in cash and seller lowers the price by $5,000). However, if the seller had multiple offers there may be another buyer willing to pay that high price just to get into contract, so sometimes a seller will not renegotiate. It is always worth a try though, because if the other potential buyers are getting loans the seller could wind up in the same position.

2. Pay the difference with cash. Lenders are only concerned with the appraisal only because it affects the borrower’s loan-to-value ratio. The lender will only make a loan based on the contractual amount or appraised value.

3. Seller can carry a second loan. If you cannot lower the price and the buyer cannot pay cash over appraisal value, the seller can offer to carry a small second loan to make up the difference. The problem with this is that often the interest rate is higher than normal, but you can negotiate with the seller

4. Challenge the appraisal and ask for another to be ordered. Depending on the type of loan the buyer is obtaining this can be a possibility. If there is a good reason to challenge the appraisal with a conventional loan, say the appraiser was from out of the area or did not know the reasons why comparable properties sold for different prices (maybe your home is highly upgraded or has a better lot or view, etc.), then the appraisal can be challenged and you can ask for a second appraisal. Make sure that you provide comparables and an analysis of their sales to the new appraiser or to the lender – a job that the listing agent should have done (but even if s/he did there could still be other issues that did not bring in the appraisal value to the contract price). Talk to your agent and mortgage professional and figure out a plan that works best.

5. Cancel the sale. If there are no other options available the buyer has the right to cancel the sale without losing any deposits (unless otherwise agreed in the contract).

The bottom line is that there are potential solutions if your appraisal does not come in at contract value, so don’t panic. Make a plan with your agent and mortgage professional and see what you can do. Most of the time there will be a valid solution.

RSS Feed

3 Reasons Why You Need a Realtor When Buying a New Construction Home

Wednesday, August 31st, 2016

A good real estate agent is golden when it comes to assuring that all your needs are met as a buyer – from searching for the right home to negotiating, to making sure all obligations are met as a buyer and that everything needed from the seller has been provided. It not just about getting to the close of escrow, but also about protecting your legal rights as a buyer and making sure there are no surprises once you do close escrow. house_shoppingcart

When it comes to the purchase of a new construction home many buyers end up using builder sales representatives, partly because they are there on site and make it easy, and partly because buyers do not know why this can actually be detrimental when it comes to their rights. Here are the top reasons why working with your own real estate agent can help you when purchasing new construction:

1. Dual agency dilemma: When you work with a builder representative, their first allegiance is to the builder. Once they represent you as well then dual agency comes into play. If you are a frequent blog reader you know how I feel about dual agency (click here to read more), and the dangers it brings. In the alternative, it is better if you have your own representation so that the allegiance is only to you – that person can look our for ONLY your best interests.

2. Extra set of eyes and problem solver: Once again, if you have your own representative Realtor to look over the new construction contract then s/he may point some things out to you that you might be able to alter to suit you better. For example, including items that do not come with the home, or extending deposit dates. A good real estate agent is there to assist you and make sure that you benefit. The builder does not care to whom it pays the commission – they just want to get the home sold. Even if you the builder uses its own contract (as opposed to state or local real estate association documents), your agent can still be with you while the documents are presented and help you decipher them.

3. No extra cost to you: Many buyers make the mistake of believing that if they work directly with a builder sales representative, they will save money on the purchase of their new home. This is not true – the builder takes into account the commissions when setting home prices. The builder wants to sell the home, and while it may  (key word – “may”) pay out less commission to an on-site sales rep, most builders do cooperate with brokers and advertise such. A buyer is not going to gain anything by working with an on-site sales rep versus an outside agent. In fact, an outside agent who is a good negotiator may be able to help negotiate perks and price adjustments on your behalf. Either way the builder is going to pay a commission, so why not take advantage of independent representation – someone who has ONLY your interests in mind and not those of the builder. There is no cost to you as a buyer.

When looking at the possibility of purchasing a new construction home, make sure you are well represented. Your interests should be first and foremost.

RSS Feed

Buyers and Buyer’s Agents: How to Avoid Losing a Sale

Thursday, September 10th, 2015

Recently I had a sale fall apart at the 11th hour, and it could have easily closed had the buyer’s agent been in constant communication with his client’s mortgage professional. It was very frustrating for my seller, who was trying to accomplish a 1031 exchange and close the sale prior to closing a purchase – she ended up canceling a sale after issuing a notice to perform and close escrow. This could have been prevented, but a few people dropped the ball, including the agent.

If you are a buyer’s agent, please read on. If you are a buyer, also please read on and make sure your agent is doing his/her part to assure you close escrow on your next home. fault

If you are a buyer’s agent you must stay in constant communication with your buyer’s mortgage professional. You can never sit back and assume things are going smoothly. It is NOT the listing agent’s job to chase your client’s mortgage professional.

All buyer’s agents need to do the following in every sale, even if the mortgage professional seems to be on top of things – because the minute you know there is a problem, the better chance you have of helping to remedy it.

  1. Call and email the mortgage person immediately upon getting an offer accepted – introduce yourself and provide all your contact information.
  2. Forward the contract and related documents to that person right away, including a synopsis of deadlines (I like to email this and highlight it – even though the mortgage professional will have all the information in the contract, it helps to remind them).
  3. Check in with the mortgage person several times a weeks to get a progress report, or let him/her know right off the bat that you would like a progress report emailed to you on Tuesday and Friday, even if there is not much to say. If you don’t get it, call or email.
  4. Make sure you get any further documentation to the mortgage professional right when it is requested.

If you already have a relationship with a preferred lender you know how that person works, and that will undoubtedly help you and your buyer. I know when I am working with my preferred lender, and a few others out there who have great communication skills, that I will always know what is going on with my client’s loan and there will be no surprises.

As the old adage goes, no one can do it better than you can do yourself – so buyer’s agents: please take those words to heart and make sure you are on top of your transactions. You will make your clients very happy in doing so and you will be more successful.


RSS Feed

How to Win in Multiple Offer Situations

Thursday, July 26th, 2012

Lately I have been involved in quite a few multiple offer situations, both as a listing agent and as a buyer’s agent. As a listing agent I always feel sad for the people whose offers do not get chosen, especially when they have expressed how much they love and want the home. As a buyer’s agent I have to get creative, to give my buyers the best shot possible of having their offer accepted. There is no guarantee that adhering to the following advice will get your offer accepted over other offers, but it will definitely put you in the best position possible.

Here are my suggestions to make sure you present the strongest offer possible in any situation – as a listing agent I know that when I see an offer with these qualities, it has a much higher chance of being accepted by the seller and myself.

1. Put your best offer on the table. In such a market where multiple offers are common, and especially when you find a great property, it is imperative that you write the strongest offer. By this I do NOT mean you should write an offer way over asking price. Instead, your agent needs to thoroughly review the comparable sold properties with you, take into consideration condition and location, upgrades and amenities, and then write the best offer possible.

As an aside, if you know there are multiple offers and you are getting a loan, coming in with an offer that is much higher than asking, although it may seem like a great idea, could actually end up sending your offer to the bottom of the pile as well. I would rather have a strong offer at market value, taking into considerations any upgrades/improvements, etc., as there is a better chance for appraisal and closing on time.

2. Submit a pre-approval letter (not just a pre-qualification) AND proof of funds if you are getting a loan. A preapproval letter is stronger than a prequalification letter, so discuss with your mortgage professional about getting one. For a good explanation on the difference click here. Also, if you are obtaining financing I highly advise you to submit proof of funds that you will use for your initial deposit and downpayment, to show that you can do what the contract states. Likewise, if you are paying cash submit that up front as well.

3. Have your agent call the listing agent and get all pertinent information before writing an offer. This is very important, and makes for less of a chance of a counter offer. Your agent needs to find out whether there is anything that the seller or bank would like to see in the offer, who they prefer to use for title and escrow, whether a short sale lender will pay for certain items like termite work and home warranties, and anything else that may be beneficial (such as items that do not convey with the sale, or whether there is a preference for the length of escrow, or an amount that is preferred for the initial deposit, etc.) Finding out about any of these items could give you an edge over other offers that may have been submitted, as yours will not require such items to be countered.

4. Write a “clean” offer. This is always good advice, especially in a situation that may warrant multiple offers. By “clean” I mean to keep your contract simple, and only ask for things out of the ordinary if you  have to.

5. Submit a letter to the seller or bank with your offer. I never submit an offer without some kind of letter. If it is a traditional sale, I always encourage my buyers to write the letter to the sellers, explaining why the home is perfect for them. It really makes the offer more personal. If it is a short sale or a bank-owned property, I write the letter. I submit comparables and a complete analysis, photos (if necessary) to back up our offer price, and information about the sellers – nothing personal here, just facts and numbers, as that is what the bank cares about.

It is always important to do your homework before submitting any offers…if you take the time to do so, and follow the above advice, you will have a higher chance of successfully purchasing your new home or investment property. Best of luck, and let me know if it works for you!



Photos courtesy of Dreamstime

RSS Feed