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Real Estate on the Cheap: How to Craft a Lowball Offer - MSN Real Estate 10/19/2011

I guess October 19th was my day for reading MSN . . .

As an real-estate broker who works frequently as a Buyer's Agent, I have been making "Lowball" offers on REO's (and even some seller-owned) properties for years.  Many of my investor clients have made hundreds of thousands of dollars by allowing me to guide them to the best REO's, hammer out the best prices, assist them with determining the correct items to repair for increasing the property's worth, and then reselling.  However, I have learned, the rules are different for buyers who are looking for a great deal on their dream home.  We can still negotiate fabulous deals, but will loose the home if we try to be as agressive as those investors who are not emotionally involved in the property.  It takes a lot of research, patience, and luck to land the fabulous buys.  How to approach the negotiation shouldn't be taken lightly . . .

Real estate on the cheap: How to craft a lowball offer.  A buyers market isn't necessarily a free-for-all.  Here are tips on how you can score a great bargain in your next home purchase. 

By Leah Culler of MSN Real Estate

We all love getting a good deal, particularly in this economic climate.  Whether you're saving 75 cents on a bag of frozen french fries or "$5,000 on a new home, frugality is in.  That's the idea behind "Real estate on the cheap," on MSN Real Estate.

The art of the lowball offer:  To kick it off, let's talk about that all-important step after you've found your dream home: submitting the offer.  If you're following the numbers, you're probably aware that most U.S. markets still favor homebuyers.  That may lead you to believe that sellers are desperate and will take any offer you throw at them . . . You'd be wrong.

While sellers may be more willing to negotiate now than they were in 2006, for instance, you still must perfect the art of the lowball offer.  The key is research.  An agent in Northern California states, "you must know everything about the market, the property, the seller and yourself."

The Market: There is no such thing as a national real-estate market, which means all this talk of a buyer's market may not even apply where you live.  Even in a seemingly depressed market, certain price ranges and amenities are still sought after and may be moving quickly.  Your real-estate agent can find out whether comparable homes are selling quickly or slowly and at, above, or below asking price.

The Property: How does the price of the property compare with those of comparable homes?  How long has the home been on the market?  The longer it has been listed, the more likely the seller may be to entertain lower offers.  "If it has been on the market for months or even years and there have been no offers, at some point the seller is going to give up and either accept a much lower price or just resolve not to sell it," Byrd says.

Another factor is whether the home will require a lot of work, says a real-estate agent in Virginia Beach, VA.  "One house had a tarp over the roof, and a lot of investors were avoiding it because they didn't want to deal with it,' she says.  "I had a group make a low offer, and it was accepted. If you're willing to do the work, you can generally find good deals on fixer-uppers."

The Seller:  If sellers already have purchased another home or are starting a job in a new city and must sell quickly, that will affect their willingness to settle for less.  Being flexible on the terms of a contract also can translate into a lower price.  For example, if the seller plans to move to a new home still under construction, he might accept a lower price in return for a rent-back agreement allowing him to stay in the home for some period after closing.

Yourself: Are you in love with the house or with getting a good deal?  If the former, you would probably want to offer something closer to market value in order to lock it up, particularly if it's in a market with intense buyer competition.  If the latter, take a shot at whatever is in the lower hemisphere of fair and see how things develop.

A buyer's best bet for finding a great deal is to buy a short-sale property.  That said, you must be sure you're cut out for what is usually a long, difficult process.  You can get a bargain when buying a foreclosure, but those homes are typically priced based on what is owed to the bank rather than their actual value (unless, of course, it needs serious repairs).

If you're looking at a distressed property, be realistic about whether you can handle buying a property "as is".  If you've never picked up a hammer, the money you save on the purchase may not be worth the hassle and expense of hiring contractors to make updates - or even to make the home livable.

I have made some changes, paraphrasing, and ad-libs to this article.  To read the original article, go to http://realestate.msn.com/real-estate-on-the-cheap-how-to-craft-a-lowball-offer.

What Real Estate Agents Do For Buyers . . . MSN Real Estate October 19, 2011

I saw this article on MSN Real Estate a few days ago, and thought it was a pretty good one for first time home-buyers to review.  Everyone has heard "It is a Buyer's Market", but fewer people than one would expect actually choose a Buyer's Agent to assist them with their purchases.  Likely this is because few people understand Buyer's Agency, or that - unless they specifically enter into a Buyer's Agency agreement - the Real Estate Agent helping them is a Seller's Agent and is obligated to represent the Seller in the transaction.   If you would like more information about Buyer's Agency in Georgia or South Carolina, please call 706-376-PROS (7767) or email Julie@PropertySourcePros.com anytime, and I can help guide you through the process . . .

What real-estate agents do for buyers; First-time homebuyers research online but use real-estate agents for complex tasks.  By Michele Lerner of Bankrate.com

Homebuyers, including first-time buyers, usually use the Internet for the preliminary work of finding homes for sale and collecting information on neighborhoods and recent sales.  But those buyers, particularly if they are first-timers, should use real-estate agents to indentify long-term value in properties, negotiate prices and ensure that deals go through.

Functions of buyer's agents: "Many first-time homebuyers will not be purchasing their dream home as their first place, and (they) often have difficulty seeing the true value in homes," says a real-estate agent in Seattle.  "Since may of these buyers will be moving in the future, I think it is a good idea to think about resale when the buyer is purchasing.  Buyers may not be aware of things like the problem of living on a busy street, or know to check on issues with homeowner-association covenants."

A buyer's agent can point out potential issues that could affect the resale price of a home and suggest changes to increase the home's value.

"I have a three-legged approach to working with buyers," says an associate broker in Arlington, Mass.  "I start by getting to know what the buyers want by picking up on the hidden signals that a prospective buyer shows when they see a home.  They may not know what they want, but they can feel what they want.  When I'm showing a house that absolutely does not work, I dig into why it doesn't work.  When we see other houses that may be a better fit, we discuss what does work for them and why." 

The other two parts of the approach are negotiating a transaction and bringing that transaction to settlement.  "The most important function of a {buyer's agent} is negotiating a good deal on behalf of the buyer and educating the buyer about the market," says a managing broker in McLean, VA.  "First-time buyers should rely on their Realtor to provide them with data about comparable homes that have sold, how long a home has been on the market, what homes haven't sold and all the activity that has been happening in the local real-estate market.  Ultimately, it is the buyer's decision what price and terms they wish to offer.  However, buyers should be able to rely on their Realtors to guide them toward an educated offer on the home."

The agent points out that negotiation occurs not only at the beginning of a transaction over price and terms, but also possibly after a home inspection, an appraisal and at other times between contract and closing.

Fair-housing laws and real-estate agents:  While real-estate agents can help buyers in myriad ways, there are some things they cannot do:  "Fair-housing laws prohibit discrimination.  Thus, an agent cannot steer a client to or away from particular neighborhoods based on their knowledge of an area's demographics.  Further, agents cannot explicitly describe a neighborhood based on racial, religious, age or other demographic criteria.  The agent can point buyers to websites and other reference sources where buyers can discover this informaiton for themselves."  As one realtor interviewed says, "Our job is to talk about the home, not the people."

Working with other professionals:  First-time homebuyers need to recognize that they must work with other professionals during the homebuying process, such as an attorney, inspector, and mortgage lender.  "Agents are not lawyers, home inspectors, mold experts, financial advisers or tax advisers.  While a real-estate agent can give some general background information in each of these areas, they cannot claim to be an expert and must suggest that the buyer retain the services of one of these other professionals should the need arise."

The biggest concern for most buyers today is whether a home will keep its value.  An experienced buyer's agent can provide a buyer with the local market knowledge needed to make an informed decision about what to buy and how much to spend. 

I made some changes and paraphrases for this blog post.  Read the original article online at: http://realestate.msn.com/what-real-estate-agents-do-for-buyers