Fielding a Lowball Purchase Offer on Your Home

By: Marcie Geffner
Published: June 10, 2010

Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.

You just received a purchase offer from someone who wants to buy your home. You're excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond? Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal.

Check your emotions
A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that's a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer
Unless you've received multiple purchase offers, the best response is to counter the low offer with a price and terms you're willing to accept. Some buyers make a low offer because they think that's customary, they're afraid they'll overpay, or they want to test your limits.

A counteroffer signals that you're willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you'd like to take with you.

Consider the terms
Price is paramount for most buyers and sellers, but it's not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps
Ask your REALTOR® whether any homes that are comparable to yours (known as "comps") have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer's comps
Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don't include comps to justify their low purchase offer, have your real estate agent ask the buyers' agent for those comps.

Get the agents together
If the purchase offer is too low to counter, but you don't have a better option, ask your real estate agent to call the buyer's agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer's agent) has a reputation for lowball purchase offers. If that's the case, you might feel freer to reject the offer.

Don't signal desperation
Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home's listing describes you as a "motivated" seller, you're signaling you're open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you're motivated, the next purchase offer you get might be more to your liking.







Marcie Geffner is a freelance reporter who has been writing about real estate, homeownership and mortgages for 20 years. She owns a ranch-style house built in 1941 and updated in the 1990s, in Los Angeles.




Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright 2010.  All rights reserved.

7 Tips for a Profitable Home Closing

By: G. M. Filisko

Be sure you're walking away with all the money you're entitled to from the sale of your home.

When you're ready to close on the sale of your home and move to your new home, you may be so close to the finish line that you coast, thinking there's nothing left for you to do. Not so fast. It's easy to waste a few dollars here and for mistakes to creep into your closing documents there, all adding up to a bundle of lost profit. Spot money-losing problems with these seven tips.

1. Take services out of your name
   Avoid a dispute with the buyers after closing over things like fees for the cable service you forgot to discontinue. Contact every utility and service provider to end or transfer service to your new address as of the closing date.
   
   If you're on an automatic-fill schedule for heating oil or propane, don't pay for a pre-closing refill that provides free fuel for the new owner. Contact your insurer to terminate coverage on your old home, get coverage on your new home, and ask whether you're entitled to a refund of prepaid premium.
   
   
2. Spread the word on your change of address
   Provide the post office with your forwarding address two to four weeks before the closing. Also notify credit card companies, publication subscription departments, friends and family, and your financial institutions of your new address.
   
   
3. Manage the movers
   Scrutinize your moving company's estimate. If you're making a long-distance move, which is often billed according to weight, note the weight of your property and watch so the movers don't use excessive padding to boost the weight. Also check with your homeowners insurer about coverage for your move. Usually movers cover only what they pack.
   
   
4. Do the settlement math
   Title company employees are only human, so they can make mistakes. The day before your closing, check the math on your HUD-1 Settlement Statement.
   
   
5. Review charges on your settlement statement
   Are all mortgages being paid off, and are the payoff amounts correct? If your real estate agent promised you extras-such as a discounted commission or a home warranty policy-make sure that's included. Also check whether your real estate agent or title company added fees that weren't disclosed earlier. If any party suggests leaving items off the settlement statement, consult a lawyer about whether that might expose you to legal risk.
   
   
6. Search for missing credits
   Be sure the settlement company properly credited you for prepaid expenses, such as property taxes and homeowners association fees, if applicable. If you've prepaid taxes for the year, you're entitled to a credit for the time you no longer own the home. Have you been credited for heating oil or propane left in the tank?
   
   
7. Don't leave money in escrow
   End your home sale closing with nothing unresolved. Make sure the title company releases money already held in escrow for you, and avoid leaving sales proceeds in a new escrow to be dickered over later.

G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright 2010.  All rights reserved.

6 Tips for Choosing the Best Offer for Your Home

Article From BuyAndSell.HouseLogic.com

By: G. M. Filisko

Have a plan for reviewing purchase offers so you don't let the best slip through your fingers.

You've worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You'll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here's a plan for evaluating offers.

1. Understand the process
   All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.
    
2. Set baselines
   Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won't fall apart because the buyer can't get a mortgage, require a prequalified or cash buyer.
    
3. Create an offer review process
   If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.
    
4. Don't take offers personally
   Selling your home can be emotional. But it's simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don't be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.
    
5. Review every term
   Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures-such as appliances, furniture, or window treatments-to be included in the sale that you plan to take with you?
   
   Is the amount of earnest money the buyer proposes to deposit toward the downpayment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.
   
   Have the buyers attached a prequalification or pre-approval letter, which means they've already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can't get a mortgage, and they'll take their earnest money back, too. Are you comfortable with that uncertainty?
   
   Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer's proposed closing date mesh with your timeline?
   
   With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?
    
6. Be creative.
   If you've received an unacceptable offer through your agent, ask questions to determine what's most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.

G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright 2010.  All rights reserved.

Assess your risk of identity theft, and protect your personal information

On-line privacy ... and privacy of your personal information ... can be assessed and protected.


As with locking down your credit histories (see earlier posting), there are some web sites and services that can be of help. Here they are: 

• Assess your risk of identity theft at http://www.myidscore.com/
• Get a copy of your file from the Medical Information Bureau at http://www.mib.com/html/request_your_record.html
• List yourself with the Direct Marketing Association’s opt-out service to reduce junk mail. https://www.dmachoice.org/MPS/
• Make sure all your phone numbers are on the national Do Not Call Registry. https://www.donotcall.gov/

It's also a good idea to make a photocopy of your passport and the contents of your wallet (fronts and backs of credit cards, licenses, etc.), and keep it somewhere safe. In case your wallet is stolen, you'll have a copy of the credit card numbers, the "magic numbers" on the back, and the phone number to call.

Lock your credit histories and further protect your identity

When applying for a mortgage, it's easier - and you can get better interest rates - with a clean credit history. Consider putting a security freeze on your credit report. (Doing it yourself is easy - and much less expensive - than paying one of the companies that wants to charge you a monthly fee for doing the same thing!)

Upsides:

• No one (including you) can open “instant credit”. It takes additional action on your part to unfreeze your reports first.
• You must have a special identification number to open your credit file (the number is sent to you when you request the freeze).
• You can lift the freeze immediately, temporarily, permanently, or for a specific business or lender any time via phone or the web.
• Companies you’re already doing business with can continue to access your information. 
• If you have a police report documenting identity theft against you, you can freeze and unfreeze your histories for free.

Downsides:

• You have to plan ahead if you want to open a bank account, line of credit, or investing account with a new institution.
• Depending on which state you live in, the cost for freezing your history with each agency may cost you up to $10.
• Depending on which state you live in, it may cost you an additional $10 with each agency to “unfreeze” your credit to open a new line (I have successfully negotiated reimbursement for that to come from the company that wants to grant me credit, however).

Further information on security freezes is available at the web sites for each of the three agencies (the specific links change from time to time, so here’s the landing pages - search for "security freeze" once you get there):

• Experian
• TransUnion
• Equifax

The credit reporting agencies are not particularly enamored of security freezes, since they make it harder for companies to send unsolicited offers of credit.

While you're at it, opt out of receiving pre-approved credit offers or offers of insurance at 1-888-5OPTOUT begin_of_the_skype_highlighting              1-888-5OPTOUT      end_of_the_skype_highlighting, or at www.optoutprescreen.com - this will reduce or eliminate credit card offers being sent to you (and then waiting in your mailbox to be stolen).

Short Selling Basics for Sellers

Navigating Short Sales: What to Do When the Sale Price Leaves You Short
If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

• Refinancing your loan at a lower interest rate
• Providing a different payment plan to help you get caught up
• Providing a forbearance period if your situation is temporary

When a loan modification still isn't enough to relieve your financial problems, a short sale could be your best option if

• Your property is worth less than the total mortgage you owe on it.
• You have a financial hardship, such as a job loss or major medical bills.
• You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional* and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest.

A qualified real estate professional can:

• Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
• Help you set an appropriate listing price for your home, market the home, and get it sold.
• Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
• Ease the process of working with your lender or lenders.
• Negotiate the contract with the buyers.
• Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can't sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale "package" that accompanies any offer typically must include

• A hardship letter detailing your financial situation and why you need the short sale
• A copy of the purchase contract and listing agreement
• Proof of your income and assets
• Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender's review of the short-sale package can take several weeks to months. Some experts say:

• If you have only one mortgage, the review can take about two months.
• With a first and second mortgage with the same lender, the review can take about three months.
• With two or more mortgages with different lenders, it can take four months or longer. 

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender's loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don't expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

• You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can't pay back the balance, talk with your real estate attorney about your options.
• Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
• Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

Your Mortgage Lender Doesn't Want to Foreclose!!

As a Short Sale Specialist, I find myself constantly reassuring distressed homeowners. The majority of people I work with are under the mistaken impression that their lender is awaiting the opportunity to foreclose on them with some kind of sick elation! Nothing could be further than the truth. Banks are businesses and as such, accustomed to making a profit! It typically costs more money for a bank to pursue a foreclosure than to allow a motivated seller to short sell their home. In general, it is thought that banks make 20% to 30% more on a short sale than they would on a foreclosure. There are some exceptions to that rule though. State by state, the numbers are different. In Florida, for instance, it is very inexpensive for a bank to initiate a foreclosure. In Indiana, my home state, the foreclosure process is lengthy and that time equates to money spent! Usually on a short sale, if a house is appropriately priced, an offer will come in closer to market price than if that house has gone through foreclosure. The bank assumes additional carrying costs during the foreclosure process which include maintenance, utilities and repairs. The bank also assumes additional risk during the process because of vacancy - vandalism is a concern. If the bank has the opportunity to avoid these additional costs, including the cost that directly correlates with time, they will most definitely agree to work with the homeowner that wants to try to short sell their home instead of foreclosing on that homeowner and taking their house back! If you need additional information to help determine whether or not short selling is the right option for you, or you want information relevant to options other than foreclosure, please email me at rbcramer8@gmail.com. I'm happy to talk to you! We're all in this together!!