Month: October 2011

Real Estate Negotiating Tips

Newton Mass Homes for Sale

1. Go first. Many people hate to be first to toss out a figure because they think they might miss out on an opportunity. (”If I offer $10k and he would have been happy with $5k I’ll spend a lot more than I have to.”) Occasionally that might happen, but it makes more sense to go into a negotiation assuming the other party is smart and has a reasonable sense of the value of whatever they want to buy or sell. Making the first offer lets you set the “anchor” for negotiations to follow. Studies like this one show that when a seller makes the first offer the final price is typically higher than if the buyer made the first offer. Why? The buyer’s first offer will always be low, which sets a lower anchor. In negotiations, anchors matter.

2. Be quiet. When we’re nervous we tend to talk a lot and therefore miss a lot. Let silence be your friend. If you make an offer and the seller says, “No way,” don’t respond immediately. To fill the silence the seller will give reasons why your offer is too low… and in the process may give you information you wouldn’t have received otherwise. Stay relatively quiet, listen, and when you do speak, ask open-ended questions. You can’t meet in the middle (or, hopefully well to your side of the middle) unless you know what the other party really needs. Give them time to tell you.

3. Know what you want. You should always know what you need — and what you’re willing to spend or pay. If you don’t have a clue about the cost of a particular service, don’t expect the other party to educate you; that puts even the most ethical person in an awkward position. At the least have a sense of the market price for the product or service you want to purchase. Then you can adjust your offer based on the quality and quantity you will actually receive.

4. Assume the best case. High expectations typically lead to high outcomes. Ask for what you want, and go into the negotiation assuming you’ll get it. Why not? You can’t receive if you don’t ask. My wife is the eternal negotiation optimist; she always assumes she can make a deal on her terms. And she almost always does — because she confidently asks for what she wants.

5. Avoid setting ranges. Service buyers often ask for estimates in ranges: “I know you don’t have all the information you need, but based on what I’ve told you, what’s a ballpark figure?” Ranges create anchors too. If you don’t have enough information to provide a solid estimate, don’t. And never say, “Well, somewhere between $10k and $20k…” because the buyer will naturally want the final cost to be as close to $10k as possible, even if what you’re asked to provide should cost well over $20k.

6. Only make concessions for a reason. Say a buyer asks you to cut your price, saying, “All I can afford is $500.” Make sure you get something in return. Say, “For $500 I can do X and Y,” and take Z off the table. Every concession should involve a trade-off of some kind; otherwise your price was simply too high to begin with. Use the same logic if you’re buying; the classic home negotiation move is to ask for, say, all the appliances and fixtures when you counter at a higher number. Always ask for something in return, and don’t be afraid to ask for things you don’t really want early on so you have items you’ll be happy to take back off the table later.

7. Never be Harry Truman. Truman kept a sign that said “The buck stops here” on his desk to remind him that his was usually the final decision. In negotiations it’s tempting to say you have the final word and ultimate authority (especially if that’s true.) Don’t. To avoid getting cornered or pressured, always have a reason to step away and get the okay from another person, even if that other person is you.

8. Make time your friend. Never, ever rush. Never see a negotiation as something to wrap up as soon as possible. A negotiation is an investment in time, and most people don’t want to lose their investments, so the more time the other person has in a deal the more they’ll want to close the deal — and the more they will voluntarily give up in order to get you to say yes.

9. Ignore face value. Negotiating is a little like being on Survivor; in the spirit of the “game,” many people feel it’s okay to be less than forthcoming or honest. Don’t assume everything you hear is true. Statements like, “I can’t go a penny lower,” are more likely to be negotiating tactics than truths. Listen, but toss a few grains of salt onto what you hear. Look closely for what lies under the posturing and positioning.

10. Give the other person room. People get defensive or attack when they feel trapped, and neither helps a negotiation move forward. Push too hard and take away every option and the other party may have no choice but to walk away. You don’t want that, because you should…

11. Forget about winning and losing. Negotiating can feel like a game but it’s not. No one should win or lose. The best negotiations leave both parties feeling they received something of value. That’s how you want a negotiation to end up, because a negotiation should…

12. Create a relationship. Take, but don’t take too much. Give. but don’t give too much. Establishing a long-term business relationship should always be your goal.

And when you’ve finalized the deal, say thanks — and mean it.

Boston is 4th Worst City to Rent in the Country

Best And Worst Cities For Renters

Steve Dunwell/Getty Images


Worst Cities, No. 4: Boston, Mass.

Average Monthly Rent: $1,625
Change in Rent year-over-year: 3.6% increase
First Quarter Vacancy Rate: 4.6%
Mortgage Payment v. Rent Payment: $598 cheaper to rent

6 Extreme Personality Types You’ll See At Open Houses

Newton, Mass Homes for Sale

Mood of the Market


Inman News™

From the profane, underhanded real estate agents of “Glengarry Glen Ross” (intensely depicted by an ensemble cast including Jack Lemmon, Al Pacino, Kevin Spacey, Alan Arkin and Alec Baldwin), to the affirmation-chanting agent portrayed by Annette Bening in “American Beauty” and Rodney Dangerfield‘s embezzling mortgage broker in the Richard Pryor film “Moving” — fiction has long seemed engrossed with extreme exaggerations of real estate pro stereotypes.

What these writers don’t seem to recognize is that there are “types” of real estate consumers, too; and nothing brings the most extreme consumer types out of the woodwork than a good old-fashioned open house. Here are a few you might see, if you decide to venture out this weekend:

1. The Voyeur. The Voyeur is the neighbor, from next door or around the corner, who has come by for strictly lookie-loo purposes. Once upon a time, Voyeurs primarily stopped at open houses to check out the neighbor’s decor or landscaping — or to snoop in their drawers. Given the turn the market has taken, though, many Voyeurs hope to keep track of how property values in the area are trending, in part, through their open-house visits — it’s the best way to track what kind of property sells for what kind of price.

2. The Poser. The Poser is the seller who lets the agent in, bids the agent adieu, and then comes back an hour later with a backpack and baseball cap on, posing as a visitor — almost always to the agent’s total and complete horror and surprise. Posers thinks that no one can show their house like they can show their house, so they walk around chatting other, real prospective buyers up, casually commenting on the amazing drapery (“wow — that looks custom!”) or the wide variety of fruit trees in the backyard (“plums, peaches and lemons — it’d be like having your own private orchard — and what a great price”).

3. The Lure. I once went to a public open house (i.e., not a broker’s open house) in a decidedly non-luxe home, where the postage stamp-sized urban backyard had been turned into a scene from the South of France, complete with an entire crew of individuals who qualified as Lures — including waitstaff members busily passing heavy hors d’oeuvres and espresso-pulling baristas. Word on the street is that Thai-massage practitioners and Botox doctors are among the next-gen open house Lures now being used to attract agents who represent prospective buyers into open houses.

4. The Crack Negotiator. The crack negotiator is usually a relatively serious buyer who thinks, bizarrely, that they’re going to go the process 100 percent DIY (do-it-yourself) and that they have the skills to cut a crazy good deal by making an insanely lowball offer — during the actual open house. Not deterred in the least by the facts that the seller is not there, that the listing agent’s junior assistant is actually holding the place open or that they should actually be making this offer via a proposed contract, Crack Negotiators think if they make enough 40 percent-off offers by scrawling a number on a napkin at the kitchen table, someone is bound to take it in this market.

5. The Amateur Inspector. By contrast with the Crack Negotiators, most of whom lose their screwball tactics after a couple of dozen rejections and then move on to successfully purchase a home, the Amateur Inspector is typically a lookie-loo type or real estate hobbyist posing as a serious buyer. Amateur Inspectors think they’ll impress someone with the extent of their knowledge (acquired almost entirely by watching Bob Vila on vintage “This Old House” episodes), and aim to win admirers by mildly stalking true prospective buyers and agent attendees around, pointing out every wall crack, faucet drip and floor slope in the place.

6. The Besotted Buyer. Besotted Buyers saw the listing come online, have driven by 12 or 13 times in advance of the open house, and have bitten their fingernails the whole four days between the time the listing was published and the first open house. They come, they see and they just know — this house is “The One.” But sometimes, in their possessiveness about the property, they begin to act out, coming back to the open house over and over, even trying to nonchalantly discourage other attendees about the property, suggesting it is overpriced and making a big to-do of the few flaws they can find.

The economy has created some extremes in the housing market, and open houses seem to bring out those with extreme personalities who love to look at and shop for real estate. The upside? These folks transform open-house hunting into a spectator sport — not just for home viewing, but for people-watching as well. Have fun!

Making A Realistic Offer to a Resistant Seller

Newton, MA. Homes for Sale:

This article was written by Amy Hoak from Dow Jones, however, the title of the article is How to Make A “Lowball” Offer. I submit that a property that has been languishing on the market for a few months is an overpriced home. In reality you are submitting a market rate offer to an unrealistic seller. I can be reached at 617-921-6860 or to discuss this very important distinction.

For some home sellers, it was a long summer without a home sale. That means this fall, some buyers — smelling the desperation — may be able to cut a better deal.

Top mistakes when making a low-ball offer on a home: If you’re thinking of making a low bid on a home, avoiding these mistakes will increase your chances of getting an accepted bid. Amy Hoak has details on Lunch Break.

“Sellers who had their homes on the market all summer are anxious to move on, especially before the holidays hit,” says Bill Golden, a real-estate agent with ReMax in Atlanta. The closer it gets to the holidays, the more anxious unsuccessful sellers can become, he says.

Other sellers will choose to let their listings expire and try again next year. They, too, may be willing to make a deal in order to sell their properties, even if they’re no longer actively trying to sell their place, says Patrick Carlisle, chief market analyst for Paragon Real Estate Group in San Francisco.

The key to making an aggressive “lowball” offer on a home is to start by finding properties that have languished on the market for a long time. The softer the market, the more likely the strategy will work, Mr. Carlisle says.

But buyers can get tripped up. Here are six things you need to do when making a lowball offer.

1. Understand the market

Before submitting an offer, your real-estate agent should do a full comparative market analysis of the property to determine what its fair market value is, Mr. Carlisle says.

For instance, it’s still a buyer’s market in the Richmond, Va., area, where Susan Stynes works as a real-estate agent for Long & Foster. Ms. Stynes says she wouldn’t hesitate to encourage a client to make an aggressive offer, after considering the time the property has been on the market and neighborhood comparables.

But in other markets a low offer won’t get you far, says Stephen G. Kliegerman, president of Halstead Property Development Marketing in New York.

2. Pick the right real-estate agent
[sjMW1009]Tim Goldman

Some real-estate agents caution buyers against making an offer that is so low it could offend the seller and halt the negotiation process.

But sometimes agents are too reluctant to make aggressive offers, Mr. Carlisle says. They may be more focused on completing a deal and collecting their commission, rather than making the best deal. Or their negotiation skills might not be up to par.

“If it’s an appealing, well-priced property that has five or six offers on it, well, going in 10% or 20% under asking isn’t going to get you anywhere,” he says. But on a property that has been overlooked by the market and doesn’t have multiple bidders, it often doesn’t hurt to go in low.

3. Back up your price

There’s an art to presenting an offer that’s substantially under the asking price. A low offer could start negotiations off on the wrong foot if you’re not careful, Mr. Golden says. The key is for you or your agent to explain the offer when presented.

“Sellers want to know why you’re coming in so low. Include recent [comparable sales in the area] or issues with the property that validate why your offer is so low,” he says. Don’t be too harsh with your criticism, however — that can also work against you, he adds.

4. Know what you’re willing to pay

Buyers these days have a strong motivation to get the best possible price on a property, especially if they believe that home values will fall even more, says Jay Butler, professor emeritus of real estate at the W. P. Carey School of Business at Arizona State University. Their biggest worry is often that people will say they overpaid, he says.

But sellers have limits, too, most often dictated by the amount of home equity they have, Mr. Butler says.

Before negotiations begin, it’s important for a buyer to decide what his walk-away price is, Mr. Carlisle says. “At some price point, the deal is no longer worth doing, no matter how great the property.”

While a buyer should know how high she is willing to go, don’t put limits in the first offer, Mr. Kliegerman says. You lose integrity if you say it’s your “best and final” offer, but then are willing to come up with a few thousand dollars more in order to buy the property.

5. Make a clean, easy offer

When you make a low bid, you want other elements of the offer to be attractive to the seller. And a deal that can close quickly often will have appeal.

Make sure there are as few contingencies as possible, Mr. Golden says. It’s best if buyers don’t have a home to sell in order to buy the one they’re bidding on, Ms. Stynes says.

Also, have your financials in order from the start. Loan qualification is more difficult these days, so it’s important to have a lender pre-approval letter, Mr. Carlisle says.

6. Be smart about a cash deal

Cash is king, but in the end, a seller often wants the most money for his home — regardless of if the buyer needs a mortgage or not. So don’t think making an all-cash bid will automatically mean an accepted offer.

If the seller is a bank because the property is a foreclosure, the institution may accept a lower offer from a cash buyer, as opposed to someone who needs a mortgage, Mr. Golden says. Banks often don’t want to deal with mortgage-related delays.