Tuesday, April 24, 2012

Are you Truly Ready to Make Your Offer to Buy a Home in New Jersey?

Making an offer: Everyone assumes that all there is to an offer is the price. This is not always the case. The components of an offer include the following: 1. Price 2. Amount of money being put down 3. Type of loan 4. How quickly you plan to close 5. How soon you plan to conduct your home inspection 6. Whether you plan to put a $ cap on possible home inspection issue repairs or waive home inspection negotiations 7. Whether you plan to waive your right to test for Lead Paint (yes, I know an offer that lost out to another party because the other party waived their right to inspect for Lead Paint). 8. And, let us not forget the opportunity for you, as the buyer, to have bonded with the seller as a result of personal meetings or at least through a written introduction provided by your Buyer Agent. Here is some advice for Buyer's that are planning to make an offer on a home: Obtain Crucial Data Before Making a Home Offer It's always helpful to find out why the seller is selling; however, you might not be able to obtain that information and a good listing agent will often refuse to tell you. Why? So you can leverage knowledge to your advantage in making an offer. What else can you do? Well, we always here that it’s either a Seller’s Market (advantage to the seller’s) or it’s a Buyer’s market (advantage to the buyers). For the past few years it has truly been a buyer’s market. But, as of 2012, in Northern New Jersey, it’s as if the market suddenly to the Seller’s. Multiple bids are occurring with a great deal of frequency. As I always tell my buyer’s, let’s make decisions on what we can find out and what we do know. Step One: What Type of Market are we dealing with? Is the market Hot? Cold? Or neutral? If you're making an offer in a Buyer’s Market, you may have less competition from other buyers for the home. As a result, Sellers may be more likely to be receptive to any offer because there are fewer buyers and will consider themselves lucky to have an offer to work with. However, if you're buying in a Seller’s Market, sellers might not consider any offer that is less than list price. In fact, sellers could very well receive multiple offers, which means your offer will have to be constructed to be as attractive as possible to win acceptance. • Find Out How Much the Seller Paid, May be useful If the Seller has a top notch agent, the price the seller originally paid for the home will have little bearing on your negotiations; however, if the seller purchased a few years ago and the current market value is less, seller's position on price may not be realistic (unless they are being transferred and their company will be covering the loss). If you are able to figure out the condition of the home when the seller bought it, then you can help yourself be utilizing knowledge. Homes with little to no improvements over the past 5 years actually experience a decline in value when market conditions are static. How can you find out what’s been done? Well, the Seller’s Disclosure is a useful tool as it can advise you of how old key appliances and operating systems are? It can tell you when upgrades and renovations occurred? Making adjustments for increases due to appreciation and renovations, called improvements, will help you better understand where your offer should be to reflect fair market value. If you are working with an agent that isn’t able to help you understand this, then you are going to be disadvantaged. Similarly, if your agent is giving you advice and you aren’t heading it fully, then you may be disadvantaging yourselves. • What Does the Seller Owe on their Mortgage? If the seller has an extremely high mortgage balance, then you can imagine the seller may not be as willing to work with a lower offer. Conversely, if the mortgage balance is very low, the seller may have room to negotiation, in your opinion, but may not be motivated to immediately sell, and can afford to wait out the market to get list price. All of the above will be negated if the Seller is working with a good agent that can advise their seller of the closest fair market value for their home. • Analyze Comparable Sales What are the Sales you and your agent should be reviewing when we refer to Comparable Sales? Well, appraisers will focus on sales that occurred in the last three months. However, when a market is changing, a good agent will provide you as much information as to change in DOM—Days On Market—how long certain types of home are taking to get Under Contract, etc. The properties you should use should be of similar size and room make up, age and location to the home you want to buy. If your agent is only showing you front pics, then they should get an F as a grade. Interior pics help to show what the Kitchen Looks like (your most expensive part of your home) and often bathrooms are shown when they are renovated. • Analyze List Price-to-Sales-Price-Ratios Ask your agent for a trend report covering the last six months. Look up the prices of the homes as they were listed and compare them to the prices that have sold. Ask how much is the gap? Are homes selling over list price or under? If under list price, by which percentage? Please keep in mind, if a market has shifted like it is seemingly doing right now, then you will need to differentiate from sales that were consummated more recently rather than sales that may have had longer lead times to closing. • Ask your Agent about the Home's History and DOM Often, agents will re-list properties that have been on the market for a while so as to attempt to “re-set” the DOM clock. The DOM are important, because if homes have been on the market longer than 60+ days, especially without a price reduction, the sellers might be more apt to now work with a lower offer. Do your HOMEwork, though and try to find out if the home was either an expired or withdrawn listing, when you work up your offer. But, once again, in a market undergoing a Shift, the rules may be thrown out! Mark Slade Keller Williams 917.797.5059 www.goodhomesforgoodpeople.com Selling a Maplewood/South Orange area home involves many steps and having an experienced Maplewood New Jersey Real Estate Agent and Realtor®, specializing in the Bedroom Communities of New York City in Essex/Union County—Montclair, West Orange, South Orange, Livingston, Maplewood, Springfield, Summit, Madison, Chatham, Scotch Plains, Fanwood, Cranford and Westfield--by your side will make the transaction run a lot smoother. I would love to be your Maplewood/South Orange New Jersey Area Real Estate Professional! I assist both buyers and sellers in the Bedroom Communities of New York City that offer commutes of 45minute or less to NY Penn Station, with either the purchase and or sale of residential real estate. As an Accredited Buyer’s Agent (pending), I have received special training to guide and educate you through the entire home buying process. From start to finish, I listen to your needs and desires in what you would like and take the information you give me to find you home. As your Maplewood/South Orange//Essex/Union County New Jersey listing agent I am well versed on as your local expert in all things in the Maplewood and South Orange area Real Estate Market. You can expect personalized service that includes a detailed consultation on how to best position your home to be competitive in today’s market with training to provide my clients with an in-depth Advanced Comparative Market analysis, and advice on staging. As my office’s technology officer as well as both a Zillow Platinum Premier and Trulia Premier agent, I use the latest and most up-to-date marketing methods to get your home in front of as many buyers as possible. Being your New Jersey Real Estate Agent and Realtor ® not only involves just finding the home or selling the home, but being your guide, negotiator, advisor and advocate and making sure that your needs and goals are met. Being your New Jersey Essex/Union County area Realtor® is one of my truest passions, and “Helping You Find Home” is my number one priority.

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