Do ‘da Due Diligence Dance

Do ‘da Due Diligence Dance

            “Due Diligence”, saying it just makes you feel smarter, doesn’t it?  Due Diligence is “the act of investigation prior to signing a contract”; now doesn’t that sound prudent?  Ignoring your due diligence can and probably will place you in a pile of Due Due, and while pigs may be happy in it – people generally are not.  So let’s look at the three most important factors to conduct your due diligence on prior to placing an offer.

Nothing is certain but HOA fees and Taxes

            When I moved to Florida decades ago, I had no idea what a Home Owners Association was.  Gated communities in my neck of the woods were mainly prisons and mental disability wards, and “associations” in Rhode Island are generally comprised of stocky Italians in silk ties.  The importance of taxes and HOA fees can and will likely be an imperative part of the equation when purchasing a home, especially if going with FHA financing.  High monthly fees and a large tax rate can potentially kill your deal if the numbers put you over your approved monthly ratios.  If you happen to fall in love with a house with high fees and taxes, be sure to run the numbers with your loan officer prior to placing an offer.  Find out what your maximum purchase price can be with these fees involved, and then start the negotiation process with seller.  Doing this can and will protect you in the long run, no one wants to be embarrassed by a loan denial based primarily on high HOA fees. 

History repeats – so don’t be a part of it!!

            If a deal seems to good to be true… it probably is.  No surprise here, we’ve heard it, read it and said it before, but we all seem to still be surprised when we end up with a lemon.  What can prevent you from trying to make lemonade?  DUE DILLIGENCE!  If a home has the eerie feel of a lemon in the making, get out your Sherlock Holmes gear and get to work!  Your Realtor® can and should be able to help you with this.  What to look for? A string of dead deals; if a home has been on the market for some time and the deal looks too good to be true, have your agent look into the homes history.  You’ll want to look at pending sales that fell apart and try to find out why.  Also research liens and tax records on the home.  An agent worth their salt will know the triggers to look for, and can keep you out of a sticky situation.  While these are factors that you will probably learn about in the near future, wouldn’t you rather know before you write an offer, place funds in escrow, and hire an inspector?

Dare to Compare

            Just because a home is listed at a certain price does not indicate it’s true value.  The thought isn’t brilliant, nor is it unknown, but it is often forgotten once a buyer falls in love with a particular property.  When you do find that perfect dream home, the one you’ve been searching high and low for; be sure not to jump without preparation.  And how do we prepare?  DUE DILIGENCE!!  We all get blinded when we see something we desire, and often throw caution into the wind.  It is crucial that you maintain a level head when and if this happens.  Don’t get caught up in the beauty, focus on the deal.  If working with a buyer’s agent, please be sure that they “comp out” (use comparable sales to predict worth) other sales in the community and/or immediate area.  Be sure that your offer reflects true fair market value, and doesn’t exceed 10% over that value.  The home may be just right, but if you offer then it’s worth, your budget will be tight.

            These three Due Diligence tasks will help keep you protected in your future Real Estate transaction.   We all get excited when we finally find what we’ve been looking for (I hope some day Bono get’s there), but without proper preparation and DUE DILIGENCE your dream home may turn into a nightmare.   Keep the sleep, do your research and prosper, prosper, prosper. 

O.M.G – What if I don’t close?

O.M.G – What if I don’t close?

            The process of selling the home can, in itself, be stressful.  But nothing will wake you from a deep sleep like the image of the other party backing out once you’ve gone to contract.  Listen, it’s a lesson we learned as kids – Life Isn’t Fair – it can happen, buyers can walk and sellers can decide to stay.  What’s prudent is preparing for the worst.  When properly prepped, you’ll get that beauty sleep we all deserve.

Promises are alright, but Escrow tucks you in at night

            The importance of escrow is undeniable.  Without the buyer putting something “in the game”, a seller is taking their home off the market based on nothing short of hope.   A buyer placing funds in escrow shows they are willing to put skin in the game, and want the same end result as seller – a closing at negotiated price.  Escrowed funds protect both parties and cannot be released unless both parties agree.  While escrowed funds vary, 10% of purchase is a good standard, but 5% is acceptable in some cases.  Without escrowed funds – and proof there of – your contract isn’t much more then an I.O.U – and that’ll keep you up at night.

Don’t be late on these 5 dates

            The protection of contract, and thus escrow – is based on specific dates to perform as listed in purchase contract.  Buyer must meet these dates or contract can be considered null and void, effectively placing escrowed funds at risk.  Contract dates are specific to events that must take place in a timely and orderly manner as agreed upon by both buyer and seller.  First date to know is your Effective Date, this is the date upon which both buyer and seller agree to terms of purchase contract, possibly the most important date as all other deadlines will be set according to.  Following is the inspection date, 2^nd escrow placement date, mortgage commitment date and of course – your closing date.  Keeping these dates calendared will help ease the stress an upcoming closing can bring.  If ever unsure as to where your sale stands, a quick check up on other parties’ performance will give a great barometer.

Get to know your teammates

            Every Real Estate transaction has a team associated, and it is your agent’s job to manage that team to the best of their efforts.  The list of players is short, no reason not to know them all.  Our first teammates are of course the buyer and sellers agents, generally one of each – but some agents do work in pairs.  Secondly is going to be buyers loan representative, sometimes the MVP of the transaction.  Third is closing coordinator, often working directly with Title Company chosen to close transaction.  It is advisable to get to know all of these key players prior to issues arising.  While your Realtor® should be in constant contact with this team, it’s not a surprise that that doesn’t always play out.  Once inspections have passed, take inventory of who is involved in your transaction and what parts they play.  Make a list of contact information to have at your disposal, and be sure to call and introduce yourself.  The purchase contract authorizes seller and sellers broker to be fully informed of mortgage status throughout the process.  Shall an issue arise, you’ll know whom to contact and they’ll know you.   Keeping this line of communication open and clear can at the very best, keep a closing together – and at the very least, tell you when it’s time to find a new buyer.

            Keeping these ducks in a row should keep you from waking up in a cold sweat.  Be sure your agent, or you yourself, fully keeps track of status of contract at all times.   While we all hope and pray that all parties do their jobs to the best of their abilities – it simply doesn’t always happen.  The best person to protect you is you.  Ask questions, stay abreast, be prudent – putting these small steps into play will be sure to get you to the church closing table on time.

You can’t lose if you don’t play

You can’t lose if you don’t play

            The Real Estate market is coming back and gaining speed.  With stronger opportunities for sellers to succeed, many are itching to sell and just get it over with already.  However, I’ve seen many listings recently sell for below fair market value, pocketing the seller less for no reason other then bad strategy.  These sellers may have sold, but many lost because they chose to play the game.  Losing in Real Estate can mean upwards of tens of thousands of dollars, and as the market gains steam I am reminding my sellers– “you can’t lose if you don’t play”.

So don’t play

            It’s an odd phrase, I understand.  What I am trying to portray however is that you can’t sell at a loss if you don’t “play” around with negotiations.   Your list price as well as price changes must be strategically decided on before you go to market. Have a firm understanding of what your realistic goals are.  This includes knowing how much of a loss from anticipated sales price you are willing to accept.  Having a solid plan in effect will allow you to simply not “play the game” if a buyer is trying to low ball you.  Many sellers will get anxious and may have agents pushing them to sell – but if you’ve made your mind up already as to what your true bottom dollar is you can avoid the game, pick up your ball and proclaim, “I’m not playing”

Be sure your agent is on your team

            I run into it often; sellers who become frustrated with their agent constantly asking them to lower the list price and/or push them to accept a low-ball offer.  Your Realtor® has to be by your side and have your proverbial “back” each step of the way; WITH the same playbook you possess.   Agents don’t get paid unless you sell or buy, so be sure your Broker or Agent is working for YOU and not their commission.  If the strategy of the sale is agreed upon at the start of the sales process, there should be no pressure to accept an offer your gut simply says no to.

Prove your point

            The information available to buyers and sellers alike has become almost infinite.  Hearsay is a thing of the past; and all facts, sales and trends can be checked and verified – often then and there on a smart phone.  Because of this we must be prudent in obtaining and presenting our “side of the story” relating to list price.  The number one factor today in gaining top dollar is the ability to prove your worth.  Your Realtor® should be able to help you with this by providing comparable sales in your immediate area.  Remember, we ALL think our homes are worth more – when it comes to pricing be honest with yourself and what you are offering.   If you know what your home is worth – there is no need to play the negotiation game, you might be able to steal a page from CarMax and have “no haggle pricing” !!

            I hate to see sellers sell for less out of fear, pressure or simply because they didn’t have the correct information at hand (unless I’m buying the house of course).  Take these thoughts into consideration when selling, stick to your guns and laugh your way to the bank.  With proper preparation you can make the rules in your negotiation game, and possibly win without even playing!

Need an agent? GO Local!!

Need an agent? GO Local!!

No, not Loco – Local!

        I’ve run into and across a lot of non-local agents in recent months.  With the market getting back on track and choo choo chooing us out of the recession many homeowners are once again eager to sell.  A common mistake in the Real Estate market is simply choosing the wrong agent – the non-local.  As within any industry you are bound to know of a friend, family member or acquaintance in the business.  While this can be appealing and may seem like the easy choice, if they are not local to your property -  it is often the wrong choice.   By choosing “feelings” over your success you can easily put yourself and your transaction in Jeopardy.

“Like the back of my hand”

        It’s a term we are all familiar with; an agent with complete knowledge of your local area gives you a tremendous leg up in your sales process.  A local agent can and will answer all pertinent questions regarding shopping, schools, entertainment available and more.   Today’s buyers are savvier then ever, giving just as much importance to lifestyle as you’d expect they would give to the home itself.   Your listing agent MUST know the surroundings and what is offered in your exact location.  Having an immediate answer instead of a “….ugh… let me ask the owners and get back to you” can and will increase your odds of a successful and profitable sale.  If your agent doesn’t know or isn’t familiar with your area, how can you have faith that they will sell and market your home properly?  You can’t.

“More show = More dough”

        I personally like to show all of my listings and don’t believe in lock boxes, others do and that’s fine.  However, using an agent outside of your territory only adds time and frustration to a market that moves rapidly.  People’s schedules in these times are very different.  The standard 9 to 5 workweek is becoming a thing of the past, and if your agent is not available to show buyers when they are ready – your proverbial cart is in front of your horse.  Agents whom are not local may tell you that they are available at all times, but we need to be realistic.  There are not many people ready to leave at a moments notice for a 45-minute commute with the hopes and prayers that this will be the buyer.   A local agent can easily access and show your home when buyers want to see it, as they’re just a hop/skip/jump away.  Speed is the name of the game here sellers – closeness in proximity simply equals greater speed.

“Local agents swim in your pool”

..when you are at work.   All joking aside, a local Realtor will be “swimming” in the same pool of buyers that you are trying to entice and obtain.  An agent from Weston is not very likely to meet a buyer looking for a Parkland home, so why go in that direction?  Local offices, local media, local advertising, these are the ways we gain our cliental, and generally speaking agents are going to market and promote in the area closest to them.  Setting yourself and home up with an agent who is marketing in a different territory would be like trying to sell cars at the Parkland Farmers Market – you’re not going to have much luck, it’s just not what the buyers are looking for.  Don’t be a fool - Stay within your pool!!

    Local agents are what truly drive the Real Estate market, by knowing the area as well as recent sales trends a local agent will net you more and will be able to do so in a timely manner.   So remember, when selling... Don’t go LOCO – Go LOCAL!

Navigating your transition period

Navigating your transition period

         The market is heating up and the right homes are selling fast!  Recently selling a listing of mine after only 9 days on market I was asked by an immediately anxious seller…“What do I do now”?  It’s a common question whether you’ve been on the market 9 days or 90.  Homeowners, in general, have settled and are often not ready for the transition to a new home or living situation.  Keeping a few of the following things in mind should, hopefully, make it less stressful for you and your family.

Become a Tenant!

         If you don’t have your next home under contract or already purchased, I recommend finding an acceptable short-term rental once you’ve gone to contract and passed inspection and appraisal.  You don’t want to rush the purchase of your next home, and delaying a closing because you’re unsure of your next step can be risky and costly.   A perfect scenario would be a furnished short-term rental, which you could occupy while you search for your next home.  The simplicity of a furnished unit is great, nothing to move!  An open-ended lease option will also allow you to relax and negotiate with less emotion when purchasing.   You don’t want to be “pushed” to buy due to current living situations.

Pull out the ole’ Piggy Bank!

         If you’re lucky enough to still have equity in this market, be sure to put your proceeds in safe keeping during your transition time.  No matter who you are, an injection to the bank account can be tempting.  A great idea is to keep your net proceed funds in escrow with your broker or title agent.  Most of these funds will probably be used on your next home purchase anyway and doing so will give you the ability to go to contract with pre-deposited escrow funds.  Cash is tempting; protect yourself from you.  You don’t want to be looking at your new Rolex at your next home closing wondering what you can hock it for. 

Having to Downsize?

         The phrase I seem to use most often in this market is, “relax, you’re not alone”.  If you are in an unfortunate situation and have to leave your home for financial reasons, keep one thing in mind.  You are NOT alone.  We should all be aware by now of the hardship most of America is under.  Moving forward with the sale of the home should simply be seen as closing a chapter of your life; make it a relieving moment rather then a mournful moment.  Life moves forward, not back.. One of my favorite quotes is “It will all be OK in the end, if it’s not OK, it’s not the end”.  Keep this in mind as you move forward, downsizing is simply a move, not a basis of personal character.

     No matter what your transition period involves, it is likely to be stressful without preparation. Anything in life without proper preparation is simply a risk.   Get your ducks lined up and you’ll sail through your transition period!!

Beating Investors to the Punch

Beating Investors to the Punch

Many buyers in this market are running into the same wall, the cash investor.  While investors are a crucial part of our Real Estate market, they can be a bit of a pain for buyers in the $100k - $300k range.  With the ability to act swiftly and wads of Benjamin’s at their disposal, how can a regular buyer compete?

Run Forrest Run…

You have to be fast to beat an investor to the finish line, so even if you think you can’t... run Forrest run!  If you know what you are looking for, with the speed of this Internet run world there is no reason you can’t come out on top.  Once a property hits the market that is within your criteria, view it.  If you can’t view it have your agent view it for you and text, email or even facetime you!  That thing in your pocket that rings can do some really nifty things, use them!  The goal here is to get to it first, no matter what; early bird gets the what?

But the cure for most obstacles is, Be decisive.
-George Weinberg

What separates investors from “standard” buyers is their ability to decide, on the spot at times, whether to purchase or not.  They have a black belt in decisiveness.  If you plan to beat them to the punch, you MUST be ready to make a decision right then and there.  Do your research ahead of time; answer your questions prior to walking in the front door.  You should be at the house for a yes or no – not a checklist of questions that need to be answered before you decide.   If you want to be really quick, go equipped with an iPad and submit the offer while you are there.  Take THAT investor!

Put your comb over away – You’re not Donald Trump

This is not the time to play hardball, puff your chest and offer 50% of list.  You may have seen some great late night infomercials, but properties today are selling much closer to list price then you may think.  We all want a great deal, but you need to be realistic with yourself and the nature of the market.  There are definitely times to strike, but be honest with yourself whether this is the time or not.  Trying to “steal” the home can and may cost more in the end.  While slow, prices are definitely rising – think smart and act accordingly. 

Don’t let the investors out there get you down.  Most are going to upgrade the home and put better inventory on the market or will offer housing for great people in our community.  You may not think it’s a fair fight out there, but you can certainly make it one.  Put your ole’ ducks in a row, get out there and make it happen!

Synchronized Buying and Selling

Synchronized Buying and Selling

            One of the most stressful aspects of a Real Estate transaction can be trying to close on one home while you are purchasing another; especially if you are using proceeds from the sale to do so.  Although there are many more hurdles to be cleared when trying to coordinate this, it can be done successfully if you plan accordingly.  Take these three factors into consideration and you will be sure to make the transition smooth and stress free. 

Don’t search for a new house until your home is under contract!!

            Doing so will drive you crazy.  Until your home is under contract you really don’t know where you stand as a buyer.  Feel you won’t have enough time?  Let buyers know right off the bat that you will need an extended closing 60-90 days is generally sufficient.  Buyer locked in a rate and has to close in a specific time frame?  Offer to rent the house back for a monthly fee or a reduction in sales price until you can close on your next property.  There are ways to work things out for both buyer and seller, but until you are under contract, don’t even window shop.  Things change daily in the market; you don’t want to fall in love with that cute doggy in the window if you aren't ready to take him home yet.

Get your purchase mortgage in line

            The biggest mistake you can make when purchasing your next home is to assume you will be approved for a mortgage prior to selling your current property.   A closed sale isn’t much to celebrate when you don’t have a place to throw the after-party.  Be sure to talk with your mortgage broker about your plans as well as your financial ability to do so.  Times, rates and requirements can change rapidly and you need to be sure that your next purchase is fiscally possible.  Crossing these “t's” is imperative prior to even listing your current home.  You cannot negotiate the sale of your property properly without knowing what your next step will be. 

Price Correctly!

            If planning a sell/purchase transition your best bet is to price correctly at fair market value.  This will increase your chances of not only obtaining a quick sale, but also in procuring a cooperative buyer.  A buyer who doesn’t have to go through a lengthy and stressful negotiation process is more likely to grant you more time in the home, or approve an extended closing.   This is NOT the time to let greed get in the way – be honest with yourself and be sure to work with an agent who truly understands fair market value for your particular home.

            Keeping these points in mind will help you transition from your current home to the next with less stress.   Not keeping these factors in mind can hurt both your sale and your purchase.  I’ve seen people rush to buy for fear of not having a place to call home as well as sellers whom have sold for less just so they don’t lose a home they’ve fallen in love with.   A home sale and purchase can be a very emotional experience, it’s always a good idea to mentally prepare and stick to your game plan.  Remember, prepared people succeed!