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Are low-ball offers
advisable?
ANSWER:
A low-ball offer is a term used to describe an offer on
a house that is substantially less than the asking
price. While any offer can be presented, a low-ball
offer can sour a prospective sale and discourage the
seller from negotiating at all. Unless the house is very
overpriced, the offer will probably be rejected. You
should always do your homework about comparable prices
in the neighborhood before making an y offer. It also
pays to know something about the seller's motivation. A
lower price with a speedy escrow, for example, may
motivate a seller who must move, has another house under
contract or must sell quickly for other reasons.
Can you buy homes below market?
ANSWER:
While a typical buyer may look at five to 10 homes
before making an offer, an investor who makes bargain
buys usually goes through many more. Most experts agree
it takes a lot of determination to find a real
"bargain." There are a number of ways to buy a bargain
property:
● Buy a fixer-upper in a transitional neighborhood,
improve it and keep it or resell
at a higher price.
● Buy a foreclosure property (after doing your research
carefully).
● Buy a house due to be torn down and move it to a new
lot.
● Buy a partial interest in a piece of real estate, such
as part of a
tenants-in-common partnership.
● Buy a leftover house in a new-home development.
Do I need an attorney when I buy a
house?
ANSWER: In some
states, you do need an attorney to complete a real
estate transaction, but in others you do not. Most home
buyers are capable of handling routine real estate
purchase contracts as long as they make certain they
read the fine print and understand all the terms of the
contract. In particular, you should be clear on the
terms of any contingency clauses that will allow them to
back out of the contract. If you have any questions at
all, it may be advisable to consult an attorney to avoid
future legal hassles. In looking for an attorney, ask
friends for recommendations or ask your real estate
agent to recommend several. Call to inquire about fees
and to check on their experience. In general, more
experienced attorneys will cost more, but real estate
fees as a rule are small relative to the cost of the
property you are buying.
How do you determine the value of a troubled
property?
ANSWER: Buyers
considering a foreclosure property should obtain as much
information as possible from the lender, including the
range of bids expected. It also is important to examine
the property. If you are unable to get into a
foreclosure property, check with surrounding neighbors
about the property's condition. It also is possible to
do your own cost comparison through researching
comparable properties recorded at local county
recorder's and assessor's offices, or through Internet
sites specializing in property records.
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Is a low offer a good
idea?
ANSWER: While
your low offer in a normal market might be rejected
immediately, in a buyer's market a motivated seller will
either accept or make a counteroffer.
Full-price offers or above are more likely to be
accepted by the seller. But there are other
considerations involved:
● Is the offer contingent upon anything, such as the
sale of the buyer's current house? If so, a low offer,
even at full price, may not be as attractive as an offer
without that condition.
● Is the offer made on the house as is, or does the
buyer want the seller to make some repairs or to lower
the price instead?
● Is the offer all cash, meaning the buyer has waived
the financing contingency? If so, then an offer at less
than the asking price may be more attractive to the
seller than a full-price offer with a financing
contingency.
What are some tips on
negotiation?
ANSWER: The
more you know about a seller's motivation, the stronger
a negotiating position you are in. For example, seller
who must move quickly due to a job transfer may be
amenable to a lower price with a speedy escrow. Other
so-called "motivated sellers" include people going
through a divorce or who have already purchased another
home. Remember, that the listing price is what the
seller would like to receive but is not necessarily what
they will settle for. Before making an offer, check the
recent sales prices of comparable homes in the
neighborhood to see how the seller's asking price stacks
up. Some experts discourage making deliberate low-ball
offers. While such an offer can be presented, it can
also sour the sale and discourage the seller from
negotiating at all.
What are the standard contingencies?
ANSWER: Most
purchase offers include two standard contingencies: a
financing contingency, which makes the sale dependent on
the buyers' ability to obtain a loan commitment from a
lender, and an inspection contingency, which allows
buyers to have professionals inspect the property to
their satisfaction. As a buyer, you could forfeit your
deposit under certain circumstances, such as backing out
of the deal for a reason not stipulated in the contract.
The purchase contract must include the sellers
responsibilities, such things as passing clear title,
maintaining the property in its present condition until
closing and making any agreed-upon repairs to the
property.
What contingencies should be put in an offer?
ANSWER: Most
offers include two standard contingencies: a financing
contingency, which makes the sale dependent on the
buyers' ability to obtain a loan commitment from a
lender, and an inspection contingency, which allows
buyers to have professionals inspect the property to
their satisfaction. A buyer could forfeit his or her
deposit under certain circumstances, such as backing out
of the deal for a reason not stipulated in the contract.
The purchase contract must include the sellers
responsibilities, such things as passing clear title,
maintaining the property in its present condition until
closing and making any agreed-upon repairs to the
property.
What is the difference between list and sales
prices?
ANSWER: The
list price is how much a house is advertised for and is
usually only an estimate of what a seller would like to
get for the property. The sales price is the amount a
property actually sells for. It may be the same as the
listing price, or higher or lower, depending on how
accurately the property was originally priced and on
market conditions. If you are a seller, you may need to
adjust the listing price if there have been no offers
within the first few months of the property's listing
period.
What is the difference between list price, sales
price and appraised value?
ANSWER: The
list price is a seller's advertised price, a figure that
usually is only a rough estimate of what the seller
wants to get. Sellers can price high, low or close to
what they hope to get. To judge whether the list price
is a fair one, be sure to consult comparable sales
prices in the area. The sales price is the amount of
money you as a buyer would pay for a property.
The appraisal value is a certified appraiser's estimate
of the worth of a property, and is based on comparable
sales, the condition of the property and numerous other
factors.
Who gets the furnishings when a home is sold?
ANSWER: It
depends. Fixtures, any kind of personal property that is
permanently attached to a house (such as drapery rods,
built-in bookcases, tacked-down carpeting or a furnace)
automatically stay with the house unless specified
otherwise in the sales contract. But anything that is
not nailed down is negotiable. This most often involves
appliances that are not built in (washer, dryer,
refrigerator, for example), although some sellers will
be interested in negotiating for other items, such as a
piano.
Whose obligation is it to disclose pertinent
information about a property?
ANSWER: In most
states, it is the seller, but obligations to disclose
information about a property vary. Under the strictest
laws, you and your agent, if you have one, are required
to disclose all facts materially affecting the value or
desirability of the property which are known or
accessible only to you.
This might include: homeowners association dues; whether
or not work done on the house meets local building codes
and permits requirements; the presence of any
neighborhood nuisances or noises which a prospective
buyer might not notice, such as a dog that barks every
night or poor TV reception; any death within three years
on the property; and any restrictions on the use of the
property, such as zoning ordinances or association
rules. It is wise to check your state's disclosure rules
prior to a home purchase.
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