2009 October — Lise Howe.com

Lise Howe’s Diary – Negotiating a Bethesda Home Purchase

October 29, 2009 By admin Leave a Comment

Today I worked on a counter offer to purchase a home in Bethesda which has been going back and forth for ten days now. My client, the buyer, had been receiving email listings from me for approximately six months. He had highlighted the listing and gone to see it at the first open house. He immediately called me and we went back to see the house the next night. After seeing it for a second time he still liked the house and wanted to make an offer to purchase. I provided comparables for recent sales in the community and we discussed an appropriate price for the house.

Based on recent sales in the neighborhood, we agreed that the house was optimistically priced – i.e. overpriced. My buyer decided to make an offer for the house that was approximately 8% less than the asking price but actually almost 1% MORE than the most recent sale that had taken place in the neighborhood. We submitted the offer, with a letter from a lender saying that the buyer was financially well qualified and did not need to sell his home in order to purchase this new home. The buyer asked for settlement to occur 90 days after settlement and asked for the seller to leave the Murphy bed that was attached to a wall in the basement bedroom.

After waiting three days and being promised a response momentarily, the seller’s agent called to tell me that the seller was not going to respond at all because the offer was too far off. The seller did not want to leave the Murphy bed, wanted an earlier settlement date, and was not willing to accept our offering price. I asked why the seller didn’t just say that the Murphy bed did not convey, name an earlier settlement date, and counter on the offering price. The seller’s agent repeated that we were too far apart.

I confess that I was nonplussed that the seller wouldn’t counter at all. To my mind, we had made a very fair opening offer. It was $5000 more than the most recent sale (and that house was updated with a new kitchen and baths) although the house for sale was 50 feet bigger than the one that had sold. We had offered a non-contingent offer with a qualified buyer and a longer settlement date, picked out of respect for the seller’s age. (The seller is moving from her home of 20 years into an independent living facility.)

After waiting two days, my client reopened the negotiations with a new offer. The settlement date was changed to 60 days, the Murphy bed was struck from the initial offer and the offering price was left unchanged. The buyer was not willing to counter his initial offer on price and bid against himself before the seller made a counter offer on price.

Three days later, the seller countered. The settlement date was cut down to 45 days and the price counter was about 2% less than the asking price. The seller also asked for an increase in the earnest money and to shorten the time for the house inspection and the radon inspection.

My client is still hanging in there, so we countered again. The buyer was willing to settle on the seller’s requested date, increase the earnest money, and do the house inspection in a condensed time frame. He also was prepared to make an offer that was very close to the top of his ability to pay.

We talked about the nature of the seller’s personality and whether the seller would need another counter to be satisfied. I thought that the seller had at least one more counter to give. Therefore we made an offer that was slightly less than he was actually willing to pay so that the seller could make an additional counter.

I will keep you posted on how it turns out.

There are several things to keep in mind when negotiating to buy a home in the DC area.

Try not to go back and forth more than twice. Don’t annoy each other by prolonging the negotiations.
Focus on the strengths of the offer – is it non-contingent? Is the buyer qualified?
Find out what is important to the seller and what is important to the buyer.
Don’t get lost in the minutiae of the offer. You can counter on settlement date, price, terms.
It is important to keep talking and moving toward closure.
Eliminate each area of conflict one at a time, and focus on the ultimate goal of resolving the difference.

If you want to buy or sell a house in DC, Bethesda, or Chevy Chase, give Lise Howe a call. After years of negotiating for the US Government, she can negotiate a successful transaction for you too!

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Filed Under: Latest News! Tagged With: Ask price, Chevy Chase, sales

Lise Howe’s Diary as a Realtor – DC Home Inspection

October 28, 2009 By admin Leave a Comment

Once you have a ratified contract on your new home, you must schedule a Home Inspection to be done as soon as possible.

What Can You Expect from a Professional Home Inspection?

What Will the Inspector Inspect?

What can I expect from a professional home inspection is a question most buyers ask during the home buying process. The job of a professional home inspector is to look over every major part of the home and prepare a report for the buyer’s use. The usual components of a home inspection focus on the structural and mechanical properties of the home. In the DC metro area, homes are sold either “in working order” or in “as is” condtion. If the house is in “as is” condition, then the seller is putting the buyer on notice that the seller will not make any repairs to the property. Accordingly, the buyer should have a home inspection prior to buying the property to understand the condition of the property. If the property is not being sold in “as is” condition, then the seller is saying that the heating, plumbing, electrical and appliances are all in “working order.” If anything is not “in working order,” the seller will correct the defect by repairing the item.

For example, if the dishwasher leaks, it is clearly not working correctly. A leaking dishwasher is covered by the property condition language of the contract, and as long as the house is not in “as is” condition, the seller must repair the leak. However, a scratch in the dishwasher door does not affect the functionality of the dishwasher and so it is not covered by the working condition language of the contract The buyer can ask for the scratch to be repaired under the house inspection contingency, but the seller is not required to repair it because the dishwasher is otherwise in condition.

On the day of the inspection it is very important to for the buyer be in attendance and to follow the inspector as the home inspection takes place. That way when the home inspector finds a problem he can clearly explain the issue. In addition, the inspector will give the buyer helpful maintenance hints for the new house and identify important parts of the house, such as the location of the main water valve or the hose bibs.

SO WHAT IS COVERED BY THE HOME INSPECTION?

EXTERIOR home inspection items

foundation – holes, cracks
gutters and downspouts – gaps, sagging
siding – warping
paint – peeling, blistering
windows and doors - cracks, loose caulk
roof – worn spots
chimney – loose bricks, stone; tilting
driveways, retaining walls, and walkways – sagging, cracks
land – proper water drainage

INTERIOR home inspection items:

general structure – soundness, rot
floors and stairs – squeaking shaking
plumbing system – general condition, leaks, clogs
heating and cooling system – condition
electrical system – condition, proper grounding
insulation – thickness, efficiency
walls – cracks
kitchen – age and condition of appliances

Most inspectors also will note the presence of mold, if it is seen, and asbestos (which is frequently present in old floor tiles, some siding, and insulation around heating pipes.) However, a house inspector is not typically licensed as an environmental inspector. If there is a concern about radon, mold or asbestos, then an additional inspection should be scheduled.

Similarly, a house inspector is not an electrician or a plumber. The house inspector is qualified to identify issues or defects, but will occasionally suggest that a “specialist” be called in.

The Home Inspection Report will be used to create a Request for Repairs to be sent to the seller. It is up to the buyer to decide which items from the home inspection will be asked to be repaired. This is part of the continuing negotiation process between the buyer and the seller.

TODAY BRONWYN AND I SPENT NEARLY 6 HOURS AT AN INSPECTION

Usually home inspections are shorter than that – more in order of 3 hours. However, the property that was the subject of the marathon inspection was a property with a full rental unit in the basement – which required a double inspection. Since the property that we inspected today was a “short sale,” it is being sold “as is,” and the seller will not make any repairs. Short sales frequently are “as is,” because the seller is typically very short on cash. The inspection is particularly important in such a situation because the buyer really needs to know what he or she is buying.

I confess that I don’t follow the inspector around anymore. I have watched too many inspections through the years, heard the same inspector jokes, and learned the same tips about home maintenance. Now I being my laptop and hope for connectivity somewhere. However, if there is an issue, I am there to see it so that I can explain it to the listing agent. If I am representing the seller, I always go to the end of the house inspection so that I can show the seller what the seller has identified and which repairs should be made where.

Lunch was definately fun with my client. During the house inspection, he was hungry so we quickly went to a nearby Jamaican restaurant, the Mango Cafe, for yummy jerk chicken. The rice and beans were VERY spicy, but it all was easily washed down with some ginger beer. So DELICIOUS!!

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Filed Under: Latest News! Tagged With: buyer, home inspection, home inspector., Maryland home inspector

Lise Howe’s Diary as a Realtor

October 27, 2009 By admin Leave a Comment

WHEN I GOT MY REAL ESTATE LICENSE over 20 years ago I jokingly told my family that I was going to sell million dollar houses, drive a Jaguar, and pop bonbons.

Jaguar Convertible or Jeep

I never got the Jaguar although I drove a Jeep for years, and since they both start with a “J” it seemed that I was almost there. I did end up selling million dollar houses, but that was after the market had tanked in 1989 and 1990, and I was selling them for $400,000 instead. I didn’t develop a taste for bonbons though, but two out of three isn’t bad.

I also discovered that there is a lot more to being a Realtor than just driving around in a pretty car and popping bonbons. Some days my family doesn’t even have an idea of how I spent the day. So…. I decided to start this diary to explain what a realtor does all day and to review how I spent the day. I hope for you, the reader, it will be interesting and informative. For me, it should be a kind of accountability.

With that sense of optimism, here it goes!

TODAY, October 27, 2009, is probably not a representative day to start a diary. This morning I took my dog to the vet at Friendship Animal Hospital for a monthly shot because he has Addison’s Disease. Who knew that standard poodles are predisposed to Addison’s? Fortunately the vet at Friendship over a year ago knew that. Now we go to the vet every month which he loves because he gets treats there non-stop so he doesn’t misbehave, bark, or lunge at other dogs.

Poirot and my daughter, Lise Courtney

After the trip to the vet, I stopped at my office at Coldwell Banker on Wisconsin Avenue. We are remodeling our office, which promises to be a new and incredibly exciting space. No more cubicles! They have been replaced with a lounge, zebra striped chairs, sofas, a coffee bar, and communal work tables. Our manager, Darrin Friedman, promises that this will be Kinko’s meets Starbucks. Since we have been living in chaos for the last two weeks, we will be happy to see the end results.

I wanted to check my office, which was being painted “Hawaiian Blue” this morning. Thanks to a suggestion by Bronwyn Mathis, my assistant, the two end walls were painted with white board or dry erase so that we can keep track of listings and sales in progress, make sure we are in contact with our clients on a regular basis, and monitor all appointments on a massive calendar. Happily, the color is exactly what I wanted and the white board paint works. (The outer office has a big blackboard for writing notes to each other, but I really prefer our white board! No chalk dust and it is so much brighter!)

My office is childishly signficant to me. Even though I was consistently a significant contributor to the bottom line of my previous real estate company- always in the top five in production and sales- I never had my own office. Now that I am at Coldwell Banker, I have my own office, an assistant and a buyer’s agent. As a team we are so much more productive – exponentially so – than I was as a single agent in my old company. The happy Hawaiian blue walls and white board establish the style that I want the office and my team to project – warm, comfortable, welcoming, peaceful, and very productive. With the white board, we will always be able to monitor productivity and the positive direction in which we are moving.

Once I was wowed by how great my office was looking, I went to Herndon, Virginia with my buyer’s agent, Janet Rushford, to attend part of the REBarCampDC. It is hard to explain exactly what REBarCamps are - a collection of realtors and vendors who believe that technology can make a signficant contribution to the real estate industry. Janet and I attended a presentation on the use of video tours in real estate. The consensus of the group was that video tours should be no longer than 3 minutes, although a second and longer video tour can be posted along side the shorter one for anyone who is very interested in the listing or neighborhood.

Several people there reminded me of some tax attorneys I have known because of their delight in debating how many angels can dance on the head of a pin. The people at REBarCamp sidetracked the presentation to a discussion of whether agents can post videos on line of other agents’ listings. I think that the end conclusion was that it depends on state law, and the NAR code. It seemed to me that it is inappropriate for an agent to post another agent’s listing on the Internet without getting the listing agent’s consent. Generally an agent is delighted to have another agent include photos and information about the listing on that agent’s website or blog, as long as the listing agent is clearly identified. I still am not sure why we wasted five minutes in such a non-issue.

After this angels on the head of a pin discussion, Janet and I decided that the office was looking even better than before as a destination, so we left before the next presentation on the use of statistics in marketing. After a quick stop by the office to watch the paint dry, I pulled my laptop out of my bag to settle in for some real work.

Much of my day is spent in responding to emails and reaching out to new clients. Today we received several inquiries from Homegain buyers and sellers which had to be answered with offers of our services, including a set of properties available that match the buyer’s criteria or a description of our marketing plan for the seller’s property. Inquiries from buyers visiting my website www.homesinchevychasebethesda.com require that we set up a search for those buyers with daily notifications of new listings.

A current client needed the name of a handyman, while a new contact that I hope will turn into a client needed a painter. I shared the name of my handyman, Mike Sanepour, with first client, and called my painter, Pete, to make sure he was taking new business.

In the meantime, Bronwyn scheduled a house inspection for tomorrow and tried to track down a missing electrical permit.

Now it is 10 oclock and I have finished studying high school chemistry for a test tomorrow that I fortunately will not be taking. I am going to end this first day’s effort so that I can respond to some more buyers on HomeGain. Hopefully there will be more business for me tomorrow!

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Filed Under: Latest News! Tagged With: Coldwell Banker, diary, Homegain, how to sell your home, Lise Howe, listing, real estate broker, Realtor, sales, www.homesinchevychasebethesda.com

BUYER’S MARKET OR NOT – MAKE IT A STRONG OFFER

October 22, 2009 By admin 1 Comment

Thinking of a deal?

EVERYONE KNOWS IT’S A BUYERS MARKET – RIGHT?

So why isn’t every buyer getting their first choice on their first offer? There are so many buyers out there right now, and everyone is competing for that scarcest of all commodities – the starter house in a good neighborhood! So, what to do? You have to make a strong offer that distinguishes you from the other buyers.

A strong offer is one that sellers will consider seriously; it shows that you mean business and provides benefits for both parties. You want to get the best possible deal on a property you’ve selected, so make a strong offer which is either likely to be accepted or will motivate the seller to open negotiations.

An offer can be simply divided into price and terms (closing date, condition of property, etc. ) - pick one or the other to maximize. Trying to make both price and terms advantageous to yourself will likely offend the seller and make them less likely to negotiate.

A strong offer has the following characteristics:

- A signficant earnest money deposit A sizable earnest money deposit is a good indication of seriousness and shows you are committed to the purchase. Less is a weaker offer, more is a stronger offer. A seller takes a risk when they take their home off the market and a larger earnest money deposit mitigates that risk. Remember that the check is not cashed until the contract is ratified. In addition, you can write the offer with a provision that the check will not be deposited until after the inspection contingency is removed. NB – under Maryland law, the earnest money deposit on a Maryland property cannot be held by the real estate broker if the check is to be held until after the inspection contingency is removed. In that case, the title attorney should hold the deposit.

- A pre-approval letter from a lender or proof of funds for a cash offer to show that the buyer is capable of buying the property. A pre-approval letter or proof of funds for a cash offer is essential. Without it, offers may be rejected because the seller lacks confidence in the buyer’s financial ability to close the transaction.

- A balance between asking for and giving concessions. A strong offer may propose a lower purchase price and balance it with concessions on terms such as a quick closing date (10 days) and accepting the property “as is” without any warranty or repairs.

Conversely, if the buyer needs help with closing costs and wants the property to be in perfect condition when they move in, they can still make a strong offer by giving the seller full asking price with closing costs added on top – assuming that the house is priced at or below market value.

Remember that there are a lot of sellers out there – and not all of them are desperate! There are a lot of buyers out there too, and some of them are desperate to get that $8000 first time homebuyer tax credit. They are willing to write that strong offer that will get them their dream house. Are you?