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Shadow Inventory and the Denver Market
My clients see a lot of negative stories in the media about Shadow Inventory and the large number of bank owned homes that still need to be liquidated. This leads to concerns real estate prices could fall further. While this is true for many large cities in the US, it isn’t equally true in every market. First, let’s define Shadow Inventory.
Shadow inventory is either:
- Real Estate Owned (REO) by a bank, or
- Consumer-Owned that is more than 90 days late on their loan.
If it is REO, that troubled property could be…
- Actively on the market, available for purchase today
- On the market, but under contract
- Not actively on the market – a part of Shadow Inventory that has to be sold eventually.
If it is a consumer-owned property, property could be …
- Actively on the market, available for purchase (as a short sale or regular sale)
- Under contract or pending bank approval of short sale terms
- Not on the market – but likely to but likely to get a loan modification
- Be sold as a regular sale or short sale soon, in an orderly way
- Not on the market –the owner is in denial, and the home will eventually become a foreclosure. This is part of the Shadow Inventor
The rest will explain how estimated the size of the Shadow Inventory and what it might mean for people buying and selling Denver real estate. There are three reasons why Denver likely does NOT have exposure to this problem.
Reason 1 – Homes in Denver are more likely to have positive equity and not be underwater.
The Denver market has fallen 16% from its peak. Prices have been stable or slightly increasing for three years. Many cities in the US had much more dramatic gains and falls. As a result, if you look at the average equity gain over the last three years, Denver is the best among the largest thirty cities in the US. Las Vegas has suffered the most. Foreclosures are much more of a problem in a market where prices are still declining.
Reason 2 – As a result, the number of homes owned by banks is very low in Denver.
Because Denver’s home prices didn’t appreciate as much during the bubble and began the correction before most markets, Denver has already processed the majority of its REO (real estate owned by banks) inventory. Only San Antonio and Kansas City have smaller REO inventories. Miami has the most REO inventory.
Reason 3 – The number of late mortgages in Denver is less severe than most markets.
Notice how severe the problem is in Miami, compared to Denver. In Denver, we have about 29,500 homes that are 90+ days delinquent on their mortgages but are still owned by the consumers. What will happen to them?
- According to NAR (National Association of Realtors), 2500-3500 homes in Colorado receive a loan modification each quarter. We might expect that 10,000 of these delinquent loans are cured by modification.
- Some of the homes have equity and can proceed thru a normal sales process. That might be another 5,000.
- Some of the homes do not have equity. Pro-active sellers will conduct a short sale, and avoid foreclosure. That might be another 5,000.
- Finally, some of the homes will go all of the way thru the foreclosure process. That might be another 9,500. However, it’s just an estimate – it could be anywhere from 5,000 to 15,000. Regardless of the number, these Shadow homes probably won’t hit the market for 3 to 12 months.
We estimate the total Shadow Inventory to be about 16,000 homes in Denver. The question is: over what time period they be brought to the market?
Our 2012 inventory is at the lowest point in about a decade. On a per capita basis, we’re near the lowest inventory we’ve ever had. Of the 9,500 REO properties, we estimate that 3,000 are currently on the market. It’s likely that about 2,000 are under contract and 1,000 are active (and thus in the 10,325 active homes). Among the 29,500 seriously delinquent properties, we’d estimate about 2,000 are currently listed as short sales and are pending approval from the banks. Another 1,000 are active on the market.
We estimate these properties will come to market over the next twelve months – around 1,000 per month. You can see how the available inventory would increase in such a scenario. In a crisis situation, we might assume that around half of those troubled homes all get dumped on the market at once. Even in this crisis scenario, you can see this only increases the number of active properties on the market to the level we were at in 2010. This isn’t an issue. We currently have a shortage of inventory at most price points under $450,000. Bringing these homes on the market would be a good thing for buyers – particularly first time buyers, and investors that want to bring rental properties to the market.
The Shadow Inventory is a significant problem in many markets – especially Miami, Las Vegas, Chicago, and many parts of Arizona and California. However, in Denver, our housing market never got into as much trouble as these speculative markets – and we’re reaping the benefits now as a result.
Analysis figures courtesy of Lon Welsh, Your Castle Real Estate, LLC
Housing affordability is still at a record high, according to the National Association of Realtors (NAR). It is at the highest level since record keeping began in 1970. This is based on the relationship between median home price, median family income and average mortgage interest rate.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said this latest data underscores buyer opportunities in today’s market. “This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” he said. “For buyers who can qualify for a mortgage, now is a very good time to become a homeowner.”
Projections for the remainder of 2012 indicate that this affordability high will continue and rates will remain low. “Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country,” Veissi said. “If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.”
Despite these incredible buyer opportunities, builder confidence is down. The National Association of Home Builders (NAHB) reports that builder confidence for newly built, single-family homes declined for the first time in seven months.
”What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,” said NAHB Chief Economist David Crowe. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery – particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.”
This has been an ongoing concern for many market activists. While housing affordability is at an all-time high, gaining access to credit is a tough road for many would-be buyers. Additionally, some would-be buyers are still wary of the market and are waiting on the sidelines for the economy to improve or market conditions to stabilize.
Regionally, results varied. The Northeast was the only region to see a gain in builder confidence, posting a 4 point gain on the HMI scale. The West remained unchanged, but both the West and South posted declines. Single-family home production held steady for the month. The multi-family sector saw a double digit decline, according to the U.S. Commerce Department.
Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, FL, reported, “While more consumers appear to be seriously considering a new-home purchase, builders remain very cautious about starting new projects until they see more actual sales materializing.
Information provided by Carla Hill
Is there a project you’ve stalled on, something you’re procrastinating on, or a part of your business you’ve been avoiding but know needs attention? You’re not alone. My garage was a mess after the holiday months. I went in to organize and found a dozen boxes of tissue, 6 boxes of zip lock bags, and 3 boxes of garbage bags! I can never find anything so I keep buying more. Procrastination is unfortunately an easy path to take when our lives are busy and demands on our time are high. The problem with procrastination is that it simply puts off until later something that still needs to be completed.
There are plenty of experts on productivity and great books on ‘getting things done’ out there to help give us perspective but this simple fact remains: while it might be easy to do that one little task, oftentimes it’s easier notto do it! I worked with an amazing woman who owns Efficiency by Design and she changed my business life and office! I try to retake the class every year and pick up new information to help my business and personally.
A simple but effective trick I like to use is to break things down into smaller pieces and tackle each one individually. I worked on organizing my email folders, desktop, purse, briefcase, car – you name it. How great it is to know where everything is at and it saves time!
 Too Much Paperwork
Looking at the project or task as a whole might be overwhelming and cause us to avoid it. But breaking it down into manageable parts and then checking each one of those off a list can be enormously rewarding and a source of pride as you begin to see your list disappear.
No matter what the project or task is, break it down into smaller elements. Get one of those done at a time and then move on to the next. Before you know it you’ll be a master of productivity. Remember it doesn’t happen overnight. One step at a time and this year can turn your life around. Try 10 minutes a day in any part of your home and office. Soon you will see the results and make the project a priority!
From time to time the IRS releases tips designed to help people with their taxes. Some of these are quite useful. The agency released “Ten Tax Tips for Individuals Selling Their Home,” (IRS Summertime Tax Tip 2011-15).
As a real estate agent or broker, it is not my job to give home sellers tax advice. Instead, I refer sellers to this list of IRS tips. It’s a good starting place for them to begin to understand this often complex area of tax law. Print it out and hand it to anyone who asks you about these issues.
Here are the IRS’s top 10 tax tips for home sellers:
1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time home buyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Home Buyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
These tips can be found on the IRS website at http://www.irs.gov/newsroom/content/0,,id=104608,00.html.
http://www.inman.com/buyers-sellers/columnists/stephenfishman/irss-top-10-tax-tips-home-sellers
When the first-time home buyer tax credit was enacted in 2008, in the aftermath of the housing crisis, it was structured as a no-interest loan and taxpayers who used it had to pay it back over time (in annual installments through your tax return). In 2009, the credit was amended to eliminate the pay-back requirement. If you have decided to rent you home out or need to moveprior to the three (3) years agreed upon, then you need to reeed this and understand the consequences.
 First-Time Homebuyer Credit Lookup Tool To help 2008 and other borrowers who have to pay back the proceeds of that credit, the IRS today released a “tool” to help make that process easier, the First-Time Homebuyer Credit Lookup Tool.
In essence, the tool simplifies the gathering of information you need to include the proper pay-back amount in your federal tax filing:
- Balance of your first-time homebuyer credit
- Amount paid back to date
- Total amount of the credit received
- Annual installment repayment amount
Prior to release of this tool, taxpayers had to gather this information themselves for reporting on IRS Form 5405. Now it’s available through the IRS by punching in your Social Security number, date of birth, and some other identifying information.
Who else besides 2008 credit users need to pay back their benefit? The IRS says those who used the credit in 2009 or 2010 and then sold their home within three years of purchase. (Under the program, you have to own your primary residence for three years after you take the credit to avoid the pay-back rule.)
You can get more on the rules and the new look-up tool from the IRS.
Access IRS Form 5405.
Access instructions for IRS Form 5405.
Information gathered from article On February 2, 2012, in Breaking News, by Robert Freedman
Is it better to pay off your mortgage early or should you put your money into investments or even income property? This is a topic that can be debated no matter what the market is looking like and there are many sides to the debate.
Paying off Your Mortgage Early
Anyone who lived through the depression has felt the need to pay off their mortgage, which is really a peace of mind issue. Once you’ve paid it off, you can wake up in the morning and know that you have a home for all time that is 100% yours. This sense of security maybe the most important financial decision that can provide you the satisfaction that a lot of investment planning does not. It can also be a great asset that you can tap into to get an equity line of credit, a reverse mortgage, or to use for future unplanned expenses.
Looking beyond the comfort and security of paying the mortgage off early, it can also enabling you to focus your money in other directions. After retiring, you may not need as much retirement income to support your lifestyle. You also may not need the tax deductions that are great when you are in your high earning years. Although you will still have taxes, insurance and maybe even an HOA to pay, this is far less than the burden of a mortgage.
Why Investing is Better than Paying off your Mortgage Early
By paying off your mortgage you will reduce the amount of money you can put into other investments. Look at the amount of return you are getting vs. the amount of interest on your mortgage. Analyze the return rates and you may see that your return is less than the interest on the mortgage. There is also the effect of inflation if we start heading in that direction again. As the value of the dollar goes down, future mortgage payments will effectively cost less than they do now.
Buying investment property cheaply now can give you added income and the tenants actually pay the mortgage off. Right now with inexpensive homes, you can cash flow an investment giving you added dollars to pay off either your home or investment property.
The Compromise
You can do a little of both and depending on market conditions you can invest a little more heavily in investments or paying down debt according to your comfort level at the time. Now maybe a good time to refinance your mortgage to get a lower interest rate or start a 15 year mortgage on your home. You can also pay your mortgage every 2 weeks which pays down the debt in 7 years less time than the monthly payment plan.
You may want to invest in rental property to give you added tax right offs and increased income to put into retirement accounts. Maximizing retirement accounts while you are in your peak earning years is a great plan. Try adjusting your life style so you don’t have to live off of everything you earn. Reduce expenses by analyzing your bills every six months and see if there is a way to cut costs.
Every person has a strategy that feels best for them. Listen to the experts and then decide what is best for you and your future. It is never too late to start.
Here’s 5 quick, creative, and cheap ideas to decorate your home for Halloween. Halloween comes next week and here are a few tips to help you get your home ready in a jiffy:
 Decorate for Halloween
1. Lighting change – Replace your home’s outdoor lights with orange light bulbs for a festive Halloween look. You can also buy some orange ot purple Halloween string lights to hang near or around your front door. Check out some of the local stores for creative lights like bats or cats to string up in the trees like you would do for the holiday season. Lights are also great around your windows or porch to let the children know you are ready for them.
2. Use old Halloween costumes by creating a few festive scarecrows by stuffing past year’s Halloween costumes with straw and prop up in your yard or pose in a chair. Stuff an old pillowcase with straw to create the head and draw a face with marker or paint. You can also use them inside windows to look as though they are peaking out and looking to frighten the trick and treaters!
3. Use pumpkins & gourds – If you are not up for the time and mess of pumpkin carving, buy an assortment of pumpkins and gourds and draw faces on them with markers or craft paint. It’s a great craft for young kids too. There is always multiple uses for these at Thanksgiving so add some straw bales and/or some cornstalks that can take you through the fall and Thanksgiving season.
4. Give masks new life – Use masks from Halloweens past as decorations for your front door or entryway windows. Back-light them to make them extra spooky. Old sheets can be stuffed and made into ghosts or you can use smaller white garbage bags and stuff the head, put a string around the neck and hang them from a leafless tree!
5. Light your walkway – Use clean, gallon milk jugs to create ghost lights by using a black marker to draw a ghost face on each jug. Fill each jug about halfway with white Christmas lights, which can be strung between the jugs. You can also use the luminaries for Christmas and change up the lights to orange and purple to give them a different effect and using them for another season of fun.
Remember to keep everything well lit and safe going up to your doorway especially with groups of children so they do not stumble or fall. Give the walkway and the door landing as much opoen space as possible. Let your imagination go and remember what you enjoyed as a kid!
Buying real estate continues to be cheaper than renting in the vast majority of major U.S. cities, according to a quarterly rent vs. buy index from real estate search and marketing site Trulia. This index compared the median list price and the median annualized rent on a two-bedroom apartment, condominium or townhouse in the country’s 50 most populous cities. According to the index, the cost of buying was less than renting in 37 of the 50 cities (74 percent) as of July 1, 2011. About the same share, 78 percent, favored buying over renting in Trulia’s last index report, released in April.
The total costs of home ownership include “mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing (homeowners association) dues and private mortgage insurance, where applicable. It also includes an offset for the tax advantages of home ownership, including mortgage interest, property tax and closing cost deductions.” Currently, many aspiring homeowners are on the fence about renting and buying in today’s market. Should they take advantage of falling home prices and low borrowing costs, or should they continue to rent until the economy stabilizes?” said Ken Shuman, spokesman for Trulia, in a statement.
“Price alone should never be the sole factor in deciding to purchase a home. Instead, buyers should first ask themselves if they plan to live in the home for at least seven to 10 years, could make monthly payments on the house, and have enough cash in the bank for a down payment and an additional six to eight months worth of mortgage payments. “If you can answer ‘yes’ to each of these questions, then the cost of buying a home definitely outweighs renting in most cities.”
A price-to-rent ratio of 1 to 15 means that it’s much cheaper to buy than to rent in a particular city. Las Vegas, Detroit, and Mesa, Ariz., most favored buying among major cities.
Top 10 cities to buy vs. rent:
| Rank |
City |
State |
Price-to-rent ratio |
| 1 |
Las Vegas |
Nev. |
6 |
| 2 |
Detroit |
Mich. |
7 |
| 3 |
Mesa |
Ariz. |
7 |
| 4 |
Fresno |
Calif. |
7 |
| 5 |
Arlington |
Texas |
8 |
| 6 |
Sacramento |
Calif. |
8 |
| 7 |
Phoenix |
Ariz. |
8 |
| 8 |
Jacksonville |
Fla. |
8 |
| 9 |
San Antonio |
Texas |
10 |
| 10 |
Tulsa |
Okla. |
11 |
A ratio between 16 and 20 means that it’s more expensive to rent than to buy, but buying may be better than renting “depending on personal circumstances, such as one’s tax bracket,” Trulia said. Any ratio above 20 indicates that owning is much more costly than renting in a city. According to the index, renting was much cheaper than buying in six cities: New York; Fort Worth, Texas; Omaha, Neb.; Seattle; San Francisco; and Kansas City.
Top 10 cities to rent vs. buy:
| Rank |
City |
State |
Price-to-rent ratio |
| 50 |
New York |
N.Y. |
36 |
| 49 |
Fort Worth |
Texas |
32 |
| 48 |
Omaha |
Neb. |
27 |
| 46 |
San Francisco |
Calif. |
24 |
| 47 |
Seattle |
Wash. |
24 |
| 45 |
Kansas City |
Mo. |
22 |
| 44 |
Portland |
Ore. |
20 |
| 43 |
Los Angeles |
Calif. |
19 |
| 42 |
Boston |
Mass. |
18 |
| 41 |
Memphis |
Tenn. |
17 |
Source: Trulia foreclosure hot spots saw their price-to-rent ratios drop in the first half of this year, with Detroit seeing the biggest decline, at 39 percent. Miami, however, was an exception. “A mini buying boom created by foreign investors and foreclosure freezes have caused (Miami’s) price-to-rent ratio to jump by 112 percent: from 6 in January to 13 in July,” Trulia said.
COOL CHART – look for DENVER: http://insights.truliablog.com/vis/rent-vs-buy-q3/… Better to buy!!
http://www.inman.com/news/2011/08/16/buying-real-estate-a-better-deal-renting-in-74-major-us-cities
The good news for homeowners: Consumer Reports’ latest tests yields a tantalizing menu of value-priced kitchen upgrades that cost as little as $1,000. Besides paying off now in improved looks and convenience, these smaller upgrades are likelier to pay bigger dividends later as home prices rebound. Here’s the list:
Add fresh paint
If cabinets are structurally sound but shabby, spruce them up with a coat of paint. Paying a pro costs as little as $50 per door, less if you tackle the prepping and painting yourself. One pick from our tests is the self-priming Behr Premium Plus Ultra Satin Enamel, $33 per gallon at Home Depot.
Improve convenience
For about $200 or less, you can improve cabinet storage with pull-out shelves and retractable trash bins.
Update the countertops
Designers’ views are mixed between granite and quartz (about $40 to $100 per square foot), which mimics granite and other stone. Quartz topped our gauntlet of tests, and it never needs sealing. Want to spend less? Laminate costs just $10 to $40 per square foot and resisted stains and impact even better (but be careful about cuts).
Beautify the backsplash
Durable ceramic-tile starts at about $10 per square foot installed. And even high-maintenance materials like glass are smart options, since they don’t get the wear and tear of a countertop. Whatever you use for the kitchen backsplash, caulking between the backsplash and countertop is a must.
Fix up your flooring
Tile or wood may impress realtors, but some top-rated vinyl and laminate floors also look sharp, resist wear significantly better, and cost far less when the work is done. Examples from our latest tests include the vinyl-tile Congoleum DuraCeramic Sierra Slate SI-74 Golden Greig, $5 per square foot, and the laminate Armstrong Coastal Living L3051 White Wash Walnut, $3.50 per square foot.
| Copyright © 2006-2011 Consumers Union of U.S., Inc. |
http://shopping.yahoo.com/articles/yshoppingarticles/641/five-dirt-cheap-kitchen-upgrades-that-pay/
On today’s market, every savvy seller wants to know what turns buyers off, so they can get their homes sold as quickly as possible, for as much as possible. But buyers, take note – there is a minefield of seller turn-offs you can trigger that hold the potential to keep you from getting the home you want at the best price and terms, or to unnecessarily complicate dealings with your home’s seller.
If you think all of today’s sellers are under the gun and will just put up with whatever behavior buyers dish out, be aware that there are still many multiple offer situations in which buyers have to compete with each other to get a home – buyers who trigger these turnoffs tend to lose in those scenarios. Also, avoiding these seller turnoffs can create a transactional environment of cooperation and avoid things turning adversarial. That, in turn, can empower you to score a better price, get extra items you want thrown into the deal, and even negotiate more flexibility around your escrow and move-in timelines – all perks that can make your life easier and your budget go further.
For sellers, these turnoffs pose the potential of irritating you out of an otherwise good deal – maybe even the only deal you have!
Here’s a few of the most common buyer-perpetuated seller turnoffs, with tips for sellers on how to keep an emotional (and economic) even keel, even if your home’s buyer makes some of these waves:
1. Trash-talking. Trash-talkers are the home buyers who think they’re going to negotiate the list price down by slamming the house, telling the sellers how little it is really worth, how the house across the street sold for nothing, why the school on the corner should make them desperate to give the place away, etc. This strategy never works; in fact, when you attack a seller and their home, you only cause them to be defensive, and think up all the reasons that (a) their home is not what you say it is, and (b) they shouldn’t sell their home to you!
Sometimes this happens with buyers who actually love a house and just walk around it fantasizing about all the ways they would customize it to their tastes while a seller is there. Sellers: avoid being at home while your home is being shown. Buyers: save your commentary for your agent; if you do encounter the seller in person keep your conversation respectful and avoid critiquing the house or the list price.
2. Being unqualified for mortgage financing. When a seller signs a buyer’s offer, most often the seller agrees to effectively pull the home off the market, forgoing other buyers who might be interested. As such, the only thing worse than getting no offers on your home is getting an offer, getting into contract, then having the whole thing fall apart when the buyer’s loan falls through – especially if that could have been predicted or avoided up front.
Sellers: Work with your agent to vet your home’s buyers’ qualifications, including their loan approval, down payment and earnest money deposit – before you sign a contract. It’s not overkill for your agent to call the buyers’ mortgage pro before you sign the contract and get a level of comfort for how robust their qualifications are. Buyers: Get pre-approved. Seriously. And make sure that you don’t buy a car, quit your job, deposit lottery winnings or do any other financial twitchery between the time you get loan approval and the time you close escrow on your home.
3. Making unjustified lowball offers. No one likes to feel like they are being taken advantage of. And sellers generally know the ballpark amount that their home is worth, as well as what they need to sell it for to get their mortgage paid off. Yes – the price you pay for a home should be driven by its fair market value, rather than the seller’s financial needs, and deals are more available in a market like the current one, in which supply so vastly outpaces demand. But just throwing uber-lowball offers out at sellers hoping one will hit the spot is not generally a successful strategy, especially if you really, really want a given property.
Sellers: Don’t get overly emotional about receiving a lowball offer; counter at the price you and your agent decide makes sense based on the total circumstances, including your motivation level, recent comps and the interest/activity level your listing is receiving. Buyers: Work through the similar, nearby homes that have recently sold (a/k/a comparables) before you make an offer to factor the home’s fair market value into your offer price – also factor in how much you want the place, too. Don’t be amazed if you make an offer far below asking, and don’t get a response.
4. Renegotiating mid-stream. Sellers plan their finances, moves and – to some extent – their lives around the purchase price a buyer agrees to pay for their home. If you get into contract to buy a home, find out during inspections that costly repairs need to be made, then propose a lower sale price, repair credit or even actual repairs to the seller, that’s sensible and fair. But if you were aware that the property needed a lot of work before you made an offer on it, then you come back asking for beaucoup bucks’ worth of credit or price reductions midstream, expect the seller to cry foul. And holding the seller up two weeks into the transaction because you caught a case of buyer’s remorse? Not cool, and not likely to foster the spirit of cooperation you may need to get your deal closed.
Sellers: avoid mid-stream price renegotiations by having a full set of inspection reports and repair bids at hand when you list your home. Buyers: try to avoid renegotiating the entire deal unless you get some major surprises at your inspections or inflating small repairs to try to justify a major price cut.
5. Misleading or setting the seller up. Remember when we talked about buyer turn-offs? Being misled by listing photos or very fluffy property descriptions was high on the list. The same goes for sellers.Offering way over asking with the plan to hammer the seller for a reduction when the house doesn’t appraise at the purchase price? #LAME Making an as-is offer planning the whole time to come back and ask for every penny ante repair called out by the inspectors? Lame squared.
Sellers: If you get multiple offers and are tempted to take a sky-high one or one that claims to be all cash, consider requesting proof that the buyer has sufficient funds to make up the difference between what you think the home will appraise for and the actual sale price, and statements showing the cash truly exists. Buyers: Don’t be lame. I’m not saying you have to tell the seller exactly what your top dollar is, but making offers with terms designed to intentionally mislead is really, really bad form – and can result in losing the home entirely if and when your bluff gets called.
P.S. – You should follow Trulia and Tara on Facebook, too!
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