The RIGHT WRONG Things

When my husband and I walked into our current home the first time, it was a sad sight to see.  Shag carpeting, dark wood paneling, old formica countertops.  And yet we knew it was “the” house for us.  How?  It was UGLY.  And yet the right things were wrong with it.  The carpeting we could tear out.  The dark wood paneling could be taken out or painted over.  Walls could be moved and removed.  Countertops could be replaced.  The home’s flaws allowed us to put our signature on the home and make it our own.  We loved the soaring ceilings, floor to ceiling glass, and huge acre lot with tons of trees.

But another home we looked at was much prettier.  Already renovated in a style we liked.  We could have moved right into that home.  But the WRONG things were wrong with that home.  The driveway was steep.  There was no garage, and due to the topography (steep drop-offs beside the home) no easy way to put one in.  Not enough guest parking – and guests would have to climb up that mountainous driveway.  So while it was beautiful – and we went back to it several times – it was *not* the home for a couple who love to entertain and really want a garage.

This was our experience in the doctrine of the “right wrong things”.

Now, the right wrong things for us would have been just the “wrong things” for some other buyer.  Say, one who didn’t want to have to do ANY renovation.  Or a buyer who couldn’t see past ALL the work that needed to be done (and there was a lot!)  The things that were “RIGHT” for us would have been wrong for someone else.  Not everyone wants a large lot to care for, and not everyone appreciates the 1970s aesthetic.

When YOU are looking for a home, don’t expect to find the house that is exactly right in every aspect.  It doesn’t exist!  Look for the home that has the “right things wrong with it.”

First, determine whether you are willing to do any renovation at all.  If so, the following might be the right wrong things:  old carpeting, Formica countertops, loud paint colors you don’t like.  These are things that are easily changed (of course, if you don’t want to do any work at all, these are just “wrong” things).

Other right wrong things might be a yard that is in disarray but with a little landscaping could be great; or a carport that  could be converted to a garage (if that’s a “right” thing for you).  It’s also important to know, however, the WRONG wrong things.  Maybe a quiet street is important to you.  If the home you’re seeing is on a BUSY street, that’s the “wrong” wrong thing – something that CANNOT be changed, no matter how hard you try.  Put together your list of the WRONG wrong things, and do NOT GO SEE A HOME that has those things.  You’ll save yourself a lot of time and frustration.  Other “wrong” wrong things might be: a home in the wrong school district.  A home without a fireplace if you’ve always dreamed of having one.  A home in a bad n’hood if safety is paramount to you.  You see – the “wrong” wrong thing is something that cannot be changed.

So, before you go to look at houses, put together a quick list.  What are the RIGHT WRONG THINGS?  And what are the “wrong” things that you cannot abide – let’s eliminate those houses before we start, but let’s NOT eliminate those that have the RIGHT wrong things.   Determining your right wrong things could be the way to get a deal on a house – and to have the flexibility to make it your own!

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

WE HAVE AN OFFER! NOW WHAT?

Prices are rising rapidly in Metro Atlanta and we do not have enough homes to sell.  Buyers are frustrated by the lack of inventory and how quickly the good homes get snatched up. Let’s say we have put your home on the market (and I’d love to do that).  Say you’ve priced your home to sell.  You’ve painted the walls a pleasing neutral color and staged perfectly.  You’ve made it readily available for agents to show.  In this fast moving market, we should have an offer within days or a few weeks.  If there’s no offer within a few weeks, they we must re-evaluate why – a subject for another article.  But presuming we’ve gotten it right, offers should be coming in!  How do we respond?

If we get an offer immediately upon listing, we may have a very hot property (one indicator is that we also have a lot of showings right away).  This is happening a LOT currently.  If we’re getting multiple offers, lucky you!  We could have a bidding war.  One way to handle this is to say that we’ll be responding to all offers at some point in the near future.  It’s best to give a date certain.  Say we list on a Wednesday, and it’s clear we’re going to get more than one offer.  I can say “seller will respond to all offers by Tuesday at 5pm”.  This allows the weekend for showings to more potential buyers and allows the open house to pull in more potential buyers (if we’re holding open houses at your home).   If an offer comes in the first day and you respond to it, you don’t give other potential buyers the chance to bid up the price.  That said, if the first offer is excellent and solid and one you just can’t refuse, at times the best thing to do is to move quickly on that first offer and enter a solid contract.

But if we are soliciting multiple bids and get them, once they are all in we review them carefully, comparing all terms.  The “best” offer may not be the “highest” price.  You’re looking for a buyer who will not ask for excessive concessions during the inspection period and who will surely make it to the closing table with no financial difficulty.  Thus, a cash offer (with proof of funds, of course) is typically a better offer than an offer contingent on a loan.  An “as is” offer (indicating that the buyer will not be asking for repairs) is better than one with the right to ask for inspection repairs.  An offer contingent on the sale of another home is not as desirable as one that is not.  We take all of these things into account in deciding which offer is the “best” and the one you want to respond to.  Unless one bid is so strong you want to nail the contract down and sign it as it is written, you will have the opportunity in the counteroffer to counter any terms you do not like, including price.

Now, in contrast to the multiple bid situation, if yours is a home that is not receiving immediate multiple bids, then I typically recommend responding VERY quickly to a bid on the property.  Strike while the iron is hot!  Buyers who must wait a day or two for the seller to respond sometimes lose their enthusiasm and start having second thoughts.  It’s smart to respond quickly to a good offer to keep the momentum going if your home has been on the market for a while or we don’t believe that a bidding war is possible or probable.

We’ve been concentrating on good offers and how to respond – but it’s important to note that you should respond to every offer that comes in, good or bad.  Some inexperienced buyers and even some seasoned veteran buyers just feel that they have to “try” a lowball offer.  Don’t be offended.  Answer it anyway, unless it is just truly ridiculously outside the realm of possibility.  I’ve seen unreasonable buyers get very reasonable in the end and jump to a high number that made my seller very happy.  And everyone’s idea of what IS a “low” offer differs.  Even if you respond at list price, respond.  Play ball.  Having an offer , even if you only have one, is a wonderful thing.  If it’s not going to work out, you should know within very short order and it so it’s not a big time waster.  If fact, if the initial offer is too low, we can respond verbally until the buyer gets to a more reasonable number.

Our Atlanta market has been sizzling hot this summer; well priced properties sell quickly and with multiple bids.  If you price right and stage well, your home will be one of the “hot” properties.  How to respond to offers, single or multiple, is an art as well as a science; with a little forethought and help from a licensed Realtor, you will be SOLD in no time.  Call me today if you or someone you know has been thinking about selling!

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

The Real Estate Times they are A'Changing...

The Real Estate Times, they are A’Changing

Does the real estate market’s positive shift this Fall signal more great times ahead?  Or is this a temporary positive blip?  I believe that the recovery will continue into next year, and that the bust is over. 

In fact, the third quarter of 2013 gave us lots of positive momentum that has and should continue.  While December is typically a slow month we are still seeing the best properties sell quickly with multiple offers.

The best strategy for sellers now and for the year to come is to choose an initial listing price that is aggressive enough to compare very favorably with competing listings.  A home needs to be the best option in the price range in order to sell quickly.  Strategizing in this way brings into play the “scarcity fear” – meaning buyers will see the home as a scarce commodity in the price range and will move quickly and be willing to pay more.  Buyers, in other words, will be afraid that someone else will snatch up the home first.  This is exactly what a seller should want.  A seller who overprices in the beginning loses that buyer urgency.  The longer a home sits on the market, the less a buyer thinks it is worth.  Therefore, paradoxically, a seller who prices less from the beginning will net more than the seller who starts out high and has to price reduce thereafter. 

The good market for sellers that we are seeing now is due to the fact that the downward price pressure from distressed properties has alleviated.  For several years, the number of foreclosures and short sales have brought all prices down.  Now, however, we are seeing much fewer distressed properties on the market and overall lower inventory, so this is the best time to sell that we have seen in years.    While the market may be even better in the Spring, sellers who list NOW have the added advantage of the low inventory of homes available over the holidays.  If a seller waits until the Spring, they will be competing with many more homes.  A buyer looking right now has little to choose from, and this can mean a higher price for a seller who acts strategically.  The following chart shows the severe decline in listing inventory.

Even though there are fewer properties in general, and significantly fewer distressed properties on the market currently, they still have an impact on a sellers’ ability to get top dollar.  When setting an initial list price, take into account how many distress properties you will be competing with.  This can vary greatly from area to area, so it is hard to provide generalized advice about the impact on pricing.   The following chart shows the decline in the number of distressed properties for sale; but note that there ARE still a number of distressed properties out there.

For Buyers, it is important to understand that the supply/demand relationship has shifted to the seller’s advantage. Now, fast action and realistic offers will be necessary for buyers to capitalize on still-low prices for many available properties. Low-ball offers on properties that are already well priced will result in missing out on a great opportunity.  In other words, our low inventory of homes for sale and the fact that prices are still low in a historic sense reduces the buyer’s advantage in contract negotiations.   Making realistic offers is a must for desirable houses.

Overall, the good news is that prices are still historically low and interest rates are too, but inventory is ALSO low and prices and interest rates are rising.  This Spring will see an uptick in activity, with rising inventory, prices, and probably also interest rates.  

A HOUSE DIVIDED: The Family Home in a Divorce

“When we divorced we split the house 50/50 – she got the inside and I got the outside.”

“Have you seen the new “Divorcing Barbie” doll? She comes with Ken’s house.”

            Joking aside, the family home is sometimes the greatest asset to divide in a divorce – so let’s look at how to handle this crucial asset.

It is advisable to call a Realtor early on, when you’re analyzing what assets you have and don’t have.  I often get called in to look at the home and give an assessment of its value in today’s market.  It makes sense to call a Realtor at this point – we typically are more familiar with the neighborhood and have been in the homes that are for sale and have sold, and are accustomed to pricing properties for sale.

             There are online tools you can use as well – zillow.com, for instance, which gives you a “zestimate” of what your home is worth, or trulia.com.  However, these services have obviously not been inside your home or the other homes – so they are very general and cannot necessarily be relied upon.  Tax records are also notoriously unreliable.

            A crucial consideration at this point may be whether or not the couple is “underwater”; that is, whether you owe more on the property than the property is worth.   If so, to sell the home you would have to bring money to the table.  In other words, in some instances it may not be possible to sell the home.

            Also consider early on whether or not you want to fight to keep the home.  Can you afford the monthly carrying costs?  It might not be worth fighting for if it’s something you cannot keep up.

            If one party does end up staying in and keeping the home, however, that party may be buying the other party out.  In that instance, professional appraisals are probably in order – each side getting their own appraisal and then perhaps a third appraisal if the two vary widely.  Know that appraisals are an ART as well as a science – while appraisers are bound by the Uniform Appraisal Guidelines and professional dictates, there is some subjectivity in the process.  When you hire an appraiser, you might wish to share with them the comparable sales that you think are most applicable and why they should be used.  Most appraisers are happy to consider the information, although of course they are not bound to use it.

            But say the decision is that the home needs to be SOLD.  It’s great if you can both agree on a Realtor.  That actually happens much more often than you might think.  Maybe you both liked the Realtor who sold you the home.  Or know a Realtor jointly who you respect.  Another tactic is to interview three Realtors and see if there’s a clear front runner who you can agree upon.  If not, one way this is sometimes handled is that one party will choose the Realtor for a specified period of time and the other party will choose for the next period – be it 3 months or 6 months.

            Several considerations arise here.  Keep in mind that there are various expenses involved in getting the home ready for sale and keeping it maintained while it is on the market.  How those expenses are handled should be decided upon in advance.  You might also want to decide in advance how much the list price will be decreased and when – and what offers should be acceptable (i.e., you can agree that any offer within five percent of list price must be accepted, that sort of thing).

            Then there are some very practical showing considerations.  An example will illustrate this point.  We had one client where the wife left with all the nice furniture.  We were left showing a home with very little furniture and a “divorce feel.”  Try to agree to keep enough nice things in the home to make it show well.  Like it or not, buyers are swayed by these things.  Most buyers choose emotionally and THEN justify the purchase logically.  If they walk in and the home feels forlorn and empty, they will not feel great about the home – or may think the seller is in desperate circumstances and thus make a lower offer.  It pays off to have the home nice for showings.  If nothing else, the parties can agree to borrow or rent furniture or to have the home staged for showings.

             The home must also be AVAILABLE for showings.  This becomes an issue when the person staying in the home doesn’t necessarily want the home to sell.  Perhaps the other party is paying the bills, and so once the home sells the occupying party loses that support AND must move to a lesser home.

            When an offer comes in, keep in mind that your net is less the Broker’s commissions, the mortgage payoff(s) and any repairs that will be necessitated during the inspection period.  Your Realtor can help you figure your net from a given offer.  Again, it is sometimes helpful here to have agreed what amount and type of offer should be acceptable.

            A note here if one party stays in the home.  Be aware of title issues.  When you sell the home, a title search is performed.  If there are any liens against the property, these must be paid off before closing.  Even if you do not sell the home, if you are the one keeping the home you want to have a title search before all is finalized.  That way you can be sure the departing spouse didn’t borrow money against the house or otherwise create liens that you will be responsible for when you sell the house and which effect its value.

            The final issue – housing options once you leave the family home.  This is for you and your Realtor to decide, but just a few things to keep in mind: do you need to stay in the same school district for the kids?  Do you need to stay close to the other spouse for the children’s sake?  Even the priciest zip codes have affordable options that your Realtor can help you find.  And keep in mind that emotionally you may want to stay in a familiar area; the one you’ve lived in or an area with friends and family near.

MULTIPLE OFFER SITUATIONS

Our Atlanta real estate market is currently a strong “seller’s market”. We define a seller’s (vs. buyer’s) market in terms of available inventory.  If there is six months or less of housing inventory on the market, it’s a seller’s market – more than six months of inventory is a buyer’s market. 

When we say “six months” worth of inventory, that means that if nothing new were to come on the market (hypothetically, of course), it would take six months to sell everything that it currently listed.  This is calculated this way:

• We compute the total number of active listings on the market last month in the area under consideration;
•  Then compute the total number of sold homes for the that month;
•  Then divide the number of current active listings by the number of total sales for the month, which gives you the months of inventory which remain.

Using this formula, the Atlanta Metro area has less than five months of active listings (in some areas, less than three).  So listings are often going under contract within the first day or two they are available, with multiple offers.  A seller who gets multiple offers may pick the best one and respond to it OR may decide to contact all bidders and request their “highest and best” bid and go with the bid the seller finds most advantageous to them. 

 If you are a buyer trying to “win” in a multiple offer situation, it goes without saying that you should place your HIGHEST offer – the most amount of money that you are willing to pay for the property.  The seller will usually go with the highest bid, but not always.  There are other factors important to the seller: how likely a buyer is to get to the closing table, for instance (so a buyer with cash is “king” – because loans can fall through, of course).  This is why the seller asks not only for your “highest” offer, but for your “highest and BEST” offer.  Let’s look as some of the factors that will help your offer be the “best” offer.

First, if you can avoid asking the seller to pay closing costs, I would recommend that.  A seller will perceive a buyer who is asking for closing costs as not as strong a buyer.  A strong buyer has enough cash on hand to pay their own closing costs and can avoid rolling those closing costs into the loan by asking the seller to pay for them.  (What the seller cares about is the seller’s “net” – contract price minus closing costs paid.  By asking the seller to pay closing costs you are offering them “less” than the contract price and perhaps indicating that you are not as strong  a buyer).

Another seller consideration is how difficult the seller perceives that the buyer is going to be during the contract to close process.  A buyer who asks for too much in the opening bid may be perceived as a scared buyer who is more likely to terminate the contract during the due diligence period.  Or one who is likely to ask for excessive seller concessions during due diligence.

Here are some other pointers if you are the buyer placing a bid against other offers:

• Make your offer a CLEAN AS POSSIBLE; meaning avoid stipulations.  Keep those stipulations you do include as simple as possible. 
• For instance, we will sometimes insert a stipulation asking for a professional cleaning of the property from the seller prior to transfer of possession.  If there are multiple bids, LEAVE THAT OUT.  That stipulation is sometimes taken the wrong way by sellers who think that they are indicating that the property is less than clean, and that may be the thing that prevents you from getting the property.  You can pay for your own move in cleaning if the seller doesn’t (and many, if not most, sellers will have the property professionally cleaned without you asking for it)– but don’t risk losing the property by asking for this when there are other offers.
• The same thing goes for other items you might otherwise ask for: a survey, condo documents, etc.  You can pay for a survey yourself and still *ask* for the condo documents (or have your agent get them) during the due diligence period.  Asking for them in the initial offer may, all other things being equal, cause a seller to choose another offer that is simpler for the seller.
• You may be competing against other offers that DO NOT HAVE a financing or appraisal contingency.  If you need financing, you must have those contingencies (unless you have enough cash to cover if the property ends up not appraising for full contract price and are willing to take that chance).  But keep this in mind – know that some buyers will pay cash without a loan OR appraisal contingency for a hot property.  So you may be beat out not on price but by a buyer in that position.
• So if you must have a loan and appraisal contingency, make them as clean and enticing as possible.  Here are some guidelines: indicate in the contingency how much money you are putting down – more is better to the seller, of course.  If you are putting fifty percent down, you are a stronger buyer than someone putting twenty percent down, for instance.  Keep the loan and financing contingencies as tight as possible – 21 to 25 days is the norm, but go shorter if you can in order to present your offer in the best light. 
• HAVE A PREAPPROVAL LETTER (or proof of funds if you are paying cash).  Most sellers won’t even consider an offer with a prequal or proof of funds.  It is best if that preapproval letter is from a recognized lender who regularly does mortgage loans so that the seller is reasonably certain that the lender will not botch the deal.
• You may also be competing against an “AS IS” offer; that is, one in which the buyer says that they will purchase the property without asking for any repairs.  (In an “as is” contract, the buyer still has a right to inspections, but has agreed not to ask the seller for any repairs).  Therefore, if you do want a due diligence period, keep that period as short a possible (typical is 7 to 10 days – in multiple offer situations, I definitely recommend not going over 10 days).

Finally, it sometimes helps to use a “personal touch”.  Tell the seller something about yourself.  We call this a “buyer’s letter” and I will often write them for clients in situations where I think it would be helpful.  Tell them what you like about the home and give them information so that they know you’ll be a good neighbor.  Not all, but many sellers care very much about what type of person is purchasing their home and what type of neighbor that person will be for the friends that they are leaving behind.

Put your best foot forward when there are multiple offers – remember that you are competing not only on price; and good luck!  If your bid is NOT the winning bid, consider asking the seller to hold on to it as a “back up offer” in case the winning offer falls through.

PREPARING YOUR HOME FOR SALE

So you’ve decided that you want to sell your home.  The first question is WHEN should you sell?  The prime months for selling vary year-to-year, but in good years and bad, generally the “peak” times are from March 1^st through Memorial Day and from mid-August until the week before Thanksgiving (conversely, the “slow” periods are typically the summer & winter vacation months, and the holiday lull extends through February).

But also remember that there are ALWAYS buyers out there.  Even in our “slow” months there are buyers ~ and there’s less inventory.  So although it may seem counterintuitive, if your home comes on the market in a “slow” month it may actually help your chances of selling.  In times of limited inventory, the listing is king!

Regardless of your target date for putting the house on the market, your preparation for selling should begin months before.  It is never too early to contact an agent and start getting your home prepared.  Your agent or your agent’s stager will give you a list of things to do to get your home ready, and the earlier you start on them the better.

And please do not be insulted by the list of things your agent or stager tells you to do in order to sell.  All of us start to overlook the little quirks that a home develops and the clutter that accumulates once you live in a place for a while.  To sell your home at top dollar, you want your home in great condition and looking its best.  That means putting aside a little pride and listening to what the professionals ask you to do.  It really does pay off!

If you want to get started NOW, here are some general guidelines we give clients:

GENERAL STAGING GUIDELINES:
1. Gather packing supplies; boxes and tape or plastic bins.  Also gather boxes and bags for those items you want to donate to charity.
2. Take everything off the floor of every closet and find another place for it if you can – ideally, nothing is on the floor of any closet.
3. Pack up half of what is in every closet.  Half of your clothes, half of everything else – make sure every closet looks SPACIOUS and incredibly neat. 
4. Clear as much stuff off every horizontal surface as you can.
5. In one place, have any staging “extras” that you may have – extra pictures, vases, pillows, towels, etc.  Your agent or stager may be able to use them in getting your home ready..
6. Make sure all lights work and no lightbulbs are out.
7. Fix anything you know needs to be fixed; that icemaker that stopped working, the siding boards that need to be replaced, and the faucet that is dripping.
8. Take down all of your personal pictures, then just put back out one or two on each floor (minimal personal pictures, but enough to personalize and let the buyer know that you are a “real” person).

Those should get you started.  And who knows, after you clear some clutter and fix up things you may decide you want to stay.  If not, it is time to call in your Realtor.

HIRING AN AGENT

So you have decided that it is time to sell your home and move on to a smaller home, a larger home, or just greener pastures.  How do you find an agent?  You might ask your friends and colleagues who they recommend; you might decide to hire the “neighborhood expert”; or you might already know a great agent you would like to use. 

If you are not certain who you want to use, it is time to call in several agents, meet with them and have them look at your home, and then decide who you are most comfortable with.  There are many factors to consider and questions to ask: 

• Is the Realtor a FULL TIME agent?  You do not want to hire anyone who only does real estate part time – they cannot give your home the attention it deserves.
• Is the Realtor with a reputable company, and are they well connected/well liked among other Realtors?
• Does the Realtor have an assistant to help with marketing efforts so that if the Realtor is very busy someone is still marketing your home full time? 

Hire who you are most comfortable with, not necessarily the agent who gives you the highest suggested list price.  Some agents will give you an inflated price to entice you to list with them.  Overpricing your home can be deadly, since the longer a home sits on the market the less desirable it is to buyers and the less you will ultimately get for the home.  Go for the agent who is the most knowledgeable and realistic about your home’s value over the one who gives you a high price just to get you to sign the agreement. 

Ask what services the agent offers as part of the listing – among the things a great agent may offer are professional photography, staging services, full color professional brochures, agent caravans, and videography.  Let the agent know what you expect from them – some sellers like to be contacted by the agent as much as possible, while others just want a phone call when an offer comes in.  Let your agent know what works best for you. 

And as the listing moves forward, let the agent know whenever you are unhappy about anything and give them the opportunity to rectify it.  Most of us will bend over backwards to make a seller happy, and to sell the home.