If it’s a short sale, don’t count on the fact that the seller knows you. In the event of multiple offers, the bank will want the seller to select the highest offer, not the offer of someone they know and love.If you plan to offer over asking price, don’t make it a game for another day. Don’t rely on the fact that the seller will agree to a price reduction a week before closing because appraisal did not match asking price. When this occurs, seller/banks may agree to reduce the sales price, but don’t count it. By this time, almost everyone is mad. Some sellers will cancel the escrow and start over. Others will reduce the price to match the appraisal.Some loan agents have intentionally delayed ordering the appraisal in these cases so that the appraisal reflects the price down the road instead of the date of sale.It is not uncommon for asset managers to punish the listing agents in these circumstances and assign the listing to another agent in a different company.Then there is the “per diem” charge, often $100 per day for late closings. To avoid these charges, make sure your agent requests for extensions for good reasons on a form known as an Addendum. Very seldom are per diems charged if the asset manager is informed on the progress of the transaction.Another sensitive area is when buyers ask for repairs. If you asked for and received closing costs up to 3%, you may not receive credit for repairs. If the seller does grant a request for repairs, it will be called “credit against closing costs”. It is possible that your request for repairs will not actually be received because you will not be given cash back at the close of escrow.If your lender can legitimately increase closing costs to cover the costs of lender required repairs, the repairs will have to be paid with this money.Don’t be surprised if your agent asks you to request bids and arrange for payment. It is generally accepted that the one who orders the work is viewed as the person who pays for it. Since agents are not general contractors, they don’t want to be in the line of fire when payment is due.Wrap-up. Can it take a long time to get a response to your offer? Yes it can. Can it take a long time to get the escrow opened once the offer has been accepted? Yes it can. Are delayed closings often the fault of the seller/bank? Yes they are. Does it do any good to get mad about it and demand better service? No it doesn’t.There is a fair amount of frazzle within the real estate community over this “new normal,” lending environment. Most accept the new rules and work with it. Most adapt and continue to serve their clients with intelligence, creativity, grace, imagination, and honest dealing.Kay Wilson-Bolton is a broker for CENTURY 21 Buena Vista with offices in Ventura and Santa Paula. She can be reached at 805.340.5025 and met at www.readysetkay.com.
How to negotiate your REO purchase
January 30, 2009
REALTOR® Outlook
Columnist
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By Kay Wilson-Bolton
By Kay Wilson-BoltonIf you find a home you think is a “good deal”, chances are someone else does too. To avoid disappointment, hassle and whatever else goes with this “new normal” way of doing things, here are some tips on getting your offer accepted-first and early.If you want your offer to stand out, you are convinced the house is a good deal in the long run and you can afford the payments in the short run, make note of the following.Make your escrow period as short as your lender can deliver.Make your deposit at least 1% of the offered price.Come as close to full price as you can. If you love the house, offer a little over. You won’t notice the difference in monthly payment but the asset manager will notice the difference in price.If a termite report exists on the property ask about the cost of Section I. If the cost is affordable, don’t ask the seller bank to pay for it. Always agree to pay for Section II work.Don’t ask the seller bank to pay for home protection plan. The trend is to cut them out-1000 homes time $330 per home protection, computes to a big savings for the seller.Limit your inspection period to 10 days.If you are going to ask for closing costs, offer a little more on the price. The days of banks paying 3% for costs and 3% for buydowns are generally considered to be over.If others join you in the bidding exercise, you may be asked to submit your best and final offer within 24 hours. If you are in that situation, improve your offer with the same suggestions.Every day in Ventura County lenders prepare a pre-approval letter stating the dollar amount for which a buyer is qualified. If that figure is $300,000 and the price of the home is $290,000 but you have offered $280,000, every seller will think twice about accepting an offer less than asking price if your letter of approval states you are qualified for $300,000. The ideal situation is the have a ready-set-go lender who will write a new letter reflecting every offer you make.The earnest money deposit and down payment have to be in an account under the buyers name and verifiable. Buyers should not, obtain the down payment on a credit card charge. Paragraph 2 on page one of the purchase agreement states the deposit and down are not contingencies.There are two particularly sensitive areas of your negotiation that need to be considered.
