Real Estate on The Front Range

A good negotiator is someone who always gets what they want. Right? I say, not always. Being a good negotiator to me is someone who can give themselves or their clients the best chance to achieve their goals. Giving you the best chance does not always mean you will get exactly what you want. In order to achieve sustained success, a negotiator must go for Win-Win, not Win-Lose. A successful negotiation substantially meets the goals of all parties involved. Right now in the Boulder area real estate market buyers have the perception that they may be able to get a great deal on a home. It is true that there is more inventory out there and a portion of those sellers are quite anxious to sell. I have seen lately many offers well below full price and it takes a delicate touch to try to meet somewhere in the middle. Here is what I try to do to give the offer the best chance to come together. Do our homework - find out what is reasonable. What have other houses actually been selling for? How much is the average negotiation off of full price?

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Some Views On Negotiation

A good negotiator is someone who always gets what they want. Right? I say, not always. Being a good negotiator to me is someone who can give themselves or their clients the best chance to achieve their goals. Giving you the best chance does not always mean you will get exactly what you want. In order to achieve sustained success a negotiator must go for Win-Win, no Win-Lose. A successful negotiation substantially meets the goals of all parties involved.

• Do our homework - find out what is reasonable. What have other houses actually been selling for? How much is the average negotiation off of full price?


• Establish goals - What would be an acceptable outcome. Begin with the end in mind and you have a good chance to get there.


• Understand the situation - Try to understand what situation your counterpart is in. Understanding is power. With every contact, I try to learn a bit more about where the other people are coming from. Many times, after making an offer it is the first counter that gives you the most information.


• Keep the lines of communication open - As a Realtor I need to represent my clients to the best of my ability but I have found that being adversarial to the other side doesn't get you anywhere. I try to keep on very good terms with the other agent. I find that this helps in coming to a successful closing. If we become adversarial along the way it is very hard solve all of those little details that come up along the way. I try to treat other Realtors well, so the next time we are working together they can tell their clients I am easy to work with and to expect a smooth transaction.


• Remember that every situation is different - You never know what is in the head of someone else. You can guess someones motivations but you never know what someone is thinking. Don't try to guess, try to learn, understand and adapt.


• Anticipate - I find that I am really able to help my clients by anticipating what may happen during a certain transaction. If we can talk about different scenarios before they happen they are easier to solve when they come up.

Video Sewer Line Inspections

Purchasing a home is a huge undertaking and is most likely your largest investment. It is therefore wise to do everything in your power to minimize your risks. The first step is to hire a competent Realtor, that is where I come in. Your Realtor can then lead you through the process of intelligent due dilligence. Some common items to consider: Is the asking price justified for comperable sales? How does the homes condition compare to others on the market? Are there any obvious flaws? What is the potential resale potential of the home? If the property is part of an HOA, can I live with the rules and the assessments? Can I live with the neighbors? etc...

-Multiple Offers-

We are working in a buyers market. The average days-to-offer in our market is around 75 days. It is unusual to have houses go under contract right away. You would think that multiple offers and offers over full price would be non-existent; but they happen. When there is a large inventory of houses on the market buyers become very good at spotting a good deal. When after looking at 20 homes, buyers see a new listing that they "know" is a good house for a good price, they tend to jump on it. If they are smart they give a good offer and wrap up the negotiations as quickly as possible. Chances are they are not the only buyers looking in that area and price range. What happens if two buyers decide to write an offer on the same house. Here is some advice from the buyer and seller perspective.

• Check to see if you have competition. Your agent will call the listing agent to announce your intention to write an offer. Make sure you know if you are competing with another buyer. At the same time have the agent ask for the sellers preferred closing date and for any items that will be excluded from the offer. All of the information below assumes that there is another offer.


• Make your decisions quickly. Getting your offer in a day ahead may make a big difference. Ask for a quick acceptance deadline.


• Do your homework: Check comparable sales and decide the maximum price you will be willing to pay. Also, think about how you would feel if you would lose this house over a couple of thousand of dollars.


• Do a thorough walk-through: When you see a house you are interested in, take your time. Check on the condition of the house, what would you need to do to make it yours. Are the systems (furnace, roof, windows) in good condition?


• Prepare a clean offer: Don't ask for Sellers to pay for appraisal, cleaning, HOA transfer fees etc. When the seller is considering two similar offers, $50 can make a big difference and send a signal that the buyers asking for all of the small stuff will be tougher to work with down the road on inspections etc.


• Have your financing in place and make sure to include a letter from a lender along with the offer. I prefer to see a local lender who can jump in and make the closing work in a difficult situation rather than somebody who is working a toll free line.


• A nice touch is to write a personal letter to the seller explaining who you are and why you love their house. The seller has an emotional attachment to the house and wants to sell to someone who will take care of their house.


• Consider an escalation clause. When the house is a good value and you know there is competition one effective method is to write in an escalation clause. This clause in the contract automatically raises the bid price if another offer beats theirs financially. For instance it could read "the offer price shall be automatically raised to a price $1,000 above any other bonefide offer, the purchase price shall not exceed $xxx,xxx". This is where the buyer has to know how much they are willing to pay; is it full price or $5,000 over?

From The Sellers Perspective:

• If you are attracting more than one offer it shows that you have taken care of your home and priced it correctly.


• You want to make sure that all interested parties have a chance to submit an offer. Have your agent communicate to each agent who has shown the property recently to gauge interest.


• When reviewing offers look at these main points: net price to you after all closing costs, dates and terms and buyers ability to pay and close.


• Try to read between the lines and get a feel for motivation. A buyer who has been transferred and is living in temporary housing is a stronger candidate than an investor who will not be living in the house.


• Try to tie up some of the loose ends now. Use a counterproposal to change dates and terms. You will never again be in a better negotiating position.


• Choose what feels right and be open with your agent .


• Remember, you have a right to choose what offer you accept but you do not have the right to discriminate against a buyer. Choose an offer based upon what is on the paper.

From The Agents Perspective:

• Make sure the communication lines are open. Get a dialog going with the other agents. If all parties feel informed about the process and situation there will be no hard feelings. If a second offer comes in after the first, it is customary to call the first agent and give them a chance to change their offer.


• If you are in an agency position with your client they will lean heavily on an agents advice. Give them good information and let them choose from the possibilities.

Every situation is different but remember the buyers agent is charged with helping the buyer get the house and the sellers agent or listing agent is charged with getting the best price and terms for their client.

Rent To Own

As I drive around in my market I tend to see homemade signs posted at major intersections with houses advertised as "Rent to Own". In this post I'd like to layout a typical rent to own deal as well as show how the unscrupulous can take advantage of an unsuspecting buyer.

1. Buyer and Seller agree to an option price and the time for which the option is good (usually 3 years or less but is negotiable).


2. Buyer pays an non-refundable option fee upfront to Seller (usually 1% - 5% of purchase price) . If they exercise the option the option fee goes toward the purchase price of the house.


3. Buyer agrees to pay monthly rent to the Seller. Usually, the buyer pays a premium on the market rate rent and that premium also pays down the option price of the house.

Advantages for Seller:

1. Expands the pool of possible buyers to their house. This is especially helpful in a slow market.


2. Option money is upfront and payable to the Seller.


3. They can usually collect above market rate rent.

Advantages for the Buyer:

1. They are able to lock in a sales price on a house.


2. They are able to pay down equity each month they pay rent.


3. They are given time to accumulate a down payment or repair credit.

Buyer Beware:

There are situations where the Seller is just looking for a victim. There have been many instances where sellers are just looking for the upfront money and premium rent and then find a technicality to evict the buyer/renter before the option can be exercised.

Condition at Closing
or How to Avoid a Mess at Closing

One of the greatest sources of letdown and conflict in a real estate transaction is the condition of the house after the Sellers move out. Provisions in the purchase contract allow for the buyer to do a walk through inspection prior to closing. I advise my buyers to do this walkthrough as late as possible so as to see the true condition of the property as it will be left. What to look for in a walkthrough could be its own topic but in summary; we are checking to make sure that the inspection items were completed as agreed upon, the inclusions are still at the house, that there has not been any recent damage to the house and finally to check the cleanliness of the house. The first three items are fairly "cut and dry", either the refrigerator is in the kitchen or it's not. I have found that cleanliness is very subjective. What may be very clean to one hurried, harried seller may be "filthy" to the buyer. I try to mitigate this by talking about this subjective divide as we write the agreement and make the language in the contract as plain and literal as possible. Instead of saying carpet cleaning (sellers picture the Bissell in their closet, buyers picture the $500 top of the line pro), I would make it clear that the carpets are to be cleaned by a professional with the receipt provided.

No matter what you try to plan for it is an issue. Sometimes it becomes an outlet for buyer frustration after a particularly tough set of negotiations. Sometimes it is a seller with good intentions but not enough time. Sometimes it is a professional hired who does a less than professional job. All I know is that I have hired cleaners, pitched in with the sellers as we did a last minute shine or have cleaned cupboards and closets myself. Small important details in making the closing day go smoothly and making my clients happy.

So some parting advice:
To Sellers:

• Plan in advance. Closing and moving is a very hectic time and it is not always easy to complete all of those little last minute tasks.
• Bring in help. Hire a cleaning company or better yet family. It is always very hard to go back to the old house to clean while all of your stuff is at the new house.

To Buyers:

• Get it in writing. If you are worried about the condition of the house, set forth your expectations in writing.
• Be realistic. Maybe you have to tidy up a bit when you move in to bring it up to "your" standards. Don't let it ruin your day.