home

The Delicate Art of Counteroffers

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | November 5th, 2014

A machinist and his homemaker wife, both in their early 40s, had long been planning to sell their fully renovated Craftsman-style house to build a bigger, custom place on a rustic country lot. But they held off until autumn, waiting for perfect selling conditions in their area.

Their timing was just right.

Within a couple of days after their place went on the market, the couple bagged two offers, each for their full asking price, which gave them leverage when they made a counteroffer.

"Besides a good price, the sellers really wanted to remain in their house until the new place was totally move-in ready. Through good planning, they closed on their sale and now have the right to stay for up to 90 more days at a very nominal rent," says James "JJ" Godi, a real estate broker involved in the deal.

This story illustrates how sellers can often shape an offer to their liking, without pushing so hard as to alienate prospective buyers, says Fred Meyer, an appraiser and real estate broker who sells property near Harvard University.

Can all sellers act as demanding as the machinist and his wife?

"That depends on how much leverage they have in their market. The sellers' strategy has to be appropriate for market conditions," Meyer says.

Here are a few pointers:

-- Don't solicit advice on an offer from friends in your neighborhood.

Some sellers are inclined to ask neighbors to review a bid before deciding how to respond.

But Meyer cautions that most of your neighbors will probably lack the up-to-date information needed to guide you. What's more, they may be biased in their thinking and overestimate the value of the property.

Godi says a trustworthy real estate agent is typically your best source for sage counsel when you're attempting to ensure that a bid on your home is up to its true market value and that all the clauses in the document are acceptable.

"I go line-by-line through any offers my sellers receive," Godi says.

As he notes, each year so-called "standard" sales contracts become more complex and lengthy, as more mandatory disclosures are added. Yet often the most troublesome provisions involve nonstandard language.

"You have to be especially careful with handwritten clauses that are inserted in a sales contract by buyers or their agent," Godi says.

He advises those seeking a second opinion on a bid to have it reviewed by a lawyer who specializes in real estate.

"You don't want an attorney who does divorces or bankruptcies doing your real estate transactions. You need someone who really knows real estate law," Godi says.

However, he says you probably won't want your lawyer directly involved in negotiations with potential purchasers. The problem with that is that your buyers may think they also need an attorney, which can lead to an adversarial situation that might ruin your deal, he says.

-- Beware of special conditions attached to an offer.

In areas where demand for homes outstrips supply, Meyer says it's rare for potential buyers to risk making their offer conditional on finding a buyer for their own property.

But sometimes -- even in a hot seller's market --buyers may attempt to make an offer contingent on the closing of a pending deal for the sale of their current home. Even this provision can prove problematic, Meyer says.

Prior to signing such an offer, he recommends you ask your listing agent to obtain a copy of the contract for your buyers' deal to ensure that all the appraisal and home inspection issues have been resolved. Also, try to find out if firm financing is in place.

Remember that if your buyers' deal falls apart, the domino effect could topple your deal too.

-- Make doubly sure your buyers' financing plans are solid.

Accompanying any good contract offer for your home should be a letter stating that the would-be purchasers have been pre-approved for a mortgage. That means an established lender has not only checked their credit reports but has verified that they possess the wherewithal to purchase a place.

"What you need is proof that the buyers have the necessary income and assets," Godi says.

Nowadays, the terms "pre-approved" and "pre-qualified" are often used interchangeably. But, as Godi says, a pre-qualification letter "isn't worth the paper it's written on." That's because the borrowers have yet to give the lender the bank statements, W-2s and pay stubs needed to show they can afford your home.

Even a pre-approval letter is not a watertight guarantee that the lender will fund a mortgage for a particular set of buyers.

To protect his sellers, Godi routinely calls the lender who's signed a pre-approval letter to ask about the buyers' financial status.

If the lender gives vague or general answers to his questions, Godi says he goes a step further and requests actual copies of the buyers' documents, including tax returns.

"You've got to be sure any buyers who wish to purchase your place, including cash buyers, have all their financial ducks in a row. Otherwise, what seems like a wonderful deal could totally collapse," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

home

Pointers for Downsizing Retirees

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | October 29th, 2014

After a long foreign-service career and early retirement, a couple in their late 50s decided to leave their sprawling 5,000-square-foot suburban home for a 3,500-square-foot place in a resort town an hour's drive away.

The couple envisioned the resort house, with its five bedrooms, as a mecca for their grown children and many grandkids. And indeed the offspring piled in -- all too often for the couple's taste. Exhausted by all the entertaining, five years later they moved again, this time to a 2,000-square-foot apartment with just one guest room.

As this true story illustrates, downsizing is a reality for many people in the second half of life. And a surprising number of retirees go through the process more than once, says Dorian Mintzer, a psychotherapist and author of "The Couple's Retirement Puzzle."

"Energy and priorities shift in retirement for a lot of people. Although many want to age in place in a big family house, others find it's more than they can handle in this phase of life," she says.

Mintzer says her downsizing clients include many older people with health issues that limit their housing options. Although they don't yet need assisted living, they hanker for a simpler life in a low-upkeep place free of stairs.

"Some people move because they have current or anticipated health problems," says Mintzer, whose retirement coaching practice is called Revolutionize Retirement (www.revolutionizeretirement.com).

Other retirees find it necessary to liquidate a big house to help underwrite living expenses.

"Given the high cost of college tuition for their kids and other factors, many boomers simply haven't been able to save enough for retirement. They have no choice but to cut living costs by moving to a smaller place," Mintzer says.

Although many seniors downsize out of necessity, others do so by choice. These are people with long-postponed passions they wish to fulfill. By simplifying on the home front, they hope to increase their time and energy for higher goals.

"Many older people want to streamline their lives before it's too late. And keeping up a big house doesn't make it on their bucket list," says Natalie Conrad, a professional organizer who specializes in downsizing.

Conrad, who heads a small firm called Organized Habits, has authored a workbook to help those who must purge accumulations and move to a smaller property. It's called "Organize to Downsize" and is available through her website (www.organizedhabits.com).

Regardless of the reason you're moving to a smaller place, the entire process can seem daunting. Here are a few tips to help keep it under control:

-- Focus more on features you want in a home than those you wish to leave behind.

As they contemplate an idyllic retirement setting, many people think primarily about the annoyances of living in their current property. For example, they may be running from the demands of a large yard or seeking to exit an area plagued with noisy traffic. But Conrad urges downsizers to concentrate more on features they're seeking than those they wish to avoid.

"Don't just think of retirement as retreat. Make sure you're much more proactive than that," she says.

-- Think twice before choosing an area with a strong homeowners' association.

Longtime life coach Lin Schreiber and her husband, a software specialist, thought they wanted to live in a new custom-home community surrounding a manmade lake. They bought their "dream house" there and assumed they'd stay for the rest of their lives.

But after just three years, they were so rattled by the rigid rules imposed by the strong neighborhood association that they sold the property and moved elsewhere.

Looking back on their experience, the couple wishes they'd investigated further before buying into the lakeside community, where Schreiber says neighborhood leaders proved bothersome and intrusive.

"Residents there were always arguing over minor matters related to the appearance and running of the community," she remembers.

Though she acknowledges that some people appreciate a strict neighborhood association, which can help protect property values, she says others find life in such a community too constricting.

-- Don't allow your children to make key housing choices for you.

Lots of retirees have grown offspring whom they both like and admire. But downsizers vary greatly in terms of the role they'd like their children to play in the next phase of their life.

"Some empty nesters feel a void in their lives and hope to see their children more often," she says.

Even so, Conrad cautions downsizers against giving their kids too much influence in the selection of retirement housing.

"Though their intentions are good, sometimes kids don't realize their parents' interests have changed since retiring. They only remember what their parents were like during their growing up years," she says.

-- Give yourself ample lead time before you have to move.

It's unusual for homeowners who've lived in a property for several decades to reach retirement without amassing a vast collection of material items, says Conrad, who conducts de-cluttering webinars and workshops for downsizers.

The issue is that to successfully sell a property and squeeze into a smaller space, nearly all downsizers must sift through possessions and make countless decisions on which to keep and which to let go.

"The real crux of the matter is mindset. Before you even put one thing in a box, you must be confident you know where you're going. At that point you shouldn't still be second guessing yourself on where to move," she says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

home

The Upside to Downsizing

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | October 22nd, 2014

The latest recession is over, at least according to statistics from the Federal Reserve. Yet many people are still feeling the fallout. Some who for several years have met their mortgage payments by dipping into savings are finally facing the harsh reality that they can't hang onto an expensive property much longer.

"Many people lost well-paying jobs during the downturn," says Eric Tyson, author of "Personal Finance for Dummies."

He says the homeowners who cope best with the anticipated loss of a home are those who move forward decisively toward a sale rather than waiting until mortgage payments are late and foreclosure looms.

The number of homeowners in the foreclosure process peaked at 1.2 million in 2010 and has since fallen to 650,000, says Daren Blomquist, a vice president at RealtyTrac (www.realtytrac.com), a publisher of real estate data.

While many of these foreclosures were products of underwater mortgages, in which the current value of the house is less than the money owed, that's now changing.

"Due to rising property values, one-third of those now entering foreclosure have positive equity, which meant they could have sold and probably walked away with some proceeds," Blomquist says.

Tyson says that though a wrenching decision, an involuntary downsizing can sometimes have positives.

For example, some families appreciate the reduced upkeep demands that come with a more modest house, as well as the generally increased financial flexibility.

No matter the pros and cons in your case, you're likely to fare better if you take a strategic approach. Here are a few pointers:

-- Don't procrastinate on tough decisions.

Sid Davis, a real estate broker and author of "A Survival Guide to Selling a Home," says many homeowners delay too long to make the tough decision to sell.

Multiple government and private sector programs are now available to help homeowners struggling to keep their homes after a financial setback. However, assuming you've explored these programs and know you're ineligible, Davis recommends you engage the services of a reputable real estate agent to list your property and attempt to sell it as promptly as possible.

"People who delay getting their property on the market often fall behind on their payments, making it all the more likely their good credit rating will be sacrificed," he says.

-- Investigate your options for the future.

One approach to lessen the psychological pain of an involuntary home sale is to waste no time in starting to look at alternative areas where you could live. The aim here is to select the best community you can afford, keeping your household expenses firmly in mind.

The primary advantage to exploring other neighborhoods early is to give you a tangible vision of your future lifestyle.

"You could be pleasantly surprised by some of the strong qualities of a more affordable neighborhood. For example, the new area might have better parks and more playmates who are the right age for your kids," Davis says.

But he urges you to resist the temptation to tour specific homes until you've received a solid offer for your old place.

"Why get your heart set on a particular house until you know how you'll do financially on the sale of your present property? There's no point to putting the cart before the horse, which can cause serious disappointment," Davis says.

Still, by pinpointing your favorite community early in the process, you'll be primed to find the right home when the appropriate time comes, he says.

-- Get active in the new community of your choice.

Even before you've sold your house, you might wish to become acquainted with residents in your target neighborhood. As Tyson says, beginning to make friends in the new area can help make for a more comfortable transition when your move finally occurs.

"Perhaps you could start doing some volunteer work in the new community or your kids could join a sports league there," he says.

-- Consider throwing a "farewell party."

As Davis says, one way to generate happy memories is to stage an informal "farewell party" involving the friends, family members and relatives closest to you. During the party, pose your guests for photos in the parts of the home you love most.

"Try not to view your move as a major setback. Instead, consider it a chance to reorder your priorities, find new friends and possibly discover a community more to your liking," Davis says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Next up: More trusted advice from...

  • How To Handle a Late Tax Payment
  • Are You a 'Great Investor'?
  • No Retirement Plan at Work? Change Is Coming
  • High Creatinine Levels Can Indicate Chronic Kidney Disease
  • Eagle Syndrome Causes Sudden Nerve Pain in Neck and Face
  • There Are Several Stages to Fire Ant Bites
  • Your Stars This Week for May 28, 2023
  • Your Stars This Week for May 21, 2023
  • Your Stars This Week for May 14, 2023
UExpressLifeParentingHomePetsHealthAstrologyOdditiesA-Z
AboutContactSubmissionsTerms of ServicePrivacy Policy
©2023 Andrews McMeel Universal