'Sucker Tactic' is a rather harsh word, isn't it? By now you know I pull no punches, but it is truly because I care. In a Buyers Market,what type of Broker/Agent has the greatest likelihood of obtaining a sale? The Listing Broker/Agent? Not hardly. Buyers Brokers/Agents (or Selling Agents, as we in real estate call them) have the best chance at a paycheck in this slim pickens market.
Soooooo, how would a Listing Broker make a sucker out of you?
I will tell you...now!
'Why yes Mr Seller, this house is gorgeous...(gush, gush, gush). Oh I have no doubt your home is worth every bit of what you say it is. It is in top condition, so lets just start it at your Top Sales Price. We can always drop the price later, if we need to.'
Now why would a Broker take your listing at a ridiculously high price, with no resistance at all, and start out by telling you 'we can drop the price later'? I'll tell you the nasty truth...now!
Because your house, in a highly visible location, will yield him sign callers, which he will work hard (much harder than he'll work your listings, by the way) to convert to a Buyer whom he is now helping. True, your house is too expensive, but that's okay, because there are thirty others in the neighborhood to choose from. He'll gladly sell them one of those!
'Yes, I know we are getting showings, but no offers, Mr. Seller. We just need to give it some more time.'
Hogwash! Time doesn't sell houses, proper pricing to the condition does! But Mr. Seller does not want to hear that, and Mr. Slickboy Broker needs some bait to attract a steady stream of Buyers he can make money off of for six months. Your lovely house is perfect for his Buyer trap.
'Looks like we need to extend the listing for 3 to 6 more months. Perhaps, now we need to consider dropping the price, Mr. Seller?'
And you thought you were getting such a bargain on the commision he's charging! Three or four Buyers, and he won't care what he gets paid, or even if he ever does get your house sold!
If you want the house to sell in this or any market, you had better want to hear the truth, and you'd better find someone who'll tell it to you, even if it is what you don't want to hear!
Your lovely alternative is to spend time, tax money, hassles, frustration, and mortgage payments (if it is sitting empty), while lining Slickboy's pockets with Buyer Dollars.
Don't be a Sucker for this one!
(The vast majority of Realtors are ethical, professional, and will not do these behaviors. That said, lots of unsold listings, and lots of closed Buyers is a caution flag. Also, beware the schmooze artist, who will take your listing at any price, because he 'just loves how you've done this house!' That may well be a Sucker Listing you are being set up to endure.)
Thanks for reading the Dr Phil of Real Estate!
Monday, May 10, 2010
Do Interest Rates Really Matter?
Do Interest Rates Really Matter?
Let's ask this another way, a more personal way,....
Should I buy now, before interest rates go up?
Okay, here's my first caveat: while I DID pass the Mortgage Broker Exam for the state of Texas on the first try, I DO NOT PRACTICE mortgage lending. (Now the mortgage brokers can get mad at me with a reason.)
The scary, uncomfortable answer to your question is, ultimately, 'No, you should not!'
'Say what!?' you ask in strident disbelief.
Put your tar and feathers away. Then I'll explain.
The average loan lasts less than 10 years, 7 is more likely. Then the house is sold, refinanced for a usually smaller amount, or equity is taken out, depending upon the state laws, and so on. So what, exactly does that mean?
Naked Truth Number Two coming...(see my other posts to find out what number one is):
Your Interest rate doesn't matter!
In the 70's people were buying all the home they could get for 18% interest! In the mid 90's, they were buying all the home they could get at 6.5-8.5%! And in 2010 and beyond, GUESS WHAT?
People are still doing what they have always done. And you will too, and so will I.
If rates ever fall to zero, we'll all refinance again. Don't get fooled into a 'hurry up and buy' scenario over some alleged 'The rates are rising!' flood scare. This is NOT a reason to buy a house ever.
Here's the question behind your question, and it's what you should really be answering? How much house payment should I really be shackling myself to? For how long?
I like Dave Ramsey's guidelines. I have answered that question in another post.
Thanks for reading the Dr. Phil of Real Estate!
Comments are welcome, by the way.
Let's ask this another way, a more personal way,....
Should I buy now, before interest rates go up?
Okay, here's my first caveat: while I DID pass the Mortgage Broker Exam for the state of Texas on the first try, I DO NOT PRACTICE mortgage lending. (Now the mortgage brokers can get mad at me with a reason.)
The scary, uncomfortable answer to your question is, ultimately, 'No, you should not!'
'Say what!?' you ask in strident disbelief.
Put your tar and feathers away. Then I'll explain.
The average loan lasts less than 10 years, 7 is more likely. Then the house is sold, refinanced for a usually smaller amount, or equity is taken out, depending upon the state laws, and so on. So what, exactly does that mean?
Naked Truth Number Two coming...(see my other posts to find out what number one is):
Your Interest rate doesn't matter!
In the 70's people were buying all the home they could get for 18% interest! In the mid 90's, they were buying all the home they could get at 6.5-8.5%! And in 2010 and beyond, GUESS WHAT?
People are still doing what they have always done. And you will too, and so will I.
If rates ever fall to zero, we'll all refinance again. Don't get fooled into a 'hurry up and buy' scenario over some alleged 'The rates are rising!' flood scare. This is NOT a reason to buy a house ever.
Here's the question behind your question, and it's what you should really be answering? How much house payment should I really be shackling myself to? For how long?
I like Dave Ramsey's guidelines. I have answered that question in another post.
Thanks for reading the Dr. Phil of Real Estate!
Comments are welcome, by the way.
How Much House Payment Should I Really Get?
How much house payment should I REALLY get?
Alrighty, then, Folks! Here's where I get paid to tell you some hard but good advice.
Naked Truth Number 3: Your Loan Officer is wrong (usually)!
Let me explain that: While your LO is great at calculating your theoretical maximum loan amount, and hence your monthly Principal, Interest, Taxes and Insurance Payment, that usually isn't the best choice for you, no matter what size loan you're getting.
Here's why:, your LO is probably calculating the income both partners are contributing. But what happens if one of you gets disabled, has a car crash (not your fault, but you're still unable to work)? All of a sudden one of you is trying to hold up an elephant in one hand, while taking on double duty on both the home and work fronts! (You're 6 times more likely to be disabled than to die before retirement age!...I know, I used to sell Insurance).
You should follow Dave Ramsey's advice, which is, roughly this: Never take a loan of more than 15 years, and never for more than 25% of your total monthly take home pay? (It could be 'gross monthly income' I don't have The Extreme Money Makeover book in front of me just now.)
Now that will drastically affect the size house you were planning to buy, I know. But when the economy does flip flops, or you're suddenly laid off, you're not facing a foreclosure! It will also force you to save up, responsibly, for a healthy down payment, like they did in the old days (when foreclosures were rare).
I sense some of your hearts are wilting in the face of this white hot truth! Courage Dear One! You will thank me later, when your kids get to take piano lessons, go on overseas trips, ride horseback each summer, and invest in areas of giftedness. And they will do that because you had discretionary income to pay for those things, rather than being a slave to your house.
And your home will be paid off quickly, too, so YOU get to go play sooner, as well. There are just too many positives to this plan to ignore it!
Imagine being so house poor you couldn't go on vacation, or give that budding artist lessons? (Sadly, I don't have to imagine it. I know first hand.) Here's a little secret I learned during the 120,000 deliveries I made for UPS. Stuff (read here: a bigger house) doesn't make you happy. It makes you comfortable while you're miserable. I have met people at the doors of multi-million dollar mansions, and at mobile homes. There is no corrrellation of peaceful, unstressed looks on their faces, based on the size of the house.
Less is truly more!
Thanks for reading the Dr. Phil of Real Estate!
Alrighty, then, Folks! Here's where I get paid to tell you some hard but good advice.
Naked Truth Number 3: Your Loan Officer is wrong (usually)!
Let me explain that: While your LO is great at calculating your theoretical maximum loan amount, and hence your monthly Principal, Interest, Taxes and Insurance Payment, that usually isn't the best choice for you, no matter what size loan you're getting.
Here's why:, your LO is probably calculating the income both partners are contributing. But what happens if one of you gets disabled, has a car crash (not your fault, but you're still unable to work)? All of a sudden one of you is trying to hold up an elephant in one hand, while taking on double duty on both the home and work fronts! (You're 6 times more likely to be disabled than to die before retirement age!...I know, I used to sell Insurance).
You should follow Dave Ramsey's advice, which is, roughly this: Never take a loan of more than 15 years, and never for more than 25% of your total monthly take home pay? (It could be 'gross monthly income' I don't have The Extreme Money Makeover book in front of me just now.)
Now that will drastically affect the size house you were planning to buy, I know. But when the economy does flip flops, or you're suddenly laid off, you're not facing a foreclosure! It will also force you to save up, responsibly, for a healthy down payment, like they did in the old days (when foreclosures were rare).
I sense some of your hearts are wilting in the face of this white hot truth! Courage Dear One! You will thank me later, when your kids get to take piano lessons, go on overseas trips, ride horseback each summer, and invest in areas of giftedness. And they will do that because you had discretionary income to pay for those things, rather than being a slave to your house.
And your home will be paid off quickly, too, so YOU get to go play sooner, as well. There are just too many positives to this plan to ignore it!
Imagine being so house poor you couldn't go on vacation, or give that budding artist lessons? (Sadly, I don't have to imagine it. I know first hand.) Here's a little secret I learned during the 120,000 deliveries I made for UPS. Stuff (read here: a bigger house) doesn't make you happy. It makes you comfortable while you're miserable. I have met people at the doors of multi-million dollar mansions, and at mobile homes. There is no corrrellation of peaceful, unstressed looks on their faces, based on the size of the house.
Less is truly more!
Thanks for reading the Dr. Phil of Real Estate!
What if my house sells and I have nowhere to move into?!
What if my house sells, and I have nowhere to move into?
Okay, I hear you. You are worried, and this is a REAL FEAR to you, not a theoretical 'What if' scenario.
I'm writing this post just for the orderly, 'plan and then execute' type people out there. I ought to say that I 'are not one of you!' But don't worry, I've sold 'your' house many times.
Here is how you handle this potentially joyful experience. First, plan what you are going to buy, and get looking for it, and don't do that without a Broker who is fast, smooth, and truly out for your interests first. (Both of these may be harder to do than you think.)
Second, get your Listing Broker to instruct you on what to fix and what price to list for. Listen to him, too! Price yours right and the 'stars will align with you'. I mean this sincerely. You see, in the Universe, for every action, there is an equal and opposite reaction. Until you List your house, the Universe will not respond, and I am not kidding!
Next, put in the listing that you want to lease, possibly, after you sell. This expands the potential Buyer pool to include folks who also have some delays.
Lastly, pray for God to help you time all 360 details of the transition to happen well. I'm serious. I've seen Him do it dozens of times.
A final back up plan is to reserve some cash for hotel expenses just in case things don't happen as you would like. (That happened only once, because they didn't listen to the Buyer Broker, when he told them to make an offer 'Today!', or list in the wind, while kicking themselves. They got to live with good, I mean really good friends!)
With a competent Listing Broker, and the humility to admit that owning a house does not make you an expert at buying or selling one, you will turn out alright!
(If you already know everything, and can handle the emotional ride, then ignore this wisdom...and save up extra for that hotel!)
Thanks for reading the Dr Phil of RealEstate!
Okay, I hear you. You are worried, and this is a REAL FEAR to you, not a theoretical 'What if' scenario.
I'm writing this post just for the orderly, 'plan and then execute' type people out there. I ought to say that I 'are not one of you!' But don't worry, I've sold 'your' house many times.
Here is how you handle this potentially joyful experience. First, plan what you are going to buy, and get looking for it, and don't do that without a Broker who is fast, smooth, and truly out for your interests first. (Both of these may be harder to do than you think.)
Second, get your Listing Broker to instruct you on what to fix and what price to list for. Listen to him, too! Price yours right and the 'stars will align with you'. I mean this sincerely. You see, in the Universe, for every action, there is an equal and opposite reaction. Until you List your house, the Universe will not respond, and I am not kidding!
Next, put in the listing that you want to lease, possibly, after you sell. This expands the potential Buyer pool to include folks who also have some delays.
Lastly, pray for God to help you time all 360 details of the transition to happen well. I'm serious. I've seen Him do it dozens of times.
A final back up plan is to reserve some cash for hotel expenses just in case things don't happen as you would like. (That happened only once, because they didn't listen to the Buyer Broker, when he told them to make an offer 'Today!', or list in the wind, while kicking themselves. They got to live with good, I mean really good friends!)
With a competent Listing Broker, and the humility to admit that owning a house does not make you an expert at buying or selling one, you will turn out alright!
(If you already know everything, and can handle the emotional ride, then ignore this wisdom...and save up extra for that hotel!)
Thanks for reading the Dr Phil of RealEstate!
Things That Grownups Do Can Really Impact a Kid’s Life, by A. Kidd
(This article was recounted to me by 'A. Kidd.' I know this is not directly real estate related, but our adult choices have a huge impact on children, and greatly affect their quality of life.)
Ever thought of some of the things that you do with kids surrounding you? If you haven’t, I’ll have you know that some of the things that you do can change a kid’s life and turn it topsy turvy. I’m sure that as a child there were things that your parent or adults did, or made you do. You can probably remember some of them.
Here are some things that adults do that really change a kid’s life, such as:
-abortions
-drug and alcohol abuse
-stereo blasting
-smoking
-and last but not least, divorces
These are some things that I am sure you can all relate to in some way. First of all, if you have one kid or child, you might be pregnant and do an abortion. If that child was hoping to have a brother or sister, he’d be quite disappointed, and also become afraid that you might destroy the child that you have already given birth to.
Drug and alcohol abuse are some of the worst things that you can do as a father/mother, because you might go crazy and beat up your kids.
Another terrible thing that you can do is stereo blasting. It is not only irritating to other drivers, it also can RUIN a kid’s ears. Which will be a bad limit in the child’s life, plus, it hurts your ears!
Smoking is one of the asthma causing habits that you could do. My grandmother smoked for many years and now has asthma problems. It also affects me when I go over to her house and smell the smoke. I always have to take some sort of pill to stop my allergies. And I am always trying to get out of the house. If that is not possible, I go into the cleanest room in the house, which is the computer room.
One of the worst, terriblest, horriblest things that you could do is get a divorce. Unless one of the parents is abusing the other, it’s a very bad decision to do. Not only does it separate the family, when children go through a divorce, they get all cranky and sorrow-filled, and they don’t know how to handle the pain. In my opinion, a divorce is something that God really hates. It’s a lot of running around, instead of sitting down at a table together and eating, laughing, and talking. It can also mean that you can end up with two dads and two moms, which is quite confusing at times. Because if your friend asks you where your mom lives, it would be quite embarrassing to say “Which mom are you talking about?” And so before you go out drinking and taking drugs again, think logically for a moment about how it may impact your child’s life.
Friday, May 7, 2010
Naked Truth Number One: Traps that Stop Your Home from Selling in Tough Markets!
I use the term 'Naked Truth' in the title of this blog because, grievously, I don't see the candor I would want, were I in need of a broker, and not a licensed real estate broker. Someone needs to shoot straight with you, the home seller!
So let me tell you the first horrible truth about selling your home:
NAKED TRUTH NUMBER ONE: It doesn't matter what you think! Ouch!
I have walked hundreds (if not thousands) of prospects through homes. Here is a list of things they NEVER SAY (look closely and you'll see traps that ENSURE your home won't sell!)
:
I wonder how much they have in it?
Is this where their kids grew up?
This is definitely worth paying 20% above market price!
Let's pay them as much as we possibly can!
It has lots of repairs left undone, let's offer full price!
Oh look at that clean, outdated, worn carpet. Blue and I love it!
Firetruck red, navy blue, and endearing black walls in the teenagers' rooms...terrific!
Think through these comments carefully and you will see there are underlying mental assumptions made by the Seller that, while important to you, have no bearing at all on what the market wants. The market doesn't lie, either. The question is really, 'Can you emotionally handle the Truth?'
Okay, now I'll give the answers in plain English.
It does not matter how much money you have in the house. The market does not care.
Your Sentimental value does not translate to market value!
What you think your upgrades are worth is irrelevant. You aren't buying them, the Buyer is!
The Price you want to get matters to no one else.
The little dings, scratches, and dry rot have a DEVASTATING effect on Sales Price.
Your color tastes, and worn out carpet make Buyers' skin CRAWL.
Paint the walls neutral colors. You are MOVING, for crying out loud! The teenagers won't die from a change in paint color.
Want to know more? Just ask, I will shoot straight with you! I'm like the Factory Five Racing GTM 200 shown above. Fast and efficient! (Check out www.FactoryFive.com)
I will tell you other Naked Truths, about broker tactics you should avoid, (or pay thousands of dollars too much if you don't!).
You ask it, I'll answer.
Scott McDonald
Keep Moving Forward!
Scott McDonald Realty
So let me tell you the first horrible truth about selling your home:
NAKED TRUTH NUMBER ONE: It doesn't matter what you think! Ouch!
I have walked hundreds (if not thousands) of prospects through homes. Here is a list of things they NEVER SAY (look closely and you'll see traps that ENSURE your home won't sell!)
:I wonder how much they have in it?
Is this where their kids grew up?
This is definitely worth paying 20% above market price!
Let's pay them as much as we possibly can!
It has lots of repairs left undone, let's offer full price!
Oh look at that clean, outdated, worn carpet. Blue and I love it!
Firetruck red, navy blue, and endearing black walls in the teenagers' rooms...terrific!
Think through these comments carefully and you will see there are underlying mental assumptions made by the Seller that, while important to you, have no bearing at all on what the market wants. The market doesn't lie, either. The question is really, 'Can you emotionally handle the Truth?'
Okay, now I'll give the answers in plain English.
It does not matter how much money you have in the house. The market does not care.
Your Sentimental value does not translate to market value!
What you think your upgrades are worth is irrelevant. You aren't buying them, the Buyer is!
The Price you want to get matters to no one else.
The little dings, scratches, and dry rot have a DEVASTATING effect on Sales Price.
Your color tastes, and worn out carpet make Buyers' skin CRAWL.
Paint the walls neutral colors. You are MOVING, for crying out loud! The teenagers won't die from a change in paint color.
Want to know more? Just ask, I will shoot straight with you! I'm like the Factory Five Racing GTM 200 shown above. Fast and efficient! (Check out www.FactoryFive.com)
I will tell you other Naked Truths, about broker tactics you should avoid, (or pay thousands of dollars too much if you don't!).
You ask it, I'll answer.
Scott McDonald
Keep Moving Forward!
Scott McDonald Realty
Should I spend money to replace the carpet, or offer a credit to the Buyer?
"I could spend thousands replacing carpet, but doesn't it make more sense to just provide a Buyer flooring credit? After all, what if the Buyer doesn't like the color I choose? I don't want to gamble on THAT much money!", comes your anguished cry, reverberating through cyperspace.
(I feel your pain, really, I do. Now get ready to feel some more pain!)
In my ever so tender literary style, I will cautiously guide you to enlightenment....Not.
Let's take a few steps back from that pile of money you don't want to spend in order to sell your house. Breathe deeply, exhale, and listen, er... read.
Has the question you are asking EVER been asked before? Answer: Yes!
HOW MANY TIMES? Answer: Thousands of time every day in America!
Is there likely to be a definitive answer? (Really, think about it.) YES!
The answer is at least two fold: Is your house in top of the market condition, and do you want to get top of the market price for it, or at the very least sell the thing? If it is, and your desire is to get a 'Sold' sign on it, then, Yes, replace the carpet. Pick the most popular-selling neutral tone that matches your paint scheme, etc. This is option A.
Get ready to move, by the way.
Is your house 8 or lower on a 1 - 10 scale? If it is, are you prepared to take significantly less (10-20% below top of market), or risk the house not even selling at all in this down economy (RATHER than make repairs)? If your answer is 'Yes, I will take less or not sell rather than fix it up', then 'No, do not replace it, nor do any repairs, painting or fix up.'
If you chose option B, in this economy, take it off the market, because your house is not going to sell, since there are hundreds like it, but with fresh smelling, new carpet, modern paint, and no cracks in the sheetrock.
In another post, I will tell you the psychology of home buyers, and then you will know better why used carpet is a corpse on your living room floor!
Get ready to pay your property taxes, by the way, because you're not going anywhere.
Thanks for reading the Dr Phil of real estate!
PS: Won't someone please comment on my articles? I have won this information through arduous, gladiatorial combat with potential Sellers. Surely there's at least one of you out there who still disagrees with me? But then again, maybe it just makes more sense when one's own equity is not on the line.
(I feel your pain, really, I do. Now get ready to feel some more pain!)
In my ever so tender literary style, I will cautiously guide you to enlightenment....Not.
Let's take a few steps back from that pile of money you don't want to spend in order to sell your house. Breathe deeply, exhale, and listen, er... read.
Has the question you are asking EVER been asked before? Answer: Yes!
HOW MANY TIMES? Answer: Thousands of time every day in America!
Is there likely to be a definitive answer? (Really, think about it.) YES!
The answer is at least two fold: Is your house in top of the market condition, and do you want to get top of the market price for it, or at the very least sell the thing? If it is, and your desire is to get a 'Sold' sign on it, then, Yes, replace the carpet. Pick the most popular-selling neutral tone that matches your paint scheme, etc. This is option A.
Get ready to move, by the way.
Is your house 8 or lower on a 1 - 10 scale? If it is, are you prepared to take significantly less (10-20% below top of market), or risk the house not even selling at all in this down economy (RATHER than make repairs)? If your answer is 'Yes, I will take less or not sell rather than fix it up', then 'No, do not replace it, nor do any repairs, painting or fix up.'
If you chose option B, in this economy, take it off the market, because your house is not going to sell, since there are hundreds like it, but with fresh smelling, new carpet, modern paint, and no cracks in the sheetrock.
In another post, I will tell you the psychology of home buyers, and then you will know better why used carpet is a corpse on your living room floor!
Get ready to pay your property taxes, by the way, because you're not going anywhere.
Thanks for reading the Dr Phil of real estate!
PS: Won't someone please comment on my articles? I have won this information through arduous, gladiatorial combat with potential Sellers. Surely there's at least one of you out there who still disagrees with me? But then again, maybe it just makes more sense when one's own equity is not on the line.
Subscribe to:
Posts (Atom)
Posts
