Purchase and Sale of home: pearls of advice

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alloykat
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Purchase and Sale of home: pearls of advice

Post by alloykat » Thu Mar 16, 2017 5:59 pm

Homeowners: What is something you learned buying or selling a home that you wish you had known before beginning the process? Specifically, did you learn any negotiation tactics, pricing or listing tips, contingency pitfalls, packaging/storing tips, escrow/inspection words of wisdom etc?

nick evets
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Re: Purchase and Sale of home: pearls of advice

Post by nick evets » Thu Mar 16, 2017 6:20 pm

Hmm....

Expecting a 'home inspection' to uncover real issues is like having a neighbor drive a prospective car purchase around the block, once, and tell you what's wrong with it.

After you've bought the house, but before you've moved in, is the golden opportunity for any change/painting/etc you wish to make and don't squander it!

Visit the property as often as you can before the offer, and even before closing. The drummer next door never practices when the realtor is showing. And barking dogs go somewhere else.

staythecourse
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Re: Purchase and Sale of home: pearls of advice

Post by staythecourse » Thu Mar 16, 2017 8:19 pm

Great idea for a thread.

Sold our old house last year by myself on an MLS listing site. My observation was when it comes to selling DON'T take your house of showings just because you go into contract or attorney review. You lose all the leverage in negotiating issues on inspection when your house is off market. Also learned NEVER be in the house when doing house showings. Potential buyers just don't like it.

In buying the MOST important is look past cosmetic issues that are rather easy to fix or change and focus on: Location (safety, green areas, near transportation, great schools, etc... and price.

Good luck.
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pennywise
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Re: Purchase and Sale of home: pearls of advice

Post by pennywise » Thu Mar 16, 2017 8:30 pm

We are under contract to buy a second/vacation home and I would say be ready for the most unbelievably frustrating sequence of paperwork you can imagine! My husband and I are Bogleheads AKA about the 'cleanest' buyers in the universe-excellent income, great credit scores, zero debt, job history of 35+ years in the same company (we even WORK for the same company) already own two houses with no mortgage on either, are putting down 50% so only financing half the value of a house that already appraised over the contract price...and the bank is treating us as if we are Mr and Mrs Walter White. I've uploaded so many bank statements and investment account transaction statements and check stubs and the loan processor keeps asking for more because 'the underwriter doesn't quite understand' where the money is coming from--and that's with months of background details all clearly spelled out.

Anyway my point and I do have one is, be ready to prove every single financial fact about yourself in the known universe. And then several more.

delamer
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Re: Purchase and Sale of home: pearls of advice

Post by delamer » Thu Mar 16, 2017 8:51 pm

I don't know what is standard, and it may vary by location, so keep that in mind. When we bought our current home, our agent set up the contract so that we could walk away if we were not happy with a problem that was found during the inspection. In other words, we didn't have to agree to let the sellers repair any problem found. We could just say "No, not interested anymore."

It meant if we just didn't want to deal with a significant issue -- like a leaky roof -- we didn't have to get into a negotiation, we could walk.

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Watty
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Re: Purchase and Sale of home: pearls of advice

Post by Watty » Thu Mar 16, 2017 8:55 pm

When you have found a potential home to buy then go back to the neighborhood in the evening or weekend and park your car and walk around the neighborhood and talk to the the people that you run into. That will give you a much better feel about the area.

If you have kids and are trying to evaluate the schools then go and visit the schools and don't just look at the school rankings. A small difference in the "one to ten" school rankings means very little and can be due to the demographics of the kids in the school. I was once shopping for a house in a large school district with lots of high schools that had various ranking that went from about 7 to 10. I was talking with a school counselor about the ranking and all the high schools had basically the same programs and resources. The difference was that the kids in the more expensive areas had more access to outside programs, like summer educational programs like a science summer camp. They also had fewer negative factors like students working long hours during the school year. There is apparently also a big correlation with students performance and if their parents have a college or graduate degree and the less affluent areas had fewer parents with college degrees.

The more affluent and well scoring schools can have some of their own problems with cliques of "rich kids" . When looking at a high school drive through the student parking lot. One we were looking had had a noticeable number of BMWs and Mercedes in the parking lot which was a red flag to me that my son might not fit in well there.

mhalley
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Re: Purchase and Sale of home: pearls of advice

Post by mhalley » Thu Mar 16, 2017 9:15 pm

Pull your credit reports and check your fico score and Get a mortgage pre approved before you see your first house.
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Kosmo
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Re: Purchase and Sale of home: pearls of advice

Post by Kosmo » Thu Mar 16, 2017 9:30 pm

Make the drive from the house to work (and the return trip) at your normal commuting hours on a work day. Is this something you can tolerate every day?

If possible, drive through the neighborhood after a storm. See how the water flows and if it backs up. Are there any swampy or muddy areas that used to be dry? In winter, check how well they plow the streets.

Park in the neighborhood and observe the normal happenings at various times. Are there a lot of kids playing after school? Are there a lot of people walking dogs. Joggers? Cyclists? Traffic? Business vehicles or trucks? Is it noisy? Will you feel comfortable there?

Ignore cosmetic things like paint color and light fixtures. They are easy changes. Bring a tape measure to see how well your furniture would fit in the space. Bring a level because sometimes things just look off. Visualize how you would use the rooms. Are there spaces or rooms that you're not sure how or if you'd use it?

Regarding negotiations, always be ready to walk away. Don't get suckered into paying a price you believe is too high. This is where you need to do your homework on current prices and assess each house's value to you.

2comma
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Re: Purchase and Sale of home: pearls of advice

Post by 2comma » Thu Mar 16, 2017 9:36 pm

At the public school my son went to he actually mentioned the student parking lot was where the new high dollar cars were parked and the teachers parking lot was where the 10 year old civics were. I drove by one day and sure enough...

I've bought and sold a few houses without an agent. It really is quite easy if you have the time - the loan officer will help you with the financial end and the attorney's office will help with the rest. I never had to talk to the attorney, his assistants knew all of the protocols and seemed to get a kick out of educating me. I've also had the situation where there was only one agent, since I didn't have one they were more than happy to help me and did all of the leg work happily (offer letter, ernest money) and even lowered their commission because they knew they wouldn't have to split the commission with another agent. An agent is basically a marketing person, a middle man who gets both parties together. If you know the area and have a specific neighborhood in mind they can not add much value. When I moved to a new city I used and agent but there were a lot of questions I asked that he didn't know the answers to (like what schools kids would go to or how are they rated) so I had to figure it out myself.

My son and his wife are moving back to our city where they both grew up but they don't have a lot of time to look in person so they got an agent here and she walked around and showed them houses using facetime. After a few offers where the inspector brought up significant issues the agent didn't mention they asked me to start going with the agent just to make sure nothing important was missed. Not that I am down on agents; it's a tough job, long and odd hours and usually they have to split their commission with another agent and their broker.
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TTBG
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Re: Purchase and Sale of home: pearls of advice

Post by TTBG » Thu Mar 16, 2017 10:02 pm

Familiarize yourself with IRS Pub 523 https://www.irs.gov/pub/irs-pdf/p523.pdf when you buy the home, so you know what records to keep in order to compute the adjusted basis when you sell. (This is probably relevant only if you're buying in a HCOL area where the gain when you sell might exceed the 250K/500K tax-free gain, or if you convert the home to a rental at some point.)

NoGambleNoFuture
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Re: Purchase and Sale of home: pearls of advice

Post by NoGambleNoFuture » Thu Mar 16, 2017 11:59 pm

delamer wrote:I don't know what is standard, and it may vary by location, so keep that in mind. When we bought our current home, our agent set up the contract so that we could walk away if we were not happy with a problem that was found during the inspection. In other words, we didn't have to agree to let the sellers repair any problem found. We could just say "No, not interested anymore."

It meant if we just didn't want to deal with a significant issue -- like a leaky roof -- we didn't have to get into a negotiation, we could walk.
This is pretty standard and is called an option period. Typically you put something small to "purchase" this option period - like $100. You also have the ability to extend the option period until you're completely comfortable.

Perfect example, I got under contract on my house in July and purchased the 7-day option period. During this period you get the inspection so you know what you're getting yourself into. I was buying a brand new house so didn't expect many issues but not was I wrong. If I was going to come out of option period I wanted everything fixed - it's a brand new house, it should be completely up to code. On day 7 the builder wasn't done with updates so I asked to either extend our option period or we'd walk.

We agreed to extend the option one more week and scheduled a second follow up inspection. After the second inspection where the builder could just go off of a check list and update everything there was still plenty that stood out.

I was about to walk but instead got a quote from a local contractor that was about $2000 to fix everything. I updated our offer to $5500 less than the initial contract and said I'd take it as is or I was walking (for frustration, wasted time, etc).

Moral of the story: always get the option period.

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jfn111
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Re: Purchase and Sale of home: pearls of advice

Post by jfn111 » Fri Mar 17, 2017 5:31 am

Up here in snowy MN it's called an Inspection Contingency. It's usually 10-14 days where you have the house inspected and you can back out of the contract and still get your earnest money returned. It's a standard provision we put in almost all contracts to protect the buyers.

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Re: Purchase and Sale of home: pearls of advice

Post by Jack FFR1846 » Fri Mar 17, 2017 6:28 am

Don't be afraid to lowball. All of the real estate agents we dealt with told us that any offer more than 5% below asking was an insult to the seller. We offered 50% of asking and settled on a number less than 60%.
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NotWhoYouThink
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Re: Purchase and Sale of home: pearls of advice

Post by NotWhoYouThink » Fri Mar 17, 2017 6:59 am

Jack FFR1846 wrote:Don't be afraid to lowball. All of the real estate agents we dealt with told us that any offer more than 5% below asking was an insult to the seller. We offered 50% of asking and settled on a number less than 60%.
Thank you for recommending this! I think the agents are really worried about upsetting the listing agent - they all know each other. I have never been afraid to lowball, but agents strongly discourage it, you really have to insist.

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8foot7
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Re: Purchase and Sale of home: pearls of advice

Post by 8foot7 » Fri Mar 17, 2017 7:09 am

Jack FFR1846 wrote:Don't be afraid to lowball. All of the real estate agents we dealt with told us that any offer more than 5% below asking was an insult to the seller. We offered 50% of asking and settled on a number less than 60%.
I think that advice, or at least that scale of lowball, works in fewer areas than it doesn't.
I live in a place that's not any of the typical hotspots but nevertheless is a good market. We are selling home for 390k (which is a solid price due to comps and recent appraisal) and I can assure you if someone came in with a 200k offer I'd probably reply with a roll of toilet paper.

cherijoh
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Re: Purchase and Sale of home: pearls of advice

Post by cherijoh » Fri Mar 17, 2017 7:23 am

You can ask for a contingency on anything, but the seller doesn't have to agree. I wouldn't buy a house without a rock solid inspection contingency, but you should think carefully about other contingencies and whether they could impact the likelihood of having your offer accepted. A builder may be more flexible than someone selling their home.

When I bought a new construction home, I got a contingency about selling my current home. The builder was willing to go with this up to the point that they actually started on my foundation. I didn't have a contract on my current home by that point, but I released the builder from the contingency since I really wanted the house. (Fortunately, I still qualified for the new mortgage even keeping the other one).

My realtor had suggested I look at the neighborhood since she had had another client just purchase there. Her other client had grabbed a desirable lot, but had also written a contingency on another lot that was almost ready for construction (and was likely to come back on the market because of a sales contingency that was expiring). Knowing this, my realtor suggested that I add a contingency to my contract to get her lot if she got the other one. The builder agreed and I ended up with the better lot.

mak1277
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Re: Purchase and Sale of home: pearls of advice

Post by mak1277 » Fri Mar 17, 2017 7:31 am

8foot7 wrote:
Jack FFR1846 wrote:Don't be afraid to lowball. All of the real estate agents we dealt with told us that any offer more than 5% below asking was an insult to the seller. We offered 50% of asking and settled on a number less than 60%.
I think that advice, or at least that scale of lowball, works in fewer areas than it doesn't.
I live in a place that's not any of the typical hotspots but nevertheless is a good market. We are selling home for 390k (which is a solid price due to comps and recent appraisal) and I can assure you if someone came in with a 200k offer I'd probably reply with a roll of toilet paper.
The amount of the "lowball" will differ from place to place. I agree that an offer of 50% of asking price is ... extreme, at least in my view.

The general value of this advice is good though --> don't be afraid to go lower, sometimes significantly lower, than what your agent suggests. Don't forget that your agent is compensated based on the final price too, so it's in his/her interest to go higher AND to get a deal done quickly.

cherijoh
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Re: Purchase and Sale of home: pearls of advice

Post by cherijoh » Fri Mar 17, 2017 7:34 am

8foot7 wrote:
Jack FFR1846 wrote:Don't be afraid to lowball. All of the real estate agents we dealt with told us that any offer more than 5% below asking was an insult to the seller. We offered 50% of asking and settled on a number less than 60%.
I think that advice, or at least that scale of lowball, works in fewer areas than it doesn't.
I live in a place that's not any of the typical hotspots but nevertheless is a good market. We are selling home for 390k (which is a solid price due to comps and recent appraisal) and I can assure you if someone came in with a 200k offer I'd probably reply with a roll of toilet paper.
We put my mom's house on the market after she passed. The realtor received a low ball over (IIRC ~75% of list price) soon after listing the house, but he suggested we pass on it since he had priced the house to sell within our time frame. Within another couple of weeks we received an offer that was over list price, but they wanted us to cover closing costs. It netted out to be within a couple of percent of list price and we took that offer.

I think a low ball offer is more likely to work when the house is overpriced or if the house has been on the market a while.

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Re: Purchase and Sale of home: pearls of advice

Post by BTDT » Fri Mar 17, 2017 7:55 am

Meet the neighbors before you buy. Living in a neighborhood where people still talk and get along is a huge benefit, while a hostile neighbor, not into cleanliness, can suck the life out of you. :oops:
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Argus714
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Re: Purchase and Sale of home: pearls of advice

Post by Argus714 » Fri Mar 17, 2017 8:20 am

Two points of advice from my experience:

First - don't try to "convince" your spouse or significant other to buy the house. You will live, until you sell the place, to regret it. Look at as many properties as humanly possible and when you both like it, that's the place to buy.

Second - (if you own a place already) do not buy a place without selling your existing home (contingency). Holding two mortgages is stressful and an economic hardship until you sell the place your moving from. This, of course is if you can't afford or manage the finances to hold both mortgages.

msk
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Re: Purchase and Sale of home: pearls of advice

Post by msk » Fri Mar 17, 2017 8:23 am

Selling: Leave your listing live until the sale is really finalized (inspection, offer conditions, etc. all fulfilled). Nobody sends you an email to warn you of a coming local market collapse. I got caught in one in the 1980s. The person making the offer insisted I take the house off the market. I agreed since it was all so smooth. Market collapsed, offer vanished (there is always some excuse possible). Took another 6 months to effect an actual sale, at a price $200k lower.

Buying: Do sort out all your financing before spending too much effort looking. I bought my first two houses with mortgages pre-approved. Subsequent purchases were all cash, so much less hassle.

Purchasing a home need not be a source of excessive anxiety. These days it's very probable that you will move several times during a working life (I moved 13 times before my current retirement pad, perhaps more than most). So while careful agonizing about schools, etc. is worth it, do not over do it. You are more likely to move sooner rather than later. Life is like a box of chocolates; you never know what you'll get next :D

BigMoneyGrip
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Re: Purchase and Sale of home: pearls of advice

Post by BigMoneyGrip » Fri Mar 17, 2017 8:27 am

In a hot market don't try to use earnest money, due diligence amount/long period of time, or cash back as negotiation points. Be strong in those areas to show you are committed to getting to the closing table.

Friend of mine just sold a place w/ a multiple offer situation. One of the buyers came in slightly higher, but signaled weakness in their offer with the above items and only putting 5% down. Seller ended up negotiating other buyer (20% down) up to within 1% of the same price with much better terms.

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Re: Purchase and Sale of home: pearls of advice

Post by sleepwell » Fri Mar 17, 2017 8:48 am

Be aware also of the time of year in which you are shopping (or selling). Spring seems to be a prime time to sell, so buyers don't typically have as much bargaining power. Conversely I have heard that if someone has a house for sale during the Thanksgiving/Christmas holidays, then they must be desperate to sell. Who knows? Each situation is unique and it helps to know the reasons why the owners are selling.

A few years ago, we were shopping for a lakefront vacation home. We had been looking off and on for a couple of years so we knew the area and were familiar with the typical asking prices and what that money would buy. In January, a large home came on the market. The owner had died, his second wife wasn't interested in keeping the house, and the children lived out of state and didn't want to keep the house. It was too large for a typical weekend home yet the floor plan was odd and probably would not have worked well for a family living there full-time. We made an offer which was significantly lower than the asking price. Both realtors sort of snickered and said that there was no way the sellers would entertain that offer.

You can probably guess the outcome. The sellers took our offer with no haggling. No one else was looking at lake property in January and they simply wanted the house off their hands. They made money from the sale although not as much as they might have if had they waited six more months, and we got a lake house.

Conversely, when we sold our first house many years ago, a major military base near us had just closed. We had done all the recommended things to the house, decluttered, painted, replaced the carpet. We could have accepted a low offer and moved on, but were too stubborn and held on for what we 'knew' our house was worth. A bit over a year later, we sold for what we could have gotten if we had taken the first, earlier offer. (Actually we probably lost money with the realtor fees, closing costs, etc. The first offer was from the son of a neighbor and wouldn't have involved realtors! And the new owners yanked up the new neutral-colored carpet and put in bright blue carpet.)

Be patient and good luck.

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Re: Purchase and Sale of home: pearls of advice

Post by pennywise » Fri Mar 17, 2017 2:26 pm

When you have found a potential home to buy then go back to the neighborhood in the evening or weekend and park your car and walk around the neighborhood and talk to the the people that you run into. That will give you a much better feel about the area.
+1 We did this and man, neighbors will tell you the REAL deal! We are looking to buy in the Florida Keys and sea level rise is a real and growing issue. Realtors kept pooh-poohing any worries so it was quite enlightening to go back on our own to several areas and hear about 'yeah, the end of the street is flooding now a few times a year'. One guy told us unprompted about how he loved living on his block except he didn't like that the giant house across from the one for sale that we were considering is a party rental and every weekend hordes of crazies from Miami show up to drink, boogie and generally cause mayhem that keeps everyone awake all night. Oooooookay then.

Another tip I have if you are searching for property is to use technology. Zillow is my favorite; it's astounding what you can dig up online. Once we narrowed our search area I literally was able to search properties on every block in every neighborhood; heck I was able to log onto the public property records for every house on every block! You can see the price history of any property, which will tell you how long it's been up for sale, whether the sellers have lowered the price and how many times they've done so, and even what the owner paid. Zillow also makes it easy to set up an automatic notification via email when new listings in your search area come online and when prices get lowered.

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Pretzel lover
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Re: Purchase and Sale of home: pearls of advice

Post by Pretzel lover » Fri Mar 17, 2017 3:40 pm

Another good resource is to look at the surrounding area on Google Earth to see whats around that may not be desirable.

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Re: Purchase and Sale of home: pearls of advice

Post by fishmonger » Fri Mar 17, 2017 3:56 pm

I echo a lot of the previous posts. It's fine to be trusting of people but realize two things about real estate agents:

1. They get paid nothing until a deal closes, and no matter what anyone tells you, at the end of the day they are salespeople. That matters whether you are buying or selling, and motivates them in different ways. In most deals a realtor is getting 2.5% commission, on $10k that is $250. That extra $10k one way or the other means a lot to you, not a lot to them.

2. If you are buying and using a buyer's agent, and the seller is using a seller's agent, realize there are 4 people at the table. Three of them benefit from the price being as high as possible. The fourth one is you

Bottomline, be your own advocate and educate yourself. I just sold a house today. We used a realtor and wanted a quick sale for various reasons. This is the most successful realtor in my area, with 82 closed transactions last year. Her recommended price was $179,500, I countered with $188,500. The first day it went on the market we had two offers above ask. If I had just blindly accepted her recommendation we would've sold well below market value

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Re: Purchase and Sale of home: pearls of advice

Post by petiejoe » Fri Mar 17, 2017 4:54 pm

Nothing truly unique to add, but wanted to echo a couple of the other comments:
* Don't worry about the color of the walls/carpet/etc. That's easy to replace if you want to.
* Be very pragmatic about move-in costs. Assume that you'll spend more money than you expect during the first 3-6 months as you find new things that you want to change. This is true even for homes that are "move in ready." Be careful that you don't lose all your liquidity on the down payment - keep some money ready for the first big repair.
* Flooring is _much_ easier to replace before you move in all your furniture. If you suspect you'll want new floors, I'd recommend you consider that as a move-in cost and don't defer it for later. If you can't afford new floors at the same time as you're buying the house, you may want to think twice about whether you can really afford the house.

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Re: Purchase and Sale of home: pearls of advice

Post by rralex1 » Sat Mar 18, 2017 1:01 pm

I am not a realtor but have purchased several homes in several states.

1. You make money when you buy a house, not when you sell it.

2. If you rely on an open house to sell your home, the ship has sailed.

3. Commission rates are negotiable, within reason, regardless of what you hear.

4. That saying, location, location, location, is true. Some people just don't know what location means.

5. you may get a great rate from a great, reputable mortgage company, but they are more than likely going to sell your note and it could go to a terrible, servicing mortgage company. Expect it and if it doesn't happen - upside!

6. When buying, the best homes (best in terms of location, condition, and price) they often go on the market and sell within a week (or close after). When buying, be relentless in looking each morning, visit the home that day or the next, and act quickly and decisively.

7. When selling if your home hasn't had an offer in 30 days, heads up. It doesn't mean that it won't sell, but it means that something is off, often times the price.

8.Buying and selling is a much more emotional experience than many people think. Use emotional intelligence and discipline in the process.

9. When selling: The right realtor and broker is critical to success. Interview 3 and see how they mesh with the way you want to work, see their marketing strategy, the number of homes they have sold in the last year, and refuse to lock in for 90 days. Agree at a 60 day contract.. If there is movement there is never a reason to change realtors.

10. When buying: The right realtor and broker is critical to success. you want one who is very responsive and willing to look at any house you want to quickly. See number 9.

Finally, you will likely qualify to buy a lot more home that you can really afford. That's not the case as much as it once was but it still applies for a number of reasons. Don't.

:beer

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Go Blue 99
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Re: Purchase and Sale of home: pearls of advice

Post by Go Blue 99 » Sat Mar 18, 2017 7:30 pm

Find a buyers agent who will refund part of their commission to you. We have done this in the past and it's great. Plus the IRS has ruled the commission to be tax-free.

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Re: Purchase and Sale of home: pearls of advice

Post by spammagnet » Sat Mar 18, 2017 11:59 pm

alloykat wrote:Homeowners: What is something you learned buying or selling a home that you wish you had known before beginning the process? Specifically, did you learn any negotiation tactics, pricing or listing tips, contingency pitfalls, packaging/storing tips, escrow/inspection words of wisdom etc?
If you get an offer that meets your financial needs and isn't outrageously low, take it. Don't wait for something better.

Shortly after listing we accepted an offer close to our asking price. To everyone's surprise, the appraisal came in low. (We still think it was off.) The buyer revised their offer downward but still would have had to come up with extra cash since the lender wouldn't go above the appraisal. We declined, thinking we could get better. The deal fell through.

It took six months to sell the house, during which time we were paying both rent and mortgage. We finally accepted an offer ~5% lower than the first buyer's revised offer.

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