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When Buyers Had the Lion’s Share

Happy New Year, JETS fans & others!

I decided to look back at early-January blogs from years back.  It appears that in 2008, I still thought that buyers, with the banks at their backs, should consider the world their oysters.

Buyers: Fly Like An Eagle!

  • Jan. 7th, 2008 at 8:07 AM


In my quest to find some positives about our present real estate market, I scoured the usual sources.  In Money magazine, George Mannes found that the right home buyers are like birds in paradise, scoring great items the pre-2008 buyer could only dream about:

In Seattle, a homeowner is offering round-trip airplane tickets to anywhere in the world, plus a six-night stay at a Four Seasons hotel to anyone who will just, please, buy the house he has on the market.

In New Jersey, a builder is trying to entice prospects to purchase condominiums and attached homes with a free two-year lease on a Mercedes-Benz. And in Michigan, a homeowner told potential buyers he'd throw in his peacock.

As an animal advocate, I’m devastated a homeowner would stoop to giving away a living creature to make a deal.  However, as a client advocate, I’d tell any buyer offered a hotel suite--or plane tickets--or a car--that the seller needs to forget the peacock and start talking turkey on price.

A home’s assessment (taxes) is usually based on the sales price.  The amount of mortgage money borrowed for 15 or 30 years is usually based on the sales price.  And certain closing costs are based on either the price of the house or the amount borrowed.  Therefore, a new car or new carpet without a reduced price will cost you money in the short and long runs.

Beware of the agent who says the seller “can’t come down any lower but will throw in certain items.”  The agent makes a commission based on the sales price, so a higher price plus a pool table and 12-piece dining room set earns him or her a higher fee, while you end up financing that furniture over the life of the mortgage.  Stick to negotiating on price and price alone.

If the seller is a multi-unit builder, a price drop is still often difficult to negotiate.  However, an informed buyer will realize that a promise of upgraded cabinets or a tiled back splash will end up costing money, so a substantial contribution towards closing costs or a few mortgage payments should be demanded in lieu of (or along with upgrades).  Two caveats:  1. Make sure you know what the true value is of the incentives offered by the builder.  Are you being quoted retail prices for material and labor when the builder won’t incur those same costs?  2.  Make sure a financial contribution won’t alter your financing, as many lenders balk at seller’s concessions in excess of a six percent.

Today’s positive:  if you’re being offered a finished basement or under-cabinet lighting or a pet to call your own, you are sitting in the cat bird's seat! Make the most of it, and you'll have a lovely (and affordable) feathered nest.


Happy birthday, Judy!

 

 

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