My Advice on Handling Lowball Offers on Your Home

If you receive a lowball offer, I don’t think you should flat out reject it. Here’s what you should do instead.

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Let’s say you have your home on the market for $300,000 and an offer comes in at $250,000. You’re hoping to get at least $280,000, so you have every right to decline the offer right then and there.

However, you can also counter this lowball offer. I would typically advise at least trying to counter in this kind of situation. Here’s why. A lot of buyers, especially first-time buyers, have the mentality of “let’s see what can happen” when they’re making a lowball offer. Someone with that mentality will typically bring their price up more than you think after negotiation. They may come up to $260,000 or $275,000 quicker than you think. 

I would advise at least trying to counter.

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This happens pretty frequently. A lowball offer gets countered, then the buyer comes up to an area where the seller would accept it.

If you have any questions for me about this specific situation or about anything else related to selling your home, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

A Quick Word on Closing Cost Credits

When a seller pays a buyer's closing costs, what are they actually paying for? Find out today.

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There are a number of reasons a buyer might ask for a seller to cover the closing costs, but is this arrangement really as common as HGTV makes it seem? Yes and no. 

When a seller does cover a buyer’s closing costs, these funds are usually taken out of the total list price rather than paid out directly. 

Sellers cannot contribute to the buyer’s down payment.

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Also, it’s important to realize that down payments aren’t included in these “closing costs.” Instead, closing costs in this case refer to additional expenses like title fees, escrow fees, insurance, and more. 

The reason this distinction matters is that sellers cannot contribute to the buyer’s down payment. The buyer must provide these funds themselves. 

So when a buyer asks for closing costs, they aren’t actually asking that every bit of their closing-related expenses be paid by the seller. 

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

What Happens if an Appraisal Comes in Low?

When the appraisal on the home you’d like to buy comes in low, you and the seller have three workable solutions to consider.

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What happens when your appraisal comes in low?  

Let’s consider this question through the eyes of a buyer. Once the inspections and repair requests are squared away, the bank will order an appraisal, which serves as a professional opinion of the home’s market value. 

The bank will send an appraiser out to the property, and that person’s job is to certify that the price in the purchase contract and the home’s actual value are in line with one another. If the appraiser can’t justify the price, it’ll either be too high or too low. 

If the appraisal ends up being higher than the offer price, there’s no issue. The buyer will receive greater equity than originally expected, and the parties can move through closing without a hitch. An appraisal that comes in low, on the other hand, can be problematic. 

One of three things will happen following a low appraisal: 

1. The seller takes a price reduction 
2. The buyer brings more money to closing 
3. A combination of the first two options  

If no agreement is reached, the contract will be rendered null and void because the buyer won’t be able to obtain the loan they made arrangements for. 

An appraisal that comes in low can be problematic.

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I’ve seen it play out in different ways: I recently saw a seller take a $13,000 price cut for the sake of saving the deal. I appreciated it because I was representing the buyer in this particular transaction. In another scenario, one of my buyers made an offer on a home that appraised low. They felt that the home warranted a higher appraisal, and together we fought the appraiser on it. Despite our best efforts, the buyer ultimately chose to bring more money to the table to secure the home.   

If you’re getting ready to purchase a home and you have any questions about appraisals and how they work, please give me a call at 815-931-2279 or send me an email at Edward.Pluchar@Gmail.com. I’d be happy to hear from you!

If You're Under Contract, Is It Too Late to Back Out?

If you’re worried about whether the offer you accepted was as good as it could’ve been, there are a few things you should think about.

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Today’s question is, “Could I have gotten more out of my sale?” The person who asked this question went on to ask whether there were any options they had moving forward. Unfortunately, there isn’t much that can be done once the contract has been signed.

If you’re in a contract, which is legally-binding, things are basically settled. While you as a seller are unable to back out at this time, the buyer is still free to do so.

For example, if the buyer is dissatisfied with the inspection report, can’t get the financing, or has another valid issue arise, they can step out of the deal.

However, there is something you can do. You can continue to market your property on the multiple listing service with the understanding that it is currently under contract. However, although you can still entertain offers, you cannot accept them unless your own contract falls through.

Sometimes, the first offer you get may be the best.

If your first buyer does happen to back out for some reason, you can then fall back onto a backup offer.

Though, while you can list your property on the multiple listing service after going under contract, it will be listed as contingent and will receive much less traffic from interested buyers.

With all of this said, remember that the early offers you received were likely from buyers who were very interested in purchasing the home. You may think you could do better on the offer you’ve signed into contract, but you can’t be sure. Sometimes, the first offer you get may be the best. This isn’t always the case, but is definitely something to keep in mind.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

What Are the True Benefits of Buying and Selling in the Fall?

Today I'll focus on what advantages there are to buying or selling in the autumn versus other times of year. Each season has pros and cons.

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Many real estate agents will tell you why any time is a good time to buy or sell, without really distinguishing any advantages. Actually, each season has its advantages and disadvantages. 

Today, I want to specifically focus on what advantages there are to buying or selling in the autumn versus other times of the year.

In the spring, buyers and sellers come out of the woodwork, and there’s a lot more inventory on the market. Spring has the advantage of more choices, but the disadvantage is that sellers are looking for premium prices.

In the fall, the inverse is true. Prices start to dip as winter approaches, but there are fewer houses on the market to choose from.

Also, sellers sometimes return to the market during the fall after pricing themselves out of it during the spring. Since they’ve reduced the price to a point where it’s reasonable, their listing is essentially available for the first time.

Each season has its own advantages and disadvantages, but fall has some great benefits.

It’s also important to consider the strong level of motivation that buyers and sellers have during later months of the year. The spring is a very popular time to be on the market, so those who are buying or selling during the autumn instead are usually doing so for good reason.

Another advantage that I was personally unaware of until recently is that fewer burglaries occur in the fall. This puts buyers in a good position, since they will have more time to install a security system following their move.

Finally, there’s the matter of the “center of attention” phenomenon. Real estate agents tend to be most busy during the spring. So when you work with an agent during the fall, they’ll be able to provide you with more personalized attention. You may get a degree of service that isn’t available in the spring.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

A Quick Tip for Selling Your Home in Today’s Market

If you plan on selling your home, make sure you do not overprice your property. Buyers can tell if you haven’t made any improvements to the home.

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Today I just wanted to give you a quick tip if you are selling a house in the current market.

In fact, this just happened today. I was showing a house that sold for about $185,000 just three years ago. The current listing price for this home is $212,000.

I didn’t see the home three years ago but it was pretty clear to me that nothing had been done to the house, which is a bad sign. If you are selling a house, you have to be ready to list the improvements to justify an increased price.

The market and inflation will increase the price in certain circumstances, but this house was in a very steady neighborhood that didn’t see a lot of price appreciation. This seller was looking to make a cool $27,000 after just three years without doing any significant work on the house.

Thanks to sites like Zillow and Trulia, buyers can often tell when a home is overpriced. If they can’t, then their agent certainly can tell them, “Don’t pay $212,000 for this house. If someone else wants to, let them, because that is too much money.”

You can shoot for the moon, but you won’t get it.

I like to visit the neighbors when I look at listings, so I went to the neighbor and asked her, “What do you think of this price?” She gave me a look that clearly said, “That is not the right price.” Her house was meticulously taken care of and beautiful.

If it’s clear to the neighbors and strangers seeing your home for the first time that nothing’s been done to the house, then you need to price it appropriately. You can shoot for the moon, but you’re not going to get it.

You need to be realistic about the price of your home. Understand that today’s consumer is very intelligent and well-informed on price these days. Price your home accordingly. If that home had started at $205,000, I bet it would have sold before I had the chance to show it today.

If you have any questions about selling your home or what your home is worth in today’s market, just give me a call or send me an email. I would be happy to help you!

Can You Raise Your Home’s List Price After It Hits the Market?

If you want to adjust your sales price upward after your home hits the market, you can do one of two things.

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As a seller, can you adjust your sales price up after your home hits the market?

I was very recently working with the person who asked me this question. We were in the process of setting up a listing agreement, and we had a listing price in mind. The seller thought the home was still worth more, though. This is a common occurrence, as most sellers believe their home is worth more than it actually is.

First of all, your listing price should be determined by the sales of comparable homes in the immediate area. What prices did they sell for? What got those homes sold? How long were they on the market? Are you willing to let your home sit on the market or do you need it under contract right away? There are different price ranges for that, and your Realtor can help determine it. 

We came up with a price (let’s say it was $299,000) and we were signing the listing agreement when the seller popped the question of wanting his sales price to go up.

The truth is, your home’s sale price is always flexible, and you’re free to renegotiate the listing agreement with your agent. You can also use a price modification form.

Your home’s sales price is always flexible.

My answer to this seller, though, was that if we listed the home at $299,000 and the market told us it was worth $350,000, there would be too many showings, too many offers, and they’d be selling their house in a quasi-auction setting. The reason for this is homebuyers are out shopping all the time, and they recognize what a home is worth. If they see a steal of a deal, they won’t be the only ones seeing it.

When you get a bunch of offers on your home at once because it’s underpriced, you can do one of two things: take it off the market, increase the price, and start over again, or ask for the highest and best offer from one of the buyers. If you’re in the ballpark range of the price you really want for your house, you’re in a position to ask buyers how much they’re willing to pay for it.

I can’t think of a better way to get the price you want for your home than that last scenario. This encourages someone to come up with a maximum number to pay for your house. They don’t know what any of the other offers are, so they’re competing for it.

If you have any questions about adjusting your price up or you’d like a free valuation of your home, don’t hesitate to give me a shout. I’d be happy to assist you.

Zillow's Zestimate Can Cost You Big

Zillow’s Zestimate has become a household name. But, as it turns out, the feature could end up costing you tens of thousands of dollars.

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Many people have made the mistake of using a Zillow Zestimate as an appraisal. The problem is, Zestimates are often inaccurate.

A woman in Glenview, for example, learned this from experience when a Zestimate valued her home at an $80,000 less from what she and her real estate agent believed was its true worth.

Because of this, she struggled to get her house off of the market and is now suing Zillow. If there is a large disparity in a home’s true value and its Zestimate, buyers will be hesitant to make sufficient offers, or to make offers at all.

This isn’t to say that Zillow is without any positive attributes, though. One feature I’m personally a fan of is their mortage calculator, which allows you to not only work with principal and interest but also allows you to enter taxes and insurance. This lets you work with all the data given to find out what sort of loan might be right for a given client.

A study has shown that the Zestimate is always off by an estimate of about 5%.

I do, however, have a couple of problems with Zillow. For example, Zillow’s data, which they get from the MLS, is oftentimes wrong. As a result, clients frequently send me links from Zillow and express interest in listings that turn out to be no longer available.

As I mentioned earlier, my second grievance with Zillow is the Zestimate. A study has shown that the Zestimate is always off by an estimate of about 5%—which can make a big difference, especially for higher-priced listings.

Because of this, Zillow went so far as to hold a contest offering $1 million to anyone able to correct their Zestimate algorithm.

Their defense against the lawsuit they’re facing, in fact, is by admitting that the Zestimate isn’t even an appraisal. Be that as it may, the lawsuit came about because the Glenview woman I mentioned earlier experienced a direct and negative influence on the prospects of her home because of the Zestimate.

As sticky a situation as this all is, the lesson I think comes from it is that you should be skeptical of Zestimates and, most importantly, should talk to a real estate professional about the value of your home.
 
If you’re thinking about the value of your home, the home you’d like to buy, or if you have any other questions for me, feel free to call or email me. I look forward to hearing from you.

The Different Kinds of Home Purchases You Can Make

Traditional sales are by far the most common type of home sale. That doesn’t mean you shouldn’t know about the benefits of short sales and foreclosures, however.

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I get questions all the time about traditional sales, foreclosure sales, and short sales. A lot of buyers are under the impression that they each follow a similar script, but that’s not true at all. Each type of sale is different and has its own set of advantages and disadvantages. Here’s what sets each type of sale apart.

A traditional sale is by far the most common and widely experienced type of home sale. It’s a transaction between whoever owns the house and you. The bank isn’t involved here because the homeowner has enough equity in their property to make the sale, pay off the existing mortgage, and move on. A traditional sale is strictly between you and the home seller.

When a homeowner owes more on their mortgage than what the home is currently worth, they can attempt a short sale. This is where they approach the bank with an offer on their home and ask them what they think. If the bank thinks the price is acceptable, they will proceed with the short sale. They might counter back or straight up reject the offer, however. This is a difficult kind of sale to pull off, but not impossible. The big problem is that it can take at least six months in most cases.

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Each type of sale is different.

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With foreclosures, the bank has already taken possession of a home and is looking to get rid of the property quickly and for as much money as possible. You’ll have to negotiate directly with the bank to purchase a foreclosure. This is another type of sale that takes a bit of time to go through.

As a buyer, you can get a great deal on a short sale or foreclosure home. However, you might have to wait six months or more to get into that home. A traditional sale is much easier and faster, but you’ll have to pay market value for the home.

If you have any questions about any of these kinds of home sales, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.