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Inventory is dramatically shrinking and it is commonplace in many markets to have multiple offers on a home. While the sellers would prefer to be able to choose the best offer for them, it can be incredibly frustrating for the buyers who might consider the following tips to get their offer accepted.

1. Remove the uncertainty that you may not be approved for a mortgage by having a pre-approval letter from your mortgage company.

2. Show your sincerity by increasing the normal amount of earnest money customary for the area and price of the home. The earnest money will be applied toward your down payment and closing costs. Consider placing even more money in escrow when the contingencies have been met.

3. Specify a closing date in the contract but acknowledge that you can be flexible to accommodate the sellers moving date. If it becomes an issue, it still must be mutually agreed upon.

4. Make the contingency periods shorter if possible to make the seller feel that they’ll know sooner that the offer is solid.

5. If the contingency really isn’t important to you, leave it out of the offer. The more contingencies included in a contract, the more the seller will feel might happen to keep it from actually closing.

6. Write a personal note to the seller explaining why you like and want their home. Consider including a picture of your family and pets.

7. Physically sign the offer with a felt tip pen of contrasting color. You’d be surprised how this adds a personal touch to the offer.

Offer a fair price for the property in your initial purchase agreement. It shows sincerity and good faith that you’re actually trying to purchase the home and not trying to take advantage of the seller. The old adage that you can always go up later may never happen if there are multiple offers on the property in the beginning.

Thinking of selling your home “By Owner”? Here are three tips on how to avoid leaving thousands of dollars off the table.

As the real estate market in Metro Detroit continues to be one of the hottest in the country, some sellers are taking the home selling job into their own hands and considering the For Sale By Owner or “FSBO” option.

Usually the biggest concern for many home owners when considering to sell is what will be their net proceeds, or the amount of money they will walk away from the closing with. Some home sellers look at the real estate commission and figure that they can save that by selling on their own. Often, I will see home many FSBO’s willing to cooperate with real estate brokers or offer a commission to a real estate broker if they bring a home buyer to them and accept a purchase agreement on their home. Is the home seller really saving themselves the commission by not retaining a real estate broker? Here are a few reasons why a home seller could be shorting themselves potentially thousands of dollars if they choose to try to represent themselves or sell “By Owner”.

1. Selling your home below market value - Home owners are not professional real estate agents. Real estate agents work in their communities and neighborhoods on a daily basis and know exactly what homes are selling for. By retaining a real estate agent, they will be able to give you comparable market analysis and help you price your home to a current value of what homes are selling for. The average home seller sells a home only 1-3 times in their life. If you’re not in the market selling real estate every day, and knowing the trends for your community and neighborhood, you may price your home low and could be leaving thousands of dollars on the table that could have been in your pocket. This is a huge benefit of having a real estate agent on your side. By a Realtor representing your best interests and giving you the proper advice on pricing your home correctly, you could easily erase the commissions expense.
2. Let the buyers bid your home up in value – With the lack of inventory of homes for sale in the Metro Detroit Real Estate Market, many homes that are priced well, show well, and have proper exposure are selling anywhere between 1-10% above the sellers asking price. With the proper marketing techniques, such as my exclusive, “Coming Soon” home selling program, you can create a bidding war environment to have your home sell for thousands of dollars above your asking price. For more details on my exclusive program to create multiple offers, visit http://www.OneDaySold.com
3. It is all about the exposure – You could have the best home for sale in your entire city, but if it is not seen by the masses, you may never know what the top dollar for your home is. Don’t under-estimate the power of the multiple listing system or the MLS. Here in Metro Detroit, the largest multiple listing system is a data base used by over 11,000 real estate agents and brokers. These agents and brokers are working with many home buyers that are dependent on getting current inventory of homes for sale by their Realtors. I would estimate that the average real estate agent is working a dozen home buyers at any given time. If you take those 11,000 Realtors and the home buyers they are working with, that is over 100,000 home buyers in the Metro Detroit Real Estate market waiting for your home to be seen on the Multiple Listing Service. There is not a better way for your home to be seen then this. It is all about your home being seen by the masses and with this amount of exposure, you could easily have multiple buyers ready to start bidding on your home.

So the bottom line is, look at the big picture. Sometimes the real estate commission can initially be the determining factor on if you will hire a real estate agent to represent you, but in the long run, having a professional Realtor advising you how to market and price your home could end up helping you net more at the closing table and walk away with a bigger check.

Renters Want to Buy

Fannie Mae, in a recently released study, states that consumer attitudes continue to be favorable about homeownership, particularly with the younger generations, ages 18 to 34. Slightly over half of them think that owning makes more sense than renting when comparing the financial and lifestyle benefits.

90% of aspiring owners expect to purchase a home someday and slightly over half think they’ll do it within five years. The primary challenges are having sufficient savings and the difficulty of getting a mortgage today. Younger renters see renting as a temporary stepping stone toward homeownership.

Homeowners are far more likely than renters to be “very positive” about their housing experience. Some of the benefits identified are:

• Having control over what you do with your living space
• Having a sense of privacy and security
• Having a good place for your family or to raise your children
• Having the best investment plan
• Living in a nicer home
• Building up wealth
• Saving for retirement
• Living in a place where you and your family feel safe
• Feeling engaged in your community

To satisfy a buyer’s doubts about qualifying for a mortgage, make an appointment with a trusted mortgage professional. If you’d like a recommendation at no cost or obligation, please contact me at Jeff@JeffDuneske.com. Check out this Rent vs. Own to see the real cost of owning a home.

For more information about the Fannie Mae survey in presentation form, Click Here.

What’s It Worth?

How much is a one carat diamond worth? Anyone who has shopped for one knows that the price could have a significantly wide range of value. It’s been said that purchasers should consider the color, cut, clarity and carat size to compare stones but when it gets down to decision time, buyers still want to know “how much is it worth?”

Real estate valuation can be equally as confusing to the public. There are three commonly used tools that today’s home buyers rely on to make decisions but they vary significantly in the methods used to make the determination as well as the possible final consideration.

Appraisals are an opinion or estimate of value based on specific guidelines made by individuals who are licensed and possibly certified. Buyers and sellers may be reluctant to engage an appraiser because there is a fee of several hundred dollars that must be paid in advance even if no sale is ever consummated.

A Broker’s Price Opinion (BPO) as defined by the National Association of REALTORS® is an “estimate of the probable selling price of a property.” The Dodd-Frank Act describes a BPO as “an estimate…that details the probably selling price of a particular piece of real estate property and provides a varying level of detail about the property’s condition, market, and neighborhood, and information on comparable sales, but does not include an automated valuation model.”

A Comparative Market Analysis (CMA) is a commonly used tool of salespeople to provide information to buyers and sellers to facilitate a sale. In most cases, it would be difficult to distinguish a CMA from a BPO because the steps considered are essentially the same and practitioners commonly use the terms interchangeably.

Another method called Automated Value Model (AVM) use software to search available data on the Internet to arrive at an approximation of value. Zestimates found on the Zillow site use this method. AVM’s may not consider all the market activity such as MLS sales and active listings. They can’t make adjustments based on human experience and market knowledge.

For what it’s worth, a buyer or seller might want to acquire as much current and factual information as possible from a trusted real estate professional familiar with the market before making a decision on the largest single asset most people acquire.

Will the “Good Life” Be Ready When You Are?

The Life of Riley was a TV show from the 50’s starring William Bendix but the title’s origin came from an expression meaning that a person was living the “good life.” Most people envision themselves living the good life by retirement but don’t really have a plan to get there.

There’s a rough rule of thumb used to estimate how much net worth a person would need by the time they retire to generate a certain income. The target annual income is divided by a safe, conservative yield to determine the investable assets needed.

A person who wanted $100,000 annual income generated from a 5% investment would need investable assets of $2,000,000. If a person had $500,000 now, they would need to accumulate $1.5 million more by the time they retire. If it was estimated to be 15 years away, they would need to save about $100,000 a year, each year until retirement.

It is a sobering example that could be depressing without a plan. It might be easy to say, “I should have started sooner” which may be true but there is still hope.
Gradually, over the next several years, accumulate rental property and allow the tenant to retire the debt for you. The equity in each property will grow from the amortization of the loan each time a payment is made. It also grows as the property increases in value due to appreciation.

Single family homes as rentals offer the investor an opportunity to meet their retirement and financial goals for the following reasons:

• The ability to borrow large loan-to-value mortgages
• At fixed interest rates
• For long terms (easily up to 30 years)
• On appreciating assets
• With significant tax advantages
• And reasonable control not offered by alternative investments.

Breathe Easy

The benefits of regularly changing the heating and air-conditioning filters are obvious to homeowners; the real challenge is creating a system to make sure it gets done.

A reasonable schedule would be to replace it with a new one-inch pleated filter every 60-90 days. Households with shedding pets should consider replacing them every month. Some people change their filters every month when they pay their electric bills. A simple system would be to set a recurring appointment on your calendar like Outlook or Google.

Filters trap dust, mold and bacteria which can directly affect the air quality and play havoc with your allergies. When a filter is dirty, it prevents proper airflow and allows dust, dirt and allergens to blow through your home. Changing your filter regularly helps to avoid maintenance, improves equipment life and produces increased energy savings.

When shopping for filters, it’s understandable to look for the best bargain but the cheapest price may not be the best choice. When purchasing, recognize that HEPA-rated and HEPA-type filters are not the same thing. HEPA stands for high-efficiency particulate air. A HEPA filter meets or exceeds standards for efficiency set by the U.S. Department of Energy. Most HVAC contractors recommend HEPA filters.

Some filters need to be changed monthly and other types have manufacturer recommendations of every three months. An alternative to disposable filters are the permanent, washable types. These will cost more initially but because you can clean them and re-use them, eventually, you’ll recapture the cost and realize savings.

Whose Commission Is It?

One of the most common reasons buyers want to deal directly with the seller is because they feel they can save the commission. It’s a valid consideration but interestingly, it’s the same reason the seller isn’t employing an agent.

Both parties cannot save the commission. The buyer feels they have earned it because they’ve had to find the home, determine its value and negotiate with the seller. They had to arrange their own financing, title and inspections.

The seller equally feels that they have earned the commission because they too have had to research value, financing and title work. They have incurred all of the marketing expenses and have invested hours upon hours to be available to show the property, hold open houses and answer inquiries.

There is certainly value in all of the things that buyers and sellers are willing to do. However, only one person can save the commission assuming the buyer and seller can reach a written agreement.

The Profile of Home Buyers and Sellers survey reports that 14% of sales were For-Sale-by-Owners in 2003 and 2004 compared to just 9% in 2012. The trend shows that agent-assisted sales rose to 88% in 2012 from 82% in 2004.

The three most difficult tasks identified by for-sale-by-owners is attracting potential buyers, getting the price right and understanding and performing the paperwork. When surveyed, sellers most value the home selling in an anticipated time frame and for an expected amount.

Experienced, third-party advocates helping buyers and sellers is a valuable contribution to the transaction which may determine whose commission it is.