by Dan Connolly on November 12, 2008
Disclosure in Real Estate Sales - What can be kept confidential?
What is Disclosure?
First of all, a disclosure is a part of the purchase and sale contract that gives the Seller the chance to tell you about any defects he may know about his property. Why would he ever want to do that? Well, because it’s the law. It’s illegal for the seller to hide defects from the buyer. Yet there are some things that the seller doesn’t have to tell you, some things that you may really want to know.
Do you have to tell if you have ghosts in the attic?
Well, I will start with the silly stuff, like is the house haunted? That’s a grey area in disclosure. The courts tend to rule that if the buyer thinks that something is detrimental then it is detrimental. Yet what if the rumor is that the house is haunted but the seller doesn’t believe it? Is he still required to tell you a story he doesn’t believe at all? It would be like me telling you that there was something wrong with the house because it was built while Mercury was in retrograde, if I don’t believe in astrology. There was a case in New York where a seller was sued for not revealing that the house was haunted, and lost. Part of the case hinged on the fact that the seller published a story in Reader’s Digest about the haunted house, so that proved that the seller believed it.
by Dan Connolly on November 1, 2008
There has been a long time ongoing discussion about whether appraisal is an art or a science. I think most people assume that it is a science, but is it? [click to continue reading…]
by Dan Connolly on October 21, 2008
How to negotiate your best deal
when buying Atlanta foreclosures
The first thing you need to know is that for the most part, THE SELLERS ARE NEGOTIABLE! One of the prevailing myths is that the foreclosure sellers are firm on their prices. This is turning out to be more and more not true. Occasionally you will find some asset managers who have adopted a strategy of listing drastically below the market, trying to start a bidding war. These homes will usually sell quickly and for more than list price. But these would be homes priced at 50 cents on the dollar or less. And I mean 50% of the real price today, not the imaginary, inflated price from a couple of years ago…
Nevertheless, generally today, most of the asset managers are pricing aggressively but not so low that there would be bidding wars. We see many instances where these sellers are taking as much as 15-20% less than list price, especially on foreclosures that have been on the market for awhile. So, knowing that the low offers will not be surprising or insulting to the foreclosure sellers in today’s market means you should not be shy about offering less than what they are asking.
Inspections
If you want to leverage the best deal today in the foreclosure market, it really makes sense to do your inspection before you make an offer on a foreclosure. An as-is offer will have a much better chance of being accepted than one contingent on an inspection. Most of them will not have the utilities turned on, so you have to assume that you may need to replace the furnace or a/c and the price should reflect that. You may get lucky and not have to replace those items, but allowing for that scenario would be a good way to approach this.
Timing
When you offer can have an impact on whether the sellers are willing to negotiate. Most of the asset managers have quotas and are under the gun to get a certain number of houses under contract per month. In the last week of the month you may find that there is more room to negotiate than right after the first of the month.
Financing
Whether you have a financing contingency is a critical factor in how much the sellers are willing to negotiate. If you can arrange the financing before the offer is made so you can make either a cash offer or a fully approved loan offer, you will find the sellers are more negotiable in that case. Some investors use an equity line on their personal home to purchase and then plan to refinance later after they have done the repairs and gotten the property rented. You should make sure that the second loan is preapproved before you start on this approach. Cash is king in the foreclosure purchase arena.
Closing Time
The faster you close the better the sellers like it. The asset managers have quotas for how many they close in a given month as well as how many they get under contract, so by offering a quick closing, before the end of the current month, you stand a much better chance of getting a low offer accepted.
Earnest Money
When you offer earnest money on a foreclosure purchase, it is generally non refundable once the inspection and financing contingencies are waived. When a purchaser offers a substantial earnest money deposit it definitely causes them to sit up and take more notice. The more you put down the more serious you appear to the seller. When low-balling, large earnest money checks are one way to help your offer get accepted.
So these are some tips to getting your lowball offers accepted. Happy house hunting! If you want to start searching for Atlanta Foreclosures click here!
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