Negotiating Tactics That Will Kill A Sale

Bargaining is a subtle art in real estate and the way you handle the back and forth that happens during contract negotiations can make or break a sale. Skilled negotiators can usually find some common ground that satisfies all parties and helps close a home smoothly, but if you’re not careful, a wrong move could cause a deal to crumble for the seller or buyer.

Here are some negotiation tactics buyers and real estate professionals should avoid:

  1. Lowball offers: Going far below market value when you make an offer damages your credibility as a buyer and can be insulting to the seller. The seller has a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, they won’t even consider the offer.  This can leave a bad taste in their mouths in regards to you as a buyer and cause them to not want to accept any other offers you may make. Keep this in mind when you want to make a low ball offer and your agent advises otherwise. They have seen the downfalls of this tactic many times and are just looking out for you best interest.
  2. Incremental negotiations: Don’t continue to go back to the seller with small increases in your offer ($1,000 or less). Fighting over a small dollar amount makes you look bad and makes the seller think you will be a difficult buyer to work with. The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities.
  3. “Take it or leave it”: Try not to draw a line in the sand with your initial offer. The seller can get defensive and consider other offers if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it. People do not like to be given ultimatums and will not feel happy if they feel you are painting them into a corner.
  4. Nitpicking after inspection: Obviously if the inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate. Buyers must understand that unless they are buying a newly built home, every house has it’s little quirks of wear and tear from years of use. Combing the house with a magnifying glass and demanding it be in perfect condition could lead to the seller refusing to do ANY repairs, therefore leaving you as the buyer to do them all yourself, or walk away from the home that you possibly really like.
  5. Asking for more, more, more: Some buyers will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. Try to avoid giving the seller a reason to build up resentment and think that you’re being greedy. There should be realistic give and take on both sides of the contract to help foster a good relationship during your escrow, and help make everything go smoothly.

These are just a few things you want to avoid while negotiating a contract in order to not kill the sale. Remember that if your agent advises against these tactics, they are speaking from experience and out of their best interest for you.

Should You Use a Lower Down Payment?

If you have ever bought a home in the past, or have had friends and family who have bought homes, you’ve most likely heard the rule for down payments: save for a twenty percent down payment before you buy a home.

The logic behind saving twenty percent makes sense because it shows that you have the financial discipline and stability to save for a long-term goal, which in turn also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment— some programs allow for as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a twenty percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down twenty percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for any home repairs the home may requite upfront, or perhaps even for doing some pricey upgrading right off the bat rather than waiting years and years until you have your money saved up again. These would allow you to immediately make sure your home is stable and to make the home the dream home you’ve always wanted.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary, there are many options out there for buyers now on the money needed for a down payment. Most borrowers can find some common ground between the security of a traditional twenty percent down payment and an investment-focused, small down payment. Your trusted real estate professional and local lender can provide some answers as you explore your financing options, and what the best choice is for you in your next home purchase.

Looking for more information, or some professional Real Estate Advice on this matter? Call us at 928-771-1111, we’d love to help!

Service Animals vs. Emotional Support Animals in Renting

If you live in the United States, you might be shocked to learn that more than eighty-five million families own a pet in America. That is a whopping sixty-eight percent of households, which is well over half!

While many of us got these pets to be beloved members of our family, for other people, they got their pets for an entirely different and necessary reason, and the value of their furry friend goes far beyond companionship.  What we’re referring to here is, of course, Service Animals.

According to the Americans with Disabilities Act, a service animal is “any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual, or other mental disability. Other species of animals, whether wild or domestic, trained or untrained, are not considered service animals. The work or tasks performed by a service animal must be directly related to the individual’s disability. Examples of work or tasks include, but are not limited to: Assisting individuals who are blind or have low vision with navigation and other tasks, alerting individuals who are deaf or hard of hearing to the presence of people or sounds, providing non-violent protection or rescue work, pulling a wheelchair, assisting an individual during a seizure, alerting individuals to the presence of allergens, retrieving items such as medicine or the telephone, providing physical support and assistance with balance and stability to individuals with mobility disabilities, and helping individuals with psychiatric and neurological disabilities by preventing or interrupting impulsive or destructive behaviors. The crime deterrent effects of an animal’s presence and the provision of emotional support, well-being, comfort, or companionship are not considered work or tasks under the definition of a service animal.”

While service animals provide legitimate assistance to those with disabilities, the controversy related to emotional support animals continues to generate headlines as people take advantage of the easy access to getting your pet certified as an emotional support animal. People seek a “prescription” that includes everything from hamsters to peacocks and even pigs in order to be able to get rental properties they might not otherwise be qualified to rent because they own pets.

Where does that leave property owners who find themselves in a situation where a tenant is seeking an exception to the “no-pets” policy?

The Arizona Association of Realtors states, “Title 42 of the United States Code requires that landlords ‘make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.’ Simply put, property owners may be required to waive a ‘no pets’ policy if the tenant meets the criteria under the Fair Housing Act.”

The U.S. Department of Housing and Urban Development issued FHEO-2013-01 which states:

Housing providers are to evaluate a request for a reasonable accommodation to possess an assistance animal in a dwelling using the general principles applicable to all reasonable accommodation requests.  After receiving such a request, the housing provider must consider the following:

  • Does the person seeking to use and live with the animal have a disability – , a physical or mental impairment that substantially limits one or more major life activities?
  • Does the person making the request have a disability-related need for an assistance animal? In other words, does the animal work, provide assistance, perform tasks or services for the benefit of a person with a disability, or provide emotional support that alleviates one or more of the identified symptoms or effects of a person’s existing disability?

If the answer to question (1) or (2) is “no” then the FHAct and Section 504 do not require a modification to a provider’s “no pets” policy, and the reasonable accommodation request may be denied.

When faced with this kind of housing request as a landlord, it’s important to know that the tenant must show their need is connected to their disability and the request is reasonable.  You are allowed to ask them to show the animal is necessary for their particular disability, but you are not allowed to deny them tenancy. According to the FHA, an accommodation is reasonable if it doesn’t impose an undue financial or administrative burden.  Making the wrong decision could violate the law and potentially require you as the landlord to have to pay damages to the disabled renter.

 

How AZ Realtor Association Advocates For You!

Below is a video posted recently by the Arizona Realtor Association. A little cheesy and full of realtor humor, but also full of information on just how Realtors have fought for the people over the years.

“The Arizona REALTOR® Party saves you $1000’s every year by advocating for you and our 50,000 REALTORS®, your clients, and property owners.”

Enjoy!

Do People Think It’s a Good Time to Buy/Sell a Home?

According to the National Association of Realtors Home Survey performed in March 2019, most people would agree that now is a very good time to buy or sell a home.

  • “Fifty percent of renters compared to seventy-five percent of home owners think now is a good time to buy.” Only thirty-five percent of people believe that now is not a good time to buy.
  • “Those who are in the West (77%) are most likely to think that now is a good time to sell a home.” Only thirty-one percent of people believe that now is not a good time to sell your home.

For some more of the statistical facts and figures they found, visit the website article here.

As Realtors who work in the Real Estate business every day, we’d have to agree with what others believe as well, that now is a good time to buy or sell a home (at least here in Prescott, Arizona). We aren’t just being biased; this comes from our own experience and knowledge of the market right now.

Even though the market is projected to take a slight dip in 2020, it will be nothing near the crash we had over ten years ago, in fact it won’t be a crash at all – hence the word dip.

So, what will happen after the dip? The market will continue to go back up. With a good economy and competitive market, there’s really no waiting to be done here. “I’m waiting for the market to drop,” or “I’m waiting for the market to be less competitive.” Mortgage companies and realtors alike will tell you this isn’t likely. While you might get lucky and find a small pocket of time that’s “just right”, the reality is that the best time to buy is now so you can start building equity in your new home, rather than waiting and watching as the prices just continue to go up rather than down.

What do you think? Is now a good time to buy or sell a home?

Why Should You Use a Real Estate Agent to Buy or Sell?

With websites around today such as Realtor.com, Trulia, and Zillow, many buyers and sellers tend to think, “Who needs a real estate agent?” The answer is everyone!

Even though these websites are extremely user friendly and can make the whole real estate process seem like a piece of cake, the truth is there is so much more that goes into a real estate transaction other than finding a home, or selling your home.

While it might seem like we are being a little biased on the topic, hear us out! This is probably the biggest financial decision/investment you will ever make. That’s a big deal! Here are some reasons why we believe it is so important to use an agent rather than try to venture the industry of real estate alone.

Real estate Agents have a ton of experience: “Want to check the MLS for a 4B/2B with an EIK and a W/D? Real estate has its own language, full of acronyms and semi-arcane jargon, and your Realtor is trained to speak that language fluently,” notes Realtor.com. This isn’t exactly an end all reason to use an agent, but wouldn’t it be nice to be working with someone who knows what they’re doing rather than scratching your head in confusion and having to look things up at every turn? What if you miss something, or overlook something? Well, an agent is paid to avoid exactly that! They are also very familiar with the dozens of lengthy contract forms you will be required to sign both as a buyer and a seller, and help you navigate those wordy jungles so you fully understand what it is you’re signing exactly. Any mistake could end up costing you financially, legally, and emotionally. Real estate agents work hard to prevent that.

They have access to all the best home searches: With websites like those mentioned above, realtors and the public alike have access to them, and there are so many places to look for homes on the internet. However, realtors have even more! They have access to the MLS (Multiple Listing Service), which every home has to be listed on except FSBO (For Sale By Owner) – see what we mean about the acronyms? Realtors also often have some homes not yet on the market they could show you, giving you a jumpstart on any new listings. Good local realtors also know their areas better than anyone and will be your best resource for finding a home in the neighborhood and price range you want.

They’re master negotiators: When looking to buy or sell a home, you better believe there will be some negotiating involved in today’s real estate market. Depending on the home, there could be a lot of competition, all cash offers, bidding wars, and more. Do you want to try to traverse these waters alone, or would you rather have a knowledgeable and experienced agent at your side that has dealt with these types of situations before? Your realtor will always have your back, fight for you, and look out for your best interest to make your transaction as smooth as possible.

They know everyone: After years in the real estate business, real estate agents know the best people when it comes to buying and selling homes. Mortgage companies, real estate attorneys, Escrow companies, home inspectors, and the list could go on and on. Real estate agents will know who’s the best, who they’ve had trouble with in the past, and everything in between. This expertise is priceless considering a bad home inspection could cause a home to fall out of contract, or a mortgage company that isn’t on the ball could delay closings.

They have to stick to a strict code of ethics: Not every licensed real estate agent is a Realtor. A Realtor is an agent that also belongs to the National Association of Realtors (NAR), which is the largest trade group in the country. To be a Realtor with NAR, you have to adhere to a strict code of ethics that not only protects the agents, but also protects the buyer and sellers from any agents looking to take advantage.

They wear a lot of different hats: A Realtor is a parental voice, data analyst, therapist, expert, and so much more. They do a lot of work to earn their commission even though it might not always look like it. They are constantly looking for new homes for their buyers and using their own money to market their seller’s homes. They drive around neighborhoods and towns with you to make sure you find exactly what you are looking for. They do a comparative market analysis (CMA) on your home to see what you could possibly sell it for to make sure you are getting the most out of your investment. They are texting, calling, and e-mailing at all hours of the day. This is not a 9-5, Monday-Friday job. It is 24/7 all week long job because your real estate agent wants to be there for you!

We hope some of these reasons make sense and that in your next real estate transaction, you’ll consider using an agent.

If you’re looking for an agent’s assistance now, or have any questions about what it looks like to use an agent, give us a call. We’d love to help! 928-771-1111.

Why 2019 Might Be a Good Year to Buy a Home

If you’ve bought or have been trying to buy a home over the last several years, you know that the market has been absolutely crazy, and that includes Prescott!

Homes would go under contract before officially being on the market. Homes would go active and within one day there would be multiple offers on the property, and people would find themselves in a bidding war. Homes were going for over asking price and more than they were actually worth. This is called a Seller’s market and it was hot, and it was not slowing down for anyone!

With all that going on, unless you were a cash buyer, could put in an offer on the property within the first day, or could make an over asking price offer, your chances of landing the contract were slim.

Because Prescott’s market is higher priced than others, the affordability that 2019 seems to be promising might not affect us greatly, but some help is better than none, right?

Here are a few key changes in the market this year:

There will be more homes available to buy. With tight inventory on homes, many buyers have decided to wait it out because by the time they call their agent, the home they were looking at has already sold. Who can compete in a market like that? How this will be changing is more new builds in our area, which brings increased inventory. The problem is that new inventory might not always be in your price range, or if it is (most in the 200-300k area), it also seems to be a lot of other people’s price range and you’ll still have some competition.

Soaring prices will slow down. Even though the inventory of homes has been tight over the last few years, the prices of those homes have done nothing but rise (like we said, it’s a seller’s market). In 2019, that looks to be slowing down slightly. Home prices will continue to rise to be sure, but they will rise at a much slower pace now. According to Realtor.com, there will be a “2.2% increase in home prices this year – compared with a nearly 5% increase last year.” Prices don’t look like they’ll stop rising completely, so it’s best to buy as soon as possible to begin building on your home equity.

Rents are rising and will not stop. Speaking of rising prices and building equity, another reason to buy is so that you can stop wasting your money on renting and start investing in your home. While buying a house is a very expensive adventure and can seem scary, keep in mind that along with home prices, rental prices are rising as well. A top dollar market means that those who are able to buy and turn those homes into rentals for extra income have to charge more for rent. Think of how much they need to make on rent just to cover the mortgage, not to mention make a profit off their investment. We know that buying is a lot of cash up front, but it is also a lot of cash saved later on by building equity in your home and not having to give your money to a landlord every month.

Mortgage rates are lowering. Mortgage rates were predicted to rise in 2019, but they have actually been dropping. Lower mortgage rates are good news for buyers because it significantly helps with home affordability. Higher rates means a higher mortgage, which means pushing a home’s price over what you’ve been pre-qualified for, where obviously, lower rates means the opposite. However, Realtor.com thinks these lower rates are only temporary because of the long-term direction of mortgage rates seems to point to them going back up because of our strong economy.

We hope these pointers give you some hope about trying to buy a home this year, or at least make you consider that perhaps you’ve waited long enough and it’s time to take the plunge. If you’re waiting for another crash, it doesn’t look like that is going to happen. The time to buy is now!

To talk about possibly buying a home, or to get a better idea of what this might look like, we would love to help! You can call us at 928-771-1111.

Most Essential Home Features for Buyers

Last week we talked about older homes and renovation loans. In conjunction with that topic, we thought it would be interesting to take a look at what home features new home buyers and future home buyers would consider the most essential in their house hunts.

When you’re looking to renovate your home, or perhaps are getting a renovation loan to remodel the new home you’re buying, it is always important to not only think of what you like and want, but what other buyers might like and want when you go to re-sell your home someday. You may not believe this is applicable to you if you plan to stay in your home for the rest of your life, but you never know what life will throw at you and it is always best to be prepared. Perhaps you will get a sudden job relocation and have to move, or decide to move to be closer to your family and grandchildren? Whatever the case, never say never.

With that in mind, here are some of the high-priority home features The National Association of Realtors (NAR) found that buyers today have on their checklists when looking for a new home:

  1. Laundry Room
  2. Energy Star Windows
  3. Patio
  4. Energy Star Appliances
  5. Ceiling Fans
  6. Garage Storage
  7. Exterior Lighting
  8. Walk-in Pantry
  9. Hardwood Flooring
  10. Double Kitchen Sink
  11. Energy-Star in the whole house

As you can see, most of the home features on this list might not be ones we would think of first. While having things such as an updated kitchen and bathrooms, new flooring, and fresh coats of paint are nice, they weren’t in the top ten high-priority features among buyers. What buyers really seem to care about are things that help them save money on utility costs, give them extra storage in the home, and help make the outdoor living of the home better.

Talking about utility costs, NAR states, “While consumers may rank certain energy-saving features highly, they may not be motivated to pay more for them. Sixty-eight percent of consumers said they are concerned about the environment and would like an environment friendly home, but they were not willing to pay extra for one. However, when asked if they would pay more for a home to save $1,000 a year in utilities, the responses changed. Forty-six percent of respondents said they’d pay an average of $1,000 to $9,999 more for a home to save $1,000 per year on their utility bills; 37 percent would pay $10,000 or more.”

This is definitely something to keep in mind if replacing your appliances is on your list of things to do or to budget for in your home renovation.

Other features that ranked high among buyers in this survey included:

  1. An open layout where kitchen and dining room are open
  2. Wash and dryer on first floor
  3. 9-foot ceilings on first floor
  4. Want 2 – 2 ½ bathrooms

In conclusion, if you are thinking about renovating your home or getting a renovation loan in your new home purchase, you might want to consider these features. These are what other buyers find desirable and would perhaps pay more money for, which would maximize on your investment when you sell one day. We aren’t saying spend all of your renovation money on these things – you have to make your home your own and do the things that you want as well – but keep them in mind when considering what’s really important and where perhaps a portion of your budget should go.

Agent Feature – Jodi Petkovich

We’d like to introduce you to our amazing agent Jodi Petkovich. Jodi and her husband John have lived in Prescott for ten years now with their three kids, and they have loved every moment.

As a former teacher, Jodi brings ‘class’ to her duties as an agent as well as a fabulous sense of humor, constantly making those around her laugh. Her kindness, generosity and professionalism are what you’ll love most about her and are what make her unforgettable. She studies the needs of her clients to help them achieve their transactional goals, always seeking her client’s best interest at heart. Her extracurricular activities include making melodies and spending time with her husband and three children and serving in intercessory ministry.

Her husband John owns his own successful plumbing business called Bar None Plumbing. They do everything from basic plumbing issues to water heaters, to flood prevention services, and seek to bring the highest quality service to their customers.

John and Jodi’s three children are Ronnie, Taylor, and Riley. Ronnie is recently married and a worship pastor at a local Church in town. Taylor is currently making his nation and family proud; serving in our country’s military, though he is missed every day by his family. Lastly, Riley is a freshman at Prescott High School and she loves soccer, playing on her schools high school team as well as on a club team.

We love Jodi and we know you will too! Here are some things that Jodi’s clients have had to say about her:

“Jodi Petkovich was a great help and went out of her way to be accommodating for us to get through our purchase. She was super quick to respond every time I contacted her.”

“We worked exclusively with Jodi Petkovich and we couldn’t be more pleased with our experience. During the entire process Jodi was, to put it into simple terms, a wonderful gift. We were looking at Prescott very seriously and clicked on a property for more information and within minutes we got a call from Jodi. Over the course of many months she went above and beyond to help us find the right property and was at our side every step of the way through a challenging buying process. You can’t find a harder working, dedicated, responsive and knowledgeable professional than Jodi. I’ve dealt with many real estate agents in the past (one was a high school friend) and while all were very good at their job, I’d put Jodi on the top of the list when it comes to my experience. My wife and I highly recommend her services and the team at the Kathleen Yamauchi Group.”

“Where to start? Jodi was amazing her professionalism and knowledge was top notch. She listened to what we wanted and found the right home for us in record time. The loan officer we had even said the closing went so well because of Jodi and her quick response and attention to detail. I highly recommend her.”

Jodi is amazing!

Why Buyers and Sellers Shouldn’t Trust Online Real Estate Price Estimates

Whether you’re looking to buy or sell a home, chances are you’ve looked at a few real estate websites to see what the market is like out there right now. A lot of these sites, while very helpful in other ways, can tend to be a bit misleading when it comes to prices.

If you’re a buyer, these sites take the price the home is listed for and then break it down to give you an estimate of what your monthly mortgage might be. While sites like Zillow and Trulia state that these numbers are just estimates, a lot of times people see them and believe that is truly what they will have to pay monthly, and have hope they would be able to afford the home they’re looking at. These mortgage estimate numbers can be wrong because it doesn’t take into account how much of a down payment you will be paying, which can vary depending on your loan and loan program you’re using, or how much you can afford. Some loan programs are as low as 0% down payment, while others require the 20% customary down payment. Another reason these numbers might not be accurate is that money such as taxes and Escrow payments that get tacked onto your monthly mortgage may vary greatly depending on when you buy.

So then, what should you do if you are a buyer trying to figure out what you can afford? We recommend first speaking to a lender and getting prequalified to buy. This will not cost you anything and it will give you an accurate dollar amount of what you can afford in a home and in a monthly mortgage payment.

If you’re a soon to be seller, you go on these sites to look at what they’re predicting your home might be worth. Sites like Trulia, Zillow, and Realtor will have an estimate of what a home is worth when you look up the address, and this may be a number you look at to help you determine what your home is worth. The problem with these numbers is often times they are derived from automated valuation models and can be very inaccurate. What your home is worth depends entirely on what kind of real estate market you are in (because it varies from town to town), what your home looks like compared to other homes, the amount of land you have, upgrades done, and so much more!

What we suggest for people looking to sell their home is calling a real estate agency. Most agencies will do a CMA for free. A CMA is a Comparative Market Analysis, which compares your home to others like it that have sold in the area with similar criteria (area, year built, number of bedrooms, upgrades, etc). This will hopefully give you a very accurate idea of what your home is worth and what you can list it for rather than just having a guesstimate.

We don’t want to shoot down the real estate sites we love, we are just saying to read what even they say on their websites… that those numbers are estimates and can be inaccurate and not precise depending on your home, your situation, and so many things. For more accurate numbers, follow our tips above about seeing a lender or contacting an agency.

If you need help with either of those things, we would love to assist! You can call our office today at 928-771-111 to speak to an agent about helping you get pre-qualified or creating a CMA for your home to find out how much it could be worth.