The Art

Just recently I have talked a client out of offering more for a home so they didn’t overpay and talked another client into offering asking price instead of low-balling so they wouldn’t lose the house.  There are finer details but that is the gist.

It worked out for both.  The first client was afraid of missing out when there were other offers.   Experience helped me asses the situation.  The client’s fear almost cost them thousands of dollars. It would have been simple to just to offer my client’s maximum offer and be done.  That would be science or at least math.

I had a client tell me over and over and over that they would not lower the price.  An offer came in, under list price.  While pulling out a blank counter-offer the client said, “I saw them looking at the house.  They looked like a nice couple.  We’ll take the offer.”  As simple as that the buyers got a deal maybe no one else would have gotten.

In a weird situation I had a seller tell me to just bring them an offer.  They were flexible.  The offer came in $10,000 off and the seller countered $1,000 off list price.  The buyers didn’t buy and had a few choice words that I didn’t pass along.  Not very flexible.

I have had sellers moved by a letter from the buyer about how much they loved the home and others scoff at the idea that a letter would influence them beyond the dollars at close.  I have seen the sellers and buyers talk through an issue and resolve it smoothly while in other cases, not so amicable.

It’s an art because it isn’t always about money or seemingly selfish motives.  Early in my career I learned regardless of how strongly a client say they will or won’t move, it can happen.  Everyone once in a while I have someone call me and ask if my clients are flexible on price, or their offer, and I usually say the same thing,

I have had past clients tell me they will or won’t budge but then later change their mind.  If you catch them on the right day, you might get lucky.  Bring us your best offer.

Sometimes agents get in the way of a deal.  Some feel the need to fight for something that the buyer didn’t necessarily ask for.  One agent called and came up with some silly extras for the contract. While mulling it over my clients found a better house.  Another agent felt “she just wasn’t doing enough for her clients” even though the buyer and seller had agreed to a change on their own.  A stir was caused and then they fixed it again.

Recently I told an agent that my clients weren’t going to do anything beyond what was in an addendum.  Many days later the other side came back asking for more.  My clients sent a termination.  The agent called and said, “Well if it’s that important my client doesn’t need to have it.” We had told them, they didn’t listen, and now they could find another buyer.  Principle has often gotten in they way.  I think the agent is the one who suggested asking for more.  My clients didn’t like the way it was being handled, felt they were being straightforward while the other side wasn’t.

You might be surprised to hear how often hurt feelings kill deals. The best way to keep a deal going, or at least not feel bad if it falls apart, is to act fairly.  The smoothest deals are where people try to understand the other side while asking for what would be fair in their mind.

Negotiating is an art like tight rope walking. You try to get a feel for what is going on, check the wind, and adjust when things get shaky.  And there is no guarantee you won’t fall which can make it exhilarating.

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Ever heard of feral homes?  Above is a picture capturing what is happening to an estimated 33,500 abandoned homess in Detroit.  Two years ago I posted a map of the foreclosure situation in Detroit – colorful but not pretty.  Over the last few years I have heard about how bad it is from a house that took 3 weeks to sell for $19 to the average home selling for less than a car built in Detroit.

There has been hope of turning Detroit into an artist’s utopia.  With homes abandoned and in different states of disrepair, they have sold for $19, $500, and even $1,900 giving starving artists a place to live.  Many of the homes have been stripped of wiring and anything else not bonded to the earth. The homes become a canvas of sort to play with in design and green technologies.

A interesting idea has popped up; a somewhat counter-intuitive idea.  What if they shrunk the city?

The city would demolish houses in some of the most desolate sections of Detroit and move residents into stronger neighborhoods. Roughly a quarter of the 139-square-mile city could go from urban to semi-rural.

Now, a city of nearly 2 million in the 1950s has declined to less than half that number. On some blocks, only one or two occupied houses remain, surrounded by trash-strewn lots and vacant, burned-out homes. Scavengers have stripped anything of value from empty buildings. According to one recent estimate, Detroit has 33,500 empty houses and 91,000 vacant residential lots.

Several other declining industrial cities, such as Youngstown, Ohio, have also accepted downsizing. Since 2005, Youngstown has been tearing down a few hundred houses a year. But Detroit’s plans dwarf that effort.

It makes sense.  Rudy Giuliani who is credited for cleaning up New York said he couldn’t tackle Los Angeles because it is too spread out.  Detroit has lost half of it’s population but still has to provide city services to the same area.  If there was going to be a rush of young creatives it probably would have already happened.

I just remembered that a client called me three years ago and said they were going to buy a home in Detroit for $40,000.  It’s so cheap.  I said, “Well, it does seem cheap but it’s all relative.  That may just be the price homes sell for there.  And there isn’t a driving force for the economy to recover.”  I hoped they wouldn’t buy but they did.  It’s just gotten worse.  I can only hope it comes back for their sake and all of the people living there.

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Some will say that when you buy a house you will find a way to make it work.  Recent foreclosure numbers might hint that isn’t enough.

I have suggested to many buyers that they start immediately taking the difference between their rent and expected mortgage and put it in a savings account.  For the very bold they should add another 4% of the that expected payment and put it into the savings account as well.  While this may not predict your success in owning a home it is a realization of what you will have left over every month.

Some lifetime renters will say they are better off.  They don’t have to deal with home repairs or the up and down of the real estate market.  They have flexibility if they have rotten neighbors.

Though there are still 0% down loans, FHA is talking about raising the minimum downpayment and lowering the amount that they seller can contribute to the buyer’s closing cost.  Downpayment is not the only factor in a loan failing but if there is more skin in the game then maybe the buyer will think twice about the ability to pay and will work harder to make it work. 

Foreclosures will always be there because life has it’s unexpected turns.  Renting is flexible but the owner can decide to sell and forcing the renter to move. 

This post was inspired by LifeHacker and My Life ROI

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I may not agree with their final analysis. The bank could make tons of profit by just approving all short sales now.  But what they show in this video is one heck of a sweetheart deal that is just ridiculous.

Video from ThinkBigWorkSmall.com

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I sprained my ankle really bad yesterday (picture here).  I was just stepping out of my house to go to an appointment. I locked the door and stepped back while turning and heard two pops.  Instantly I started sweating and breathing fast.  Oh, it sucked.

A neighbor helped me and at first I thought I didn’t need the help.  And as others found, out they offered me help too. It reminded me of when I was 20 and had surgery on my wrist that had been broken for five years.

I had my Mom and girlfriend ready to wait on me hand and foot and I pushed them away; told them I was fine.  I went to school that following Monday, driving myself with cast from my wrist to my shoulder.  The professors already told me it was fine if I took a few extra days off but I didn’t.

I took some of the help that has been offered to me yesterday but I have still declined some that I shouldn’t have.  I can’t find one reason and can only guess at the mixture of ideas of why I don’t ask or take advantage of help being offered.

The weird part is that I love to help people.  I have stopped to push stalled cars out of the road more times than I can count. I took at friend’s cat to the vet while they were out of town. (I’m scared of cats because they have Five Points of Attack).  I love to help but asking for it is almost painful.

Which brings me to the real estate segue.  I know of cases where homes went to foreclosure without anyone ever trying a loan modification or a short sale.  They don’t want to ask for help.  Whether it is ego, independence, taking your lumps, toughing it out or whatever, you need to drop your guard and accept help.  (I’m talking to myself here as well).  The way you enjoy helping is not unique to you.  You help others by letting them help you.

It borders on selfishness not to let others help.  So whether you are mulling over a tough situation like a short sale or need someone to bring you some ibuprofen, accept the help.

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Clever video; give it a minute to get into the flow.

One underlying theme you might notice on my blog is that predictions don’t mean much to me. The line you hear in investment commercials, “Past performance are not indicative of future results”, is true for real estate too. For 9 years they have been swearing that interest rates are going up, and when they don’t, they give us reasons why. And how long have they said we will be in the midst of a recovery in two quarters? For about 3 years.

With the recent election increasing taxes you have strong opinions on both sides and they have theories to back up their opinions. If nothing else, this video will explain to you two main theories that our government bounces between and how long it’s been going on. Enjoy.

Found via robhahn

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Politics and religion, issues not worth touching with a 100 foot poll for me.  But I want to dip my toe in to the pool to make a small point.  I have written and deleted this post a couple of times.  It was harder to write than I thought but here’s my shot.

I got mad after I watched Food, Inc a week or two ago.  In 13 states they have made it easier for food producers to sue their critics for libel.  But libel laws already exist.  Why do should they get an easier burden of proof than anyone else? Either we voted for the law or we voted for the lawmaker who voted for these laws.

So here it is plain and simple:  Read and learn about what you are voting on.  Don’t just follow your party lines.  Don’t just follow your ideologies.  Think it through and don’t let commercials do your work for you. Make an informed decision. A vote shouldn’t be a trivial thing.

JFK (I believe fought his own party) to make tax cuts and, ironically in retrospect, the Republicans called it irresponsible at the time.  Decades later Ted Kennedy wanted to ignore that the tax cuts worked.

Massachusetts had been Ted Kennedy’s state for 46 years and Elizabeth Coakley thought she could walk in to Ted Kennedy’s seat without even trying just because she was a Democrat and Obama had carried the state by 26 points over a year ago.  Oops.

Lastly, I read an article in the Portland Magazine about a woman who felt it was her civic duty to be a juror and not try to get out of it like you hear people talk about so often.  She didn’t like what she saw from the other jurors and she came away from it thinking she never wanted her fate to be in front of a jury because of what she saw.

As you make your decisions to vote, are you making them with the intent and knowledge that you would want others to have if you had written the measure?

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Here is a link to the full report.

The 4th quarter of 2008 was dismal and it continued through the 1st quarter of 2009. The fact that we sold 187 less homes in 2009 than 2008 shows that we stabilized those bad times. Time will tell if the stabilization holds but there is hope. I still don’t see a V shaped recovery.

I would love comments on the video. I want to know if anyone finds it better than just rewriting the information on a post.

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If you don’t know what is going on with NBC, Jay Leno, and Conan O’Brien, you might count your self a little lucky.  It is better than any “reality” show out there but it is tedious because it seems to be about a spoiled millionaire, Jay Leno, for the most part who in effect changed his mind about retiring..

So how do I tie this in to the Late Night debacle? Jay seems to be returning to 11:35 and Conan was asked to be pushed to 12:05.  Conan said no and that he respected the institution that is “The Tonight Show”.  There was also a belief that NBC didn’t have the right to move him otherwise it was a breach of contract and he would still get 60 – 80 million dollars.

Now there are reports that he doesn’t have that 11:35 time guaranteed in his contract – and that might be costly.  Who would have thought there would be a scenario that he needed to have that in a contract. When else has “The Tonight Show” aired without being bumped by sports or breaking news?  I would have never expected they would bring Jay back to the time they forced him to leave.

Real estate is a little backwards but typically negotiations take place and then a contract is written. Contracts are to enforce what everyone wanted and agreed to do in the first place.  So by leaving something out, just because it seems understood, it can bite you when someone gets desperate much like NBC is right now.

Do the drapes come with the house?  How clean will the house be when possession occurs?  Is there a walk through prior to close written in?  If you want it, write it in.

And this is for all contracts.  In my mind a contract is to enforce what everyone was thinking the day the contract was drafted.  As time goes on view points change and people may become desperate it keeps everything in line.  Protect yourself.

Just for fun: Jeff Zucker, NBC honcho, had Conan arrested in the 80’s and stared him in the face while it happened.

photo via I’m With Coco

Mike Rohrig, Broker

Beaverton Realtor

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Spruce up those stand up lights which are usually inefficient and run to hot.

Add some efficiency to your home with Energy Star @ Home.

Make a Home Fire Plan.

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