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Negotiating Mistakes Kill Deals

I’ve seen many negotiating mistakes over the past few decades, but the worst negotiating mistakes actually killed deals entirely. If you’re a buyer, how you negotiate is critical to reaching mutual acceptance, but if you have a seller who does not know how to negotiate in this market, you may have to walk away.

Negotiating Mistakes Kill Deals

Negotiating mistakes come in all sizes and shapes, but often the seller has an inflated opinion of the value of their home. That plays out like this. A seller will ask their listing agent to do an evaluation of their home, which includes a CMA, or a comparative market analysis. Many sellers have strong personalities that overpower the listing agent’s personality. That can result in their agent going along with an inflated listing price. But it’s very subtle. In other words, neither the seller nor the agent are intentionally over pricing the home. In an area like Sequim, many of the custom homes do not have comps that can establish the fair market value, and a seller always wants as much as they can get, so they price it higher rather than lower. They don’t want to leave any money on the table, and that is understandable, but listing substantially over the market is a set up for failure.

Negotiating Mistakes

First, the seller convinces themselves (with the enabling help of their listing agent) that the house is worth more than it really is. So when a buyer comes along and makes a realistic offer much closer to true fair market value, the seller will feel insulted or tell their listing agent they will not accept a “low ball offer,” even though it really is not a low ball offer. (more…)

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From Offer to Mutual Acceptance

A lot can happen from the offer to mutual acceptance. Today I want to share the tip of the iceberg on that process from the time of the offer to mutual acceptance. Entire treatises have been written on this subject and the nuances involved through each step, so bear with me as I try to compress thousands of pages (and 40 years of my own experience) into a 500 word article. I’ve had some complex negotiations, and some clients want to learn how things work while it is happening.

Mutual Acceptance

Offer to Mutual Acceptance

Drafting an offer on your next home involves getting the offering price right and the terms right. Regardless of the listing price, you need to know true fair market value (FMV), and your offering price should be based on the FMV and the current inventory, and of course, supply and demand. And if you don’t know how to construct the best terms that a seller will be able to accept in the local market, you may never reach an agreement.

The process goes like this: 1.) the offer, 2.) the seller’s response, which could be acceptance, rejection, or a counteroffer, and if the seller counters, 3.) the buyer’s response could be acceptance of the seller’s counteroffer, or a counter to the counter.

If a seller counters, he has rejected the offer, and is making a new offer to the buyer. That means the price and terms, and all the deadlines in the original offer are dead and not part of the seller’s counteroffer. If the buyer makes a counteroffer to the seller’s counteroffer, the buyer is rejecting the seller’s counter, and putting a new offer on the table. 

Mutual Acceptance

The terms of a buyer’s offer may include contingencies, such as a financing contingency, a home inspection contingency, and maybe even a contingency on the sale or close of the buyer’s own home. 

There are a variety of specific terms under each of these scenarios. There is the potential of a “bump clause” in which the seller is entitled to accept a second offer and the buyer has to match the terms of the second offer or their offer is bumped and terminated. There are potential backup offers, and the buyer will have a number of options regarding his due diligence from the time of mutual acceptance to closing 

What I’ve learned is that some of my buyer clients trust me to handle the contract language and processes from the offer to mutual acceptance, other clients have some questions during the process, and still other clients want to know every single detail and are full of questions.

As a buyer, you don’t need to try to learn everything a professional has learned over a period of decades, but I do recommend that you carefully select your Realtor, because if your Realtor is going to do a good job for you and get you to mutual acceptance and beyond, your Realtor needs to be darn good. Just because someone has a real estate license, or just because they’ve been a Realtor for a while does not guarantee they have the requisite knowledge and experience. [Read more articles on various aspects of Negotiating.] You can also learn more about specific steps of the process by using the drop down menu at the top of this blog where you’ll find thousands of articles written specifically for buyers by a Sequim Realtor and Attorney (Ret.).

The process from the offer to mutual acceptance is full of traps for the unwary, and it is a complex process. There’s a lot at stake, mostly your money and the rest of your life, so I recommend you make sure you get it right.

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Unmanaged emotions during the purchase or sale of real estate can create tremendous stress, and it can even kill a transaction. Far too often unmanaged emotions hinder the parties from achieving a common goal, which is getting to closing.

Unmanaged Emotions

Examples of Unmanaged Emotions

I’ve had buyers who experienced frustration when there was a delay that they attributed to bad motives on the part of either the seller or the other Realtor. A client who has unmanaged emotions can fall into the trap of false accusations against another party in the transaction, and that’s when unmanaged emotions become destructive to the relationships.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Mark Twain

Short sales are complicated transactions, and require a great deal of patience on the part of buyers, because the closing date cannot be set with any kind of certainty. I had one short sale that took 353 days through no fault of my buyer or myself as the buyer’s agent, and through no fault of anyone else. There are many independent parties involved in a short sale, including other banks (sometimes several banks), their independent attorneys, the seller who must cooperate with all the independent parties who all require separate documentation, and there is often a bankruptcy trustee, which makes things even more difficult. There is also the short sale negotiator, who like the other parties is somewhere in the country far away from everyone else. Coordinating a complicated short sale is like playing three dimensional chess, although the buyer and the buyer’s agent do not have control over the other parties or their individual timelines and legal responsibilities to their own clients. (more…)

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In Real Estate Knowledge is Power

Knowledge is Power. We all know that, but the statement that knowledge is power is so true in real estate transactions, I’ve seen it translate into tens of thousands of dollars. I’ve also seen lack of sufficient knowledge kill transactions. I’ll tell you exactly how this plays out.

Knowledge is Power

Knowledge is Power

If you are a buyer who wants to be in the strongest possible negotiating position when you make an offer on a home, you would want to either know or have a buyer’s agent who knows more about these subjects than the seller and the seller’s Realtor:

  1. how much to offer based on true fair market value (not the listing price);
  2. how to respond to a counteroffer;
  3. human behavior in negotiating (predictability);
  4. real estate contract language and addendums, and the legal meaning, options, and timelines;
  5. due diligence, including inspections (home, well, septic);
  6. financing timelines;
  7. construction quality, HVAC systems, irrigation systems, septic and well systems;
  8. common problems as well as uncommon problems and how to deal with them; and
  9. an understanding of other Realtors’ thinking and behavior.

Why Knowledge is Power

Why is it that knowledge is power when you are buying a home? Drop the knowledge meter on any or all of these subjects listed above, and you suddenly are at a huge disadvantage.

I’ll use an analogy that is close to home. My son, Bristol, is a mixed martial artists, and a very good one. He has fought in the UFC and wore a championship belt. Pound for pound at either 170 or 185 pounds, he is one of the most dangerous men in the world. In sparring sessions, he has taken down world champions like Randy Couture, Victor Belfort, and many others.

So imagine someone getting into the cage to fight Bristol, but what if that person only possessed a fraction of Bristol’s knowledge on wresting moves, submission techniques, striking, jujitsu, kick boxing, and what if that person did not have the same cardiovascular conditioning or the strength? Who would have a massive advantage? Bristol would, of course.

When you’re ready to have your buyer’s agent draft your offer, are you certain you have the advantage in all necessary areas? Of course, every Realtor will claim they have this knowledge in all areas, but that would be like any amateur claiming he could win a fight with Bristol. Like most specialities, knowledge is power, and that knowledge can make all the difference in the world. I can assure you in real estate transactions knowledge is power.

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What Makes Negotiating Hard?

Negotiating for the best price and the best terms when you buy a home is often fraught with uncertainty, and it can be a tough job. Most buyers in the middle of negotiating will say that it is stressful and sometimes frustrating. So what makes negotiating so hard?

Negotiating

Negotiating Can Be Hard

There are many aspects to negotiating a real estate transaction, but there is one variable which can add to the difficulty more than any other. After I tell you, it will be obvious, but many would miss this. The biggest variable working on your side of the negotiating table is your negotiator, and in real estate that would be your Realtor. Let me share some real world scenarios.

Keys to Negotiating Successfully

When you have a reasonable buyer and an experienced and professional Realtor on one side and a reasonable seller and an experienced and professional Realtor on the other side, you have what will be a rational and good negotiating effort. Alas, rarely does a real estate transaction give us the perfect template.

A seller may be a reasonable person, but if that seller is getting poor advice from a Realtor, the negotiating may come to a sudden end. A seller may be reasonable, and their Realtor may not be giving poor advice, but if their Realtor is inexperienced in negotiating, he/she may still chase the buyers away with inappropriate demands or excessive delays, or a buyer may pay too much.

The negotiating experience of Realtors ranges from 1 to 10 on a scale of 10 where 10 is the most experienced. What level of experience would you demand when it comes to spending several hundred thousand dollars of your hard earned money? Many buyers hire a level 1 or 2 or 3 because they don’t do any research. Be careful. It’s your money. Why not find the 9 or 10 and hire him/her.

If there was a single reason to hire the right Realtor, it would be negotiating skills. Everything else depends upon getting mutual acceptance, and if you don’t get that, nothing else matters. Negotiating effectively is everything.

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Negotiating the Best Price

There is much more to negotiating the price on a real estate transaction than meets the eye. Negotiating price and other critically important terms in your transaction is full of traps for the unwary buyer. My father told me when I was only 14 years old, “Never assume you know something you do not. It could cost you your life.” I grew up in a cabin in one of the coldest regions in Alaska, and my father was talking about the dangers of living in the harsh climate of Alaska. In the ’60s and ’70s we saw many cheechakos travel to Alaska from the “lower 48” assuming they knew enough to survive the cold and the wilds of the Last Frontier. Some did not survive. Others lost everything and went home. Granted, buying a home in Sequim or Port Angeles is not like surviving in the Alaskan wilderness in a cabin for a full winter. But assuming that you are a master at negotiating the purchase of real estate (if you are not) could have its own disastrous consequences.

Negotiating

Negotiating Price

Negotiating to buy your retirement home, presumably the last home you intend to own, requires knowing several very important pieces of information. To effectively negotiate, you must start at the right price (within a range) and with the right terms. That means having a good grasp of property values and fair market value for a home like the one you want to buy, and how to evaluate the listed price. Starting from a position of strength means you will need to know the strength or weakness in the market for homes like the one you want to buy. It means knowing the specific area where this home is located, the issues of concern that may arise in that area regarding drainage, well water, and septic systems. Don’t forget to consider Internet access, since not all homes have high speed Internet, and you’ll want to know how many bars Verizon gets in that area. After all, who can survive without cell phone coverage? But there are a hundred issues to consider when buying real estate, and all of this must be part of your repertoire of knowledge and experience. If they are not, you negotiate from a position of weakness and with a huge disadvantage.

Negotiating Like a Pro

There are many due diligence issues that need to be addressed to protect you from buying a nightmare. At this phase in your life, you definitely don’t need to get involved in a financial disaster or a legal battle with the seller. If issues do come up during the home inspection, the well or septic inspection, or your own due diligence on other issues, you must know exactly how to handle the negotiating on those issues.

As a buyer, if you have a lifetime of experience negotiating real estate and are familiar with local issues, you are ready to start negotiating. But if you do NOT have a lifetime of experience negotiating–specifically real estate–don’t start negotiating without an expert in your corner. There’s too much money at stake–your money! You never have to worry about underpaying. Sellers do not underprice their homes. But you do have to worry about overpaying. Sellers want you to overpay, and Realtors all make a commission at any price.

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Why Negotiating is Not for Amateurs

I’ve written on this real estate blog about negotiating price and the importance of knowing what you’re doing when you draft an offer and negotiate the price. Not only can it mean the difference between reaching mutual acceptance with a seller or killing the deal, it can also mean tens of thousands of dollars to you. 

Negotiating

Negotiating – Mistakes People Make

Experienced negotiators have seen many patterns of behavior over the years, and they learn all the nuances of negotiating. Amateurs think in simple terms, like take the listing price and offer 5% less. Or amateurs assume if a listing has been on the market for 100 days that the home is overpriced, and its time to make a low ball offer. There are a hundred immature and dumb negotiating approaches I have seen people and their agents take over the last three decades. The crazy thing is they are totally confident they know what they’re doing. That’s the problem with knowing just enough to be dangerous, and it can cost you a lot of money.

Today I’ll share one example of what I’m talking about. Realize that this is one of hundreds of examples, so you will see why I say negotiating is not for amateurs. I represented a buyer who spent a lifetime working as an engineer. The seller who was represented by another agent was a very creative artist. So when we went into the negotiations what did I know, and what could I anticipate? (more…)

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Should I Make a Backup Offer?

Should you make a backup offer if the home you want is already under contract? For many transactions, making a backup offer would be a waste of time. Approximately 97% of the offers I write for clients close, but there is a small percentage of cases in which making a backup offer could make sense.  I have some very happy buyers, and their recent transaction is a perfect example of when a backup offer can actually get you the house of your retirement dreams.

Backup Offer

                                 Image courtesy of Photostock/FreeDigitalPhotos.net

The Backup Offer

A couple wrote an offer on a Sequim home contingent on the sale of their California home. They were sure their California home would sell quickly, because that local market was very hot. The offer in Sequim was accepted and the transaction was classified as pending. Meanwhile, another couple from California also fell in love with this Sequim home, and they wrote a backup offer. They were also from California, but their backup offer was not contingent on the sale of their home. The first offer was bumped by the contract language, and Voila! my buyers who submitted the backup offer stepped into first position and got their dream home. Of course, there is a happy couple (my clients), and there is an unhappy couple (the bumped buyers). How does all this work, and how can you know if a backup offer makes sense?

Backup Offer Wins for 2nd Buyer

Whether writing a backup offer makes sense is a question your Sequim Buyer’s Agent really needs to be able to analyze and answer for you. There are several important issues to take into consideration. In addition, the contract language and the process of getting a backup offer into first position and bumping the other offer is very specific and must be followed precisely. And if you are writing an offer that is in first, you want to make sure that you don’t draft your contract so that you can be bumped, if possible. The full explanation of all the contract language that applies and it’s interpretation, and the process and timing of each step is beyond the scope of this article, but suffice it to say, you must do it right in order to succeed.

My 20 years as a real estate lawyer is experience that my clients often remind me is not wasted, especially when it comes to dealing with complex contract language and a backup offer.

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Making an offer can be challenging. A buyer found their perfect home in the Sequim area. This was long in coming, because they had spent months searching and filtering on one of the best Sequim MLS sites, and finally identified one special home with a great water view. It needed some work to make it their ideal retirement home, but they decided to pursue this one. As my clients, they talked with me on the phone about this home over a period of a few weeks, and early in the conversations I went to the home to preview it and called them back to tell them exactly what I saw. They planned a trip and came to Sequim to see it and confirm that it was everything they wanted. They did that, and then considered how they might make an offer and how much to offer. They ultimately made the offer a week later. Just before emailing it to the listing agent, I checked the MLS status, and low and behold, it had just sold. What a disappointment for my clients.

Offer

Getting Your Offer in Before Others

Finding a home you want to buy is a large task, and making an offer is a big decision. Clearly you should do these carefully and with all due diligence. One should never get in a rush, because that’s when mistakes are often made. But the biggest variable in the entire process in the current market is the possibility of another buyer making an offer and getting it submitted before your offer. During most of the recession, this was not a great concern, but in the current market, we are seeing this happen periodically. 

The Status of an Offer

I think wisdom would suggest that once you find that ideal home, do what you need to do to promptly to draft and submit your offer as soon as practical. If someone else gets an offer in before you do and their offer (or counteroffer) is accepted, there is a low probability the first offer will fail and you could come back with your offer, but in this market I would not count on that. If you miss an opportunity, it’s time to start looking again. Don’t forget that you can look up the status of a property every day at Sequim-Homes.com by looking specifically at the “status” field, which will show you if the property is “pending” or “active under contract,” which is the same as pending. If the status is “active” you can still make an offer.

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Real Estate Prices and Why Sellers Struggle

Real estate prices are working their way back up slowly in many areas of the country, including Sequim and Port Angeles, and more rapidly in other hot markets (like some southern California markets). In areas like Sequim where real estate prices have not leaped upward, sellers are still struggling with listing prices and selling prices. This article is not about the obvious. For example, sellers in a recession always want more than they can get and they lament how much they are losing on their home. We all get that, and that is the obvious. The less obvious is how sellers negotiate when they’ve reached their threshold of pain.

real estate prices

Negotiating Real Estate Prices

Let’s take a broad brush and paint a typical scenario for sellers who listed their home with a Realtor during this recession. The original listing price was almost always a little above what the market would bear. In other words, the listing price was somewhat above fair market value in the market at the time they listed. There are two major reasons the listing price is so often above the selling value. First, some sellers don’t ask their Realtor–they tell their Realtor how much the listing price will be. Second and more often, Realtors are under tremendous pressure to outbid other Realtors for the highest listing price just to get the listing. (more…)

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Homes Are Selling

Wow, Sequim homes are selling. We are approaching what I would call a hot market. It remains to be seen if this is a short term or long term trend. For now homes are selling better and faster than they have during the entire six year recession. 

Homes are Selling House2 House3 House4

Homes Are Selling

Many homes are selling in Sequim and in Port Angeles, and these four are pending. The selling prices of these four homes ranges from $292,500 to $670,000. Prices appear to be creeping upward because of the demand. We are a long way from being able to say that we are in a long term recovery in the Sequim real estate market, but since homes are selling so much quicker and in larger numbers than in many years, I think it is fair to say that we appear to be in the early stages of a recovery.

What This Means – Homes Are Selling

For buyers this means that when you find the ideal home, draft the offer and get it submitted. Don’t dilly dally, and don’t play hardball with the sellers on minor details. Negotiate your best price, but beyond that, be careful about trying to press the seller to repair small items that show up on the home inspection report, because the seller may have one or two backup offers at higher prices, and the seller may actually be hoping you terminate the transaction.

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The KISS Principle: Keep It Simple Stupid

The KISS principle of keeping things simple when it comes to buying real estate is a guiding principle for me and my clients. It’s more important than most people realize.  I’ve identified three major reasons this is true for you if you are going to buy a home or land in the Sequim or Port Angeles area.

The KISS Principle

The KISS Principle and Sellers

First, complexity can confuse the seller.  Anytime you negotiate with a seller, too many issues or too much complexity can cause a seller’s mind to blow a fuse.  They try to comprehend, filter, balance, and mentally compute the possibilities and consequences of various responses.  The default response for a seller who is not 100% sure of exactly what the details of an offer will mean to them is to reject it.  Complexity can lead to a “no,” or an outright rejection, or an unreasonable response.  By the way, complexity doesn’t necessarily mean the terms of your offer are really complicated.  Complicated to the seller is anything that does not live up to the KISS principle, anything that could push a seller not to sign.  How the offer is drafted and the complexity, or how much you stick to the KISS principle really depends on your real estate agent, doesn’t it?  (more…)

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Are Sequim Homes Getting Multiple Offers?

The news around the country is that some real estate markets are getting hot and multiple offers are not unusual, and that some homes are being bid above the listing prices.  What about Sequim homes?  Are Sequim homes receiving multiple offers?

Multiple Offers and Competition

Sequim homes are not receiving multiple offers like some areas in the San Diego area or around other parts of the country, but here is where we are seeing buyers get beat out of their offer on a Sequim home or a Port Angeles home.

The ideal retirement home goes on the market, and by ideal I mean it is in a very nice location with some privacy, the home is a newer home in great condition, the floor plan is fantastic, and the price is really really good.  There are not many homes like this in the entire Sequim and Port Angeles market, so when this kind of home shows up in the MLS, buyers who are watching the new listings on my online Sequim MLS site (listed in the last 14 days), are ready to make an offer.

Multiple Offers for the Perfect Home

I have had several buyers who decided to make an offer on a home only to find out that another buyer made an offer the same day or the prior day, and the other offer was slightly better, i.e. full price.  Most of these cases involve buyers who took too long to make a decision, days or even weeks.  What a disappointment for a couple who find the perfect retirement home and someone else buys it out from under them.!

The point I share with clients is that when you see an extraordinary home with a very reasonable listing price that is at or below fair market value, don’t fool around.  Make a full price offer, and do it now.  You can make a lower offer, of course, but you increase the chance that someone else will make a full price offer, which is happening a lot lately for these ideal homes.  I would say six of my buyers have lost their homes because they did not do this.  This is not an effort on my part to get clients to make full price offers on homes that are listed too high.  You’ve got to know market values and have the experience to discern a good deal when it shows up.  Then you’ve got to take appropriate action before it is too late.  Do not procrastinate when you find the right home in the right area at the right price, because you might learn about multiple offers first hand.

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Should I Buy a Home by a Freeway?

A home by a freeway is listed in the MLS, and the question is should you consider buying a home by a freeway?  I have two concerns on this subject that I think are relevant for buyers.  My first concern is the home by a freeway that is listed at the same price as a home in a quiet area miles from the freeway.  My second concern is the home near a highway that could become a home by a major freeway.

Little Home by the Freeway

Home by a Freeway

This photo shows current construction on the freeway between Sequim and Port Angeles.  What was a two lane freeway (Interstate 101) will soon be a four lane freeway.  This home was invisible from the highway for many years, sat well above the two lane noisy traffic with a large mound of dirt and a thick hedge of trees and vegetative growth sheltering it.  Suddenly this homeowner is looking down at the new freeway under construction from the back deck and from all the back windows of the house.  This home is no longer sheltered from the noise of traffic, and any thoughts of privacy in the back yard have gone poof.  Little home by a freeway is now little home no one wants.

Home by the Freeway Passing Lane

Are homes by a freeway worth less than a home in a quiet neighborhood?  Absolutely!  Supply and demand prices such homes at substantially less value.  The surprise for me and so many buyers is that sellers often list their home by a freeway at the same price as a home a mile away in a quiet area.

Sweet Quiet Home by the Freeway

Noise is a factor for many buyers who are retiring to Sequim.  I did recently sell a home adjacent to the busy Sequim-Dungeness Road, and my buyers told me they didn’t find it bothersome since they had lived near a Los Angeles freeway for 30 years.  Okay, but they are definitely in the minority of folks moving to Sequim who do consider a home by a freeway to be less appealing.

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A cash offer does have an advantage in the Sequim real estate market.  The reason is not because the seller gets a higher price. They do not.  And whether the offer is a cash offer or includes financing, the seller still gets paid in full at closing.  But there is an important reason a cash offer is more attractive to a seller.

Cash Offer

Cash Offer Picking Up

In Oakland, California homes are receiving multiple offers above the listed price.  In one story, after nine offers by a buyer in which she was outbid by other buyers, a woman paid $100,000 more than the listed price to get a home.  See the video here. A third of the buyers in Oakland are going with a cash offer.

Cash Offer in Sequim

Sequim is not Oakland, but I’m drafting a cash offer for one of my clients on a regular basis this year.  With the real estate market getting hot in many other areas of the country, retirees who sell and move to Sequim are coming with more cash than in past years.

Cash Offer Advantage for Buyers

The main reason a cash offer appeals to sellers is because it eliminates the need for the lengthy loan application process, the entire appraisal process, and the bureaucratic underwriting hurdles.  A transaction can be killed in any one of those processes.  A cash offer can be closed sooner as a result.  In other words, a cash offer reduces uncertainty for sellers, and that is an advantage for a buyer who is in a position to make a cash offer.

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Is a backup offer a good idea?  If you’ve searched for your next home for many months before coming to Sequim, and you go out with your Sequim Buyer’s Agent and look at 6 to 12 homes and find your ideal retirement home, you would be quite disappointed to find out your perfect home just sold.  So the question you may ask your buyer’s agent is, “Should I make a backup offer?”

Backup Offer

Sold – The Backup Offer

A backup offer can be submitted when there is an accepted offer in first place.  If the backup offer is at least as good or better than the first offer, the seller will be inclined to accept your backup offer.  If the buyer in first backs out or if the appraisal or underwriter kill the transaction, your backup offer automatically steps into first position.

The Backup Offer – Waiting Impatiently

A backup offer could be a waste of time, and 95% of the time, it would be.  In Sequim sellers are not accepting offers unless the buyer is pre-qualified with a loan officer and has a good story about their job and their (retirement) income. (more…)

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How much your monthly mortgage payment will be is often one of the primary factors in deciding how much of a home you can afford.  Today I want to look at how interest rates effect how much you pay for a home.  Understanding how current mortgage rates effect price can substantially improve the quality of home you purchase without compromising your financial security.

Mortgage Payment and Interest Rates

Interest rates are at historically low levels, and 3.5% is a good fixed 30-year rate.  Any rate under 4% is pretty amazing.  This is more significant than many people realize.  I remember when the interest rate on a 30 year loan was 11%, and you may remember this:

As Jimmy Carter stepped before the television cameras . . .  his task was not just to proclaim another new anti-inflation program but to calm a national alarm that had begun to border on panic. Inflation and interest rates, both topping 18%, are so far beyond anything that Americans have experienced in peacetime—and so far beyond anything that U.S. financial markets are set up to handle—as to inspire a contagion of fear.  [Time Magazine, March 24, 1980, read Jimmy Carter v. Inflation]

Mortgage Payment Comparison

We love low interest rates, but here’s how incredible 3.5% is for buyers today.  Let’s do a quick comparison on a $300,000 loan with a 30-year fixed rate loan at several different rates. 

At 11% the monthly mortgage payment was $2,857
At 8% the monthly mortgage payment was $2,201
At 6% the monthly mortgage payment was $1,799
At 3.5% the monthly mortgage payment is $1,347

Wow!  What a different a few points can make on a mortgage payment!  This is why I have emphasized in previous articles the extraordinary significance of these low interest rates for buyers.

Mortgage Payment

I share this analysis, because the majority of retirees who move to Sequim find that the maximum price they want to budget for their ideal home is often just short of the price of the home they really want.  Among hundreds of retirees I’ve worked with over the past 18 years in the Sequim and Port Angeles areas, many find that the home they want is $20,000 to $50,000 more than their preset maximum price.

Your Mortgage Payment and Quality of Life

A lot goes into financial planning for retirement, and a preset maximum price may have a lot of solid planning behind it.  That I do not doubt.  My point here is that with interest rates so low, we should consider adjusting the financial planning template we used when mortgage interest rates were much higher.  Now with such low rates, and therefore with the possibility of a low mortgage payment, retirees can afford to increase the purchase price of their home a little, and end up with the retirement home they really want.  Many retirees tell me their retirement home in Sequim or Port Angeles will be their last home, and they tell me that they are willing to pay $20,000 to $50,000 more and have the perfect home for the last years of their lives.  At such low interest rates, this makes more sense now than it has in three decades.

I believe everyone should do careful financial planning, and never exceed one’s financial ability to manage income and expenses into the retirement years.  But I also see many clients wanting the ideal retirement home, which is a little more than they budgeted before they arrived here to look at homes.  Most of us tend to think of what we can afford based on the interest rates we’ve observed most of our adult lives.  I believe interest rates will go up soon and never reach these low levels during our lifetimes again.  So this is what you could call a “window of opportunity” for retirees at this point in time.  It will pass soon.  This could mean that right now you can afford more of a home than you originally planned.  It could also change the way you negotiate for the perfect home.  You may not want to walk away from a negotiation if it means you get the the home you really want for only $45 more per month in your mortgage payment.

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How to Make a Counteroffer

Let’s talk about How to Make a Counteroffer.  There is a huge mistake I see sellers making through their agents.  This mistake is as old as real estate, but it’s still popular.  If you’re a buyer who will be making an offer on a home, it might be helpful to know what to do if this happens to you.  If you’re a seller, you don’t need to make a common mistake some sellers make when they receive an offer.  Offers are so few and far between these days, you cannot afford to make a mistake and chase a buyer away.  Knowing how to make a counteroffer could save your transaction.

How to Make a Counteroffer

How to Make a CounterofferBelieve it or not, some sellers who are lucky enough to receive an offer in this real estate recession reject the offer and do not even make any kind of counteroffer.  They literally kill the transaction by letting it die at the first offer.  So what could a seller (and perhaps their agent) be thinking when they reject an offer and make no counteroffer?

If a buyer makes an offer that is substantially less than the seller is asking, a seller might think he knows how to make a counteroffer by not making one.  In other words, some sellers think it is an intelligent negotiating tactic to simply reject a low offer with no counter.  There are two reasons a seller will justify this thinking.  Some will take offense at an offer they think is too low.  This is a mistake.  (more…)

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Negotiating the price when you are buying a home is the first of several negotiations in the process.  Negotiating price involves an initial offer, a counteroffer, and often a counter to the counter.  Beyond that, once mutual acceptance has been reached, there will be inspections of the septic, the water systems, and the home itself.  Issues raised during any of the inspections will typically result in a request for repairs or credits.  This kind of response often results in a counteroffer on the conditions of repair or credits.

During this process of dealing with inspections, there will normally be an expert well/water inspector, an expert septic inspector, an expert home inspector, and if there are negotiations for repairs or credits, there may be additional third-party inspectors to get accurate and unbiased estimates.

How you and your Realtor handle these issues in the ongoing negotiations will result in final mutual acceptance and closing, or the parties will get frustrated and someone will issue a notice of termination.  The professionalism and experience of the Realtors on both sides are the major factor during this phase.

If you are buying your home (or land) in Sequim or Port Angeles, I strongly urge you to hire your own Buyer’s Agent, because negotiating to buy your home can involve several phases of negotiations, and the successful negotiation will involve knowledge of the specific real estate issues, an understanding of how to negotiate complex conflicts, and a keen ability to draft unambiguous language that will get you to the closing table.

Chuck Marunde is a Buyer’s Agent and can be reached at chuckmarunde@gmail.com or by phone at 360-775-5424.

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Negotiating Sequim real estate prices or the terms of a transaction involves some key elements to arrive at a final agreement.  But I have come to realize that there are two critical components to a successful negotiation, and if you are missing one of these, your transaction may go up in flames.  You or your Realtor must be good at both of these.

Good written communications are an absolute requirement to effectively negotiate the price and terms of a real estate transaction.  Honestly, I’ve learned this from the school of hard knocks, mostly from negotiating with opposing parties who are horrible at written communications.  Imagine for a moment that you are a buyer negotiating to buy a home in Sequim or Port Angeles.  Now imagine that the seller or the seller’s agent has drafted ambiguous language in an addendum addressing an important issue.  As you often end up with counter addendums and a counter to the counter, a poorly drafted original addendum is like building a house upon a weak foundation.  The potential problem of dealing with bad language just gets worse.

(more…)

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Chuck E. Marunde, J.D.

Founder and Broker of
Sequim & Port Angeles Real Estate dba iRealty Virtual Brokers
435 W. Bell St. Suite A, Sequim, WA
(360) 775-5424
ChuckMarunde@gmail.com
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Who is Chuck Marunde?

Chuck Marunde is the #1 Sequim Buyer's Agent, having sold more homes (by volume) to buyers than any other agent or any "team" of agents for the past seven years. He is the author of thousands of articles for buyers on this real estate blog, and he is the author of several real estate books for buyers and one for sellers. He is the creator of many free tools that buyers use and love every day. He is recognized as a national expert on real estate transactions, marketing, and negotiating. Please schedule your appointment to view homes with Chuck well in advance of arriving in Sequim.

From Los Angeles

It's rare, but once in awhile life provides the perfect collaborator for an important endeavor such as buying your new home. For me that person was Chuck Marunde. His two decade background as a Real Estate Attorney, his prolific career as an author of articles and books on Real Estate and his forthright and moral character made choosing Chuck a no-brainer. Chuck is dedicated, thorough, incredible at the negotiating table, knowledgeable about all local laws & regs but, most importantly, Chuck loves what he does. And what he does is find his client the perfect property. Chuck isn't about making the sale, he's about making the sale that is OPTIMUM for his CLIENT and this makes Chuck a rare bird indeed. I love my new home in Sequim and I am indebted to Chuck for making it happen. Kevin E.

From Seattle

I’ve had the pleasure of working with Chuck over the past three years in selling my parent's estate. It was a tough time to sell during the housing recession, but Chuck always kept things on the positive side. With his real estate law background, he offers sound, practical advice. He helps you along with the process using discussions and reason, rather than opinions and speculations. If Chuck doesn’t know the answers, he will get them for you. In several instances, Chuck took the initiative to meet with county officials to get up-to-date facts about zoning and regulations. I was always impressed with his company’s tech savvy communi-cations and internet presence: weekly email updates, blogs, videos, links, Linked-in networking, etc. He is truly pioneering the future of buying & selling real estate. Brian M.

From Florida

We do our homework for the task at hand and we look for and expect to enlist partners that do the same. It was our good fortune to select Chuck Marunde of Sequim and Port Angeles Real Estate to represent us as a buyer's broker in our search for a home in the Sequim/Port Angeles area. Chuck's site is all encompassing and super fast compared to many others, he knows the market at every conceivable level and his guidance through the process of selecting and purchasing a home is priceless - above and beyond that of anyone with whom we have ever worked. Add to all this his 20 year background in real estate law and you have discovered a superb asset in the adventure of purchasing a home. Greg and Marilyn

From Gilroy California

As an out of state buyer unfamiliar with the area, it was important to me not only to have a real estate agent who knew the area well, but also one who knew the value of the properties. I chose Chuck because he is also a real estate lawyer and it is reassuring to have that extra degree working for you. I selected the houses I was interested in on line before taking a two day trip to Sequim to look at them in person. I sent my list to Chuck, who gave me feedback, then organized our tour so we could see 16 properties in a short time. He was very accommodating, driving me all over Sequim, and rescheduling appointments when we fell behind on our time. On day two, I found my home and we drafted an offer on it that evening. By the time I arrived back home on the plane the next evening, my offer had been accepted. Chuck was honest about what it would take to get me into my new home, while having my back the entire transaction. Since I was unable to relocate immediately after closing, he and his assistant Ade, have been taking care of many additional responsibilities for me. He was a pleasure to work with. Chris D.

From Corona California

The best decision I made, once I settled on Sequim as the ideal place to spend the rest of my days, was to hook up with Chuck Marunde as my broker/go-to guy. He happily took on the entire complicated merry-go-round associated with a long distance move that involved selling in Southern California (with a different agent) and buying in Sequim – all in the span of just over a month. The unexpectedly quick sale of my previous home was already a week into a 30 day escrow when I got to Sequim for my house hunt. We had two days to find my slice of heaven. And day one was less than stellar, each home having at least one major issue. The killer was the dream home that turned out to be an unmitigated disaster once we got inside. I was crushed. Chuck had his work cut out for him that night. And he worked his magic. On day two there was one beautiful possibility, but not quite right. Suffice to say, in the early afternoon we pulled into a driveway and the first words out of my mouth were “That’s my house.” 29 days later I took possession of my new home. Every sale has its issues, but throwing in the complications of a short escrow on top of 1200 miles of separation from all documentation, etc. gives new meaning to “challenging”. Thanks to his encyclopedic knowledge coupled with a great sense of humor, Chuck was able to keep me on an even keel when things got dicey. He knows when to step in and when to let it evolve. I cannot imagine making this move without him. Rebecca B.
Sequim Real Estate

From Bakersfield California

"During the months of February and March 2012, Chuck showed my wife and I over two dozen homes from Port Angeles to Port Townsend. We found Chuck to be very helpful, friendly and courteous. With Chuck there is no pressure; It is all about finding the best home for the buyer. As a Buyer's Agent, Chuck will give you his honest opinion of a property, including a fair market price. In one instance Chuck wrote up an offer for us which was accepted. Chuck was very helpful arranging for home and well inspections which involved multiple trips to the property. Unfortunately, escrow failed to close when, during the home inspection process, it was determined that a septic system repair was needed which the seller was unwilling/unable to make. We will continue to work with Chuck as there is no better Buyer's Agent on the North Olympic" Bert and Sally
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From Los Alamos New Mexico

"Over a year ago, during a visit to the Olympic Game Farm, we developed what we eventually called the “Sequim Syndrome.” We live in New Mexico and decided Sequim was where we wanted to live in retirement. On our second visit to Sequim, we met with Chuck and asked him to help us. Chuck's web site provides such amazing search capabilities. Chuck's site also contains a 1000 blog postings and a real estate video series detailing buying real estate in Sequim. We bought Chuck's book about Sequim real estate and set out to follow his advice carrying on an ongoing email and phone conversation with Chuck. Doing our due diligence “Marunde style” and using his MLS search site, we came up with about 50 homes that met our needs. We narrowed the list down to 15 properties that best met our needs. We came back to Sequim a third time with our list in hand, and Chuck spent two days with us showing us all the homes on our list. Not only did Chuck help us find that dream home, he spent time to educate us about the quality of construction, fair market values of various properties, home layouts, and the joys of Sequim living. We had a great time as we traveled from house to house. By mid afternoon of the second day, my wife said we had found “the house.” Chuck helped us draft our offer and sent our offer to the seller's agent. It turned out there was a second offer made on the property at the same time. Chuck's help to make a clean offer paid off. At breakfast two days later, we got a call from Chuck saying our offer had been accepted by the sellers. We are now back home in New Mexico. Chuck attends every inspection on our behalf, updating us at every turn by email and phone. Our dream home is becoming a reality because of Chuck and because we were smart enough to follow his advice. We absolutely would NOT have been able to do this without Chuck Marunde's expertise and enthusiasm. We recommend Chuck to everyone planning a move to Sequim, Port Angeles, or anywhere on the Olympic Peninsula. Chuck is a gold mine of information and expertise for home buyers everywhere, not just on the Olympic" Larry and Shirley
Sequim Real Estate Bookstore

From Sun Lakes Arizona

"We are ex-Washington residents who currently live in Arizona. We had been searching the Puget Sound area four years for a waterfront property to build a retirement home when we first contacted Chuck Marunde through his website. We had made multiple trips to various areas but most of the Realtors we contacted simply sent us an email, provided no follow up and did next to nothing to help us locate a property. On our first trip to Port Angeles, after connecting with Chuck, we purchased our dream property. We now own a high bank waterfront lot overlooking the Straight of Jaun de Fuca, and are excited to become part of the Peninsula community." Paul and Linda

From California

"Andy Romano is a successful motion picture character actor with over 40 years in 'the Biz.' Mr. Romano has a home in beautiful Santa Barbara, California, but he chooses to live most of the time in Sequim, Washington on the Olympic Peninsula in the great Pacific Northwest. Why? In his own words, 'Because it's even more beautiful and surrounded by more beauty in this incredibly peaceful and quiet place. With respect to real estate agents or brokers, well my friend Chuck Marunde, owner of Sequim and Port Angeles Real Estate, is hands down the best there" Andy R.

From Sequim

I’ve known Chuck Marunde for several years. My wife and I bought and sold one house through his services, and now have another listed through him for sale. Whether Chuck was representing us as the buyer or seller, I am confident he always had our best interests at heart. He helped us set or negotiate a reasonable price, and made sure there was a clear and open line of communication. He responded rapidly to email and phone calls and always knew the best person to contact for the various services involved in a transaction. I have worked with quite a few real estate agents and Chuck is right at the top of my list of good ones. Actually, Chuck is first and foremost just a good person, and he carries his personal honesty and integrity over into his profession. He has the greatest depth of experience in real estate of any agent or broker I have known. His years of practicing real estate law prior to becoming a broker are evident in the meticulous care he takes with the process and documentation. I am impressed by the way Chuck has integrated internet services into his real estate business. He probably knows more about this process than any other realtor in the country. In this tight market it is important to use every possible means to spread the word about available properties…to reach the few people who might be interested in a particular property. Steve L.

From The Netherlands

"We contacted Chuck about six months ago to help find a retirement property in Sequim. We had visited Sequim several weeks before and decided that this was the place for us to retire. We liked the friendly people and the natural beauty of the area. We had been looking for some time in other parts of the country - California, Oregon, North Carolina, and Vermont. In most of these other areas, we found real estate agents that were knowledgeable but did not follow up with us to continue narrowing down real estate possibilities. Once we were out of earshot, communications would stop. That is one of the reasons we were interested in working with Chuck. Besides having great knowledge of both the local real estate market and of law, his testimonials on the internet indicated a willingness to actively communicate with his clients. Chuck demonstrated this immediately. Even before we met, he responded very quickly and helpfully to any email question. After arriving for a second visit to Sequim in September, we finally met Chuck face to face. He was friendly, encouraging, and readily shared good practical information. We worked with him on a number of candidate properties - including an offer on a property while visiting that week. Although we could not come to terms with the owners on the final property price, we look forward to continuing to work closely with Chuck. He is an invaluable resource to help us identify and purchase the retirement property that's right for us." Paul and Virginia

From Fremont California

We can't say enough about working with Chuck Marunde. Luck would have it that we discovered his web site, spoke with him on the phone and had an instant feeling that we had found our realtor. And we were right. With Chucks help and expertise, our longtime dream to retire to the Pacific Northwest came to fruition with Chuck assisting us in finding the perfect home for us. Buying a home is always a big decision and these days can be complex with unexpected delays etc. In fact, our whole experience from offer day to closing, was very smooth. Chuck took all the time we needed to explain processes and made us feel at ease, even though we lived 800 miles away, tying up loose ends and getting ready for the big move to our new home in Sequim. We were impressed with Chuck's ability to listen to our needs and understand our concerns in buying from a distance. Chuck kept us informed all along the way, during the process and was so good at getting right back to us if we had another question. All went so well and Chuck really went above and beyond for us, taking time out from his busy schedule to assist us with some details regarding our beautiful property, even after the closing, because we were not yet arrived there. Without hesitation, our son and his wife will be contacting Chuck this summer, as they plan to follow us to paradise in this lovely town. Thanks again Chuck, for everything! Mary and Jerry

From Fontana California

My husband and I went to Sequim intending to interview several realtors to find one to help us locate and buy a home in Sequim. We knew we wanted someone we could trust and who would have our best interests in mind. Since we would be handling the transaction from S. California this was very important to us. We met Chuck and looked no further. We felt a connection right away and spent some time looking at homes together so Chuck could get a feel for what we wanted. Well, we left Sequim having made an offer on a home which the owner accepted. Chuck has helped us through the purchase process. We are positive it would not have gone so smoothly without his help. We give him 4 thumbs up. Wally & Cathy

From Tacoma

Chuck Marunde’s level of expertise in real estate investment is amazing. His knowledge, experience and legal training have given me a dramatic advantage in real estate investing. He works hard to stay on the cutting edge of real estate marketing, sound advice and value-added service for his clients. Kirk Wald, Financial Planner

From Wendell Idaho

My wife and I moved to Sequim six weeks ago, and prior to our move here I contacted Chuck Marunde and enlisted his help as our buyer's agent. Once we got here, it took us about two weeks looking at houses, and Chuck did a superb job of showing us places and letting us make our own decisions and guide us through the purchase of our home. We now completed our transaction and are very happy. We would recommend Chuck to anybody. Don & Marilyn

From Sequim

"Buying property either commercial or residential can sometimes be a tricky proposition. That’s why I would recommend Chuck to help you with purchasing or selling property. His background as a real-estate lawyer and his no nonsense to the point advice will help you make the right decisions. Experience and Integrity, what you need when you can’t afford to make a mistake. Dail Hurdlow, CEO, Hurdlow Enterprises

From Seattle

I am an experienced real estate buyer, but I am not from the Sequim area. I am somewhat flexible, realistic, but also particular. So the question was, “how do you choose the RIGHT real estate agent?”

I made my appointment with Chuck on a Sunday morning in March, 2013. He showed me 5 houses. Every house he showed me was within my parameters! I was amazed: a real estate who listened, did his research, and didn't waste my time showing me houses I would never buy! I made an offer a few days later. That was the easy part…

Buying a house is always a stressful time in life. Advice to Buyers: choose an agent who is competent, communicates well, and has exceptional follow-up and follow-through! You will spend a lot of time with your agent during the process. Choose someone likable. Go with your gut. I got to know Chuck during the process, and he's a great guy!

You need an agent who is competent to handle and help you negotiate the issues that come up during disclosure, home inspection, appraisal, etc. Chuck's competence is superb! I got truly professional, sound, straightforward advice.

Chuck's communication skills are exceptional: phone, email, fax. He has a wonderful ability to stay "on-point" with what is actually important and doesn't lead you astray on issues that aren't so important.

Chuck's turn-around time on questions, issue resolution, etc. was virtually always within 24 hours. He follows-up, follows-through. He does what he says he will do timely. This relieves a lot of Buyer stress!

Having a difficult time finding the right agent? Simplify your life! Choose Chuck Marunde. I did. [Name withheld by request]

Intro by Chuck Marunde

From Sequim to California

"In our Sequim real estate broker Chuck Marunde we found a Realtor who knew not only how to list a property, but most importantly, he knew how to sell a property. Chuck is very skilled in current technology and uses that skill to advertise your property nationally. We were very pleased with Chuck, his honesty and integrity." Jerry Levitan and Donna "Teva" Tetiva
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