THE EMOTIONAL SIDE OF REAL ESTATE

If there is one piece of advice we can offer to home buyers today, it’s that emotions seem to rule the day for some home sellers in today’s market. If you can recognize that there is a human being on the other end of the transaction who may be driven by emotion or irrationalities, you will be able to craft an offer and approach the results in a successful sale at a fair price.
As a home buyer, you may feel emboldened by what you have heard or read about today’s housing market in certain locales. Friends and family may offer up a variety of semi-educated advice about how to take advantage of the situation. Our experience with thousands of offers over the past few years has shown that overly aggressive up-front offers may reach a dead end, or backfire on you in later inspection negotiations.
When we represent buyers, our job is to get the property at the best possible price. That obligation is balanced by a competing factor, which is that we also must help you to actually get the property under contract. Having seen thousands of deals over the past few years, I can say with quite a degree of certainty that extreme low-ball offers are not the path to success with home sellers. A very low offer from a buyer with a large range of negotiability is almost certainly going to get a worse result than a more carefully thought out offer that involves less negotiation. Here are some of the emotional factors that may drive how a home seller negotiates with you.

1. Attachment to the home – Never underestimate a seller’s personal attachment to their home. If they’ve lived in it for years, brought up children there or celebrated other major life events in the home, parting with the home can be difficult. Many sellers have a conscious or subconscious desire to see the home passed to someone that they feel good about. They may make this judgment based on the offer terms you are presenting.
2. I’m offended – We've seen some of the most rational, data-driven creatures come totally unglued when presented with what they feel is an unfair offer. Sometimes they legitimately get their feelings hurt, as they perceive their home value differently than the buyer. Many times they just don’t think you’re a serious buyer. (Clearly you are, if you spent the time to write up an offer.)
3. My home is better than the neighbors’ – This is a tough one, particularly in fairly homogenous neighborhoods. Sellers may perceive their yard, lot location, or the finishes of their home as wildly superior to their neighbors. All you can do if offer up your own opinion and analysis of competing properties, but some gaps simply can’t be bridged. A private backyard may be worth $20k to one buyer and nothing to the next.
4. I just spent $70k on upgrades, so my house is worth $70k more – Recent upgrades were likely costly, and their memory is fresh in the seller’s mind. New countertops or updated bathrooms do legitimately add value to a home, but not on a dollar-for-dollar basis. Other upgrades like a new roof or siding may simply be maintenance items that add no measurable value to the home. They simply make the property more sellable. Try to step back from debating the value of individual upgrades and focus on the overall price of the home and how it relates to similar sales in the area.
5. I just lowered my price – There is a totally predictable psychology at work when a property is first listed and each time the seller makes a price drop. Negotiability in the first few days or couple of weeks is definitely limited.
6. Get to the point – Most sellers do not relish negotiation. It makes them nervous and uncomfortable. Craft an offer that will get you to your desired result in 2-3 steps at most. Any more than that, and I can almost guarantee that a seller will begin to feel that they are being taken advantage of or that they are being nickeled and dimed.
7. Don’t forget about the inspection – Unless you are buying a brand-new home, you are going to be worried about repair and maintenance items that show up during your home inspection. Buyers want perfection, and long-time home owners recognize that every older home has issues and ongoing maintenance items. If you beat a seller down too hard on price during the initial negotiation, there is not going to be anything left to give if your inspection turns up issues that you want fixed. We find that inspection negotiations can often be more contentious than initial price negotiations.

You should always try your best to negotiate a great deal on a house, but if you can put yourself in the seller’s shoes for a moment and acknowledge some of the emotional factors driving their decisions, you will craft offers that have a better chance of success. Nothing here says that you should overpay on a house, and if all of the data tells you are overpaying, sometimes letting more time pass is the only solution that is going to get the seller in a frame of mind where your offer can be successful.

HOW PAYING LESS COMMISSION MADE THIS SALE POSSIBLE.

This Cudahy home on Rosewood Dr had been with Homeowners Concept for a number of months but had switched to a 6% broker after it expired unsold. During the time it was listed we had 3 offers from 3 different buyers but all where for a price that was unacceptable to the seller.

The first offer was the highest for about $205,000 but sellers felt that "they were not going to give it away" (they were priced at $219,900). A couple of months later sellers reduced the advertised price to $209,900 and another offer came in for just under $200,000. Again sellers rejected it as inadequate. After a period of time a third offer came in even lower than the first two offers. Despite the writing on the wall, the sellers refused to accept reality. About this time the listing came up for expiration and to our amazement sellers wanted to try a "high commission" broker and pay thousands of dollars more in commission AND hundreds extra in administrative fees.

After a few weeks with the new broker, sellers reduced their price to under $200,000 (and willing to pay 6% on top of it). The buyer with the 3rd offer was made aware of the reduction and was willing to redraft the offer now that the sellers had come to grips with pricing. The new offer was finally accepted and because buyer had been found during the time with Homeowners Concept, the commission to seller fell under our 1.5% commission (buyer was an exclusion to their new listing with the high commission broker). Sellers were very lucky that the buyer had not found a property and as a result we were able to put the deal together and save them a big chunk of the 6% commission.

In summary, most sellers rely on our expertise (and we do have much more expertise than the average high commission agents). Every once in a while a seller refuses to listen to facts and market data. And paying much more commission and extra fees makes absolutely no difference to a buyer as these sellers found out.

WHERE IS THE BEST PLACE TO GET A MORTGAGE?

Getting a mortgage can be a daunting task to the uninitiated, but it pays to understand the process upfront and pick the right mortgage company to work with to ensure a successful and quick closing.

When getting a mortgage, there are three key individuals in the process: the loan officer, the loan processor and an underwriter. Your interface to the lender is a loan officer, sometimes called an account manager or mortgage banker. Their job is to collect a complete and accurate loan application package from the borrower, and provide quotes and estimates of your loan terms. Loan officers usually have a processor that helps them to gather, submit and track application status along the way. The other key person in the mortgage process is the underwriter. The underwriter reviews loan files to see if they fall within the lender’s lending guidelines and are the ones who will ultimately approve or deny a loan application.

Choosing the Right Mortgage Professional

You have countless choices of loan officers, but many buyers make a critical mistake and simply walk into their local bank or credit union branch to apply for a home loan. In-branch loan officers often wear many hats taking loan applications, opening checking accounts and processing deposits. Anything not mortgage-related is a distraction, and you are best served by loan officers who do mortgages for a living. Moreover, many of the loan officers at bank branches are on salary or salary plus commission so are not as dependent at trying to complete each loan timely.
Mortgage brokers do not originate loans, but simply act to broker your loan application to an appropriate mortgage lender. Mortgage brokers have an advantage over banks or credit unions because they can place the loan with any of the lenders in their portfolio. Having the ability to shop the loan and not be bound by the underwriting criteria of one particular bank or credit union is a clear advantage these days. Furthermore all mortgage brokers have to be individually licensed by the state while loan officers working at a bank do not have to (they work under the bank's license). In other words you find more experienced and more seasoned loan officers at a mortgage company which results in not only knowing upfront that the loan can be funded but also how it should be processed so that it is underwritten and eventually funded at closing.

Ask the Right Questions Before Applying for Your Mortgage

Nothing is more painful than loan delays when closing the purchase of your home. One way to avoid them is to ask the right questions, which almost no one does.

1. Where is my loan going to be processed and underwritten?
2. What is your current turnaround time for loan underwriting?
3. Do you have a mechanism for escalating files that are in jeopardy of being delayed?
4. Can you provide statistics on what percentage of loans you close on time?
5. Will you provide any guarantees or fee reductions if my loan is late?

By asking the right questions upfront, you can avoid painful loan delays at the back end of the home buying process.
We have had great success with Netcentral Mortgage as they have helped in making numerous loans in the past 14 years that other banks and credit unions could not. They're extremely competitive and they can be reached at 414-258-7833.

6 MYTHS BUSTED

Don't fall for untruths some agents spread about Homeowners Concept. They have a much higher commission and administrative fees to protect.

1. “You have to pay money upfront “
    ABSOLUTELY NOT - There are no listing fees

2. “You don’t get the experience of a 6% agent”
    ACTUALLY, THE OPPOSITE IS TRUE - Instead of having armies of agents doing just        a few sales a year, we have fewer Realtors that sell a much higher volume than average (3 to 4 times higher). Also, Homeowners Concept’s Realtors have 19+ years in business vs only 6 for a typical agent.

3. “You won’t get as much exposure”
    NOT TRUE - Not only do we have our own magazine, our homes appear on the top two real estate websites: Zillow and Trulia (unlike some companies that hold back their listings from these sites).

4. “Other agents do not show their homes”
    WRONG - This a pure scare tactic. Nowadays, the buyers find the homes they like to look at, on the internet. They then either contact us directly or tell the agent they’re working with to set up appointments. Agents have very little control on which homes the buyers like to view. 

5. “You have to be available to show your home”
    NO - We have had a full service program where our agents show your house for over 10 years and because of the volume of sales we can charge much less than 6%.

6. “You won’t get good service if you don’t pay 6%"
    AGAIN, NOT TRUE - Not only have we been in business for 30 years now, we have maintained an A+ rating with the BBB for all those years (unparalled in the industry)!

1984-2014: 30 YEARS OF PROVIDING PREMIER SERVICE WHILE SAVING COMMISSIONS IN METRO MILWAUKEE!

Yes, we are extremely proud of our record, having sold tens of thousands of properties and saving close to $95 MM in commissions. Thanks to all of our current and past clients for making this exceptional record a reality.

Our Concept of bringing to the table a high level or real estate expertise in highly skilled, full time, long term agents who are truly dedicated to real estate while saving thousands of dollars in commission for the average priced home, made sense in 1984 as it does now.

Instead of constantly bringing in rookie agents or having agents that do very few sales a year (exactly what most real estate companies offer), we decided from day one to develop and maintain real estate professionals with a high sales volume. Selling 3 to 4 times as many homes than the average agent per year and doing so for many years (on average our agents have been in business for 19+ years) assures a very high level of expertise for our clients. Our Realtors don't have to market themselves and we make every effort to hire just enough dedicated experienced agents so that they make a decent living. Our marketing is almost exclusively geared to promoting the properties for sale which is good for our clients and our long term survival as evidenced by our 30 yrs in business. Our Realtors are truly focused on buying and selling homes, not promoting themselves. The savings in commissions then, becomes a bonus. And that is a great bonus walking away from a closing, having saved thousands of dollars and knowing you received the highest possible price for your home!