Guest post by Greg Whelan, Redfin Agent serving Chicago’s Near North Side

Deciding It Was Time to Buy

After helping more than two hundred people buy and sell homes during my last decade as a real estate professional, I decided last spring that it was time to become a homeowner myself.  I had been quite content renting my very reasonably priced apartment for the last several years, but I was finally starting to crave more space. After reviewing available rentals, I realized that renting the type of apartment I wanted would cost nearly as much as a monthly mortgage payment on a comparable place.  It was a perfect storm: low interest rates and declining home prices combined to make home ownership an affordable option.  It just felt like right time for me to buy.

Touring and Negotiation Processes

I had my eye on a house in the Ukrainian Village that my friend had lived in a few years ago. It had been pulled from the market as a short sale and was in the process of becoming a foreclosure. When it was finally relisted as a foreclosure in September, I got in to see it right away.  After spending an hour and a half touring the house, I realized it just wasn’t what I remembered it to be. It had been pretty badly beaten up in the foreclosure process and needed new floors and windows among many other repairs. This was a lot more work than I wanted to do, and it made me realize I really wasn’t in the market for a fixer-upper.

I expanded my search a couple neighborhoods up the EL to Logan Square where I found the two-flat (a two story building with separate apartments on each floor) I eventually bought.  After touring the home, I wandered the neighborhood at various times of the day and night, on bike and on the EL. I took the advice I give my clients: I ate at the little café on the corner, walked to the EL, and had a drink at the neighborhood bar to make sure I really liked the location.

I did a Comparative Market Analysis (CMA) and found that the home was significantly overpriced, so I came in with what I deemed to be a fair offer at twenty percent below list price. I justified my offer with comparables, knowing that the seller might take offense at my “lowball” offer. Next ensued a week of fierce back-and-forth negotiations culminating with us agreeing to meet halfway at ten percent off the list price. The process taught me a lot about myself and my role as an agent. I repeatedly found myself becoming angry when the seller wouldn’t respond quickly or agree to my preferred terms (or simply accept my offer). When I’m representing a client, I know that to them, it’s way more than just a deal, but coping with my own feelings gave me a  greater understanding of how important my job is to not only represent my clients in a professional manner, but first and foremost to advocate for them and their feelings.

Inspection

I wish I could report that once we had settled on a price it was smooth sailing. To the contrary, the inspector uncovered several minor items that needed repair and one huge problem: the underground crawl space was not sealed off, leaving the house un-insulated and vulnerable to pest infestation.  For me, this was a deal breaker, but the seller refused to pay the cost of sealing it off.  I threatened to back out of the transaction using the inspection contingency and told the seller I’d be happy to watch the home sit on the market through the winter. The seller backed down and agreed to cover the cost of this major repair, and the deal moved forward to a successful closing.

What I Learned

As a Redfin agent, advocacy has always been a core value of mine, but the emotionally charged process of negotiating on my own behalf instilled in me a much greater appreciation for the fact that my role as an agent is not just to be a cool, calm and, when necessary, fierce negotiator. My most important task is to advocate for my clients to not only get them the best deal possible, but also to get them what they want out of the deal, whether it’s a fair price from which they can’t budge or a repair they can’t live without.

After devoting so much time and energy in helping others become homeowners, I’m proud that I can now call myself one too.  I called my mom as I was pulling into my new garage after closing and said to her, “Coolest thing about buying this place, I got a house for my car!”

Services and Service Providers I Used

Inspector: Larry Robbins
Lender: Erik Johansson
Attorney: Jason Schram
To List Rental Unit: Craigslist
Tenant Screening: TransUnion SmartMove

The post What Would An Agent Do? Long-Time Agent as First-Time Home Buyer appeared first on Redfin Real Estate Blog.

Time was, the problem with real estate was too many listings, at unrealistic prices. But with home-owners anxious to sell before the holiday season, we recently saw the average cumulative price drop exceed 10%. And with almost no new listings entering the market, across the markets we cover the number of homes for sale has actually decreased, by about 3% since August. In some places, transaction volumes increased.

But the problem now is with buyers, some of whom simply don’t have the money anymore to afford a house.

Plenty of Offers, Very Few Deals
“It was a weird week,” said Seattle agent Allie Howard. “Things were looking good, then deals started going in reverse.” By the end of it all, only four of the 15 offers she prepared were still under contract, about half the usual success rate.

In five or six cases, the buyers backed out.

Bay Area agent Jim Holt had one client beat out four other offers on a $750,000 home then ask for a $50,000 discount (they settled on a $5,000 discount). “I saw people go from ‘gung-ho’ to ‘never mind,’ all in just a few days.” Another client of Jim’s who was out-bid  shrugged and said, “It’s only going to get better for me.”

As Boston market manager Alex Coon noted, one problem has been just coming up with the down-payment, which for most folks means selling already-battered stocks. But Alex also saw buyers who had already crossed the Rubicon hurrying to complete deals before their financing fell apart. “These cycles work themselves out,” Alex said. “But short-term, consumer confidence is shot.”

Cash is King
The credit crunch has given financially strong buyers lots of leverage negotiating deals with sellers nervous about financing. “If you have a 20% down-payment,” Allie said, “you can really call the shots.”

And across the board our agents saw a flood of new incentives being offered by builders and banks, either in the form of increased commissions to the buyer’s agent (4% instead of the usual 3%) or offers to subsidize a mortgage. In San Francisco especially, a lot of the incentives were focused on October deals. “We’re talking about big buy-downs,” Allie said, “I saw one worth $20,000 just last week.”

OK, So What Do You Think?
Of course, this is only what we’ve seen. If you have hair-raising tales of deals getting done or deals going south, or if your plans have changed or remained the same, just leave a comment!

The post "It's Only Going to Get Better for Me" appeared first on Redfin Real Estate Blog.

First of all, you’re buying from the person who built it, not the person who called it home. Often, the property is just one of many they are trying to sell.

We asked our agents who specialize in new construction for the most important things to consider when buying a new house or condo.

1. Hire an agent
One that specializes in new construction and isn’t affiliated with the builder.

2. Be creative during negotiations
Builders don’t like to drop their prices. Instead, ask them to cover closing costs or upgrade the kitchen for free.

3. Get it in writing
Don’t sign until everything has been negotiated, agreed upon and written into the contract.

4. Be wary of upgrades
They’re where builders make the most profit. Don’t take upgrades you don’t want or can’t afford.

5. Research the builder
Visit other developments and talk to home-owners. Google the developer for reviews, testimonials and news.

6. Ask for a guarantee
You’re often buying a home that is not completed. What guarantees do you have the home will be ready on time?

7. Get the home inspected
New homes have problems too. Hire an inspector to make sure everytthing is safe and up to code.

8. Bumper-to-bumper coverage
New homes should come with a warranty from the builder. Know what is and isn’t covered and for how long.

9. Look to the future
Check with the city to see what is planned for the surrounding area. If you have a view, will it still be there in 5 years?

10. Find your own lender
Don’t use the builder’s lender. Shop around for the loan that is best for you, not them.

This is our list, but what do you think? If we’ve missed something, leave a comment.

Photo credit: SqueakyMarmot on Flickr.

The post Ten Tips for Buying New Construction appeared first on Redfin Real Estate Blog.

Oh yeah, and they’re not boring either.

Since the birth of my son 3 years ago, my knowledge of the literary works of Dr. Suess has skyrocketed. In fact, you could probably call me a Seussologist. My most recent favorite is And to Think That I Saw It on Mulberry Street. If you haven’t had a chance to read this masterpiece, I recommend that you spend the 13 – 15 cents necessary to make it happen. It is the journey of a young boy named Marco, who on his way to school runs into chariot drivers, Eskimos, a Rajah, a brass band, the Mayor, Sergeant Mulvaney (a motorcycle policeman), a magician, and of course a man with a ten foot long beard. So, leave it to me to visualize my Redfin clients as part of this caravan of uniques that make their way down Mulberry Street. Now, I think at this point it would be wise for me to clarify what I mean by that. I’m not saying my clients have ten foot long beards or ride blue elephants or belong in the company of Hurley from Lost, but what I’m saying is that Redfin clients are just unique enough to make you fall in love with them.

Last year when I was taking a trip through the Rockies, I made a stop in Missoula, Montana. I love that town. There is a big letter M on the side of a hill, and apparently everyone in town has taken the time to hike to the top of it. This “let’s climb a mountain, own some land, and be a part of our environment” spirit is one aspect of what makes Missoula unique… but there is something else which makes Missoula unique too – people get along there. I mean they really get along – Republicans, Democrats, Constitutionalists, Libertarians – everyone. You’re just as likely to run into a gun slinging cowboy as you are a sandal wearing Harvard grad, and in some cases they end up being the same person. You see, its not political beliefs or fashion or financial status which unite these very different demographics, rather it’s the respect of allowing people to do things their own way. It is this independent spirit which exudes from Redfin’s Clients, and in the end, it is this spirit which makes me root for them, respect them, and attempt to give them the best experience I possibly can.

It’s been an adventure since I began working at Redfin. My clients have ranged from local TV personalities to MIT professors to ranchers. They fight just as hard for their $120,000 condo in Lakewood as they do for their 1.2 million dollar home on Mercer Island. They do things like negotiate barn cats into $900,000 transactions and put unlimited escalation clauses into contracts. They blog about their experience when they’re happy and they do the same when they’re unhappy (see comments). They agonize over data about whether they should list their house on a Tuesday or a Friday, and they spend their Wednesday nights eating pizza with us in downtown Seattle in order to learn the Yoda-esque secrets for getting the best deal on a home. Simply stated, they don’t even march to the beat of a different drummer. They refuse to march at all.

What’s so perfect about this whole situation is that Redfin’s agents have the same revolutionary quirkiness about us. Consider the background of our agents: one is an Opera singer, another is a volunteer firefighter, and another just got back from traveling the world (literally the whole way around the world). Some speak Spanish and another speaks Arabic. We have experts on manufactured homes (that would be me) and experts on Belltown condos. Some of us own investment properties, and others of us are waiting to buy until the market further softens. All of us though hope to make the real estate industry better through our unique approach to serving clients.

And so it turns out we’re a good match for each other. We eccentrics can stick together, do real estate a little different, and in the end make the whole industry a little better.

So here is to the notoriously quirky, meticulously analytical, boisterously different cavaliers that are Redfin’s clients and agents. You have made my job more rewarding and my mind more thoughtful. Each day is an adventure as I work together with you to help you buy your dream home.

Until next time…. when we see each other on Mulberry Street.

Bonus: Did you know there is a Dr. Suess National Memorial?

Photo Courtesy of thepocket.com

The post Missoula, Montana, Sergeant Mulvaney, and How I Fell in Love with Redfin's Clients appeared first on Redfin Real Estate Blog.

So publishing a how-to guide for lowballers is a little like hanging a kick-me sign around our neck. We’re the ones who have to make deals happen, even when our client is convinced a house in Palo Alto is overpriced by 15%. 

Yes, we know that especially in outlying areas the market stinks. But so does the seller, who priced his house in the first place. And the likelihood that he’ll lop another 5% or 10% off his asking price isn’t just determined by the house’s “intrinsic value” or its “fundamentals.”

It’s also a matter of the seller’s state of mind, which can drive him to stick to a high price, or to drop an already-fair price. So as brokers, we don’t just look at the cards on the table but also at the people playing them, searching for “tells” that the seller is ready to cut a deal.

Now as part of our Agent-Off-the-Record series, where our agents get together to assemble a greatest-hits list of insider advice on a topic, we’re outlining what we think are the six major signals and eleven minor signs that a seller is motivated to negotiate.

To get a significant discount, of say more than five percent from list price, we would typically expect to see at least two major signals or one major signal and two minor signs.

For example, just because a seller is going through a divorce doesn’t mean he’ll sell his house at a 10% discount. But if the place has also been on the market for a few months, or it’s in a neighborhood with a big inventory pileup, he might consider it.

So these signals say nothing about whether a property is fairly priced, only about what the seller is willing to accept now.

The Seven Major Signals

1. The seller must move: the seller’s agent occasionally posts a message in the MLS that the seller is motivated. Bingo!
2. The home’s previous sale price was much lower: the seller may accept a discount if he can still come out ahead. On the other hand, few sellers will accept less than what they owe on the mortgage, unless they’re already in default.
3. The home has been on the market 90 days without a price change: Redfin displays days on market for each listing.
4. The neighborhood has many homes languishing on the market: use the listing statistics below Redfin’s map to see if the neighborhood’s listings average 90+ days on market.
5. The property is vacant: the seller’s probably paying two mortgages.
6. The owners are getting a divorce: look in the property tax records for recent title transfers.
7. The property is the first or last home in a development: new-home prices are difficult to negotiate, but extras and closing costs aren’t. Builders are anxious to sell the first home for marketing buzz and the last so they can move on.

The Ten Minor Signs

1. The home is staged: staging can costs hundreds every week. It increases the listing’s appeal but also increases the seller’s motivation to sell. (We argued about this one, as some Redfin agents see it as a sign of strength)
2. The property has been re-listed: when a property is relisted, Redfin.com resets days on market. But your agent can query the MLS directly for the listing’s entire history.
3. The seller is offering special incentives to buyer’s agents: tell a seller to keep the incentives in lieu of a lower price.
4. The listing is a short sale: to avert foreclosure, the seller will take almost any price, but the trick is getting bank approval prior to foreclosure.
5. A bank is selling a foreclosed property: banks don’t like owning homes, and are often eager to sell.
6. The property is an estate sale: relatives may not want to hold out for top dollar.
7. There are many foreclosures in the area: even if the listing isn’t a foreclosure, it competes for buyers with nearby foreclosures.
8. The property is the most expensive in the neighborhood: an expensive home built on inexpensive land can easily be overpriced. Sellers value the wine cellar more than you will.
9. The property is unique: sellers become emotionally attached to unique properties, which are difficult to price, and difficult to sell. But if the home is one of many in the same development, the seller’s agent is usually more confident about the asking price. And if the home is part of a new development, the builder will hesitate to set a low precedent for future sales.
10. A contingent sale fails, or stalls for more than 45 days: after a competing buyer has rejected or delayed a deal because of financing or inspection contingencies, the seller may eagerly accept cash on the barrel, even at a lower price. Use listing alerts to track contingent property sales.

Our parting advice is to remember what Time-Warner’s CEO, Richard Parsons, says about any successful negotiation: that both parties have to feel like they won something. But who wants to hear such sage advice when the market’s going nuts? Tell us what’s worked for you. Once we’ve incorporated your suggestions, we’ll publish a final version to our main site, and link back to here.

The post Getting Good Deals in a Tough Market: 7 Negotiating Techniques appeared first on Redfin Real Estate Blog.

This is probably because most of us would rather reject a car than a person. And some people just don’t know what to ask when evaluating an agent.As agents ourselves, we know what we’d ask. We went around the office to make a top-ten list and are now soliciting your suggestions on all the questions we avoided, rigged or just overlooked.

We’ll incorporate your comments to create a permanent page on our site, and link back to here so everyone can see the discussion.

Our top-ten list actually has fifteen questions:

1. Is this your full-time gig? How many clients have you served this year?
An active agent is more likely to be up-to-date on the market and the law.

2. How many sales have you handled in my target neighborhoods?
You want someone who knows the local market, with a few recent deals in your target neighborhoods.

3. When clients are unhappy with your service, what has gone wrong?
Asking why a client has been a bad fit for an agent can help you figure out if you’re a good fit.

4. Has a client ever filed a complaint against you?
If you’re uncomfortable asking, just check with the state licensing board.

5. What’s your fee?
The seller pays the buyer’s agent using the money you pay for the house, typically 3% of the sales price. Some buyer’s agents refund part of this fee.

6. What services do you offer beyond negotiations and escrow?
Make a list of what you’ll be paying for. Negotiations, paperwork and contingencies are the minimum.

7. When am I committed to working with you?
Many consumers start touring homes without realizing this can obligate them to work with the agent, contract or no contract.

8. How many foreclosure or short-sale transactions have you handled?
Distressed properties can be great deals, but the paperwork is complicated, and your liability is greater. The best agents have experience closing deals with banks.

9. Who else will be working with me?
An agent is often supported by a team. But the person you hire should do most of the work.

10. Will you show me all the properties for sale?
Good agents show all properties, even for-sale-by-owner properties that don’t pay a commission.

11. How quickly can you get me into a home?
Hot homes move fast. Ask how the agent handles tours on short notice.

12. Do you represent buyers and sellers on the same house?
No agent can fairly represent both. You need someone on your side.

13. What sets you apart from other agents?
Look for expertise, not just eagerness. You aren’t hiring the neighborhood kid to rake your leaves.

14. What if I’m unhappy with your service?
Agents get paid when you buy a house. But most customer complaints occur during the closing process. Ask for a guarantee.

15. Can I get references for your last five deals?
Every agent has clients he served well. But the best agents serve nearly all of their clients well. Getting an agent’s last five clients will give you a more balanced picture of his service than letting him choose his most favorable references. Call at least two of the five, asking clients some of the same questions you asked him. Look closely at these last five deals to see how they compare to similar sales in the neighborhood. Did he negotiate a good price for each customer?

So that’s our list. But let’s have all the DIY consumer mavens and Internet-savvy brokers who read our blog give the list a once-over so we can see what we missed.

And please check back next week for the questions every home-seller should ask their agent.

Photo credit: cambodia4kidsorg on Flickr.

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