Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.

Check your emotions

A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that™s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer

Unless you™ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you™re willing to accept. Some buyers make a low offer because they think that™s customary, they™re afraid they™ll overpay, or they want to test your limits.

A counteroffer signals that you™re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you™d like to take with you.

Consider the terms

Price is paramount for most buyers and sellers, but it™s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps

Ask your REALTOR ® whether any homes that are comparable to yours (known as œcomps) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer™s comps

Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don™t include comps to justify their low purchase offer, have your real estate agent ask the buyers™ agent for those comps.

Get the agents together

If the purchase offer is too low to counter, but you don™t have a better option, ask your real estate agent to call the buyer™s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer™s agent) has a reputation for lowball purchase offers. If that™s the case, you might feel freer to reject the offer.

Don™t signal desperation

Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home™s listing describes you as a œmotivated seller, you™re signaling you™re open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you™re motivated, the next purchase offer you get might be more to your liking.

Washington Report: Higher Costs, Tougher Standards

by Kenneth R. Harney, Published: December 7, 2009

HUD Secretary Shaun Donovan made it official last week: Applicants for FHA insured mortgages in the coming months are going to be hit with higher costs and tougher credit standards. In congressional testimony, Donovan said some of the changes are likely to include the following: Number one: Higher downpayments. The current minimum is 3.5 percent. Donovan didn’t say how much higher the agency might push it, but congressional critics want to see at least a five percent minimum. Number two: Look for FHA’s generous “seller concessions” to be cut in half — from the current six percent to three percent of the loan amount — and maybe even lower. Under present FHA rules, home sellers can contribute to their buyers’ closing costs up to a maximum of six percent of the initial mortgage amount. Critics say that encourages sellers to inflate the prices they want from buyers, and allows marginal purchasers to buy houses they can’t really afford. Number three: Higher mortgage insurance premiums. FHA currently charges what it calls an “upfront” premium of 1.75 percent of the loan amount. That could go a lot higher, maybe even to three percent, according to Donovan. FHA also charges an “annual” insurance premium, which gets tacked onto borrowers’ monthly payments. Currently that premium is set at 0.55 percent of the loan amount, but Donovan wants Congress to raise it. Finally: Look for tougher credit rules. FHA does not have a minimum credit score for applicants at the moment, preferring instead to evaluate the “total” credit picture of applicants individually. But now FHA is expected to announce a minimum acceptable FICO score for the first time. It may not be as high as Fannie Mae’s or Freddie Mac’s, both of which use a 620 FICO minimum, but don’t expect it to be much lower either. Along with tougher rules for loan applicants, Donovan said FHA also plans to crack down hard on lenders who send it poorly-underwritten loans to insure. The agency has already bounced two of its highest-volume producers out of business by withdrawing their approvals to originate FHA mortgages. Donovan said the agency also plans to post a “Lender Scorecard” on its Website, ranking all its participating mortgage companies according to the delinquency rates on their loans – for all to see – and to raise lender net worth requirements sharply. Bottom line: Sometime early in 2010, it’s going to get pricier and tougher to get financing through FHA. If you or your clients have a home purchase lined up that might be affected, get your loan application in sooner rather than later.

Wall Street Journal, By Sari Krieger

December 7, 2009

For home buyers, green is fast becoming a priority”whether it’s because they want to reduce their energy costs, minimize their carbon footprint or improve indoor air quality.

Here are 10 questions that prospective buyers or renters ought to ask to find out how green a house or apartment is.

1. How big is it?

The bigger the home, the more energy it uses. The U.S. Green Building Council considers a “neutral size” home”basically what most people need, without what might be considered luxury space”to be 900 square feet for a one-bedroom home, 1,400 square feet for two bedrooms and 1,900 square feet for three bedrooms. A 100% increase in the size of the home adds anywhere from 15% to 50% to energy use.

2. Where is it located?

Can you walk to public transportation? Are there sidewalks or easy places to walk in the neighborhood, so you don’t always have to drive? How close are shopping centers and other places you would frequent? The Web site walkscore.com rates the walkability of cities, neighborhoods and individual addresses and shows the distances to stores, restaurants, schools and amusements.

3. How is it oriented?

South-facing windows can trim heating costs in the winter. Shading from trees to the south and west can reduce cooling costs in the summer.

4. Is it well insulated, and are doors and windows sealed tightly against air leaks?

The U.S. Energy Star Web site, energystar.gov, features a calculator to help determine how much insulation you need, based on your location. To guard against air leaks, windows and exterior doors ideally should have an Energy Star rating, which indicates they meet a certain standard of efficiency in preventing the loss of heat in the winter and cooling in the summer. You may be able to feel air leaks, or you can hire an energy auditor to conduct a “door blower test””a big fan placed in a doorway sucks air out of the home, creating easily detectable drafts rushing in from outside wherever there’s a leak.

5. Has the indoor air quality been tested?

Well-insulated, well-sealed homes not only hold in heat and cooling, but also can retain toxins such as formaldehyde, mold, asbestos and lead. A test will show whether any toxins are present in levels that exceed the safe maximums established by the Environmental Protection Agency. You might also ask whether the home was constructed or renovated with nontoxic building materials and furnishings, like low- and zero-emission paints and sealants and materials like strawboard for the subflooring.

6. If it’s an older home, have insulation, heating and cooling systems and appliances been upgraded?

Newer products are far more efficient than those bought several years ago. Also, has higher-efficiency lighting been installed?

7. How efficient is the water usage?

Are the kitchen and bathrooms equipped with water-efficient plumbing fixtures? If it’s a house, does it have a water-conserving irrigation system for the grounds, and landscaping that minimizes the use of water? It may also have a rainwater collection and storage system, particularly in drier areas where water is increasingly scarce and costly.

8. What’s on the roof?

A lighter-colored roof reflects more heat than a dark-colored roof, which absorbs heat, putting more strain on the cooling system. Does it have skylights that let in natural light?

9. Where do the home’s materials come from?

Recycled or salvaged building materials reduce the home’s impact on the environment. Also preferable are materials that are locally available, can be processed with less energy and water, are reusable or recyclable, are durable, and are abundant in the environment.

10. Has it been certified green?

The U.S. Green Building Council, the Environmental Protection Agency and others offer ratings on homes, based on inspections by trained third-party professionals.

Welcome to Merlin Parker’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Centennial.