Archive for the 'Negotiating' Category

The Net, The Net, and Nothing But The Net

said on May 14th, 2012 filed under: Negotiating, Real Estate Nuts and Bolts

Once you put your home on the market for sale, it becomes a product.  It can be difficult for you to change your preception about the place you live from “home” into its new identity as a commodity.  But that’s what it is now, and more so, it’s now business.  For many homeowners, selling your home may be  big business, the biggest you may ever conduct.  Your  financial future may be determined by the success or failure of the sale.  We’re not fooling around here.

You need smart, objective business decisions followed by energetic action and a sharp eye toward the bottom line, the net, the size of your check when all is said and done.

Your agent should (must!) provide you with a net sheet, or multiple net sheets at different selling prices, so that you can get your mind on the net where it belongs.

Smaller decisions about costs, who pays what, during marketing and escrow should be examined only in regards to how they affect the net.

I frequently hear things like this from the homeowner:

  • “I’m not paying for a home warranty for the buyer!”
  • “When I bought this house I had to pay the escrow fee, and now that I’m selling it, they want me to pay it again.  It’s the buyers’  turn to pay.  I won’t do it!”
  • “The buyers want me to give them 3% back to help them with closing costs?  Nobody gave me help.  No way!”

I keep reminding you over and over, “just look at the net.”

If the buyers want you to absorb $3,000 in closing costs (the nerve!), but they are offering $5,000 more for the sale, you are netting an additional $2,000.  It seems like a no-brainer to me, but real estate transactions can become emotional, especially if you are still wrapped up in the perception that it is your “home” that you are selling.

  • Keep your eye on the goal.
  • Don’t lose sight of the forest among all the trees.
  • Don’t lose a fortune bending over to pick up a dime.
  • The net, the net, and nothing but the net.

In an ideal world, you would give me the keys to your house, and then you would fly off to Maui and sit on the beach until I called you to come back and pick up your check.

(Or maybe I’ll bring the check to you.  Maui, you said?)




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Auburn Real Estate, First Quarter Comparisons, 2011 to 2012

said on May 5th, 2012 filed under: Auburn, Localism, Negotiating, Neighborhood Profiles, Real Estate Nuts and Bolts

Here is the analysis of Auburn, California real estate comparing the first quarter of 2011 with the first quarter of 2012.  For this study I have used only residential homes (one or two dwellings per parcel) and excluded raw land, commercial property, condominiums, and multi-units (duplexes, apartments, etc.).  I selected Auburn, Southwest of Auburn, Meadow Vista, and Christian Valley as the geographic areas for the comparison. I excluded the non-incorporated areas of Auburn that are north of the Bear River in Nevada County, thereby eliminating “South County” and Lake of the Pines.  The data was obtained from the Metrolist Multiple Listing Service.


Here is the lowest priced house sold in the first quarter of 2011.

This property near downtown Auburn on Electric Street was listed for $79,900 and sold for $69,900 after being on the market for 85 days.  It s0ld for 87% of the asking price.  At 665 square feet it sold for $105 per square foot.

Here is the highest priced house sold in the first quarter of 2011.

For the past couple of years, the priciest homes in the Auburn area have been located in the Winchester Country Club near Meadow Vista.  This home was put on the market at $1,387,500 then reduced to $1,245,000 and sold for $1,165,000.  It was on the market for 59 days and sold for 94% of the listing price.  At 4142 square feet it sold for $281 per square foot.


Here is the lowest priced house sold in the first quarter of 2012.

This property out on Mount Vernon Road  was listed for $59,900 and sold for $65,000 after being on the market for 25 days.  It s0ld for $5,100 above asking price.  At 1104 square feet it sold for $59 per square foot.

Here is the highest priced home sold in the first quarter of 2012.


As in the previous year, the priciest home in the Auburn area was located in the Winchester Country Club near Meadow Vista.  This home was put on the market at $899,900 and sold in 3 days for $900,000, a whopping $100 above asking price.  At 5288 square feet it sold for $170 per square foot



2011 number of houses sold     123

2012 number of houses sold     137

2011 average days on market     121

2012 average days on market     82

2011 average price per quare foot     $143

2012 average price per quare foot     $144

2011 %selling price/listing price     96.49%

2012 %selling price/listing price     97.18%

2011 average original price     $340,326

2012 average original price     $320,755

2011 average listing price     $309,455

2012 average listing price     $3o6,871

2011 average sale price     $298,610

2012 average sale price     $298,212

2011 median sale price     $259,500

2012 median sale price     $263,000



Houses sold a bit quicker in 2012 than in 2011, and a few more houses sold first quarter of this year than in 2011, but the cost of home buying was virtually unchanged.  You would have trouble finding a “flatter” market.  Inventory remains low, and lower-end houses priced at market value are snapped up quickly by first-time homebuyers and investors.  Interest rates have fallen even lower which makes houses more affordable, but lending requirements have tightened, knocking some marginally qualified buyers out of the market.




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Cheap Homes in Auburn, California? Gone, Baby, Gone.

said on April 3rd, 2012 filed under: Auburn, Localism, Negotiating, Real Estate Nuts and Bolts

If you were hoping to buy a ticket on the Cheap Home Cruise of Auburn, California, you may be left standing on the dock, because, baby, that ship is putting out to sea.

Four days ago, a “nice enough” little house came on the Auburn real estate market.  It was on the smallish side, about 1300 square feet.  The kitchen had to be redone because you couldn’t open the fridge door without it slamming into the range, nor open the back door without it slamming into the sink.  Totally dysfunctional.  Modest neighborhood, nothing special.  About the best you could say about this house was that it was “kind of cute” and “in pretty good condition.”

By the end of the second day, the listing agent had 28 offers.  TWENTY EIGHT offers.  So overwhelmed, the seller (a bank!) ordered him to put the house in “pending” status just to stop the feeding frenzy.  To the 28 hopeful buyers, the listing agent sent those dreaded words, “highest and best offer by 5PM today.”  No second chance.  Do or die.

My clients came back with an all-cash offer $5,000 above asking price.  We never stood a chance.  The final number won’t be known until escrow closes, but I have been able to learn, through the fine art of real estate espionage, that the winning offer was at least $75,000.  Above asking price.  Yes, you read that right, $75,000 ABOVE ASKING PRICE.

So what did you learn from this fiasco?

The real estate market, at least the market in Auburn, California, is changing rapidly.  No, that’s not quite right, the market has already shifted dramatically.  You are just learning about it now.


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The 4 Hidden and the 4 Normal Costs of Closing a REAL Estate Transaction

said on November 25th, 2011 filed under: Negotiating, Real Estate Nuts and Bolts

When you are trying to complete a real estate transaction, you should anticipate 4 hidden expenses that are not “normal” closing costs. Normal closing costs means the money you actually bring to the closing table in order to conclude your purchase.  The 4 additional hidden expenses are:

  • moving costs
  • fix-up costs
  • pre-paid property taxes
  • pre-paid insurance premiums

One way or another, you are going to have to whip out your checkbook, or call Uncle Bob, one more time, for some extra dough.  These hidden expenses are going to fall on you like continue reading…

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Pest Inspection Basic Training

said on November 6th, 2011 filed under: Localism, Negotiating, Real Estate Nuts and Bolts

Wood destroying pest inspections, and the costs of repairs indicated in those inspections, can be one of the most difficult obstacles to overcome in a real estate transaction.

Inspections are cheap, typically about $150 in northern California.  Sellers should commission these inspections prior to putting the house on the market–whether or not they continue reading…

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Pre-Inspections by the Sellers

said on November 6th, 2011 filed under: Localism, Negotiating, Real Estate Nuts and Bolts

Before putting their home on the market for sale, there are pros and cons for the sellers to consider when hiring professionals for pre-inspections.

Why sellers should not pre-inspect

  • Sellers may spend money they don’t have to spend, costs that they can pass on to the buyer, or not spend at all.
  • Sellers may discover things about their property that they don’t want to know about.

Though I may agree with the first point, and understand the human nature that informs the second point, I must urge the seller, in the strongest possible terms, to surrender the notion of “plausible deniability.”  Simply put, if an inspection reveals defective items, those flaws must be disclosed to the agents (seller and buyer agents, both) and to the buyer.

In fact, the report itself must be disclosed, not just the findings.  Suppose the seller fixes all the defects discovered in the inspection?  The entire report itself still must be disclosed.  How about really old reports, and how old is “really old?”  I don’t know the answer to those questions, but recent legislation has made this point clear:  all inspection reports must be disclosed.

Once again, we go back to the basic rule taught to agents in real estate kindergarten:  When in doubt, disclose.

Why sellers should pre-inspect

Knowledge is bargaining power.  The sellers are in a much stronger position to set the price their house strategically and negotiate with confidence when they know exactly:

  • what condition their home is in
  • how much money it will take to bring the house up to standard condition or better

Pre-inspections may reveal opportunities to “spend a little and make a lot” by correcting problems that buyers will use to beat down the price.  This is especially true for health and safety items.

Pre-inspections may reveal opportunities to upgrade certain items, especially cosmetic items, that will attract or please the buyers.

Homeowners develop blind spots as they accomodate themselves to that sticking door or that toilet valve that keeps running until you give the handle a second shake.  These little annoyances, now forgotten by the sellers,  add up in the buyers’ mind, and give the buyers an impression that the property is poorly maintained.  The pre-inspectors will identify these irritants so they can be pre-emptively fixed.

Pre-inspections can be used to great effect in marketing the home.  A home, clean as a whistle, with pre-inspection reports available are very attractive to buyers and to their real estate agents.  Agents prefer to show houses with as few problems as possible.  The reports are quite encouraging and reassuring.

Buyers Remorse.  This disease, also known as “second thoughts” and “cold feet,” is epidemic in today’s buyer-dominated marketplace.  It seems as if buyers, as soon as they get an offer accepted, start looking for reasons to walk away.  Sellers should eliminate as many reasons as possible, before the buyer even knows about the house.

Sellers should eliminate as many “mysteries” as they can.  This pre-market strategy is particularly important with rural properties, the subject of our article on inspecting rural homes.

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Should Sellers Seek After-the-Fact Permits?

said on September 14th, 2010 filed under: Lake of the Pines, Negotiating

When homes being prepared for sale, should the seller obtain after-the-fact permits for non-permitted additions?  Non-permitted additions pose a dilemma for both the seller and the listing agent.  Of all the elements of home value, the size of the home, expressed in square feet, is the most important—at least in today’s market when the home appraisers are driving the real estate bus.

Consider this house currently for sale at Lake of the Pines, California.

Acacia front

The county assessor has the house recorded at 1100 square feet.  The current owner bought the house at 1600 square feet.  It includes a non-permitted 500 square foot downstairs suite with a bedroom, den, laundry and half-bath.  At the current market average of $150 per square foot, that downstairs suite is worth continue reading…

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