Regarding Sellers paying closing costs, there are a couple of ways to think about this.

It’s not about whether the Seller is nice or not.  The Seller has a bottom line for how much they must net on the sale of their home. After taxes, brokerage commissions and lawyers are paid they have to be left with a certain amount of money to pay off their mortgage and to help them get to their next home.

So if you offer a Seller $250,000 but then request $10,000 back at closing for closing costs and prepaids….you are really offering them $240,000.  If their bottom line is $240,000…we have a deal.  If not, no deal.

Make sense?

When we request that the Sellers pay for closing costs, we are actually going to ask them to pay for “closing costs and prepaids”.  This would include standard closing costs like your lawyer fees and property tax and also your prepaid expenses like your building inspection and prepaid insurance.  We can not ask for anymore than your mortgage will allow, so please consult with your lender.   Sometimes a mortgage allows for 3% other times 6% for closing costs and prepaids.  So, please ask your lender what the limit is.  Another important thing to know is that you can’t walk away from the closing table with money from the seller.  Banks don’t allow this.  So, if you are going to ask for cash back, you need to be conservative.  If you ask for $10,000 and only can apply $9,000 to closing costs and perpaids…that excess goes back to the seller.

Asking for money back at closing for closing costs and prepaids is not, in essence, a gift from the sellers.  You can’t think of it that way.  What you are basically doing is financing your closing costs in your mortgage.

One last thing:  Although it is usually allowable to get closing costs and prepaids from the seller at closing, the appraisal may complicate things and make financing the home a challenge.  If we go back to the example above, you are offering $250,000 with $10,000 back for closing costs and prepaids.  If the appraisal comes in lower than $250,000, let’s say $242,000, the bank is only going to give you a loan based on $242,000.  Now it is up to you and the Seller to determine what is going to make up the difference.  Is the Seller going to agree to taking $232,000 and give you the $10,000?  Are you now only going to get $2,000 back at closing while the seller gets their $240,000?  At this late stage of the game all bets are off.  The terms have changed and neither party has to agree to take a lower amount.  We are at an impasse that, for obvious reasons, is difficult to work through.  The Seller still has a bottom line and the Buyer still needs money for closing costs.  In this case, there are usually compromises by both parties.  Sometimes, the deal falls apart in the 11th hour.

So as you can see, the question “can the seller pay our closing costs?” isn’t exactly straight forward.  There are many caveats…and we are happy to clarify any of them in more detail.

Let us know how we can help and when you are ready to start looking at homes.

We were the number one team in our office.  This is a big deal because the number two team has twice as many agents as our team (including the owner of RE/MAX North Professionals) and several administrative personnel working for them.  We are just two Realtors that are assisted with one awesome but part time assistant.

We were also in the RE/MAX of New England Top 10 List for the first time.  This is huge because we were competing against much larger teams in larger markets.

These milestones have encouraged us to push harder.  With the help of our friends and past clients who continue to recommend us and bring us new clients…we will stay among the top.

As I have mentioned before, it’s not just one market but several markets.  Although they may be interconnected and abide by the same general rules…each market is different.  Each state is different.  Each town is different.  Each neighborhood is different.  In fact, each street may be different.

In Chittenden County we can see that some towns have 13+ months of home inventory.  In Burlington it’s just a couple months.  In some Burlington neighborhoods, like the Five Sister Neighborhood in the South End, homes don’t last more than a couple of days on the market.

So before you assume that it’s a buyers market, do your homework.  Work with a Realtor that will take the time to educate you on the local market(s) of your choice.  Then, when the right home comes around, don’t hesitate to make a solid offer.

I have had too many clients that want to make low-ball offers.  They are under the false impression that “the market is soft” and sellers are desperate.  Not the case.

If you really want the home because it’s in the school district you want to send your kids or it has the perfect character or  it just feels right, make a fair offer.  Study the recent sales and submit an offer that reflects your seriousness.  Sellers will know that they have a fair negotiating partner.

Low offers scare off sellers the way high list prices scare off buyers.  Plain and simple.

If you come in low just to see what the seller will say…assume that he will tell you take a hike.

If you submit a fair offer…you may actually get what you want.

Http://www.rentalcodes.org provides guidance on safety and health standards and  outlines the legal rights and responsibilities of both landlords and tenants throughout the rental process.

1. Stagnation – the longer your home sits on the market, the more likely it is to be considered stale.  Perspective buyers will begin to wonder “what is wrong with this house?”
2. No Showings – if your home is overpriced, buyers may not even look at it.  Today’s buyers are pretty sophisticated.
3. Selling the Competition – If your home is overpriced, it will make your competition’s home seem like more of a bargain.
4. Appraisal Problems – Even if a buyer is ready to pay above market value, if that same buyer is financing the home (90% of all buyers are) and the home doesn’t appraise…the sale is likely to fall apart.
5. Tougher negotiations – If your home is overpriced and therefore sits on the market longer, buyers are likely to negotiate harder and will have more leverage to demand more concessions from you.
6. Lost Opportunities – If you aren’t fishing in the right pond, your not likely to catch any fish.  For example if you have a $275K home that is priced at $300K, the buyers who could afford $275K may not even look at your home if it is out of their price point.  The buyers capable of paying $300k may not be impressed.

Most buyers look at 10-15 homes before making any decisions.  Because of this, it is essential to be competitively priced relative to competition if you wish to be succesful in selling your home.

The article recounts Allen’s rise from a self taught land speculator to the founding father of Vermont.  Similar to many of us non-native Vermonters, Ethan was drawn North from Massachusetts by the open expanses and seemingly endless possibilities of the rugged land.

Ethan was opportunistic.  Before the revolution, claims to the same Vermont land were held by both deed holders in New Hampshire and New York.  In 1764  by edict of King George III, New Hampshire titles were declared void and Vermont became part of New York.  Allen began to ferociously acquire titles to land from the disenfranchised New Hampshire land investors who thought that their holdings were worthless.

Ethan and his family started the Green Mountain Boys and began to terrorize the New Yorkers that began to claim to the land.  In 1775, plans were set to arrest Allen for treason.  While avoiding capture, the insurrection of the colonists was beginning in Boston and Allen seized the moment and lead an attack on Fort Ticonderoga with only 83 men.  He took the fort without firing a shot.  It was the Patriot’s first victory over the British and provided them with a huge store of munitions.

Ethan Allen was declared a war hero, later became a prisoner of war and then finally returned to Vermont after it was declared a state independent of New York to cash in on his big gamble…Hundreds of thousands of Vermont acres along the Champlain Valley.

Ethan Allen greedily grabbed large expanses of land away from early settlers and New York land barrens.  I can only speculate that through those actions he established the sustained values of future Vermonters regarding land  and individual liberty.  He was also the first major player in Vermont real estate.

When a seller decides to sell there home they can decide to sell it For Sale By Owner (FSBO)….or they can list with a realtor (these are the homes that appear in the MLS).

In a FSBO scenario (which makes up roughly 15% of all real estate transactions according to the National Association of Realtors) the sellers aren’t typically interested in paying a commission.  Therefore, if you are working with an agent you can choose to have him/ her show you the property or not.  If they don’t show you the property, you owe them nothing (some realtors may create caveats in their agreements by which you must pay them even if they never showed you the property…but we do not).  If they show you the property you have to pay commission out of pocket.  While this is true, you may still save money and aggravation by having a realtor work with you.  We study the market and negotiate for a living.

In a scenario where a seller has decided to work with a realtor (about 85% of all transactions), things work differently.  When that seller enlists a realtor (century 21 etc.) they agree to pay that realtor a percentage (typically 5 or 6%) at closing from the proceeds of the sale.  The seller pays this, the buyer does not.  This commission rate is established in their contract.  Now if you become interested in a property that is being represented by a realtor (about 85% of all transactions) you have two options:  You can call the realtor on the for sale sign or you can work with your own realtor.

In this situation, think of the commission as a pie.  If you work with the sellers realtor to purchase the property, the sellers realtor keeps the whole pie.  Not only that, but they work for the seller and not for you which means that they are trying to get the most money out of you that is possible. On the flipside, if you decide to work with your own realtor, that commission pie gets cut in half.  That is how buyers’ agents get paid.  You pay nothing out of pocket. The amount of commission being paid by the seller from the proceeds of the sale doesn’t change.  The only thing that changes is that a realtor, working on your behalf gets paid too.

I know it is kind of confusing and smart people get tripped up by the process.  You are not alone.  It’s just that in my experience, the only time that I have witnessed where it doesn’t make sense for a buyer to work exclusively with a realtor is if they are purchasing a home from their aunt and getting a sweet deal.  In that case, no realtor is necessary.  Just call a lawyer and draft an agreement.  Otherwise, having a realtor that knows the market, knows how to negotiate, acts in your best interest and is in essence free (unless you are going the FSBO route) seems like a good way to go.

Let me know if you have any other questions,

Dan

Modern home, idyllic setting, 10 min. from the I89. A completely renovated home redesigned by nationally renowned architect, Michael Minadeo in 2008. Specific attention was given to every detail, from the radiant-heated slate entry flooring and the expansive kitchen to the custom built outdoor benches. Ash floors, hardwood soft-close cabinetry, butcher block counters, stone fireplace with gas stove insert, walk-in pantry, fully customizable closets in master, soaking tub. Baxi Luna on-demand boiler, 4 heat zones, new foam insulation make this home very energy efficient. Gorgeous blue stone patio surrounded by design forward landscaping includes a remote-controlled Markilux awning and leads to one acre of lawn.

Situated on 5 acres just across the Richmond border, realize the privacy of the wooded setting and the convenience of living minutes from Richmond town center. Only a short walk to the Audobon Center for swimming and hiking and minutes from Owl’s Head Blueberry Farm.

(Click to see the full listing)

It features a detached three-bay garage which could provide you with perfect studio, shop or storage space. There is also development potential for the industrious homeowner or developer.

This duplex has tons of efficiency and aesthetic upgrades. There is updated electrical, new blown cellulose insulation, foam insulation around foundation and several weatherization improvements throughout home. New efficient Boderus natural gas heat and hot water system installed in 2010, energy efficient light fixtures, fresh paint throughout and a newly remodeled downstairs bath make this duplex move-in ready.

Rents include additional storage in basement, heat, hot water, trash removal, water/sewer, and off-street parking. Oversized, lush, private, partially fenced yard with vegetable and flower gardens is an oasis in the Old North End.

Check out the listing here…

High-end, two-bedroom, one bath luxury loft condo located in award-winning architectural building in downtown Burlington. Polished ox-blood concrete floors, gourmet kitchen with gas stove and other high-end stainless appliances, poured concrete counter tops, walk-in rain shower, huge soaking tub, Ipe exotic hardwood and slate deck, in-ceiling sound system, Eagle double pane windows, solid hard wood slab cabinets, custom built-ins, elevator, and many other distinctive features.

New construction – built in 2005.Reserved off-street parking in back of building included along with individual on-site lockable storage space. Easy walk to Church Street restaurants, shopping, City Market, Lake Champlain, galleries, and bike path. Ample off-street parking for guests. Low condo fees and excellent neighbors. Art gallery and event space available to residents in basement. Hookup for gas fireplace in living room ready to go. Munare Falklan chandelier DNS. Nelson medium saucer lamp shall convey.

Please call or email Jessica Bridge if you are interested in scheduling a showing.