Insider Real Estate Secrets Revealed! (Educational Course for Home Buyers and Sellers) Lesson # 7
Darren Meade
January 08, 2007
Welcome to this week's edition of Insider Real Estate Secrets Revealed! (Educational Course for Home Buyers and Sellers)
We hope you have learned a tremendous amount from our articles and we look forward to providing more educational material to help you on your home buying or selling journey.
In this edition of Insider Real Estate Secrets Revealed, we will learn 3 rules you need to know about if you plan to negotiate the price with a home seller. We're also discussing whether or not it's a good idea to pay points to reduce your interest rate. So, sit back, relax, and enjoy this edition.
EXPOSED! - The 3 Rules of Negotiating with a Home Seller
Negotiating - a word that strikes fear into the hearts of most homebuyers. If you are like most people, when you hear the word negotiating, you cringe, picturing a heated confrontation where tempers flare and big numbers are volleyed back and forth across the table.
It doesn't have to be that way. It's perfectly reasonable to expect the seller to make some concessions while you do the same. Meet in the middle.
Negotiating Tip #1 - Be Realistic
When entering a negotiation with a Home Seller, you need to be Realistic. If the house you are looking to purchase has 6 bids already, your chances of getting thousands of dollars slashed from the price are slim. Negotiating in these cases may prove to simply be a waste of your valuable time. This is especially true in hot markets like Boston, San Diego and Miami.
Even in a case where the home seller is willing to make concessions, and you have a strong bargaining position, you should never attempt to 'go for the throat'. Be reasonable. If you know the home is priced $3,000 above what you are willing to pay, tell the Seller that the home is priced $3,000 too high, but that you would be willing to sign a Purchase Agreement today if the Seller were to bring the price down $1500. This way, it's a win-win all around. The seller is happy and you walk away content in the knowledge that you successfully slashed $1500 from the home price.
Negotiating Tip #2 - NEVER Show Your Cards
Remember the old country song by Kenny Rogers that goes 'you've got to know when to hold em' and know when to fold em''? It's true with Poker and it's certainly true in Real Estate negotiations.
When you walk into the home of your dreams, don't scream out, 'oh it's beautiful - I'd do anything for a house like this!' Around the Seller and the Seller's Real Estate Agent, keep your emotions in check. If the Seller is aware that you are in love with the home, they will have a strong bargaining position. But if they think there is a chance you will walk away from the table, they will be more willing to negotiate on your terms.
Negotiating Tip #3 - Do Your Homework
It's time to go to school. First, you need to make a checklist of everything you want in a home and then prioritize the list. Amenities you can't live without should top the list and then the other items should be listed in descending order of priority. If you know what you want before you start, it will make the entire process easier, and give you an idea of how much leeway you have in negotiating (i.e. if you are in love with a home and it has everything on your list, you may be less apt to try and haggle the Seller's price down).
You also need to be aware of what market conditions are like in your area. Take this simple quiz and see if you know the answers:
1.) Are you aware of the supply and demand statistics of home inventory vs. sales made this year?
2.) Are you aware of what % of total homes listed for sale actually sold last month
3.) Are you aware of how the total % of homes sold last month can positively affect how you structure your purchase offer?
4.) Have you assessed the best use of your cash and planned to maximize your leverage?
In short, have you prepared a Home Purchase Strategy? We participate in many real estate transactions every month. Over time, we've learned a thing or two. Our staff would like to help you develop your personal strategy and consequently help you save thousands of dollars in the process.
We call this our Home Buyers Coaching Session®. We put our experience to work for you, preparing you to make an informed, money saving offer. We do this at no cost.
Why? Simple - if we do a good job helping you prepare, maybe we can earn your mortgage business. We are sure willing to try. Are you willing to spend 30 minutes with us?
Don't wait, Request your NO-COST Home Buyers Coaching Session NOW. Visit our website and we'll contact you right away to schedule your appointment.
Should I Pay Points to Reduce My Interest Rate?
A common question among borrowers is 'Should I pay Points to Reduce my Interest Rate?'
In this report, we'll discuss this topic in detail and show you how you can determine if paying points is the right decision for you. Let's get started!
What are Points?
In their simplest form, Points are up-front mortgage interest fees paid on a loan to reduce the initial interest rate. Points are fees the borrower pays the lender at the time of loan closing. If you pay one point (1%) on a $100,000 loan, then you will pay the lender $1,000 at loan closing.
Most people pay points to reduce their long-term loan interest rate. For example, if you are taking out a loan, and the lender says you qualify for a 7.25% interest rate, it may be possible to reduce the interest rate to 7.0% or less by paying points. This is similar to making an investment. You monthly payment and total interest over the years will be reduced by paying points.
Am I required to pay Points?
First, it's important to understand that you are not required to pay points. It's your decision.
If you watch TV or read the newspaper, you might have thought you were required to pay points. The rates you see in the newspaper and on TV are usually expressed as a loan rate and points (i.e. - 6.75% and 2 points). But most lenders will be willing to remove points and simply charge a higher interest rate instead.
Should I pay Points?
Most lenders offer loans with 0 points. This may seem attractive at first, but you need to calculate how expensive a 0 point loan will be over time, because it's quite possible you could obtain the same mortgage with a lower long-term interest rate, by paying a couple of points.
The main factor in deciding whether or not to pay points is the length of time you plan to live in the home you are purchasing or refinancing. As a general rule of thumb, you should only pay points if you plan on keeping the mortgage for more than 4 years. Because points are prepaid interest, you need to be sure you will keep the loan long enough to recoup these costs through lower monthly mortgage payments.
Tax Advantages
Another consideration you should take into account is the potential tax advantage that points represent. If you are purchasing a home, any points that you pay up-front are immediately tax-deductible. If you are refinancing, however, points ARE NOT tax-deductible and must be amortized over the life of the loan.
How to Make Sense of This
Take this short pop-quiz to see how prepared you are to make an informed decision on your next purchase or refinance:
1.) Should I pay points or not?
2.) Since there are hundreds of loan programs, how do I know which one is best for me?
3.) How can I tell if I am getting the best rate?
4.) How will the choices I make with now affect me 10-15 years in the future?
5.) Which loan choice will allow me to have a better retirement or money for my child's college education?
If you are unsure of the answers to any of these questions, you should seek expert advice for a knowledgeable, respected lender.
Your home purchase or refinance will be one of the largest financial transactions you will ever be involved in and the choices you make now could affect you for years to come. This is why we offer a NO-COST, no obligation 'Borrower Coaching Session' to help people just like you get answers to the most important questions.
We put our experience to work for you, preparing you to make an informed decision that could save you thousands of dollars.
Why? Simple - if we do a good job helping you prepare, maybe we can earn your mortgage business. We are sure willing to try. Are you willing to spend 30 minutes with us? If so, please visit our website to request a 'NO-COST Borrower Coaching Session'.
Visit my website.
We hope you have learned a tremendous amount from our articles and we look forward to providing more educational material to help you on your home buying or selling journey.
In this edition of Insider Real Estate Secrets Revealed, we will learn 3 rules you need to know about if you plan to negotiate the price with a home seller. We're also discussing whether or not it's a good idea to pay points to reduce your interest rate. So, sit back, relax, and enjoy this edition.
EXPOSED! - The 3 Rules of Negotiating with a Home Seller
Negotiating - a word that strikes fear into the hearts of most homebuyers. If you are like most people, when you hear the word negotiating, you cringe, picturing a heated confrontation where tempers flare and big numbers are volleyed back and forth across the table.
It doesn't have to be that way. It's perfectly reasonable to expect the seller to make some concessions while you do the same. Meet in the middle.
Negotiating Tip #1 - Be Realistic
When entering a negotiation with a Home Seller, you need to be Realistic. If the house you are looking to purchase has 6 bids already, your chances of getting thousands of dollars slashed from the price are slim. Negotiating in these cases may prove to simply be a waste of your valuable time. This is especially true in hot markets like Boston, San Diego and Miami.
Even in a case where the home seller is willing to make concessions, and you have a strong bargaining position, you should never attempt to 'go for the throat'. Be reasonable. If you know the home is priced $3,000 above what you are willing to pay, tell the Seller that the home is priced $3,000 too high, but that you would be willing to sign a Purchase Agreement today if the Seller were to bring the price down $1500. This way, it's a win-win all around. The seller is happy and you walk away content in the knowledge that you successfully slashed $1500 from the home price.
Negotiating Tip #2 - NEVER Show Your Cards
Remember the old country song by Kenny Rogers that goes 'you've got to know when to hold em' and know when to fold em''? It's true with Poker and it's certainly true in Real Estate negotiations.
When you walk into the home of your dreams, don't scream out, 'oh it's beautiful - I'd do anything for a house like this!' Around the Seller and the Seller's Real Estate Agent, keep your emotions in check. If the Seller is aware that you are in love with the home, they will have a strong bargaining position. But if they think there is a chance you will walk away from the table, they will be more willing to negotiate on your terms.
Negotiating Tip #3 - Do Your Homework
It's time to go to school. First, you need to make a checklist of everything you want in a home and then prioritize the list. Amenities you can't live without should top the list and then the other items should be listed in descending order of priority. If you know what you want before you start, it will make the entire process easier, and give you an idea of how much leeway you have in negotiating (i.e. if you are in love with a home and it has everything on your list, you may be less apt to try and haggle the Seller's price down).
You also need to be aware of what market conditions are like in your area. Take this simple quiz and see if you know the answers:
1.) Are you aware of the supply and demand statistics of home inventory vs. sales made this year?
2.) Are you aware of what % of total homes listed for sale actually sold last month
3.) Are you aware of how the total % of homes sold last month can positively affect how you structure your purchase offer?
4.) Have you assessed the best use of your cash and planned to maximize your leverage?
In short, have you prepared a Home Purchase Strategy? We participate in many real estate transactions every month. Over time, we've learned a thing or two. Our staff would like to help you develop your personal strategy and consequently help you save thousands of dollars in the process.
We call this our Home Buyers Coaching Session®. We put our experience to work for you, preparing you to make an informed, money saving offer. We do this at no cost.
Why? Simple - if we do a good job helping you prepare, maybe we can earn your mortgage business. We are sure willing to try. Are you willing to spend 30 minutes with us?
Don't wait, Request your NO-COST Home Buyers Coaching Session NOW. Visit our website and we'll contact you right away to schedule your appointment.
Should I Pay Points to Reduce My Interest Rate?
A common question among borrowers is 'Should I pay Points to Reduce my Interest Rate?'
In this report, we'll discuss this topic in detail and show you how you can determine if paying points is the right decision for you. Let's get started!
What are Points?
In their simplest form, Points are up-front mortgage interest fees paid on a loan to reduce the initial interest rate. Points are fees the borrower pays the lender at the time of loan closing. If you pay one point (1%) on a $100,000 loan, then you will pay the lender $1,000 at loan closing.
Most people pay points to reduce their long-term loan interest rate. For example, if you are taking out a loan, and the lender says you qualify for a 7.25% interest rate, it may be possible to reduce the interest rate to 7.0% or less by paying points. This is similar to making an investment. You monthly payment and total interest over the years will be reduced by paying points.
Am I required to pay Points?
First, it's important to understand that you are not required to pay points. It's your decision.
If you watch TV or read the newspaper, you might have thought you were required to pay points. The rates you see in the newspaper and on TV are usually expressed as a loan rate and points (i.e. - 6.75% and 2 points). But most lenders will be willing to remove points and simply charge a higher interest rate instead.
Should I pay Points?
Most lenders offer loans with 0 points. This may seem attractive at first, but you need to calculate how expensive a 0 point loan will be over time, because it's quite possible you could obtain the same mortgage with a lower long-term interest rate, by paying a couple of points.
The main factor in deciding whether or not to pay points is the length of time you plan to live in the home you are purchasing or refinancing. As a general rule of thumb, you should only pay points if you plan on keeping the mortgage for more than 4 years. Because points are prepaid interest, you need to be sure you will keep the loan long enough to recoup these costs through lower monthly mortgage payments.
Tax Advantages
Another consideration you should take into account is the potential tax advantage that points represent. If you are purchasing a home, any points that you pay up-front are immediately tax-deductible. If you are refinancing, however, points ARE NOT tax-deductible and must be amortized over the life of the loan.
How to Make Sense of This
Take this short pop-quiz to see how prepared you are to make an informed decision on your next purchase or refinance:
1.) Should I pay points or not?
2.) Since there are hundreds of loan programs, how do I know which one is best for me?
3.) How can I tell if I am getting the best rate?
4.) How will the choices I make with now affect me 10-15 years in the future?
5.) Which loan choice will allow me to have a better retirement or money for my child's college education?
If you are unsure of the answers to any of these questions, you should seek expert advice for a knowledgeable, respected lender.
Your home purchase or refinance will be one of the largest financial transactions you will ever be involved in and the choices you make now could affect you for years to come. This is why we offer a NO-COST, no obligation 'Borrower Coaching Session' to help people just like you get answers to the most important questions.
We put our experience to work for you, preparing you to make an informed decision that could save you thousands of dollars.
Why? Simple - if we do a good job helping you prepare, maybe we can earn your mortgage business. We are sure willing to try. Are you willing to spend 30 minutes with us? If so, please visit our website to request a 'NO-COST Borrower Coaching Session'.
Visit my website.
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