10 tips on how to write an offer letter
By Sam DeBord Real Estate News
Homebuyers trying to stand out from a crowd of offers in today’s competitive market are often told to write a personal letter to accompany their offer. Buyers who are financing a home, or have a smaller down payment, often have trouble competing with all-cash buyers. Appealing to the seller as a person, as opposed to a contract, can sometimes give a buyer an emotional edge.
What isn’t often explained to buyers is how exactly to write that letter. The best ideas are often squandered by poor execution. Here is a quick guide to framing the home buyer letter and leveraging your best attributes by thinking from the seller’s point of view:
1) Flatter First
This is an emotional pitch. You’re attempting to tell the seller, “I’m such a good person that you should ignore the numbers.” They need to like you. Tell the seller how great their taste in color is, how much you’d love to have their lifestyle, and what an amazing neon bottle cap exhibit they have over the fireplace. Lay it on thick, but keep it sincere. You’re selling, but you don’t want them to feel like they’re being sold a used car.
2) Get To The Point
You may have 10 great ideas that you’d like to tell the seller. They will only remember two. The seller may have 10 other letters to read. If you mix in your best points with your lesser points, they may all just become a jumble.
Pick two or three reasons why you will be the best buyer for this home, and make them distinctly recognizable. The more streamlined you make your message, the more memorable it will be.
3) Paint A Picture
People remember what they’ve read at a far higher rate when they can see a picture of it in their head. “I really love this neighborhood because I’ve lived here and gone to school here,” doesn’t resonate.
On the other hand, “I spend half of my time walking the cobblestone streets around this block, dropping my daughter off at Gilman School and volunteering at Schnitzelfest every summer,” will trigger a visual memory for a seller. Think “I’d be so happy in the summer to be cooking Neapolitan pizza for friends and neighbors in your outdoor wood-fired oven”.
4) Don’t Remodel The House
Planning on adding a second story or changing the landscaping? Don’t mention it. You might be correct that the seller’s sewing room would make a great workout room for you, but this isn’t the time.
If you’re going to expand to create more bedrooms, you might be changing the seller’s favorite eyebrow windows in the roofline. They may have buried their dog under the tree you’re planning to pave over. he sellers may have awful taste, but homeowners are very protective of their homes.
5) Show Stability
Present yourself as a stable buyer who will have no problem closing the purchase. Whether that is a reference to your lack of contingencies, stellar employment record, or commitment to moving in as soon as the sellers are comfortable, ease the sellers’ fears of a shaky transaction.
6) Show Humility
At the same time, be humble and ask for the sellers’ blessing on your offer. “We would be so honored to live in your home,” goes much further than “We are confident that you will accept our generous offer.” The ball is in their court, and your letter should acknowledge that.
7) Don’t Whine
The emotion of your letter must be upbeat and high. It needs to make the seller feel good. Everyone wants to play with a winner.
The seller doesn’t care how many other homes you’ve lost out on. They don’t care that your rent just doubled. They don’t want to know about your wife’s sad condition that requires you to have a home like this. They just feel uncomfortable now. In fact, they’re already tossing your offer in the round file as they finish this paragraph.
8) Close With Clarity
Remember the five-point paragraphs and five-paragraph themes you had to write in school? While those formulas are too long and rigid for this letter, their closing advice should be noted. Your excitement, motivation, and ability should be reiterated at the end of your letter in a quick recap.
Remember that the sellers could be reading a few letters. Make sure that the closing of your letter reminds them of your best qualities and reinforces them.
9) Sign with Appreciation
The feeling your sellers will leave with can live or die on the signature line: “Sincerely”, “Cordially”, “Best Regards”, and “Yours Truly” do not apply. This is not a business correspondence of equals. Thank the sellers for spending their valuable evening reading the ode that you wrote about your unworthy self.
“Thank you so much for your time,” “Thank you for the opportunity,” “Your consideration is greatly appreciated,” or even “We are honored to have the opportunity,” will leave the seller understanding that you value their time and are grateful for it.
10) Spell Check. Grammar Check. Buddy Check. Do It Again.
As the recovering son of a former Catholic school English teacher, there is a dark secret I’d like to let you in on. We’re prejudiced. We look down on people who aren’t like us. There is a heinous belief ingrained in us from birth that says people who misspell and use incorrect grammar are lesser beings and not worthy of our respect.
Truthfully, though, there is an unbelievable amount of weight that some sellers will put on the preciseness of the letter. Right or wrong, the buyer’s personality will be judged from their attention to detail, ability to follow-through, and level of care in the letter. Buyer reliability is often gleaned from how well the rules of grammar are followed. If grammar isn’t your thing, find someone whose thing it is. You never know: the house you want to buy just might belong to my mother.
Write The Letter, Check It Twice, and Send It Off
There are many tactics being used by home buyers to stand out from the crowd. While not all sellers will read them, personalized letters are the most-accepted and popular form of unique buyer strategies available. Don’t rush the letter. Take the time to write it correctly. It just might be the most valuable single page of text you ever write.
Friday, May 24, 2013
Friday, May 17, 2013
Seller's market tips
The market is great right now for sellers! That being said, here is a great article for seller's that are looking for the right agent. by Deidre Woollard-Real Estate News
Deciding to move isn’t a step anyone takes lightly. Your house is more than just an investment, it is your home. As you begin the process of distancing yourself from the place where you made so many lasting memories you will begin to think about what your home will be worth to someone else.
When you are ready to meet with a Realtor you may already have an idea of what your home is worth. You may have seen what other homes in your neighborhood have sold for or kept an eye on local listings. Your agent will prepare for you a comparative market analysis (CMA) that is an in-depth version of any research you may have done on your own.
The CMA is used to help evaluate how your home will fare against the competition. It takes a look at both homes that are currently listed and those recently sold. The purpose is to find the highest price that will still make the home competitive on the open market.
A Portrait Of Your Home And Its Surroundings
The CMA includes a fact-based portrait of the home including information such as number of bedrooms and baths, approximate square footage, size of major rooms, age of the home, property taxes, and desirable amenities such as fireplaces and pools.
Depending on the market the CMA will go back in time as long ago as a year or a month or week ago. The range can also vary. Some will just cover a few streets around your home, CMAs can cover areas as narrow as one or two streets surrounding your home, or as broad as an entire subdivision.
Beauty Is In The Eye Of The Beholder (Or Potential Buyer)
Selling a home isn’t just about the facts. There are many pieces to the puzzle and it’s often the indefinables that impact a potential buyer’s perception of the home. A home purchase remains fundamentally personal. Speaking at the Luxury Roundtable: State of Luxury 2013 conference, Camilla Papale, the chief marketing officer of Douglas Elliman Real Estate, defined real estate, especially at the high end, as being primarily emotional. She said that 90 percent of Douglas Elliman’s transactions are influenced by the buyer’s emotions versus rationalization. Perception can alter reality and so this is an important consideration when looking at a CMA. People make decisions based on curb appeal, light, design choices and many other factors.
At the end of each home’s information on the CMA report there will be a brief statement provided by the listing agent that will address some of these subjective factors such as recent remodels, historic features, or things that might be of interest to the buyers. The agent will be marketing the home and is already thinking about how it will be presented as a product to tempt the public.
The Changing Face of the CMA
The CMA today is different than it was before the internet era partly because the potential seller does so much of their homework ahead of time. Jeff Rightmyer, a sales agent with Building Bridges Partners Keller Williams explains how technology has changed the CMA: “If anything, it has increased the amount of avenues now available to display more accurate and precise information ranging from short sales, standards, all the way up to luxury. It also has allowed little room for error as clients can accurately research the information for themselves.”
There are still resources that agents have access to that most sellers do not. Also agents have the experience of listing, marketing, and selling many homes on their side. A local expert will know what buyers in the area look for and be able to easily assess how your home measures up. Together you and your agent can find a price that brings you what you need and will be attractive enough to attract your home’s new owner.
Deciding to move isn’t a step anyone takes lightly. Your house is more than just an investment, it is your home. As you begin the process of distancing yourself from the place where you made so many lasting memories you will begin to think about what your home will be worth to someone else.
When you are ready to meet with a Realtor you may already have an idea of what your home is worth. You may have seen what other homes in your neighborhood have sold for or kept an eye on local listings. Your agent will prepare for you a comparative market analysis (CMA) that is an in-depth version of any research you may have done on your own.
The CMA is used to help evaluate how your home will fare against the competition. It takes a look at both homes that are currently listed and those recently sold. The purpose is to find the highest price that will still make the home competitive on the open market.
A Portrait Of Your Home And Its Surroundings
The CMA includes a fact-based portrait of the home including information such as number of bedrooms and baths, approximate square footage, size of major rooms, age of the home, property taxes, and desirable amenities such as fireplaces and pools.
Depending on the market the CMA will go back in time as long ago as a year or a month or week ago. The range can also vary. Some will just cover a few streets around your home, CMAs can cover areas as narrow as one or two streets surrounding your home, or as broad as an entire subdivision.
Beauty Is In The Eye Of The Beholder (Or Potential Buyer)
Selling a home isn’t just about the facts. There are many pieces to the puzzle and it’s often the indefinables that impact a potential buyer’s perception of the home. A home purchase remains fundamentally personal. Speaking at the Luxury Roundtable: State of Luxury 2013 conference, Camilla Papale, the chief marketing officer of Douglas Elliman Real Estate, defined real estate, especially at the high end, as being primarily emotional. She said that 90 percent of Douglas Elliman’s transactions are influenced by the buyer’s emotions versus rationalization. Perception can alter reality and so this is an important consideration when looking at a CMA. People make decisions based on curb appeal, light, design choices and many other factors.
At the end of each home’s information on the CMA report there will be a brief statement provided by the listing agent that will address some of these subjective factors such as recent remodels, historic features, or things that might be of interest to the buyers. The agent will be marketing the home and is already thinking about how it will be presented as a product to tempt the public.
The Changing Face of the CMA
The CMA today is different than it was before the internet era partly because the potential seller does so much of their homework ahead of time. Jeff Rightmyer, a sales agent with Building Bridges Partners Keller Williams explains how technology has changed the CMA: “If anything, it has increased the amount of avenues now available to display more accurate and precise information ranging from short sales, standards, all the way up to luxury. It also has allowed little room for error as clients can accurately research the information for themselves.”
There are still resources that agents have access to that most sellers do not. Also agents have the experience of listing, marketing, and selling many homes on their side. A local expert will know what buyers in the area look for and be able to easily assess how your home measures up. Together you and your agent can find a price that brings you what you need and will be attractive enough to attract your home’s new owner.
Friday, May 10, 2013
How many people ask this question when they buy or sell a home?
What's the difference between a Appraisal and a Home Inspection? Real Estate news-Diedre Wollard
I thought that this article had some really great information.
When you are getting ready to sell your home, dealing with inspections and appraisals is part of the process. Your home is now a product that is being sold and needs to be evaluated. Many people think that appraisals and inspections are essentially the same thing but there are some key differences. If you’ve ever watched “Antiques Roadshow” on PBS, you’re already familiar with the concept of an appraisal on personal property. The idea is similar in the realm of real estate valuations. Each property is unique, and the appraiser relies on his or her general expertise and specific research to arrive at an opinion of value.
An appraisal provides valuable information for the buyer and the seller, but the appraiser’s primary mission is to protect the lender. Lenders don’t want to own overpriced property and that’s why the appraisal takes place before the lender grants final approval of the buyer’s loan.
The Appraisal Process
Appraisers use a variety of factors in their decision making. They weigh the location of the home, its proximity to desirable schools and other public facilities, the size of the lot, the size and condition of the home itself and recent sales prices of comparable properties, among other factors. Appraisers aren’t interested in whether or not the house is clean but they do notice signs of neglect such as cracked walls, chipped paint, broken windows, torn carpets, damaging flooring and inoperable appliances.
Federal law requires states to establish minimum standards and licensing practices for real estate appraisers. In California, for example, trainees must take several courses, pass an examination and complete 2,000 hours of supervised experience.
If the buyer is applying for a mortgage that will be insured by the Federal Housing Administration (FHA), the appraiser must survey the physical condition of the home and disclose potential problems to the buyer. No such obligation exists for non-FHA mortgages.
If a home receives an appraisal lower than the purchase price there are some ways the purchase can still go through. The seller can reduce the purchase price, the buyer could make a bigger down-payment, or if it’s a question of needed repairs, a separate escrow account can be set up to fund those repairs.
How Is An Appraisal Different From An Inspection?
An appraisal isn’t a substitute for a professional home inspection in fact they have some key differences. The appraiser formulates an opinion of the property’s value for the lender, while the inspector educates the buyer about the condition of the home and its major components. The appraiser is primarily focused on the value of the home whereas the inspector keys in on the home’s condition with an eye toward both existing and potential future problems.
I thought that this article had some really great information.
When you are getting ready to sell your home, dealing with inspections and appraisals is part of the process. Your home is now a product that is being sold and needs to be evaluated. Many people think that appraisals and inspections are essentially the same thing but there are some key differences. If you’ve ever watched “Antiques Roadshow” on PBS, you’re already familiar with the concept of an appraisal on personal property. The idea is similar in the realm of real estate valuations. Each property is unique, and the appraiser relies on his or her general expertise and specific research to arrive at an opinion of value.
An appraisal provides valuable information for the buyer and the seller, but the appraiser’s primary mission is to protect the lender. Lenders don’t want to own overpriced property and that’s why the appraisal takes place before the lender grants final approval of the buyer’s loan.
The Appraisal Process
Appraisers use a variety of factors in their decision making. They weigh the location of the home, its proximity to desirable schools and other public facilities, the size of the lot, the size and condition of the home itself and recent sales prices of comparable properties, among other factors. Appraisers aren’t interested in whether or not the house is clean but they do notice signs of neglect such as cracked walls, chipped paint, broken windows, torn carpets, damaging flooring and inoperable appliances.
Federal law requires states to establish minimum standards and licensing practices for real estate appraisers. In California, for example, trainees must take several courses, pass an examination and complete 2,000 hours of supervised experience.
If the buyer is applying for a mortgage that will be insured by the Federal Housing Administration (FHA), the appraiser must survey the physical condition of the home and disclose potential problems to the buyer. No such obligation exists for non-FHA mortgages.
If a home receives an appraisal lower than the purchase price there are some ways the purchase can still go through. The seller can reduce the purchase price, the buyer could make a bigger down-payment, or if it’s a question of needed repairs, a separate escrow account can be set up to fund those repairs.
How Is An Appraisal Different From An Inspection?
An appraisal isn’t a substitute for a professional home inspection in fact they have some key differences. The appraiser formulates an opinion of the property’s value for the lender, while the inspector educates the buyer about the condition of the home and its major components. The appraiser is primarily focused on the value of the home whereas the inspector keys in on the home’s condition with an eye toward both existing and potential future problems.
Friday, May 3, 2013
Ready for your new home? How much house can you afford?
I came across an interesting article written by Terence Loose-Yahoo! Homes. He has some really great tips that I thought I could share.
Tip #1: Calculate Your Debt-to-Income Ratio to Make an Educated Estimate
Are you awash in credit card, auto, and personal loan debt, or are you debt-free? It's likely you're somewhere in between. But whatever your financial situation might be, your debt-to-income ratio will be an important factor in determining how much house you can afford.
What is a debt-to-income ratio? Simply, it's how much your total monthly debt is in relation to your gross monthly income. Now let's get into some details.
"Things that are included in the debt-to-income ratio for most people are anything that shows up on your credit report, such as student loan payments, credit card payments, car notes. Also, the mortgage you plan to get will be factored in," says Duffy. He also notes that alimony and child support count as well. Things like groceries, life insurance, and tennis lessons, however, don't count.
So when it comes to deciding how much home - or mortgage - you can afford, your total debt-to-income ratio, including the predicted mortgage payment, should not exceed 40 percent (this threshold can vary from lender to lender).
To fully illustrate this, here's an example. Let's say you and your significant other earn a household income of $8,000 per month. Forty percent of $8,000 is $3,200. So your debt, including your mortgage, should not exceed this amount if you want to qualify for said mortgage. From there, you can figure out how much house you can afford…or at least move onto the next section.
Tip #2: Check Your Credit Score to Predict Your Interest Rate and Monthly Payments
Let's say you figured out your debt-to-income ratio and determined that you can afford a $300,000 loan. That's great, but you'll also have to figure out what your credit score is. If it’s on the lower end, you may be paying more in monthly payments than you imagined.
Tip #3: Factor in Your Private Mortgage Insurance
Private mortgage insurance. It just sounds expensive, doesn't it? And unfortunately, if your down payment is not large enough, private mortgage insurance can be costly and shrink the amount of house you can afford.
First, what it is: Private mortgage insurance, or PMI as it is commonly referred to, is an insurance that protects the lender against you defaulting on your mortgage, according to "A consumer's guide to mortgage refinancings" published by the Financial Reserve Board (FRB). The FRB says lenders usually make you pay PMI when your down payment is below 20 percent.
According to the FRB, the estimated cost of PMI is about $50 to $100 per month. However, Duffy says it can be substantially more since the formula for figuring PMI varies with everything from loan size to loan type, and even how little of a down payment you make. So it can range anywhere from .5 percent of the mortgage amount to 1.5 percent of the mortgage amount - per month.
Let's be conservative and say it's .75 percent on a $375,000 fixed-rate mortgage. That comes out to $234.37 per month tacked onto your monthly payment. And yes, PMI counts toward your debt-to-income ratio.
The good news, however, is that PMI is not permanent. According to the FRB, once you pay down your loan enough to achieve 20 percent equity in your home (based on the original appraised value), you can simply write a letter to your lender asking for them to cancel the PMI. That's probably the best letter to a bank you'll ever write.
Tip #4: Add in Your Homeowner's Insurance and Property Tax Expenses
We know - more insurance. And taxes are kind of a bummer, too. But it's certainly best to plan for them now rather than calculating them during a bout of stress-induced insomnia.
First, let's talk about homeowner's insurance. According to the FRB, your mortgage lender will require you to carry this insurance. It protects you against physical damage to the house by fire, wind, vandalism, and other causes.
As for the cost of home insurance, the FRB estimates a cost of $3.50 per $1,000 of your home's purchase price. So, for a $375,000 home, it would be about $1,312 annually. Divide that by 12 months - because Duffy says that often this cost is added to your monthly mortgage payment - and it comes to about $109 per month.
Now on to your property taxes. These of course vary widely depending on not only the assessed value of your home, but also the county your home is in, says Duffy. The national average is 1.14 percent of the home's value, according to 2010 figures from the Tax Foundation, a non-partisan tax research group based in Washington, D.C. Their data shows that this can vary anywhere from .27 percent (Hawaii) to 2.01 percent (New Jersey).
So let's use the average of 1.14 percent to see what this might mean for your housing budget. On our $375,000 home, that's $4,275 per year, or about $356 per month.
Based on this example, that's an extra $465 you'll have to add to your monthly mortgage payment for homeowner's insurance and property taxes alone.
Tip #1: Calculate Your Debt-to-Income Ratio to Make an Educated Estimate
Are you awash in credit card, auto, and personal loan debt, or are you debt-free? It's likely you're somewhere in between. But whatever your financial situation might be, your debt-to-income ratio will be an important factor in determining how much house you can afford.
What is a debt-to-income ratio? Simply, it's how much your total monthly debt is in relation to your gross monthly income. Now let's get into some details.
"Things that are included in the debt-to-income ratio for most people are anything that shows up on your credit report, such as student loan payments, credit card payments, car notes. Also, the mortgage you plan to get will be factored in," says Duffy. He also notes that alimony and child support count as well. Things like groceries, life insurance, and tennis lessons, however, don't count.
So when it comes to deciding how much home - or mortgage - you can afford, your total debt-to-income ratio, including the predicted mortgage payment, should not exceed 40 percent (this threshold can vary from lender to lender).
To fully illustrate this, here's an example. Let's say you and your significant other earn a household income of $8,000 per month. Forty percent of $8,000 is $3,200. So your debt, including your mortgage, should not exceed this amount if you want to qualify for said mortgage. From there, you can figure out how much house you can afford…or at least move onto the next section.
Tip #2: Check Your Credit Score to Predict Your Interest Rate and Monthly Payments
Let's say you figured out your debt-to-income ratio and determined that you can afford a $300,000 loan. That's great, but you'll also have to figure out what your credit score is. If it’s on the lower end, you may be paying more in monthly payments than you imagined.
Tip #3: Factor in Your Private Mortgage Insurance
Private mortgage insurance. It just sounds expensive, doesn't it? And unfortunately, if your down payment is not large enough, private mortgage insurance can be costly and shrink the amount of house you can afford.
First, what it is: Private mortgage insurance, or PMI as it is commonly referred to, is an insurance that protects the lender against you defaulting on your mortgage, according to "A consumer's guide to mortgage refinancings" published by the Financial Reserve Board (FRB). The FRB says lenders usually make you pay PMI when your down payment is below 20 percent.
According to the FRB, the estimated cost of PMI is about $50 to $100 per month. However, Duffy says it can be substantially more since the formula for figuring PMI varies with everything from loan size to loan type, and even how little of a down payment you make. So it can range anywhere from .5 percent of the mortgage amount to 1.5 percent of the mortgage amount - per month.
Let's be conservative and say it's .75 percent on a $375,000 fixed-rate mortgage. That comes out to $234.37 per month tacked onto your monthly payment. And yes, PMI counts toward your debt-to-income ratio.
The good news, however, is that PMI is not permanent. According to the FRB, once you pay down your loan enough to achieve 20 percent equity in your home (based on the original appraised value), you can simply write a letter to your lender asking for them to cancel the PMI. That's probably the best letter to a bank you'll ever write.
Tip #4: Add in Your Homeowner's Insurance and Property Tax Expenses
We know - more insurance. And taxes are kind of a bummer, too. But it's certainly best to plan for them now rather than calculating them during a bout of stress-induced insomnia.
First, let's talk about homeowner's insurance. According to the FRB, your mortgage lender will require you to carry this insurance. It protects you against physical damage to the house by fire, wind, vandalism, and other causes.
As for the cost of home insurance, the FRB estimates a cost of $3.50 per $1,000 of your home's purchase price. So, for a $375,000 home, it would be about $1,312 annually. Divide that by 12 months - because Duffy says that often this cost is added to your monthly mortgage payment - and it comes to about $109 per month.
Now on to your property taxes. These of course vary widely depending on not only the assessed value of your home, but also the county your home is in, says Duffy. The national average is 1.14 percent of the home's value, according to 2010 figures from the Tax Foundation, a non-partisan tax research group based in Washington, D.C. Their data shows that this can vary anywhere from .27 percent (Hawaii) to 2.01 percent (New Jersey).
So let's use the average of 1.14 percent to see what this might mean for your housing budget. On our $375,000 home, that's $4,275 per year, or about $356 per month.
Based on this example, that's an extra $465 you'll have to add to your monthly mortgage payment for homeowner's insurance and property taxes alone.
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