Give and Take Negotiation
by Drew Peterson

Headlines bleed:“Housing Market in Shambles”, “Mortgages Defaulted”, “Steal A Short Sale Today!” Since the onslaught of the national media, there are many Buyers who have successfully negotiated the “bargain of the year.” Other Buyers are pondering the press and the internet to search house sales data waiting for the signal to purchase.

However, Buyers who wait are realizing they may have missed the wave as short sales and bargain properties are swept away at the closing table. Many Sellers grasp the realization that the real estate market did not shift from Boom to Bust. Rather, the market has shifted from Boom to REALITY. And, based on seller’s motivation, house inventory has been moving since now sellers are treating every offer as if it were the only one the Seller will receive – its all about the give and take between buyer and Seller.

With the media blood bath, buyers who do decide to dive in, pounce on a list price with a vengeance. Many home sellers refer to these buyers as oceanic “bottom feeders” where the attempt is to negotiate tooth and nail to strip the home seller of every penny and ounce of pride. Of course, until title is passed, it is still the Sellers’ property.
Buyers should not be over confident when it comes to negotiating. If a house is priced right from the get-go, there may be multiple bids where Sellers propose highest and best terms and price to buyer contenders. Every property for sale is not a short sale or fire sale opportunity. So, what makes a good negotiation for a Buyer and Seller?

Buyers should submit a pre-approval or commitment letter from a mortgage representative. The letter should be specific to the offering price and loan terms. If a cash offer, provide a verification of funds.
Your real estate agent can provide and review comparables of houses that have SOLD. In many markets, bank appraisers are using only recent sales. Active list prices are not factual and are not used by a bank appraiser.
Know what the list to sales ratio has been over the past six months in your local market. Is the offer in range of the ratio?
Review the Multiple Listing Data Sheet. Understand what is included, appliances, sprinkler system, lighting fixtures, etc…Even window treatments and fireplace tools are not considered fixtures. Rather, anything not bolted attached is referred to as personal property is known as chattel. Please do not forfeit a sale with the loss of a over a washer or dryer combination either.
All offers should be in writing to be taken seriously and to validate open questions.
Include a specific time frame for inspections and contract signing. Can inspections be completed in 5, 7, 10 business days?
Buyers and Seller should provide the name of a real estate attorney with the offer.
Determine what the Seller paid for the property, current mortgage, commission fees and estimated closing costs to determine potential net to Seller.
Sign all property disclosures and submit with offer
The Seller has three options, accept, reject or counter offer.
A counteroffer automatically nulls the initial offer and Buyers now have the decision to accept, reject or counter offer once again.
Be very clear on what may be termed an “AS IS” listing. Most foreclosures and short sales are “AS IS” I have witnessed many personal effects including dishes in the dishwasher, televisions sets and plain rubbish left for the new homeowner to contend with on closing day.
Connecticut is not a survey state where a survey is required from the Seller. Therefore, when not available, it is the Buyer’s responsibility to research data showing lot dimensions, wetlands, easements, setbacks, well, septic, locations. Does the property share any contiguous lot lines for undeveloped parcels? Is there a shared driveway? Neighborhood Association? Annual Fees? A real estate attorney can advise in these areas and a visit to the local town hall will provide most of the information.


Realize that negotiations are a business transaction, market conditions vary by locality, and location, location, Motivation will be key component to establishing a meeting of the minds between a Buyer and Seller.

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Valuable information to share with buyers and sellers.
This week brought many signs that the economy and the real estate market may be recovering from recession. Positive trends were reported in real estate, retail and consumer confidence.
In addition, a report on Friday showed that the pace of job losses slowed in April, as employers shed fewer jobs than in previous months. This is notable since employment tends to be one of the last areas where improvement is seen before an economic recovery takes place.
The positive news specific to real estate points to increased demand for home purchases, and included:
The National Association of Realtors' index of pending sales rose 3.2 percent in March. The index was 1.1 percent above last year's levels and has risen for two straight months. Pending home sales typically turn into closed transactions.
According to a Federal Reserve survey of loan officers, demand for prime mortgages was up substantially in the first quarter of this year, for the first time since early 2007.
While it is still early, these "green shoots" are encouraging signs of a brighter future to come.

Whaddya Mean There Are Other Offers? I Thought This Was A Buyers' Market!
Elizabeth Bolton - Cambridge MA Real Estate Agent (617)844-2713 contributed from ACTIVERAIN.COM
Given the unrelenting doom and gloom in the media, it's no wonder you feel like you've got the upper hand when you're looking for a new home. Visions of lowball offers, grateful sellers, and bargain basement prices dance in your head.
But real estate is local and even today you may find yourself in a competive market where houses sell quickly and still get multiple offers.
There have been a number of multiple offers in my market recently and it can take newcomers by surprise. Some houses, clearly well priced, get half a dozen or more offers the first weekend on the market. So here's a game plan to take you through the crazy, stress-producing process of buying a home when you've got competition.
What's a savvy buyer to do when there are multiple offers?
For starters, don't be discouraged and don't be afraid. It is possible to "win" and get the house of your dreams and it doesn't necessarily mean you have to break the bank to do so. I've bought three of the four properties I've owned in multiple bid situations - including my first house. And I've been happy with every house - no regrets!
Get A Buyers' Agent
You need to be working with a buyer's agent who will represent your interests in the transaction. Sometimes buyers think that going directly to the seller's agent will give them a leg up. But the seller's agent's responsibility is to the seller, not to you as a buyer. And it's quite likely that the seller will still owe the same commission to the listing office even though only one agent is involved in the transaction. And most important - in a multiple bid situation the listing agent's responsibility is to get the best offer for the seller - regardless of whether you've submitted an offer directly to him or her. The sellers' goal is to get more money in their pockets - not the agent's.
You need somebody on your side. A buyers' agent will be able to:
Pull comparable sales info to enable you to decide on a reasonable but competitive offer price
Advise you about real estate activity in the neighborhood for similar houses
Strategize about how to put together a compelling offer that has a strong chance of prevailing in a bidding war
How Does the Seller Decide Which Offer To Accept?
When the seller looks at several offers there are only so many points to compare. You want to shine on all points:
Price - Go over the comparable sales information with your agent. Don't get stuck on the asking price - the house may be purposely priced low to generate excitement - and that strategy worked! Carefully go over the stats and decide on a price that makes sense and seems competitive. Your agent will have experience in the market and be able to offer advice but ultimately you're deciding on an offer price that is comfortable for you and reflects just how much you want the house.
Don't assume that multiple bids means the offers will go sky high - sometimes all the offers can be under the asking price. Other times it does seem the sky is the limit - we've had at least two houses in Cambridge sell for $1,000,000 over the asking price. The comparable sales info and the amount of activity for the listing should give you some sense of how the offers might go.
Dates - Your agent will find out what dates work best for the seller - do your best to meet them. Maybe you'll have to move in with your parents for a few weeks or move more quickly than you had hoped but remember - you'll be moving into the house you love. The temporary inconvenience will be quickly forgotten.
Contingencies - The typical offer contingencies are financing, inspection, and in the case of condominiums, satisfactory review of the condominium documents. You should have a letter of preapproval from your lender at the ready. Be aware that some buyers may very well drop any and all of their contingencies. You have to decide if you are comfortable eliminating any contingencies. Perhaps you have cash on hand from a previous sale or your parents will back you up and you're open to the idea of dropping a financing contingency. Or you had the chance to go through the property with an inspector prior to submitting your offer.
Everyone's situation will be different and everyone's risk tolerance varies as well. Decide what if any contingencies you're comfortable eliminating. And if you are including contingencies discuss with your agent how to minimize the impact - by tightening dates, increasing the dollar value of repairs you're willing to take on, etc.
Deposits - Expectations for deposit amounts vary in different states and regions. Talk to your agent about the norms in your area and consider increasing the deposit. Thist doesn't cost you anything since the deposit will go towards your down payment. From the sellers' perspective, however, it shows evidence of the seriousness of your offer.
Respect The Emotions Involved In Selling A Home
Don't forget that selling a home is often an emotional transaction. Honor that. The sellers want to feel good about passing on their home to its new caretakers.
Now is not the time for pointed questions or asking for repairs - though that time may come if you've allowed for an inspection. Remember - you're being compared with other buyers. Don't stand out as a pain in the neck - it's not to your advantage if you want the house.
Keep extraneous issues out of the offer. You're buying a house - not the furniture. Focus on the goal and talk about extras later.
And one no-cost but often very effective tool is a letter to the sellers. Write about who you are, why you love the house, and how you'll take good care of it. Mention any special things that stood out to you. If you can tell the sellers took good care of the house say so. If you like their decorating mention that. Sellers will often remember and remark about the letter weeks after receiving it.
Ultimately the seller wants the best price and the fewest hassles. And if they can feel good about the new caretakers of their family home all the better.
What Happens Next?
There aren't any rules for how the seller chooses an offer. You may get an opportunity to better your offer and resubmit at an agreed upon time. Or the seller may choose one of the offers on the spot. It's typically to your advantage to submit as strong an offer as possible in the first round. But it also might not a bad idea to have a small buffer so that you can increase your offer by a few thousand if given the chance. But remember - you might not get that chance. Plan accordingly and put your best foot forward.
Go For It!
Some buyers are tempted to walk away from a multiple offer situation without even making a bid. But if you've found the house you really want - give it your best shot. A multiple bid situation is not insurmountable. And you can't assume that you'll have to write a sky high offer to get your offer accepted. When I sold my first house, purchased in a bidding war during a down market, one of the first people at the open house was one of the other bidders from five years before. I never regretted buying that house and for him it was the one that got away. So - work with your agent, craft your bid, and know that you've done your best. And maybe, just maybe - you'll be the happy new owners. Good luck!

This is a good article from the New York Times which I think sums up the attitude of our market overall. What will happen after the election, I am optimistic. The question is what is the catalyst for moving buyers to take action and more importantly having sellers realize the real market value of their ome is the best offer they have at them moment!
I have been telling homesellers that every offer should be treated as if it were the only one the seller will receive.
January 2, 2009
Catskill Home Prices: How Low Will They Go?
By FRED A. BERNSTEIN
RANDY FLORKE, a real estate broker who specializes in weekend houses in the Catskills, ought to be distraught.
Some sellers have had to reduce prices by a third or more. (His own house in Livingston Manor, which he had hoped to sell last year for $299,000, is now listed at $199,000.) And still, he said, buyers are scarce.
But during a drive last week past some of the houses he would like to sell, as sunlight reflected off the perfectly white snowbanks, the situation seemed far from bleak. Mr. Florke said that, if anything, “part of me is thrilled about this market.”
When he started selling weekend houses in 1996, he said, prices in Sullivan County (the heart of what has traditionally been called the Catskills) were so low, he was able to help Manhattanites of modest means buy second homes.
“It was an exciting time,” he said, recalling days when young couples, with only $100,000 to spend, could find a farmhouse fixer-upper. “And I feel like we’re recapturing that moment,” he said. He recently listed a house for $85,000, a price, he said, he hasn’t seen in years.
Mr. Florke, who has several other businesses, can afford to be sanguine. But for many in the Catskills, this is a tough winter.
“Buyers think everything should be a fire sale,” said David Knudsen, a broker at the Catskills Buyer Agency in Liberty, who said the average sale prices declined more than 15 percent from November 2007 to November 2008. At the same time, by all accounts, the number of closings has declined substantially.
The tightened credit market is part of the problem. But even those buyers who can get financing are playing wait-and-see. “They don’t have one iota of motivation to do anything,” Mr. Knudsen said, because they think both prices and interest rates are going lower.
At the same time, Mr. Knudsen said, “many sellers are in la-la land,” unwilling to recognize how low buyers expect prices to go.
And that — the expectations gap — means houses aren’t selling.
In early October, in his Catskills real estate blog, blog.catskill4sale.com, he called the situation an “economic Armageddon.”
A few weeks later, Sullivan County’s largest brokerage, Yeager Realty, with 40 agents in Liberty, Bethel and Rock Hill, shuttered its offices, after a 24-year run. (The company’s owner, Paula Yeager, said she would continue to work from home.) .
Indeed, with so many fewer serious buyers, Mr. Knudsen said, he thought the best advice to some sellers was to close up their houses for the winter, rather than keep them open for the occasional — very occasional — showing.
“If they want to come up for a weekend, they can stay in a motel,” he said. It’s cheaper, he said, than heating the house all winter.
True, Ronny Murphy, a broker at Coldwell Banker Currier Lazier, in Rock Hill, said she has sold a few places recently — one, in Fremont, was reduced to $205,000 from $300,000 — and that she had a “quite a few” people looking in December. Some of them figure “real estate is a better place to put their money than the stock market,” she said.
At the same time, Ms. Murphy said, a number of sellers have taken their houses off the market, because the Multiple Listing Service reports how long they’ve been for sale, and they don’t want the listings to say “one year.” They’ll put them back on the market, as fresh listings, in the spring, she said.
Mr. Florke said that he had an offer on his own house, but the buyer needed financing, which required an appraisal. And the appraiser said he couldn’t come up with comparables, because there hadn’t been any sales nearby in several months.
Homeowners who haven’t been able to sell include Mark and Lisa Hellman, who own a large farmhouse on a spectacular site in Youngsville. After buying the place for $275,000 in 2004, they put $500,000 more into a gut renovation. “I got my dream kitchen,” said Ms. Hellman, surveying her six-burner Viking range and Sub-Zero refrigerator, amid a sea of tasteful cabinetry. The entire house is ready for the cover of a magazine, thanks to the decorating efforts of Ms. Hellman (who is an executive of the fashion house Versace).
But the Hellmans — who have two small children and are considering exchanging their city and country homes for a single suburban residence — put the house on the market in mid-2007. At the time, they were asking $1.2 million. Soon they had an offer for $1 million, which they rejected as too low.
Now their asking price is $985,000, and still no one has looked in months, said Mr. Hellman, an executive of his family’s building maintenance company, Temco Service Industries. That may reflect a particular softness at the high end of the market, Mr. Knudsen and other brokers said.
But the Hellmans have something in common with many people offering houses in the Catskills: they don’t need to sell.
“You don’t see a lot of distressed sellers up here,” said Dorothy McArdle, the owner of Apple Tree Realty, in Andes (a small town in Delaware County). People who bought second homes in the Catskills, she said, have tended to buy places they could afford, and to make large down payments. “You don’t see the high loan-to-value ratio” that is causing problems in other areas, she said.
The owner of a house on a pond in Andes recently lowered the price to $299,000 from $329,000, said Ms. McArdle, who is listing it. She said she had seen “some reductions more drastic than that, but in those cases the original asking prices were inflated to begin with.”
Having sold real estate in Andes for 30 years, Ms. McArdle said she remained “optimistic about the market.
“Right now, people are scared. We need to get through the inauguration, through the winter. At the end of March, the beginning of April, we’ll see an increase in activity.”
But at what prices? Mr. Knudsen said the Catskills were seeing “a move to moderation.” He said that in 2007 “the sweet spot in the second-home market” — where a mid-range New York City buyer would be looking — was around $325,000. “That would have bought a chalet-style house,” he said, “with wood floors, cathedral ceiling, three bedrooms, two bathrooms — a really nice getaway.”
A year later, he said, buyers expect to pay about $100,000 less. “The buyer that I’m seeing in what I call the mid-range — employed, not wealthy, the middle-class urban buyer, looking for a getaway — is looking in the mid-200s. But I don’t know that their expectations have necessarily shrunk as fast as their budgets.”
Some of the biggest bargains may be not in homes, but in homesites. In mid-2007, Redstone Properties, a national developer of subdivisions, began marketing lots in Bethel, in Sullivan County. The lots were priced at $149,900 and up. Some of those same lots, which range from 4 to 10 acres, are now available for as little as $69,900, according to Toby Potterton, the sales manager for the development, the Highlands at Bethel. He said that the company was actually bullish, and that it wanted to sell the land so it could use the money for larger projects.
Undeveloped land isn’t the only real estate available for under $100,000. When a neighbor asked Mr. Florke to list his house — a cute cabin with an unfinished interior — Mr. Florke decided to price it at $85,000, making it his least expensive listing in years. (In 2007, he would have asked almost twice as much, he said.)
“Everyone asks, ‘Are we at the bottom?’ ” Mr. Florke said. His answer: “I don’t know, but there are some great deals out there.”
Indeed, he said, “this may become one of those periods that people look back on with nostalgia, talking about the bargains they were able to pick up.”

Glitzy Greenwich feels hedge fund pain
© Thomson Reuters 2008 All rights reserved

GREENWICH, Connecticut (Reuters) - As many hedge funds suffer big losses and anxious investors yank out their money, the town synonymous with the riches of their recent glory is now hurting.
In Greenwich, Connecticut, the luxury car dealers are quiet, the prices of mansions are declining and the retailers who have made a good living serving its wealthy residents are complaining about a sudden drop in business.
"Everything is down. We started to see it in the summer, but October is when the bottom caved in," said James McArdle, whose family has run McArdle's Florist and Garden Center in Greenwich for 98 years. "Housing sales are down and so that always cuts into our market. Fewer buyers, fewer makeovers."
For as long as there's been a Wall Street, titans of finance and industry have built their palaces in this shoreline town 30 miles from New York. Later it became home to hedge funds -- lightly regulated investment pools that made rich clients richer and turned their managers into billionaires.
According to Hedge Fund Intelligence, this town of 62,000 was until recently home to 35 firms that together managed more than $200 billion of assets, greater than the annual GDP of nations such as Chile or Malaysia.
Now, two months after the bankruptcy of Lehman Brothers and the near collapse of American International Group, financial markets are still reeling and government bailouts of banks and other financial companies continue at a breathtaking pace.
After the worst back-to-back months in a decade, some expect one third of hedge funds will be forced to shut down and others will become much smaller than they were. Billionaire investor George Soros, one of the world's first hedge fund managers and among the most famous, has predicted the industry would shrink by as much as two-thirds.
Visit this town and it soon becomes clear that things aren't quite what they used to be. One recent weekday morning, the only creature strolling the showroom floor of Carriage House Motor Cars was a tiny mouse.
Richard Koppelman, owner of rival luxury dealership Miller Motorcars, did not want to discuss his sales. "We're in a cyclical business. It's obviously down right now. We'll hopefully see things get better soon," he said.
For now, there are fewer people able to splurge on cars like the 2009 Bentley Continental GTC, which Miller's website lists at more then $212,000 or a "base" 2008 Ferrari 612 Scaglietti coupe for just $263,500 and change.
The town itself is bracing for a slowdown in taxes and fees generated by property sales and new home permits. It froze hiring to hold headcount down.
"I think everybody is cautious. There's a high level of uncertainty," said Peter Tesei, the town's first selectman, an elected post akin to mayor.
For years, Greenwich benefited from hosting these funds, he said, but now these benefactors have less to spend. One tree service firm suffered a 30 percent decline, Tesei said, while local charities and cultural centers expect donations to fall.
The town's top notch Bruce Museum, which is operated by a private nonprofit organization, recently postponed a $16 million expansion in light of the market downturn, Tesei said.
Worries about the future have chilled the heady world of Greenwich real estate, where the average transaction price is $2.5 million and prices exceeding $20 million are not uncommon. Since markets were upended, real estate agents say houses are staying on the market longer and prices were down.
"There are fewer people buying $10 million, $20 million homes. We're seeing an adjustment, a correction taking place," said Roxana Bowgen, an estate agent at Engel & Volker, an international broker of high-end properties. "These things have to happen. After a while, things need to be cleaned up."
Bowgen, a former commodities trader at Phibro, stressed that houses are still being sold, but the pace has slowed. Banks demand two appraisals rather than the one or even none asked for in the past, she said. Mortgages are harder to get.
"People are in a wait-and-see mode. Buyers are not ready to jump in without asking a lot of questions. They're taking their time -- there's a lot more inventory," Bowgen said.
Realtor David Ogilvy of Ogilvy & Associates noted many managers he knows have weathered the financial storm, some by holding big piles of cash or correctly betting markets would fall, but they are being discreet about buying big homes.
Still, "We're definitely slower than we were," Ogilvy said. "Some people who have taken it on the chin, they were heavily leveraged. We don't know who they are yet."
For now, the proud citizens of Greenwich remain upbeat. The heart of the town is Greenwich Avenue, a mile-long stretch of high end shops that rivals the offerings of Beverly Hills. Besides some home grown luxe merchants and restaurants, there are elite national brands such as Coach, Saks and Tiffany's.
Even the police provide personal service. In lieu of traffic lights, officers stand watch over several intersections to usher shoppers across the street and scold jaywalkers.
Terry Bettridge, whose family has run Bettridge Jewelers on the Avenue since the 1940s, said the fall of Lehman has hurt a business where customers spend $10,000 to $50,000 at a time.
"Business was phenomenal in the first quarter. When Bear Stearns fell apart, things began to get a little wonky but were still up. But when Lehman went under, there was a precipitous fall in business," Bettridge said.
Another sign of the times is that a third of Greenwich High School's 2,700 students -- most raised in affluence -- are seeking jobs through a school-sponsored placement service and the number of new students registering for the service jumped to 230 in September from 170 last year.
In general, people are starting to keep a tighter hold on the purse strings.
"My clients are being a little more cautious. They're not doing everything at once. They're being more thoughtful," said Cindy Rinfret, who owns an interior design and decoration business that carries her name. "Before, it was 'How quickly can you get it done?'"
Rinfret, who wrote a book on style featuring Greenwich's colonial, Tudor and English country style houses, said her business has held up well. Some clients who cannot sell their house are spending to improve their surroundings, she said.
Residents have not stopped spending completely, but they're being a little more thrifty, she said. A friend planning a party for 150 people invited 20 close friends instead after a big drop in financial markets.
Luxury merchants are adapting to the environment, too, reaching out to customers.
"Given everything going on, things are good. But I wont lie to you: are we feeling it? Of course," said Scott Mitchell, a co-owner of Mitchell's. The family-owned department store sells high-end jewelry and clothing from brands such as Brunello Cucinelli and Hermes, and even Ralph Lauren sweaters costing $1,000.
Business has remained strong, though the store is adapting to the environment, he said.
"We are keeping our inventory in balance. That's our biggest expense. We're cutting expenses that don't touch the customer. We are trying to reach out to our customers, one-on-one, and thank them for their business," Mitchell said.
Greenwich merchants observed that the town was affluent long before the hedge fund boom and has weathered downturns before. Its proximity to New York City and top-notch facilities, they said, will always make it a destination for wealthy families.
"You're talking about a town that historically has housed some of the greatest wealth in the world," said Ron Cavalier, who sells artwork at Cavalier Galleries. "My guess is that, of all the towns, Greenwich is going to be affected the least."
(Reporting by Joseph A. Giannone; Editing by Eddie Evans)

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