Ms. Lank: We need advice fast. We've found the house we want. What can we do to feel out the seller before we sign anything? Is it usual to start low and bargain back and forth? Does an offer have to be written? — askedith.com
Answer: First off, there's no point in discussing price. In the sale of real estate, oral offers, and even oral acceptances, don't count. They're not legally enforceable. Don't bother "feeling out" the sellers — you might just get them riled up.
You've probably been looking at comparable properties, so you must have some idea what the place is worth. Before you begin, and before emotions take over, settle in your minds the top price you would really invest in the house if you had to.
Should you expect to pay full asking price, or is there a formula for the amount of bargaining built in by the sellers? The answer is simple: It all depends.
Homeowners who hate haggling may have listed their house at a rock-bottom price with no room for flexibility. Others may have added a 5 percent cushion to what they'd really take.
If the property has been on the market for months, the buying public is voting that it isn't worth the asking price. If, on the other hand, it's just been listed and your local market is "hot," consider offering something over list price. This will give you an advantage over competition. It sounds suspicious when a broker recommends such an action. This is where it helps for you to already know and trust your buyers' agent.
If you've been looking extensively in that area, you may be the best expert on neighborhood values for a short time. In an unfamiliar area, ask your agent for sale prices of comparables. Those are similar homes that recently changed hands in that area. Other considerations affecting price include the condition of the house, the time of year, any special financing available and the general economic climate — whether it's a buyers' or sellers' market.
You may be curious about what the homeowners paid for the property, but that's not at all relevant. How much they've invested in the place is their concern, not yours. In the end, as appraisers say, "Buyers make value."
Forget about starting low with lots of bargaining in mind. That can lead to hard feelings. People start to say, "It's not the money. It's the principal of the thing," and there goes the ball game; instead of working together toward what is known as a "meeting of the minds," negotiations become a war.
Make your first (written) offer close to the top price you'd really pay. The idea is to tempt the sellers to take it, even if it isn't exactly what they aimed for.
Ms. Lank: In your recent column, you wished that someone would write and tell you how their experience with getting rid of a timeshare worked out.
We bought a timeshare in Mexico quite a few years ago. After a few visits there and trading to other resorts, it became difficult to trade for what we wanted, and the fees were increasing yearly.
I called the resort to see what the options might be, but since we had paid cash, it didn't want anything to do with us. I tried to sell it through ads and lost several hundred dollars with no results. In the end, I just stopped paying my yearly maintenance fees, and even though I was told it would affect my credit, I never heard another thing from the resort and there was no negative impact on my credit.
It is a problem. And in hindsight, I never would have purchased it and was glad to be rid of it! — B. O.
Answer: Thanks for sharing your experience. As always, a timeshare may be considered a pleasant way to visit a favorite resort, but it shouldn't be considered an investment.
Dear Edith: I am interested in information on selling and buying with a reverse mortgage. I am retired and over 62 years old. — P. R.
Answer: Yes, you can use a reverse mortgage to buy a home. You'll have to make a substantial down payment, perhaps with money from the sale of your present house. After that you won't have to make any monthly payments. They'll just pile up, not to be repaid until you die or leave the house permanently. How much you can borrow depends on your age (more if you're older) and the value of the house.
The AARP website has useful information, and you can get specific information from any lender that handles FHA-insured reverse mortgages.
Contact Edith Lank at www.askedith.com, at [email protected] or at 240 Hemingway Drive, Rochester NY 14620.