Burbank, CA

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What makes a real estate agent a good negotiator?

Certified Real Estate Negotiator
Lupe Soto (818)968-3718

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Quite often I see buyers and sellers request an agent with the number one prerequisite that they be a good negotiator. But what does that mean? What does that mean to the real estate agent and to the consumer who is requesting this quality? And does the consumer really understand what a good negotiator does in a real estate transaction? Is the real estate negotiator's job solely to get the price up for the sellers and down for the buyers or are there other issues that qualify a real estate agent as a good negotiator?

As a professional who has been practicing real estate since 2003, I attest that negotiations start even before the buyer sees the house or the seller puts the property on the market and does not end until after the closing papers are signed and even beyond. In this article I will focus on negotiating for the buyers (and only refer to the sellers, periodically) to provide a clarity of examples and not look for a parallel at every turn.

Since I work with first time home buyers and savvy investors, I can see clearly where my experience and expertise in negotiations is most valuable. Being astute listener is the best skill a good negotiator can have when it comes to get the buyers what they want. A real estate agent should understand the buyers' needs at first meeting. One achieves this result by asking the right questions and applying the answers to the criteria and the process of buying a home. If the buyers give an indication that they are not sure of their financial stability, this issue should be addressed foremost. If the buyers indicate that they are not sure of the area or criteria for their new home, the real estate agent must discuss and give options to formulate a better plan of action to achieve the ultimate result of acquiring a property.

Once the buyer is focused, it is time to look at what is available on the market. At times, preliminary negotiations take place at the appointment booking. As an example, when the property is priced at or above the buyers' financial comfort level, the real estate agent can finesse the information out of the listing agent as to the sellers' firmness on the price. This can go a long way once the negotiations on the offer take place. A good negotiator is a good researcher. A real estate agent who is worth his/her weight in gold will never give you an opinion of value without full market analyses, no matter how experienced they are in that location. Market changes practically on a daily basis and unless you write offers or go over market statistics on a daily basis you need a market analyses, specific to the subject property, to determine the home's value. The next step for a good negotiator is to plan out a strategy with the buyers to achieve the goal of getting that house and getting it at the price the buyers have decided they want to pay. At this juncture, the buyers should to be aware that, (especially in a seller's market) sometimes, an agent's job is to beat out the other competing buyers and just get that house for the clients. Sometimes a negotiating strategy has to be changed midstream when the agent finds out that there are multiple offers.

A good negotiator knows what questions to ask and how to ask them. Prior to presenting an offer, a good negotiator will talk with the listing agent to determine motivation, time line and any other elements of information which can be useful in negotiating the offer.

A good negotiator will make the buyers real and human to the sellers and listing agent. I always include an introductory letter with our offer, from the buyers to let the sellers learn a little about the buyers' motivation, interest in the house and financial ability. Rejecting a human being is a lot harder than rejecting a price that is too low. Knowing when to give a little is a good negotiating tactic. Beating up a seller on the price is not advisable even when you know you can. You never know when you might need something down the road. Being true to your word is paramount for a good negotiator. If you tell the seller that your offer expires at a certain time, make sure that it does. If you allow for something (such as an arbitrary time extension), the seller or listing agent will know that you will bend on other items as well. Work out all possible scenarios before presenting offers so that you know how to respond when the time comes.

A good negotiator is always negotiating . Through out the transaction, there will be times for discussion when buyers and sellers will want something from the other party. A real estate agent will use his/her experience to be sensitive to know when to ask and for how much. A good negotiator knows that the ideal negotiation is a "win - win" negotiation. There are no losers when it comes to a successful process, everyone should come out a winner!

There are no losers when it comes to a successful process, everyone should come out a winner!

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Housing Tracker is predicting a trend of -23.9% for Los Angeles area home prices and Homepredictor.com is prognosticating a 21.7% drop in prices for the Los Angeles area. Many economists are predicting that housing will not rebound in 2009. But how do you know what your area will experience?

Whether looking at Burbank or the San Fernando Valley, if you have followed real estate home sales for any amount of time you know that neither gains nor losses are ever uniformly distributed throughout a city or county. Certain areas experience the majority of the gains, other areas will experience more of the losses and it’s not always easy to predict.

The reason for homes in a particular area to be hit hard on the up or downside depends on many factors. From a macro economic standpoint things such as level of unemployment, industry strikes, bank lending standards, ie loose or tight, whether interest rates are headed up or down and how many businesses are entering or leaving an area all play a major role. On a micro level, you need to consider the accessibility of an area to transportation and jobs, condition of houses, specifically condition of the home being sold, curb appeal etc. Is your area undergoing gentrification or is it deteriorating?

Price is the one thing that sells in today’s market, but having said that, I have worked with several buyers who preferred paying a little more in order to get more of a turnkey or move in ready house.

If you are thinking about or need to sell your home in today’s market, be prepared to compete with the vast numbers of foreclosures on the market and :

Be prepared to do a pre-sale home inspection to avoid surprises when you are in escrow.

• Fix items that buyers will want fixed, or be prepared to negotiate the price down during escrow. Anything safety related such as electrical issues, foundation issues, roof repairs etc. will become a reason to negotiate a credit.

If you are a home buyer there are the obvious considerations:

Getting pre-qualified so you know how much home you can afford.

• Doing your homework on different areas so you can focus your home search.
• Condo vs. House…..consider association fees and proximity of neighbors.

Then there are the not so obvious discussions:

If you are married or purchasing a home with a partner make sure you are all on the same page regarding issues such as how much work you are willing to put into the home to fix it.

• Will you hire someone or do the work yourself.
• Are you ok with doing the work over the span of several months or several years?
• Are you willing to make the time commitment required to fix the house while living in it? Not everyone has the patience to handle the turmoil of a remodel with grace.
• Who will be in charge of getting the estimates, making actual decisions on paint, counter tops etc.
• Do you have a process in place to accommodate the flow of information and more importantly, settle disputes.

My point in bringing all of these issues up is that in today’s market, sellers have to compromise. Sellers are compromising on price, having to make certain repairs and buyers are compromising on condition of property, to a point. If it’s an all out bargain most buyers will come out from the sidelines, evidenced by the myriad of multiple offer situations we’ve seen over the past few months. But with so many properties on the market, and more foreclosures coming online it’s important to know your market and pricing.

There are both bargains and overpriced properties out there, it’s important to know the difference and your parameters before you decide to purchase or list your home.

Market Index

A market index of above 1.20 is a seller’s market, between 0.80 to 1.20 is a balanced market, and below 0.80 is a buyer’s market.

Dropped from 0.41, FIFTEEN points to 0.26. The last time there was a drop this big was the mortgage meltdown last fall.

New Listings - We had 88 new listings, compared to 79 in October, versus 64 in November 2007.

Pending Listings – Forty-four listings opened escrow, compared to 79 last month and only 25 last year.

Pending Ratio – 0.50, about even with October’s 0.49, it was 0.47 in November of 2007.

Average Sales Price - $546,479, which is 13.6% lower than last November – but UP from July and steady for the past four months.

Price per square foot $345.87, down slightly from last month. Down 15.7% from last year,but still above the this year's low in July.

It is amazing that even given the economic shifts occurring the market is still very stable. Aside from the large influx of condos, Burbank prices are holding steady. Expect the condos to sell at a bargain price and affect the averages.

My advice – interest rates are low, buy now. You might look back and say, "Gee, I wish I had bought back in December, 2008 when prices and rates were low."

Economic Recap:

• Pending home sales for September dropped 4.6%, worse than expected.
• Showing extremely weak numbers, total domestic light vehicle sales came in at 7.7 million annual unit sales. This the lowest since the recessionary times in the early 80s. The car rate of 3.9 million is the lowest yet in data going back to 1967.
• The October jobs report fell for a tenth-straight month, showing larger-than-expected job losses and the highest unemployment rate since 1994. Nonfarm payroll employment in October plummeted another 240,000, following a revised drop of 284,000 in September and a revised decrease of 127,000 in August. The For the year-to-date, the economy has lost 1.2 million jobs net.

• Federal Reserve lowered interest rates this week by ½% to 1% for the federal funds rate and 1.25% for the discount rate.
• Consumer Confidence is at it’s lowest level, ever! Or at least since they began tracking this number 40 years ago.
• So far this year we have had 17 bank failures.
• Chicago Purchasing Manager’s Index came in with a steep drop, from 56.7 in September to 37.8 in October. Readings below 50 point to slowing output, reduced orders, which point to reduced consumer spending and demand.
• Both the 3 month and overnight LIBOR rates have dropped. There is a great article….Uncovering the mysteries of the LIBOR, for those interested in further reading.

Be on the look out for the advance retail sales report due out end of next week.

As I’ve said before, I think many things need to happen for both the economy and the real estate market to turn around, but key elements include shoring up the unemployment situation as well as our credit markets. How quickly this will happen as well as cleaning up our mortgage situation will determine how fast we come out of the current quagmire.

As far as the Burbank and San Fernando Valley real estate market, we'll have to see how the local economy fares. We’re still not out of the woods with respect to unemployment and the recessionary back drop. How bank lending reacts to the current financial upheaval will prove to be a pivotal factor in our recovery as well as foreclosure bailout proposals being discussed by congressional leaders.

Burbank Real Estate Monthly Activity Report: 10-2008

Property Type: Residential

The columns for New, Under Contract, and Sold represent the number of listings that went into those statuses during the month. These are updated on the 1st and 15th of each month for the preceding month.

Month to month average sale price from September to October 2008 is up $, year over year, average sale prices are down by $ or %.

Average days on market, year over year are days.

Average square footage is % year over year.

Most notably number of sold properties is down 34% from September 2008 and down 22% from October 2007.

• According to the San Fernando Valley Economic Research Center, foreclosures soared 203 percent from July through September compared to a year earlier. 2,589 local families lost their homes in the market collapse.

• There were 854 foreclosures in the comparable period in 2007.

• The glut of homes on the market pushed down the median price, to $400,000 in September from $620,000 a year ago, down 35.5%. The price fell $21,000 from August levels.

• The median price of an existing, single-family detached home in California during September 2008 was $316,480, a 40.9 percent decrease from the revised $535,760 median for September 2007.

• Statewide, days on market and inventory on hand is down. We are currently at a 6.5 month inventory for California.

• The new home sales report for September points to the possibility that the sector has bottomed. New home sales came in at a better-than-expected annual rate of 464,000, up 2.7 percent on the month. The 464,000 rate is the first back-to-back below 500 rate since the '91 recession. Supplies are coming down and are at 10.4 months, down from 11.4 months in August. The median price, of $218,400, is the lowest in four years.

• Impressive reductions this last month in the foreclosure arena! For the San Fernando Valley, in the $200k-$400k segment (yes, there is plenty of housing out there in the neighborhood of $200k), I saw reductions ranging from several thousand to one hundred thousand dollars! This points to the fact that the banks are wanting to clear out some inventory, maybe some year end house cleaning? At any rate many homes have gone into multiple offer situations as buyers are out in full force.

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GREETINGS TO BURBANK INTERNET BUYERS:

Thank you for visiting my website www.BurbankinAction.com and trying my FREE SEARCH tools. 80% of Buyers find their home thru the internet and I provide the tools to make it convenient for your to view these properties in the comfort of your home!

I will be happy to continue providing you with excellent service via email until you are ready to meet with me. I will be happy to provide complimentary service to YOU, no hassle, no obligation.

I firmly believe you will realize and appreciate all the benefits I can offer you: free consultation, VIP service, from beginning to end Lupe is BUY your side!

FYI, I am highly educated to provide assistance to first time buyers with stable jobs with reasonable credit scores in need of down payment assistance, learn more: down payment assistance programs & grants, I can help you with the following programs: FHA Federal Housing Authority, VA Veteran Adminstration, CalHFA California Housing Financing, CHDAP California Home Buyer Down Payment, AHPP Affordable Housing Partnership, LAHD Los Angeles Housing Department. FOR INVESTORS, there are still easy loan doc with 10% or 20% down based on your fico score, please call or email me for more info.

The only favor I would like to ask you is to feel free to share with me your input/comments regarding the list of properties received, please feel free to request more information about them and also feel free to request more reports when you are ready to review more or visit my website for FREE HOME SEARCH http://www.BurbankinAction.com or http://www.BankOwnedSFV.com or http://www.IncomePropertiesWithLupe.com

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