Bob Jenkins

This morning, I was coming up the back side of the toughest hill on the Clementine Connector, running easily with my indispensable partner, Dharma the Wonder Pooch. I crested the hill top to find two beautiful women resting on their bicycles. They had just powered up the tougher front face of the hill. One woman had long, dark, curly hair; just my type. The other had a long, silky blond pony tail; just my type. (Except for red heads who are also . . . just my type). Long legs, athletic builds. Oh my. They were startled, briefly, with my unexpected appearance, but quickly gave me big grins. I had spread my arms wide with my palms to the heavens as if to say, "Oh Lord, thank you for this exquisite sight!" They totally "got it," my response to their tableau. Without slowing down I ran between them, a quick exchange of pleasantries:

"You made it!"

"You, too!"

"How you doing?"

"Wonderful!"

"Me, too!"

As I ran past the brunette, she gave me an opportune high-five.

<slap>

I dropped down the front side of the hill, still grinning my face off and thinking, "Life is GOOD!" I was also pleased to be wearing my sleek black running tights and my "Marines" muscle T-shirt. As they continued on with their ride, they might have had a complimentary word about the Marine with the handsome yellow lab. Hey, you never know.

My wife and I have been having an 8 month affair with Madeline. Secret meetings, never calling her home phone number, destroying any paper trail that might link us to her, especially documents that might allude to our profession. Shhhhh! Real estate agents.

Madeline (not her real name) has been house hunting on the sly. We are her co-conspirators, sneaking around town and entering homes for sale. We don't have to break in, exactly; we do have licenses and lockbox keys, and computers and offices, and reputations, and stuff like that.

What we don't have, that Madeline does have, is a scary, abusive boy friend. This "man" has not physically assaulted her (that we know about), but he is a verbal and emotional rapist, a skilled bully, and a master manipulator. "If you ever leave me, I'll kill myself." Do you know this asshole? I bet you do.

Except for her propensity to hook up with soul-sucking vampires, Madeline is an otherwise sharp cookie, and in fact, the kind of tough broad I really like. Her profession? Maintenance technician. Madeline is a janitor. She can re-seat a toilet on a new wax seal faster than you can. Madeline's got game. She's also got some good common sense and had managed to save and hide about $200,000. She planned on putting down $60,000 (about 20%) and borrowing the rest.

So for 8 months we shopped for Madeline's sanctuary. Like most of the buyers today, she was stuck on "foreclosures and short sales." She thought "distressed property" was a magic incantation that would conjure the deal of the century. Seven failed offers later (I'm not making this up), my wife finally found the perfect home for her. It was not a short sale or bank-owned home, though it was being sold by the trustees of an elderly woman who had found her own sanctuary in a local care facility.

I'll use the real numbers here. The asking price was $299,000 which Maddy was eager to pay. I had to talk her into making a lower offer. She wanted this house! Buyer and seller agreed on $289,000. Let's blast through the usual escrow ups and downs, appraisal, inspections, loan conditions, repairs, contingencies, and mountains of paperwork. Yesterday afternoon, the title officer called with the real magic words "We're on record."

I drove into Auburn at sundown, one of those beautiful evenings, warm and soft. I kept reaching down to feel her keys in my pocket; just making sure they were still there. We met at her new home and gave each other a hug. We turned and looked at Sanctuary, sitting up there on its own little hill, surrounded by tall pines and old oaks. We imagined what it was going to look like with a fresh coat of paint, her choice of colors.

I felt pretty damn good. Ya' think?

So, why don't you join me in a round of applause? Raise your glasses high, and let's give a big cheer, Hip Hip Hoorah for Madeline!

In this buyer's real estate market I have noticed three common negotiating psychologies.

Let's start with an asking price of $200,000 for an average suburban home. Of course, there are many mitigating factors. How long has it been for sale? What's the condition? Has there been a price reduction already? What else is available in the area? And so on.

Negotiating psychology #1. The buyer really, really wants this house. Buyer feels that it is worth the asking price and is willing to pay asking price. But it's only "good business" to offer less and see what kind of price reduction might be possible-without pissing off the seller. Remember, the buyer wants this house. Here's a typical sequence:

Buyer offers $180,000.

Seller counters $195,000

Buyer re-counters $185,000

Seller re-counters $190,000

Buyer accepts $190,000

Buyer is happy, seller is happy. Remember, this is a buyer's market and the seller will usually give some discount.

Negotiating psychology #2. This is the meet-in-the-middle psychology. The buyer wants the house, but will not be broken-hearted if the negotiation fails. Buyer feels that the house is over-priced or, perhaps, it's just more than the buyer can afford. Buyer, coached by an adroit realtor (yep, that was a commercial), understands that the seller has "padded" the asking price to eventually arrive at the price that the seller really wants. Buyer picks a point square in the middle between asking price and buyer's offer. Essentially, buyer is saying, I'll come up the same amount that you come down. Fair is fair. Even-steven. Typical sequence:

Buyer offers $140,000

Remember, this is a buyer's market and buyer's can get away with his kind of "low-ball" offer. What is buyer after? The point half-way between asking price and offer price, that is, $170,000.

Seller counters $190,000

Buyer re-counters $150,000

OK, the game's afoot. Both sides know the rules. Equal reductions and raises will arrive at $170,000. It's in the seller's court. If $170,000 is acceptable as a final price, seller will signal such with a re-counter of $180,000. If $170,000 is too low for seller, seller will do one of two things (a) re-counter at his previous number of $190,000; this is a sign-off; take it or leave it (b) re-counter at $185,000. We can still talk, but, Bubba, it ain't gonna get to the middle.

Seller re-counters at $180,000

Buyer re-counters at $160,000

At this point, if not before, the realtors will probably confer off the record, asking each other if $170,000 will work. Yes? It will? OK.

Seller re-counters at $170,000

Buyer accepts at $170,000

Not bad. Both parties feel pretty good about the final price. Have you seen the flaw in this scenario? Hmmmm? Fifty Imperial Blog Points if you can uncover the arbitrary variable in this problem

Negotiating psychology #3. Buyer likes the house, but only at a bargain price. Buyer thinks the asking price is way too high.

Buyer offers $125,000

Seller is royally pissed, and probably worried. Seller wants to tell buyer to "get stuffed," but seller's adroit realtor calms seller down. "Let's see what buyer is up to."

Seller counters $185,000.

Buyer re-counters at $135,000

Seller re-counters at $180,000

Buyer re-counters at $135,000 (!)

Buyer has re-countered at the previous offer! Buyer's cards are on the table. Seller now knows buyer's final offer is probably $135,000. There will be no meeting in the middle. Negotiations are over unless the seller is desperate. It was a long shot anyway. Sigh. But let's pretend that seller is desperate and makes a final effort to keep the buyer on the hook.

Seller re-counters $150,000 (seller has capitulated)

Buyer re-counters $140,000 (sends brother out for champagne)

Seller re-counters $145,000 (have mercy on me)

Buyer re-counters $140,000 ("$140,000 is $5000 above my "final" offer. That is mercy.")

Seller accepts $140,000

Buyer is happy. Seller . . . well, seller might be bloodied . . . or secretly gleeful to dump the property at any price. Who knows?

Sure, these three scenarios are over-simplified, and lots of stuff can and will happen.

• Some people are better poker players than their opponents.
• Emotions on either side can explode and the whole thing can shatter into little pieces.
• Prices are often . . . weird. We get a counter at $171,836.89. WTF does that mean?
• Both sides can agree on a price and the damned appraisal comes in $40,000 below the agreed price.
• One side can have an adroit realtor, and the other side can have a weak realtor, giving one side an advantage over the other.

In an upcoming post, I'll discuss tactics for arriving at offer prices on bank-owned properties.

Till then . . . Think Bob.

Go west from the Alaskan town of Bethel, almost to the coast, out in the tundra where the tallest vegetation doesn't come up to your knee, you'll come to the dismal Yupik Eskimo town of Newtok. This village of 305 suffering Indians is slowly sinking into the thawing permafrost. The Ninglick River is rapidly tearing away the shoreline. You walk around on plank sidewalks that squish into the muck. Every inch of ground is wet or underwater. Every puddle is a seething brew of E.Coli from the honey buckets that are emptied wherever possible. It's a mess.

Newtok, Alaska

I don't have to tell you what's causing this. The permafrost turns into a soggy sponge, the glaciers melt and swell the rivers, ice packs recede leaving the coast unprotected from winter gales. Yep, global warming. Some say it's not our fault. The Yupiks don't agree. They're begging for help, and while waiting for it, suing the U. S. government for its failure to curb greenhouse gas emissions.

The young Yupik men play poker, drink moonshine, and cook meth. The high school girls search the hands of visitors for wedding rings. "Take me the hell out of here!" I know these things are true because my son, Luke, is up there right now trying to help these people relocate to higher ground.

Robert "Luke" Jenkins, USMC

Along with a handful of other enlisted Marines, a few soldiers, national guardsmen, and one inexplicable Air Force captain, Luke's little task force is camped 9 wet river miles from Newtok. We've heard from him twice, late at night on a satellite phone that he, in the best tradition of the Corps, boosted from the Army. All things considered, the crummy weather, bad food, no booze, and few smokes, Luke says he's happy. I believe him. He's on the forward edge of the planetary battle lines fighting a war worth winning. He knows this. He's profoundly aware of the great privilege he enjoys just being there and doing what he can in service to the Yupiks, his country, and all of us down below. My son, the warrior. Could any dad be more proud?

If you have the software, use Google Earth get a glimpse of Newtok, Alaska. The shot above is a couple of years old, so you can imagine it now, mostly underwater. You can also Google Newtok, Alaska to read about the deplorable conditions Yupik Indians are enduring.

Warren is a 46 year old bachelor who has rented a condominium at $900 a month for almost 10 years. He has never owned his own home. Over the years he has kept his credit clean and managed to scrape together $35,000 that he keeps in a low yield CD.

Warren walked into an open house I was holding in a nearby condominium. I had it for sale at $149,000. We got to talking, and we started scribbling numbers. If we could get the sale price down to $139,000, we calculated that he could buy the condominium with a 20% down payment and end up with a monthly nut of $865. That nut included his mortgage payment, taxes, homeowners association dues, and a little insurance policy for his personal stuff.

I was, in fact, able to negotiate a sale price of $139,000. We found a conventional 30 year fixed-rate loan at 5.25% with one point for the broker. Over, under, and through the obstacles of today's typical escrow we climbed, crawled, and blasted.

Yesterday, I gave him the keys to his own place where he pays $35 less than he was paying on rent. Did I fail to mention his excellent first-time home buyer's credit of $8000 and the usual mortgage interest adjustment to gross income that he will enjoy next year for the first time in his life and every year thereafter?

In these grim days of real estate gloom and doom, there are terrific success stories, and Warren is one of them. What do you say? Let's raise our glass and toast the success and happiness of Warren!

He's an ex-Marine, by the way, so I'd like to add, "Semper Fi, Brother!"