What's it cost?

By
Real Estate Agent with Samsel & Associates 0790808
https://activerain.com/droplet/LMK

We've been working with a young couple who've been looking to buy their first home.  After looking at 10 or 15 houses (a couple more than once) they finally found their dream home.  It's a beautiful 3 bedroom. 2.1 bath split, on a large lot, with tons of recent updates.  

So after our second look at it, they said let's write an offer.  We showed them comps and they agreed to offer $310,000 on the property which was listed at $335,000.   After a day the seller's agent came back with a counter offer of $322,000.   Seems fair.

I spoke to the buyers and informed them of the counter offer.  They stated to me, "we're going to stick at $310,000, it's really all we can afford."  I hung up the phone, reeling a bit and contacted the seller's agent to let him know.  He called me the next day and told me the owners will go to $316,000, but that's their rock bottom price.  I reached out to our buyer and let them know about the new counter offer.   Our buyer said, "I guess we'll have to keep looking."  

The next day I was playing with the numbers and I realized that at the mortgage rate the buyer's were quoted  (3.25%) that the difference in their payment would only be about $18 a month.   I then did the math based on $310,000 and realized that if the rates went up .25% (which is not unlikely) that their payment would be more than $65 a month more than at the current rate.  

I quickly called the buyer and told them my findings.  I explained that the extra $6000 equates to two packs of cigarettes a month.  Did they really want to let this house get away?

The next morning the buyer reached out and said "Let's do it!  It's foolish to let it go for such a small difference per month."

So last night at 8pm we resubmitted the contract for $316,000 and today the seller is going to sign off on it!

This is a classic case of looking at how much a house costs, as opposed to just focusing on the price. 

Cash Register

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~ Wayne & Jean 

Union County, NJ - a great place to live and work!

If you're looking to buy or sell a property in Union County, call us at 908-917-4189 or email TeamZuhl@gmail.com.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Susan Haughton 11/19/2012 09:59 PM
Topic:
Lending / Financial
Tags:
sales
seller
new jersey
price
buyer
cost
interest
real estate
mortgage

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Ambassador
1,678,435
Alan May
Jameson Sotheby's International Realty - Evanston, IL
Helping you find your way home.

Who smokes cigarettes these days!?  Other than that... brilliant thought pattern.  Back in the day, I used to tell clients that it cost about $5.00-$6.00 per thousand/per month... but today (at rates like those) it's even less.  As you point out, down around $3.00/month.

Nov 19, 2012 06:24 AM #4
Rainer
17,278
Kimberly Schaefer
Coldwell Banker Heritage - Dayton, OH

That is great!!! I think it is important to be able to break it down for buyers.  Sometimes they get lost in the final price without and realizing what it means.  I think most people want there agents to be straight with them.

Nov 19, 2012 06:28 AM #5
Rainer
95,548
Shane Barker
Amerifirst Financial, INC. - Salt Lake City, UT

What a great story and example of finding a way to make it work and putting it in a context that all parties can understand and feel comfortable with!

Nov 19, 2012 06:50 AM #6
Rainmaker
421,084
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Wayne & Jean, 

Way to work out the best for your clients.  It's important to put everything into consideration.

All the best, Michelle

Nov 19, 2012 09:02 AM #7
Rainmaker
1,064,087
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Jeanne, your clients are lucky to have you as their Realtor. One of the most important parts of our job is to empower our clients by providing them with the knowledge to make educated decisions about their purchase or sale.

Nov 19, 2012 10:28 AM #8
Rainmaker
206,170
Sophia Lin
Intero Real Estate Services - Sunnyvale, CA
Sunnyvale CA Real Estate Specialist

Hi Wayne & Jean, good for you to do the math.  I hear about that, but I haven't really applied it myself, that could really make the difference of making or breaking the deal!

Nov 19, 2012 10:41 AM #9
Rainmaker
1,579,121
Mike Cooper, GRI
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Good job, WJ.  A little finese is good to help some buyers see the benefit of a purchase.  You definitely found the right solution for this couple.  Way to go.

Nov 19, 2012 10:52 AM #10
Ambassador
1,704,310
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

That was so smart of your part. Good thing your buyers were working with such smart agents.

Nov 19, 2012 10:55 AM #11
Rainmaker
661,621
Tanya Van Blake-Coleman
Van Blake-Coleman Realty, St. Thomas/www.talk-to-Tanya.com - St Thomas, VI
Improving the Quality of Your Life

Great job. It is all about prospective. It is this kind of "interpretation" that a good agent brings to the table.

Nov 19, 2012 11:10 AM #12
Ambassador
1,172,560
Jerry Newman
Brown Realty, 210-789-4216,www.JeremiahNewman.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

It's all about the numbers, and you were able to convince your buyers that this home was actually in their price range after all. Keep up the Good Work!

Nov 19, 2012 11:29 AM #13
Rainmaker
1,317,651
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Buyers and Sellers often focus too much just on the price.  There are a lot of other considerations for both.  Looking beyond the price to discover what else is important to the parties is often the key to putting a contract together.

Nov 19, 2012 12:02 PM #14
Rainmaker
752,640
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

It's always good to make a case with the hard numbers.

Numbers don't lie.

Nov 19, 2012 03:14 PM #15
Ambassador
2,010,522
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M
Wayne and Jean - Sometimes people really need to understand just how little the extra cost will be.
Nov 19, 2012 03:38 PM #16
Rainmaker
1,348,347
Wayne and Jean Marie Zuhl
Samsel & Associates - Clark, NJ
The Last Names You'll Ever Need in Real Estate

Thanks, Rich, Adam, Michelle, Christine, and Sharon :)

Rebecca, Jerry, and Sophia  - with interest rates so low, it's an easy argument to make.

Alan - you're so right. Yuck. Hardly ever see them any more.

Kim and Shane - sometimes taking an outsider's point of view helps people to see things more clearly.

Mike, Tanya, and Tammie - you're too kind :)

I couldn't agree more, Joan.

Pete - emotional arguments lead to rebuttals and stubbornness. Logical arguments, especially empirical ones, can't be debated.

 

Nov 19, 2012 07:25 PM #17
Ambassador
1,207,809
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

Great job Wayne and Jean.  Wait...  how much do cigarettes cost these days?  HOLY MOLEY I'm glad I stopped smoking years ago!!  

Nov 19, 2012 09:44 PM #18
Rainer
50,633
Barbara Bartell-Kamp
Keller Williams NY Realty - White Plains, NY
Westchester County NY Rentals, Condos, Coops, Home

I always have buyers let me know what they want their "total" monthly costs should look like. I point out, as all of you probably do, that you cannot just ,include mortgage cost, but taxes which do go up yearly here, electric, gas or oil, maintenance. With property taxes varying so much in Westchester County..from neighborhood to neighborhood can range from $7,000 to $18,000...the price point does really filter in. That max they can spend becomes different if the taxes are half!

Nov 19, 2012 10:00 PM #19
Rainmaker
2,505,322
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

This is one of my favorite topics...I always prevail when it comes to buying something because I understand the power of pennies when broken down...it amounts to nothing in the scheme of things...Why cant people see that I wonder?

Nov 19, 2012 10:13 PM #20
Rainmaker
231,133
Wayne Bennett
One Home Team Realty/Charlotte,NC 704-293-3931 - Charlotte, NC
Real Estate...As It Should Be

I always discuss monthly mortgage payment vs purchase price...if property taxes and home insurance is escrowed the only thing that will affect a monthly payment will be the loan amount and with rates where they're at, it's pennies..great job

Nov 20, 2012 01:42 AM #21
Rainer
147,871
Kimberly Tapscott
Keller Williams Prestige Properties - Stamford, CT
Giving you the service you deserve!
Wayne and Jean good job. So many times people don't see the forest for the trees. But it' s our job to bring the objective view, reality and perspective. Well done!
Nov 20, 2012 04:06 AM #22
Rainmaker
1,171,937
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Good for you pointing out how much your buyers were being stubborn over.  I am sure they didn't realize how little the difference was.  You made the deal happen.

Nov 20, 2012 04:42 AM #23
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Wayne and Jean Marie Zuhl

The Last Names You'll Ever Need in Real Estate
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