Dana's Blog

I recently negotiated a transaction on my buyer's behalf. My buyer worked hard over several years to get her finances in order and scrape together enough cash for the down payment. However, she was short the cash to cover closing costs. When she spoke with her loan officer, they decided that the best way to approach this would be to set a ground rule that any home she would buy would need to include a seller's concession for x% of the sales price.

I always consult with the loan officers who have first pre-approved my clients so that I know what to expect. There are a few basic things we need to know up front and whether or not the buyer will require a seller's concession for closing costs and prepaids is one of them.

When I presented my buyer's offer to the listing agent, there was some resistance to the seller's concession. I believe this resistance mainly stems from a mistaken belief that a seller's concession is somehow illegal or dishonest, or that it is somehow a sign of weakness for the seller to grant one. This was confirmed by a quick browsing of some real estate websites offering Q&A discussion for the consumer. Opinions and explanations varied widely and were confused.

A seller concession could be used by the seller to preserve the sales price while sweetening things for the buyer by throwing in any number of incentives ranging from paying a certain amount towards closing costs to buying down interest rates to pre-paying condominium fees as an incentive to sell the property. However, in this case, it is simply a way to enable a sale by rolling a cash cost of the purchase into the mortgage. Of course there are lender rules for seller concessions and of course the buyer may not come away with cash in their pocket. But I also have to make sure our attorney is aware of the sellers' concession and that the amount we're requesting will be fully absorbed (if not, the funds could revert back to the seller).

When negotiating a seller concession I try to simplify by making the seller's concession the buyer's problem (which it is in this case) and direct the discussion toward focusing on the seller's net price, which is what matters to them.

I understand there are circumstances where a seller's concession is not possible, such as when the profits from the sale will be taxed, increasing conveyance taxes (like we have in CT), some short sales/REOs and any number of other situations, which is fine.

What do you think about seller concessions? Are you hesitant to use them?

JUST SOLD Lives like a house!! Upscale 3BR duplex townhouse w/ adjacent 2 car garage in superb GDC planned community with award winning amenities. Bradford model boasts large rooms, 9' ceilings, crown molding, and oak floors throughout. Finished basement w/ media and exercise room is plumbed for third full bath, walks out to cobblestone patio. Woodland Hills is an upscale condominium community with award winning amentities including a clubhouse with patio, pool, playground, tennis courts, and indoor basketball court. Enjoy strolls through the quiet cobblestone lined streets on the superbly landscaped site. Centrally located near the Newtown Rd./Federal Rd. shopping hub with multiple stores and entertainment options. Just minutes from Danbury Hospital, quaint downtown Bethel, and convenient to I-84 and commuting routes to lower Fairfield County/Westchester County.

While touring homes in New Fairfield recently with a client who recently relocated from out of town, our conversation turned to sweet corn, one of my summer barbecue favorites. Turns out, her husband is a big corn fan too. "What's Halas?" she asked. Since consistent, good quality sweet corn is hard to come by, I promised her a blog post complete with map about Halas Farm Market, one of the best local spots to pick up fresh produce in Northern Fairfield County. Besides the great corn, Halas has an annual pumpkin painting contest that benefits charity. See their website for details. They also have lovely plants and garden supplies, pictured below. Enjoy!!

Map to Halas

If you're thinking about relocating into the Greater Danbury area, it takes a while to learn to navigate the area. Our roads are were not exactly planned on a grid system around here. The Federal Road shopping hub on the Danbury/Brookfield line has a lot to offer. There is a Home Depot and a Lowes within less than a mile of each other, a Best Buy, a huge movie theater, Stew Leonard's - a great local fresh dairy/farmers market style grocery store, Kohls, numerous furniture stores and more.

One of my favorite places in Greater Danbury to stop in for a quick bite to eat is the Costco snack booth. My husband and I stopped in on our shopping day for a slice of pizza for lunch. A frozen yogurt on a hot day after a long shopping trip certainly hits the spot. Our local Costco parking lot is full almost any given day with customers from Northern Fairfield County, Southern Litchfield County, and even many cars with New York license plates from the eastern part of the state near Brewster.

Click below for a map and directions.

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Below is a snapshot of market data for the six towns in Greater Danbury from January to August.

Coming in to the fall market we see a lot of first time buyers in the market competing for homes because of the $8,000 first time home buyer tax credit, but also because of improved affordability resulting from lower interest rates and prices. In Danbury alone, there were 20 closed sales under $350k in August and there had been 26 in July, whereas typically activity levels would drop off. For more info on this phenomenon I suggest reading Janet Guilbault's blog Outsmart the Crowd: Skip the $8000 Tax Credit and Wait to Buy .

Also, the number of single family home sales in the $350k to $450k price range was 9 in August, compared to an average of 5.3 during the last 12 months. This is and encouraging sign. Investors out buying REO's and multifamily homes in cash. Over two thirds of all multi-family properties on the market right now are short sales or REO's which is making them attractive for distressed investors, even as rents continue to fall. Some are taking advantage of the glut of REOs to purchase their first rental property.

So what does this mean for me? It depends, of course!! When the market enters a down cycle, the cycle doesn't just last one year. For those who are waiting thinking that things will get better in 2010, I assure you it will take longer than than. The drumbeat from economists about the "double dip" recession continues to grow. The fact is that the cycles in real estate are long, 5-10 year cycles. This market presents some interesting opportunities, but only for those who act conservatively and are willing to take a long term view.

 

Immaculate Harrison model in private setting with lovely views from nearly every window. Living room with fireplace and french doors to private deck. Exceptional master suite with sitting area, loft above perfect for office or studio, luxurious master bath with soaking tub, and walk in closet. Finished walk out lower level. Pristine condition. Woodland Hills is a GDC community of elegant townhomes built in 2002, situated on an attractive 65 acre hilltop environment featuring panoramic vistas. The exceptional amenities include a community center with social, media & party facilities, clubhouse, swimming pool & tot lot, fitness center, half-court basketball & tennis court and walking trails. There are 252 units and 7 different models. Woodland Hills is conveniently located just minutes from shopping hubs on Newtown and Federal Road and offers easy access to I-84 and major commuting routes in lower Fairfield County/Westchester.