For Sale by Owner: Pricing and Negotiation

By August 1, 2017

Posted 06/19/2017

For Sale by Owner: Pricing and Negotiation


The hardest part of selling a home, whether you do it yourself (FSBO) or use a Real Estate Agent, is putting a price on your property. Pricing a property too low or too high might keep you from getting all you can for your home or lead potential buyers to not consider your listing.

Valueing one’s things more highly than other people do is called the endowment effect and it’s a natural inclination. However, if you keep a few things in mind it’s entirely possible to arrive at a price that works for both the seller and the buyer.

Getting the Listing Price Right

Counteracting the endowment effect is a key benefit of working with a Real Estate Agent. However, their objectivity comes from knowledge you can obtain for yourself. It starts with looking at what homes are selling for in your area. Also, attend open houses for properties currently on the market to see how yours stacks up. Then, to help you get into a buyer’s frame of mind, ask yourself what you would pay for your house today if you did not already own it.

You may also want to consider paying for an appraisal. The buyer’s bank will eventually insist they obtain one during the closing process. However, having your own done helps you value your property and lets you know what the bank’s mortgage limit on your home would likely be.

Negotiating Tips

Once you receive an offer, what you do next will ultimately determine your selling price. Here are some best practices to keep in mind when negotiating with potential buyers.

  1. The first offer could be the best. Typically, the first offer is a good assessment of your market value. Though, there are some buyers who will start very low hoping you are in a hurry to sell. When an offer is too low, you have the option of not countering, but instead asking them to resubmit.
  2. Consider conceding before countering. Often, offers come with concessions, like a request for a delayed closing, for instance. When an offering price is close to your listing price, you may want to accept a concession instead of immediately lowering your price.
  3. Be a listener, not a talker. The less buyers know about your circumstances and reasons for selling, the better. Additionally, the more you know about the buyer’s circumstances, the more leverage you have in a negotiation.   
  4. Know your limits. Before you list, determine your minimum sales price. Then, ask yourself how long you are willing and can afford to have your home on the market. You may come out money ahead by selling at a lower price due to your carrying costs, especially if you have already moved.
  5. Know your facts. Create a history of upgrades you’ve made since you bought the home, the age of appliances, and how much it would cost to replace them. You may want to consider offering a home warranty to counteract any reluctance on a buyer’s part. This relatively inexpensive insurance covers repair costs should something break down within the first year of you selling the home.
  6. Follow the money. Understand the lending conditions your buyer is working with. That can help you determine whether you want to agree to a lower price to help them qualify for their mortgage in exchange for a larger participation from them in the closing costs, for example.

Successfully selling your home on your own may require a little more upfront research, but when you know what to negotiate, it should lead you to the results you originally sought from choosing an FSBO solution, a larger check at closing. 

Orange County Business Journal Ranks New American Funding a Top Private Company for 2017

By August 1, 2017

Posted 06/20/2017

Orange County Business Journal Ranks New American Funding a Top Private Company for 2017


For the fourth consecutive year, Orange County Business Journal (OCBJ) has named New American Funding to its annual Private Companies list. The Southern California-based mortgage lender made the 27th annual list at #42, moving up from its #48 ranking last year. More than 100 companies are represented on the 2017 list, ranging from healthcare, technology, and construction businesses, all of which make up a key part of Orange County’s economy.

In order to be ranked by OCBJ, a company had to be privately owned, headquartered in Orange County, and have a minimum annual revenue of $100 million for the 12-month period ending December of 2016. “It’s rewarding to make OCBJ’s list of Top Private Companies for four consecutive years. This recognition is a testament to the outstanding dedication and commitment of our hard-working team on a daily basis,” said COO Christy Bunce.  “We’re constantly searching for new ways to stretch ourselves and to outperform yesterday’s achievements.”

2016 Milestones

New American Funding is privately owned by husband-and-wife duo, Rick and Patty Arvielo, who have expanded the company into one of the fastest-growing mortgage lenders in America. Even though the company is headquartered in Orange County, it has more than 130 nationwide branches in 20 states. In 2016, the mortgage comp any hit record-breaking growth, which included:

  • Hiring 1200+ people

  • Adding 36 retail locations

  • Funding $11.7 billion in loans

Recent Accolades

Due to its rapid business growth over the past year, New American Funding has received several notable accolades, which include:

  • Inc. 5000 – Fastest-Growing Companies in America

  • Scotsman Guide – Top Mortgage Lenders in America

  • Stevie American Business Award – Fastest-Growing Company

OCBJ’s Private Companies list will also appear in the 2018 Book of Lists.

5 Tips to Help Vacation Homebuyers

By August 1, 2017
man on beach


Just reading the word “vacation” may be enough to make you feel more relaxed. Imagine if helping clients find the perfect vacation home were a regular part of your real estate practice. For many Real Estate Agents, thinking about other people’s vacations is routine.

The latest data from the National Association of REALTORS® (NAR) finds 16 percent of home sales involve vacation properties. While that number has declined a bit from its peak in the prior year, demand for second homes and family retreats is expected to remain steady as Baby Boomers transition into a more leisurely pace of living. Also, the rise in online solutions for short-term rentals is expected to help more families justify the expense of maintaining more than one home.

The type of homebuyer drawn to vacation ownership is also attractive. According to the NAR study, people purchasing a vacation home had a median income of $103,400 and 38 percent of these buyers paid in cash. In addition, of those who used home loans, just over half financed less than 70 percent, which can lead to smoother closings for all of the involved parties.

What’s Different About Working with Vacation Homebuyers?

Vacation home buying is somewhat seasonal, with the most Google searches on the term “vacation homes for sale” occurring between January and July. That makes any advertising you may want to do, especially if you are going to use search-word marketing, pretty straightforward.

You can build a niche by using your website to highlight your familiarity with the needs of long-distance buying and part-time ownership. Reinforce your shared enthusiasm for the area with blog posts that highlight your favorite restaurants, provide touring tips, and feature the lives of those in the area who have made the transition to part-time residents.

Be sure to use social media channels to support your marketing efforts by tagging photos so your posts are more likely to pop up when a visitor to the area conducts a search. It’s reported that some 70 percent of Internet buyers worked with the first agent that they connected with online.

Here are some other considerations you may want to share with clients as you help them locate their ideal vacation retreat.

5 Tips to Help Vacation Homebuyers Find the Perfect Property

1. Find out if clients are seeking a retreat or a future permanent residence to determine what areas may work best for them. For instance, a beach house might be perfect in-season but isolated and difficult to inhabit due to weather issues in the off season.

2. Encourage clients to “test drive” neighborhoods with a series of longer-term rentals before committing. This will give them a better feel for how day-to-day living might differ from a week of vacationing.

3. Supply clients who are considering renting their property out when they aren’t in residence with rental rules for the development itself (if applicable), as well as those of the municipality and state.

4. Educate clients about the local taxes that impact homeowners—not every part of the country has property taxes, for instance.

5. Advise clients to speak with their tax professionals before making any purchases. Being a property owner across state lines can have tax implications, as can the circumstances under which property is rented.

Adding a vacation property expertise to your business does more than put you in touch with enthusiastic buyers. It allows you to leverage your local familiarity in new way.  

Return of the Multigenerational Lifestyle

By August 1, 2017

Posted 07/6/2017

Return of the Multigenerational Lifestyle


The multigenerational household was a fairly common occurrence until the 1950s, when it gave up ground to the lure of the suburban development and the rise of the nuclear family. Times have changed, and with them a greater appreciation for multigenerational living.

Today, nearly one in five Americans, or about 60.6 million, lives in a multigenerational household, according to the Pew Research Center. For its purposes, the research group defines multigenerational as two or more adult generations sharing a home. On a percentage basis, this is about the same as in 1950 and well above the 12 percent figure reached in 1980. In terms of people, however, the number of individuals involved has almost doubled.

Why Families Are Sticking Together

Pew credits the influence of Hispanic and Asian populations on society, in addition to the more practical needs of the “sandwich generation,” for the shift. While technically these individuals can be any age, members of this group tend to be sandwiched between adult children still living at—or returning—home and elderly parents who prefer to age in place but need assistance. While the trend toward togetherness accelerated with the Great Recession, it was already on the rise. According to Pew, multigenerational living is a choice that is expanding among all U.S. racial and age groups.

Even families that aren’t multigenerational are showing an interest in homes that accommodate the needs of an extended family. For them, it may be about gaining the flexibility and space to be able to meet future needs. There is also the opportunity to create a source of rental income, as more private homeowners turn into occasional landlords or one-room hotels thanks to online booking sites.

Recognizing the Multigenerational Home

As an emerging trend, the shift back to multigenerational living appears to have some staying power. A recent consumer insights survey indicates that more than 40 percent of new homebuyers would like to be able to accommodate their elderly parents—nearly the same percent who want to be able to accommodate adult children.

National home builders are now designing homes specifically to meet the needs of multigenerational buyers. They are commonly asking for the flexibility to accommodate separate living quarters and common areas under one roof. This includes first-floor master suites with small sitting areas, kitchenettes, and separate entrances. Multigenerational buyers also tend to favor open floor plans, wide doorways, hallways, bathrooms, and pocket doors to accommodate room reconfigurations.

3 Tips for Meeting the Needs of Multigenerational Buyers

Although the nuclear family isn’t quite as dominate as it once was, the houses built to serve it are. That makes locating appropriate homes for these buyers a little more challenging. It also means adapting your search methods to this niche’s needs.

Here are three tips for working with clients with multigenerational needs

  1. Thinking “multi” is key to understanding how to work with these buyers. It requires you to understand the needs of each household member, not just those of the buyer.

  2. Knowing how the local housing code treats renovations or accommodations for separate entrances, multiple kitchen facilities, and rental agreements becomes essential. Many local ordinances are on the books that prevent “in-law” apartments from being carved out of single-family homes. More recently, ordinances are being passed to prohibit short-term rentals, which may impact your buyer’s plans.

  3. Understanding the cost advantages is also crucial. Larger properties may seem more expensive at first, but when the costs can be broken down over two or three households, they may make more sense. There are now mortgages that accommodate both multigenerational buying and renovating homes to accommodate older household members.

The preference for being at home with family represents a great opportunity to meet housing needs that are a little out of sync with the traditional housing stock. Knowing where to find what multigenerational buyers are looking for could lead to a comfortable spot in a growing niche.  

6 Ways to Keep Borrowers Satisfied

By July 27, 2017
6 Ways to Keep Borrowers Satisfied


The 2016 J.D. Power U.S. Primary Mortgage Origination Satisfaction Survey found four in five homebuyers were satisfied with their lender choice, which is great news. While the overall satisfaction rate was good, here are some tips on how to ensure that your own clients’ satisfaction rates register even higher.

  1. Use meeting opportunities to educate. Even when a survey respondent felt they had received a good deal, they lacked a clear understanding of how they ended up with it. This made them feel disconnected from the process. Taking an educational approach by guiding clients through the program selection process can lead to a greater sense of self-determination.
  2. Be patient. As frustrating as it can be, operate on the client’s schedule. Individuals process information at different speeds. Let your client take the time they need to make their choice, even when the choice is obvious. This lets them feel like they are in control of the transaction.
  3. Anticipate needs. Satisfaction comes from knowing a fee paid to a professional is being earned. When a client has to call you, it can feel like they are working too hard. Try to anticipate the answers they need before they realize they have a question.
  4. Be appreciative. The easiest way to make a client feel good about a transaction, even one that may have experienced a few hiccups along the way, is to thank them for their business after the closing with a simple handwritten thank you note.
  5. Be collaborative. Mobile technology lets you be reachable even when you are on the go. Being readily available is a great way to reassure anxious clients. The transparency it fosters and your availability can also lead to a more lasting relationship with Real Estate Agents.
  6. Invite feedback. After the client has closed, dealt with the stress of their move, and made a payment, follow up with an opportunity to provide feedback. This creates a means of channeling any criticisms to you and away from public forums. If they express any, let them know you’ve heard them and how you expect to incorporate their suggestions into future transactions. This can help diffuse any further venting.

Given the nature of the digital world we all live in, there are numerous ways experiences and reviews are shared. The best practice of all is to ensure that all your reviews foster your new business efforts, rather than hinder them. Being consistently proactive, can help keep your own satisfaction ratings close to 100 percent. 

A Good Problem to Have: Multiple Offers

By July 27, 2017
A Good Problem to Have: Multiple Offers

It’s always good news when a marketing plan you’ve put together for a client works so well that the home receives multiple offers. Once it has, you are in a much better position to help the seller make the most of the situation.

Guiding clients through the good fortune of having the upper hand in a home sale negotiation often starts with making it clear to them that selling is about more than price. It’s about receiving the highest offer with the best possible terms. Realizing these terms starts by culling the list to the most attractive buyers.

Types of Buyers

As you review the offers with your client, you will want to explain the merits of each type of buyer. For instance, a cash buyer typically represents the greatest likelihood of a quick and easy closing.

Buyers who are motivated by personal circumstances—those who need to get their children settled before the new school year starts, for example—are also good candidates. They not only will be looking to close quickly, but they may be willing to pay more to accommodate their timelines.

Many offers are made with contingencies. The ones with fewest strings attached tend to be more compelling than those that ask for special accommodations. It’s also worth considering the financial arrangements of some of the interested buyers.

Requesting a Final Offer

Once your client narrows the list of offers, it’s time to go back to the remaining buyers and explain that, given the situation, you are inviting them to resubmit with new and final offers. You may also want to relay your client’s preferences, such as no contingencies, a longer or shorter timeline for closing, or more earnest money.

It may be possible that a bidding war ensues, and the offers reach a level that potentially could exceed the appraised value of the home. In this case, you may want to suggest your client counteroffer with a request to remove the appraisal clause. This would mean that if the home appraises for less than the accepted price, the buyer will make up the difference in cash.

Keep Things Moving

Your job throughout the negotiations is to keep the playing field level and communications open and clear. You may want to exercise even greater care than usual and favor telephone and in-person conversations. Messaging nuances and misspellings in texts and emails can create confusion and should be avoided when selling what is probably a client’s largest asset.

Reaching a Decision

Be prepared for the highest price not to be the selling price. In competitive markets and depending on your client’s feeling toward the home, the highest price could come in second to the prospects of an easier closing or even an emotional connection.

When a childhood or family home is involved, the client may be more comfortable selling to a buyer that reminds them of themselves. This is why many buyers will include a personal letter about their own feelings toward the home to elicit an emotional predisposition to their offer. It’s also why some Real Estate Agents suggest their clients not read these letters. However, if a client is emotional about selling, a letter may give them the comfort they need to feel good about their decision.

Whatever your client’s ultimate choice under these circumstances, you’ll know that you performed as promised. You not only helped them realize the highest price for the best terms, you enabled them to move on to the next phase in their lives.

Millennial Buying Trends: What Moves Them

By July 27, 2017
Millennial Buying Trends: What Moves Them


Members of the Millennial generation (born between 1980 and 1998) are on the move, with a growing number moving into homeownership. During  2016, they accounted for 34% of homebuyers according to The National Association of REALTORS® (NAR) Home Buyer and Seller Generational Trends Report 2017

Where They Are Headed

After flocking to urban areas as single renters, many Millennial buyers indicate they are headed to the suburbs and beyond. As they marry and start families, more Millennials seem to be seeking the same things previous generations did: more room, open spaces, and safe neighborhoods with access to transportation. Affordability is also a consideration. Millennials understandably want to get the most home they can for their money.

Concerns for affordability are apparent in these buyers’ general preference for single-family homes that will need minimal repair and maintenance. The NAR report also indicates Millennial homebuyers pay close attention to the condition of homes. They are sensitive to the age of heating and cooling units, the roof, appliances, and kitchen and bath fixtures when placing their offers. Minimizing the expenses faced after closing appears to be a priority for many.

The Down Payment Is a Challenge

Saving for a down payment remains a key obstacle to homeownership, according to the NAR Report. For many, it isn’t that they are spending unwisely. Instead, they have been using a considerable amount of their budget to repay student loans. In fact, NAR found 46 percent of Millennial homebuyers last year had student loan balances with a median balance of $25,000.

An Opportunity for Loan Officers

There seems to be a fair amount of educating that you can offer these clients, many of whom are first time homebuyers. Ninety-eight percent of the Millennials who bought homes in 2016 financed their purchases, according to the NAR Report. Fifty-six percent of them used conventional financing, 27 percent FHA, and 9 percent accessed a VA mortgage. The amount of the home that was financed was 93 percent.

Typical home purchased by Millennial buyers in 2016

-Built in 1984

-1,800 square feet

-3 bedrooms/2 baths

While these borrowers made the purchases work, they certainly can benefit from sitting down with a professional to make sure that they are making the best decisions in view of their current needs and long-term financial goals. Many may also benefit from understanding all their financing options—those beyond the conventional—along with any local or state incentives for which they qualify.

These buyers may also be unaware of the opportunities to combine a first mortgage with a home equity product or of the availability of products like the FHA 203(k) loan, which can help offset the cost of renovations. This type of financing could expand the pool of homes they are willing to consider and enable them to build home equity more efficiently.

Stay Connected

The Millennial home wave is just getting underway. While most buyers are still using traditional channels to reach Loan Officers, NAR reports that last year 26 percent of these homebuyers searched for mortgage information online. In fact, 23 percent were prequalified online, 12 percent found their Loan Officer online, and 16 percent applied for their mortgages online. To connect with these buyers, you may want to consider incorporating a multichannel approach.

However you choose to reach them, members of the Internet generation are on the move, and they are as ready to finance as you are to lend.