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June, 2000 Newsletter

The Home Buyer's Information Center Newsletter

+++++++++++ June 16, 2000 +++++++++++++++++++

Mortgage Rate Update: Rates Ease a Bit
Recent Site Updates: Mortgage Section
This Month's Tip: Effective Negotiation

Welcome to the June edition of the Home Buyer's
Information Newsletter. Late May and early June
have found a bit of softening in the Real Estate
market in many areas of the U.S. and Canada both in
re-sale and new homes, largely due to the previous
increases in mortgage interest rates. With many areas
having available housing inventory and with rates easing
a bit (see the next story), this may well be the
best time thus far this year to be looking for a home.

Mortgage Rate Update:

Although it may not have been dramatic, there has been a
bit of easing in mortgage rates in the early June period,
with U.S. average rates falling to the 8.00% range, down
about 1/4 point since the previous reporting period.
In Canada, 3 year closed term rates have been averaging
in the 8.30% range, also reflecting a small decrease.
Although there are a few conflicting messages, it appears
that there is some evidence that the economy is slowing
a bit, lessening inflation worries and putting less
pressure on both short-term and long-term interest rates.

For more information on mortgages, visit the recently
Mortgage Section.

Recent Site Updates:
Mortgage Section Redesigned
We have redesigned the
Mortgage Section of the site with
links to all mortgage content and information from a
single location.

Credit Reports
One of the very first steps, according to most
experts, in securing a mortgage is to get an up-
to-date copy of your credit report. Consumerinfo.com
offers the availability of not only a free copy of
your report but also 30 free days of their Credit
Watch monitoring service.
Free Credit Report


This Month's Tip: Effective Negotiation

If you are not able to arrive at a selling price that
satisfies both you and the seller, much of the work done
previous to selecting a specific home--mortgage comparisons
and applications, finding a good Agent to work with,
researching neighborhoods, seeing individual homes
and finding one that fits your needs and wants--
may be in vain. Without a valid contract signed by all
the necessary parties, the up-front work you do on a
particular house will likely be wasted.

Which means that you must be able to negotiate an acceptable
agreement, one that meets the requirements of both you,
as buyer, as well as those of the seller. The more effective
you are in negotiation, the easier the entire home buying
process will be.

Why do a number of transactions get bogged down (or lost
completely) in negotiation? Simply because, to some degree,
common sense often tries to fly out the window when the contracts
and pens hit the table. Emotion often takes control of both
buyer and seller and emotional (instead of factual) negotiations
almost always run into snags.

From the buyer's perspective, there are several barriers that
need to be hurdled in order to have a common-sense approach to
negotiations. First, there is always the possibility that a
you have found yourself looking at too much home. No matter
how much you may wish it, or try to cut it, a $200,000 home will
never fit into a $150,000 home budget. (This is one reason why
it is so crucially important to get prequalified and preapproved
for a mortgage loan prior to beginning your home search.) By
looking at houses beyond your budget range, you may try to
make a home "fit" with an absurdly low offer, but the odds of
reaching the contract stage in these situations are extremely
small. Plus, when you are forced to "retreat" to the correct
price range, you often find that the homes just don't seem
to match up with the more expensive ones you have been looking at,
which can be frustrating.

Bad advice often is another cause of negotiations that seem to
go nowhere. Somehow, a lot of buyers have gotten the notion that
you NEVER want to offer less than 90% of the listing price of a
home. In depressed economies and slow real estate markets, this
approach may have some validity, but in active markets (such as
we have seen almost everywhere in the last 2 years or so) this is
terrible advice. There are no rigid parameters when it comes to
pricing a home--each and every property stands on its own. Some
may be underpriced, others priced "right on the money" and others
overpriced. A buyer's offer should be based on how a particular
home fits into the average price range of similar homes in the
same area, not on erroneous "advice." See the section on

Sometimes, a buyer's insistence on a concession can get in the
way of smooth negotiations. Occasionally egos come into play--
"no one pays the full listing price!" which is fine when a home
is overpriced, but can cost a buyer a perfect home if the home
is priced correctly--or worse, if it is underpriced! If a
property is priced right, meets all your needs and wants, and
is otherwise desirable, don't let insistence on a $500 price
concession cost you the home. Remember, too, that if interest
rates rise 1/4% while you are trying to save a little money on
the price, the increased interest costs over the life of the
loan will cost much more than your potential price savings.

From the seller's perspective, bad information is often the
biggest barrier to smooth negotiations. You may hear "Why,
the Desmonds' house sold for $127,000 and ours is MUCH nicer.
Of course we want $140,000!" (The facts: The Desmond house
was listed for $124,000 and actually sold for $121,800).
As a buyer, arming yourself with an up-to-date Comparable
Market Analysis (CMA), showing the actual sale prices of homes
in the neighborhood, can counter this misinformation quickly
and easily.

Sellers will also block common-sense negotiations when they
are too much "in love" with their house. They may want to demand
a premium in price for the memories that they cherish from their
time in the home--something of absolutely no value to the
buyer! The way to counter this is simple: Be understanding but
insist that the facts (the CMA) must determine the real value
of the home, not emotion.

Additional Hints on Negotiations:

* Remember that contracts are legally enforceable documents.
Offers to purchase should not be taken lightly, since they
can become binding contracts with a quick stroke of the
seller's pen.
More information,

* Get everything in writing.
Every offer and counteroffer must be in writing to be binding.
Until the entire contract is in writing and signed by both
buyer and seller, any negotiations are little more than
conversation. It can be disheartening to find out that your
verbal "commitment" has been overridden by another buyer
with a written--and legal--contract.
More information.


As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line to:
or access our
feedback page.
A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.

Have a great month and keep cool!

The Team at the Home Buyer's Information Center

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