Looking through binoculars

The days of watching a house sell in a nanosecond are way, way, gone.
Today even a house in first rate condition can take a while to
sell.  It means we are in a Normal real estate market.  It
allows prospective buyers the luxury to look at a prospective house
many times and at many different time of the day before writing an
offer.  And, what gets written is an offer where it is expected
you as the seller will negotiate with the buyer.  New concept Mr.
and Mrs. Seller!

Buyers are more in control than in resent years.  Sellers are just beginning to wake up to this, even in San Mateo County where a great many of our real estate markets are still Warm Seller’s markets. Prices are finally adjusting.  They are edging downward, inch by inch.  Not much, but a little at a time with the help of single offers close to asking but not above.

For Sale

If you have a house for sale today and it has sat for a while there is only one problem with it and that is price.  Any house will sell for the right price.  So let’s assume your house is priced competitively and it has been on the market over 60 days.  You
have reduced the price once but is there anything else you can do short of another price reduction? Yes, there is.

I’ve been talking about Points the last couple of days.  Rather than the buyer paying for points, why don’t you, Mr. and Mrs. Seller, offer to pay down the buyer’s points.  Believe me, this is likely less money than another price reduction for you, and it will allow a seller to get a more favorable loan rate.  You win.  The buyer wins.  The agents
win.  We all win.  It’s an old idea that is becoming resurrected and getting used again.  It was done pretty regularly in the late 20th Century — remember back then?  It’s easy to do, effective and just might help get your house sold.  It will certainly garner some additional looks by prospective buyers and isn’t
that what it’s all about?

Suggest it to your agent.  If they haven’t been around very long they may not even know what Points
are, so you can explain them to him.  If you agent is seasoned they’ll jump on the idea and add it to the MLS listing for prospective buyers to see.   If your agent doesn’t “Get It”, call us.  We do.

The fee for one point is equal to 1% of the total new loan amount.  In San Mateo County, the normal loan written is for a Jumbo loan, so you need a serious amount of cash for a reduction of 1 point.  That cash is required at closing time which is why paying down points isn’t always something you can or should consider.

Go Slow

The term Point might be mentioned to you in several ways.

• Loan Origination Fee
• Discount Fee
• Warehousing Fee
• Funding Fee

You get the idea.  If the word “fee” shows up, be sure you know what it is for and then decide whether you want to pay it. We are in a market with some fluctuating rates so be expected to hear more about Points.  The good news:  They are tax deductible the year you pay them just like you deduct your mortgage interest.

Does it make sense for you to pay down points for a lower interest rate on your loan?  Only you can decide that one.

• Are you planning of staying in that house for a long time?

If so, then it might be a consideration.

• Do you have a large saving account on hand?

If so, it could be a consideration and it won’t be difficult to bring the additional cash to the table.

• Will you keep the loan a long time before refinancing?

If yes, then it could be a consideration.

• Do you like to refinance your loans as soon as a lower rate comes along?

If so, it should not be a consideration.

Points work if you have cash on hand, plan on staying put for a while and don’t refinance your loans a
lot.  Be sure you know what that “fee” is on your Settlement Statement.  Move forward with caution.  It’s not a new gimmick, just something new to most of you and definitely unique to our country.  And only you can decide if 1% per point is too much for your budget.  Humm, I wonder why?