How About NO? (A Home Buyer’s Conundrum)

ACHTUNG! Today we are shifting our focus to Malaysia property – since we are opening the Kuala Lumpur branch of Uptown Place Homes in 2015!

Foreclosure home.

Image source: SXC.HU

For many Malaysian home buyers, the real goal for every house hunt is not only to find the home they’ve always dreamed of. It’s also about buying a home or property in Malaysia that will suit the needs of his family. More importantly, will suit whatever budget the family has for mortgage. Home buying is hardly ever cheap, that is why short sales are a very popular choice among home buyers on a budget.

A short sale in real estate refers to selling a home that is bound for foreclosure (or “kena lelong” in Malay lexicon). And while that does not sound too enticing, there are tons of home buyers who actually scramble after foreclosure homes for sale mainly because the houses on short sale are downright cheap.

The Malaysian home owners need to sell them as quickly as possible in order for them to avoid foreclosure and so they allow for their homes to sell below its market value.

Reasons Why You Should SAY NO!

A foreclosure Malaysian home.

Image source: SXC.HU

But should you really buy a house on lelong? Doesn’t it come with actual risks? Here are five top reasons you should probably not buy a lelong home:

  1. Foreclosure homes are more likely to be in a bad shape. Homes have gone into foreclosure primarily because its homeowners have gotten into a financial rut that prevented them from affording their mortgage fees. And only logically, we should expect that if they cannot afford their mortgage fees, they would be less than likely to even afford a single repair on the house. And the fact that the sale is short and quick, there would be no time to make actual and significant works on the house.
  2. There might be more underlying problems on the house. Because the sale is supposed to be quick and the house being sold as is, there might not be time to get the house inspected. And because the Malaysian homeowner is in haste in trying to get the house sold, they may not fully disclose the real condition of the house. After all, they are  trying to sell it as quickly as possible.
  3. They may be selling the house without the mortgage lenders consent. Homeowners are bound by contract to obtain permission from the mortgage company to sell their house in the event of a looming foreclosure. However, not all homeowners get that ‘privilege’. Unless they prove that they truly are in a ‘hardship’ situation, that permission might be hard to come by. And should they proceed with the sale, and you end up buying the house, you might have to pay more for assuming the previous Malaysian homeowner’s existing and obviously indebted mortgage loan.
  4. The closing costs might be higher. No lender is ever happy with a short sale, and you might take the blunt of this ‘unhappiness’. Lenders hardly offer anything for short sale buyers as far as closing costs are concerned so you might have to pay that yourself; and with all the complexities – paper wise – of a foreclosure sale, you should end up paying for ore.
  5. Because it is complicated and it has tons of people and other things involved, you might have to wait longer than expected before the house becomes yours. The wait can be indefinite, boring and scary.

Get a lelong home, for all its worth, only if you are willing to put up with these risks.

So… this is my conclusion -

500px-How-about-no-bear

 

Randy’s Tips: How To Turn Down Offer With Class (If You Have A KLCC Condo!)

Hey, Randy here with another installment of “Randy’s Malaysia Property Tips”. :) Today we talk about how to reject an offer – especially if you’ve got a classy KLCC condominium which will undoubtedly go up in value over the years! I mean, there’s so little left of Kuala Lumpur freehold land, and whoever who can still go and grab some will definitely prosper in the future. Mark my words! :)

And yeah, I received some hate mail regarding my last post about not buying foreclosures, and as we all know, Malaysia foreclosed properties are kinda, well, sucky.

Turning Down An Offer – What To Do Without Pissing People Off!

As good as getting an offer may get, sometimes, we just have to turn it down. In home selling (particularly in Malaysia), turning down an offer could be the best or the worst move any home seller could make. It could be the best on one hand, because you might be getting an even better, more ideal offer for your house – what home owner could ever say ‘no’ to that anyway?

Just the same, turning down an offer – especially in a competitive market – could be a fatal mistake for your home sale; it might just be the first and only offer you’d get for your home.

As demand for KLCC condominiums are already on the downside (although certain properties like the mighty Quadro are still hot), your choices of offers might be limited…

However, there just are offers that are unacceptable and you – the homeowner – are left with no other option than to turn it down. But that does not make it any less difficult. Turning down an offer without offending your potential buyer can be really challenging. And yes, up to this point, even when you’ve turned their offer down, they are still potential buyers, keeping the door open for them to adjust their offer to rates more acceptable for you.

Sidenote: This is especially true when you are in hot areas and properties such as: Medini in Iskandar, Tropicana Metropark, Empire Subang, Vipod Suites in KLCC and also slightly older projects in Puchong South such as 16 Sierra (IOI Properties) and D’Alpinia.

Your Options… Count ‘Em!

There are three basic ways to turn down offers:

  • Write a letter back with your lawyer’s signature, along with a copy of the offer. Politely inform your potential buyer that the offer is a little too low for your standards. It does not really have to be long and elaborate; a polite little note with a signature from your lawyer will do.
  • Have your real estate agent write on your behalf. If you’re doing your home sale with an agent, your agent can then rely the message to your potential buyer.
  • Give your potential buyer a call, or have your real estate lawyer or agent make the call. If communication in this form is possible, then do so.
  • Talk to them in person. You can always invite them over the house for some refreshments and turn down their offer personally.

How to Turn Down an Offer With Class

The thing about turning down an offer is that it seems so negative, so final. Turning down an offer should not be about closing the doors on that certain buyer just because her initial offer did not meet your ideal price.

PRO TIP: Use this as an opportunity to meet each other in the center.

Whether you call, write, or meet with your potential buyer about turning down their offer, make sure your message states the following:

  • A polite, slightly apologetic (for formality’s sake) manner of turning it down, like ‘I’m sorry, but I’m afraid I cannot accept the offer for now’.  If possible, get a seller of the same property that can perhaps meet the offer – the best way to do this is to go to good location-specific property sites (for example, a good KLCC condominium site would be the KLCC Condominiums Encyclopedia, and a good Australia real estate site would be something like Homely. Alternatively, also look out for “purpose driven” sites like 42Floors – which is a commercial real estate site in US).
  • An explanation on why you can’t accept the offer. Mostly, this is just talking about the actual market value of the house and just how much you’re willing to accept for the house.
  • An offer to give them some time to revise the offer. You may never get another offer on the house and so keeping the door open for them for revision is one way to ensure that you don’t lose them. You seriously need them if indeed the market is a little too competitive (cue: Mont Kiara properties, and some areas in Sentul: for example, YTL’s Fennel and Maple).

Rock on,

Randy “KLCC Hunk” Evans

RandyEvans@uptownplacehomes.com

PS: I will be out of town from today until next Monday – there will be a property expo which I want to go in Iskandar, Johor Bharu.

Real Estate Turnaround Markets Hinge On Dealing With Non-Serious Buyers

The list is out, and it seems that Oakland once again tops the list of turnaround markets in the US. We have sent representatives from UptownPlaceHomes (Sarah Carlo and John Haggins – two newbie negotiators who have just graduated from University of Bradford and University of Westminister respectively) to go interview the top three real estate agencies in Oakland to ask about their secrets of success.

According to Charles Mint, the president, founder and CEO of Mint Associates LLC (one of the top performing agencies in Oakland), the trick to turnaround is to know to deal with non-serious buyers.

Here’s what Mint said:

When you’re selling your homes these non-serious buyers are just about everywhere. They go at your open houses, ask you tons of questions, and sometimes even book a showing with you. Pros hate them, and you dear FSBO buyer does too. They ask so many questions and act so weirdly and convincingly serious that you almost seriously swore you love them until you text them and ask if they have made a final decision on the house and then they drop the bomb: we’re not buying just yet, we’re still looking.

Boom. Way to go. Way to crush your hopes and make you sullenly think about having to go back to square one. Oh, and way to make you doubt every single ‘looker’ from then on. :)

But here’s something you will have to understand in FSBO: there will be more non-serious looky Lou’s than serious buyers and you’d have to treat them all exactly the same way. But of course there are ways to save you time and effort as far as this dilemma is concerned.

“I know UptownPlaceHomes now deal with Malaysian real estate, so here’s what I think. Let’s say you’re selling a unit in Mont Kiara, say, the majestic 11 Mont Kiara. You’ll get more non-serious buyers who can hardly afford the $3,000,000 price tag anyway. You need to qualify them as much as possible. Don’t be afraid to turn away leads,” said Mint.

Mint also offered the following guidance:-

  • Figure out early on whether or not you’re dealing with a serious buyer or just the opposite of that. You can’t do that with just a single look, so you’ll have to deal with this through conversations. Ask the right questions, pry on the subject as discreetly as you could. Ask about reasons for moving, what type of house they are exactly looking for, the target dates for moving, and how much they are willing to spend on a house. It would also be very helpful if you could ask them some generic but significant details of their mortgage. Your ‘suspected non buyer’ will likely spill the beans about them ‘just looking’ sooner than they actually might.
  • Just tell them the good stuff about the house just the same way you would to a serious buyer. This is still networking nonetheless and they might come back for the house should you still be up for sale sometime later. Or they might know someone who’s more serious about buying a house that because of your being nice, they might refer your house to their buying friend instead.
  • Don’t compromise on the price just because you think they are non-serious and that you are merely talking. You can never be too complacent and play along when they pretend to be negotiating. Like I said, treat them like serious buyers and ‘negotiate’ with them keeping in mind your actual and serious price for serious buyers but don’t put too much focus on them. Focus all your attention, instead, on the serious ones (their preapproval is a perfect giveaway though there are actually serious buyers who don’t believe they need to get preapproved).
  • Do not for one second be intimidated by them. Instead of letting them take the lead in the conversation, take the driver’s seat and ask them questions. Yes, intimidate them with your factual questions. Sooner or later, they’ll realize they have to business wasting your time because you won’t allow it and won’t bug you anymore. Now let them handle that!

 

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