San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

Let me just start by saying this is my effort at sharing an experience I encountered today so that newer agents out there do not fall into the same trap.  Hopefully someone can walk away having learned something positive from this experience.

I have always believed the first rule of negotiations is to know where you stand before you engage the other party. Pretty elementary, right?  Sort of the first rule of negotiations 101.

Well, it seems that little gem of advice is sometimes lost to Realtors out there who proclaim themselves as  being “professional negotiators” as if that were a special badge of honor that only a handful secretly receive.  We Realtors are all negotiators, it just seems some are better prepared and do the prep work to insure they do not look incompetent.

Unfortunately, these days, in their desperation to close any deal, agents sometimes open themselves up to ridicule and more importantly, do their clients a dis-service by not being adequately prepared when they negotiate. Not only will they not get a deal, they may possibly lose the client whom they failed to protect.

I am engaged with a veteran agent (probably 30 years in the business) who is on the buy side of a deal.   The deal is taking longer than anticipated because one of the lenders is dragging their feet in coming to a decision on a short sale.  Everyone is frustrated including me, so I understand his impatience.  But nothing can happen until the second approves the deal.

But today he was trying to re-negotiate the price on the deal in a back-handed way which I did not really appreciate.  First, he claimed that the prices in the complex were falling drastically in the past two weeks and he now believed his client was over-paying for the property.  I told him if he believed that to be true, then his clients had the right to back out and I would return the deposit; I have a back up offer that will be glad to fill in.  (His claim of prices in the complex dropping is incorrect).   Secondly, he claimed we may not close in time to claim his client’s $8,000 tax credit because we cannot, at this point close escrow by June 30 (This is true).  Finally, he claimed his client was further harmed because the California Tax Credit (up to $10,000) had been exhausted within 2 weeks of it being announced (This was news to me) and he couldn’t get that either, so he wanted to reduce the offer price.

I understood the message he was trying to convey: 1) that the prices in the complex were falling and 2) the California Tax Incentives had run out and his client was depending on that.  He was claiming his client was hit with a double whammy.  Well, I would have been sympathetic if he had verified these claims before he made them to me and tried to unilaterally re-negotiate the contract.

1.  He was simply uninformed about the prices in the complex.  They were not falling dramatically, an identical unit had come on the market only 7 days ago for nearly $10,000 more than the price he offered to pay.  This is basic stuff, you check the comps before you talk prices.   2.  His claim that the Tax Credit fund had been exhausted, was again, an incorrect claim.  http://www.ftb.ca.gov/individuals/new_home_credit.shtml The fund is only 57% depleted!  I have no reason to lower the price; I am thinking he should raise the price since the house looks like a better deal now than before.

I shot down the grounds for his argument in 5 minutes.  He could easily have verified the information if he took 10 minutes to go online and look them up before he made these false claims to me. This is an individual who has been selling real estate for probably close to 30 years.  This was simply embarrassing for him and certainly did not make his client’s case any stronger.  Now I question whether I want to continue to do business with him or simply deal with the back up offer.   What was he thinking?  All he managed to demonstrate today was that he doesn’t know the first thing about negotiating and now has planted a seed in my head as to whether he is a competent agent or not.

Folks, check the comps and do your due diligence before you start making claims which could back fire on you and your clients.  That’s your job.

The buzz in the recent weeks around here for me has been about the newly resurrected California Tax Credit.  It is certainly causing the fence sitters, who thought they did not have enough time to qualify for the Federal Tax Credit,  to dive head first into the purchase market now they have more time to qualify for another program that is possibly worth more.  HOWEVER, THERE IS A SMALL WINDOW OF OPPORTUNITY where a buyer may BE ABLE TO QUALIFY FOR A TOTAL OF $18,000 combined credit.

To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.   Please check with your tax professional for specific details.

The issue for the California Tax Credit is that it is limited to $200 Million in total, hence it the fund runs out before the deadlines, you will be left holding the bag like last year.  First come First Served basis again.

Here is a quick side by side comparison to help clarify matters of concern.

Just got a letter from CAR President announcing that Gov. Schwartzenegger signed into law AB 183 which will provide up to $200 Million tax credit to home buyers of both new and existing homes that are purchased between May 1, 2010 – December 31, 2010.

Highlights:

* principal residence

* credit equal to $10,000 or 5% of purchase price, whichever is lesser amount

* credit to be taken in equal amounts over 3 years

* must live in home for at least 2 years

With the Federal First Time Home Buyer Tax Credit set to expire if the buyer is not in contract by April 30,2010, this is the perfect complementary plan to continue to encourage California Home owners to purchase throughout the remaining year  so that we can continue to deplete the excess inventory of distressed properties that are out there  and will continue to hit the market place in the months to come.

Fantastic Job Governator!