Great real estate deals are made and lost at the negotiation table.

With all of today’s technology, finding a house that you like is relatively simple - it just takes time. You can find homes for sale on my website. You can go to GreatSchools.net for school ratings. You can use Google’s Street View to help get an idea of what the neighborhood looks like. You can even get a feel for the floor plan and interior condition from virtual tours and multiple photos. With time and a little persistence, you can do the majority of your house hunting from the confines of your couch.

Technology can’t, however, do your negotiating for you. Therefore, if you wish to get the absolute best deal you possibly can while either buying or selling a home, you need to make sure your agent is skilled in writing and negotiating contracts. An article worth reading (or passing along to your agent/negotiator) was posted on the GigaOm Blog recently and is titled Harvard Negotiation Project: 5 Lasting Rules For Negotiating Anything. It’s not specific to real estate, but it’s principles definitely apply!

Sooner or later, every buyer I work with asks if the market still has room to drop. Unfortunately, what most don’t understand is that paying attention to housing prices is only part of the equation. What also needs to be taken into account is the interest rate at which a loan can be secured. For it is the combination of the purchase price and the interest rate that determines whether a buyer is getting a good deal or not.

To help understand this, consider the following scenarios:

1. Purchase a house today at $500k using a 6.0% 30-yr fixed loan
2. Purchase a house in 3 months at $475k using a 6.5% 30-yr fixed loan
3. Purchase a house in 6 months at $450k using a 7.0% 30-yr fixed loan

Which is the better deal?

Although saving $50,000 on the purchase price sounds very enticing, it actually has no impact on the mortgage payments! That’s right, in this scenario, waiting 6 months for the price reduction saved you a whopping $3.89 a month:

If you are anything like me, you are always looking for ways to save money … especially when it comes to a purchase as large as real estate. Most people, however, don’t realize the fees that are involved with getting a mortgage loan - fees that can quickly add up. That’s why, if you have the time, I’d recommend you take a look at a CNN/Money article titled Take a bite out of closing costs: Hold the fees please. How to save if you’re buying a new home or just refinancing. The article was written a while ago, but it still has some very valid and important points to keep in mind.

When it comes to negotiating, we are always looking for an edge. As a buyer, we want to make sure that we are paying as little as we possibly can. As a seller, we want to make sure that we are receiving as much as we possibly can. Well, Ron Lieber recently wrote an interesting article for the New York Times about using a personal letter to defend your position titled Negotiating for a House? Start With ‘Dear Seller’. If you have a couple minutes, it is definitely worth reading. Although the approach may not be for everyone, it’s always good to know about different tactics.

Starting on June 1st, Fannie Mae will institute a new, national policy on down payment requirements for conventional, conforming mortgages. As the announcement stated:

Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter (DU) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

What does this mean for you? Well, it will be possible to get better terms on a loan for a new home in Contra Costa County with a smaller down payment. If you’d like, you can read the rest of the announcement on Fannie Mae’s website: Fannie Mae Announces Single National Down Payment Policy; Replaces Policy Regarding Markets Where Home Prices are Declining.

Now, I’m by no means a mortgage expert, but if you are interested in learning more about what your mortgage options are, please give me a call (925.817.8428) or send me an email (Brian@SPARRproperties.com) and I’ll put you in touch with a couple people who are.