Q & A with Barbara Corcoran

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Q1 - My husband and I have lived in our home since it was built in 1976 and would like to buy the home owned by our neighbors across the street.  We'd like to make a cash offer for the asking price of $260,000.  The property's never been updated and it has some structural issues.  I've heard you say one should consider offering up to 20% off the appraisal price. Can I also deduct for needed updates like toilets, sinks and chipped countertops?

A - Just figure out what the improvements will cost and factor that in before, not after, you make your low bid.  Addressing outstanding details, like the toilets, sinks and chipped countertops, outside the bid always derails the sale. 

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Q2 - I've been looking at houses in Wichita for the last three months and recently saw an advertisement I liked.  Would I get a better deal if I go direct to the listing agent?

A - Listing agents sell fewer than 5% of their listings on their own.  95% of their listings are actually sold with cooperating brokers who bring in the buyer.  So find a competent broker who represents your interests and can negotiate on your behalf, because that's the best way to get a good deal.

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Q3 - Are banks also modifying loans on investment properties?

A - Some banks are, and some banks aren't.  You should call your current lender to find out.  But don't be fooled by all the "5% rates" you're reading about because investment properties are usually a full 1% higher and often have steep pre-payment penalties.

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Q4 - I had a $ 100,000, 15-year mortgage which I just paid off in October.  Would it pay to take out a home equity line of credit for $50,000 now while rates are low, just so I have the cash in case I need to do work around the house?

A - You should try your best to do the work without borrowing money, because even the best loans will cost you interest.  But if you must get financing, an equity line of credit is your best bet.  The bank won't charge you a fee for opening the line, and you should open it sooner rather than later while rates are low.

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Q5 - I'm 28 and I've been selling real estate for 10 years.  I've ranked in the top 5% of Denver Realtors for the last four years.  I've had steady production of $10 million each year, have taken advantage of the high foreclosure rate in Colorado to market our REO properties and I'm affiliated with a very good firm in Denver.  The average sale price in Denver is $265k, my average is $253k and I've done 32 transactions year to date, but the average in my brokerage firm is a whopping $875k.  How can a 28 year old break into the multi-million dollar market?

A - Simple.  The key is making friends with the big shot producers.  Offer to sit at their open houses for free and help them with any extra business they're too busy to handle.  Ask if you can go as their assistant on their listing presentations so you can watch them in action.  You've already built the foundation of a huge business.  All you need is exposure to high-end clientele.

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Q6 - I had a lot of problems with my job two years ago, and my ex-husband has ruined my credit buying expensive gifts for all his stupid girlfriends.  I want to move out of this dark hole and buy something for myself.  I've had the same job for almost a year now and have saved some money, but not enough for a 20% down payment. 

A - FHA loans require only 3.5% down and they don't mind loaning to buyers with bad credit.  They'll hit you up for another 1% to 2% for mortgage insurance, but that still only adds up to 5%!  So don't wait until you have 20% before you buy.  Count up your money now, find yourself a sunny space and forget the bum and his girlfriends!

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Q7 - We are beginning the process of putting our house on the market.  The real estate agent said he charges 6%.  That's awfully high, don't you agree?  How do we go about negotiating his commission, and what is the percentage we should be paying here in Saline, Michigan?

A - There are no set commission rates and all commissions are negotiable so in the end it comes down to what you're willing to pay and what they're willing to accept.  But be careful here.  If your broker is the top at what they do and you're serious about selling, offer them 7% or 8%.   That moves your house to the top of their list and makes it the first house that every cooperating broker will show.  Spending more money on the right people always puts more money in your own pocket.

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