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You are here: Home / Archives for Dave Taylor

Dave Taylor

About Dave Taylor

Dave Taylor is a retired Army Lieutenant Colonel who joined The Howell Group in 2011. He is married to Kimberly Howell and they have four children and two granddaughters between them. Since joining the Team, Dave has focused on representing buyers and property management. He can be reached at (210) 865-1790 or dave@kimberlyhowell.com.

Real Estate Negotiation – What’s Reasonable and What’s Not?

February 9, 2016 by Dave Taylor Leave a Comment

Real Estate Negotiation

In simplest terms, a real estate negotiation is a discussion that generally takes place between two sides with an issue to resolve. Both sides attempt to use influence and/or leverage to obtain their respective goals, which are often not the same. The nature of these discussions can take on a “win-lose” or a “win-win” approach. According to Saul Alinsky, “…there is an art of how to take and how to give.” Regardless of your political views I think we can all agree, Mr. Alinsky’s notion seems like a good starting point for crafting a strategy on how to negotiate. And just for the record, even William F. Buckley thought Saul Alinsky was highly effective. See, even political polar opposites can find some common ground for agreement! It might be stretching it a tad to say those two figures were ever in total agreement, but total agreement is irrelevant to a successful negotiation. But how is Mr. Alinsky telling us to attempt to optimize outcomes for two sides with conflicts of interest in a real estate negotiation?

One can infer that Mr. Alinsky is telling us that “reciprocation” is an extremely influential motivator. One may further presume from his statement that in order to parley successfully, both sides must find a common ground along with understanding what the other side wants. Once you understand the desire of the other side you can begin to work toward reaching a reasonable solution that both sides can live with – the “win-win” approach. In residential real estate, the common ground involves a person who wants to sell their home and another person who wants to buy the home. The problem – the seller normally wants the best price the market will allow and a buyer normally wants to pay as low a price as possible. All too often, sellers and buyers tend to only focus on their own personal wants and needs. And as Stephen King explains, “I believe the road to hell is paved with adverbs, and I will shout it from the rooftops.” Obviously Mr. King is speaking about using too many adverbs in writing, however, in our case, one adverb, “only,” can derail the sales process and make everybody’s life a living hell. How do we prevent that? Understanding what is reasonable and unreasonable to a seller or buyer in any given situation will go a long way to solving the dilemma! There are typically two main items that come up in any real estate negotiation. The first involves getting a home under contract and the second, and often most difficult, is resolving the option period during which most buyers will inspect the property and look for repairs to be made.

The First Real Estate Negotiation

There is an old saying, “the buyer gets two bites of the apple.” The first bite (negotiation) in a real estate transaction involves a buyer and seller arriving at a reasonable sales price based on the location of the home, the condition of the home from a visual inspection or a Property Condition Assessment, and a review of the Seller’s Disclosure Notice (before an inspector looks at the home); and the terms involved. The written agreement based on these four real estate fundamentals (price, location, condition, and terms) is what we call an executed contract. But is the contract reasonable? Well, it’s reasonable to believe that homes in popular locations, with high quality amenities, and are not in need of any major repairs normally sell for a higher price than similar homes in the same or less popular areas, with standard amenities, or that require some major repair work. It’s also reasonable to believe that terms of a sale like cash and a quick close, where the buyer is not asking for assistance with closing costs, can generally bring a lower sales price. Just as it’s reasonable for a seller to ask for a higher sales price when the buyer is financing the sale with an extended closing date and has requested seller paid closing costs. In the former example, the buyer using cash and a quick close is providing favorable advantages to a seller. Consequently, a seller may be more inclined to give the buyer a more advantageous sales price. In the later example, the seller is assuming some risk by taking his home off the market for an extended period of time while the buyer completes his financing requirements and in addition, they’re also helping with the buyer’s closing costs. Therefore, it’s reasonable for the seller to normally want a higher sales price based on the risk and the seller paid closing costs involved.

Let’s take a look at a basic scenario. If a seller has priced his home in line with the market for $300,000, it’s probably unreasonable for a buyer to expect the seller to accept a sales price of $290,000 based on the buyer being approved for a loan coupled with a request for $8,000 in closing cost assistance. In essence, the buyer is asking the seller to sell his home for $18,000 below market price. That is not a win-win solution. There are many other factors that come into play that may assist the buyer and seller in this example to reach an agreement. If the buyer absolutely needs the closing cost assistance than he should be prepared to go up on sales price. Other terms could be adjusted also. For example, the buyer could pay the seller’s title policy or allow a seller who needs more time to move to remain in the home on a seller’s leaseback. Every situation is different and one size does not fit all. However, these are examples of each side “giving something to get something.” Too often negotiations break down over minor details because one side or both are looking for an “I win – they lose” solution. Just think, how many times have we seen a difference of several thousand dollars lead to a transaction’s failure? As a general rule of thumb, when a buyer is financing a purchase, each $1,000 financed will cost a buyer $6 toward his monthly mortgage payment. So a $2,000 difference in sales prices is around a $12 a month on a monthly mortgage payment. Now let’s jump forward and look at how we resolve the option period and repair negotiations. This is usually referred to as the second bite (negotiation). And it’s usually the more contested of the two negotiations for myriad of reasons.

The Second Real Estate Negotiation

The general purpose of the option period is for the buyer to have the home inspected and, if required, have the seller and buyer renegotiate the price and/or repairs. Remember, initially the buyer and seller based the price of the home on the condition known from a visual inspection and review of the Seller’s Disclosure Notice and any other information delivered by the seller. Therefore, once an inspection has taken place, latent defects not known or disclosed can impact the price. If a buyer is going to have to replace a roof because the current one is not functioning as intended (not known at the time of executing the contract), then the buyer has a reasonable right to come back and ask the seller to remedy the situation. The roofer worcester acknowledges it.  A prudent seller will figure out how best to resolve the roof issue in order to keep the transaction on track to close. Unreasonable sellers fail to consider that if they let the current buyers walk away, the next reasonable buyer will probably ask for the same or similar repairs or resolutions. Tree damaged roof shingles, leaking air conditioner coils, a faulty septic system, a rusted air conditioner drain pan, plumbing leaks, and other items are not going to disappear upon the next buyer’s inspection. It’s very reasonable for a buyer to ask a seller to resolve safety issues as they have a high probability of causing injury. Or to correct water penetration issues that could lead to mold problems. And correct material defects that severely degrade the performance of major systems such as the foundation, roof, heating and cooling system, electrical system, plumbing system, appliances, pools, septic systems, or wells. On the flip side, it’s unreasonable to expect sellers to cure code items in older homes, when those items were not required at the time the home was built. For example don’t send the seller a laundry list of requested repairs for a home built in the 1970s which essentially represents a remodel and code upgrade of the entire home to present day standards. When a buyer chooses to buy an older home, he should know and accept this. Also, if the seller holds out for at or above full price on the sale at the beginning, it’s reasonable for a buyer to expect a seller to be a bit more flexible on the repairs. The buyer will want the house and land packages to be in “full price condition,” which means no major problems. Accordingly, if the buyer has absolutely beat the seller up on price right at the outset, you can’t usually expect to beat the seller up again on repairs and expect the deal to proceed smoothly.

Focus on what is reasonable. Clearly understand what the other side wants and articulate what it is you want. This will most likely lead toward a win-win solution when reasonable people are involved. And above all, remember real estate negotiation isn’t about egos – they only tend to get in the way of the solutions. It’s about finding the best alternative for all involved. There will be times when you simply can’t reach an agreement, but more often than not, you will.

image courtesy of US Mission Geneva

Filed Under: Real Estate Tagged With: contracts, repairs, real estate, negotiation

My Dream About The Raiders Coming to San Antonio

January 25, 2016 by Dave Taylor Leave a Comment

Oakland Raiders

The Raiders have occupied a lot of conversations in San Antonio lately. With the recent news that the Raiders would not be returning to Los Angeles, many people began talking about the possibility that the team might be heading to San Antonio. If you want to bet on them, you can select sites like 바카라 사이트.

And so my story begins. After a long and tiring day that culminated in the usual heavy meal and a couple of Patron shots, I fell into a deep slumber. A sleep so satisfying and deep, that it came complete with a charming dream that remained vivid in my memory when I awoke. The central theme to this rather lucid dream was that Raider Nation was on the way and being in real estate, I had to consider that the San Antonio luxury home market has everything they need. Here’s how it all happened…

In my reverie, I was on a plane listening to San Antonio billionaire, Red McCombs, and Mark Davis the owner of the Raiders discussing why a move of the team to San Antonio was a great idea. Suddenly, Mr. Davis turned to me and said, “James, what are your thoughts?” After a quick moment of silent reflection on the numerous articles I’ve read, I rapidly switched focus to controlling my panic stricken state of being. My inner monologue went something like this, “Wait…what? I’m actually participating in the conversation and not just listening?” I guess I can hold off on the ‘mom’ discussion during my next therapy session, as I now have some much bigger emotional concepts to discuss. But I digress. Consequently, I gently grasp the arm of the passing flight attendant and asked for a shot of Patron (some dream images need no explanation) and then slowly begin to speak. I said, “It’s uh Dave, but…never mind. Gentlemen, you have both made a living out of doing things that most said can’t be done.” (Again, the inner monologue kicks in, “What a cheesy statement…oh well, it’s a dream and we can add that to the therapist discussion.”)

I cleared my throat and tried to contain my excitement of being on a private plane with these two men discussing the future of the Oakland Raiders, “You both know how to navigate hurdles like ‘competing dollars and popularity’ with the Spurs, Cowboys, and Texans. In the end, competition for ownership of capital drives economic activity, which will be good for the area and everybody involved. We can’t let economic activity be determined by a defect ‘state controlling body’ of select people.” Whew, I managed to get that out with fumbling over the words. Mr. Davis replied, “Thanks for the soliloquy on the merits of capitalism versus socialism, Milton Friedman, but you are my housing director. I was asking for your advice on available housing…are there any good areas for our players to live in?” Right at that moment the flight attendant delivered my Patron, so I quickly took a couple of sips and replied, “Ah, sorry sir, yes, housing. Well, there are many superb areas and as San Antonio is my home, I can tell you you won’t be disappointed here.”

“Let me explain with the aid of the map in front of you. Take for instance, The Dominion, located on the northwest side of town. It’s one of the most affluent neighborhoods in the city and has an incredible country club and a world-class golf course. According to city date, the average price of a home in the neighborhood is around $700,000 and the median residential income is $180,000. These figures are greatly enhanced when comparing San Antonio’s relatively low cost of living to other metro areas. Properties start at around $400,000 and range to well-above $1,000,000, depending on the house and what section of The Dominion it lies in. One of the newer neighborhoods in The Dominion is Andalucia. It features homes built by some of the top custom home builders in the area and it is located close to excellent shopping and restaurants.”

“A little closer to the downtown area, which is experiencing a renaissance of sorts, is the charm and tree lined streets of Alamo Heights. While not gated like some of the communities that lie further from the city center, Alamo Heights has a classic vibe that some people prefer. There are plenty of gated homes and tear downs are not all that uncommon if you want the land, but prefer a more modern, contemporary style home. Prices are all over the charts in this area, so you’ll really want someone to guide you through the different areas and find the right home for you.”

“Another great area, that’s centrally located just off the 281 corridor on the northern side of the city, is Canyon Springs. According to research data, the Reserve at Canyon Springs is very popular. Home prices range from the high $500Ks to the $700Ks. Surrounded by restaurants, shops, and medical services of the Stone Oak area, the neighborhood also contains a championship golf-course and provides easy access straight into the heart of downtown including the airport for those that have visitors traveling into town.”

“And I can’t forget the new Hidden Canyon neighborhood – nestled deep in the heart of Stone Oak in the north central area of San Antonio. Building has begun in the neighborhood with Rialto and McNair Custom Homes kick starting the growth of the community. The Preserve section offers some gorgeous estate-sized lots ranging from 0.57 acres all the way up to 2.05 acres and are ready to build your own custom luxury home. This gated community will include a large pool complex, sports court, soccer field, and numerous nature trails throughout the neighborhood.”

“The agents at Kimberly Howell Properties have plenty of experience in luxury real estate as well as building custom homes. With agents well versed in relocation as well as experience with the need for sports figures to move in (or sadly, out) of town at a moment’s notice, we are well equipped to handle any of your needs – whether house hunting for players, coaches, or staff – we’re ready to bring Raider Nation here to the Alamo City.”

Mr. Davis looked up at me and smiled, “Sounds good Joe, thanks for the run down…”

“It’s Dave sir, but…never mind.” And then I awoke.

image courtesy of Julie, Dave & Family

Filed Under: Miscellaneous Tagged With: nfl, football, san antonio, oakland raiders

Financial Preparation and Understanding the Real Estate Process

September 9, 2013 by Dave Taylor Leave a Comment

Intersection

Finances and the Real Estate Process

Have you ever felt overwhelmed about making a home purchase? Understanding the financial preparation and associated real estate process may help manage expectations and ease your angst as you navigate the process. It is also important to consult with Toronto, ON Financial Litigation or other experienced firms regarding financial litigation if you foresee legal disputes.

Accepting your financial situation is critical; especially if you already own a home and are looking to buy another. Will you have to sell first or if you can buy and then sell? This question is best answered by the assistance of a lender and a REALTOR®. The lender will assist you with understanding your ability from a financial stand point and the REALTOR® will help you understand the pros and cons from a market perspective, ie, is it a sellers’ or buyers’ market? How much do I think I can sell my house for? How will either a sellers’ or buyers’ market affect me?

If you have to sell your current home before purchasing a new one (known in real estate as a contingent offer) you will usually be negotiating from a position of disadvantage. However, a REALTOR® may be able to assist you with listing your home first and getting it under contract to a point that is more advantageous for you. As an example, a REALTOR® would likely look to have you close on the home you are selling before closing on the home you are buying, which can improve your leverage in negotiating on a new home purchase. For the sake of further discussion we will assume you can purchase without selling or do not currently own a home.

A good way to start is to find a lender and complete their pre-qualification process in order to determine your maximum loan value prior to making an offer on a property. Obviously, you don’t have to buy at that price but you also don’t want to look at houses you can’t afford. Once your lender determines your maximum loan value you should ask him to provide a Good Faith Estimate (GFE) for all associated costs. Most buyers focus on the costs associated with principal, insurance, taxes, and interest (PITI) that equate to your total monthly mortgage payment. Remember, any associated HOA fees are separate. Additionally, there are other associated costs to understand ie, closing costs and pre-paids, the down payment (if required), and other monies based on the type of loan you are going to use. Different loans vary on down payment required and seller concessions you can ask for. Your lender can explain those options to you. Further, your lender will also ask you if you want to pay your own taxes (no escrow) or if you want to pay your taxes (escrow). If you pay your own taxes than your monthly mortgage will be lower but you will have to ensure you are prepared to pay your taxes in their entirety when due.

Ok, so why is understanding my Good Faith Estimate (GFE) so important upfront? How can that information help me navigate the process?

  • It will let you know the maximum amount you can borrow toward a home purchase.
  • It provides an estimate of your monthly mortgage payment either with or without an escrow account.
  • It provides an estimate on your down payment, closing costs, and pre-paids which are key numbers to understand when negotiating your offer (total amount you as a buyer may need to bring on the day of closing).

How can the data from the GFE help me and my REALTOR® negotiate the best offer?

  • Your REALTOR® will compare the current list price of the home with their own Comparative Market Analysis (what have similar homes sold for in the last month in the area).
  • Based on your loan type and down payment and closing costs you and your REALTOR® can decide if you want to try and have the seller reduce their sales price and/or provide assistance with your closing costs.
  • These days, on average (based on current average interest rates) your mortgage payment is effected by a +/- of $6 for every $1000 you finance. Thus, a difference of +/- $10,000 in sales price is around a +/- $60 in your monthly mortgage payment.
  • Consequently, you can determine if it’s more important to keep money in your pocket upfront (lower your closing costs) by trying to negotiate that into the deal. Or, limit the amount of money you pay over the life of your mortgage payment.
  • Knowing all this information ahead of time will expedite your ability to negotiate when time is of the essence!

Lastly, you’ll want to be familiar with the general timeline and associated milestones for a contract based on financing in Texas. Normally they run thirty to forty days from the date you have an executed contract (the day you have both the buyer and sellers signatures on all necessary documents) to closing and funding (the day the property exchanges hands after signing all necessary paperwork with the title company). Key parts of the process are:

  • In order to get to an executed contract you have to have an agreed upon sales price coupled with additional key terms of the contract (title company, amount of earnest money, length of option period, option fee, closing date, closing costs, HOA documents, survey etc.). This process can generally take anywhere from 48 to 96 hours depending on how many offers are involved and how contentious the terms are to the parties.
  • Once the contract is executed the buyer generally has 48 hours to provide the agreed upon option fee (money paid to the seller to acquire time to perform inspections and opt out of the contract with no penalty) to the seller and the buyer’s agent must get the contract and agreed upon earnest money to the title company so the contract can be receipted. Earnest money is a negotiated good faith amount put toward the purchase of the house upfront by the buyer (it acts as a deposit against the total amount due when closing).
  • Subsequent to the contract being executed and receipted, you move into the option period based on the time frame negotiated into the contract (generally ten days). This time is used to inspect the home and negotiate repairs (a second round of negotiation). The first negotiation involved procuring an executed contract as discussed above.
  • The option period is when contracts have the highest probability of ending as the buyer has the unrestricted right to terminate and will only lose their option fee (normally $100 or $10 a day for a $10 period) if they decide to not proceed.
  • After the option period, buyers can generally only terminate and keep their earnest money if the seller defaults on an agreed upon term or buyer financing falls through and seller is notified in the time frame described in the contract (normally twenty one to twenty five days from date of execution).
  • Once the option period is complete, lenders normally order the appraisal. The appraisal process usually takes around ten business days to be completed. The appraisal is normally a buyer expense so you don’t want to order it until you are out of the option period and sure you are proceeding with the purchase.
  • If the appraisal comes in below the agreed upon sales price you have one of four options: continue with the terms of the contract as written – you pay above the appraisal, have the seller make up the difference, you and the seller split the difference in some fashion, or you terminate the contract.
  • The remaining fifteen to twenty days until closing involves ensuring all financing paperwork is satisfied by your lender’s underwriting team.

image courtesy of Gabriel White

Filed Under: Mortgages and Financing Tagged With: buying a home, financial preparation

Title Commitment vs. Title Policy – Which One is Which?

June 19, 2013 by Dave Taylor Leave a Comment

Title Commitment and Title Policy

Title Insurance

Often clients will ask me to explain the difference between title commitments and title policy. An easy way I’’ve found is to tell them to think of the title commitment as an offer to issue a title policy along with an overview of the important parts of the policy in question. Of significance to point out to clients is that a commitment is usually not an all-encompassing search back to the original owner (insurance companies manage this risk internally). Consequently, a “clean” commitment does not always ensure that the buyer will never have title problems, only that he will have coverage if problems do arise. That’’s why it’’s important to make sure you are working with a reputable title company who will likely still be in business if a problem does arise.

Additionally I take time to highlight the four title commitment sections for clients called “schedules” which provide information in a standard format for ease of understanding.

Schedule “A” Covers basic information about the transaction such as the effective date; policy coverage amount; the legal name of the current record title owner and a legal description of the property. Problems will arise if this information is incorrect.

Schedule “B ” Contains a pre-printed list of standard exceptions that the title policy will not cover. Most importantly it will also list matters specific to the transaction that could impact the usefulness of the property, ie restrictive covenants, easements, and rights-of-way.

Schedule C Considered the heart of the commitment as it lists the requirements that must be satisfied for the issuance of the title policy. Examples include information on marital status, updated surveys, liens, judgments, lawsuits etc. Generally the seller is responsible for resolving discrepancies identified in Schedule C.

Schedule “D” discloses the total policy premium, along with an explanation of how the premium is divided among the various parties who may be responsible for examining title and issuing the policy.

In order to ensure clients are getting the coverage they expect, I always recommended they discuss any questions they have with real estate attorney.

Filed Under: Buying a Home Tagged With: title policy, title commitment

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