Tips for buyers and sellers in NJ’s red hot real estate market - NJ.com

The red-hot residential real estate market has meant big profits for sellers and even bigger frustrations for buyers.

Low inventory is causing bidding wars, driving prices up and making homes sell in just days. It can be an intimidating situation to get into whether you’re the buyer or the seller.

While the age-old advice for buyers — calculate costs, determine what features are important, learn the market and start the mortgage process before you shop — still apply, there’s even more to consider these days.

NJ Advance Media asked some New Jersey real estate agents for tips for buyers and sellers. Here’s what they had to say:

Tips for buyers

Do the math. Look at your income and debt. A general rule from many experts is to spend no more than 30 percent of your gross monthly income on your housing costs -- mortgage, insurance and taxes, according to New Jersey Realtors. But low-ball offers aren’t going to get you your dream house. “Low inventory and a multitude of buyers armed with the lowest interest rates we’ve ever seen causes many offers on homes and many of them considerably over the asking prices,” said Brian Morgenweck, broker owner of Power Realty Group in Hackensack. “If you love the home, most other people will probably love it, too. Effective negotiating in this market means getting the deal, not trying to save what equates to merely peanuts per month on a 30-year mortgage and being turned down.”

Be flexible. Sellers might need to wait for a child to graduate or their next home to close. A buyer in Burlington County let Beth Kimmick of ERA Central Realty’s seller rent the home back after closing so the seller could have the cash from the home sale to purchase their new home and wait for construction to be completed.

Don’t believe everything you see online. Kimberly Lasalandra, managing broker at Green Team Realty in Vernon, said she often has clients call her with a list of houses they found online. What the buyers can’t see through third-party websites is the real estate agent’s notes saying the home is under contract or in attorney review. “Sellers are getting so many offers, it takes time for them to review all of those offers,” she said. “I had one guy who found five houses he was excited about. Then when I reached out to the agents there were multiple offers or they were in attorney review. I think only one of them was still available.”

Make your offer the most desirable. Get pre-qualified. Eliminate contingencies. Sometimes that will mean accepting it as-is and not holding the seller to items found in a home inspection or waiving the appraisal, Kimmick said. And if the buyer feels connected to the house and can convey that to the seller, it could help. “Tell them who you are and what you like about their house,” she said. “How you can see your family in that house. Most sellers love their house. They’ve lived there, done work to it, raised their family there. That really does pull on their heart strings.”

Kimmick represented a buyer in Hamilton who wanted a house that was in a bidding war. When the client toured the house she noticed a lighted cabinet where there was a collection of tea pots displayed. The buyer also had a collection of tea pots. “They wrote a letter and sent pictures of their tea pots,” she said. “I think that might’ve helped us. We did get the house. Any time you’re flattering them, it’s always good.”

Tips for sellers

Don’t be greedy. “Take the offer that fits your needs and is realistic,” said Hakan Karahan, president of Cherry Hill-based HomeSmart First Advantage. Karahan said he had a seller in Cherry Hill who was told his home was worth $240,000. The seller insisted on listing it at $259,000 and accepted the highest-priced offer, $289,000. “We told them it was not going to appraise for more than $240,000,” Karahan said.

The home did only appraise $240,000 and the buyer ended up backing out of the deal because they didn’t have the $45,000 in cash to make up the difference between the sales price and what the bank would lend them for the purchase. “Meanwhile the seller lost other offers that were higher, fully waived the appraisal, had conventional mortgages and were putting 20-25% down -- versus this person who was putting down 5%,” he said. “So they may lose a better deal by accepting the highest-priced offer.”

Address potential problems with your home before they come up in an inspection report. About 80% of homes have flaws that a seller might not see, said Brian Morgenweck, of Power Realty Group in Hackensack. Your real estate agent can come in and give suggestions on nickel fixes that will get you a quarter back, he said. “Small things can set hooks in buyers,” he said.

A recent transaction Morgenweck’s office was involved with in Wayne was an estate sale. The heirs were living out-of-state so his office did everything from clean out the home, to holding an estate sale and arranging for cosmetic and other fixes, such as an upgrade to the electrical panel. The house closed two weeks ago for $40,000 more than the asking price. “It might cost you $4,000 to $5,000 to do upfront, but the buyer might ask for $15,000 to $20,000 for the same items,” he said. “The money is better off in your pocket than theirs.”

Tip for buyers and sellers:

It’s never too early to start talking to a real estate agent. If you’re a buyer, the real estate agent can help put you in touch with reputable lenders. If you’re a seller, they can keep your home in mind before it even hits the market if a buyer is looking for the neighborhood or type of home you have.

“You’re going to get the best value for your house in the next 12 months,” said Kimmick.

A good real estate agent is someone who is seasoned in negotiating and knows the local market, said Morgenweck. Check agents’ websites, read reviews and talk to people who did business with them. Real estate agents are salespeople, he said. “Take other people’s word for it.”

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Allison Pries may be reached at apries@njadvancemedia.com.

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