Whether you're a buyer or a seller you want to succeed in the realty marketplace. That's natural and reasonable, but what are the steps you need to triumph?

Negotiation is a complex matter and all transactions are unique. Both sides -- buyer and seller -- want to feel that the outcome favors them, or at least represents a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take, and neither party gets everything they want.

So how do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are five basic keys which will determine who wins at the negotiating table.

1. What Does The Market Say?

At various times we're in a "buyer's" market, a "seller's" market, or a market where supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique -- it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you're a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

2. Who Has Leverage?

If you're on the front page of the local paper because your business went bust -- and the buyer knows it -- you have less clout in the bargaining process. Alternatively, if you're among six buyers clamoring for that one special property, forget about dictating an agreement -- the owner can sit back and pick the offer which represents the highest price and best terms.

3. What Are The Details?

A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $5,000 of the buyer's closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount -- the $275,000 purchase price less the value of the roof repairs, closing credit, and other items. If you're a buyer, this is the deal you want. If you're a seller, you would prefer to be the second owner and give up nothing.

4. What About Financing?

Real estate transactions involve a trade -- houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:


Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available -- a loan application can be declined because of appraisal problems, title issues, survey findings, and other reasons.
However, buyers who are "pre-qualified" or "pre-approved" (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.

The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it's possible that the transaction could fail because the buyer can't get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.


The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.
Alternatively, high rates or even rising rates may drive buyers from the marketplace -- and that's not good for anyone.


It used to be that downpayments were a major financing hurdle -- but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 100 percent financing, mortgages with nothing down, are now being made by conventional lenders. Reduced downpayment requirements are good for both buyers and sellers.
5. Who Has Expertise?

Imagine you're in a fight. The other guy has black belts in 12 martial arts -- and you don't. Who's going to win?

Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?


Written by Peter G. Miller

You've unloaded all your boxes and furniture into your new home, and you're eager to unpack and get comfy. Wait. Unless you made sure the house was ready for colder weather before you bought it, take the time to do it now. Tending to a little inside and outside home maintenance can make the coming cold months much more enjoyable -- and it can save you money, too.

Like most Americans, you'll probably pay an average of $1,300 a year on energy bills. According to the Department of Energy, nearly 50 percent of that is for heating and cooling your home. Here are just a few ways you can lower your bills:


Change the lighting. This fall the government's Energy Star program is encouraging every American to replace the five lighting fixtures they use most with Energy Star-qualified lighting. You can save more than $60 every year in energy costs. Also replace old incandescent light bulbs with compact florescent bulbs. They cost more, but they last far longer.

Before you put the furniture in place check phone, electric and cable outlets to be sure they're not allowing drafts. Adding appropriate foam gaskets directly behind the outlet cover can solve the problem. When you place your furniture, don't block heating registers or return-air vents.

Peek underneath sinks and anywhere else pipes come through a wall. If the hole is much larger than the pipe, fill the gaps with insulation.

Look outside for clothes dryer, stove and other vents. Prevent air from seeping through any crevices by applying weatherproof sealant. You also can purchase dryer vents that have a lid (rather than flaps that open with the slightest breeze), which help keep cold air, bugs and tiny animals out.

Investigate the fireplace. Any birds' nests in the chimney? Is the flue well-sealed? Repair any loose mortar and replace the chimney cap, especially if you have trees nearby that might give small animals access to the chimney. Did the previous homeowners clean the fireplace thoroughly? Always keep the damper closed when there's no fire, and consider adding an inflatable fireplace draft stopper. They're easy to insert and remove, and keep warm air in and cool air out. Glass doors on the fireplace add even more energy efficiency.

While you're up on the roof, make sure it's in good shape. Repair any loose, damaged or missing shingles. Be sure flashing -- the material used where walls meet chimneys, other walls (next to dormer windows, for instance), vent pipes, etc. -- is secure. Flashing keeps water flowing off the roof. If it's in poor shape, water flows into your rooms instead.

Clean the gutters. Use a hose to be sure they drain well, and repair any leaking seams. Ice dams (caused when snow melts off the roof and refreezes in the gutter or its overhang, thus making new snow back up underneath your shingles) can cause major structural damage.

Looking for new appliances? Buy those with the Energy Star sticker. They may cost a little more, but you can save up to 30 percent on your utility bills. Many energy companies also offer rebates to customers who use these appliances. And just this month, a congressional committee approved an energy bill draft that will provide for incentives for energy efficiency -- tax breaks that could trickle down to the consumer.

Is the furnace room warmer than all the other rooms? Pacific Gas and Electric Company says that as much as 50 percent of the money you use heating and cooling your home can be lost through small air leaks in the ductwork. Seal the leaks at duct joints, and then insulate the ducts to keep the air hot as it moves through the ducts. Look for a sticker on the furnace indicating when it was last inspected or tuned up. If it was more than a year ago, call in a professional to be certain it's working correctly.

Replace air filters monthly. It's amazing that something so inexpensive can make your home's heating and air conditioning so much more efficient and cost-effective.

Use caulk to seal any drafty gaps between the edge of heat registers and the wall or floor.

Is your thermostat programmable? If not, invest in one. It lets you keep the temperature warm when you're at home, cooler when you're not.

Check for weather stripping around windows and doors. Add it if it's not there to save a bundle on your heating bill. Caulk or otherwise seal any space around door and window frames and the walls.

Are your windows made of wood? Use a glazing compound where wood meets glass, then put up the storm windows. If the previous homeowner didn't have storm windows, check your hardware store for thick plastic to cover the windows instead. If any windows need replacing, consider forgoing architectural and historic charm and use double-paned aluminum windows with an energy-efficient coating on them.

If your home has ceiling fans, look for a small switch that allows you to reverse the airflow. Your fan may be able to pull cold air up in the summer and push warm air down in the winter.

Ensure that your attic has R-30 rated insulation and save as much as 20 to 30 percent on your heating costs, says Pacific Gas and Electric.
Finally, ask your local energy company if they'll perform a free energy audit. They'll send someone to check for any energy-wasters you may have missed and offer suggestions for improving energy efficiency -- thus lowering your bills.


Written by Diane Benson Harrington

Everyone generally understands that as a real estate investor, the concept is to let someone else's rent payments pay for your mortgage and to hopefully come out with a positive cash flow at the end of the month.

There are plenty of ways to get started in real estate investing. Here are some one-line descriptions of how to do it including the pros and cons of each alternative.

Foreclosure

How it works: Purchase the property at a courthouse auction -- hopefully for less than it's worth. Fix it up, sell it or rent it out.

Pros: This is a common sense approach to getting started in real estate investing. If you can get the property for a wholesale price and then rent it out for more than your mortgage, you're on your way to building wealth one month at a time.

Cons: You get into the property and find out it has major problems costing a lot more than you'll ever recover. Ever heard of concrete being flushed down the drain (usually out of spite from the former owner)? It means having to remove all the sewage drains. Hidden defects can run costs up and give you a red ink bath before it's done. Since the bank/note holder is selling the property as-is, there's not much recourse.

Fixer-Upper

How it works: Purchase a property that needs major repairs. This is not a property that just needs paint and carpet. This type of property usually has rot, flooring, roofing, basement and just overall problems. But that's what makes it so enticing.

Pros: For investors with their repair ducks lined up in a row, this can be a good money maker. The key here is to hammer on the seller early in the negotiating process. Get the house for as low as possible and know what your bottom line really is.

Cons: For those wanting to flip the property, if you can't make $30,000 -- $50,000 on the projected profit, then you may want to pass. Why? An unseen defect can run into the tens of thousands of dollars really quickly.

Retail Investment

How it works: Keep your eye open for under-priced properties in an area where rentals are brisk. This would be a house that really does just need paint and new carpet. Be sure you know what the rents are before going into the property. You want a positive cash flow before you even walk into the property.

Pros: A house that is in good shape can rent for years without any major expenses if it was taken care of early on.

Cons: Good rental properties -- say, in a college town or near a military base -- don't come on the market often, so you could be waiting a while before you find one. (Experienced investors usually scoop these up before the novices even know they're on the market.)

Paper Real Estate

How it works: This one is where you invest in the mortgages of real estate instead of the real estate itself -- financing second trusts, purchasing mortgages at a discount, wraparound mortgages, etc.

Pros: For those who have cash, this one can give major returns on your money. For example, if you can pick up a $20,000 note at 12 percent for $15,000, your return on the note jumps to 16 percent. This is not going to fluctuate like the stock market is sure to do.

Cons: Your mortgagee (the borrower) could skip town, leaving you to foreclose -- right behind the first-trust note holder who usually gets paid first in a foreclosure.

These are just a few of the ways you can get started in real estate investing. For more education, find a good REALTOR® to start working with who can show you the ropes and help you avoid the pitfalls.


Written by M. Anthony Carr

If you look at the bank accounts of most first-time buyers the day after settlement, you are likely to find very little in it.

Yet more than half of first-time buyers -- especially in older areas of the country -- choose older, generally less-expensive houses. Even those who gravitate to newer houses, townhouses especially, tend to defer some of the bells and whistles for financial reasons.

Still, it doesn't cost all that much to make some changes that personalize a house for the new homeowner.

Painting is the most popular improvement by first-timers. Of course, that can be motivated more by taste than by necessity. A lot of buyers, first-time or otherwise, may buy a house despite the color of the walls, then head to the store as soon as the papers are signed.

Many first-timers depend heavily on books and the vast supply of how-to television shows for their information. Yet books tend to be too complicated for most, and the TV shows make it look much easier than it really is.

The TV shows especially are designed to sell home-improvement products. Some of these products may look nice, and even may be something a homeowner might want to consider down the road.

But, other than painting, the first year or so someone spends in a house is the time to tackle the problems the home inspector has pointed out and the ones that have cropped up since the inspection. Remember, you really don't get a good sense of what your house needs until you've lived there for a while.

Money is, indeed, short for most, but it doesn't hurt to contact a professional for advice.

Contractors who work with first-time home buyers tend to be teachers and hand-holders. They have to help their clients establish priorities. If the client needs to take care of the roof first before hiring the contractor to make built-in bookcases, it is the contractor's job to tell them that.

Finding someone who has studied first-time home buyers and their first-year activities is akin to searching for water in the desert.

But remodeling surveys by the Joint Center for Housing Studies at Harvard University and by the National Association of Home Builders do show how much first-timers spend. The figure is $2,070 a year for first-time home buyers under age 35, according to the Joint Center.

The amount spent by first-time buyers rises with income level, starting at $2,050 for those earning less than $40,000 and increasing to $4,820 annually for people making $120,000 or more.

American Express Co. compiles a retail index annually on home-improvement trends. The most frequently cited reason for making exterior and interior changes is "changes in personal taste."

Other major factors include mandatory maintenance (such as roof work), the need for more space and emergency repairs.

If money were no object, project choices would include adding a room, building a porch or deck, completely rebuilding the house, putting on a new roof, and installing a swimming pool, said American Express vice president Ronald Shultz.

Lowe's Cos. Inc. has not targeted first-timers for a survey, spokeswoman Julie Valeant Yenichek said, but the chain does focus on inexpensive improvements that new homeowners might make.

These include hanging pictures, hooking up washers and dryers or the cable-TV box, fixing squeaky or sticking doors and drawers, and small plumbing problems that might not require a plumber.

"Before you start knocking down walls or tearing out tubs, consider how long you expect to live in this house," said Melissa Birdsong, Lowe's director of trend forecasting and design.

"If you don't anticipate being in your current home very long, be careful not to over-improve by spending more than you could recoup when you sell your home," she said. "Make choices that will yield results that not only meet your own needs, but that are also consistent with upgrades in other houses in your neighborhood."

The National Association of the Remodeling Industry in Alexandria, Va., has identified some common mistakes made by homeowners.

These include hiring the wrong contractor, selecting inferior products to save money, overextending on a do-it-yourself project, improper planning, not taking all choices into consideration, starting the project at the wrong time, not managing your budget, and over-improving for the neighborhood.

Another mistake is "the domino effect" -- installing a new kitchen, for instance, then deciding the living room looks shabby, and so on, until you break the budget.


Written by Al Heavens