People about to search for a new home or sell an old one may think that if they just knew how to negotiate correctly, they could either purchase a house for less than its market value or sell it for more. Of course, a lot of luck is involved, but John B. Goedecke Jr. of PNC’s mortgage division says that what is most important is ensuring you have a good team — attorney, real estate agent, home inspector, and, for the buyer, the lender.
Goedecke will speak on “The Art of the Residential Deal: How to Keep a Contract on Track,” Thursday, October 9, from 7:45 to 9:30 a.m. for the Princeton Regional Chamber of Commerce at the Nassau Club of Princeton, 6 Mercer Street. Other panelists include Nancy Goldstein of Goldstein and Herst, the 601 Ewing Street law firm. Cost: $40. For more information, call 609-924-1776; and to register, go to www.princetonchamber.org.
A good team communicates well, helps buyers stay informed, and gives them good advice, whether they are newbies or seasoned homebuyers. But even getting to the stage of having a contract does not mean the deal is done. Says Goedecke, “It is one thing to go to contract, but the challenge is — is it a realistic contract? Will it close on time? Will it close based on the terms agreed upon?”
Goedecke notes that a buyer may encounter a few speed bumps along the way and suggests how to circumvent them in a way that moves the process toward closing. Here are some of the challenges:
Unrealistic sales price, not supported by value. A good realtor will look at the same data a lender will look at and should be able to help a buyer understand what is a reasonable price. The realtor will assess what has sold of a similar style and size in the last six months and if necessary will look at data for a town nearby if nothing has sold locally. “Some people may not do the extra work because crossing the threshold is an emotional experience — I want to buy this house,” Goedecke says. Or a seller may suggest an unrealistic price, but, he continues, “a good realtor will be honest and open about that.”
Regarding a buyer, realtors are important advisors. “In my experience, realtors can’t tell you what price to offer, but they can tell you if it is a new listing and priced well and therefore is going to attract a lot of attention or a listing that has been on the market for some time with little activity,” Goedecke says.
Goedecke has seen some clients over the years who have bid and lost on multiple properties before they finally modify their bidding approach. “To some degree, it is luck, and being prepared is probably the best way,” he says. “If they know the numbers, they can make a more informed decision.”
If, say, potential buyers really want a particular home, they may be willing make a more aggressive offer, and knowing the numbers helps demystify what this will mean cash-wise. “If you increase an offer by x, it will cost x, and you will either need additional cash or you will be borrowing more,” Goedecke says.
Lack of clarity about a house’s condition. “A professional home inspection company will provide details on the soundness of a home,” Goedecke says. “If they see a defect, they can say the approximate cost to fix the defect.” But, he adds, some defects are not accessible during the inspection and would require picking up the floors and looking at the joists. So, he warns, “you may be getting into something that you don’t know the full details of.”
No preparation on the financing side. One way to avoid problems is to get pre-approved for a mortgage. PNC, for example, can provide preapproval commitment letters. “Before shopping, you can be literally approved for a mortgage,” he says.
If don’t need a mortgage and can pay cash, you will still have to ask your bank to provide evidence that you have sufficient funds to pay cash, he adds.
Timing off. Making sure your financing is ready when you need it is also a matter of timing things right. Goedecke poses this question: “If you are buying a home and agreeing to close in 30 days, can your lender commit, process, and close within 30 days, or do you need more time?”
It is important to have a lender who is realistic about the timing. “I’ve seen closings happen in less than 30 days, but sometimes it takes longer because the borrower needs some time to get their down payment together or credit issues addressed or their documentation,” he says. For example, borrowers may be in the United States legally but are putting together their green cards or work visas and may or may not have a credit history in this country. So they can often get financing, but it will just take a little longer to assemble the supporting documentation.
An attorney will review the offer and make recommendations as to what language they might want to include, regarding, say, home inspections, or based on whether the property is a single family home or a condo or is larger or older.
Geodecke grew up in Camp Hill, Pennsylvania, near Harrisburg. His father was a physician and his mother a registered nurse.
He graduated from St. Joseph’s University in Philadelphia in 1984 and started doing residential lending in 1987. He began his career at PNC in 1993 and now oversees a group of mortgage loan officers, whose role is to work primarily in the greater Mercer County region, to assist clients in purchasing or refinancing homes, though they are able to lend across the country.
And what prompted Goedecke’s interest in mortgage lending? “I primarily got into it for the service opportunity. It’s a great way to meet people and to be part of your community,” he says.