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The following is an example of how a counteroffer was handled.

In this situation, the data was applied several different ways and
the indicated value range was unusually narrow; the data pointed
to a very reliable expected value range. The initial offer reflected
the current market and while aggressive, it was not offensive.

The listing agent detailed her opinions in an email after consulting

with her clients; this is my response to her standard agent
analysis (CMA). I shared with her much of the pre-offer analysis
that was completed to support our position. The home had not
been listed long and they were basing their opinions on an
unrealistic initial list price. They were also not overly enthused to
see the extensive data presented.

The home was eventually contracted but the deal fell apart during
the inspection.

Hank Miller, SRA, ABR

Associate Broker & Certified Appraiser
Keller Williams Atlanta North
other agent
Hi Karyn,

Since it seems that you appreciate facts and the data crunching that’s involved in properly guiding our
clients, I want to share much of what I’m looking at and have you understand my approach. We’re simply
advocates for our clients; the data we look at is the same. It’s how we use that data and counsel our folks
that make us successful or not. I’ve sat and explained data to many potential sellers, often they wave
their hands at it as if it doesn’t apply to them – at that point I wish them luck and leave. Same for buyers,
they all think everything is half priced – and I’ve walked away from many of them as well. Here’s what I
see for your listing -

Your seller’s coming off the list price 5% is good and consistent with the data. The one hitch is that the
5% needs to be applied to the adjusted list price, not original list price.

Here’s what the data shows for activity in this area –

• Edgewater shows an avg 20K reduction from OLP to LP at sale. The SP/LP is 95.53%.
• Closed sales in Pope HS from 01/08+ selling between 500-750 show an avg 23K reduction from
OLP to LP at sale. The SP/LP is 95.75%.
• Closed sales in Hightower / Pope from 02/09 selling between 500-750 show an SP/LP of 95.1%
(OLP to LP figures skewed by distressed dumps)
• A 1004 Fannie Mae review of activity between 500-800 shows Pope HS at a current SP/LP of
92.99% and around a 2% level for seller concessions (closing costs). The twelve month look back
shows about 1%

I have cut the data in other ways – more geared toward the appraisal/anticipated trend view point and it’s
consistent with this. Applying the data sets parameters:

700,000 – 20,000 x 95.53% = 649,604 – 6,496 avg 1% closing costs = 643,108

700,000 – 23,000 x 95.75% = 648,227 – 6,482 avg 1% closing costs = 641,745
700,000 – 21,500 x 95.10% = 645,253 – 6,482 avg 1% closing costs = 638,771
700,000 – 21,500 x 92.99% = 630,937 – 6,309 avg 1% closing costs = 624,628

It’s always a good idea to work from inside out – start in the community then expand. The obvious reason
is the most reliable data comes from samples large enough to accurate reflect and develop trends. What
I’ve done here is what an appraiser will do; start small and open it up – that is most reliable way to gauge
both the community and competing market. Note that I did not leave the Pope HS district for any of this
data and it is all reflective of the current market – and all based upon closed sales.

As far as the initial offer and counter, nothing in the stips is atypical.

Your comments - Some of the items they asked for in the special stips section are not items that
the seller typically provides (i.e. survey, termite letter, etc). We have taken those out. They will,
however, provide a home warranty for them. Also, their termite bond renews in March and they
agent will go ahead and pay for a full year, not just 6 months. A survey is one of the most important things
comments for a buyer and something that I encourage on every deal. As far as a termite letter I have my buyers get
one from the sellers for obvious reasons. If they have it under bond then it should be academic and not
an issue. 28 days for the appraisal is to ensure adequate time – this business is in complete chaos and
I’m not going to get caught in a time crunch. While my buyers are open to the rent back idea, we want to
secure the home before discussing those terms.

Your comments - Also, I went back through the comps and realized that stucco house sold for
$655,000, not $625,000. I didn't have the specifics in front of me so I couldn't remember when we
were talking. Once again, that home has a significantly lower value since it's stucco and this one
is brick. The buyer’s agent is in our company and I spoke with her. She described the kitchen remodel
as gorgeous with new high end everything. It’s also very open with significantly more cabinet and counter
space. Note your microwave is in a closet and for a 4,000 sf home that is not a large kitchen conducive to
traffic/entertaining and the European design is not widely accepted. While I don’t see a redlink entry, she
said she remembered the home as around 4,400 off the appraisal with similar finished basement area.
She also said the yard was beautiful and on a cul se sac corner with wide and flat front, side and rear
yards and fenced. There is no home directly behind and the lot is free from dead/dying trees which will
require attention. It’s also just about fully Bermuda – no dirt areas or wet areas. It was stucco inspected
and sold with a bond. I agree that stucco homes are stigmatized to some extent but this home has a
plethora of appealing features that made it sell so quickly and so rapidly.

Chartley does as well, but I also see a twelve year old roof, twelve year old mechanicals, a yard that
requires attention and removal of at least two trees, a nice terrace but without a bar or media room, a nice
kitchen but not as large and open as many and with an atypical design and a home with many of the
original fixtures and features. Obviously the home is appealing and attractive to my buyers, but when we
speak of placing a home in the very top tier of the value range these are the things that my twenty years
of experience are drawn to. We also discussed square footage, please don’t rely too heavily on that to
ascertain value. There are so many variables when assigning price per square foot (especially with
homes of this age) that it’s pointless. That’s been recognized by Fannie Mae as we are no longer required
to provide a cost approach in appraisals; it is a useless method and appraisers have recognized that for
years. I’ve included the subject’s redlink entry so you can see what past appraisers have determined to
be living area, the basement may have an increase in finishing area not recognized.

I understand that your sellers are not in any financial distress and that they are not “going to give the
home away”, but let’s be honest and acknowledge all of the circumstances for both seller and buyer. They
also own a home overseas, are trying to maintain the status quo through May and execute moving a
home that is obtainable by a continually shrinking pool of buyers. Current opinions on the economy show
a consensus that unemployment will hold in double digits, the housing and mortgage industry will
continue to sag, credit isn’t going to open up anything like it was, the feds are expected to end the
purchase of MBS next month and there’s zero confidence in private investment firms for real estate
related offerings.

It’s also clear to the experts that rates have to go up as they’ve been held artificially low for so long and
the jumbo mortgage arena (already a disaster) will just become worse. I’m certain that the gurus at
Coldwell Banker are discussing the rates and expectations for rates to move up, that’s just going to
further reduce the number of able and willing buyers. I could bore you with the stories of the appraisal
side of all of this (I’m still active) and tell you how automated underwriting, HVCC, fees cut in half and the
combative relationships between appraisers and everyone else is playing as well, but you should know all
of that.

I have an interested qualified buyer that has the assets to avoid the jumbo dance, is open to offering a
competitive price and is willing to let your sellers remain in place against my recommendations.
Everything I just laid out above, I have discussed with them but they are willing to accommodate your
sellers. They are not in a “must move” situation and we are pursuing another home as well that is
locationally more desirable with features similar to yours, and it’s vacant which allows them to list their
current Walton HS home and catch the spring market. They can close in thirty days or they can sit tight
and wait for the right opportunity to come along. The Chartley home is appealing to them but only under
the correct circumstances.

I encourage you to share this with your sellers and if you have any questions please don’t hesitate to call.
to our clients

Well here’s my review on things. The very first thing that needs to happen is
between you two – that is to answer the question of “is this a house that
works well for the long term?”; then the follow up is, “what will I pay for it?”.
The question of long term stability and appeal is answered – this is a solid
area and community.

Assuming the first answer is yes, the question then is what is the number
that makes you happy? I’ve cut the data a few different ways and I’m able
to drop a dime on that number – it’s between 637K and 653K depending on
the pool of data used. My initial gut was between net 640 and 650.
So, that said…the counter included:

• Them asking for a bump to 6500 in earnest money isn’t unusual (1%
is the norm).
• Closing costs are part of our number anyway so we can add them in
on top of our desired net.
• I’m going to hold on a 28 day appraisal window – they have been
chaotic of late and I don’t want to get caught by the short hairs on
time. 21 is doable, but 28 is better.
• I’m not prepared to stipulate a rental rate at this point. My thought is
that if you wind up with around 400K for a note, your carrying costs
might be less than market rent. Then again, I could be being a nit wit
splitting hairs like that. The counter argument being essentially keep it
simple for 10 weeks and cover the costs and get a security deposit, we
can chat about that.
• They won’t give us a new survey – estimate 450 on that. I’ll ask if they
have an older one.
• They’ll give us a retreatment termite bond but not a letter. That’s
stupid since if they are under bond the assumption is that there are no
termites – I’ll have them do that letter.
• Signing of the disclosure acknowledges receipt only, nothing else as
we’ll be doing an inspection anyway in the due diligence period.

So now the number; the counter is 70 apart so conventional wisdom would

say split it. At net 630 would show that you’re serious and that would force
them to consider not coming back with a number reflective of the data – this
requires their agent’s input. With us at 630, I would expect them to come
back around net 655 or so if they’re smart. At that point I again pick up the
phone and chat with the agent and advise her that we’re not playing ping
pong. That might be the point where each side says “this is it”; if so then I
think we hold an advantage and I will remind them of that. They would be
fortunate to have another buyer willing/able to pay and rent back.
Now – this is only my opinion so take that for what it’s worth. It’s based on
the data; I have no illusions of me in that home. This is my side – that
emotional end is your side in conjunction with this stuff. I’ll be calling her
prior to sending back the counter to press her on her data research,
continue to influence the situation my way and reinforce the convenience to
her clients of not moving.