Ron Mazzacane's Real Estate Facts

Comparison Shopping for Schools

2012-02-17T06:55:00.000-08:00

Real estate professionals are very often faced with a question from buyers that has nothing to do with houses: "What are the best schools in the area to which we’re moving?" When you relocate, the most important thing you'll be moving is your child, and you want to be certain you are making the right choice for education.

One excellent resource for beginning your research is SchoolMatters.com, an online database of public schools. Begin with statistics that illustrate students' achievement levels in each school. Compare reports for all students, including minorities and children in low-income families. Schools in which all students perform well are providing balanced educational opportunities.

Also pay attention to extra-curricular activities offered, particularly if your child is interested in sports and other pursuits outside the classroom. The School Matters database offers ratings and reviews directly from the parents, so you can learn from those with experience.

One thing you can't determine online, however, is the actual classroom environment, so you should absolutely schedule a visit to one or more schools in the area before making your decision. Meet with the principal and watch the manner in which teachers and students interact.

Once you have an understanding of the distinctions between schools, your choice will become clear. You wouldn't buy the first home you see, and "shopping" for a school is no different!

A Brief Tale of the Short Sale

2012-02-10T08:54:00.000-08:00

Foreclosure has a negative impact not only on homeowners, but also their neighborhoods and local economy and housing market. One way to avoid foreclosure is with a "short sale," in which the lender is willing to accept a payoff that is less than the balance of the loan. Such a sale still benefits the lender, supports home values, and helps the seller maintain a level of credit.

Because "short selling" is a different process for different types of loans, the expertise of a real estate agent adds value to these complicated transactions. A "normal" sale involves at least two agents, the seller, the buyer, the buyer's lender and other professionals. A short sale involves all of them, plus the seller's lender, counselors, lien holders, insurers and more.

The National Association of REALTORS® has worked to help agents understand and solve the problems involved in short sales, including the piles of paperwork, overextended loss mitigation departments, and appraisals that don't reflect seller duress or recent foreclosures in the neighborhood.

You might consider speaking with an agent about a short sale if you meet three basic criteria: you're behind on payments, you can prove legitimate hardship, and have little equity. With the expert knowledge and guidance of a real estate professional on your side, you have an opportunity to salvage your credit and avoid the pain of foreclosure.

Have An Escape Plan

2012-02-03T07:53:00.000-08:00

Selling a home has its challenges, some of which go beyond the obvious aspects of determining an asking price and developing a marketing plan. Just trying to keep your home in immaculate condition while living there is no mean feat, not to mention being prepared for showings at any given moment. However, experience proves that there are some basic steps to take to alleviate these stresses.

First, be prepared with a large plastic storage tub for each room. When an agent and buyers are on their way for a showing, quickly unclutter each room by placing toys, personal items, and knick-knacks in the tubs and putting them in the closet. Then it's easy to replace everything once your visitors have left.

Also have your "escape plan" determined. Decide in advance where you’ll run off to for thirty minutes while your home is being shown. Maybe you'll go down to the park or the local coffee shop, but it helps to know where you'll go before you hop in the car and start driving around aimlessly waiting for prospective buyers to clear out of your home.

Finally, and perhaps most importantly, be flexible in your scheduling, as restrictions on your home’s availability can make marketing the home difficult for your representative. With a little preparation, you can be ready for anything, particularly that full price offer!

Pause For The Paws

2012-01-27T05:52:00.000-08:00

With millions of dogs and cats as members of American families, there’s a good chance that you've got pets sharing the home you're trying to sell. Since not everyone enjoys the company of animals, there are some measures you should consider taking before prospective buyers come over for a showing.

Pet odors are the biggest problem sellers face, but they can be easily minimized with thorough cleaning and vacuuming, and vigilant duty with the litter boxes. Black lights are available that help you to pinpoint the origin of any mysterious smells. It also makes a good impression if you pick up and store toys, bedding, and food and water bowls while your home is being shown to buyers.

If at all possible, take your dog(s) out with you when an agent brings visitors, or ask a friend or family member to keep your pet during the initial listing period. This will help reduce the stress on your pet at a time when showings are usually more frequent.

Another way to put buyers more at ease with their purchase is to offer a cleaning credit or allowance. Even if you're certain you'll remove all evidence of your beloved pets before vacating your home, the buyers may not share your confidence.

Why not offer these gestures of good will, thereby encouraging a better offer from the buyers?

Time To Make Lemonade

2012-01-20T09:51:00.000-08:00

When one hears the word "foreclosure," images are conjured of families unable to meet their loan commitments, and forced to consider unpleasant options. However, it's not only homeowners that suffer from a foreclosure. Renters can be "out on the street" if their landlord defaults on mortgage payments.

A report from the Mortgage Bankers Association states that nearly 20% of recent foreclosures have been against investors who did not live in the property, and even tenants in good standing face having to vacate the premises if they're renting one of these properties.

Why mention this gloom and doom scenario? Because home values have declined, and buyers are seeing the best deals in many years. While unpleasant for sellers, price declines increase affordability for buyers, so if you've been renting, now is a fantastic time to turn that monthly payment into equity.

Interest rates have inched up, but still-historically low rates combined with very affordable housing yield a formula that should put you in a home that you own for the same amount you are now paying for rent. Not to mention that at a lower purchase price, you'll enjoy some great appreciation over the coming years.

Just because you're renting now, you’re not necessarily safe from suffering the consequences of a foreclosure. Take matters into your own hands and buy yourself some peace of mind.

Bring It On Home

2012-01-13T09:48:00.000-08:00

Buyers and sellers develop a natural sense of excitement as a transaction's closing date nears. While most aspects should run smoothly, it's wise to be prepared for unexpected delays. Anticipating potential problems before they develop could save untold time and stress.

One pitfall might be the title search. The title is simply legal proof of a property's ownership, but issues such as death, divorce, and liens can cloud the final result. Meet with an attorney to determine and resolve any problems.

Financing can also present snags. If the buyers can't qualify for a loan, the deal falls through. Buyers should begin their mortgage education well in advance of their home search, and sellers should ask a price in line with the home's appraised value. If the appraisal is much lower than the contract price, the lender will likely reject the loan application.

The best situation for buyers (and sellers) is to have a loan pre-approval in hand. It starts with the loan officer performing a review of the buyer's credit, income, and asset v. liability status. A letter of pre-approval should indicate exactly how much home a buyer can afford, and should put sellers more at ease with pre-qualified buyers.

There are myriad aspects to closing the deal, so go over each item thoroughly with your real estate representative and develop your plan of action!

Buy More Home Now

2012-01-06T03:28:00.000-08:00

While the pundits determine whether the real estate market is plunging or recovering, buyers are in the unique position of looking at a glass that is half full, not half empty. When sales are slow, that's actually a good thing for qualified buyers, and there has not been a better time to consider finally purchasing that vacation home.

Your second home is not a short-term investment, like those that have been "flipped" in recent years. Your vacation home is meant to be a long-term investment that pays big dividends not only in appreciation, but also in recreation and great family memories.

Today's market allows you to take more time to do your research and make your decision. Start by connecting with a real estate agent in the area you're interested in, and have them watch that market like a hawk to alert you to possible buying opportunities.

Don't focus on what the market is doing now... look ahead and consider the value of your purchase several years from now. Because real estate nearly always appreciates, you can buy more home now than you could further down the line.

Property is still a terrific long-term investment, regardless of current market conditions. Knowing that you can always rent your second home might just prove to be a great strategy for making second home ownership a real possibility!

Don't Compare...Compete

2011-12-30T06:24:00.000-08:00

As you prepare to list your home, you'll need to determine how to set your asking price. You may come across the term Comparative Market Analysis, which is used as a tool for gauging the perceived value of your home. However, as a seller, you should think of that informal appraisal more as a COMPETITIVE Market Analysis.

Why? Because comparisons can be very subjective, and while buyers may "compare" several homes, sellers must "compete" against other properties. No matter how unique you believe your home to be, it doesn't really matter how it compares to others until you have priced it to compete successfully against them.

In today's real estate market, past sales may not necessarily reflect the present reality. Similar listings compete by asking the lowest price for the perceived value, with price and value representing different sides of the same coin.

When you speak with a real estate agent, he or she will explain how your home must challenge the competition with savvy marketing, spotless presentation, and aggressive pricing. That is how to attract the interest of other agents and buyers.

Remember, it is the prospective buyers who will be making the comparisons. It's your responsibility as a seller to compete for their best offer in a challenging marketplace. Ask your representative today for a Competitive Market Analysis to get the ball rolling.

Purchase Some Protection

2011-12-23T07:22:00.000-08:00

A listing that offers a home warranty presents a win-win for all parties. Sellers can use this attractive marketing tool to give buyers some added assurance and confidence in their purchase, by giving the buyers protection against failures in the home’s systems and appliances.

Not all home warranties are the same, however, so sellers should be careful to educate themselves about the differences in cost, coverage, and policy owner feedback among the various companies that offer these contracts. These warranties may cost between $250 and $500 for one year, but that investment is well worth the return when a confident buyer makes an offer.

Even if the seller does not offer such a policy, buyers are able to purchase one themselves, if they wish. Visit websites such as homewarrantyreviews.com to check reviews and ratings with the Better Business Bureau.

Also pay attention to what fees, if any, are charged for the service calls, and what exclusions may apply. All warranties offer a “basic coverage” policy, and you can often upgrade to include additional systems and appliances that are not included in the core package.

Chances are that the listing agent and buyer’s agent will have a list of recommended companies that offer these warranties, and will have worked with many buyers and sellers in the past who gave them feedback. Don’t be afraid to ask!

Preventative Medicine

2011-12-16T04:21:00.000-08:00

It’s an understandable conundrum: sellers believe their home is worth more than it is, and buyers think that it’s worth less. So where is the proverbial “sweet spot” when it comes to the single most important aspect of marketing your home - setting its price?

Consider how many homes are for sale in your neighborhood. Is that number high? Then your listing price should be lower than the competition if you want to generate the most interest. Obvious, right?

But how many of those rival listings are foreclosed properties or short sale listings? The most critical factor in evaluating this type of competition is the condition in which they are offered. Neglected homes aren’t likely to affect you, but if they are in good shape and presented at prices 20% below market, you’ve got some hard thinking to do.

If buyers aren’t making appointments or showing up at an open house event, you probably priced too high at the start. Don’t hesitate to make an adjustment, however, because properties generate the most interest in the earliest stage of the listing.

Finally, give any offer strong consideration. You may counter, but these days, buyers won’t engage in extended negotiations - they’ll just move on to the next property. You can avoid these bitter pills by practicing a little preventative medicine through competitive pricing right from the beginning.

This Too Shall Pass

2011-12-09T06:20:00.000-08:00

Even with recent gains in the market, the concept of homeownership is still under attack. Owners feel let down by falling values, critics say the American Dream has become a nightmare, and others say renting is the best option now. There is no doubt that many have suffered at the hands of bad lending practices and economic turmoil associated with the recession.

However… owning a home has always been a huge part of the American Dream, and will continue to be so long after the current economic crisis and wave of defaults has passed. Our homes are a place of security for our families and for establishing traditions with our friends.

No one can argue against the benefits that homeownership provides to our communities and to society in general. Homeowners have a higher level of self-esteem, education, and involvement in civic activities. Why try to tear down these fundamental truths simply because we are in a downward part of the always dynamic cycle of real estate?

The time has come to reaffirm the dream of homeownership, but in a more sober and accountable fashion. We should emphasize responsible ownership for the long term, which helps us and our communities achieve the common goals of financial and social well-being. Today’s naysayers will change their tune when the cycle rises again, and you can count on that.

Don't Risk It

2011-12-02T03:19:00.000-08:00

When listing your home, you may need to move before a sale takes place. If you vacate the home, it’s very important that you notify your insurance company, because many homeowner policies have a “vacancy clause” that goes into effect once the home is unoccupied, usually for more than 30 to 60 days.

Insurers see different risks in vacant homes, like vandalism, systems failures, or other liabilities. In most cases, you’ll simply purchase an endorsement to your existing policy, but different insurers have different options, and if an endorsement is not available, you can get a separate “vacant-home” policy.

It may be an additional cost, but it’s called “insurance” for a reason, and could save you a lot of money down the road. If you don’t notify your insurance agent about vacating your home, they could reject any claims you file for property damage or liability, or accuse you of insurance fraud.

It may be tempting to just hope that your home will sell within 30 to 60 days after you have to move out, but it’s critical to speak with your insurance agent before you move to discuss your options. They may even pro-rate and refund part of your premium if you sell before the end of the policy’s term. It’s a small price to pay to protect your home and your peace of mind.

Save Money Now and Later

2011-11-25T04:18:00.000-08:00

Before you begin what should be the fun process of buying a home, consider a couple finer points to help save you money, both upfront and down the road. One issue relates to your credit score and its impact on your financing, and the other relates to the condition of your home and the cost of repairs.

First, know your credit score in advance of house hunting, and take immediate steps to improve it if it’s less than good. During your loan application is not the time to find any surprises.

Correct any errors on your credit report, pay down some revolving debt, and don’t make any other major purchases (like a car) until your loan paperwork is complete and you’ve closed on your home. This is important because borrowers with lower scores pay higher fees and interest rates, which can total tens of thousands of dollars over the life of the loan.

Once you’re in the position of having made an offer to purchase, do not skimp on inspections. No matter how strapped for cash you think you are, the cost of the inspections is a drop in the bucket compared to what unexpected plumbing, electrical, and structural repairs will cost you in the future. Your agent will go over a list of available inspections and suggest the most appropriate ones for your property.

The Wow Factor

2011-11-18T03:16:00.000-08:00

Now is a great time to take care of the exterior details that will make your home stand out when buyers first lay eyes on it. Starting at the top, make sure your roofing materials are functional and looking good. Gutters should be cleaned out and repaired, and any signs of water damage eliminated.

Little details have a huge impact. Paint is cheap, but pays off handsomely when you apply it to any trim, railings, shutters, and especially the front door. A new knob and knocker wouldn’t hurt, and a new mailbox and street numbers make a good impression, too. Once you’ve improved those details, light it all up with attractive outdoor lighting.

Finally, there’s the front yard and driveway. Your walkways and driveway set the tone for the rest of the scene, so make sure they are meticulously swept, edged and maintained. Of course, mow the lawn regularly, keep it fertilized for a lush look, and keep pulling those weeds.

It’s easy to save money while still giving your yard an expensive landscaped look by simply buying lots of beautiful flowering plants. Plant them in groups and place mulch around them, or use large pretty pots on your porch and strategic areas around your driveway and walkways.

You know how important first impressions are, so don’t waste any opportunity to maximize your home’s appeal.

Don't Forget The Variables

2011-11-11T04:15:00.001-08:00

You’re ready to make an offer! You’ve done your homework by reviewing a CMA (Comparative Market Analysis), local DOM (Days On Market), and even the LP:SP (List Price to Sales Price) ratio to formulate your offer based on the numbers, and you have confidence in the mathematics.

However, there may be “non-tangible” factors that don’t fit neatly into the equation. Your representative will endeavor to discover variables like the seller’s motivation and your possible competition.

If the home you want has been listed much longer than the average DOM, the sellers may have become more realistic and more motivated to accept lower offers. Sometimes the sellers are motivated by the pressure of having purchased, or offered to purchase, another home. Then time becomes more important than money. No one wants to pay two mortgages or risk their ability to close on another purchase because they can’t sell their first home.

Also try to find out if other buyers are making offers on your chosen property. If so, make your first offer your best offer, because sellers are unlikely to counter in this situation. But… never offer more than your representative believes the home will appraise for, or your financing will fail and you’ll be back at Square One. Talk to your agent about the facts and the variables, and then make your offer with confidence.

Too Good To Be True

2011-11-04T05:14:00.000-07:00

Many homeowners are still facing mortgage default, and while the best bet is to contact your lender directly, there are tempting advertisements out there for companies that claim they can solve your financial crisis. Fraud is rampant, so look out for the following warning signs.

First, don’t believe the hype when you hear, “We’ll stop the auction!” or, “Debt eliminated, guaranteed!” If it sounds too good to be true, it is!

You should be suspicious of any company that tries to gain your trust by imitating a government agency. They may (illegally) publish government logos and names, or even copy the look of an official website, so pay attention to the details.

Back out of any deal that requires you to pay any fees upfront. There is no need to pay anyone to modify your mortgage terms, because your lender, and only your lender, can do that.

Most importantly, do not make mortgage payments to anyone but your lender. If a person or company presents you with an official looking statement that indicates payments should now be made to them, don’t walk – run for the door, and call the Better Business Bureau.

By working directly with your lender, you may be able to modify your loan terms, or agree to a pay-off through a “short sale” listing. Please heed this advice from an experienced professional.

Crunching The Numbers

2011-10-28T09:25:00.000-07:00

You recently read here about formulating your offer based on the information included in a CMA (Comparative Market Analysis). You can fine-tune that offer by applying current market trends. Trends may vary by region, state, city, and even the neighborhood, so do your homework.

You and your agent can study a lot of available statistics - the CMA, local listings’ DOM (Days on Market), and list to sale price ratios. The CMA compares similar properties, while the DOM figure gives you an idea of whether you’re looking at a buyer’s market or a seller’s market (in which you’ll have more competition and less negotiating power). If possible, look at DOM for listings within a mile of the home you want to purchase - it’s that area-specific.

Let’s move on to the average “List Price to Sales Price Ratio” (LP:SP). Like it sounds, it’s simply a percentage based on how closely the final sales price corresponds to the price at which the home was listed. A house that sells for the asking price has an LP:SP ratio of 100%. So a house that lists for $175,000 but sells for $160,000 has an LP:SP of 91%.

Look at the these ratios for the homes on the CMA that most closely match yours, and you’ll have a sound basis for what percentage of the list price to offer.

Learn From Their Mistakes

2011-10-21T09:15:00.000-07:00

Want to increase your chances of a quicker sale at a higher price? When it comes to real estate transactions, you need representation! A recent survey of 1,000 homeowners reports that of the 83% who used a real estate agent to sell their home, 60% were successful.

Compare that to the 17% who were unrepresented and only successful 39% of the time. Even more telling is the revelation that 83% of those who bought a home worked through a brokerage. Simply put, For Sale By Owner properties are less likely to attract buyers who work with agents.

Obviously, agents work with other agents, who already have a long list of suitable properties to match the needs of particular buyers. If you are trying to compete on your own against that kind of inventory, you’ll soon understand why you yourself would want representation.

Your level of satisfaction is greater, too, when you have a professional on your side. Of those homeowners who enjoyed a sale through the efforts of a real estate agent, nearly 90% said they would use a professional’s services again.

And those who tried to sell their homes “By Owner”? A quarter of them ended up contacting an agent for help in the end. Don’t waste time and money when you can make your first step the right step - use a professional!

Analyze This

2011-10-14T09:14:00.000-07:00

When you’re ready to make an offer on your dream home, will you gaze into a crystal ball for mysterious guidance to determine the magical price that the sellers will accept? Oh, if only it were that easy! There are a number of factors to consider when formulating your offer, but one of the most important tools is the Comparative Market Analysis (CMA) prepared by your real estate agent.

The CMA takes the characteristics of your house (number of rooms, square footage, age, location, etc.) and compares it to similar listings in the area. You’ll see the prices of properties that are currently for sale, have recently sold, or have expired without selling. Current listing prices are irrelevant, but pay attention to the prices at which properties SOLD, because that’s what buyers were willing to pay.

Throw out the highest and lowest prices in the range and figure an average sales price for the remaining homes. Your agent will help you determine how those “average” homes compare to the one you want, so that you can adjust your offer accordingly.

Be sure to note how recently those sales took place, too, because sales from six months ago are probably no longer relevant or useful for your decision. Your agent will help interpret the information so that you can make a fair offer likely to be accepted.

Not As Easy As It Looks

2011-10-07T09:13:00.000-07:00

Just as setting a listing price is ultimately your decision, so is whether to accept an offer. These days, it can be difficult to decide if an offer is a good one, because there are so many influential factors. Getting an offer is the first positive step. Now take a deep breath and consider your options.

Are you under pressure to move? Whether it’s finances, family, or a job transfer, the urgency of your need to move may dictate accepting an offer lower than you had expected.

Likewise, how much debt do you still carry on your mortgage? Unless you are listing under “short sale” terms, you don’t want to accept an offer that’s less than what you owe, so pay close attention to how depreciation and closing costs affect your bottom line before making the decision to accept or counter an offer.

Another important factor to consider is whether or not the buyer is pre-approved for financing. If so, you can expect a quicker closing with no surprises, and confidently begin the pursuit of purchasing your next home. Even a lower offer from a pre-approved buyer may be better than a higher offer from one whose financing falls through at the last minute.

Remember, offers are about negotiation and compromise. Be flexible and reasonable when considering any and all offers that come your way.

The Ball Is In Your Court

2011-09-30T09:12:00.000-07:00

Still waiting to jump off the fence and into homeownership? There are many aspects of today’s market that should make your decision easier. First of all, mortgage rates are still very low, which means you begin building equity even more quickly (by paying less interest), and you can tolerate the ups and downs of the market while values recover.

You’ll still find many assistance programs helping to encourage middle-class families to become homeowners. Get the ball rolling with a discussion with your agent to find out exactly what loan programs are available, and then combine them with the current low interest rates for the greatest benefit.

When you make an offer and apply for financing, you’ll also find that appraisal rules have come more into line with the reality of the market. Appraisers have more flexibility now in determining the value of a home based on comparable properties. This is an important facet of successfully securing realistic financing for your purchase.

And your choices now couldn’t be better, as distressed properties are beginning to clear out of the system, and finer and better-maintained homes are entering the listings. You’ll find that homeowners were investing more in maintenance and improvements while the market was down, which will increase your choice of attractive properties now. Start your search today, while all these factors are in your favor.

Open Their Eyes

2011-09-23T01:43:00.000-07:00

You know what? Size does matter! You want buyers to soak up every square foot of your home, visualizing how their belongings will fit in. Follow these recommendations to maximize the space they perceive, particularly if you are selling a smaller home.

Furniture makes the most direct impact on the living space, so scale down the size of your furnishings, or even better, remove a few larger pieces and rearrange what remains. Large furnishings can make a room feel cramped, so open it up.

Avoid busy fabric patterns, which can also make a room “feel” smaller. Use texture in fabrics to add interest, and if necessary, buy slipcovers for patterned chairs or sofas that you love or can’t remove.

After furniture, the next biggest impact is your walls. Since dark colors absorb light and make even large rooms look smaller, invest in some light paint (think creams, light blues or greens, soft yellows) to open your room’s space.

Another great “trick” is to simply hang some mirrors. Mirrors do double duty in expanding the space. Seeing a reflection of the room gives the impression of more space in “another” room, while mirrors also reflect light, and a brighter room feels like a bigger room.

These are simple suggestions to implement, and a real estate professional will have even more advice for creating an appealing interior.

Attitude Adjustment

2011-09-16T01:42:00.000-07:00

In spite of the real estate roller coaster of the last few years, homeownership remains the bedrock of financial and familial security. Having a long-term investment that provides the satisfaction and pride of ownership beats just about anything else you can do with your savings.

When the market exploded several years ago, the expectations of many consumers grew too high, too fast. Homes became more commodities than investments, and now markets and attitudes have been forced to realign.

Conditions today make it an opportune time to secure your future. Home prices and interest rates are still low, and tax advantages are abundant. You just have to get past all the negativity in the media. All the bad news has drained consumer confidence, and frankly, you cannot underestimate the effect of intangibles like confidence and expectation on the real estate industry.

Real estate transactions are unlike any other financial transaction. The demand and desire for homeownership doesn’t expire like other flashy investment instruments. The inherent value of a stock can be calculated by a formula of company profits, earnings ratios, performance history, fund managers, and so on.

However, a home’s value is ultimately determined by what a buyer is willing to pay for it, and the security and well-being that owning your own home provides. Honestly, there’s hardly been a better time to make your move.

Create A Comfort Zone

2011-09-09T01:41:00.000-07:00

While experts may debate the value of holding an open house, your home may be a good candidate for this marketing tool. If your agent offers to show off your home on a Sunday afternoon, apply some elbow grease and take advantage of the opportunity.

Obviously, get things tidy inside and out. Give all of your countertops a spacious feel by hiding your toiletries under the sink in the bathroom, and by stashing your kitchen appliances in the cabinets. Clean and clear make a great impression.

Also remove photographs, appointment cards, school artwork, etc. from the refrigerator and other areas of the house. Yes, it’s your home, but you want buyers to picture it as their home, so don’t intrude on the fantasy!

You can encourage buyers to linger by simply putting out refreshments, like fresh baked cookies (the aroma can be a powerful intoxicant!), and a pitcher of iced tea or minis of bottled water - anything to make them pause and take a closer look around.

The one thing that shouldn’t be in the home during an open house is… you. No offense meant, but buyers are there to see the home, not the owner, and they may feel uncomfortable asking probing questions if you are within earshot. Make your visitors feel at ease, and trust your agent to take care of the rest!

Final Exam

2011-09-02T01:40:00.000-07:00

You're ready to celebrate: your offer was accepted, you got your dream home under contract, your financing has been approved, appraisal and inspections performed, and settlement and closing are only a handful of days away. What important step have you yet to take? It’s the final walk-through.

It may seem minor, but this real estate tradition is critical before you take possession. This is the last opportunity for you and your agent to verify all is prepared - and repaired - according to your contract.

Make a checklist and begin with the plumbing, starting the dishwasher and clothes washer upon your arrival. Check under the sinks for any signs of leaks, turn on the shower and kitchen and bath faucets, and flush all the toilets so you know all is in working order.

Move on to the electrical systems, by turning on all the light switches, starting up the clothes dryer, and making sure the oven and stovetop heating elements are working. Open and close the garage door while you're at it. Be sure the sellers have left you any manuals and warranties for the appliances.

Don't forget to open and close all the windows and any sliding glass doors. Sure, your inspector is supposed to check and report on all these items, but this is your last chance to avoid any oversights or surprises!

Pet Proposals

2011-08-26T01:39:00.000-07:00

Did you realize that 6 out of 10 U.S. households have pets? That means that those without critter companions are in the minority, but if you’re a pet owner selling your home, you shouldn't ignore the perceptions of those families that don't include cats or dogs.

Odors are the biggest issue. This isn't to say that your housekeeping is remiss, but remember that some buyers who visit your home may experience allergies or be particularly sensitive to pet dander or odors. Just vacuum the floors and furniture frequently and use an air sanitizer.

During the early stages of your listing, you'll likely experience more frequent showings and visits by buyers. This is a particularly good time to make arrangements to board your pet, or seek out a good "doggie day care" center for quick visits during showings. This may be safer and less stressful for your pet than a constant parade of strangers in your home, and may put buyers more at ease as well.

In any case, be sure to pick up toys, bowls, and bedding in advance of a showing, just as you would tidy up the children's things and other rooms throughout the house before buyers visit. A particularly attractive gesture would be to offer a cleaning allowance, no matter how scrupulously you maintain your home. This should quiet any potential objections.

It's All About Approval

2011-08-19T01:38:00.000-07:00

These days, a buyer's biggest concern shouldn't be so much about finding the lowest interest rate, but finding a lender who will approve their application. There are three basic types of mortgage providers, each regulated by a different agency, and following different disclosure laws.

Banks: generally employ their own underwriters and provide loans with their own money. They often have mortgage products matched to particular situations, such as manufactured homes or new construction. Minimum credit score requirements will vary from bank to bank.

Brokers: work on a commission and make a little more than bankers, but their business is highly regulated and transparent. They prepare your application file and present it to banks or investors. Involving a third party can take more time, of course, and since they have higher credit score requirements and fees, don't shop at a broker if your score is below 620.

Correspondents: draw from their own credit lines and sell your mortgage shortly before closing. Since their ability to lend depends on their own credit, it's possible for closing to be delayed if they are processing more loans than they have funds to cover. That doesn't mean you can't still get good terms, however.

You need to assess your financial position and your needs, and speak with your real estate agent about which type of lender best suits your situation.

It Pays To Stay

2011-08-12T01:38:00.000-07:00

If you want to take advantage of the affordability of homes today, but anticipate major life changes in the next couple of years, you have to consider the implications of selling so soon. Keep the following factors in mind when making your decision.

As long as you sell for more than you owe on the mortgage, you'll be fine. Otherwise, you'll lose those costs associated with your initial investment, including the money you spent on loan and closing fees.

Also consider the cost of selling your home soon after purchasing. You paid closing costs when you bought it, but you face more closing costs when you sell it. In just a couple of years, most people won't build up enough equity in the home to justify selling so soon and paying transaction fees again.

Finally, if you sell your home in less than two years - for a profit - you may have to pay capital gains taxes on that profit. Currently, homeowners are exempt from those taxes up to $250,000 (or up to $500,000 for married filers) - but the home must be your primary residence and lived in for at least two years.

Hardships like health issues or job relocation may allow you a partial exclusion on those taxes, though. Speak with your tax advisor and real estate agent for some solid advice.

Look At It This Way

2011-08-05T01:32:00.000-07:00

Most of us don't have the resources - or the guts - to own stocks in really large quantities. That’s what makes your home such great "risk capital." It's not the stock market, and you shouldn't look at buying a home as a way to get rich, but if the economy picks up, real estate values will eventually follow. Building equity in your home is like linking your investment portfolio to the growth of the economy - without the sleepless nights.

Plus, it's like forced savings for you and your family. Maybe you could rent a condo for $1,800 per month instead of buy one for $2,200, but would you really "save" that $400 a month for the future? The part of your mortgage payment that goes toward principle is like paying yourself back in equity - instead of burning that money on rent.

And the interest you're paying on your loan, along with your property taxes, is tax deductible and probably enough to allow you to itemize tons of other deductions from your income as well. For many people, just these tax breaks alone make owning cost less than renting.

Usually, you can buy a much better home than you can rent, and with high inventories and low interest rates, now is the time to contact an agent and start saving for the future, today.

The Numbers Tell A Story

2011-07-29T01:31:00.000-07:00

Real estate transactions are increasingly complex these days, especially in relation to short sales and constantly changing mortgage lending rules. Setting a fair price today is also particularly challenging, as markets correct themselves amid fluctuating factors.

So it's no surprise that fewer sellers are choosing the For Sale By Owner (FSBO) route. But the numbers started dwindling two decades ago, even before the wave of defaults and falling values. In 1991, one in five sellers were By Owner, but in 2010, only one in ten did not enlist a real estate agent to sell their home.

It's revealing that in 2010, 50% of FSBO transactions involved sellers who knew their buyers upfront. Unless a seller already has a buyer lined up, it's evidently much less likely they would attempt such a complex process on their own.

Then there's the question of sales prices. On average, a home marketed and sold through the representation of a real estate professional fetched $199,300 versus just $140,000 for a FSBO sale. Those who try to sell By Owner won't pocket that 5%-6% commission they think they'll save, especially considering all the hard work and potential liabilities.

And when it comes to offers, buyers of FSBO listings are also eyeing that same percentage, and in today's market, buyers usually win with a price reduction far greater than the cost of representation.

Listing Lingo

2011-07-22T13:30:00.000-07:00

As if the language of real estate weren't confusing enough, the wave of bad lending practices and loan defaults of recent years have added more terms that have subtle but important shades of difference. When you prepare to speak with an agent about buying or selling, make sure you understand the lingo.

First, realize that the word "foreclosure" does not describe a property, but the legal process by which a homeowner loses their interest and the bank or lender assumes ownership. It's a legal term, not a property description.

If you're buying, you go to tour "foreclosures," per se. You're probably going to look at "Real Estate Owned" listings, or REOs. These are properties that the lender has taken back after the foreclosure process is complete. You may see these advertised as "bank owned."

Then there's another type of listing described as a "short sale." This may qualify as a "distressed" property, but it is not yet in the hands of the bank or lender. The homeowners and the lender have reached an agreement to sell the property for less than the owners owe on their mortgage.

The short sale is an attempt at compromise between the two parties, keeping the sellers out of foreclosure and credit history ruin, and keeping the lender out of the costly process of foreclosure and expensive business of property management.

Get Their Attention

2011-07-15T13:29:00.000-07:00

There are many reasons to feel pressured to sell, be it a job transfer, family medical issues, or financial hardship. This is when you face cold hard facts about your home's value and what you can expect to net from your sale. Understand that what you paid for your home years ago has no relevance today, and a buyer won't pay a premium price simply because that's what you owe.

If your home is now worth less than what you still owe, it may be time to call your lender and arrange listing as a "short sale." Your lender will indicate the lowest price they'll accept, and you can begin your aggressive marketing. A short sale will blemish your credit rating, but not as badly as a foreclosure would.

If you're not experiencing such financial hardship, but still facing a deadline to sell, then you need to discuss the Comparative Market Analysis (CMA) that your agent prepares, and price your home below the average sales prices listed. That's "sales" prices, not "listing" prices. “Expired” listings educate you about the prices for which homes did not sell under any circumstances, so pay attention.

Realize that an underpriced home will seem like a bargain, and attract more interest and qualified buyers. It's always better to sell lower sooner than have to reduce your price and sell lower later.

The Market Where You Move

2011-07-08T13:28:00.000-07:00

As we see some market recovery, the scales become a little more balanced between buyers and sellers. However, if you're a buyer moving out of the area, local conditions here aren't relevant. You need to investigate whether it's still a strong buyer’s market in the area where you are relocating.

If long listing times and price reductions are prevalent, then you have the luxury of exercising some of the following options when you search and eventually make an offer. First of all, you needn't jump at the first suitable home you find, because inventory will be high and price reductions open to discussion.

When you finally decide to make an offer, play the time card to your advantage, asking for a speedy seller response, perhaps within 24 hours. Pressure to accept is one thing, but do allow a reasonable amount of time for inspections, repairs, etc. Speaking of which, don't be shy about stipulating major repairs in your offer, and the inclusion of a "home warranty" policy for the first year.

Offer below asking price, but don't lowball and insult the seller. You can always reject their counteroffer in a strong buyer’s market, as long as you can accept the risk and move on to the next property. Have your representative assemble a good selection of suitable properties and take one step at a time!

Buy, Sell, Win, Win

2011-07-01T11:41:00.000-07:00

Buyers, sellers, the time for hesitation is over for both of you. Home sales are rising, inventories are shrinking, and even though home values fell dramatically in the last few years, the good news is that houses are now more affordable than they have been at any time during the last twenty years.

If you are buying, now is the time to make your move, literally. As the market recovers, the scales are still tipped in your favor. There are still many "distressed properties" (foreclosures and short sales) on the market, and other homeowners are entering the selling field as improving conditions increase their confidence.

You can still expect competition for lower end, entry-level homes, but demand is softer in the middle to upper end property market, so you could be in a stronger bargaining position in those two tiers.

If you're a seller, don't be alarmed by the good news for buyers. Buyer confidence and strength makes it more likely that you'll enjoy a sale. Don't try to compete against short sales and foreclosures when you're pricing, though, because that's a tough game to win.

Just complete any needed repairs, get your home into great showing condition, and emphasize your home's strengths and features. We're in an interesting transitional phase where both buyers and sellers can be winners with the right attitude and representation.

R.O.I.: Return On Improvement

2011-06-17T11:37:00.000-07:00

If you plan to remodel or update before selling your home, you have to find the balance between what's appropriate and what qualifies as over-improvement. If you're in a mid-range neighborhood and install granite countertops, you're unlikely to recoup your costs. But if you're in a higher-end community, laminate may be too little, too late, resulting in a lower sales price.

So what will always work? Painting, inside or out, is one of the most affordable ways to increase your resale value. If you've got wood floors underneath carpeting, show them off. Old light fixtures in the kitchen, bath and hallways should be updated to popular styles with stainless steel or brushed nickel finishes. And be sure to make a good first impression outdoors with a maintained yard and perhaps a new mailbox, doorknobs and house numbers.

Before you plan your updates, visit some open houses or new home communities where you can see the latest styles, and update your home's features accordingly. Just remember to keep your improvements clean, neutral and timeless.

Try not to be the last one on your block to remodel or update, because buyers will pass your listing over for one up the road that's already been updated. Improve your chances for a quicker sale at a higher price by discussing with your agent which improvements provide the greatest return.

Thinking Of Shrinking

2011-06-10T11:36:00.000-07:00

It's not just the economy - there are lots of reasons that people choose to downsize. It could be retirement, a recently emptied nest, or just plain "maintenance fatigue." Whatever the reason, plan your new lifestyle carefully.

When you search for a smaller home, don't forget that Location is still the key ingredient. Even if you don't have kids or they've flown the coop, a good school district and proximity to public transportation and recreation are still the best bets for retaining value.

If this will be a retirement move, think about the future and seek out homes on one level, or at the very least, with the master bedroom on the ground floor. For practicality's sake, at least one bathroom should be handicap-accessible or easily remodeled as such. Even if you don't think you'll need it later on, your visitors might appreciate the convenience.

If downsizing to you means less maintenance, you may be tempted by town home or condominium living, but be aware of "hidden costs," like annual or monthly homeowners association fees. Check recent association meeting reports to see if there is a building renovation planned, as you could be hit with an assessment fee in the future, too.

There are a lot of considerations in advance of your move, so ask an agent for more advice and enjoy your new lifestyle!

Don't Go Home Without It

2011-05-27T11:34:00.000-07:00

These days, particularly with so many foreclosures on the market, ordering an inspection when you've made an offer is not only recommended, it's critical. Otherwise, you're relying on the seller (in some cases, the bank) to provide you with a list of defects.

An inspection provides an objective report about the home's exterior, interior, and "internal organs" - the wiring, the plumbing, the heating and cooling system, etc. While your agent may supply a list of recommended inspectors, you are free to select any professional you wish.

The seller and their representative will not see the report without your permission. The inspection of a 2,000 square foot home should take two to three hours to complete, and once the report has been delivered to you, you can discuss the findings with the inspector.

Expect your home inspector to walk the roof and explore the attic and crawlspace (if present). Electrical panels, outlets and switches will be tested. Drains, water pressure, toilets and pipes will all be checked in the plumbing system. Walls, ceilings and floors will be inspected and all the doors and windows will be checked for functionality.

All the items in the report will depend on the particular home's features, but the findings give you an opportunity to estimate repair costs and renegotiate your offer. Never bypass this critical aspect of a purchase.

Photography 101

2011-05-20T11:32:00.000-07:00

They say a picture is worth a thousand words, but in real estate, a picture could be worth a thousand dollars (or more). Most agents aren’t photography professionals, but there is an understanding that better photos get listings more attention, and ultimately, a higher selling price.

The absolutely best photos are taken not with "point and click" cameras, but with SLR (single-lens-reflex) cameras. Without getting too technical, just know that SLR cameras give the photographer more control and produce higher quality images.

While an SLR camera costs more than your average point-and-click shooter, consider that a recent study found that listings with high quality photos sold for anywhere between $934 and $116,076 more than their average listing photo counterparts. If your agent doesn't have an SLR camera, then you could easily recoup your investment by purchasing one yourself.

Even though better photos attract more online attention, only about 15% of listings make use of the superior technology. Obviously, high-end listings stand to reap the greatest benefits, so if you've got a million dollar home, why would you skimp on such an important facet of marketing it?

However, there is a caveat: the study found that homes listed under $300,000 didn't see any real difference in sales price with the finer photos, so realistic and competitive pricing is the most effective marketing tool in those cases.

Don't Chase The Market

2011-05-18T02:48:00.000-07:00

Buyer's market or seller's market - the simple fact is that your home is worth only what a buyer will pay for it. The simple law of supply and demand usually determines the final sale price. If there are fewer homes for sale in your area, then buyers must compete for those listings, making it a seller's market.

However, when there is a glut of homes for sale, buyers have more choice and more power to dictate price and terms, creating a buyer's market. Many communities are seeing large inventories of homes for sale, due to economic conditions and defaults.

So if your home is to get attention in those conditions, you've got to price aggressively against your competition. Do not overprice your home, because you may end up making even less money than if you had priced properly from the start. Why? Because sellers who overprice have to keep chasing the market down by reducing their price.

While setting a price is ultimately your decision and your decision alone, do some research and educate yourself first. Order an appraisal and consult with a real estate professional to get a realistic figure for your home's value. If you choose not to comply with current market value, then you won't be a seller, you'll just be an owner with a For Sale sign in the yard.

Benefits On Both Sides

2011-05-17T21:31:00.000-07:00

There are new rules regarding short sales meant to improve the experience for both sellers and buyers, but the legalities and legwork can overwhelm even the most savvy. Of course, that's where the real estate agent shines, handling the paperwork and the phone calls, leaving you to focus on your move.

Keep in mind that if you're expecting to buy a home on short sale, you can get a great deal, but don't expect miracles from a bank that has agreed to accept a price lower than what the sellers owe on their mortgage. These short sales often generate multiple offers, and if a home has been approved to sell for $200,000, don't expect to waltz in and offer $125,000.

The real advantage of a short sale deal is that the home will likely be in much better physical condition than its foreclosure counterpart. Often, a foreclosed home will have been abandoned for months, and perhaps trashed before being vacated. A short sale property in better condition is in and of itself a benefit with real value that offsets any lower price you could offer on a foreclosure.

And for sellers, a short sale preserves your dignity, reduces some of the stress, and won't damage your credit history as much as a foreclosure. Whether selling or buying, consult an agent for the best results.

If They Should Ask

2011-05-13T11:31:00.000-07:00

When you tell friends and family you're going to buy or sell a home, and they ask, "Why are you working through a real estate agent when you can just use the internet," how will you respond? Your first answer should be to have a professional handle all the paperwork - disclosure forms, inspection reports, deeds and titles, settlement statements... they’ll get the picture.

You could describe your representative's knowledge about the area - schools, zoning, and property values. You want to know that the neighborhood matches your needs, and that your home holds resale value for the future.

Tell them there's more to advertising than websites, and that your agent will more likely find a buyer instead through their relationships with other agents and past and current clients. Not to mention the fact that you don't want complete strangers visiting your home, and you're more comfortable knowing that your representative has screened and qualified all potential buyers.

And once you're on either side of an offer, you trust a professional's ability to negotiate successfully when it comes to terms like price, financing, inspections and repairs, and other contractual commitments.

Your final argument might be that most people may buy or sell a handful of homes in their lifetime, but your agent has been successful hundreds of times, on both sides of the transaction. Case closed!

Buy, Sell, Win, Win

2011-05-11T11:41:00.002-07:00

Buy, Sell, Win, Win

2011-05-11T11:41:00.001-07:00

Buy, Sell, Win, Win

2011-05-11T11:41:00.000-07:00

Benefits On Both Sides

2011-05-11T11:39:00.000-07:00

R.O.I.: Return On Improvement

2011-05-11T11:38:00.000-07:00

Don't Chase The Market

2011-05-11T11:36:00.001-07:00

Thinking Of Shrinking

2011-05-11T11:36:00.000-07:00

There are a lot of considerations in advance of your move, so ask an agent for more advice and enjoy your new lifestyle!

Don't Go Home Without It

2011-05-11T11:34:00.000-07:00

Photography 101

2011-05-11T11:33:00.000-07:00

If They Should Ask

2011-05-11T11:32:00.000-07:00

Reaching The Finish Line

2011-05-11T11:30:00.000-07:00

My last column got you started on your purchase by determining how much you could afford, getting loan pre-approval, finding the right agent to tour suitable homes. Now what?

Get “comparables” from your representative for each appealing home, review property disclosures, and research liens and restrictions. If possible, ask the seller's reason for listing.

Now you're armed to make your offer, which should include contingencies regarding financing and inspections, as well as any special requests or repairs, and also a closing date and earnest money deposit. There may be some negotiation, but once both parties have agreed on the terms, you'll sign the Purchase and Sale Agreement.

Now you’ll apply for financing, order an appraisal and inspections, and possibly renegotiate after those reports are complete. You'll need to secure homeowners insurance and complete the loan process. You'll want to have cash ready for your downpayment and closing costs, and do a final "walk through" just before closing.

You and your agent will be able to review all the settlement documents in advance of the closing date, to be sure everything is correct and to dot the "i"s and cross the "t"s. You're finally ready to make an appointment with the closing attorney, get an Official Check from your bank for downpayment plus closing costs, and sign the papers giving you the coveted status of "homeowner!"

Start at the Beginning

2011-04-29T06:31:00.000-07:00

What's the first question you ask yourself when you're ready to buy a home? It should be, "How much can I afford?" Without that crucial piece of information, you can't even begin your search. Figure your monthly income and debt payments, order your credit reports, and determine how much you can put down.

Now, apply for pre-approval from a number of lenders, to shop for the best interest rate and terms. You can choose fixed or adjustable rate, and a conventional or government or jumbo loan, among the most common types of mortgages.

Now, what do you want out of your new home? Want a location within the city, right downtown, in the suburbs, or a rural setting? How many bedrooms and bathrooms, in a single family home or townhouse or condo?

Now that you've figured out what you're looking for and what you can afford, locate the neighborhoods that satisfy your requirements. An area real estate agent can give you information about schools, your work commute, and proximity to shopping and recreation. Find your agent through referrals and interviews to get the right "chemistry."

You can browse listings online, but the agent should be able to provide a list of suitable properties right away. Make appointments for tours and attend open houses if available. My upcoming column will guide you through the next steps!

A Pricing Puzzle

2011-04-22T07:30:00.000-07:00

If you need to sell your home, but it has lost value since you first bought it, you're facing a pricing puzzle. But before deciding on a fair price that may be below what you really want, consider the costs of not selling by asking more.
If your home sits on the market, waiting for a higher offer, you've got to figure in the costs of continuing your monthly mortgage payments, utilities, maintenance and insurance.

Compare the asking prices of similar homes to the actual sales prices, often determined more by the lenders than the buyers. If you’re asking more than your home's current value, the required appraisal will show that, and the lender won't approve the buyer's loan, leaving you back at Square One.

Walk in the buyer's shoes and do your homework. Go ahead and tour similar homes listed in your area. Compare their price per square foot and see how yours stacks up against the competition in terms of value. This should help you arrive at an aggressive asking price that will hopefully be your sale price.

Local inventory determines your price, too. Divide 1 by the number of months of inventory (ask your agent for this number to determine the local "absorption rate"). 8 months of inventory yields a 12.5% likelihood of selling, so speak with your agent and price accordingly.

How To Buy Like A Seller

2011-04-15T08:29:00.000-07:00

If you're in the market to buy a home, take a counter-intuitive tip and imagine the day you'll be selling it. That's right - whether you're a first time buyer, or relocating, this home probably won't be your last, so look for features that will pay off when the day comes to move again.

North, south, east or west, the biggest amenity the next buyer will look for is central air conditioning. In the Deep South, over 90% of buyers rank central air as critically important, and three-quarters of buyers everywhere else put it high on the list.

Another often-overlooked feature is storage. Over half of buyers desire a two-car garage and a walk-in closet for the master bedroom. Ample closets and storage space just can't be stressed enough.

If at all possible, avoid costly upgrades and offer incentive down the road by purchasing an energy efficient home with newer windows, pervasive insulation, and Energy Star appliances. If the home is already wired for cable, satellite, and high-speed Internet, so much the better.

Finally, it’s still all about location, location, location. It's the one thing you can't change about the home you buy, so look for good schools (even if you don't have children) and proximity to shopping and recreation. Just ask your agent about the most popular features in your area and take heed!

A Warm Invitation

2011-04-08T07:28:00.000-07:00

In spring and summer, it's easy to envision ways to enhance your home's curb appeal with a trimmed lawn, planted and potted flowers, and patios and decks arranged with outdoor furniture and an inviting grill. But when the leaves fall and the temperatures drop, even homes in temperate climes undergo a winter transformation that can challenge a seller to create exterior appeal.

When it comes to landscaping and colorful plants, there are plenty of ornamental grasses and plants that look great in wintertime. Purple cabbages, fountain grasses, and potted evergreens along pathways and by the door all add seasonal color and appeal. And obviously, your sidewalk, entry path, patio and deck should be clear of leaves and/or snow.

Be sure to keep in mind that shorter days mean that buyers are that much more likely to see your home after sunset, so make sure all your floodlights are clean and in working order, highlighting your home's exterior features. Lamps with soft lighting in all your windows will also offer a warm invitation.

Finally, just to cover your bases, have photos available of your home in all its glory during the spring and summer months. This gives buyers a better sense of your home's appeal during all the seasons of the year. Your agent will have more tips for attracting buyers in any kind of weather.

Don't Give It Away

2011-04-01T07:25:00.000-07:00

While indicators show that housing is making a comeback, the glut of negative reporting is still making people skittish about buying a home. This has created a hot rental market, with few places available to lease and rising rent rates. Consider some reasons why it’s always better to own than to rent. First, as owner, you are your own landlord. You won’t be kicked out for any reason other than not making your mortgage payments. You control every other aspect of how you choose to live in your home. Even more important, those monthly payments are a kind of forced savings, helping you to build equity. Although it's possible that home values could fall further, the same could happen to your 401(k). But over the long term, both types of investment are more likely to see gains. Right now, interest rates are still very low, which means that if you choose a fixed-rate mortgage, that rate will never change, and you will build equity at an even quicker pace. Another reason to opt for the ownership route is that you'll find - particularly now with so few leases available - that the nicest homes in the safest neighborhoods with the best schools will be offered for sale and not for rent. Consult with an agent and turn that rent payment into savings and security instead.

Expose Yourself

2011-03-25T12:54:00.000-07:00

There is much debate among real estate professionals about the value of holding an Open House. Some insist these events help get the house sold. Others argue it's an outdated practice in the digital age of virtual tours. However, it's been estimated that nearly half of all buyers who visit open houses first learned about them on the Internet.

With all the time and money that an agent puts into marketing your home, an Open House puts those very targeted buyers inside your home and in front of your representative. One of the best aspects of the Open House is the feedback that visitors provide, feedback that can suggest you change your approach or make needed improvements.

Aside from interest generated by the Web, the signs your agent places may also attract curious passersby. While they may not be making a purchase themselves, they may very well know someone who is. An Open House also helps to create a sense of urgency among those who visit, particularly when they see that other buyers are showing interest.

Obviously, a successful Open House exposes your property to a broad base of buyers, but even if only three people visit and one makes an offer, it was clearly worth it. Not all homes are ideal candidates for this type of marketing, so ask your agent about the possibilities.

Proceed With Caution

2011-03-18T08:53:00.000-07:00

Many sellers are tempted to list For Sale By Owner (FSBO) because they feel home prices are down and they don't want to lose one more penny to paying a commission. But with fewer than ten percent of all home sales falling into the FSBO category, it's a challenging strategy.
In personal terms, you'll have to safeguard yourself against prospects who have not been screened and qualified by a professional. When someone calls to request a showing, note their caller ID and keep a log of visitors. Stash away prescription medications and valuables before showings, and afterwards check that all your windows and doors are locked.

There are also legal considerations for your listing and hopefully, your eventual sales contract. Be sure your listing complies with the Fair Housing Act, which prohibits discrimination against buyers. If you're unfamiliar with escrow and title insurance, hire a real estate attorney to draft, review and record all documents.

This economy makes securing a loan difficult, so it's wise to require a loan pre-approval letter from buyers before accepting any offers. If you really want to get attention, sweeten the pot by offering a two to three percent commission to any agent who brings buyers to you. FSBO is not the easiest route, and many impatient and frustrated sellers end up hiring an agent to make the sale happen.

The Buyer's Blueprint

2011-03-11T13:52:00.000-08:00

Once you find a home you love and are ready to make the commitment, consider the Offer To Purchase as your blueprint for executing a successful transaction. Your real estate representative will present your offer to the seller's agent, and the ball will be rolling.

The most critical elements of your purchase agreement include your proposed offer price, what property will be included in the sale, inspection and financing contingencies, provisions for the disclosure and repair of any defects, requested seller concessions, your deposit or "earnest money" amount, and finally the expiry date of your offer.

Your real estate agent will draft this document with you, explaining all of your options and what will happen once the offer is presented. Once the seller reviews your purchase agreement, the seller may accept, reject or counter your offer. Any changes that the seller or the buyer make to the agreement will be initialed, and the Offer To Purchase will not become binding until all parties have signed the document.

If you don't want to pay full price, but also don't want to risk rejection of a low offer, propose other terms that will reduce your bottom line, such as a quick closing or offering to buy "as is." Your agent will explain your options and help you present an offer that is most likely to be accepted.

It's A Small World

2011-03-04T08:50:00.000-08:00

If you're anticipating selling your smaller-than-average home, do not despair, because the days of the overly sized and overly priced McMansions are shrinking in the rearview mirror! Buyers these days are looking for ways to save money on utilities and taxes, as well as save time on yard work and maintenance.
Your smaller property offers benefits to first-time buyers and those with an eye towards conservation. Be sure to highlight your lower utility costs, and if your home sits on a small lot, research property taxes on larger lots in the neighborhood and show how much money buyers can save with yours.

People who are downsizing or buying for the first time want easy maintenance, so you should absolutely list any new appliances or systems you've installed, like heating and/or air, and Energy Star refrigerators, water heaters, and the like. First time buyers are usually accustomed to the landlord fixing any problems, so new appliances still under warranty are very attractive to that segment.

Buyers who are downsizing will be rethinking their space, so make sure you make your rooms look larger and show off your storage space. Cut the clutter, remove some furniture, and let in the light!

If you live within walking distance to shopping and activities, have your agent promote that, and emphasize that location and function offset your home's smaller size.

Deal Or No Deal

2011-02-25T10:49:00.000-08:00

As it always has been, in any kind of market or economy, buyers will find the best deals while looking at homes that are less than perfect. While stretching your home-buying dollar is Priority Number One, keep the following features in mind when determining a home's potential.

While you've heard it a million times, I would be remiss not to mention "location, location, location." Just remember that you get the best deal buying the worst property in a fantastic neighborhood, instead of buying the best home in a less desirable community.

Also pay attention to the age of the home. If you're looking at something over fifty years old, don't be surprised by issues with outdated wiring and plumbing, or problems with the roof or foundation.

As far as a home's basic design goes, look for three things: a livable floor plan, plenty of natural light, and ample storage space. If you've got to move walls, you're going to have to invest a huge amount in renovation. And you can never have enough closet and storage space in a home. Adding on storage is never cheap, so seek out homes with plenty already built in.

Begin by consulting your agent and creating a checklist of all the features you'd most like to have, but always be prepared to compromise when the right deal comes along.

Preventing Inspection Delays

2011-02-18T08:48:00.000-08:00

No matter how much you prepare, closings just seem to take longer these days, often up to sixty days from the date of the initial offer. A recent survey of REALTORS® reveals that ten to fourteen percent of pending sales don't get to closing, while another twenty percent experience unplanned delays before being finalized.
Delays fall into three major categories: financing, title research, and inspections. Getting estimates and negotiating repairs can really hold up a transaction, but there are ways to speed up the process.

One option is for sellers to procure a pre-listing inspection and make repairs before the first potential buyer sets foot in the home. However, this can be a costly expense for sellers, especially when buyers will almost certainly hire their own inspector after making an offer, and there can often be great differences between two inspection reports.

A better alternative is for the listing agent to walk through the home with the sellers, noting the age and the condition of major components of the home and securing estimates for potential repairs. Sellers may not have to fix the problems, but having an idea of the cost of repairs will help them price the home fairly, as well as reduce the time necessary for buyers to negotiate the costs. This is an excellent preventative and proactive step towards a successful closing.

It All Adds Up

2011-02-11T08:46:00.000-08:00

As you search and tour homes that appeal to you, how can you be sure that the asking prices are in line with current values? Begin by asking your real estate agent to collect comparables and prepare a Comparative Market Analysis (CMA). This report indicates market trends by showing whether similar homes in the area are selling for above or below the asking price of the home(s) you've selected.
Using the comparables that your agent researched, you'll be able to figure the average cost per square foot for the area, and determine if the home you want compares favorably with those figures. Total the square footage of several homes and divide by the number of homes to get an average. Total the "sold" prices of each home and divide by the number of homes to get an average selling price.

Now, divide that average selling price by the average square footage to produce the average price per square foot for homes in the area. When you multiply that average price per square foot by the square footage of the home you want, you'll discover how your choice compares, and then you'll know if you're looking at a fair price.

Other factors like the seller's motivation or urgency may also affect your offer, so talk to your agent about that CMA and take the next step!

A Better Alternative

2011-02-04T08:44:00.000-08:00

Due to recent government incentives, short sales are becoming the darling of the distressed-property marketplace. A short sale keeps owners out of foreclosure, because the lenders allow the homeowners to sell their house for less than they owe.
Banks have really sped up the process, hiring large numbers to serve the short sale specialty. In early 2010, one of the very largest banks had more than doubled the number of short sales it approved, sometimes as quickly as 24 days. Compare that to last year, when short sales stalled indefinitely or took more than six months to complete.

The biggest roadblock to approval was often a second mortgage held by the seller. Since the primary lender must be paid first, the second lien holder could be left with nothing, and they would basically kill the sale. But now the Home Affordable Foreclosure Alternatives (HAFA) program provides money to primary lenders who share the proceeds with the second lien holders. HAFA also provides up to $6,000 to those secondary lenders if they release their claim.

Short sales keep borrowers out of foreclosure and reduce the impact on their credit. While foreclosure can shave 200 points off your score, the penalty for a short sale is only half of that. Hopefully, a boom in short sales will also bring us closer to ending the ongoing foreclosure crisis.

Look Before You Leap

2011-01-28T11:42:00.000-08:00

If my recent column about the three types of foreclosures peaked your interest in making such a purchase, read on to learn a few of the common mistakes to avoid when you're ready to make an offer.

First, don't get caught up in a bidding frenzy. Banks may under-price their offering, hoping to generate multiple bids and sell quickly. Don't get overexcited - there's another foreclosure to bid on tomorrow!

Second, don't underestimate your repair costs. Carefully read the inspection report, and factor in an additional 10-20 percent of the purchase price for unexpected repairs.

Third, don't ignore the "comparables" for similar properties in the area. If there are abundant foreclosures in the neighborhood, be sure that you have the latest home prices to compare against, and keep your offer at or below those figures.

Fourth, if you're buying for the short-term because you may relocate or upgrade in a few years, don't go house hunting in a neighborhood full of foreclosures. These properties may continue to decline in value, meaning you may have to sell at a loss in the near future. Protect your investment by purchasing the only foreclosed home in a better neighborhood.

Finally, do secure loan pre-approval, because you'll need to move quickly once you've found your ideal property. With your agent as your field guide, your hunt should be successful!

Salvaging Credit and Equity

2011-01-21T10:40:00.000-08:00

The issue of pricing strategies was recently addressed here, particularly for facing moving deadlines or selling a home that's languishing on the market. But what if you're experiencing financial hardship or losing valuable equity in your home?
If you're facing mortgage default and want to avoid foreclosure, you're probably looking at a short sale, an agreement with your lender to sell your home for less than what you still owe. This pricing strategy is challenging, because you have to list high enough to satisfy the lender, but low enough to attract buyers.

First, complete a short sale application from your lender and get a quote for how much they're willing to accept. Work with a reliable real estate agent to find the sweet spot between what the lender wants and what will excite buyers, and you may be lucky enough to receive multiple offers.

If you're not defaulting, but your home has lost significant value, you're still in a tough situation. If you bought during the peak years, you may have trouble salvaging your equity in today's market. While painful, the best pricing strategy in this case is to ask your agent for a Comparative Market Analysis (CMA) and price your home at fair market value or below. Again, if your price is right, you may encourage multiple offers, resulting in a higher sale price.

Multiple Choice

2011-01-14T08:39:00.000-08:00

If you're looking for a bargain and considering purchasing a foreclosure, you'll first have to decide what kind of foreclosed property to pursue. The three categories are Pre-Foreclosure, Sherriff's Auction, and Repossession (or a bank-owned REO).
Pre-foreclosures are in the process, but have yet to be auctioned. Your offer will have to be negotiated with the lender as well as the owner, which makes the deal complicated and slow. Prices also tend to be highest in this category of foreclosures.

The lowest prices are found on properties that are being auctioned, but inspections are usually unavailable for these homes, and the transaction can get very sticky. These foreclosures are often best left to contractors, investors and developers who are well versed in the challenges these properties present.

Finally, if the home does not sell at auction, it is repossessed by the bank and offered as an REO (Real Estate Owned by the bank). These may list at a higher price than the auction price, but you may have the home inspected and avoid any repair surprises, not to mention the fact that you have clear title to the property.

However, homes in this stage are usually still offered in "as is" condition, so make sure to pay very close attention to the inspection report and as always, consult with your agent before making any offers.

Pricing Under Pressure

2011-01-07T08:38:00.000-08:00

Deciding on an asking price for your home is challenging enough these days, but you need specific pricing strategies for particular scenarios, especially if you're under pressure to move quickly or your home isn’t selling after being on the market for several months. Here are suggestions for both situations.
If you're facing a deadline due to job relocation or other reasons, then you need to price competitively, even more competitively than expected in today's market. You'll need to list at significantly less than your competition. Think 15% less. That may seem tough to stomach, but it’s better than continuing your monthly loan payments or the hassle of trying to find tenants to rent your home.

If your home has been listed for some time, but not generating interest, you'll need to lower your price. Of the three elements that sell a home - price, location, and condition - price is the one you'll have the most control over.

If home values have declined in your neighborhood, the price you originally listed at a few months ago may now be too high and out of line with comparable listings. Now would be the time to have your real estate agent prepare a new Comparative Market Analysis (CMA) and reevaluate your pricing strategy. If you've got to sell, and sell now, price it like you mean it.

Smooth Sailing

2010-12-31T05:02:00.000-08:00

As a buyer, you want your offer to be accepted and your contract to close on schedule. However, in today's climate, you should expect some negotiation, and submit your offer with the following advice in mind.
The financing contingency in your offer will state your loan total and anticipated interest rate and approval date. Strongly consider locking in that rate with the lender, as rates are still very low, and you'll avoid any future fluctuations in the market.

Reserve funds now for your settlement costs at closing. Anticipate anywhere from 2% to 6% of the amount you're financing, plus your down payment (less any earnest money you offered as a deposit), which will be presented in the form of an official (cashier's) check.

If your down payment funds are not in an immediately liquid account, keep things on track by moving the funds into your checking account at least a week before closing, so you're sure that you'll be able to access the money in advance of the closing date.

Finally, try to avoid a closing date at the end of the month or the end of the year, as these are the busiest times for lenders and could cause undue delay in meeting your approval deadline for financing. Speak with your agent about other factors in crafting your offer and successfully closing on schedule.

Questions and Answers

2010-12-24T04:01:00.000-08:00

We all know the mantra of real estate: location, location, location. The neighborhood is usually the most critical factor in determining a home’s value. When you begin your home search, you should create a list of criteria for the neighborhood in which you want to live, work, and play.

Ask yourself questions like how long is the commute to your workplace? Is an urban setting or a rural area more suited to your lifestyle? What is the crime profile for the neighborhoods that interest you?

How convenient is it to get to shopping centers, churches, schools? Speaking of schools, how is the area's school district rated? Even if you don't have or plan to have children, the quality of the school district is another significant factor that determines the home's future value, which will be important when the time comes to resell your house.

If you find that you're priced out of the neighborhood you really love, try to locate fixer-uppers in the area. They may need work, yes, but you'll get your foot in the door, so to speak, and can expect your property value to rise along with the other neighborhood properties and your improvements and repairs.

A real estate agent will help you locate a suitable neighborhood and home, and protect your best interests. Make your list and make a call today.

A Proactive Approach

2010-12-17T04:00:00.000-08:00

Typically, homeowners will spend weeks preparing their home for sale, rushing to repair the roof or drafty windows or electrical issues or old appliances (not to mention rushing to the bank to cover the costs of getting the home in model condition). However, there is another novel approach to making your home appeal to buyers, and it's called preventative maintenance.
In other words, starting from this day, look at your home as a prospective buyer would. If you would repair or improve certain features of your home for them, then why not for yourself?

Even new homeowners will one day find themselves on the selling side of the table. It may be difficult to look that far into the future, but life can throw some curveballs that might precipitate a move sooner than you had expected. A growing family, job transfer, or health issues are just a few of the changes that could lead to your decision to downsize, upsize, or relocate to another city.

Keep in mind that any small problems around your home will ultimately develop into bigger ones if neglected, and that it's always easier and less expensive to fix the small problem earlier on. Get proactive and enjoy living in a home that is always in selling condition. When the time eventually comes to move, you'll be really glad you did!

Open House 101

2010-12-10T03:58:00.000-08:00

No one's going to buy a home without taking a thorough tour, and Open Houses are an easy and convenient way to make the initial rounds. If you're going to visit one open house, you may as well plan to visit several in the area to get an overall impression and basis for comparison.

While you're “on the circuit,” observe a few points of etiquette. First and foremost, be sure to ask permission before taking the lens cap off your camera or video recorder. If the owners are still occupying the home, they may consider it an invasion of their privacy.

Even if the owners are not present during the open house, don't voice any criticisms within earshot of anyone around. Save that discussion for later with your agent, because you never know who might overhear you, like a neighbor or a friend of the sellers. Of course, pay attention to anything you overhear from other visitors!

Also avoid divulging too much information about yourself, like when you have to move or what your price range is. Even if you've walked into your "dream home," show your best poker face, and don't give the listing agent the benefit of spying your emotions.

Open houses are a great starting point, but your best bet is always to have your agent schedule appointments for in-depth home tours.

Auditioning For The Stage

2010-12-03T04:57:00.000-08:00

A "staged" home always makes an impression on buyers, and it's a marketing tool you should consider, particularly if you'll be moved out of your home while it's listed for sale. Your real estate agent may already have connections to staging professionals, but if you're going to conduct your own interviews, here are some points to cover.
First, it's an absolute must to meet in person and to see their portfolio. Many stagers often have specialties, so you'll want to know what experience they have preparing your type of home, and working with listings that are in your selling price range. You want to be sure that the furnishings and decor that they provide are appropriate for your setting.

Next, focus on the stager's training and background. Since this realty-related industry is largely unregulated, you'll need to ask if they have been trained, and if they have any certifications. If the stager you're interviewing also has some background in real estate, that's a bonus, because there's more to marketing your home than interior appeal, and any other ideas they can bring to the table won't hurt.

Ultimately, it may be simpler for you to just ask your real estate agent for recommendations, because it's likely that the agent has already screened stagers for skill and professionalism, and can make a perfect match for your needs.

The Impact of Escrow and PMI

2010-11-26T04:56:00.000-08:00

As you plan to buy a home, seek pre-approval for financing so that you'll know how much home you can afford and how much to budget for monthly mortgage payments. Aside from the financed amount, some other regular expenses associated with homeownership will also impact your payment amount.

First is homeowner's insurance that provides protection against fire and theft. Flood insurance is another beast entirely, and may be required depending on your new home’s location. Remember that you can save money by carrying your auto and homeowners insurance policies with the same company.

Just like insurance, your lender also collects funds each month for property taxes, but you'll appreciate paying them if you ever need to call the police or fire department, or send your kids to a local school! The lender will hold the insurance and tax funds in escrow until the bills are due to be paid on your behalf.

Finally, if your down payment is less than 20 percent of the loan value, you'll likely pay PMI, or private mortgage insurance early on. PMI is insurance for the lender against your risk of default, and might add a couple hundred dollars to your payment, depending on the size of your loan.

Don't worry, these costs are bearable as long as you're prepared for them and you do your planning before making your purchase.

Adjusting The Seasoning

2010-11-19T05:55:00.000-08:00

There are three basic ingredients in the recipe for selling a home: location, condition, and price. Sellers have the most control over that final ingredient, price. If a home isn’t selling after a couple months, that element will likely need some adjustment.

Generally, if your home isn't selling in the average amount of time that others on the market are, overpricing is the probable culprit. Deciding how much to adjust your asking price will depend on a reevaluation of your local market.

Even if you're confident that you priced fairly and correctly from the beginning, you may find yourself overpriced if local conditions have declined or not seen any recent improvement. Now may be the time to consult with your real estate agent and ask for a new CMA, or Comparative Market Analysis.

The CMA will report the current asking prices, current selling prices, and prices for homes whose listings have expired. Forget about comparing asking prices, because the market has not yet shown if those will sell or not.

Prices at which homes did sell are a good figure to heed, but you'll learn the most from the prices at which homes did not sell, or expired. After your agent's explanation of the CMA, make sure your new price reduction is in line with final sales prices and well below the expired listing prices.

You Can't Go Wrong

2010-11-12T09:54:00.000-08:00

Want to see homes that are exactly what you can afford? Want the best possible terms for your mortgage? Want to show sellers that you're serious and capable? Then start with pre-approval, from several lenders.

Forget about "pre-qualification" - that's just a quick ballpark figure the banks will offer without even checking your credit history. “Pre-approval,” on the other hand, produces a Good Faith Estimate, which spells out the terms of your loan, like interest rate, loan type (fixed rate, adjustable, etc.), and closing costs.

You'll have to provide documentation (bank statements, paystubs, W-2's, etc.) and the lender will check your credit report, but this extra work will give you a much firmer idea of what you can afford, as well as give you a powerful tool for making an offer and negotiating your purchase.

If you're serious about maximizing your investment, don't get just one letter of pre-approval. Apply with several lenders, because little things like the interest rate can make a huge difference when it comes to such a large amount. Don't just accept the first offer. Make the banks compete, and you could save thousands by comparing their terms.

Banks won't guarantee the loan until you've made an offer and the appraisal and title work have been approved, but you can't go wrong by doing your loan search before your home search.

Promote and Protect

2010-11-05T10:53:00.000-07:00

In these days of Internet scams and credit card fraud, we're all a little more protective of our privacy. However, if you're selling a home, you also know that posting a virtual tour online and having your agent show your home are absolute necessities for successfully landing a buyer.

What can be done to protect your home against would-be thieves or burglars? You've already taken the first step by seeking representation by a trusted real estate agent, because your agent only shows your home to buyers who have been screened and qualified.

Still, when you know that your home is being shown, it's best to start packing away valuables such as jewelry, electronics, silverware and family heirlooms before the first prospect ever visits. Similarly, when your home is being filmed for a "virtual tour," remove computers, wide-screen televisions, crystal, and valuable collectibles from the camera's eye. There is no need to advertise your belongings - your home's features will speak for themselves.

Further protect your home with motion sensor lights inside and out, and make sure your security system is active and that the service has an emergency contact number for you. You also have the option of registering with the local police department, so officers in your neighborhood can perform security checks. There's likely no need to worry, but why not play it safe?

Down Payment Solutions

2010-10-29T01:49:00.000-07:00

One way to get the best mortgage terms is to make a down payment of at least twenty percent. That not only gets you a lower rate and monthly payment, but you'll also avoid additional PMI (private mortgage insurance) fees, and have "instant equity" in your home.
But what are your options if you can't manage twenty percent down? There are many federal, state and local programs that provide first-time homebuyers with assistance and great loan terms. One popular FHA (Federal Housing Administration) loan is the HUD 203 (b), which requires just 3% down and rolls the closing costs into the financed amount.

If you're starting with a fixer-upper, you might consider the HUD 203(k) loan. Traditionally, lenders don't provide a mortgage until repairs are completed, but buyers can't start repairs until they own the home. This FHA loan provides the entire amount for the purchase and the improvements, based on an estimate of the home's value after repairs.

Young first-time buyers could also get great terms if your parents can make the investment and down payment for you. Their good credit will guarantee the best terms, and you can buy them out over time or they can forgive a percentage of the loan each year. If the federal programs aren’t for you, then the bank of Mom and Dad may be the next best thing!

Short Sales Get A Tune-Up

2010-10-22T11:48:00.000-07:00

Federal foreclosure-prevention tactics have recently been expanded to encourage delinquent borrowers to avoid foreclosure by streamlining the short sale process. Cash incentives are also being offered to the homeowners, as well as to the lenders and the buyers.
Perhaps the best feature of the new legislation requires the lenders to advise the sellers what their minimum acceptable price is before listing the home for sale. Then if the sellers secure an offer for the agreed price, the lender must accept it within 10 days.

This speeds up the short sale process tremendously, since the lender is also required to consult with local real estate agents in order to determine a fair price. Of course, "fair" is a relative term here, because in a short sale, the bank is agreeing to sell the property for less than the total amount due on the mortgage.

However, it is definitely in the lender's best interest to expedite a short sale instead of allowing the home to foreclose, because on average, the bank loses 50% on a foreclosure, but only 30% on a short sale.

These new standardized procedures, called the Home Affordable Foreclosure Alternatives Program (HAFA), is a new option for homeowners who have been unsuccessful under existing programs. If you're facing default, I strongly urge you to contact a real estate agent today to discuss the alternatives.

No More Suprises

2010-10-15T04:47:00.000-07:00

It used to be too common a story: you're excited about signing the paperwork, shaking hands, and grabbing the keys to your new home. But the day before closing, the lender advises that your closing fees are several hundred dollars more than their Good Faith Estimate listed. Suddenly, your excitement turns to pressure to just pay it and close the deal.
Now those days are over, thanks to the Mortgage Disclosure Improvement Act (MDIA). What was once the Truth In Lending Act has been rewritten with new rules to help consumers understand the loan costs and alert borrowers to changes in fees well in advance of closing.

Now the lender must provide their Good Faith Estimate within three days of receiving the borrowers' application, and closing cannot occur until the buyer has seven days to review the disclosure. If the final APR (annual percentage rate) differs more than 0.125% from the original quote, a new disclosure must be provided, granting the borrower the right of rescission.

This relieves the pressure that buyers once felt to agree to pay higher fees and rates at the very last minute. As always, borrowers can review the final documents one day before closing, providing an excellent opportunity for you to review all the figures with your real estate agent and to ask any lingering questions before you make it official.

A Whole New Ballgame

2010-10-08T05:00:00.000-07:00

According to a recent survey conducted by the National Association of REALTORS®, close to one third of existing home sales were either foreclosures or short sales (meaning sales in which the lender agreed to allow the home to sell for less than the amount outstanding on the mortgage). Indeed, it seems for now that these "distressed properties" have become the new "traditional" sales transaction.

This is why it is so important to seek the representation of a specially trained and qualified real estate professional. Sellers particularly need assistance in navigating these complex short sale transactions, and buyers need guidance if they are to take advantage of these delicate opportunities.

Obviously, real estate agents are among the biggest advocates for homeownership, and we strongly believe that any home lost to foreclosure is one too many. Regrettably, some circumstances arise where homeowners are simply unable to maintain their mortgage payments, and risk going into default. In those cases, a trusted agent's specialized knowledge can help secure a short sale and keep the sellers out of the grueling foreclosure process.

Aside from staying current on national and local laws that apply to short sales and foreclosures, realty professionals are trained in qualifying sellers for assistance, negotiating with lenders, protecting buyers, and limiting risk. Now more than ever, it makes sense for both sellers and buyers to seek professional representation.

The Long And Short Of It

2010-10-01T11:28:00.000-07:00

Markets go up, markets go down. Sometimes we see it coming, sometimes we don't. It all depends on what both consumers and businesses are buying, and when. How can we tell if and when real estate will recover?

We need to ignore short-term fluctuations, like the spike in home sales last November, when buyers thought the first-time tax credit would expire. Then sales rates dropped significantly when Congress extended the tax credit and removed that original sense of urgency.

We need to pay attention to long-term forecasts instead. Consider that homeownership increases by roughly 1 million each year. There are 4 million births, 2 million deaths, 1 million new immigrants, 2 million weddings and 1 million divorces each year. All of those events spur people to buy and/or sell a home.

Crunch the numbers, and you'll see that we can expect roughly 60 million home sales in the next decade. Regardless of the subprime mortgage debacle, and the ensuing foreclosure crisis, real estate will remain on the rails, an unstoppable freight train barreling towards homeownership.

Just as surely as the market sees recovery, buyers and sellers still need representation in these transactions. A recent survey by the National Association of REALTORS® reveals that 80% of buyers and sellers would recommend their agent to family and friends. That's a loud signal of the value of representation.

Quid Pro Quo

2010-09-24T15:26:00.000-07:00

Sure, it's a legitimate question: Can you sell your home without the representation of a professional real estate agent? The legitimate answer is, Of course you can - but that begs the next question of whether it makes sense to do so.

One assumes that sellers want to obtain the highest price possible. Otherwise, the home could simply be auctioned, or sold to the first buyer who offers. Getting the best price depends upon exposure to the widest, most qualified segment of potential buyers.

An ad and a yard sign are not enough to create that exposure. While agents spend untold dollars on advertising and signage, those only attract about 20% of actual buyers, so just one ad and one yard sign will yield even less.

So where does the lion's share of motivated buyers come from? In a real estate firm, they come from cooperating brokers and agents. It's logical, since serious buyers seek the assistance of agents who save them time and money by matching their needs against large inventories.

The only buyers attracted to properties “For Sale By Owner” are ones who want to save the same commission that the sellers do! You can choose to represent yourself in this competitive industry, but it may cost you. Remember that a bargain is not measured by what you pay, but by what you get

Make Your Move

2010-09-17T14:25:00.000-07:00

You know that it takes planning and preparation to sell your home, and the same applies to making a purchase. But whether buying or selling, you'll also have to put a lot of thought into Moving Day. After you've gotten three in-home estimates from professional moving companies and made your choice, start packing!
By starting your packing well in advance, you're actually less likely to pack things you no longer need. Sort those items separately as you go, and then have a yard sale or get receipts and deduct your donations.

When it comes to packing materials, you can save both money and the environment by using what you've already got. Instead of bubble wrap or paper, use towels, sheets, and other soft items to wrap your breakables and save space.

Label each box by number and room, and keep an inventory of its contents. Save a couple "load last" boxes for easy access on moving day and your arrival (towels, sheets, toiletries, medications, etc.).

When you do arrive, try not to be overwhelmed by all the piles of boxes. It's a lot more fun to unpack and rearrange in your new home than it is to load everything up. If you're properly organized, you can quickly get settled. Just work on one room at a time and be sure to start in the kitchen!

Lower Rates With A Higher Score

2010-09-10T11:22:00.000-07:00

Lenders are an increasingly difficult crowd to please, so if you're looking for the best deal on a mortgage, you need a couple of strategies to improve your credit score. Lenders use that number to determine your risk of default, and it may be the single most important factor in your application.
Scores range anywhere from a very risky 300 to a perfect 850. You'll need a 750 today to get terms a 700 would have gotten you two years ago. Begin with a $16 investment at myfico.com, where your three reports from Experian, Equifax and TransUnion are averaged into one representative score.

A Zogby poll reports that one third of all people who request a credit report find errors. Your score is only as accurate as your information, so scour your report and correct errors immediately. This could boost your score by as much as 200 points!

The largest percentage of your score is determined by your payment histories, but the second largest factor is your "card utilization rate," or your total balances compared to your total credit limits. 10% is the ideal number (like $2,500 in charges when you have a $25,000 line of credit).

If you correct errors, have an excellent payment history, and get your debt-to-credit ratio down, you can expect to save thousands with a lower interest rate on your mortgage.

From "Less" To "Yes"

2010-09-03T08:08:00.000-07:00

The painful truth: Sellers who do not price their property competitively are the most likely targets of lowball offers. In soft markets, buyers are more prone to make low offers on listings seen to be priced too high. Listings that don't sell usually require price reductions, which in turn often mean ultimately accepting an offer lower than you could have received by pricing aggressively from Day One.

Since selling your home can be such an emotional and subjective experience, it's easy to understand why you'd be reluctant to counter an offer below your asking price. But rather than feel insulted, try to see it as the beginning of a dialogue that could ultimately produce a sale.

If you feel any of the terms or conditions of the offer are unacceptable, ask your agent to present a counter-offer. Sometimes buyers and sellers don't really know beforehand what price they'll accept until they've begun the negotiations. For example, a buyer might agree to a higher price than planned if interest rates suddenly drop.

If you've received a lower than expected offer, but the buyers have proven their qualifications and commitment by securing loan pre-approval, you have grounds for serious consideration. The process of counter-offering can be swiftly settled or carry on ad nauseam. Be prepared to explore all options and act quickly before letting your negotiations fail.

What to Know About Escrow

2010-08-25T11:01:00.000-07:00

When you buy a home, or just make an offer, you will encounter the term "escrow account." Like making a friendly bet and asking a third party to hold the wager money, the "escrow agent" is the neutral party that holds funds in the interest of the mortgage lender and the borrower.

When the terms of the purchase and loan agreements have been met, the money is released. When your application is approved and the loan takes effect, the lender will likely require money for property taxes and homeowner's insurance also to be held in escrow. These funds are added to your monthly mortgage payment and disbursed when the tax and insurance bills are due.

This protects the lender by ensuring a lien isn't placed against your property for non-payment of taxes, and your home (their collateral) is protected against catastrophe. But escrow also benefits borrowers by spreading the large annual payments for taxes and insurance over twelve months.

For example, if your taxes are $1,600 per year and your insurance is $800, you're budgeting a reasonable $200 per month instead of making two big payments. Escrow accounts do not earn interest, so if you make a large enough downpayment, you may be able to avoid the monthly escrow and pay the bills directly. Ask your agent and your lender about the pros and cons.

Time To Show Off

2010-08-20T07:06:00.000-07:00

If you’ve followed advice given here about sprucing up your home's exterior, well done! Now let’s focus attention on the next thing potential buyers will see - the front door and the interior. Now is the time for spring-cleaning and to show off your home's best features.
Repaint that front door and touch up around the entry. Make it warm and welcoming with updated light fixtures at the entrance and foyer. Speaking of entries, check your windows and doors for energy efficiency. If they're not airtight, an investment in new windows and insulation will pay off handsomely and impress buyers.

Freshly repainted walls won’t hurt either, and you can achieve a bright, clean look with light yellow or cream on the walls and contrasting white woodwork. Buff up your wood floors, clean your area rugs or carpets, and replace any worn carpeting before your first showing.

Buyers look carefully at bathrooms, so be sure to remove any spots of mildew, replace caulking, and consider a small investment in a new sink and vanity to really make things sparkle.

The icing on the cake is to offer buyers a "home warranty" on the appliances in your house, allowing them a full year of service on anything that happens to go wrong. Your pride of ownership and their peace of mind should combine to produce a sale!

Take A Guide On Your Hunt

2010-08-13T12:14:00.000-07:00

There are two apparently attractive options for buyers scoping out a deal. One type is the "short sale," where sellers have made an agreement with their lender to sell the home for less than they still owe on the mortgage. The second type is the REO (bank-owned) home, which has fallen back into the hands of the lender after the sellers defaulted.
While these properties may be appealingly priced, buyers need stomach and smarts to take proper advantage. If you're considering a short sale purchase, focus only on those with a price pre-approved by the lender. Otherwise, you may be wasting precious time in negotiations that may still ultimately fail.

Also seek out foreclosures that are protected by the Cash For Keys program, which offers the current (or former) owners a cash incentive to prevent them from neglecting the property before vacating it. Either way, inspections are crucial, especially if the house has been vacant for some time. Talk to your agent about having the utilities temporarily reconnected for the inspection, so you're sure all is in working order.

And finally, don't focus on the asking price alone. Location in a declining neighborhood or extreme maintenance and repair issues will eclipse any perceived value in a low price. Great homes are out there at bargain prices, but let an agent guide you through potential pitfalls.

Like Moths To A Flame

2010-08-10T07:09:00.000-07:00

Have you done your "spring cleaning" yet? If you're selling your home, it's essential to take care of the details, both inside and out. Since buyers first see your property from the street, there are some steps you can take to pique their interest in seeing more.

Obviously, color makes an impact. Emphasize two or three colors in your flowerbeds and shrubs, and coordinate your blooms with the seasons, be it spring or summer. Also make sure your trees and shrubs are properly sized to the house and grounds, and not blocking any of your home's positive features.

Perfectly maintaining your lawn is critical while you’re listing, since a well-manicured lawn powerfully symbolizes your pride of ownership and attention to maintenance. You can reduce the time invested in mowing and watering if you can do some simple landscaping with rocks, ornamental grasses and drought-tolerant plants.

The sound of water also turns buyers on. Even if you don't have a pond, you can achieve the same effect by installing a small fountain in the front yard, or even running an electric fountain on your porch or deck.

Finally, there are a couple of architectural flourishes that add interest, such as colorful window boxes, a trellis with flowering vines, or even a pretty new mailbox. Contact your agent for a wealth of other ideas to attract buyers.

A First Time For Everything

2010-07-23T08:54:00.000-07:00

First time buyers… excited to find a good deal, afraid of overextending themselves, confused by all the conflicting reports about real estate. Well, that might describe any or all buyers right now, but those making their very first purchase may feel elevated levels of all these emotions. It helps to have someone offer you some guidance.

Don't be afraid to make your move now, regardless of what you've been hearing about the market. With affordability so high, you'll find a flurry of activity out there, so you're not alone in making the right decision to begin your home search.

Just try not to exercise excessive caution, or you may suffer what has been termed "paralysis by analysis." Your real estate representative will present you with all the facts and figures you need, and help you to interpret the data so that you can make a sound choice.

Now is not the time to vacillate about whether prices or interest rates will still drop. There is nowhere to go now but up. If rates rise to 7.5% (still historically low), the home's price would have to be reduced nearly 20% to offset the difference in monthly payments.

Set aside your uncertainties. Chat with an agent who can help you determine your financial footing, and show you an inventory of well-suited homes matched to your particular goals.

What A Relief

2010-07-13T08:53:00.000-07:00

This year’s tax filing season is behind us, but if you sell your home this year (or any other, for that matter), you'll find your home will shelter your taxes as well as your family. Specifically, the Taxpayer Relief Act of 1997 provides a substantial exemption on your capital gains when you sell.

In general terms, when you sell your home, the IRS allows you to keep capital gains – tax-free - of up to $500,000 (married filing jointly) or $250,000 (single taxpayers). That's right, no taxes on your gains, if you qualify.

It's fairly simple to qualify, with the most important requirement being that you've lived in the home for two of the last five years. And this is an exclusion you can claim again and again, theoretically every two years!

There are even provisions if you are forced to sell before you satisfy the two-year requirement, for reasons such as job change, illness, divorce, disaster or others. The exclusion on capital gains taxes is simply prorated in these cases.

For example, if you live only one year in your home before being forced to sell early, you can exclude up to one-half of the normal limits from capital gains taxes (up to $250,000 instead of $500,000 for married taxpayers filing jointly). As always, consult your tax professional to discover how to maximize the benefits of homeownership.

A "203"For TLC

2010-07-01T11:52:00.000-07:00

You find a neat "fixer-upper," then learn that banks won't lend until the repairs are done, but the repairs can't be completed until the house is purchased! This Catch-22 scenario can be solved by HUD's FHA-backed 203(k) "rehab loan," growing in popularity because so many foreclosure purchases are in dire need of repairs.

This loan covers the cost of the home, plus money for repairs up to a maximum of $35,000! To get the ball rolling, you'll need funds for the 3.5% required downpayment, and then to find a suitable property. Your real estate representative will prepare your offer, stating that you'll be seeking 203(k) financing.

Next you'll apply to an FHA-approved lender, including a sheet listing each repair and its cost. Finally, an appraisal is performed to determine the value of the home once the proposed repairs are complete.

Upon approval, you'll have financed the home purchase plus all your proposed repairs (there's even a 10%-20% "contingency reserve" included to cover any unforeseen improvements). At closing, the seller receives the purchase price, and the remaining funds go into escrow, to be disbursed to the contractor as work is completed (within six months).

Real estate agents support this loan program because it expands homeownership and revitalizes neighborhoods, but all you need to know is that it will get you into a very affordable home right now.

Don't Try This At Home

2010-07-01T11:51:00.000-07:00

When you hear that someone managed to sell a home without representation, it's likely that the sale was to a family member, close friend, or a tenant who was already renting and living there. These exceptional cases are not the norm, and there are powerful reasons why it is so difficult to make a sale "by owner."

The biggest roadblock is that For Sale By Owners (FSBOs) aren't included in the Multiple Listing Service (MLS) that licensed agents and organizations use. A sign in the yard and an ad in the newspaper are no match for the widespread exposure gained from a listing visible on the MLS.

Since the FSBO has no listing agreement providing for a sales commission, many agents won't show these homes with no promise of compensation. Again, this greatly reduces the number of potential buyers exposed to the offering, not to mention the fact that buyers who do express interest will not have been screened by a professional to determine their qualifications.

Perhaps the most hazardous aspect of selling “by owner” is the potential for legal oversights and complications. Real estate transactions are loaded with potential liability for unrepresented and unwitting sellers. One overlooked form or improper disclosure could generate an expensive lawsuit.

Just as you wouldn't enter the courtroom without an attorney, you shouldn't sell your home without professional representation.

When Less Costs More

2010-06-04T10:10:00.000-07:00

"Timing the market" in real estate doesn't work the way it does with stocks. Homes are bought and sold more out of necessity than to make an easy buck. However, some indicators give a clue when it's a good time to buy. Like now!

Despite the fact that rates are low and prices may still drop, now is the time to move if you have good credit and funds for downpayment. It would be a mistake to "wait and see" if rates or prices fall any more. Why?

Rates are low now because of federal bailouts, but continued low rates can fuel inflation. Fear of inflation causes "the Fed" to raise those rates. Waiting for a lower price on a home while interest rates rise could make the home more expensive.

Example: purchasing a home now for $177,000 at 5% could make the total cost around $370,000 by the end of the loan term. But what if you wait for prices to fall more, and next year you get that home for $160,000. You saved $17,000 - right? Wrong!

If rates rise 2% during that time, you could pay over $400,000 over the life of the loan - $30,000 more than if you bought now! If the math is still fuzzy to you, talk to an agent and crunch the numbers. You'll be glad you did.

Look Before You Leap

2010-06-04T10:08:00.000-07:00

Many retirees are facing dwindling incomes from their battered investments, which explains why applications for "reverse mortgages" have risen nearly 50% in the last two years. It sounds like a great option: a lender essentially gives you a cash advance on your home's equity, which doesn't have to be paid back until you either move or "move on."

There are drawbacks hidden in the details, however. Although recent legislation has raised maximum allowable home values, the formula for determining how much you'll get includes other factors like your age and current interest rates. Your current mortgage balance and the loan's fees are then subtracted from that number.

Although loan origination fees have been capped at $6,000, the monthly mortgage insurance premiums and service charges could push the total cost of the loan up to twice that much. If you think you might move anytime soon, this just doesn't make sense.

While anyone 62 or older may qualify, it's the youngest who run the biggest risk with a reverse mortgage, because you may very well outlive the life of your payments. When that happens, the equity you would have fallen back on has disappeared.

It's best to seek other alternatives first, with your best option being to make your move now and downsize to a smaller home, pocketing the equity from your sale for the future.

Give Them A Hand

2010-06-04T10:07:00.000-07:00

With all of the changes enacted in real estate and related industries, the appraisal process has not been immune. Because lenders were found to be pressuring the appraisers they hired, banks now must largely work with independent appraisers, and they're finding themselves buried in a backlog of jobs.

Because of their workloads, appraisers will gladly consider any information you can provide about your property, and will hopefully generate a more accurate report. As a seller, list the best features of your home, including recent improvements, professional landscaping, or even benefits of your location (like access to public transportation and schools).

While you won't necessarily be graded for your housekeeping skills, appraisers do pay attention to the very appearance and cleanliness of your home. You can positively affect your appraisal's outcome if your lawn is mowed or raked, your windows sparkle, and your closets look spacious. Appraisers are practically looking through the buyer's eyes, so pretend you're preparing for an open house before their arrival.

Finally, be sure to request a copy of the report, because lenders are required to provide it, but you've got to ask. If you find any errors in important features like square footage or property description, contact the appraiser directly. Let the lender and your agent know, too, but understand that they cannot take any direct action under the new rules.

Don't Let Them Bug You

2010-05-20T13:41:00.000-07:00

It has been estimated that termites cause $5 billion in property damage every year in this country. That makes them more of a threat to homeowners than flood, wind, or even fire. And yet, the Federal Housing Administration (FHA) demands separate termite inspections only if the state or local laws require it, or if there is an outright suspicion of damage.

Termites thrive in the warmer climates of the South/Southeast and West/Southwest, but states on the East Coast and even in the Midwest have areas of high risk. Outside those regions, still all it takes is the right combination of warmth, food and moisture to invite a termite infestation.

As a homebuyer, you would be well advised to determine whether the home you are offering to purchase is under a termite protection plan, and to seek a separate termite inspection, even if it's not required. Older homes in particular may be at risk, because of the possibility of cracked foundations, but even new homes could be potential targets if the builders did not correctly perform termite pretreatments.

You probably won't notice the little buggers until the damage is already done, so be sure to get your home into a termite inspection and treatment program as soon as possible after your purchase. If you have any doubts about inspections, ask your real estate representative for advice.

Launching A New Product

2010-05-20T13:40:00.001-07:00

In today's real estate climate, you want to be sure to take all the necessary steps to squeeze every possible penny out of the sale of your home. Small oversights or missteps can be costly when it comes to your bottom line. However, there are some common mistakes that are easily avoidable if you listen to the experience and advice of your real estate representative.

One error that can cost you is to put your home on the market before it is truly ready for presentation. Image is everything, so get all the cleaning, painting, patching, and lawn care done well in advance of your first showing.

Another costly stumbling block involves your initial listing price. Remember that you control the asking price, but not the selling price - that is finally determined by the buyers and what the market will bear. Try to detach yourself emotionally from what you want to net, and price your home aggressively against your competition, right from the beginning.

Emotional attachment can keep you from perceiving and presenting your home as what it now is, a commodity. Present it, market it and price it as you would any new product on the market. Your agent will make sure it gets exposure to the right demographic, and will help you avoid costly errors along the way to a successful closing.