What is a CMA? The best method available to home sellers to learn their home's current value so they can select the best sale price is a CMA
Everyone who has ever sold a car knows they have to first find out how much it is worth and what people are willing to pay for it. It's easy to gather the information you need to set a price from newspapers, the Blue Book, or online used car sales sites. When you've gathered this information you can then set a price that potential buyers will find attractive. It's really pretty simple and requires very little pricing expertise.
If you want to sell your home, it's not so easy and it's certainly not simple. The value of your home is much more difficult to predict and the information available to home sellers can be untrustworthy. Online home valuation sites are fun to play with, but they are based on past sales, not current market factors. Newspaper listings give you some information, but houses are usually so different that it's hard to compare.
The best method available to home sellers to learn their home's current value so they can select the best sale price is a CMA, or Comparative Market Analysis. CMA is the term real estate agents use when they conduct an in-depth analysis of a home's worth in today's market.
The best part about a CMA is that it's usually free!
When should I ask for a CMA?
If you don't get a CMA before you list your home you might try to sell it for the wrong price. Setting the price too low means you'll get less money for your home; setting it too high means it might not sell at all. Every real estate agent in the country will want to complete a CMA on your home before helping you sell it. Sellers who haven't yet chosen a real estate agent often ask several agents to complete CMAs so there is opportunity to meet different agents and to see how they work.
How is a CMA prepared?
First, an agent will walk through your home. The home does not have to be in perfect condition. However, property condition does affect price, so if you plan to do work on the property, let the agent know. At this point the agent may recommend improvements to increase your home's value.
Second, the agent will research information about comparable properties in the area, usually using a real estate industry resource called the Multiple Listing Service. This includes: · Properties that have sold and closed within the last 12 months · Active listings - properties currently for sale · Pending sales - listings that have sold but not yet closed · Expired listings - properties that did not sell during the listing period Lastly, the agent suggests a probable selling price. Don't be surprised if a CMA results in a price range rather than a set price, particularly in markets were there are price differences due to property size, age, architectural style or physical condition.
What can you expect to see in a CMA?
A completed CMA is presented in the form of a report, which includes the selling price, detailed information about your home, and the comparable properties that were researched to determine its value. Because the price derived from a CMA is somewhat subjective, some agents may include brief statements on the perceived selling points your home.
A CMA is not an appraisal.
A real estate appraisal is a comprehensive evaluation performed by an independent professional appraiser. With a CMA, the agent's experience in the business and familiarity with the local area can affect the accuracy. Typically, a CMA prepared by an experienced agent with good knowledge of the local market is right in line with your home's appraised value. A CMA can therefore be a very useful tool in a real estate transaction.
When selling your car, an incorrect price might cost you a few hundred dollars. If you set the wrong price for your home, you could lose tens of thousands of dollars. Do your homework and ask a real estate professional for a Comparative Market Analysis to ensure you get the most value for your home. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Benefits of a Pre-Listing Home Inspection Pre-listing home inspections give both the buyer and seller up-front knowledge of potential repair costs.
Inventories in most parts of the country have been pushing historically high levels. Gone are the days of multiple offers, and buyers camping out and entering lotteries to make a home purchase. With the shifting market, buyers are increasingly more sensitive to property condition and are more than ever asking for full disclosure up front about condition and other factors that affect the value.
A pre-inspected listing makes available to the buyers a full inspection report by a qualified home inspector. The report educates the buyers on the condition of the property under consideration, and lets them know what major potential expenses might be incurred once they close on the house. Then the buyer can decide early on if they want to pursue a property, given the condition. There may be some excepted items they can live with, but others they cannot.
The same report can and should be used by the sellers to assist them in preparing property disclosure documents. It allows the seller to anticipate any objections directed toward property structure and system functions such as heating and air conditioning - objections that may have potential financial implications.
A pre-listing inspection can be available at the property for review by the buyers after viewing the property. The listing agent should also have the inspection report available for prospective buyers and their agents through an HTML link on their website.
While a pre-listing inspection will not head off every potential "deal-breaker" issue, most agree the benefits outweigh holding off on the inspection until after contract acceptance. Here are some of benefits to conducting the inspection prior to the listing. · Identify defects and make repairs ahead of time. By identifying possible defects early on, the seller is in a position to handle repairs prior to listing, making the listing more attractive and the property more saleable. This may mean more money to the seller and a faster sale. Making repairs ahead of time will limit objections over defects during the negotiations. If the seller elects not to repair certain defects that turn up in the inspection, they can disclose the defects to potential buyers in the disclosure documents. State disclosure laws vary, and sellers should consult with their attorneys on state disclosure laws. · Aid as a pricing tool. Having a completed inspection report from a certified inspector will help you (the seller) arrive at a realistic list price. If you find out, for example, that your HVAC system shows significant wear and tear and will need to be replaced before the next winter season, you should take that into consideration when pricing your home for sale. · Provide a feeling of confidence to potential buyers. With a clean inspection in hand after viewing a property, potential buyers may feel more comfortable in moving ahead with an offer. When a buyer can see there are no major defects in the property to be addressed, it is easier for them to determine how much they can comfortably spend on the house. If there is a problem that needs to be addressed, they buyers can write an offer that will reflect the cost of the needed repairs, or they can ask the sellers to remedy the defect. Best practices in today's buyers' markets dictate one of the best things sellers can do to facilitate a sale is to conduct a pre-listing property inspection by a certified inspector, and have it readily available for potential buyers. The more information buyers have will aid in the negotiations and hopefully result in a successful contract.
Ask your REALTOR® for the names of several licensed home inspectors in your community and check to see they are members of the American Society of Home Inspectors. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
How is a home's value determined?
You have several ways to determine the value of a home.
An appraisal is a professional estimate of a property's market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.
A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.
You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder or assessor offices, through private real estate information companies or on the Internet.
What is the difference between market value and appraised value?
The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 to $300.
Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.
What standards do appraisers use to estimate value?
Appraisers use several factors when estimating a home's value, including the home's size and square footage, the condition of the home and neighborhood, comparable local sales, any pertinent historical information, sales performance and indices that forecast future value. For detailed information on appraisal standards, contact the Appraisal Institute at
550 W. Van Buren St, Suite 1000
Chicago, IL 60607
(312) 335-4100
Fax: (312) 335-4400
Our main e-mail address for Information Requests is: info@appraisalinstitute.org
Where do I get information on housing market stats?
A real estate agent is a good source for finding out the status of the local housing market. So is your statewide association of Realtors, most of which are continuously compiling such statistics from local real estate boards.
For overall housing statistics, U.S. Housing Markets regularly publishes quarterly reports on home building and home buying. Your local builders association probably gets this report. If not, the housing research firm is located in Canton, Mich.; call (800) 755-6269 for information; the firm also maintains an Internet site. Finally, check with the U.S. Bureau of the Census in Washington, D.C.; (301) 495-4700. The census bureau also maintains a site on the Internet. The Chicago Title Company also has published a pamphlet, "Who's Buying Homes in America." Write Chicago Title and Trust Family of Title Insurers, 171 North Clark St., Chicago, IL 60601-3294. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Pricing Your Property Selling a home creates a relationship between seller and buyer - and the glue that binds them is the asking price. It's essential, therefore, to make sure the asking price is acceptable to both parties. I believe that the 2 most important factors in selling a home are price and condition.
Pricing a home requires a bit of footwork. First you'll need to compare your home to similar properties in the market - this will give you an idea of a reasonable asking price. Your agent will provide you with a comparative market analysis report, an in-depth study of your home's value, and will track current market movements as they relate to the sale of your home. After wading through this seemingly daunting amount of information, you'll be able to establish a range of value and will feel more confident formulating an educated opinion.
But, of course, the buyer making the offer holds the most important opinion. To get a better understanding of what he or she might want, try putting yourself in his or her shoes and ask yourself some simple questions. · What, for example, are the other properties for sale in the area? · How do those values compare with those of your home? · How long have those properties been on the market? · What properties sold recently, and what did they sell for? · Also, what properties did not sell - and why? Real estate agents will advise their clients to sell their home as quickly as possible. The longer a house sits on the market, the less money it will yield. This means that there's less of a risk in pricing your home below competition than pricing it too high. A home priced below competition will generate multiple offers that will drive up the price to market value, but an overpriced home will sit on the market indefinitely.
Pricing your home smartly is as important as choosing the right agent. So make sure to take your time and weigh all your options before making decisions - it could earn you thousands of dollars more than you expected.
Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Home Selling Strategies How Much to Spend on Remodeling Your Home Remodeling areas of your home can undeniably increase its value and functionality. Proceed with caution, however, as it can be very easy to spend too much money on a home renovation project - and there's no guarantee that you'll be able to recoup your money when you're ready to sell.
How much should you spend on a home improvement project? Let's look at some key factors that will help you arrive at a decision.
Six tips to consider before leaping into home renovation: 1. Determine the areas in your home that need improvement the most.
Simple, yet long lasting repairs will yield you the highest returns when your house is placed on the market. The most financially beneficial rooms to remodel are often the bathrooms and kitchen. Newly remodeled cooking areas, counters and cabinets will attract more homebuyers and justify a slightly higher home price than comparable homes on the market. 2. Consider home values in the neighborhood.
Homebuyers typically pay more for homes that are in move-in condition. But, they typically don't pay more than the fair market value. So make sure you don't "over-improve" your home for the neighborhood. If you improve two or three major problem areas, the money you spend remodeling your home will be rewarded with a bigger profit when it comes time to sell it. · Determine how much it will cost to do the work.
Get estimates from several reputable contractors. Add 10 percent to cover changes that will inevitably happen along the way so you have a more accurate estimate.
3. Consider how long you plan to stay in the house.
If you plan to stay where you are for a long time or indefinitely, investing a larger amount may prove worthwhile because over time your home may go up in value. Plus, you'll have the benefit of living in a home that you can enjoy and suits your personal needs and style. But, it most likely doesn't make sense to undertake a major renovation if the finished product won't suit your long-term needs or if you plan to sell your house in a few years. 4. Have your home thoroughly inspected before you start the renovation.
Depending on where you live, you may want to get a "termite" inspection and/or hire a home inspector to go through your home, point out any defective systems and get an opinion from an expert. You want to make sure you limit the number of surprises and obstacles before the work begins.
If you recently purchased your home, these inspections most likely should have taken place prior to the home sale transaction, so refer to your real estate agent or documentation for details before spending additional money. - Consult your real estate agent.
Your real estate agent can provide you with a comparative market analysis (CMA) of your home, so you'll have an accurate market value. Discuss your anticipated improvements and researched costs with the agent to get their professional opinion and advice. Your agent may be able to determine whether you can recoup all or most of your investment when it comes time to sell
Before you get started on a major renovation of your home, try to determine whether it makes sense financially and time-wise. If you develop a well-thought-out remodeling plan, you can enhance the value of your home without going overboard with the remodeling costs, and be able to recoup your invested dollars when it comes time to sell. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Selling Your Home in a Tough Market - Part 1 So, you want or need to sell your home. You've been watching home prices fall over the course of the last year and the pace seems to be increasing. You know that there are a lot of homes on the market and that buyers have a lot of bargaining power.
What to do? Here are a few suggestions that may not make you happy, but they are realistic. If you have the choice of waiting to sell your home, you may want to consider that option. Real estate is cyclical and the market will shift, eventually.
There are two sides to preparing to sell your home. You need to prepare yourself mentally for the process. You will also need to make sure your home looks as good to a potential buyer as it does to you.
If you know that home prices have come down, then you cannot expect to get the same amount of money from the sale of your home that you may have received one, two or certainly three years ago. So, if your Realtor suggests to you a price which seems to be less than what you would expect, there are reasons for that. This does not mean that you simply roll over and accept whatever number is provided to you.
As a home seller, you also have a responsibility to gather as much information as possible about recent sales of comparable homes in your neighborhood. Any good agent will offer you this information (Comparative Market Analysis) without being asked.
Also inquire about a net gain sheet. Different agents may have different terms for this document. Quite simply, this document lists all costs associated with the sale of your home and will provide you the most accurate picture of how much money you will net from the sale.
Now that you are mentally prepared to sell your home, it is time to take a look at your home objectively. Remember, this will not always be your home. You are trying to make it look nice to someone who may not share your tastes.
Preparation of your home for the buyer is an absolute key element of a quick, painless and successful sale. You have heard of "curb appeal". This refers to the way your home appears to a prospective buyer from the time they initially drive up to your home, walk through the property and then return to the car to discuss how they could make your house their new dream home.
There are many elements of preparation of which you should be aware. Worn carpeting, low light levels, cluttered rooms and closets are all very negative aspects of a home and will definitely discourage a potential buyer.
Barking dogs, noisy neighbors, a filthy swimming pool and peeling paint are just a few more things which will deter a buyer. Listen to suggestions your agent proposes. This can save you a lot of time, can increase the sale price or at least maintain a fair price for your home.
Staging. This is a process by which a home, particularly a vacant home, is prepared for buyers to view. Some real estate agents do this work themselves; others will hire a staging professional. The homeowner pays the cost of staging.
A staging professional will place furniture, rugs, plants and other decorative items to give the vacant house a homey look. A potential buyer needs to envision themselves living in the home. It is very difficult to accomplish that in an empty house.
Put yourself in the buyer's shoes. If you were looking at the purchase of a home which required a lot of repairs, smelled like old socks and was painted fuchsia and chartreuse, would you ask for a price reduction? Of course, you would!
If a home is warm and welcoming, smells of freshly baked cookies and causes the buyer to picture themselves living there, your sale will move along quickly and painlessly.
Unless you have considerable experience with real estate transactions, hire a professional. Find an agent with whom you are comfortable. Get to know them and trust their judgment and knowledge.
You will pay them a commission. Under current market conditions, they will earn it. Rarely, if ever, do I perform my own surgery. There is a good reason for that. I pay for someone else's expertise. The wise choice would be to let a real estate agent or broker provide their expertise for you. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Selling Your Home in a Tough Market - Part 2 In Part I, suggestions were provided for selling your home in a difficult market. In Part II, we will take a look at dealing with the results of adjustable rate mortgages.
It would be virtually impossible not to have heard about people losing their homes due to an increase in their monthly mortgage payments. This is due to the reset of an adjustable rate mortgage. Foreclosure rates have reached record proportions.
Unfortunately, many people who wanted desperately to purchase a home received bad information on their loans. Nearly 80% of homeowners who accepted an adjustable rate loan never researched the consequences.
The result is that many people can no longer afford the homes they have worked so hard to purchase. If you are in this situation, you do have alternatives. Ideally, you do not want to go through a foreclosure for many reasons.
If your mortgage lender is willing to negotiate, this is the best way to deal with a potential foreclosure situation. Some will; some won't. It is worth asking the question.
On occasion, a mortgage lender will forgive late payments and simply tack them onto the end of the loan in order to keep mortgage payments flowing. Others may restructure the loan for smaller monthly payments.
Keep in mind that a mortgage lender can borrow money at a better rate than you can. They will then offer you a loan at a higher percentage than they pay. This is simply finance. It does mean, however, that there is room to negotiate.
Another alternative is the short sale. A short sale simply means that a mortgage lender is willing to accept a purchase amount less than what is currently owed on the property.
Five years ago, short sales were not a topic of conversation. There was no reason for them since home values were appreciating, not declining. A homeowner could always expect to make more on the sale of their home than what they paid for it.
Now, however, short sales are a good alternative to foreclosures. If you are going this route, make sure your agent understands the short sale process. Ask them how many short sales they have completed successfully. Ask them if they have someone who can act as a reference.
Short sales can be very nerve-wracking. A bank can still foreclose on a home even if there is a willing, qualified buyer. This can happen even before the short sale can be completed.
If you are able to complete a short sale, you walk away with cash. Albeit, not as much as a "normal" sale. However, your home has not been taken away from you as it would in a foreclosure situation. You can start life again without the onus of a foreclosure which will pursue you in your future financial endeavors. Let me remind you that 90% of all home sales undertaken by the homeowner (FSBO - For Sale By Owner), end up with a real estate agent being involved. If you are in a tough home selling situation, consider hiring an expert.
There are a lot of real estate agents out there. You have many alternatives and many choices. The best solution would be to hire a professional just as you would when you are having your car or teeth worked on.
A good real estate can bring a wealth of knowledge to the transaction. Interview several. Use the internet to help you search and compare. If you absolutely have to sell your home in this tough market, use the resources you have available to you. Don't simply give up or feel that you do not have choices and alternatives. You do! Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Sell Your Home Faster with a 'Virtual Open House' Virtual open houses can help sell your home faster by attracting more qualified buyers at a higher exposure level
Many real estate agents debate whether it's worth doing an in-person open house these days. Yes, there is potential to sell the home to that perfectly matched buyer, and also to meet new clients. However, because open houses are time consuming and don't always attract the right buyers, many agents are turning to "virtual open houses."
Many agents believe that virtual tours are a mandatory part of selling a home because they eliminate a lot of lookie-loos and attract more qualified buyers.
Virtual open houses also open up a world of exposure to new buyers in other states or countries, not just locals.
The Virtual Open House
Virtual open homes can pose just like an in-person open house would. You can create your own website or ask your agent. Many agents are already set up with a program that makes it easy to do. To attract more attention to new homes on the market, the agent simply sends an email to their client list with a link to view the virtual home site.
Of course, it depends on the market, too. If it's a buyer's market and homes are sitting on the market for long periods of time, you may opt to do both types of open houses for maximum exposure to all audiences.
If you are thinking about doing a virtual open house, here are some ideas: · Take nice clear photos. · Post a virtual map to the house. · Add some soft music to play on the site. · Offer ways for the buyers to ask questions like they would at an open house. Your agent can respond to through the website, depending on how Web savvy your agent is, via phone, email or live chat. · Keep it simple.
Remember to keep descriptions brief and limit it out to one web page. Since your home probably won't be online for very long, you don't want to put as much time into a virtual open house as an in-person open house.
You may ask, "So if I don't do an in-person open house, what's the point of fixing it up?" The answer is that you still need to fix up your home into selling condition to get the best price. If you can't see it in the photos, all the updates and money you put into it will be reflected in the home's description and key selling points.
Virtual Open Home Resources
These days there are a number of companies that make it easy, and you don't have to be a Web expert. Here are a few recommended websites:
· SharperAgent.com · Plan3D.com · Buildatour.com · Imagemaker360.com Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Moving Yourself Six ways to make moving yourself an easier task
Nowadays a large number of people prefer to move themselves rather than hiring a moving company. There are advantages of doing this, like saving money and being able to pack things "your way", but the down side is that it will take more time and effort. Being prepared, however, will make your move a smoother feat.
Here are six things you can do to prepare for a more successful move: · Carefully plan out your move before you begin. Although you can be a little more relaxed about your schedule if you're moving yourself, it's still wise to work out a schedule and stick to it. If you've never moved yourself before, if you have a large house with a big family, or if you have lived there for a few years, you might be amazed at how much stuff there is to sort through. · Prepare your moving supplies. Supplies you may have on hand include scissors, knife cutter, hammer, screwdriver, markers, newspapers, scotch tape. Additional supplies you will want to purchase include boxes, masking tape, and bubble wrap. Box costs can run $2 each or more, and the average eight-room house requires over a 100 boxes. If you don't want to buy or rent boxes, visit your local liquor store or grocery market and ask for their extra boxes. If you are working with a HomeGain agent, you can get free boxes. Ask your agent or visit www.homegain.com for more information. · Think through your muscle power. If you are lucky enough to have some friends who have "volunteered" to help, offer to treat them to a meal or something else to thank them. Or, if you don't know anyone, you can look at online posting sites like Craigslist.org to hire someone. Make sure to check their references because accidents do happen, and some people are just plain more careful than others. This person may also be willing to help transport your items to the new location. Regardless of the help you get, it's inevitable that you will have to lift a few items. Learn how to pack and lift heavy items correctly to avoid physical injury. · Decide what type of moving vehicle you need. If you need to hire a moving vehicle, shop around for a local supplier that has the best options for vehicle types, price and drop-off locations for your needs. Some will hire by the day or by the hour. If you choose a large company like U-Haul, you may be able to find some coupons online. Again, it's wise to check their references (or look them up on the Internet or simply ask some friends) and/or insurance policies before you sign an agreement. Be careful of hidden charges, for example, if you exceed a specific mileage. These types of companies can also rent you hand trucks, dollies, furniture pads or straps. · Look into your insurance coverage. Talk to your current home insurers to see if your coverage extends to all your possessions if you move yourself. You may find that your contents insurance will offer some or all coverage. However, you may have to pay a premium for the extra cover during your move. · Keep a few items easily accessible when you move. It's a good idea to keep items that you may need while you are moving, or once you get into your new home (and don't want to search through all the boxes). Such items include a hammer, screwdriver, cleaning supplies, extension cords, eating supplies, coffee maker, toothbrushes, and shower items. As stated earlier, the best thing you can do before starting your move is to plan it out and cover your bases. Give yourself a little extra time, too, because you can always expect the unexpected when it comes to moving.
Good luck with your move! Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Home Selling Strategies
How do you prepare a house to sell?
Doing whatever you can to put your house's best face forward is very important if you want to get close to your asking price or sell as quickly as possible. Short of spending a lot of money, here are several ideas for making your home show better:
· Sweep the sidewalk, mow the lawn, prune the bushes, weed the garden and clean debris from the yard. · Clean the windows (both inside and out) and make sure the paint is not chipped or flaking. And speaking of paint, if your home was built before 1978, new federal law gives a buyer the right to request a lead inspection. If you think you might have some problems, do the inspection yourself beforehand and make any fixes you can. · Be sure that the doorbell works. · Clean and spruce up all rooms, furnishings, floors, walls and ceilings. It's especially important that the bathroom and kitchen are spotless. · Organize closets. · Make sure the basic appliances and fixtures work. Get rid of leaky faucets and frayed cords. · Make sure the house smells good: from an apple pie, cookies baking or spaghetti sauce simmering on the stove. Hide the kitty litter. · Put vases of fresh flowers throughout the house. · Having pleasant background music playing in the background also will help set your stage.
What repairs should the seller make?
If you want to get top dollar for your property, you probably need to make all minor repairs and selected major repairs before going on the market. Nearly all purchase contracts include an inspection clause, a buyer contingency that allows a buyer to back out if numerous defects are found or negotiate their repair.
The trick is not to overspend on pre-sale repairs, especially if there are few houses on the market but many buyers willing to buy at almost any price. On the other hand, making such repairs may be the only way to sell your house in a down market.
Do sellers have to disclose the terms of other offers?
Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.
What are the standard contingencies?
Most purchase offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.
The purchase contract must include the seller's responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.
Whose obligation is it to disclose pertinent information about a property?
In most states, it is the seller, but obligations to disclose information about a property vary.
Under the strictest laws, you and your agent, if you have one, are required to disclose all facts materially affecting the value or desirability of the property that are known or accessible only to you.
This might include: homeowners association dues; whether or not work done on the house meets local building codes and permits requirements; the presence of any neighborhood nuisances or noises which a prospective buyer might not notice, such as a dog that barks every night or poor TV reception; any death within three years on the property; and any restrictions on the use of the property, such as zoning ordinances or association rules.
It is wise to check your state's disclosure rules prior to a home purchase.
How does someone sell a slow mover?
Even in a down market, real estate experts say that price and condition are the two most important factors in selling a home.
If you are selling in a slow market, your first step would be to lower your price. Also, go through the house and see if there are cosmetic defects that you missed and can be repaired.
Secondly, you need to make sure that the home is getting the exposure it deserves through open houses, broker open houses, advertising, good signage, and listings on the local multiple listing service (MLS) and on the Internet.
Another option is to pull your house off the market and wait for the market to improve.
Finally, if you who have no equity in the house, and are forced to sell because of a divorce or financial considerations, you could discuss a short sale or a deed-in-lieu-of- foreclosure with your lender.
A short sale is when the seller finds a buyer for a price that is below the mortgage amount and negotiates the difference with the lender.
In a deed-in-lieu-of-foreclosure situation, the lender agrees to take the house back without instituting foreclosure proceedings. The latter are radical options. Your simplest, and in many cases most effective, option is to lower the price.
What are the two most important factors when selling a home?
Price and condition are the two most important factors in selling a home, even in a down market. The first step is to price your home correctly. Use comparative sales information from your agent, or pay for a professional appraiser (usually $200 to $300), to objectively evaluate your home's worth. Second, go through the house and repair any obvious cosmetic defects that could deter a buyer.
In a down market, you may have to consider lowering your price and/or making a major repair, such as replacing the roof, in order to lure a buyer. Also, make sure that your home is getting the exposure it deserves through open houses, broker open houses, advertising, good signage and a listing on the local multiple listing service or online listings provider.
If this isn't happening, take it up with your agent or agent's broker. If you are still not satisfied you are getting the service you need, you may have to switch agents.
Do I have to consider contingencies?
If you are a seller in a seller's market, in which there is more demand than supply, you probably won't have to entertain too many contingencies. But if you are selling in a buyer's market, when buyers are few, prepare to be very flexible. Granting contingencies also depends upon what kind of price you want to get and on the condition of your property, most experts agree. Remember, contingencies are written into the contract and are negotiable during the negotiation phase only.
What is the best time to sell your house?
There is no "best" time to sell per se. Selling a house depends on supply, demand and other economic factors. But the time of year in which you choose to sell can make a difference both in the amount of time it takes to sell your home and in the ultimate selling price.
Weather conditions are less of a consideration in more temperate climates, but most of the time, the real estate market picks up as early as February, with the strongest selling season usually lasting through May and June.
With the onset of summer, the market slows. July is often the slowest month for real estate sales due to a strong spring market putting possible upward pressure on interest rates. Also, many prospective home buyers and their agents take vacations during mid-summer.
Following the summer slowdown, real estate sales activity tends to pick up for a second, although less vigorous, fall market, which usually lasts into November when the market slows again as buyers and sellers turn their attention to the holidays.
If this makes you wonder if you should take your home off the market for the holidays, consider the advice of veteran agents: You are always more likely to sell your house if it is available to show to prospective buyers continuously. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Staging: What should I do if my home isn't selling? Three smart moves for effectively staging your home in a slow selling market.
Today's real estate market is behaving a bit like the hit TV show "American Idol." Just as the show draws out the season before determining the "American Idol" winner, home sellers are finding that it's taking longer than they expect to sell their home. I call this idling market "American Idle."
Selling a home in today's rocky real estate market can be challenging at best. Foreclosures are rising, and, as a result, inventories are climbing in many areas of the country. New home inventories are at a high since January 1991, with over an eight-month supply currently.
What does this all mean? It means you need to act like your home is a contestant on "American Idol" and do your best to stand out amongst the crowd. How? Stage your home!
Follow these three steps to stage your home effectively and avoid being a part of the "American Idle". · Explore available resources to help you get started. Check out "Designed to Sell" on HGTV. The show has a team of experts who, on a budget of $2,000, transform a tired house into a showpiece. Seeing the transformation take place makes it easier for you to visualize what you need to do and how to implement small changes for a big impact. Talk to your real estate agent about their staging recommendations. Sometimes they will provide staging service for no extra charge. Or, they may recommend hiring a staging professional and provide you with referrals to professional stagers in your area. Visit your local library or bookstore for available books and publications on how best to sell a home, including ways to stage a home. · Visit model homes for ideas. Decorators and designers often recommend using a neutral palette to show a home off to its best advantage. One sure place to learn how professionals use color and position furniture to make a home look warm and inviting is to tour model homes. Using their ideas, such as applying a quick coat of paint in one or more of your rooms and removing or rearranging your furniture can help give your house the "wow" factor that will appeal to today's buyers. · Maximize your home's curb appeal. First impressions count, and can add dollar value to your home. Your front door and entryway are the introduction to your house and set the tone for buyers touring the house. Address outdoor living spaces as well as indoor living spaces. Those areas of the property are the most commonly overlooked, yet easiest to spruce up when preparing a home for market. Clear patios, pool and deck areas of worn and weathered furniture, give the front door a fresh coat of paint and plant colorful, fresh flowers. Expect harsh Simon Cowell types to critique your home. With more choices, homebuyers simply can be pickier. But the more you do to prepare your home for sale, the better chance you will have to sell your home fast and at the price you want.
Does staging work? Most real estate agents still believe in staging, for both in-person open houses and for virtual open houses. A staged home photographs better and appeals to a broader range of buyers, thus driving more traffic through to see your house. The more buyers who have exposure to your house, the better opportunity you have for a sale.
As always, I recommend following the advice of your agent so that you can win over even the toughest judges and sell your home quickly.
Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Seller strategies: Four tips for home sellers in a sluggish market Basic considerations and improvements can make a big difference
Everyone has a different take on the state of the real estate market. Some experts say prices will drop more, some say they'll flatten, while others say they'll increase slightly this year.
Because real estate rates are determined locally, it's possible for all three scenarios to take place.
According to the September 2006 report by the National Association of Realtors, The Housing Bubble and Its Implications for the Economy, "The inventory of unsold homes on the market is at an all-time high of 3.9 million, which is a 40 percent rise from a year ago."
Sellers need to be savvier and more strategic in order to sell their home within a shorter timeframe and at a good price.
Consider these four points when selling your home. 1. Know Your Home's Worth ?
Don't rely on real estate websites alone for home valuations. While instant home valuations are fun to use, they are based on past home sales and use computer formulae that do not necessarily reflect current market trends. Your best bet is to get a Comparative Market Analysis (CMA), a professional assessment of your property's value, from your real estate agent. With a CMA in hand, you are prepared to set your list price.
Once you've settled on a list price, have your agent reevaluate it every couple of weeks to stay current. If you don't get any interest or offers within the first three weeks, your asking price might be unrealistic and should be adjusted. 2. Condition Counts
Quirky fixer uppers are a thing of the past. Today's homebuyer is all about instant gratification, and the last thing he or she wants to do is move into a house that requires immediate cleaning or repair. The best thing you can do as a seller is to present your home to potential buyers in the very best possible light.
To present your home at its best, repaint tired and dirty walls, thoroughly clean all carpets, flooring and windows, and update front landscaping. Organize and update kitchens and bathrooms, the most problematic areas of a home. Make sure all kitchen and bath appliances and plumbing are in good working order.
A home in a less-than-sparkling condition can suggest a desperate seller and may yield a smaller profit. 3. Cover Part of the Buyer's Costs
A generous overture can make you more attractive to potential buyers. Offering to pay some of the buyer's closing costs, funding a portion of the buyer's financing, or paying for inspections or repairs that reduce the buyer's out-of-pocket expenses can help distinguish you and your home from the competition. 4. Enlist Expert Help
Go pro on your home sale by hiring a qualified real estate agent to do the job. An experienced, local real estate agent will be your best resource in helping you to meet your real estate goals in this unpredictable housing market.
When paired with the results of your own research, information provided by your local real estate agent can help you decide if selling your home now is the right thing to do. · Compare and interview several experienced, licensed real estate agents who specialize in your market area. · Ask for each agent's recent success stories in your particular market. · Contact and interview the agent's former customers
Remember to go with the agent who has been successful in your local real estate market and whose experience, marketing approach, commission rate, personality and business manner best suit your own style.
Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
The Home Sale Contingency Catch If you are selling your home right now, like many other homeowners across the country, you may be tempted to accept a contingent offer. The $64,000 dollar question is, "should you?"
What is a contingent offer?
Consider this. You have had your house on the market for weeks, maybe even months. While not exactly a model house with an address on Wisteria Lane, you are certain it would have sold by now. Yet, you have had very little foot traffic through your home and Sunday open houses held by your agent have produced no results.
Then unexpectedly, a young couple falls in love with your home! At the offer presentation, you discover the bad news. They still have to sell their present home located one town over, and have written the offer "contingent" on them selling their present home. And they haven't even listed the house yet!
Feeling deflated, you turn to your agent to ask for advice.
What are my options? If their property doesn't sell, the buyers aren't obligated to complete the purchase and can walk away from the deal - plain and simple.
In a seller's market where buyers are numerous and demand exceeds inventory, most sellers would not accept such a purchase offer. Doing so leaves you at risk for missed opportunities for offers from qualified buyers who can close quickly, perhaps even for more money.
Without knowing anything about the buyer, or their situation, it's almost impossible to make an informed decision on whether or not to accept the buyer's contingent offer. Even if you like their offering price and the rest of the offer, you can't control what asking price they will place on their own property, thus affecting its potential for a quick sale. However, you can do some research to help you make an informed decision.
Here are five ways to avoid being caught in a bad deal. · Drive by the house, if local, and assess for yourself how marketable the property is. Is it located in a "pride of ownership" neighborhood? Does the home appear to be well maintained? How is the landscaping? Does the house have curb appeal? Are there an overabundance of "for sale" signs in the neighborhood or does the neighborhood appear stable. Will the house appeal to today's average buyer in your area? · Have your agent do some research on the local market where your buyer's home is located. They can help guide you. Your agent should insist in your contract that the buyers list their home on the Multiple Listing Service with an agent, and give a deadline. · Have your agent include in your counteroffer the right to approve the list price. That way if they list for a price that seems unreasonable - which they probably won't since they want to buy your house after all - you'll be able to get out of the contract. · Make sure your agent specifies expiration dates for the contingency to be removed. Typically you might allow your potential buyers 30 days to get a sale contract on their existing property, and an end date for closing the sale on your home you can live with. · Have your agent continue to offer your home for sale under a "72 hour first right of refusal" clause. Once you receive a second offer, your first buyer has 72 hours to remove their contingency. If they are unable to do so, you are able to go forward with the second buyer. The catch is, sometimes selling agents can be discouraged from showing homes to buyers that have a contingent contract in place, but in a slow market it may be worth considering. Doing so may just mean a successful sale for you! Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Offer Strategies: How long should a home seller wait before accepting an offer? Taking a cue from local home-selling customs and market conditions can help you secure the best offer on your home. It's also a good idea to create an offer-presentation procedure and schedule with your real estate agent.
Common Practices
Home sellers typically review buyers' offers as soon as they are submitted in writing. And unless you and your agent set a specific date to review all offers at the same time, buyers assume that their offer will be heard right away,
Some home sellers prefer to delay reviewing offers for a week or longer, which enables agents to show the home to a higher number of potential buyers. This tactic can yield multiple offers, but if the seller waits too long, potential buyers may get discouraged and withdraw their offer.
Another approach is to hold off on reviewing offers until after the first public open house is held. Because it's nearly impossible to sell a home for less than market value if it's been publicly advertised, this method can bring sellers the highest price possible for their home.
Market Conditions
Before deciding on a course of action, first consider the dynamics of the real estate market. In active real estate markets where prices rise quickly, the seller will probably have the most success if he or she reviews offers after the open house or sets a specific date to hear all offers at once.
There's no guarantee, however, that waiting to hear offers translates to more offers. There must be a demand for your home and it must be priced at or below market value to generate excitement. Multiple offers build competition among buyers and can result in a home selling above the asking price.
Most agents advise clients to sell their home quickly because a slow-selling home generally brings a lower price.
But if a home is initially priced below the competition, the seller should receive multiple offers that will drive up the price to market value. There is therefore little danger in pricing a home too low - the real danger is in pricing too high, particularly in slower markets. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Closing Costs - The Who and The What Who pays for closing costs may vary depending on the location and the market. Requirements differ in each state and sometimes in each city. For example, sellers normally pay for title insurance in Lee County, while in Collier County the buyer typically pays. In a buyer's market, sellers may opt to cover the costs just to have a better chance of getting closer to the price they want.
What are closing costs?
Not only does the buyer need to bring cash to the closing table for the down payment, but also cash for closing costs. Those costs can include fees such as pre-paid taxes and hazard insurance required to fund the borrower's impound account set up by the lender, along with title insurance and recording fees, among others.
These fees are in addition to the purchase price. If closings costs are not figured correctly, the sale may possibly be affected. It's not common, but real estate closings have failed because the buyer is short on cash.
Buyers are typically expected to pay the following closing costs: · Fees for obtaining a mortgage · Inspection costs · Homeowner's insurance (must be prepaid for one year at closing) · Property taxes · Transfer taxes (although the seller may pay these or they may be shared 50-50 between buyer and seller) · Title insurance and settlement fees · Attorney's fees where applicable Your real estate agent can tell you which fees the buyer in your area normally pays for. He can also calculate the estimated costs you will be responsible for, based on the sales price, so there will be no surprises at the closing table.
Sellers are typically expected to cover closing costs like: · Loan payoff fees · Real estate commission (in some cases, a portion of this may be paid by the buyer) · Termite repairs · Transfer taxes · Title insurance and settlement fees · Attorney's fees where applicable Doing some research and asking around will familiarize yourself with the area where you are buying or selling so that you can understand what exactly you will be expected to pay. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Money and Taxes Are taxes on second homes deductible?
Interest and property taxes are deductible on a second home if you itemize. Check with your accountant or tax adviser for specifics.
What is seller financing?
Seller financing is when a seller helps to finance a real estate transaction by taking back a second note or even financing the entire purchase if the seller owns the home free and clear. Usually sellers do this when a buyer has difficulty qualifying for a conventional loan or meeting the purchase price.
Seller financing differs from a traditional loan because the seller does not give the buyer cash to complete the purchase, as does a lender. Instead, it involves extending a credit against the purchase price of the home while the buyer executes a promissory note and trust deed in the seller's favor. These special circumstances must be acceptable to the lender who makes the first mortgage on the property.
The necessary paperwork is prepared by the title or escrow company after the terms are worked out between the buyer and seller.
If you are a seller considering such an arrangement, it is critical to thoroughly evaluate the creditworthiness of the buyer first. Fear of default makes many sellers reluctant to take back a second. But seller financing can bring a higher price plus complete the sale sooner in some situations. For more information, contact the Internal Revenue Service for a copy of its Publication 537, "Installment Sales." Order by calling (800) TAX-FORM.
How are the rates set for seller financing?
The interest rate on an owner-carried loan is negotiable. Ask your agent to check with a lender or mortgage broker to determine the current rate on institutional first (or second) loans.
Seller financing typically costs less than conventional financing because sellers don't charge loan fees (points). Interest rates on an owner-carried loan will also be influenced by current Treasury bill and certificate of deposit rates. Sellers usually aren't willing to carry a loan for a lower return than they would earn if their money were invested elsewhere.
What are the benefits of seller financing?
Seller financing offers tax breaks for sellers and alternative financing for buyers who can't qualify for conventional loans.
If you are a seller, the risks you face are the same as those facing any lender: Is the borrower a good credit risk? Will the property hold enough value over time to allow for the repayment of all loans made against it?
You should run a full credit check on the borrower, require hazard insurance on the property and include a due-on-sale clause. There also are financing, disclosure and repayment-term requirements that need to be met. It is wise to consult a lawyer when putting together this kind of transaction.
Can a home seller sell a home for less than its mortgage?
Yes, in some case you can sell your home for less than what you still owe on the mortgage. But it is complicated and depends on the lender. This situation is known as a "short sale." Sometimes a lender will be willing to split the difference between the sale price and loan amount, which still must be paid.
A short sale may be more complicated if the loan has been sold to the secondary market because then the lender will have to get permission from Fannie Mae or Freddie Mac, the two major secondary-market players.
If the loan was a low-down-payment mortgage with private mortgage insurance, then the lender also must involve the mortgage insurance company that insured the low-down loan.
When does foreclosure begin?
Lenders will initiate foreclosure proceedings when homeowners become delinquent in their mortgage obligations, usually after three payments are missed. The lender will then notify the buyer in writing that he or she is in default. The lender can request a trustee's sale or a judicial foreclosure, in which the property is sold at public auction.
A borrower can cure the default by paying the overdue amount and the pending payment after the notice of default is recorded, usually no later than a few days before the property's sale.
Some sales allow the successful bidder to take possession immediately. If the former owner refuses to vacate the premises, the court can issue an unlawful detainer that allows the sheriff to come out and evict them.
Borrowers should do everything they can to avoid foreclosure, which is one of the most damaging events that can occur in an individual's credit history.
Are seller-paid points deductible?
As of Jan. 1, 1991, homeowners have been able to deduct points paid by the seller. This deduction previously was reserved only for points actually paid by the buyer.
Can I deduct the loss I suffered when I sold my home?
The Internal Revenue Service currently does not allow deductions for losses on the sale of your own home. In fact there's no way to use a loss to your advantage on your income tax return.
Where do I get information on IRS publications?
The Internal Revenue Service publishes a number of real estate publications. They are listed by number: · 521 "Moving Expenses" · 523 "Selling Your Home" · 527 "Residential Rental Property" · 534 "Depreciation" · 541 "Tax Information on Partnerships" · 551 "Basis of Assets" · 555 "Federal Tax Information on Community Property" · 561 "Determining the Value of Donated Property" · 590 "Individual Retirement Arrangements" · 908 "Bankruptcy and Other Debt Cancellation" · 936 "Home Mortgage Interest Deduction" Order by calling 1-800-TAX-FORM. To call the Internal Revenue Service about general questions, call (800) TAX-1040.
Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
Other Common Questions
Do sellers have to disclose the terms of other offers?
Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.
How do I prepare the house for sale?
First and foremost, put it in the best condition possible, especially if you are in a market with few buyers and lots of homes for sale. That means taking care of any major repairs that could deter a buyer (such as replacing any broken windows or replacing a leaky roof) if you can afford it. Next, work on your home's curb appeal. Make sure your landscape is pristine. Mow the grass, clean up any debris and weed the garden beds. Plant a few annual flowers near the entrance or in pots to be placed by the door. Other quick fixes that don't cost a lot of money but can help you get top dollar for your home: · Clean the windows and make sure the paint is not chipped or flaking. · Be sure that the doorbell works. · Clean and freshen up rooms, furnishings, floors, walls and ceilings. Make sure that bathrooms and kitchens are spotless. · Organize closets. · Make sure the basic appliances and fixtures work. Replace leaky faucets and frayed cords. · Eliminate the source of any bad smells, such as the kitty box. Use air freshener or bake a batch of cookies before your open house to ensure that the house smells inviting. · Invest in a couple of vases of fresh flowers to place around the house and next to any information about the house you have prepared for buyers.
Should I add on or buy a bigger home?
Consider these questions before making a choice between adding on to an existing home or moving up in the market to a bigger house: · How much money is available, either from cash reserves or through a home improvement loan, to remodel the current house? · How much additional space is required? Would the foundation support a second floor or does the lot have room to expand on the ground level? · What do local zoning and building ordinances permit? · How much equity already exists in the property? · Are there affordable properties for sale that would satisfy housing needs?
Ultimately, the decision should be based on individual needs, the extent of work involved and what will add the most value.
What do all of those real estate acronyms in the ads mean?
If you find yourself stumbling over weird acronyms in a real estate listing, don't be alarmed. There is method to the madness of this shorthand (which is mostly adopted by sellers to save money in advertising charges). Here are some abbreviations and the meaning of each, taken from a recent newspaper classified section: · assum. fin. -- assumable financing · dk -- deck · gar -- garage (garden is usually abbreviated "gard") · expansion pot'l -- may be extra space on the lot, or possibly vertical potential for a top floor or room addition. Verify actual potential by checking local zoning restrictions prior to purchase. · fab pentrm -- fabulous pentroom, a room on top, underneath the roof, that sometimes has views · FDR -- formal dining room (not the former president) · frplc, fplc, FP -- fireplace · grmet kit -- gourmet kitchen · HDW, HWF, Hdwd -- hardwood floors · hi ceils -- high ceilings · In-law potential -- potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first. · large E-2 plan -- this is one of several floor plans available in a specific building · lsd pkg. -- leased parking area, may come with an additional cost · lo dues -- find out just how low these homeowner's dues are, and in comparison to what? · nr bst schls -- near the best schools · pvt -- private · pwdr rm -- powder room, or half-bath · upr- upper floor · vw, vu, vws, vus -- view(s) · Wow! -- better check this one out.
Resources: "Real Estate's Ambiguous Language You Oughtta Understand," Glennon H. Neubauer, Ethos Group Publishing, Diamond Bar, CA; 1993.
How long does it usually take for a home to sell?
The time frame is usually three to four months.
Where do I get information about finding a real estate attorney?
To find a real estate attorney, contact your local bar association, which may offer local referral services. You may also ask friends or your real estate agent for their recommendations. When you have several names, call each to find out about fees and their level of experience. Feel free to contact me with any questions and concerns. I look forward to answering your questions and earning your business.
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