MAKE YOUR MOVE
ALERT: Buyers only have until December 1, 2009 to take advantage of the first-time buyers tax credit authorized in the American Recovery and Reinvestment Act of 2009.Consult now with your tax advisor and real estate representative to get moving!
Most first-time buyers (who haven't owned a home in three years) will qualify.If you're married, you and your spouse must both satisfy this description.
There are income limits for claiming the credit of up to 10% of the home's purchase price, which maxes out at $8,000.If your modified adjusted gross income (on IRS Form 1040, line 37) is less than $75,000 for individuals or $150,000 for married filing jointly, you can claim the maximum credit.For incomes up to $95,000 or $170,000 respectively, the credit is reduced.
This is not a tax "deduction," but a tax "credit," meaning that the amount you claim is reduced from your total tax bill!If you will owe less than $8,000 on your 2009 return, you'll get a REFUND from the IRS for the difference!
The biggest news is that in response to pressure from the National Association of REALTORS®, FHA lenders will allow buyers to use the credit to cover closing costs, buy down the rate or as additional down payment!I urge you to take this money from the government and make your move before December!
THE GOOSE AND THE GANDER
When facing a mortgage default, most homeowners try to sell their home - fast.The technique that works in these stressful situations also works for the rest of sellers - namely, aggressive pricing.
As a seller, you control the three factors that determine how quickly your home will sell: marketing, condition, and price.Let's focus on that last element.
First, be clear about your goals.Can you hold out for the highest price you can get, or do you want to move on quickly?Unfortunately, the fact that you paid more than what homes in your neighborhood are selling for is irrelevant in today's market.
Forget about salvaging equity, and price your home aggressively against the competition.Overpricing keeps many buyers from even seeing your listing in their affordability zone.They'll see lower priced homes as a better value, while you'll wait until the lowballers come out of the woodwork.
Start your pricing decision with a Comparative Market Analysis (CMA) performed by your real estate representative.If you're truly motivated to sell quickly, price your home 10% lower than the selling (not asking) prices of other homes in your area.
Now your home becomes a bargain, and it will attract the attention of other agents and their qualified buyers.An attractive price, good condition and savvy marketing will result in offers and ultimately, a sale.
ONE’S LOSS IS ANOTHER’S GAIN
While falling values are not good indicators for sellers, they’re great news for buyers, lifting affordability to historically high levels. For example, to purchase a median priced home of $164,600 with 20% down and an interest rate of 5.1%, a buyer would need an annual income of just under $35,000.
With the lowest interest rates we've seen in forty years, now is an opportune time to lock in a rate on a fixed loan. Rates are already showing signs of rising, and waiting too long could negatively affect your ability to secure such a mortgage.
In addition to rising interest rates, the fees on loan applications may also start increasing. This is because lenders have reassessed their risk to reward ratios in light of all the recent loan defaults. Around the corner, we might expect higher mortgage insurance premiums and closing costs, not to mention tougher and tougher terms for qualification.
With interest rates and loan fees still at very affordable levels, now is the time to make your move and secure your financial stability through home ownership. If you buy a $150,000 home today and it appreciates at a very conservative 3% annually, that home would be worth nearly $164,000 in three years.
Don't let all the negative stories about real estate blind you to the many positive factors for buyers in today's market.
LUCK IS A FOUR-LETTER WORD
A "buyers' market" is just what it implies - a market in which buyers have the advantage and exploit it. It's not a market that rewards foot-dragging, hesitation or indecision.
Unfortunately, all the factors that created the buyers' market we have today have been reported so negatively and rampantly by various media outlets that buyers are themselves too spooked to even enter the fray. Strangely, people were buying like crazy during the previous sellers' market, when the advantage was actually all to the sellers.
That's when buyers didn't fear paying too much, and now that prices are so low and inventories so high, suddenly buyers DO fear paying too much! However, it's impossible to purposefully time the market to buy at the bottom and sell at the top.
Once the market begins to settle and subsequently improve (and it will), the amazing buying opportunities we've been seeing will begin to disappear. With decreased buying activity now, pent up demand for homes will explode when the market recovers, and buyers will once again be competing for the best homes.
Don't rely on luck in the marketplace - rely on planning. Make a careful decision with a predictable outcome. Has the market dropped enough, right now, to make such a purchase? Absolutely! Forget about the top and the bottom and enter your "safe zone" with confidence.
UP ON THE DOWNSIZE
For any number of reasons, more people than ever are downsizing these days. Whether it's reduction in income, reduction in family size, or just a desire for easier living, smaller homes are becoming more attractive.
There are challenges associated with downsizing, but experience has taught some valuable lessons that you may find useful. Once you've decided to sell, start the moving process immediately. Your home will even show better once you've begun packing things away. As you decide what to keep, consider donating unwanted items or holding a yard sale.
Solicit family members for help, and see how many belongings might be passed along to family and friends. After all, they say that charity begins at home, right?
You can also "digitize" paper records with a scanner, saving them on your computer, or using an online storage service for an added layer of security. Just be sure electronic versions of certain records are legally acceptable.
If you're still left with a lot of furniture and accessories, you should strongly consider including such items in the listing for your home. First-time buyers may be particularly attracted to such an offering, saving them time and money on furnishing their home, and expediting the entire transaction.
These tips may help you downsize, but of course, any move presents its challenges. Speak with an experienced professional today for more advice.
COMPARISON SHOPPING FOR SCHOOLS
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!
DO THE MATH
After all your preparations and marketing efforts, what do you do when you get that first offer? Don't jump for joy or wallow in disappointment until you've read all the terms. Price is just the beginning, and other contingencies will ultimately affect your bottom line.
In reviewing the offer, pay attention to seller concessions, which can range from asking you to pay closing costs to including an allowance for roof repairs. Buyers may also request inclusion of certain articles of personal property not physically attached to the home. This might include the refrigerator or pieces of furniture. You can decline or accept the terms, but it's best to establish in your listing those items included and excluded in the sale.
Mortgage and appraisal contingencies indicate that the buyer will seek financing at a certain rate and terms, and that the appraisal must satisfy the lender. Make sure that all of the terms are realistic, and that there is a reasonable time limit for the buyers to secure their financing.
These and other terms in the offer impact how much you net from your sale, regardless of what actual buying price is stated. It's possible that a “full price” offer could result in thousands less than a lower offer with fewer contingencies, so please consult with a representative before listing and before accepting or rejecting any offers.
THE LINGO OF THE LOAN
Your real estate agent may not write your home loan, but that's who will probably be there when you begin discussing mortgage options. Knowing some of the nuts and bolts before you start your home search can help you find the right loan.
Factors affecting your terms are the amount, the length of the loan, and the loan-to-value ratio (how much of the home's value you are financing). Larger loans carry more risk to the lender, so the interest rate may be higher.
Similarly, a smaller down payment represents more risk, possibly warranting a higher interest rate. Get the best rate by putting down as close to 20% as possible.
The difference between a 15- and 30-year loan is also critical. Payments for a shorter term will be larger, but you'll build equity much faster, and enjoy a slightly lower interest rate.
Also understand the workings of an adjustable rate mortgage (ARM). You need to be fully prepared for what may happen to your payments after the first adjustment. However, something like a 5/1 ARM (a fixed rate for five years and an adjustment each year thereafter), could be a good idea if you're buying your first home and don't plan to stay longer than five years.
Discuss your hopes and objectives with an agent, who can help guide you down the road to homeownership.
THE DIFFERENCE BETWEEN SELLING AND DWELLING
There is a special mindset associated with "staging" your home to sell in a soft market. Staging refers simply to the act of improving your home's appearance in order to appeal to the widest segment of potential buyers. The approach you must adopt is to see your home with an objective eye.
Stop looking at your home as your "home," and start visualizing it as the "product" it becomes when it enters the market. Both a real estate agent and a professional home stager can help to market your product successfully by highlighting positive features and downplaying less attractive aspects.
Since you may have a strong emotional attachment to your home, you may not fully appreciate hearing about a better way to show your offering, but try to recognize that the way you decorate to SELL may be quite different from the way you decorate to dwell. The appearance of a space often trumps its functionality when impressing buyers.
Your goal is to sell quickly at a fair price. A survey by a large national real estate brokerage showed that staged homes sell in half the time, and another survey of REALTORS® showed that a $500 “staging” investment recouped 343% of that cost. So be prepared to swallow a little pride, move some furniture, and field better offers on the road to your successful sale.
AN OFFER THEY CAN’T REFUSE
In real estate investment, one person's misfortune is another's opportunity. Indeed, with so many foreclosed properties on the market, buyers are poised to take advantage of a literally once-in-a-lifetime chance at investment or ownership.
Every opportunity presents some challenges, however, and you'll need more than luck to effectively buy a distressed property. These transactions are more complex than traditional sales, and you are strongly advised to seek the advice and representation of a real estate professional well versed in this new marketplace.
While a bank-owned home may look like a great deal, don't assume that any offer will be accepted. Most banks list their foreclosed properties through real estate brokerages, and while they want to sell as quickly as possible, the listing agents have a fiduciary responsibility to get a good price for the owner.
An insultingly low offer can table the transaction permanently, so proceed with common sense and a trusted representative. Keep in mind when negotiating your offer that you should have an additional 10% of the price tag set aside for repairs. A foreclosed property, particularly an older one, will almost certainly require some overhauls.
In addition to your agent, consult with a local real estate attorney who can advise you about current foreclosure laws, which vary significantly from state to state. Know exactly who's at the door when your opportunity knocks!
LAUNCH AN OFFENSIVE
When buyers become scarce, sellers have to step up and make their offering stand out to attract attention. Without spending a fortune, sellers can easily highlight several of their home's features.
First, beat buyers to the punch with a pre-listing home inspection. By discovering and fixing problems before buyers ever see the home, you can impress them with a worry-free, move-in-now opportunity. Leave your repair receipts out during showings, so that buyers can see all the improvements you've made just for them!
Once the mechanical and structural features of your home have been addressed, move on to the aesthetic details. First impressions count, so make sure your home is inviting from the curb. Spiff up landscaping, paint, entries, and windows.
Inside, pay attention to bath and kitchen details, because those rooms are often most important when buyers are making a decision. Aside from deep cleaning, consider updating bath and kitchen features with new and contemporary drawer pulls, faucets, and even sinks.
Finally, get a jump on your moving by organizing your closets and ditching or packing all you possibly can. A good guideline is to reduce your closets to half-full, so that the buyers can easily picture the space for their own storage needs.
A few "preemptive strikes" should be all you need to attract buyers and offers, so ask your agent for tips today!
A PORTFOLIO OF COMMODITIES
Have you ever thought of a home as a commodity? A commodity can be defined as a raw material or product that can be bought and sold. A home is not a raw material, but it is certainly built out of many, like a box full of wood, steel, cement, glass and copper.
Over the long term, home prices usually rise along with the cost of the commodities it takes for construction. While high inventories of housing may be keeping prices lower right now, the cost of the raw materials that are intrinsically tied to a home's value are rising, and rapidly.
With increasingly higher construction costs on the horizon, buying now is an ideal investment, and a hedge against the rising cost of commodities. Every home is a store of value for all the materials, the land and the labor involved in its construction. So the long-term value of a home is tightly connected to the cost of its production, making it a very different type of investment from stocks or bonds.
Investing in commodities has always been a great way to make lemonade from the economy's lemons. And what better way to buy into the commodities market than by purchasing a home? Sooner or later, home prices will be pushed higher by the rising cost of raw materials, so make your move now!
THE NEED FOR SPEED
In areas where home prices have significantly declined, some owners find themselves strapped with mortgages that total more than their home’s value. When options such as extending the term of the loan or negotiating a lower interest rate have been exhausted, then a short sale may provide the solution.
However, short sales are complicated, requiring approval from a number of parties, so you need the representation of a professional to make sure the transaction moves quickly. You can have more than half of the paperwork done before that first offer even comes in.
Most lenders require an application package to be completed by the sellers, including a financial worksheet, as well as a letter of hardship explaining why the owners cannot continue to pay the mortgage. The real estate agent can also help with other aspects of the required paperwork, which should be assembled before the property is listed.
While the bank may be willing in such cases to accept less than the mortgage balance, the buyer's offer must still reflect a fair price under current market conditions, so be sure to consult with an agent in order to arrive at a reasonable price that will be accepted by all parties, including the lender.
Short sales may not be easy, but they do provide an "exit strategy" for homeowners most in need of a solution.
AN OUNCE OF PREVENTION
If you're planning to go bargain hunting, you are likely to come face to face with a special challenge: the long-vacant home. Many of these properties have been foreclosed, and now rest in the hands of the bank. The owners are long gone.
While the greatest percentage of these "distressed properties" are still in fair to good condition, how can you be sure of possible defects in the home when the previous owners are not available to disclose such facts?
Since the bank-owners and their real estate agent may not know all the details about the previous owners, you would be well-served by ordering a "pre-inspection" if you find an attractive property at a low price. Hire an inspector for a preliminary look, and do not make an offer until you know more.
You can pay just a couple hundred dollars for a brief inspection, money well spent before you submit a bid. Having an idea of the home's true condition can help you determine your offer, or help you make a decision to walk away from the deal, without any obligation.
If the utilities are cut off, ask your representative about getting them turned on during the inspection, which is critical to the inspection's accuracy. Take a careful look at recent sales in the neighborhood, and make your offer armed with knowledge and confidence!
TURN THOSE RED FLAGS GREEN
When selling a home, two situations may occur which are red flag indicators of a lengthy sale time. Each requires the property owners' attention in cooperation with their sales agent, and involves either the price or condition of the home.
The first involves a home that has been on the market for 60-90 days, but has been shown only once or twice. More buyers are beginning to enter today's real estate market, and homes for sale should be attracting a number of prospects.
When buyers choose not to tour a home, the reason is often the price. Homes that are attractive, but not being shown, are often priced “above” the market. The key to increased showings, then, is to learn the market price of the home, then reset the price.
The second “red flag” occurs when a home is being shown often, but neither sells nor attracts offers. The home's condition is often the culprit in this situation. Buyers learn the price, then drive by, making a judgment that it is an attractive home. Once they see the home, however, their interest evaporates.
The solution can be a critical “walk-through” by the sellers' agent to identify needed repairs and cosmetic improvements. Until corrected, traffic is likely to remain high, while the chances of selling remain low. Remove these red flags and prepare for a sale!
BUYERS ARE GAINING STEAM
A recent profile of buyers and sellers compiled by the National Association of REALTORS® has revealed promising, if not surprising statistics about the changing face of the marketplace. The percentage of first-time buyers is on the rise, and they are making their purchases for the long term.
Frankly, this makes sense, because first-time buyers aren't struggling with the sale of an existing home. Combine that advantage with low home prices, large inventories, and low interest rates, and the result is a positive trend for both buyers and sellers.
Recently enacted tax credits and modifications in the Federal Housing Administration are also helping buyers, along with predicted increased credit flow from a federal funds injection into the banking system. More buyers entering the marketplace means more sales, reduced inventories, and increasing home values.
The profile of sellers shows that over 90% used a real estate brokerage to market and sell their property. Buyers profiled listed the most important agent services as helping to find the right home and negotiate satisfactory terms and price.
If you're planning a purchase, and need funds for a down payment, learn from buyers in the study who mostly used savings or a gift from family, and who also chose a fixed-rate mortgage over 90% of the time. Consult with a trusted agent today, and get on board the home ownership train.
NO PAWS LEFT BEHIND
Over 60% of American households have at least one pet, be it dogs, cats, or any variety of furry or feathered residents. With the number of foreclosures in the recent past, you may not have considered the millions of pets faced with vacating their homes, or worse, facing abandonment because their owners are unable to find temporary shelter, as they themselves are forced to relocate under stressful conditions.
If you or someone you know is experiencing a similar situation, you'll be pleased to learn that a non-profit organization called No Paws Left Behind is educating the public and helping to provide solutions for "foreclosure pets." Their mission is to assist owners with loan workout options, but they also provide resources for finding local no kill shelters, foster care programs, and other alternative housing for their pets.
When you visit their website at nopawsleftbehind.org, you can enter your ZIP code to locate shelters and other options for your pets. They have been working over five years now with borrowers and lenders on loss mitigation and default management, and even provide monetary assistance for deposits if you relocate and have to pay extra to keep Fido or Fluffy in your new digs.
As homeowners, lenders, and the government all move toward resolving the current crisis, we should not forget those victims who cannot speak or act for themselves.
TWO WAYS TO UPGRADE
Have you ever overdressed for an event? Perhaps you understood the dress to be formal, but when you arrived in your sequin dress or black tuxedo, everyone else was wearing jeans and turtlenecks. You may recall how everyone stared as you entered the room, looking a bit out of place.
That happens to homeowners too, but it's not called overdressing - it's called over-improving. It happens when property owners remodel a home to the point where its new value far exceeds all others in the neighborhood.
Let’s say that your family has grown, and you begin your improvements by adding a wing with two more bedrooms and another bath. You expand to a three-car garage, and install an outdoor deck. In the process, you add $55,000 in improvements to your $100,000 home.
As long as you continue living in the home, that's not a problem. When it's time to sell, however, you'll face an unexpected challenge. You’ve spent $55,000 on improvements, but buyers are unlikely to be impressed as they compare the prices of other homes in the area, and expect yours to be in line.
Before beginning a major project, determine the impact on your home's value. Consider “upgrading” to a larger home vs. remodeling, getting advice from a lender and a real estate agent. When it's time to sell, you'll be glad you did.
LEARN BEFORE YOU LEAP
Although there is still speculation regarding the overall health of the real estate industry, there are signs that we are nearing the bottom of the market. If you are considering a purchase, either as your primary residence or strictly as an investment, you can easily capitalize on current conditions if you are educated and prepared.
While no one can say with absolute confidence that prices won't drop any further, some people simply must and will buy a home. Let me share some suggestions to help you avoid pitfalls and take advantage of today's opportunities.
First, shop for an appropriate mortgage and secure a letter of prequalification. Then you’ll know exactly what price range is within your reach, and you’ll stand more strongly when making an offer.
Explore Real Estate Owned properties, or REOs, which are held by banks after foreclosure, and be willing to compromise if you find a truly exceptional value. These homes are often offered well below market value, and if you are willing to hunt for bargains and negotiate, you'll be able to take advantage of high inventories and languishing listings.
Finally, assemble a top-notch team of professionals, including your lender, inspector, and attorney. Most importantly, find a real estate agent to coordinate all the activities of the other professionals who are key to the transaction. Protect your interests with trusted representation.
A BRIEF TALE OF THE SHORT SALE
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.
EVALUATING AN APPRAISAL
All of us often turn to professionals when we need critical services performed or important guidance offered. Of course, the buying and selling of property is one such example, and the selection of a representative should be pursued carefully with interviews and research.
The same applies when choosing another professional who is crucial to the real estate transaction - the appraiser. But who orders the appraisal? Most often, it is the lender, who uses the report to confirm a property's value before approving financing. Sometimes, either the buyer or the seller will order an appraisal in order to secure an independent opinion of said value.
If you hire an appraiser, be sure he or she is licensed and certified. Most states provide those qualifications through an appraisal board, and you can also refer to the federal Appraisal Subcommittee's website at www.asc.gov, although only current - not past - disciplinary actions are listed there.
Once you've ordered an appraisal, how can you be sure of its accuracy? Begin by selecting an independent appraiser who was not chosen by the lender, and use your common sense. If the home across the street just sold for $150,000 and your appraisal reports at $250,000, you may have reason to seek a second opinion, which may be provided in a Competitive Market Analysis (CMA) performed by a real estate agent.
THE FASTEST ROAD TO YES 4-13-09
Whether up or down, fast or slow, there are "tricks" you can use to make a home sell in any type of market.Following these actions should help produce results, particularly in down or slow conditions.
First, make your home a "best buy" by having your real estate representative perform a thorough analysis of listings and recent sales in your neighborhood.Position your home right in the middle of an attractive price range (buyers look in broad ranges, so be sure you are noticed).
Before your final pricing decision, determine the level of pressure you're under to sell within a given time frame.Must sell in six weeks?Then adjust your price about ten percent lower than the comparables.
Generating interest but no offers yet?Continue reducing your price until you've reached your deadline, or get creative with seller financing.If you can accept monthly payments, you'll increase the pool of prospective buyers.
Offer your home in exceptional condition, and have detailed information available to buyers, who won't respect vague answers to questions of utility costs, tax bills, etc.You DON'T have to be specific, however, when asked why you're selling."I have an excellent opportunity elsewhere" will suffice.
Finally, when that first offer comes, do everything possible to accept it.Holding out for a better offer may backfire, so be prepared to say, "Yes!"
OPPORTUNITY KNOCKS 4-6-09
There are some desperate sellers out there, but perhaps none so desperate as banks.That's right - banks that own foreclosed properties are anxious to get them off their hands.After all, their business is lending, not property management.
If you are pondering the purchase of such an "REO," or Real Estate Owned property, how do you find one, and then determine if it's the right buy for you?Banks work almost exclusively with real estate professionals, so your best bet is to begin your search at your trusted local agent's office.
Chances are the broker will have a list of REOs to suit your needs and budget.While banks don't usually price these properties much above what they're willing to finally accept, lower offers on these listings stand an excellent chance for consideration.
Look for houses that have been listed for more than 90 days, and offer somewhere between ten to twenty percent below the asking price.However, do be aware of potential hidden costs associated with foreclosed properties.
Owners who vacate a foreclosed home may have left plenty behind in need of repair.Be sure to perform a thorough inspection - with electrical and gas systems operating - and ask your real estate representative to factor repair costs into your offer.If you're smart, it's a real buyer's market, but only if you buy!
TIME FOR A HOUSE CALL 3-30-09
A real estate professional recently coined the term "Price Denial Syndrome," a troublesome condition that afflicts sellers having a hard time facing the realities of today's markets.Of course it's difficult to make a pricing concession, but an overpriced home simply will not sell.
Perhaps the sellers argue that they really need the money, but then they have to ask themselves what they'll do for money if the home doesn't sell.Maybe they figure that they can shoot for the moon now and reduce the price later if they must.However, the longer a property remains unsold, the more likely it is that even more price reductions will follow.Then it's taken even longer to get a sale at a lower price.
Some sellers might suggest trying a higher price just for the first two weeks, but that's when the interest of serious buyers is always greatest.Those buyers usually look within a certain range, and won't even make an offer at all on an overpriced property.
Most importantly, if the sellers need to buy another home, time is of the essence.If the sale takes too long, they'll be buying at a time when prices and interest rates may begin climbing again.
If you're suffering from PDS, pay attention to the news, review your home's Competitive Market Analysis, and call me in the morning!
THE NEW MATH 3-20-09
A "new" solution to the "gloom and doom" scenarios is on the horizon, and it's called "cause and effect."Just as home prices have fallen in many markets, buyers are responding strongly to the stimulus.
Like today's stock market provides excellent opportunities for investors in it "for the long haul," so too does today's real estate climate appeal to buyers with long-term expectations.And, the more buyers take advantage of current conditions, the more prices will eventually begin rising again.
That is due to a number of reasons, one being the subsequent drop in inventories, and another being the rising cost of new construction.So, those markets where home prices have dropped the most are experiencing a rise in the level of home sales taking place.
Areas where buyers are entering the fray again are well poised for recovery, and it's possible that the prices are finally bottoming out.The recently enacted housing stimulus bill is helping too, as over two million first-time buyers are predicted to take advantage of the new tax credit.
In 2009, those markets with affordable housing combined with healthy local economies will continue to see growth.Cause and effect is already in action, and you should be, too.Consult with a financial advisor and a local real estate agent to get the best results from this new but age-old formula.
LOW OFFERS: PREVENTION IS THE CURE 3-16-09
It takes an innovative marketing plan to cause a home to sell, but to attract serious buyers, it must also be priced fairly.What else must be done to successfully sell your home?
Buyers are in search of their dream home.If priced reasonably, they will purchase the home that best reflects their idea of that dream, and it's the sellers who are in charge of making it happen.
Experience has shown that buyers often reduce their offers by as much as $2 for every $1 in uncompleted repairs.Sellers won't have to face those disappointing offers if attention is given to their home before it is ever shown.
The best method for improving buyer appeal is a "walk-through" by the sellers' real estate agent.The agent plays the part of a prospective buyer, and then suggests upgrades, repairs, and cosmetic improvements.
Then the sellers should complete all the work before the home is placed on the market.Neither a prospective buyer, nor another agent, should ever see the home until it is in 100% marketable condition.
Excuses made at a showing are an open invitation to a reduced price.When a buyer is disappointed, no explanation will suffice to bring the price back up.When selling, ask your agent for advice, and then take action.Buyers will often compete for such a good value.
WHY WE SAVED FANNIE AND FREDDIE 3-9-09
Fannie Mae and Freddie Mac - who or what are these entities, and why are they mentioned so often when discussing the current mortgage crunch?These two organizations either own or guarantee nearly half of all outstanding home loans.That's over twelve trillion in debt (that's a 12 followed by 12 zeros, or twelve million million dollars)!
So maybe you can see why the government took over and began overseeing their operations, bringing stability and continued liquidity to the national mortgage market.Both companies are placed in a government conservatorship, with the Fed taking up to an 80% stake.Progress is reviewed each quarter, and money injected into operations as needed.
Since the government is now explicitly backing the loans, the market for these securities is more like that for Treasuries, which lowers rates and benefits the real estate industry enormously.
Lower rates encourage more investors to return to the market.As that happens, rates continue to drop, and more funds go into the lending machine, further encouraging buyers to apply for financing.The result is increased housing sales, which helps to stabilize home prices.
As these companies and the Federal Housing Finance Agency plan a massive overhaul of operations, you can be assured that agents and the National Association of REALTORS® will provide feedback and help shape a better future for our housing industry.
A MORE PROFITABLE ALTERNATIVE 3-2-09
You've probably heard the term "reverse mortgage," which refers to a loan that allows homeowners aged 62 and older to tap the equity in their home, without repaying it.This has become an increasingly popular way for retirees to generate extra income for living expenses and paying off debt.
However, high fees and aggressive sales tactics prompted the Senate Special Committee on Aging to recently issue an investor alert.The intention behind the warning is not to discourage reverse mortgages, but rather to encourage homeowners to make sure it's the right loan product for them.
The biggest downside to such an agreement is that the up-front costs for application, legal fees, document recording, and loan origination fees can sometimes top 10% of the loan's value.For this reason, the federal government requires meeting with a financial counselor prior to applying for a reverse mortgage, helping ensure that it's the best loan product for your situation.
In addition to a financial advisor, you are strongly encouraged to consult with a local real estate agent.Simply put, you might generate more income by selling your home and moving to a less expensive one, directly pocketing the equity you've worked so hard to build over the years.An agent can compare your home's value to other attractive properties on the market, and guide you to a profitable conclusion!
FAST ACTING RELIEF 2-22-09
Our federal government passed the First-time Home Buyer Tax Credit last month, giving buyers reason to get off the fence and into a home. There are just a few requirements, the first being that you haven't owned a home in at least three years.
If so, and you bought a primary residence in the United States last year after April 9, you may claim a credit of up to $7,500 on your 2008 tax return. If you plan to buy this year, then you’re really in luck, because the government has increased the credit to $8,000 on homes purchased during the 2009 calendar year.
While the initial credit for 2008 required repayment in very increments over fifteen years at zero percent interest, the recently passed legislation eliminates the need for repayment entirely, putting $8,000 cash in your pocket.
While the size of the credit may still be renegotiated, it will be figured as a percentage of the home's cost, up to the current maximum of $8,000, with limitations relating to your individual or household income level. At incomes above the limit, you may still claim the credit at a reduced percentage.
This incentive, combined with low rates, large inventories, and affordable prices, should put a home purchase well within your grasp. Get more details from Rhonda Gaskins and begin your search today!
COME TOGETHER! 1-9-2009
Rising real estate inventories are presenting buyers with more options and sellers with more competition. In the center of it all, you'll find the guidance and expertise of real estate agents and brokers. If you price a home reasonably, buyers will buy. If buyers make a reasonable offer, sellers will sell. It really is that simple.
For sellers, pricing is still the biggest factor in a listing's success or failure. Sellers, buyers and real estate agents all stand to lose from an overpriced property.
Likewise, buyers also need to be aware that negotiating skills are more critical now than ever. Contrary to widespread media reports of sellers panicking under the weight of foreclosure, most sellers are in fact in good enough shape to wait for a fair offer.
Buyers and sellers are still coming together in record numbers that would have been unthinkable just ten years ago. What everyone needs now is a big dose of perspective, since most home sales are still taking place for the most traditional of reasons: job relocation, growing families, retirement, or even simply downsizing.
Whether buying or selling, your best insurance for a satisfactory sale or purchase is with the knowledge and skills of a professional representative. If you're unsure about our local market, schedule a cost-free, obligation-free consultation with an agent you know and trust. Then move with confidence!
DON'T COMPARE. . . COMPETE! 1-2-09
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.
AN OCEAN OF OPTIONS! 12-22
As a buyer, you may find yourself drifting on an ocean of financing options. As lenders tighten their requirements, there are a few aspects of the loan application of which you should be aware before applying for a mortgage.
First, determine whether you are seeking "pre-qualification" or "pre-approval." What's the difference? Generally speaking, when you are pre-qualified, the lender reviews your information and hazards a "best guess" as to the size of loan for which you would qualify.
In the pre-approval process, however, the lender verifies everything on your application, and offers to approve a certain amount at a certain interest rate. Either way, the final loan is only cleared upon receipt of an acceptable appraisal, title check, last-minute credit check, and other verifications. Usually, a pre-approval puts you on stronger buying ground.
A critical aspect of your application is your credit score. Excessive credit, like car loans and credit cards, can sometimes prove as unattractive to lenders as bad or no credit, so make sure that you have plenty of credit available before applying, and put off major purchases until after you've bought your home.
Finally, investigate all of your loan options, compare worst-case scenarios, and do your math. If you need guidance, seek it from a local mortgage specialist or real estate agent who is well versed in current market and lending conditions.
IT’S TIME TO GET “REO”! 10-27-2008
What comes around goes around, and bad news for sellers has a flip side for buyers. Those ready to make a purchase can take advantage of some great deals, including “REO” properties. If you're unfamiliar with that term, it simply stands for "Real Estate Owned."
If a bank is forced to foreclose on a property, then the bank owns that real estate, making it “REO.” Of course, banks don't really want to own the home, because it negatively affects their financial status, and they have to pay for taxes, insurance and maintenance on the property.
To avoid losses, banks want to sell these holdings as quickly as possible, making many such properties a very attractive purchase. Where do you begin if you're interested in finding these investments? Many real estate agents and brokers already have relationships with the lenders, and should be able to point you in the right direction and provide both guidance and assistance in your search and purchase offer.
Once you've found a suitable property, however, you'll probably still want to seek the counsel of an attorney who specializes in real estate transactions. As is the case with most purchases, you'll want to be absolutely certain that you'll receive a clean, marketable and insurable title, with no ghosts in the closets.
Ask a trusted agent about the advantages of an REO today!
BRICKS BEAT PAPER!
Yes, there's been trouble in real estate paradise, and no matter the causes, the dramatic results have been experienced across the country.Before assuming that housing is a risky investment, please understand that owning a home offers countless advantages over stocks and other securities.
First, home ownership lets you put in a little money and get the whole house.Money in stocks only buys a very small piece of the company.
You also benefit because the government "bribes" you into buying a home by offering scores of tax write-offs, like mortgage interest, property taxes, depreciation - you may even avoid capital gains taxes.
As homeowner, you're also the sole shareholder!YOU control what to buy and what to pay.YOU choose how to increase value through improvements.Try to exercise that kind of power at a company shareholders meeting of thousands!
Stocks incur risk because they may become worthless.That's extremely unlikely with your home.Even in the worst periods, homes retain most of their value.Fluctuations over a couple years eventually balance.What you haven't heard widely reported is that housing lost value in only ONE year out of the last thirty-five.
But the undeniable advantage of a home over a stock certificate?Quite simply, you can't live, dream, raise a family, and feel secure with only a piece of paper over your heads!
KEEP THE CART BEHIND THE HORSE! 9-22-08
It's probably no surprise that nearly all buyers require financing for their home purchase. The real challenge is not so much in getting the loan as it is in finding the loan that's right for you.
The time to start your loan search is before you begin looking at homes. After you've reviewed your loan options, you'll have a better idea of just how much home you can afford.
Starting early also gives you an edge when you offer to purchase a property, because most contracts will specify that you have to apply for financing within a certain amount of time, usually seven to ten days. Meeting with a lender in advance prevents your having to rush into a loan decision.
You'll also have an advantage with sellers, because an offer to purchase from a pre-approved buyer is more attractive to sellers who won't have to worry about whether you'll qualify for financing. It demonstrates to both you and the sellers that you have the financial strength to complete the purchase on schedule.
Many real estate agents have experience and relationships with local lenders, and can suggest one or more lenders who offer a variety of loans with competitive terms and quality service. Your mortgage is as individual as you are, so take the time early on to match a loan to your particular needs.
READY TO OPEN UP 9-15-08
There's been discussion among professionals in the real estate business for years now regarding the value of holding open houses. The National Association of REALTORS® conducted a survey last year that revealed 80 percent of buyers used the Internet for property searches, but only 42 percent visited open houses. What gives, and are open houses a waste of everyone's time?
The answer varies according to whom you ask, and there are good arguments on both sides. Some agents feel that truly serious buyers do their searching well in advance, and choose to make appointments to see the homes that really excite them.
Other agents have learned that buyers enjoy the freedom of seeing properties without an appointment and without the company of a representative when they visit. Sellers, on the other hand, sometimes expect agents to host open houses to show that they're working hard for their compensation.
Real estate agents often begin developing relationships with buyers through open houses. By learning the needs of particular buyers at an open house, the agent may be able to direct those buyers to another home that's better suited to their needs – perhaps yours!
In a nutshell, both sides can be equally argued, but the sale of your home is as unique as you are. Discuss the potential benefits and deterrents of an open house with your agent.
9-8-08 HELLO, FICO!
You'd have to be living on another planet if you haven’t heard reports of subprime mortgages and their effect on the real estate industry. If you're planning to buy a home, it's apparent that loan qualification these days is more challenging. Sellers also feel the effect from fewer qualified buyers who can make a confident, full price offer.
In preparing a loan application, the most critical factor is usually your FICO score (developed by the Fair Isaac Corporation). You may be aware that your score can range from 300 to 850 points, and that your score affects your terms and interest rate. However, there are some details you may find interesting.
You don't have simply one score, you have three - one from each credit reporting bureau (Equifax, Experian and TransUnion), and each score may differ by as many as 100 points. Your score is formulated from percentages of five different factors: your payment history (35%), your debt (30%), length of your credit history (15%), your credit types (10%), and any newly issued credit (10%).
In order to qualify for a "prime" loan, you'll need a FICO score of at least 620, but you'll get the best terms and interest rate if your score is above 720. Your best bet is to check your scores and reported history well in advance of a planned purchase.
9-1-08 CERTIFY THAT PRE-OWNED HOME!
If you're looking for a competitive edge in the sale of your home, your real estate agent may have an unexpected suggestion. Although many sellers assume that it is the responsibility of the buyers to pay for an inspection, having one performed before you even list your home can go a long way towards attracting a full price offer from confident buyers.
Think about it. If you're aware of flaws and needed repairs before you begin marketing your home, you can correct potential problems before the buyers even have a chance to think about negotiating a lower price for repairs. Sellers can expect an offer that is two dollars less for every dollar in needed improvements, so why would you give away that money when you can save it by simply investing in a pre-listing inspection?
A pre-listing inspection also reduces time and stress before closing, because there's no rushing around trying to get requested repairs done on the buyer's schedule. You're also establishing good will right off the bat, creating an atmosphere of trust and honesty up front.
All of these aspects greatly increase the chances that the buyers will offer full price and follow through to closing without any doubts, delays or picky negotiations. Like a quality used car, giving your home the "Certified Pre-Owned" label will encourage the buyer's seal of approval!
8-25-08 TURNING RENT INTO EQUITY!
Larger home inventories coupled with tougher financing requirements have made it difficult for both sellers and buyers to achieve their respective goals.
In the search for creative solutions, one has recently begun catching on-Rent To Own.
The advantage for buyers is that a portion of your rent payment isput into an escrow account to be used eventually for downpayment on a traditional loan. You can begin building equity before you've even applied for financing! If your credit is less than perfect or you simply haven't the funds available for a significant downpayment, this could be a great opportunity.
Sellers also benefit from receiving income from the tenants and the likelihood that they will purchase the home outright. However, caution must be exercised, and you can protect yourself by seeking the advice and services of a real estate agent. Many agents can even manage the property for you.
Consider who will maintain the property and what percentage of the rent will go towards the downpayment. What will happen if one party wants to back out of the deal or if the renters don't eventually qualify for financing?
These are just a handful of the questions and concerns associated with this otherwise mutually beneficial arrangement. If you're facing challenges as a buyer or seller, consult with an agent today to discuss the possibilities.
Foreclosure is forcing the sale of many homes, putting homeowners in a very stressful and challenging position. While most people think of real estate agents as mediators between buyers and sellers, realty professionals also work with lenders, who are likewise facing challenges.
Financial giant Freddie Mac commissioned a survey, finding that 58 percent of homeowners who are delinquent in their payments didn't know that lenders offer many ways to help. They also didn't realize that free counseling is available for those facing default.
For instance, did you know that a missed payment could be added to your loan balance? Or that you can extend the term of your mortgage? It will take longer to pay off, but it keeps you in your home.
That's another frequently misunderstood point. Banks really don't want to take your home back - they want YOU to keep it and pay for its maintenance and property taxes and so on. Banks are in the business of lending (and making) money, not in maintaining real estate.
While help offered by lenders and assistance organizations can save four out of five homes from foreclosure, the sad fact is that most homeowners simply don't find that help until it's too late.
Please protect your investment and your community's property values by availing yourself of the assistance that's freely available. Don't wait another moment.
While some real estate markets are experiencing increasing listing times and decreasing sales, others are still doing well or even booming. Regardless of which applies, how do you position yourself for a quick, full-price sale? Even in slow markets, some houses sell quite quickly, and it's for the very same reasons that they would in a hot market.
The best performers these days are older homes with three bedrooms and two baths. In addition to those features, they are priced a few thousand dollars below the area's average asking price.
You won’t consider competitive pricing a concession when offers come in more quickly and with less negotiation. Peace of mind and a quick sale are more than worth the difference between your asking price and that of your competition.
The second common denominator among successful sales in slow markets is the fact that the properties show like model homes. Sure, location is critical, but it's condition, condition, condition that helps to set your offering apart from other homes on the market at the same price.
The final factor these sales share? Aggressive marketing by a real estate agent. A professional who shows your home to an already qualified and motivated group of buyers is worth his or her weight in gold at the closing table. Combine price, condition, and marketing for a satisfying sales result!
