Pricing Your Home
Getting the Best Value for Your Home
Getting ready to get into the real-estate market?
Most sellers today are nervous and unsure. They wonder: is taking a loss on our house inevitable?
The answer is no! A strategic sales plan, coupled with a smart buy in your new location will ensure that you recoup the maximum value for your home.
Your Strategic Sales Plan
Consult with an expert, local real estate agent to ensure your house is priced competitively and well-staged. Why? Because while there are always three factors to getting a home sold—location, price, and condition—only two are under your control: price and condition. Of the two, which is more significant? Price. Remember that price will correct bad condition, but condition will never overcome a bad price.
Act fast. You’re in a race against time—the best price you’ll get in today’s market is the one you get now. If you wait, it will be lower. And every month the price on your home decreases, your costs remain the same. For example, Keller Williams research shows that sellers who listed their home at the price the agent originally recommended, sold the home 38 days faster. This is over a month of mortgage and tax payments! For a home that cost $200,000 at time of purchase, with 20 percent down and an interest rate of 6.5 percent, selling a month sooner results in a savings of $1101.31 for the mortgage alone, not including the taxes and insurance that the homeowner would be paying during this time.
Don’t worry about where the market has been, keep your focus on where it is going. The price your neighbor down the street got six months ago is not relevant in a market where your house is competing with others from all across town. Again, a local real estate agent will have the kind of long-term, wide-ranging data that will help you decide how to pinpoint your price with precision.
Your Smart Buy
Move up. Whether you are moving to an area where prices are in a downturn, or dreaming of nicer, bigger, home in your own town, selling your house now can get you into the home of your dreams. Falling home prices are a great opportunity for a savvy homeowner looking to move up. Even though your house price may be lower, the smaller loss at sale can be made up by greater savings at purchase. For example, let’s take that same $200,000 home, and imagine that it has decreased in value by 5 percent, reducing the sales price to $190,000. At the same time, let’s imagine that you would like to move up and the $400,000 home you have been eyeing has also decreased by 5 percent. That’s a savings of $20,000, and it is a home that is likely to be better positioned for appreciation when the market rebounds.
Bottom line: don’t pit yourself against the market, work with the market to get the most out of your house sale
Short Sale Selling
Buying a Foreclosure. Do You Know a Homeowner Facing Foreclosure? Here’s A Way Out.
Headlines today are filled with stories about homeowners in financial distress—people who face a lender’s foreclosure on their home.
Millions of American home owners are wondering what to do.
Like most crises, this one has produced its share of rumors and misinformation. One of the biggest ones is “just let it happen.” Why fight back, this line of thinking goes. It’s too emotionally draining, and the government’s loan modifications aren’t helping many people. Well, that’s only partly true.
While government loan modification programs have fallen short of the mark so far, there is another solid, sensible option for homeowners. It’s called a short sale—a sale to a buyer where the seller’s lender agrees to accept less than the full amount owned.
Why not be foreclosed? Why sell short? Agents who have closed hundreds of these transactions provide this list of reasons:
Avoid the foreclosure stigma – Homeowners will always have to disclose that they had a foreclosure on any mortgage application and (many job applications) that they submit in the future. This can have an adverse affect on their future mortgage rates. Foreclosure is asked about specifically in credit inquiries. There is no seven-year time limit on this item.
Protect credit score – Credit scores will be lowered by 300-plus points (per loan) by foreclosure. The impact of a short sale—about half that much.
Improve eligibility for a government insured loan – The homeowner will be ineligible for a government insured loan for 5-7 years (only two years in a short sale). A foreclosure is the one credit report item that is almost impossible to have repaired.
Avoid a deficiency judgment – Lenders can seek a deficiency judgment against the homeowner and collect any amount they do not recover at sale.
Protect employment prospects – Many employers run credit checks on prospective employees. Foreclosure is one of the top items that will put a potential new hire, or even current employment, in jeopardy.
These are the top reasons, but there are more. An expert short sale specialist agent can give a full picture of the options.
One more tip. Don’t believe everything you read about how long short sales take and how few get finalized. Short sale timelines, while still longer than normal, are shrinking as lenders get their paperwork act together. Find out who the top short sale agents are in your market. These pros are closing 70 to 90 percent of the short sales they represent—more than three times the national average. They know where to find buyers, and how to negotiate the buyer’s offer effectively with lenders and get the deal closed—so the homeowner can move on with life and recover.
Let one of our experienced agents help you today!
Staging Your Home For A Quick Sale
- Rent a storage unit. Deposit all excess junk, furniture, clothing and unnecessary items. Remove 50% of all items from table tops, dressers and counters.
- Clean, clean, clean,— deep clean all bathrooms (including shower surrounds and curtains, re-caulk if necessary), appliances, carpets, walls and windows (inside and out). Clean all light bulbs and light fixtures to brighten the home. Remove all signs of pets and pet odors. Buyers are drawn to spotless homes that smell clean.
- Empty all closets and organize them. The Buyers will feel the home has more room for their belongings.
- Make sure all the blinds are open. Buyers love a lot of light. If some areas of your home are dark add a lamp and leave all the lights on.
- Remove all personal pictures from walls, dressers and mantels. Buyers want to decide where their family portraits will be placed.
- Arrange furniture to give as spacious a feeling as possible. Consider removing furniture from rooms that are too crowded. Remove any furniture that looks old and tattered. Clear the focal point in each room.
- Consider adding fresh or silk flowers, plants or accessories with color to a dining or living area.
- Check for peeling paint or dirty walls. If it needs paint, do it prior to marketing. This includes cabinets, moldings and especially doors and corner lath. Use a Q-tip for all touch ups.
- Kitchen work areas need to be cleared of all appliances and knick knacks. Counter space is very important to most Buyers.
- Clean and polish all woodwork and cabinets. Use a product that will make them look newer and shinier. Use Wood soap to clean and a product like Old English to smooth out scratched wood trim and moldings.
- If marketing in the winter be sure to take a look at your tired yard. Pick up all debris and cut down all of last year plantings. Rake out beds and if the lawn is looking exhausted, rake it too!
- If marketing in good weather hose down outside of house for webs and insects, clear and rake all beds, wash windows and screens. Round-up any weeds in cracks of sidewalks, curbs and driveways. Keep yard mowed and raked at all times. Trim and prune trees and shrubs. Use flowering plants to dress up the yard and patio. Make sure garage door opens easily and opener works smoothly.
- Go into crawl space to check for vapor barrier and no standing water.
I know this feels like a lot of work but it will be worth the effort in the type of offers you receive from Buyers, who appreciate the perfected condition of your home.
How to Choose a Home
Here are some tips to help determine which house is best for you.
Once you’ve settled on a couple of neighborhoods for your search, it’s time to pick out a few homes to view. Your wish list can remind you which features are absolute requirements and which amenities you’d like to have if possible. When narrowing down your home search, consider:
- Types of homes
- Home purchase considerations
- Home comparison chart
- What to do when you’ve found the right home for you
Types of homes
In addition to single family homes (one home per lot), there are other forms of home ownership:
Multifamily homes: Some buyers, particularly first-timers, start with multiple family dwellings, so they’ll have rental income to help with their costs. Many mortgage plans, including VA and FHA loans, can be used for buildings with up to four units, if the buyer intends to occupy one of them.
Condominiums: With a condo, you own “from the plaster in” just as you would a single house. You also own a certain percentage of the “common elements” — staircases, sidewalks, roofs and the like. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowners association administers the development.
Co-ops: In a few cities, cooperative apartments are common. With those, you purchase shares in a corporation that owns the whole building, and you receive a lease to your own apartment. A board of directors supervises management. Monthly charges include your share of an overall mortgage on the building.
Narrow your home search by identifying neighborhoods that are right for you.
When evaluating a neighborhood you should investigate local conditions. Depending on your own particular needs and tastes, some of the following factors may be more important considerations than others:
- quality of schools
- property values
- crime rate
- future construction
- proximity to schools, employment, hospitals, shops, public transportation, prisons, freeways, airports, beaches, parks, stadiums and cultural activities such as museums, concerts and theaters.
Neighborhood search strategies
If you’re a first time-buyer with limited financial resources, it’s wise to buy a home that meets your primary needs in the best neighborhood that fits within your price range. You can maximize your home purchase location by incorporating some of the following strategies into your neighborhood search:
- Look for communities that are likely to become “hot neighborhoods” in the coming years. They can often be discovered on the periphery of the most continuously desirable areas. Look for a home in a good neighborhood that is a bit farther out of the city. If commuting is a concern, purchase a home that is close to public transportation.
- Look at the neighborhood demand by asking your REALTOR® whether multiple offers are being made, whether the gap between the list price and sale price is decreasing, and whether there is active community involvement. You can also drive around neighborhoods and see how many “sale pending” and “sold” signs there are in a particular area.
- Look into purchasing a condominium or co-op, rather than a house, in a desirable neighborhood. This way you still may be able to purchase in a prime area that you otherwise could not afford.
Home purchase considerations
Most buyers’ first consideration, after neighborhoods are chosen, is the number of bedrooms. As you begin to view homes, keep the following purchase and resale considerations in mind:
- Weigh your needs, budget and personal tastes in deciding whether you want a home that’s a newly constructed home, an older home or a home that requires some work — a “fixer-upper.”
- One-bedroom condos are more difficult to resell than two-bedroom ones.
- Two-bedroom/one-bath single houses generally have less appeal than houses with three or more bedrooms, and therefore less appreciation potential.
- Homes with “curb appeal” (a well-maintained, attractive, and charming view-from-the-street appearance) are the easiest to resell.
- When resale is a possibility, don’t buy the most expensive house on the street, or anything that is unusual or unique. The best investment potential is traditionally found in a less expensive, more moderately sized home on the street
When you’ve found the right home
Before you begin the home buying process, resolve to act promptly when you find the right house. Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then revealed that “we always promised my Dad we’d sleep on it, so we’ll make an offer tomorrow.” Many times the story has a sad ending — someone else came in that evening with an offer that was accepted.
Resolve at this point that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or under-priced.
How to Get a Mortgage
Once a simple task that meant comparing fixed rates from among perhaps a dozen or fewer savings and loan companies, the mortgage hunt today is like finding your way through a maze.
There are dozens of loan types and hundreds of loan programs available through thousands of mortgage brokers, bankers, lenders, finance companies, credit unions, even stock brokerage firms.
Contrary to popular belief, finding a mortgage doesn’t begin with an application.
Education is a better first choice. Mortgage information sources are as vast as the number of mortgages available. Web sites, topical newspaper articles, mortgage books, consumer seminars and workshops, financial planners, real estate agents, mortgage brokers and lenders are all available to assist you along the way.
First and foremost, you must determine how your mortgage payment will fit your current budget and, to some extent, your future obligations 15 to 30 years down the road.
If you discover too late that you can’t afford your mortgage, you’ll not only face the possibility of losing the roof over your head, but you could also damage your ability to purchase a home later.
Examine your finances
If you can afford to buy a home, you must then determine how much mortgage you can afford. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which can be more than you can afford.
It’s up to you to take stock of your income and expenses, both current and projected, to determine what you can comfortably manage each month. Along with your mortgage payment, don’t forget related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment.
Shopping for a loan
When you are ready to shop for a loan you have two basic types of mortgage stores to shop — direct lenders and mortgage brokers.
Direct lenders have money to lend. They make the final decision on your application. Brokers are intermediaries who, like you, have many lenders from which to choose. Lenders have a limited number of in-house loans available. Brokers can shop many lenders for each lender’s store of loans. If you have special financing needs and can’t find a lender to suit them, an experienced broker may be able to ferret out the loan you need. Mortgage brokers, however, are paid with a slice of the amount you borrow, some more than others, some less. Internet brokers today perhaps receive the smallest cut, sometimes none at all, and can prove to be a real bargain.
Along with shopping the source, you’ll also have to shop loan costs, including the interest rate, broker fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, application fees, credit report fee, appraisal and a host of others.
Apply for a loan
The application process is the easy part — provided you’ve gathered documents necessary to prove claims you make on the application.
The application will ask for information about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses and others).
The lender will run a credit check on you to take a look at your credit status, but you’ll have to supply additional documentation including paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance, and other documentation. If the lender deems you creditworthy, it will likely hire a professional appraisal to make sure the value of the home you are about to buy is truly worth your loan amount.
For newcomers relocating to Boise there is some great information available from the Boise Chamber of Commerce on making the transition as easy as possible.