7 Keys to Selling Your House When Sales are Slow
What was once a booming residential real estate market across the country has slowed to a trickle.
Interviewing agents
You’ll want to interview at least three real estate agents to determine who will do the best job for you. What you are trying to determine is who has a finger on the pulse of the real estate market, and can offer his or her professional guidance to get your house sold for a reasonable amount. Finding top agents in your hometown is helpful – out-of-town agents may not have the in-depth market knowledge, or the accessibility to motivated buyers.
Ask these questions before listing with an agent:
• How many homes have you sold in the past year?
• How many in the past six months?
• How did the selling price of those homes differ in relation to the list price?
• What do I need to do to the outside of my home to increase curb appeal?
• What do I need to do to the inside of my home to make it more attractive to potential buyers?
• What can I do to make my home sell quickly?
• How many homes like mine are currently for sale in this town? How much are they listed for?
• How will you determine the list price of my home?
Notice the list price question came last. Too often sellers interview agents and list their home with the agent who comes up with the highest price. In a slow market, a price that is the highest may very well mean that your home will languish on the market, resulting in a much lower sales price months down the road. Find the agent who will partner with you to get your house sold in a reasonable amount of time for a reasonable amount of money.
Rising mortgage rates are lowering the affordability of homes and an increase of sellers looking to cash in on the rapid price appreciation over the past few years has led to a dramatic reduction in buyers and a rapid increase in the number of homes for sale. These factors have led to too few buyers looking at too many houses, putting buyers back into the driver’s seat.
It’s a whole new world for home sellers. So, how do you make your house stand out so it will sell when sales are slow?
1. Price your home aggressively. When mortgage rates are low and buyers are chasing too few houses for sale, sellers can ask high prices and get them. Even when houses are overpriced for the market, sellers are likely to receive some offers, as buyers are often desperate to find a home that meets their needs. When things are slow, pricing is absolutely critical. But instead of pricing your home aggressively high, you should consider pricing your home no higher than the middle of the range for homes comparable to yours. And if you need to sell your home quickly, you should consider pricing your home among in the bottom 25 percent of comparable homes. Why? With few buyers chasing many homes, you need to quickly get the attention of those who are serious about buying, If your home is priced too high, you many never get buyers to even consider looking at your home.
2. Quickly cut the price if you don’t get action. Everyone wants to sell their home for as much money as possible. Nobody wants to “give” their home away. But homes that languish on the market in a slow market often are forced to make one price reduction after another, as buyers and real estate agents may begin to question why the home has been on the market for so long. In a slow market with few buyers you may want to cut the price to make the sale more quickly.
3. Finding the right agent is critical. Any agent can list your house. But when buyers are few you need a first-class real estate professional on your side. They’ll help with everything from pricing to advising you on the other 6 points in this article. Finding leading agents who outsell other agents in your home town are the type of professionals you’ll need on your side. Talk with your family, friends, and neighbors to identify the best agents in your area. Interview several – hire the one who you believe will do the best job for you.
4. Curb appeal. After pricing, nothing will bring more potential buyers into your home than a house with outstanding curb appeal. Take a walk down your street with a critical eye. How does your home stack up from the outside? If it doesn’t stand out from the rest then it’s time to get to work.
5. Consider home staging. The quickest way to add home value to a home for sale is a fresh coat of paint. But after you do that, you may want to consider home staging. Either do it yourself or hire an outside firm to do so. A home staging professional will come in and take away some furnishings and rearrange others to make your home show better. When home sales were going gangbusters this was a technique used mostly by those selling high-end homes. When things get slow and homeowners need to sell, more people find home staging professionals to help them prepare their home to make it more appealing to prospective buyers.
6. Fix stuff. The loose railing. The broken pane of glass. The closet door off of its track. The leaky faucet. They all need fixing. If you don’t have the time or skill, find a handyman to go through your home and make repairs. Also, consider replacing the old roof that looks like it might leak, the antique furnace, and the stained rug. When there are few homes on the market, sellers sometimes offer cash at closing to repair the roof or for the stained rug. With so many homes on the market, buyers can afford to only bid on those that are in move-in condition. Fix what needs repair before listing your house.
7. Offer flexible terms. Flexibility is the key now. You’d like to close in two months, but the buyers might be in a hurry and need to close sooner. Find a way to make it happen. You were planning to take the appliances to your new home, but the buyers make a bid near the asking price – including the appliances. Leave the washer and dryer behind (and then go find a store that offers no payments on appliance purchases for a year). And for those items that have deep sentimental value, make sure they are removed prior to any showings. Competition between home sellers is high – you don’t want to lose the only buyer who has looked at your home in a month.
Wednesday, September 15, 2010
Monday, September 6, 2010
Selling Step 7: Moving
Selling Step 7: Moving
Even the smallest home contains a lot of furniture, clothes, kitchen equipment, pictures and other items. For a short move, it may be worthwhile to transport small goods by yourself, but larger items may require a professional mover. Your REALTOR® can give you advice on the moving process.
How Do You Plan a Move?
The time to plan your move begins once you've decided to sell your home. Some of the things you do to prepare your home for sale can actually help with the moving process, e.g., cleaning out closets and the garage, basement and attic.
Your planning will be guided by how far you plan to move:
• Moving locally: If you move yourself you'll need to get moving supplies and organize a van rental.
• Moving a long distance: You'll likely require an interstate mover and the use of a large van.
• Moving internationally: Contact the embassy of the country you’re moving to for information. Be aware that some items that are entirely common at home can be prohibited in foreign countries. Ask about customs protocols, duties and taxes.
Planning is essential: stock up on boxes, packing materials, tape and markers. Always mark boxes so that movers will know where goods should be placed and so you know what’s inside the boxes.
Hiring a Mover
If you need to hire a mover, ask for recommendations from your REALTOR® and friends and associates. There are a number of factors to consider. Money is one issue: you'll want to spend as little as possible, but choosing only on the basis of cost can be a mistake. Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references from past clients who had a similar volume of goods to transport.
Get mover estimates in writing. Be aware that it's possible to get discounts through membership organizations and, sometimes, on the basis of your profession.
Always confirm mover credentials. Movers should be licensed and bonded as required in your state, and employees should have workman's compensation insurance. It’s a good idea to check whether a given mover is approved by the Better Business Bureau - many aren’t.
There is also the question of how many movers to use – usually either 2 or 3. Naturally, 3 movers will cost more, but the time saved might mean that using 3 is more cost effective than using 2, who would take longer. Additionally, it’s good to find out what the minimum number of hours you’ll be charged for, given that this could determine how many movers you use.
Moving Preparation Checklist
Moving is a big job and checklists can make it more organized and easier. Here are some of the major items to consider:
• Yard sale: Get rid of excess furniture and other goods by having a sale before you move.
• Postal: Get mail forwarded to you, and inform important people and companies (bank, insurance, etc.) of your new address.
• Utilities: Prearrange to have utilities cut off at your old home and hooked up at your new home. Check whether there are any deposits that should be returned to you. Also find out what your hook-up fees will be.
• Boxes: Number boxes so that all items can be counted on arrival. Make a list of boxes by number and note their contents.
• Medicine: Keep medicines and related prescriptions in a place where they will be available during the move.
• Children: If you’re moving with children, make sure that children have some of their favorite things - toys, blankets, games, music, etc., - that will keep them happy.
• Pets: If you have pets, bring along food, water dish, carrier and other items your pets will need.
• Money: If you're moving more than a few miles you should have enough cash or credit to cover travel, food, transportation and lodging.
• Valuables: Make sure historical, antique, breakable or valued items get special handling and packaging.
• Important papers: Keep important papers with you so they do not get lost in the move.
• Contact Numbers: Have address books readily available in case you need help.
• E-mail: If you have a laptop computer with a modem, make it accessible during your trip to pick up business and personal e-mail.
Even the smallest home contains a lot of furniture, clothes, kitchen equipment, pictures and other items. For a short move, it may be worthwhile to transport small goods by yourself, but larger items may require a professional mover. Your REALTOR® can give you advice on the moving process.
How Do You Plan a Move?
The time to plan your move begins once you've decided to sell your home. Some of the things you do to prepare your home for sale can actually help with the moving process, e.g., cleaning out closets and the garage, basement and attic.
Your planning will be guided by how far you plan to move:
• Moving locally: If you move yourself you'll need to get moving supplies and organize a van rental.
• Moving a long distance: You'll likely require an interstate mover and the use of a large van.
• Moving internationally: Contact the embassy of the country you’re moving to for information. Be aware that some items that are entirely common at home can be prohibited in foreign countries. Ask about customs protocols, duties and taxes.
Planning is essential: stock up on boxes, packing materials, tape and markers. Always mark boxes so that movers will know where goods should be placed and so you know what’s inside the boxes.
Hiring a Mover
If you need to hire a mover, ask for recommendations from your REALTOR® and friends and associates. There are a number of factors to consider. Money is one issue: you'll want to spend as little as possible, but choosing only on the basis of cost can be a mistake. Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references from past clients who had a similar volume of goods to transport.
Get mover estimates in writing. Be aware that it's possible to get discounts through membership organizations and, sometimes, on the basis of your profession.
Always confirm mover credentials. Movers should be licensed and bonded as required in your state, and employees should have workman's compensation insurance. It’s a good idea to check whether a given mover is approved by the Better Business Bureau - many aren’t.
There is also the question of how many movers to use – usually either 2 or 3. Naturally, 3 movers will cost more, but the time saved might mean that using 3 is more cost effective than using 2, who would take longer. Additionally, it’s good to find out what the minimum number of hours you’ll be charged for, given that this could determine how many movers you use.
Moving Preparation Checklist
Moving is a big job and checklists can make it more organized and easier. Here are some of the major items to consider:
• Yard sale: Get rid of excess furniture and other goods by having a sale before you move.
• Postal: Get mail forwarded to you, and inform important people and companies (bank, insurance, etc.) of your new address.
• Utilities: Prearrange to have utilities cut off at your old home and hooked up at your new home. Check whether there are any deposits that should be returned to you. Also find out what your hook-up fees will be.
• Boxes: Number boxes so that all items can be counted on arrival. Make a list of boxes by number and note their contents.
• Medicine: Keep medicines and related prescriptions in a place where they will be available during the move.
• Children: If you’re moving with children, make sure that children have some of their favorite things - toys, blankets, games, music, etc., - that will keep them happy.
• Pets: If you have pets, bring along food, water dish, carrier and other items your pets will need.
• Money: If you're moving more than a few miles you should have enough cash or credit to cover travel, food, transportation and lodging.
• Valuables: Make sure historical, antique, breakable or valued items get special handling and packaging.
• Important papers: Keep important papers with you so they do not get lost in the move.
• Contact Numbers: Have address books readily available in case you need help.
• E-mail: If you have a laptop computer with a modem, make it accessible during your trip to pick up business and personal e-mail.
Tuesday, August 24, 2010
Selling Step 5:Offers, Counteroffers and Negotiation
Selling Step 5: Offers, Counteroffers and Negotiation
Selling your home involves both business and personal issues: you will have people looking at your house, and buyers presenting offers and counteroffers; and you’ll have to deal with bargaining, negotiating and signing documents.
REALTORS® assist owners in the offer, counteroffer and negotiation process, offering advice and counsel as offers are received and by working closely with legal counsel, tax specialists and inspectors as required.
What is an Offer?
When you put your home on the market, you are essentially making an offer to buyers: for a given number of dollars and other terms they can acquire the home. Buyers, in turn, can respond with several options:
• accept the offer
• decline the offer
• make a counteroffer
The process of making offers varies around the country. Typically, the buyer’s agent will present a written offer to the seller through the seller’s agent. The seller, in turn, may accept the offer, decline it or make a counteroffer.
What is a Counteroffer?
A counteroffer is nothing more than a new offer with different terms. Offers and counteroffers reflect the back-and-forth activity of the marketplace. It's a common, efficient and practical process - but also one that may contain tricky clauses and hidden costs. Because of this, and because counteroffers are common, it's important for buyers to remain in close contact with a REALTOR® during the negotiation process so that any proposed changes can be quickly reviewed.
What is an Acceptable Offer?
The goal of every seller is to have a line of buyers outside the front door, each bringing higher and higher offers. And while this has been known to happen, in most markets there is some balance between the number of buyers and sellers. To determine whether a buyer's offer is acceptable, the seller should consider the following questions:
• Has the buyer accepted the asking price or something close?
• Has the buyer buried thousands of dollars in discounts and seller costs within tiny clauses and contract additions?
• Is there a possible better deal than the buyer's offer? If a home has not attracted an offer in months, then the seller needs to recognize that each month costs are being incurred for mortgage payments, taxes and insurance.
• Do you have enough time to wait for other offers?
• What if no other offers are received?
• What if several offers are received? Do you choose the higher offer from the purchaser with questionable finances who may not be able to close, or a lesser offer from a buyer with preapproved financing?
• What are the contingencies and what time period do they last for if other offers are received?
In each case, the owner - with assistance from a REALTOR® - will need to carefully review offers, consider marketplace options and then determine whether an offer is acceptable.
Contingencies and “Subject to” Clauses
Buyer offers often contain contingencies or “subject to” clauses that must be met before the contract is considered binding. Contingencies can include the following:
• approved financing
• buyer selling an existing home
• satisfactory home inspection report
• test results for environmental factors including radon, mold and water quality
• termite inspections
• easements
• liens
Work with your real estate agent to make sure that any buyer contingencies have a time clause, also called a kick-out clause, which limits the contingency to a short time period (say 12, 24 or 48 hours) should you receive another acceptable offer. This makes sure you are able to pursue other offers without undue restraint.
How Do You Negotiate?
No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of an experienced REALTOR® is clearly evident because he or she knows the community, has seen numerous homes for sale, knows local values and has experience negotiating realty transactions. Also, your agent, from experience, can help you avoid getting locked into a deal that’s likely to fall through because of the prospective buyer’s finances.
Real estate bargaining typically involves compromises by both sides. It's not war; it's not winner-take-all. Instead, negotiating should be seen as a natural business process: buyers should be treated with respect, and owners should never lose sight of either their best interests or their baseline transaction requirements.
There are a lot of considerations, not just price, in making and negotiating offers. This is where the working with an experienced REALTOR® can guide you to a win-win negotiation.
Selling your home involves both business and personal issues: you will have people looking at your house, and buyers presenting offers and counteroffers; and you’ll have to deal with bargaining, negotiating and signing documents.
REALTORS® assist owners in the offer, counteroffer and negotiation process, offering advice and counsel as offers are received and by working closely with legal counsel, tax specialists and inspectors as required.
What is an Offer?
When you put your home on the market, you are essentially making an offer to buyers: for a given number of dollars and other terms they can acquire the home. Buyers, in turn, can respond with several options:
• accept the offer
• decline the offer
• make a counteroffer
The process of making offers varies around the country. Typically, the buyer’s agent will present a written offer to the seller through the seller’s agent. The seller, in turn, may accept the offer, decline it or make a counteroffer.
What is a Counteroffer?
A counteroffer is nothing more than a new offer with different terms. Offers and counteroffers reflect the back-and-forth activity of the marketplace. It's a common, efficient and practical process - but also one that may contain tricky clauses and hidden costs. Because of this, and because counteroffers are common, it's important for buyers to remain in close contact with a REALTOR® during the negotiation process so that any proposed changes can be quickly reviewed.
What is an Acceptable Offer?
The goal of every seller is to have a line of buyers outside the front door, each bringing higher and higher offers. And while this has been known to happen, in most markets there is some balance between the number of buyers and sellers. To determine whether a buyer's offer is acceptable, the seller should consider the following questions:
• Has the buyer accepted the asking price or something close?
• Has the buyer buried thousands of dollars in discounts and seller costs within tiny clauses and contract additions?
• Is there a possible better deal than the buyer's offer? If a home has not attracted an offer in months, then the seller needs to recognize that each month costs are being incurred for mortgage payments, taxes and insurance.
• Do you have enough time to wait for other offers?
• What if no other offers are received?
• What if several offers are received? Do you choose the higher offer from the purchaser with questionable finances who may not be able to close, or a lesser offer from a buyer with preapproved financing?
• What are the contingencies and what time period do they last for if other offers are received?
In each case, the owner - with assistance from a REALTOR® - will need to carefully review offers, consider marketplace options and then determine whether an offer is acceptable.
Contingencies and “Subject to” Clauses
Buyer offers often contain contingencies or “subject to” clauses that must be met before the contract is considered binding. Contingencies can include the following:
• approved financing
• buyer selling an existing home
• satisfactory home inspection report
• test results for environmental factors including radon, mold and water quality
• termite inspections
• easements
• liens
Work with your real estate agent to make sure that any buyer contingencies have a time clause, also called a kick-out clause, which limits the contingency to a short time period (say 12, 24 or 48 hours) should you receive another acceptable offer. This makes sure you are able to pursue other offers without undue restraint.
How Do You Negotiate?
No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of an experienced REALTOR® is clearly evident because he or she knows the community, has seen numerous homes for sale, knows local values and has experience negotiating realty transactions. Also, your agent, from experience, can help you avoid getting locked into a deal that’s likely to fall through because of the prospective buyer’s finances.
Real estate bargaining typically involves compromises by both sides. It's not war; it's not winner-take-all. Instead, negotiating should be seen as a natural business process: buyers should be treated with respect, and owners should never lose sight of either their best interests or their baseline transaction requirements.
There are a lot of considerations, not just price, in making and negotiating offers. This is where the working with an experienced REALTOR® can guide you to a win-win negotiation.
Monday, August 23, 2010
Selling Step 4: Market Your Home
Selling Step 4: Market Your Home
Marketing a home requires a specialized approach because each home is unique, the marketplace is always in flux, interest rates frequently change and new buyers search for homes each day.
In such a dynamic marketplace, you can get best sales results by working with a REALTOR® who can craft marketing plans tailored for individual homes, market conditions and buyers. Experienced REALTORS® base their marketing efforts on extensive training, what has proven successful in previous transactions and ongoing research into industry best practices.
How REALTORS® Can Help You Market Your Home
Selling can entail a variety of marketing strategies. REALTORS® can assist in marketing your home to potential buyers in several ways:
Preparation: Before being placed on the market, homes must be in "show" condition. REALTORS® can explain what repairs and upgrades are required and that are most likely to produce the best results and give the best return on investment.
Pricing: REALTORS® do more than price homes for sale, they also construct sale terms designed to hasten the selling process. It may be, for example, that a home priced at $150,000 with a 2 percent seller credit to the buyer at closing will be far more attractive to purchasers than a home priced at $147,000. Why? That 2 percent credit is worth $3,000 to the purchaser at closing - the time when buyers are most likely strapped for cash.
Marketing: REALTORS® will execute strategies and programs to get the home sold. Typically this includes placement on the local MLS and real estate Web sites, as well as related marketing, advertising and networking. Open houses, office tours, agent access to the home via the use of a lock box and networking with both local and out-of-town agents are also common.
Much of an agent’s work will be quiet and unseen - yet important. The telephone calls, the work with contacts, the follow-ups with open-house visitors, conversations with ad respondents, the Web postings and other outreach efforts are all part of the process required to sell homes.
Open Houses
There are no universal marketing standards for real estate because marketplaces are localized. For instance, open houses may be common in some communities but rarely used in others.
A REALTOR® holding an open house typically advertises that the home will be open for a given period (e.g., 2-5 p.m. on Sunday). During the open period, the REALTOR® hosts the home while the owners leave for a few hours so that buyers will feel comfortable having a good look around the property and asking questions.
The REALTOR® will provide literature, maintain a visitor log and answer questions. By interacting with visitors, the REALTOR® will seek feedback regarding the home and opportunities to follow up with prospective purchasers.
Marketing Your Home on the Internet
Your REALTOR® should advertise your home online. The Internet is a vital marketing tool for home sellers and has two important roles in the real estate selling process.
First, it is a "place" to view real estate 24 hours a day, 7 days a week and all from the comfort of home or office. There are many real estate sites, including individual agent sites, real estate franchise and brokerage sites, and also industry sites.
Second, and equally as important, the Internet offers immediate communication via e-mail and instant messaging and gives REALTORS® and consumers more opportunities to keep in touch.
Marketing your home works best using a combination of marketing strategies, knowing the local market conditions and having contact with buyers and other agents. Working with an experienced REALTOR® gives you valuable expertise in all areas related to marketing your home to buyers.
Marketing a home requires a specialized approach because each home is unique, the marketplace is always in flux, interest rates frequently change and new buyers search for homes each day.
In such a dynamic marketplace, you can get best sales results by working with a REALTOR® who can craft marketing plans tailored for individual homes, market conditions and buyers. Experienced REALTORS® base their marketing efforts on extensive training, what has proven successful in previous transactions and ongoing research into industry best practices.
How REALTORS® Can Help You Market Your Home
Selling can entail a variety of marketing strategies. REALTORS® can assist in marketing your home to potential buyers in several ways:
Preparation: Before being placed on the market, homes must be in "show" condition. REALTORS® can explain what repairs and upgrades are required and that are most likely to produce the best results and give the best return on investment.
Pricing: REALTORS® do more than price homes for sale, they also construct sale terms designed to hasten the selling process. It may be, for example, that a home priced at $150,000 with a 2 percent seller credit to the buyer at closing will be far more attractive to purchasers than a home priced at $147,000. Why? That 2 percent credit is worth $3,000 to the purchaser at closing - the time when buyers are most likely strapped for cash.
Marketing: REALTORS® will execute strategies and programs to get the home sold. Typically this includes placement on the local MLS and real estate Web sites, as well as related marketing, advertising and networking. Open houses, office tours, agent access to the home via the use of a lock box and networking with both local and out-of-town agents are also common.
Much of an agent’s work will be quiet and unseen - yet important. The telephone calls, the work with contacts, the follow-ups with open-house visitors, conversations with ad respondents, the Web postings and other outreach efforts are all part of the process required to sell homes.
Open Houses
There are no universal marketing standards for real estate because marketplaces are localized. For instance, open houses may be common in some communities but rarely used in others.
A REALTOR® holding an open house typically advertises that the home will be open for a given period (e.g., 2-5 p.m. on Sunday). During the open period, the REALTOR® hosts the home while the owners leave for a few hours so that buyers will feel comfortable having a good look around the property and asking questions.
The REALTOR® will provide literature, maintain a visitor log and answer questions. By interacting with visitors, the REALTOR® will seek feedback regarding the home and opportunities to follow up with prospective purchasers.
Marketing Your Home on the Internet
Your REALTOR® should advertise your home online. The Internet is a vital marketing tool for home sellers and has two important roles in the real estate selling process.
First, it is a "place" to view real estate 24 hours a day, 7 days a week and all from the comfort of home or office. There are many real estate sites, including individual agent sites, real estate franchise and brokerage sites, and also industry sites.
Second, and equally as important, the Internet offers immediate communication via e-mail and instant messaging and gives REALTORS® and consumers more opportunities to keep in touch.
Marketing your home works best using a combination of marketing strategies, knowing the local market conditions and having contact with buyers and other agents. Working with an experienced REALTOR® gives you valuable expertise in all areas related to marketing your home to buyers.
Tuesday, August 17, 2010
Selling Step 3: Set the Listing Price
All owners want the best possible price and terms when selling their home. Several factors, including market conditions and interest rates, will determine how much you can get for your home. The idea is to get the maximum price and the best terms during the window of time when your home is on the market.
In other words, home selling is part science, part marketing, part negotiation and part art. Unlike math where 2 + 2 always equals 4, in real estate there is no certain conclusion. All transactions are different, and because of this, you should do as much as possible to prepare your home for sale and engage the REALTOR® you feel is best able to sell your home.
What is Your Home Worth?
What homes are worth boils down to “what the market says it’s worth.” A home “value” also depends on who you ask: there's the price owners would like to get, the price buyers would like to offer and the point of agreement between buyer and seller that actually results in a sale.
In considering home values, several factors are important:
• The value of your home relates to local sale prices. The same home located elsewhere could have a different value.
• Sale prices are a product of supply and demand. If you live in a community with an expanding job base, a growing population and a limited housing supply, you have a seller’s market, and home prices will likely rise. Alternatively, if the local community is losing jobs and people are moving out, then you'll likely have a buyer's market.
• Listing prices should not be inflated. You should be strategic in setting your listing price and be sure not to overprice your home, because you may not be able to sell it. The longer a home is on the market, the more “stale” it gets, and the more likely that buyer agents will tend not to show it and that buyers will think there is something wrong with the home because it is not selling. If you overpriced your home, you many eventually have to bring the price down to even less than what you could’ve got if it was priced properly in the first place. And you will have lost the initial flurry of interest that new listings generate.
• How quickly the owner needs to sell can affect sale values. Owners who " must" sell quickly will have less leverage in the marketplace. Buyers may think that the owner is willing to trade a quick closing for a lower price - and they may be right. Conversely, owners who do not need to sell quickly may have more marketplace strength.
• Sale prices are not based on what owners " need." When an owner says, " I must sell for $300,000 because I need $100,000 in cash to buy my next home," buyers will quickly ask if $300,000 is a reasonable price for the property. If similar homes in the same community are selling for $250,000, the seller will not be able to sell for $300,000.
• Sale prices are NOT the whole deal; look also at terms and conditions. Which would you rather have: a sale price of $200,000, or a sale price of $205,000 but where you agree to make a " seller contribution" of $5,000 to offset the buyer's closing costs, pay a $2,000 allowance for roof repairs, fund two mortgage points, repaint the entire house and leave the washer and dryer?
How Do You Set a Listing Price?
Because all transactions are unique there is price flexibility in the marketplace. The amount of flexibility depends on local conditions.
For example: you're selling a townhouse and there have been five recent sales of the same model townhouse and prices ranged from $200,000 to $210,000. You now have an idea of how your home might be priced. In a strong market perhaps you can ask for $210,000 or a little more. If the market has slowed, $210,000
All owners want the best possible price and terms when selling their home. Several factors, including market conditions and interest rates, will determine how much you can get for your home. The idea is to get the maximum price and the best terms during the window of time when your home is on the market.
In other words, home selling is part science, part marketing, part negotiation and part art. Unlike math where 2 + 2 always equals 4, in real estate there is no certain conclusion. All transactions are different, and because of this, you should do as much as possible to prepare your home for sale and engage the REALTOR® you feel is best able to sell your home.
What is Your Home Worth?
What homes are worth boils down to “what the market says it’s worth.” A home “value” also depends on who you ask: there's the price owners would like to get, the price buyers would like to offer and the point of agreement between buyer and seller that actually results in a sale.
In considering home values, several factors are important:
• The value of your home relates to local sale prices. The same home located elsewhere could have a different value.
• Sale prices are a product of supply and demand. If you live in a community with an expanding job base, a growing population and a limited housing supply, you have a seller’s market, and home prices will likely rise. Alternatively, if the local community is losing jobs and people are moving out, then you'll likely have a buyer's market.
• Listing prices should not be inflated. You should be strategic in setting your listing price and be sure not to overprice your home, because you may not be able to sell it. The longer a home is on the market, the more “stale” it gets, and the more likely that buyer agents will tend not to show it and that buyers will think there is something wrong with the home because it is not selling. If you overpriced your home, you many eventually have to bring the price down to even less than what you could’ve got if it was priced properly in the first place. And you will have lost the initial flurry of interest that new listings generate.
• How quickly the owner needs to sell can affect sale values. Owners who " must" sell quickly will have less leverage in the marketplace. Buyers may think that the owner is willing to trade a quick closing for a lower price - and they may be right. Conversely, owners who do not need to sell quickly may have more marketplace strength.
• Sale prices are not based on what owners " need." When an owner says, " I must sell for $300,000 because I need $100,000 in cash to buy my next home," buyers will quickly ask if $300,000 is a reasonable price for the property. If similar homes in the same community are selling for $250,000, the seller will not be able to sell for $300,000.
• Sale prices are NOT the whole deal; look also at terms and conditions. Which would you rather have: a sale price of $200,000, or a sale price of $205,000 but where you agree to make a " seller contribution" of $5,000 to offset the buyer's closing costs, pay a $2,000 allowance for roof repairs, fund two mortgage points, repaint the entire house and leave the washer and dryer?
How Do You Set a Listing Price?
Because all transactions are unique there is price flexibility in the marketplace. The amount of flexibility depends on local conditions.
For example: you're selling a townhouse and there have been five recent sales of the same model townhouse and prices ranged from $200,000 to $210,000. You now have an idea of how your home might be priced. In a strong market perhaps you can ask for $210,000 or a little more. If the market has slowed, $210,000
Monday, August 16, 2010
Selling a house: Step 2
Selling Step 2: Get a REALTOR® When You Sell a Home
Before placing a home on the market you should identify REALTORS® in your community who can assist with the sale.
Why Use a REALTOR® to Sell Your Home?
REALTORS® are members of the NATIONAL ASSOCIATION OF REALTORS® (NAR) and must adhere to a strict Code of Ethics, and have access to a wide range of classes, seminars and certification opportunities. Local REALTOR® groups are active in community matters, and individual members are routinely involved in neighborhood organizations.
Essentially, local REALTORS® are community experts. They track real estate trends, share neighborhood concerns and participate in local matters. They're good neighbors who are in the business of helping others buy and sell homes.
How Do You Choose a REALTOR®?
Many communities have independent real estate agents and realty brokerages. You can find a local REALTOR® in local advertising; by referrals from other agents, neighbors, lenders, attorneys, financial planners and certified professional accountants; and on the Internet. Recommendations of an agent’s past clients can be valuable.
Most people choose an agent who is a relative or friend, who was referred by a relative or friend, or who was their agent for a previous sale. After that, an agent might be chosen because of a referral by one of the professionals noted above, or from a marketing piece, ad or For Sale sign.
It can be a good idea to interview more than one agent – even three or four – before selecting one to work with. These interviews are a good opportunity to consider such issues as experience, track record, market knowledge, marketing approach, professional network, representation, certification and fees.
What Should You Ask a REALTOR®?
In some cases, sellers elect to meet with only one REALTOR® while other meet with several. Whatever your preference, there are a number of questions you will want to ask, including:
• What services do you offer?
• Do you work alone or with a team or partner? What will your role in the sales process be and what will their roles be?
• What type of representation do you provide? Different states have different forms of representation: some real estate agents represent buyers, some represent sellers, some facilitate transactions as a neutral party, and in some cases different agents in a single firm may represent different parties within a transaction.
• What is your track record?
• What is your market knowledge?
• What kind of professional network do you have?
• What are your certifications/designations?
• What experience do you have in my immediate area?
• In the current market, how long should my home remain listed to get the highest possible price? Because all homes are unique, some will sell faster than others. Several factors can impact the amount of time a home remains on the market, including changing interest rates and local economic trends.
• How would you price my home? Ask about recent home sales and comparable properties currently on the market. If you speak with several real estate agents and their price estimates differ, that's OK, but be sure to ask how their price opinions were determined and why they think your home would sell for a given value.
• How will you market my home? At listing presentations, real estate agents provide a detailed summary of how they market homes, what marketing strategies have worked in the past and which marketing efforts may be effective for your home. Ask your agent which media they use, e.g., Web, flyers, real estate papers, TV, open houses, etc.
• What is your fee? Fees are established in the marketplace and not set by law or regulation. Typically, real estate agents who list homes are compensated on a performance basis, and are not paid unless the home sells under the terms and conditions that are acceptable to the seller.
• What disclosures should I receive? State rules require that real estate agents provide extensive agency disclosure information, usually at the first sit-down meeting.
• Will I be able to get an unconditional release from the listing agreement if for some reason I decide not to sell? A listing agreement is a contract that shows the real estate agent’s obligations and outlines the terms under which your home is being made available for sale. Although the length of the listing agreement negotiable, a 90 day term is common.
What Should You Expect When Working with a REALTOR® to Sell Your Home?
Once your home is listed with a REALTOR®, she or he will immediately begin to market your home according to the most appropriate conventions for your community.
Your REALTOR® should keep you informed as the marketing process unfolds and as expressions of interest are received. In time, the marketing plan may be modified to reflect buyer reactions and changes in the marketplace.
REALTORS® will also help you find any lawyers, inspectors or other professionals needed for your real estate transaction. Your agent will help you understand, evaluate, write and deliver offers and counteroffers.
Your REALTOR®’s expertise and experience is a valuable resource in the complex undertaking of selling a home. Your REALTOR® will help you every step of the way.
Before placing a home on the market you should identify REALTORS® in your community who can assist with the sale.
Why Use a REALTOR® to Sell Your Home?
REALTORS® are members of the NATIONAL ASSOCIATION OF REALTORS® (NAR) and must adhere to a strict Code of Ethics, and have access to a wide range of classes, seminars and certification opportunities. Local REALTOR® groups are active in community matters, and individual members are routinely involved in neighborhood organizations.
Essentially, local REALTORS® are community experts. They track real estate trends, share neighborhood concerns and participate in local matters. They're good neighbors who are in the business of helping others buy and sell homes.
How Do You Choose a REALTOR®?
Many communities have independent real estate agents and realty brokerages. You can find a local REALTOR® in local advertising; by referrals from other agents, neighbors, lenders, attorneys, financial planners and certified professional accountants; and on the Internet. Recommendations of an agent’s past clients can be valuable.
Most people choose an agent who is a relative or friend, who was referred by a relative or friend, or who was their agent for a previous sale. After that, an agent might be chosen because of a referral by one of the professionals noted above, or from a marketing piece, ad or For Sale sign.
It can be a good idea to interview more than one agent – even three or four – before selecting one to work with. These interviews are a good opportunity to consider such issues as experience, track record, market knowledge, marketing approach, professional network, representation, certification and fees.
What Should You Ask a REALTOR®?
In some cases, sellers elect to meet with only one REALTOR® while other meet with several. Whatever your preference, there are a number of questions you will want to ask, including:
• What services do you offer?
• Do you work alone or with a team or partner? What will your role in the sales process be and what will their roles be?
• What type of representation do you provide? Different states have different forms of representation: some real estate agents represent buyers, some represent sellers, some facilitate transactions as a neutral party, and in some cases different agents in a single firm may represent different parties within a transaction.
• What is your track record?
• What is your market knowledge?
• What kind of professional network do you have?
• What are your certifications/designations?
• What experience do you have in my immediate area?
• In the current market, how long should my home remain listed to get the highest possible price? Because all homes are unique, some will sell faster than others. Several factors can impact the amount of time a home remains on the market, including changing interest rates and local economic trends.
• How would you price my home? Ask about recent home sales and comparable properties currently on the market. If you speak with several real estate agents and their price estimates differ, that's OK, but be sure to ask how their price opinions were determined and why they think your home would sell for a given value.
• How will you market my home? At listing presentations, real estate agents provide a detailed summary of how they market homes, what marketing strategies have worked in the past and which marketing efforts may be effective for your home. Ask your agent which media they use, e.g., Web, flyers, real estate papers, TV, open houses, etc.
• What is your fee? Fees are established in the marketplace and not set by law or regulation. Typically, real estate agents who list homes are compensated on a performance basis, and are not paid unless the home sells under the terms and conditions that are acceptable to the seller.
• What disclosures should I receive? State rules require that real estate agents provide extensive agency disclosure information, usually at the first sit-down meeting.
• Will I be able to get an unconditional release from the listing agreement if for some reason I decide not to sell? A listing agreement is a contract that shows the real estate agent’s obligations and outlines the terms under which your home is being made available for sale. Although the length of the listing agreement negotiable, a 90 day term is common.
What Should You Expect When Working with a REALTOR® to Sell Your Home?
Once your home is listed with a REALTOR®, she or he will immediately begin to market your home according to the most appropriate conventions for your community.
Your REALTOR® should keep you informed as the marketing process unfolds and as expressions of interest are received. In time, the marketing plan may be modified to reflect buyer reactions and changes in the marketplace.
REALTORS® will also help you find any lawyers, inspectors or other professionals needed for your real estate transaction. Your agent will help you understand, evaluate, write and deliver offers and counteroffers.
Your REALTOR®’s expertise and experience is a valuable resource in the complex undertaking of selling a home. Your REALTOR® will help you every step of the way.
Thursday, August 12, 2010
Selling Step 1
Selling Step 1: Evaluation: Get Ready to Sell Your Home
Millions of homes are sold each year, and while each transaction is different every seller wants the same thing - the highest price with the least amount of hassle and aggravation.
Home selling is more complex than it used to be. As a seller you need to be aware of a range of issues and deal with many complex forms. You also need to know that buyer agents represent buyers and are working to get the best deal for their buyer clients.
Successfully selling your home requires experience and training in areas such as real estate, marketing, financing, negotiation and closing – this is the very expertise REALTORS® offer.
Know Why You Want to Sell Your Home
First, you should have a clear idea why you want to sell your home.
Selling a home is an important matter and there should be a good reason to sell, such as moving to a new community, needing more space, retiring to a smaller home or moving closer to family. Your reason for selling can impact the negotiating process so it's important to discuss your needs and wants in private with the REALTOR® who lists your home.
To get an idea of whether it’s a seller’s market or a buyer’s market, many people start by looking at online or printed real estate guides to research the current market and the price of comparable properties.
Is Your Home Ready to Be Sold?
The home-selling process typically starts several months before a property is made available for sale. For best results when selling your home, you need to look at your home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.
Ask yourself: “If I were buying this house, what would I want to see?” The goal is to show a home which looks good, maximizes space and attracts as many buyers - and as much demand - as possible.
When Should You Sell?
The marketplace tends to be more active in the spring because parents want their children to be settled and enrolled before the beginning of the school year. Spring is also when most homes are likely to be available.
Generally, the selling market is more active from Labor Day to early December, and then January to about May. Summer and Christmas are usually the slowest times of the year for house sales.
Owners are encouraged to sell when there is a need or desire to sell, the property is ready for sale and the seller has chosen a REALTOR® to work with.
How Do You Improve Your Home's Value?
Ideally, you want to be sure that your property is competitive with other homes available in the community. REALTORS® see many homes and can provide home-improvement suggestions that are consistent with your local marketplace and cost-effective in terms of what you will be able to recoup through the sale.
The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. In terms of improvements, this means you want a home that fits in with the neighborhood but that is not over improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and would likely be more difficult to sell.
Improvements should be made so that the property shows well, is consistent with the neighborhood and does not involve capital investments that cannot be recovered from the sale. Furthermore, improvements should reflect community preferences.
Cosmetic improvements, such as carpeting, paint, wallpaper and landscaping, help a home " show" better and often are good investments. Mechanical repairs, which ensure that all systems and appliances are in good working condition, are required to get a top price.
Prepare yourself to sell your home by evaluating why you want to sell, and when to sell and by improving your home and property to enhance its value to buyers.
Working with an experienced REALTOR® will give you valuable expertise and advice to guide you through the complex process of selling your home.
Millions of homes are sold each year, and while each transaction is different every seller wants the same thing - the highest price with the least amount of hassle and aggravation.
Home selling is more complex than it used to be. As a seller you need to be aware of a range of issues and deal with many complex forms. You also need to know that buyer agents represent buyers and are working to get the best deal for their buyer clients.
Successfully selling your home requires experience and training in areas such as real estate, marketing, financing, negotiation and closing – this is the very expertise REALTORS® offer.
Know Why You Want to Sell Your Home
First, you should have a clear idea why you want to sell your home.
Selling a home is an important matter and there should be a good reason to sell, such as moving to a new community, needing more space, retiring to a smaller home or moving closer to family. Your reason for selling can impact the negotiating process so it's important to discuss your needs and wants in private with the REALTOR® who lists your home.
To get an idea of whether it’s a seller’s market or a buyer’s market, many people start by looking at online or printed real estate guides to research the current market and the price of comparable properties.
Is Your Home Ready to Be Sold?
The home-selling process typically starts several months before a property is made available for sale. For best results when selling your home, you need to look at your home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.
Ask yourself: “If I were buying this house, what would I want to see?” The goal is to show a home which looks good, maximizes space and attracts as many buyers - and as much demand - as possible.
When Should You Sell?
The marketplace tends to be more active in the spring because parents want their children to be settled and enrolled before the beginning of the school year. Spring is also when most homes are likely to be available.
Generally, the selling market is more active from Labor Day to early December, and then January to about May. Summer and Christmas are usually the slowest times of the year for house sales.
Owners are encouraged to sell when there is a need or desire to sell, the property is ready for sale and the seller has chosen a REALTOR® to work with.
How Do You Improve Your Home's Value?
Ideally, you want to be sure that your property is competitive with other homes available in the community. REALTORS® see many homes and can provide home-improvement suggestions that are consistent with your local marketplace and cost-effective in terms of what you will be able to recoup through the sale.
The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. In terms of improvements, this means you want a home that fits in with the neighborhood but that is not over improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and would likely be more difficult to sell.
Improvements should be made so that the property shows well, is consistent with the neighborhood and does not involve capital investments that cannot be recovered from the sale. Furthermore, improvements should reflect community preferences.
Cosmetic improvements, such as carpeting, paint, wallpaper and landscaping, help a home " show" better and often are good investments. Mechanical repairs, which ensure that all systems and appliances are in good working condition, are required to get a top price.
Prepare yourself to sell your home by evaluating why you want to sell, and when to sell and by improving your home and property to enhance its value to buyers.
Working with an experienced REALTOR® will give you valuable expertise and advice to guide you through the complex process of selling your home.
How to Set a List Price for Your Home
How to Set a List Price for Your Home
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, your REALTOR® will help you set your list price based on:
• pricing considerations
• comparable sales
• market conditions
• offering incentives
• estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your REALTOR® to "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
TIP: Never say "asking" price, which implies you don't expect to get it.
Price Against Comparable Sales in Your Neighborhood
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA): The list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a "Comparative Market Analysis" (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal: A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is it a Buyer’s Market or a Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
Your REALTOR® can tell you whether your area is currently in a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set a Schedule for Lowering the Price
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR® and work out an advance schedule for lowering the price if need be.
If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Offering Incentives to Hasten a Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution.
If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
• payoff figure on your present loan(s)
• broker's commission
• prepayment penalty on your mortgage
• attorney's fees
• unpaid property taxes
Buyer’s/Seller’s Costs: Additionally, your REALTOR® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
• title insurance premium
• transfer taxes
• survey fees
• inspections and repairs for termites, etc.
• recording fees
• Homeowner Association transfer fees and document preparation
• home protection plan
• natural hazard disclosure report
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your REALTOR® will assist you in estimating what your final closing costs will be.
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, your REALTOR® will help you set your list price based on:
• pricing considerations
• comparable sales
• market conditions
• offering incentives
• estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your REALTOR® to "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
TIP: Never say "asking" price, which implies you don't expect to get it.
Price Against Comparable Sales in Your Neighborhood
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA): The list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a "Comparative Market Analysis" (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal: A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is it a Buyer’s Market or a Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
Your REALTOR® can tell you whether your area is currently in a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set a Schedule for Lowering the Price
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR® and work out an advance schedule for lowering the price if need be.
If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Offering Incentives to Hasten a Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution.
If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
• payoff figure on your present loan(s)
• broker's commission
• prepayment penalty on your mortgage
• attorney's fees
• unpaid property taxes
Buyer’s/Seller’s Costs: Additionally, your REALTOR® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
• title insurance premium
• transfer taxes
• survey fees
• inspections and repairs for termites, etc.
• recording fees
• Homeowner Association transfer fees and document preparation
• home protection plan
• natural hazard disclosure report
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your REALTOR® will assist you in estimating what your final closing costs will be.
Wednesday, August 11, 2010
Understanding Capital Gains in Real Estate
Understanding Capital Gains in Real Estate
When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
• Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
• Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
• Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home’s adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
• You have lived in the home as your principal residence for two out of the last five years.
• You have not sold or exchanged another home during the two years preceding the sale.
• You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
• Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
• Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
• Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home’s adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
• You have lived in the home as your principal residence for two out of the last five years.
• You have not sold or exchanged another home during the two years preceding the sale.
• You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
Monday, August 9, 2010
How to Choose a Neighborhood for Your Home Search
How to Choose a Neighborhood for Your Home Search
Narrow your home search by identifying neighborhoods that are right for you. This helps keep your search focused and efficient. Your local REALTOR® can offer neighborhood information to guide you in your search.
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
• traffic
• crime rate
• future construction
• proximity to schools, employment, hospitals, shops, public transportation, prisons, freeways, airports, beaches, parks, stadiums and cultural centers such as museums and theaters
Neighborhood Search Strategies for Limited Budgets
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:
• Upcoming neighborhoods: 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.
Check for planned future development such as additional transit; new community services such as pools and theatres; and chain stores planning to move in.
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.
• Neighborhood demand: Look at the neighborhood demand by asking your real estate agent 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.
• Co-ownership: 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.
Narrow your home search by identifying neighborhoods that are right for you. This helps keep your search focused and efficient. Your local REALTOR® can offer neighborhood information to guide you in your search.
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
• traffic
• crime rate
• future construction
• proximity to schools, employment, hospitals, shops, public transportation, prisons, freeways, airports, beaches, parks, stadiums and cultural centers such as museums and theaters
Neighborhood Search Strategies for Limited Budgets
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:
• Upcoming neighborhoods: 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.
Check for planned future development such as additional transit; new community services such as pools and theatres; and chain stores planning to move in.
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.
• Neighborhood demand: Look at the neighborhood demand by asking your real estate agent 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.
• Co-ownership: 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.
Friday, August 6, 2010
The Basics of Making an Offer
The Basics of Making an Offer
A written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.
REALTORS® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. Your REALTOR® will guide you through the offer, counteroffer, negotiating and closing processes. In many states certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.
If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent, by the seller's real estate agent, if that's a different agent, or often by the two together. In a few areas, sales contracts are drawn up by the parties' lawyers.
What is in an Offer?
The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement or deposit receipt). So it's important that the purchase offer contains all the items that will serve as a "blueprint for the final sale." The purchase offer includes items such as:
• address and the legal description of the property
• sale price
• terms: for example, all cash or subject to you obtaining a mortgage for a given amount
• seller's promise to provide clear title (ownership)
• target date for closing (the actual sale)
• amount of earnest money deposit accompanying the offer, whether it's a check, cash or promissory note, and how it's to be returned to you if the offer is rejected - or kept as damages if you later back out for no good reason
• method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
• provisions about who will pay for title insurance, survey, termite inspections, etc.
• type of deed to be given
• other requirements specific to your state, which might include a chance for an attorney to review the contract, disclosure of specific environmental hazards or other state-specific clauses
• a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
• a time limit (preferably short) after which the offer will expire
• contingencies, which are an extremely important matter and that are discussed in detail below
Contingencies - “Subject to” Clauses
If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. Here are two common contingencies contained in a purchase offer:
• The buyer obtaining specific financing from a lending institution: If the loan can't be found, the buyer won't be bound by the contract.
• A satisfactory report by a home inspector: for example, "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.
Negotiating Tips
You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:
• you're an all-cash buyer
• you're already have a preapproved mortgage and you don't have a present house that has to be sold before you can afford to buy
• you’re able to close and take possession at a time that is especially convenient for the seller
In these circumstances, you may be able to negotiate some discount from the listed price.
On the other hand, in a "hot" seller's market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.
It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:
• every month a vacant house remains unsold represents considerable extra expense for the seller
• if the sellers are divorcing, they may want to sell quickly
• estate sales often yield a bargain in return for a prompt deal
Earnest Money
This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A real estate agent or an attorney usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.
Buyers: the Seller's Response to Your Offer
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that's that - the sellers could not later change their minds and hold you to it.
If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, "We accept the counteroffer with the higher price, except that we still insist on having the pool table."
Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.
Buyers: Withdrawing an Offer
Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit or find yourself being sued for damages the seller may have suffered by relying on your actions.
Sellers: Calculating Your Net Proceeds
When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response) or make a counteroffer to the buyers with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you'll walk away with when the transaction is complete. For example, when you're presented with two offers at the same time, you may discover you're better off accepting the one with the lower sale price if the other asks you to pay points to the buyer's lending institution.
Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you can subtract the following costs:
• payoff amount on present mortgage
• any other liens (equity loan, judgments)
• broker's commission
• legal costs of selling (attorney, escrow agent)
• transfer taxes
• unpaid property taxes and water and other utility bills
• if required by the contract: cost of survey, termite inspection, buyer's closing costs, repairs, etc.
Your present mortgage lender may maintain an escrow account into which you deposit money to be used for property tax bills and homeowner's insurance. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.
Sellers: Counteroffers
When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer is free to walk away. Any change you make in a counteroffer puts you at risk of losing that chance to sell.
Who pays for what items is often determined by local custom. You can, however, negotiate with the buyer any agreement you want about who pays for the following costs:
• termite inspection
• survey
• buyer's closing costs
• points paid to the buyer's lender
• buyer's broker fees
• repairs required by the lender
• home protection policy
You may feel some of these costs are none of your business, but many buyers - particularly first-timer buyers - are short of cash. Helping them may be the best way to get your home sold.
A written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.
REALTORS® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. Your REALTOR® will guide you through the offer, counteroffer, negotiating and closing processes. In many states certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.
If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent, by the seller's real estate agent, if that's a different agent, or often by the two together. In a few areas, sales contracts are drawn up by the parties' lawyers.
What is in an Offer?
The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement or deposit receipt). So it's important that the purchase offer contains all the items that will serve as a "blueprint for the final sale." The purchase offer includes items such as:
• address and the legal description of the property
• sale price
• terms: for example, all cash or subject to you obtaining a mortgage for a given amount
• seller's promise to provide clear title (ownership)
• target date for closing (the actual sale)
• amount of earnest money deposit accompanying the offer, whether it's a check, cash or promissory note, and how it's to be returned to you if the offer is rejected - or kept as damages if you later back out for no good reason
• method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
• provisions about who will pay for title insurance, survey, termite inspections, etc.
• type of deed to be given
• other requirements specific to your state, which might include a chance for an attorney to review the contract, disclosure of specific environmental hazards or other state-specific clauses
• a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
• a time limit (preferably short) after which the offer will expire
• contingencies, which are an extremely important matter and that are discussed in detail below
Contingencies - “Subject to” Clauses
If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. Here are two common contingencies contained in a purchase offer:
• The buyer obtaining specific financing from a lending institution: If the loan can't be found, the buyer won't be bound by the contract.
• A satisfactory report by a home inspector: for example, "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.
Negotiating Tips
You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:
• you're an all-cash buyer
• you're already have a preapproved mortgage and you don't have a present house that has to be sold before you can afford to buy
• you’re able to close and take possession at a time that is especially convenient for the seller
In these circumstances, you may be able to negotiate some discount from the listed price.
On the other hand, in a "hot" seller's market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.
It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:
• every month a vacant house remains unsold represents considerable extra expense for the seller
• if the sellers are divorcing, they may want to sell quickly
• estate sales often yield a bargain in return for a prompt deal
Earnest Money
This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A real estate agent or an attorney usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.
Buyers: the Seller's Response to Your Offer
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that's that - the sellers could not later change their minds and hold you to it.
If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, "We accept the counteroffer with the higher price, except that we still insist on having the pool table."
Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.
Buyers: Withdrawing an Offer
Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit or find yourself being sued for damages the seller may have suffered by relying on your actions.
Sellers: Calculating Your Net Proceeds
When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response) or make a counteroffer to the buyers with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you'll walk away with when the transaction is complete. For example, when you're presented with two offers at the same time, you may discover you're better off accepting the one with the lower sale price if the other asks you to pay points to the buyer's lending institution.
Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you can subtract the following costs:
• payoff amount on present mortgage
• any other liens (equity loan, judgments)
• broker's commission
• legal costs of selling (attorney, escrow agent)
• transfer taxes
• unpaid property taxes and water and other utility bills
• if required by the contract: cost of survey, termite inspection, buyer's closing costs, repairs, etc.
Your present mortgage lender may maintain an escrow account into which you deposit money to be used for property tax bills and homeowner's insurance. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.
Sellers: Counteroffers
When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer is free to walk away. Any change you make in a counteroffer puts you at risk of losing that chance to sell.
Who pays for what items is often determined by local custom. You can, however, negotiate with the buyer any agreement you want about who pays for the following costs:
• termite inspection
• survey
• buyer's closing costs
• points paid to the buyer's lender
• buyer's broker fees
• repairs required by the lender
• home protection policy
You may feel some of these costs are none of your business, but many buyers - particularly first-timer buyers - are short of cash. Helping them may be the best way to get your home sold.
Thursday, August 5, 2010
Five Smart Reasons to Buy a Home Now
Five Smart Reasons to Buy a Home Now
The economy is stabilizing. Home prices are holding. It's not just as good a time as ever to buy a house. It's one of the best times ever.
ForSaleByOwner.com presents five overlooked reasons why now is a great time to buy a house.
1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they have a little give to absorb a few ups and downs as the still-recovering housing market gains traction.
2. Houses are in move-in condition. Homeowners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. Homeowners who have been holding back kept their houses in good shape while they waited. As those houses enter the market, they are in marked contrast to tattered foreclosures.
3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system – and this is just the opportunity that owners of many desirable properties have been waiting for.
4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines...again. Now that appraisers have more flexibility to set values that reflect the current market, today's deals will make it over the finish line.
5. Plenty of programs. Homes are more affordable than they have been for years, but communities have stuck by "workforce housing" programs that encourage middle-class families to buy houses. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates
The economy is stabilizing. Home prices are holding. It's not just as good a time as ever to buy a house. It's one of the best times ever.
ForSaleByOwner.com presents five overlooked reasons why now is a great time to buy a house.
1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they have a little give to absorb a few ups and downs as the still-recovering housing market gains traction.
2. Houses are in move-in condition. Homeowners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. Homeowners who have been holding back kept their houses in good shape while they waited. As those houses enter the market, they are in marked contrast to tattered foreclosures.
3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system – and this is just the opportunity that owners of many desirable properties have been waiting for.
4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines...again. Now that appraisers have more flexibility to set values that reflect the current market, today's deals will make it over the finish line.
5. Plenty of programs. Homes are more affordable than they have been for years, but communities have stuck by "workforce housing" programs that encourage middle-class families to buy houses. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates
Take Charge When Buying a Home
Take Charge When Buying a Home
If you approach the home buying process intelligently and with confidence, you are much more likely to buy a house you'll be proud to call home.
Approaching the task of buying a home can be overwhelming; there's so much to consider:
• How much house can I afford?
• How can I find the best loan?
• Where will I come up with a down payment, and how much will I need?
• Should I buy a new or resale home, and which will go up in value?
• Should I work with an agent or look at homes on my own?
And these questions are just the beginning. Buying a home is one of the largest financial transactions in your lifetime - do your research so you know what you’re doing.
Here are the two most important things to remember no matter where you are on the road to home ownership:
1. You can and should understand everything that is happening in the home buying process.
There is nothing that is so complex that it can't be easily explained to anyone with average intelligence. Just because you don't apply for a thirty year mortgage once a week doesn't mean you have to take the first one that comes along. You'll need to learn some new terms, apply some new concepts and take the time to understand what you're getting into.
If, at any point, something happens that doesn't make sense to you, simply demand a full and complete explanation. If it still doesn't make sense, seek help from someone you trust like your CPA, your banker or maybe an online real estate columnist.
2. In the world of real estate sales, YOU are the most important person in the entire process.
It's easy to think that everyone else carries more weight than you. The agent talks fast and has an answer for everything. The lender may decline your loan application, and on and on.
But the truth is that you, the buyer, are the one person in the transaction that makes it all happen. If you decide to not buy, the entire process comes to a grinding halt.
So flex your consumer muscle and take command of this process. Surround yourself with a team of professionals that you have confidence in and make them work for you.
Approach home buying with intelligence and confidence, and by doing your homework, and you are more likely to buy a house you’re happy with and to know that you made the right decision.
If you approach the home buying process intelligently and with confidence, you are much more likely to buy a house you'll be proud to call home.
Approaching the task of buying a home can be overwhelming; there's so much to consider:
• How much house can I afford?
• How can I find the best loan?
• Where will I come up with a down payment, and how much will I need?
• Should I buy a new or resale home, and which will go up in value?
• Should I work with an agent or look at homes on my own?
And these questions are just the beginning. Buying a home is one of the largest financial transactions in your lifetime - do your research so you know what you’re doing.
Here are the two most important things to remember no matter where you are on the road to home ownership:
1. You can and should understand everything that is happening in the home buying process.
There is nothing that is so complex that it can't be easily explained to anyone with average intelligence. Just because you don't apply for a thirty year mortgage once a week doesn't mean you have to take the first one that comes along. You'll need to learn some new terms, apply some new concepts and take the time to understand what you're getting into.
If, at any point, something happens that doesn't make sense to you, simply demand a full and complete explanation. If it still doesn't make sense, seek help from someone you trust like your CPA, your banker or maybe an online real estate columnist.
2. In the world of real estate sales, YOU are the most important person in the entire process.
It's easy to think that everyone else carries more weight than you. The agent talks fast and has an answer for everything. The lender may decline your loan application, and on and on.
But the truth is that you, the buyer, are the one person in the transaction that makes it all happen. If you decide to not buy, the entire process comes to a grinding halt.
So flex your consumer muscle and take command of this process. Surround yourself with a team of professionals that you have confidence in and make them work for you.
Approach home buying with intelligence and confidence, and by doing your homework, and you are more likely to buy a house you’re happy with and to know that you made the right decision.
Wednesday, August 4, 2010
Short Sale or not ?
TO SHORT SALE OR NOT TO
SHORT SALE?
TO BUY OR NOT TO BUY A
SHORT SALE?
Those are the questions!
Many people are curious about a short sale and the process involved in either selling a home via a short sale or buying a short sale home. There are advantages and disadvantages to both.
What is a short sale? A short sale is a process that a seller uses to sell their home when the market value of the home is considerably less than the loan balance the seller owes on the property. It is a process whereby the lender agrees to accept less then what is owed on the property and allow the home to be sold to a new buyer. This is very common today in the Portland metro market area and most other cities across the country right now.
Unfortunately, the process can be very frustrating and annoying for both buyers and sellers due to the fact most lenders take their time in evaluating and negotiating a short sale. It is a long and daunting process. However, if you have a skilled real estate agent helping you then the process can be a much more comfortable journey.
Here are some common questions and answers concerning short sales.
How long does a short sale usually take?
This depends greatly on who is the lender, their specific process and if there is only one lender or multiple lenders associated with the home. Typical short sales take anywhere from 90 days to as much as 6 months or even a year in some extreme cases. This can be extremely frustrating for a buyer to try and wait for a decision from the lender or lenders.
Why is the property still listed as active on the market if a buyer and seller have an accepted offer on the property and are waiting for the bank to approve the short sale?
90% of the time the first buyer who puts in an offer on a short sale usually finds another property that is not a short sale and will back out of the transaction prior to the bank making a decision. This is very common because most buyers want to purchase a home within 30 days or so and have a hard time waiting for the bank. A good listing agent will continue to market the property and get 2 or 3 back up offers on the property to ensure there is a ready and able buyer to close on the property once the bank makes their decision. It is very common for the 2nd offer or 3rd offer to have the choice in purchasing the home. A good buyer's agent will help most buyers that have an accepted offer on a short sale continue to look at other homes that are not short sales in case they find another property they like better and can close sooner.
What price can a buyer expect to pay for a short sale property?
Overall, you can expect to get a small discount below market value of other properties that are not short sales. During the short sale process banks will send out either an experienced real estate agent or an appraiser to get a BPO (Broker's Opinion of Value) or an appraisal on the property. This value is close to what the realistic market value of the property is as of the date of the report. The bank will then use that information to decide what price they are willing to accept on a short sale. Typically, most banks will allow a small discount below the market value of the property because they are saving costs if they receive a payoff on the home now rather then wait for the foreclosure process to gain control of the home. Once the bank makes a decision they will either accept the offer or make a counter offer to the buyer's offer. If the buyer does not accept the bank's counter offer then the listing agent will go to the backup offers and see if they want to proceed and if not then he or she will put the property back on the market knowing exactly what price the bank will accept. It is usually a very short time after that when a new offer will come in at exactly what the bank wants for the home. Short sales with an approved price from the bank go very quickly because they are usually a little under the real market value of the property and no more decision time is needed from the bank.
Do most lenders allow a short sale or is a foreclosure more common?
Most lenders will accept a short sale. A very good listing agent can get the foreclosure date postponed during the short sale negotiation process. As long as the offer is realistic in terms of what the actual market value of the property is then most short sales end up selling to one buyer or another.
Should I consider buying a short sale or selling my home on a short sale?
This depends on your specific circumstances and your real estate goals. An experienced agent in short sales can help you discuss all of the advantages and disadvantages and the options available to you. For more information please visit : http://catanarealestate.sef.mlxchange.com and let us know your desire to learn more or feel free to share your situation with us so we can discuss your options in more detail.
SHORT SALE?
TO BUY OR NOT TO BUY A
SHORT SALE?
Those are the questions!
Many people are curious about a short sale and the process involved in either selling a home via a short sale or buying a short sale home. There are advantages and disadvantages to both.
What is a short sale? A short sale is a process that a seller uses to sell their home when the market value of the home is considerably less than the loan balance the seller owes on the property. It is a process whereby the lender agrees to accept less then what is owed on the property and allow the home to be sold to a new buyer. This is very common today in the Portland metro market area and most other cities across the country right now.
Unfortunately, the process can be very frustrating and annoying for both buyers and sellers due to the fact most lenders take their time in evaluating and negotiating a short sale. It is a long and daunting process. However, if you have a skilled real estate agent helping you then the process can be a much more comfortable journey.
Here are some common questions and answers concerning short sales.
How long does a short sale usually take?
This depends greatly on who is the lender, their specific process and if there is only one lender or multiple lenders associated with the home. Typical short sales take anywhere from 90 days to as much as 6 months or even a year in some extreme cases. This can be extremely frustrating for a buyer to try and wait for a decision from the lender or lenders.
Why is the property still listed as active on the market if a buyer and seller have an accepted offer on the property and are waiting for the bank to approve the short sale?
90% of the time the first buyer who puts in an offer on a short sale usually finds another property that is not a short sale and will back out of the transaction prior to the bank making a decision. This is very common because most buyers want to purchase a home within 30 days or so and have a hard time waiting for the bank. A good listing agent will continue to market the property and get 2 or 3 back up offers on the property to ensure there is a ready and able buyer to close on the property once the bank makes their decision. It is very common for the 2nd offer or 3rd offer to have the choice in purchasing the home. A good buyer's agent will help most buyers that have an accepted offer on a short sale continue to look at other homes that are not short sales in case they find another property they like better and can close sooner.
What price can a buyer expect to pay for a short sale property?
Overall, you can expect to get a small discount below market value of other properties that are not short sales. During the short sale process banks will send out either an experienced real estate agent or an appraiser to get a BPO (Broker's Opinion of Value) or an appraisal on the property. This value is close to what the realistic market value of the property is as of the date of the report. The bank will then use that information to decide what price they are willing to accept on a short sale. Typically, most banks will allow a small discount below the market value of the property because they are saving costs if they receive a payoff on the home now rather then wait for the foreclosure process to gain control of the home. Once the bank makes a decision they will either accept the offer or make a counter offer to the buyer's offer. If the buyer does not accept the bank's counter offer then the listing agent will go to the backup offers and see if they want to proceed and if not then he or she will put the property back on the market knowing exactly what price the bank will accept. It is usually a very short time after that when a new offer will come in at exactly what the bank wants for the home. Short sales with an approved price from the bank go very quickly because they are usually a little under the real market value of the property and no more decision time is needed from the bank.
Do most lenders allow a short sale or is a foreclosure more common?
Most lenders will accept a short sale. A very good listing agent can get the foreclosure date postponed during the short sale negotiation process. As long as the offer is realistic in terms of what the actual market value of the property is then most short sales end up selling to one buyer or another.
Should I consider buying a short sale or selling my home on a short sale?
This depends on your specific circumstances and your real estate goals. An experienced agent in short sales can help you discuss all of the advantages and disadvantages and the options available to you. For more information please visit : http://catanarealestate.sef.mlxchange.com and let us know your desire to learn more or feel free to share your situation with us so we can discuss your options in more detail.
Short Sale or not
TO SHORT SALE OR NOT TO
SHORT SALE?
TO BUY OR NOT TO BUY A
SHORT SALE?
Those are the questions!
Many people are curious about a short sale and the process involved in either selling a home via a short sale or buying a short sale home. There are advantages and disadvantages to both.
What is a short sale? A short sale is a process that a seller uses to sell their home when the market value of the home is considerably less than the loan balance the seller owes on the property. It is a process whereby the lender agrees to accept less then what is owed on the property and allow the home to be sold to a new buyer. This is very common today in the Portland metro market area and most other cities across the country right now.
Unfortunately, the process can be very frustrating and annoying for both buyers and sellers due to the fact most lenders take their time in evaluating and negotiating a short sale. It is a long and daunting process. However, if you have a skilled real estate agent helping you then the process can be a much more comfortable journey.
Here are some common questions and answers concerning short sales.
How long does a short sale usually take?
This depends greatly on who is the lender, their specific process and if there is only one lender or multiple lenders associated with the home. Typical short sales take anywhere from 90 days to as much as 6 months or even a year in some extreme cases. This can be extremely frustrating for a buyer to try and wait for a decision from the lender or lenders.
Why is the property still listed as active on the market if a buyer and seller have an accepted offer on the property and are waiting for the bank to approve the short sale?
90% of the time the first buyer who puts in an offer on a short sale usually finds another property that is not a short sale and will back out of the transaction prior to the bank making a decision. This is very common because most buyers want to purchase a home within 30 days or so and have a hard time waiting for the bank. A good listing agent will continue to market the property and get 2 or 3 back up offers on the property to ensure there is a ready and able buyer to close on the property once the bank makes their decision. It is very common for the 2nd offer or 3rd offer to have the choice in purchasing the home. A good buyer's agent will help most buyers that have an accepted offer on a short sale continue to look at other homes that are not short sales in case they find another property they like better and can close sooner.
What price can a buyer expect to pay for a short sale property?
Overall, you can expect to get a small discount below market value of other properties that are not short sales. During the short sale process banks will send out either an experienced real estate agent or an appraiser to get a BPO (Broker's Opinion of Value) or an appraisal on the property. This value is close to what the realistic market value of the property is as of the date of the report. The bank will then use that information to decide what price they are willing to accept on a short sale. Typically, most banks will allow a small discount below the market value of the property because they are saving costs if they receive a payoff on the home now rather then wait for the foreclosure process to gain control of the home. Once the bank makes a decision they will either accept the offer or make a counter offer to the buyer's offer. If the buyer does not accept the bank's counter offer then the listing agent will go to the backup offers and see if they want to proceed and if not then he or she will put the property back on the market knowing exactly what price the bank will accept. It is usually a very short time after that when a new offer will come in at exactly what the bank wants for the home. Short sales with an approved price from the bank go very quickly because they are usually a little under the real market value of the property and no more decision time is needed from the bank.
Do most lenders allow a short sale or is a foreclosure more common?
Most lenders will accept a short sale. A very good listing agent can get the foreclosure date postponed during the short sale negotiation process. As long as the offer is realistic in terms of what the actual market value of the property is then most short sales end up selling to one buyer or another.
Should I consider buying a short sale or selling my home on a short sale?
This depends on your specific circumstances and your real estate goals. An experienced agent in short sales can help you discuss all of the advantages and disadvantages and the options available to you. For more information please visit : http://catanarealestate.sef.mlxchange.com and let us know your desire to learn more or feel free to share your situation with us so we can discuss your options in more detail.
SHORT SALE?
TO BUY OR NOT TO BUY A
SHORT SALE?
Those are the questions!
Many people are curious about a short sale and the process involved in either selling a home via a short sale or buying a short sale home. There are advantages and disadvantages to both.
What is a short sale? A short sale is a process that a seller uses to sell their home when the market value of the home is considerably less than the loan balance the seller owes on the property. It is a process whereby the lender agrees to accept less then what is owed on the property and allow the home to be sold to a new buyer. This is very common today in the Portland metro market area and most other cities across the country right now.
Unfortunately, the process can be very frustrating and annoying for both buyers and sellers due to the fact most lenders take their time in evaluating and negotiating a short sale. It is a long and daunting process. However, if you have a skilled real estate agent helping you then the process can be a much more comfortable journey.
Here are some common questions and answers concerning short sales.
How long does a short sale usually take?
This depends greatly on who is the lender, their specific process and if there is only one lender or multiple lenders associated with the home. Typical short sales take anywhere from 90 days to as much as 6 months or even a year in some extreme cases. This can be extremely frustrating for a buyer to try and wait for a decision from the lender or lenders.
Why is the property still listed as active on the market if a buyer and seller have an accepted offer on the property and are waiting for the bank to approve the short sale?
90% of the time the first buyer who puts in an offer on a short sale usually finds another property that is not a short sale and will back out of the transaction prior to the bank making a decision. This is very common because most buyers want to purchase a home within 30 days or so and have a hard time waiting for the bank. A good listing agent will continue to market the property and get 2 or 3 back up offers on the property to ensure there is a ready and able buyer to close on the property once the bank makes their decision. It is very common for the 2nd offer or 3rd offer to have the choice in purchasing the home. A good buyer's agent will help most buyers that have an accepted offer on a short sale continue to look at other homes that are not short sales in case they find another property they like better and can close sooner.
What price can a buyer expect to pay for a short sale property?
Overall, you can expect to get a small discount below market value of other properties that are not short sales. During the short sale process banks will send out either an experienced real estate agent or an appraiser to get a BPO (Broker's Opinion of Value) or an appraisal on the property. This value is close to what the realistic market value of the property is as of the date of the report. The bank will then use that information to decide what price they are willing to accept on a short sale. Typically, most banks will allow a small discount below the market value of the property because they are saving costs if they receive a payoff on the home now rather then wait for the foreclosure process to gain control of the home. Once the bank makes a decision they will either accept the offer or make a counter offer to the buyer's offer. If the buyer does not accept the bank's counter offer then the listing agent will go to the backup offers and see if they want to proceed and if not then he or she will put the property back on the market knowing exactly what price the bank will accept. It is usually a very short time after that when a new offer will come in at exactly what the bank wants for the home. Short sales with an approved price from the bank go very quickly because they are usually a little under the real market value of the property and no more decision time is needed from the bank.
Do most lenders allow a short sale or is a foreclosure more common?
Most lenders will accept a short sale. A very good listing agent can get the foreclosure date postponed during the short sale negotiation process. As long as the offer is realistic in terms of what the actual market value of the property is then most short sales end up selling to one buyer or another.
Should I consider buying a short sale or selling my home on a short sale?
This depends on your specific circumstances and your real estate goals. An experienced agent in short sales can help you discuss all of the advantages and disadvantages and the options available to you. For more information please visit : http://catanarealestate.sef.mlxchange.com and let us know your desire to learn more or feel free to share your situation with us so we can discuss your options in more detail.
Short Sale or not
TO SHORT SALE OR NOT TO
SHORT SALE?
TO BUY OR NOT TO BUY A
SHORT SALE?
Those are the questions!
Many people are curious about a short sale and the process involved in either selling a home via a short sale or buying a short sale home. There are advantages and disadvantages to both.
What is a short sale? A short sale is a process that a seller uses to sell their home when the market value of the home is considerably less than the loan balance the seller owes on the property. It is a process whereby the lender agrees to accept less then what is owed on the property and allow the home to be sold to a new buyer. This is very common today in the Portland metro market area and most other cities across the country right now.
Unfortunately, the process can be very frustrating and annoying for both buyers and sellers due to the fact most lenders take their time in evaluating and negotiating a short sale. It is a long and daunting process. However, if you have a skilled real estate agent helping you then the process can be a much more comfortable journey.
Here are some common questions and answers concerning short sales.
How long does a short sale usually take?
This depends greatly on who is the lender, their specific process and if there is only one lender or multiple lenders associated with the home. Typical short sales take anywhere from 90 days to as much as 6 months or even a year in some extreme cases. This can be extremely frustrating for a buyer to try and wait for a decision from the lender or lenders.
Why is the property still listed as active on the market if a buyer and seller have an accepted offer on the property and are waiting for the bank to approve the short sale?
90% of the time the first buyer who puts in an offer on a short sale usually finds another property that is not a short sale and will back out of the transaction prior to the bank making a decision. This is very common because most buyers want to purchase a home within 30 days or so and have a hard time waiting for the bank. A good listing agent will continue to market the property and get 2 or 3 back up offers on the property to ensure there is a ready and able buyer to close on the property once the bank makes their decision. It is very common for the 2nd offer or 3rd offer to have the choice in purchasing the home. A good buyer's agent will help most buyers that have an accepted offer on a short sale continue to look at other homes that are not short sales in case they find another property they like better and can close sooner.
What price can a buyer expect to pay for a short sale property?
Overall, you can expect to get a small discount below market value of other properties that are not short sales. During the short sale process banks will send out either an experienced real estate agent or an appraiser to get a BPO (Broker's Opinion of Value) or an appraisal on the property. This value is close to what the realistic market value of the property is as of the date of the report. The bank will then use that information to decide what price they are willing to accept on a short sale. Typically, most banks will allow a small discount below the market value of the property because they are saving costs if they receive a payoff on the home now rather then wait for the foreclosure process to gain control of the home. Once the bank makes a decision they will either accept the offer or make a counter offer to the buyer's offer. If the buyer does not accept the bank's counter offer then the listing agent will go to the backup offers and see if they want to proceed and if not then he or she will put the property back on the market knowing exactly what price the bank will accept. It is usually a very short time after that when a new offer will come in at exactly what the bank wants for the home. Short sales with an approved price from the bank go very quickly because they are usually a little under the real market value of the property and no more decision time is needed from the bank.
Do most lenders allow a short sale or is a foreclosure more common?
Most lenders will accept a short sale. A very good listing agent can get the foreclosure date postponed during the short sale negotiation process. As long as the offer is realistic in terms of what the actual market value of the property is then most short sales end up selling to one buyer or another.
Should I consider buying a short sale or selling my home on a short sale?
This depends on your specific circumstances and your real estate goals. An experienced agent in short sales can help you discuss all of the advantages and disadvantages and the options available to you. For more information please visit : http://catanarealestate.sef.mlxchange.com and let us know your desire to learn more or feel free to share your situation with us so we can discuss your options in more detail.
SHORT SALE?
TO BUY OR NOT TO BUY A
SHORT SALE?
Those are the questions!
Many people are curious about a short sale and the process involved in either selling a home via a short sale or buying a short sale home. There are advantages and disadvantages to both.
What is a short sale? A short sale is a process that a seller uses to sell their home when the market value of the home is considerably less than the loan balance the seller owes on the property. It is a process whereby the lender agrees to accept less then what is owed on the property and allow the home to be sold to a new buyer. This is very common today in the Portland metro market area and most other cities across the country right now.
Unfortunately, the process can be very frustrating and annoying for both buyers and sellers due to the fact most lenders take their time in evaluating and negotiating a short sale. It is a long and daunting process. However, if you have a skilled real estate agent helping you then the process can be a much more comfortable journey.
Here are some common questions and answers concerning short sales.
How long does a short sale usually take?
This depends greatly on who is the lender, their specific process and if there is only one lender or multiple lenders associated with the home. Typical short sales take anywhere from 90 days to as much as 6 months or even a year in some extreme cases. This can be extremely frustrating for a buyer to try and wait for a decision from the lender or lenders.
Why is the property still listed as active on the market if a buyer and seller have an accepted offer on the property and are waiting for the bank to approve the short sale?
90% of the time the first buyer who puts in an offer on a short sale usually finds another property that is not a short sale and will back out of the transaction prior to the bank making a decision. This is very common because most buyers want to purchase a home within 30 days or so and have a hard time waiting for the bank. A good listing agent will continue to market the property and get 2 or 3 back up offers on the property to ensure there is a ready and able buyer to close on the property once the bank makes their decision. It is very common for the 2nd offer or 3rd offer to have the choice in purchasing the home. A good buyer's agent will help most buyers that have an accepted offer on a short sale continue to look at other homes that are not short sales in case they find another property they like better and can close sooner.
What price can a buyer expect to pay for a short sale property?
Overall, you can expect to get a small discount below market value of other properties that are not short sales. During the short sale process banks will send out either an experienced real estate agent or an appraiser to get a BPO (Broker's Opinion of Value) or an appraisal on the property. This value is close to what the realistic market value of the property is as of the date of the report. The bank will then use that information to decide what price they are willing to accept on a short sale. Typically, most banks will allow a small discount below the market value of the property because they are saving costs if they receive a payoff on the home now rather then wait for the foreclosure process to gain control of the home. Once the bank makes a decision they will either accept the offer or make a counter offer to the buyer's offer. If the buyer does not accept the bank's counter offer then the listing agent will go to the backup offers and see if they want to proceed and if not then he or she will put the property back on the market knowing exactly what price the bank will accept. It is usually a very short time after that when a new offer will come in at exactly what the bank wants for the home. Short sales with an approved price from the bank go very quickly because they are usually a little under the real market value of the property and no more decision time is needed from the bank.
Do most lenders allow a short sale or is a foreclosure more common?
Most lenders will accept a short sale. A very good listing agent can get the foreclosure date postponed during the short sale negotiation process. As long as the offer is realistic in terms of what the actual market value of the property is then most short sales end up selling to one buyer or another.
Should I consider buying a short sale or selling my home on a short sale?
This depends on your specific circumstances and your real estate goals. An experienced agent in short sales can help you discuss all of the advantages and disadvantages and the options available to you. For more information please visit : http://catanarealestate.sef.mlxchange.com and let us know your desire to learn more or feel free to share your situation with us so we can discuss your options in more detail.
Tuesday, August 3, 2010
Buying a house? Home inspections
Home Inspections Avert Future Headaches
Suppose you bought a house and later discovered, to your dismay, that the stucco exterior concealed a nasty case of dry rot. Or suppose that when you fired up the furnace in the winter, you discovered a cracked heat exchanger leaking gas into your home. The best way to avoid unpleasant surprises like these is to arrange for a home inspection before you buy.
Home Inspections Help You Avoid Unpleasant Surprises
A good home inspection is an objective, top-to-bottom examination of a home and everything that comes with it. The standard inspection report includes a review of the home's heating and air-conditioning systems; plumbing and wiring; roof, attic, walls, ceilings, floors, windows, doors, foundation and basement.
Getting a professional inspection is crucial for older homes because age often takes its toll on the roof and other hard-to-reach areas. Problems can also be the result of neglect or hazardous repair work, such as a past owner's failed attempt to install lights and an outlet in a linen closet.
A home inspection is also a wise investment when buying a new home. In fact, new homes frequently have defects, whether caused by an oversight during construction or simply human error.
Getting an Inspector
Real estate agents can usually recommend an experienced home inspector. Make sure to get an unbiased inspector. You can find one through word-of-mouth referrals, or look in the Yellow Pages or online under "Building Inspection" or "Home Inspection."
Home inspections cost about a few hundred dollars, depending on the size of the house and location. Inspection fees tend to be higher in urban areas than in rural areas. You may find the cost of inspection high, but it is money well spent. Think of it as an investment in your investment – your future home.
Some builders may try to dissuade you from getting a home inspection on a home they've built. They may not necessarily be trying to hide anything because most builders guarantee their work and will fix any problems in your new home before you move in. Some builders, in fact, will offer to do their own inspections. But it’s best to have an objective professional appraisal - insist on a third-party inspector.
An Inspection Will Educate You about Your House
Education is another good reason for getting an inspection. Most buyers want to learn as much as they can about their purchase so they can protect their investment. An examination by an impartial home inspector helps in this learning process.
Ask if you can follow the home inspector on his or her rounds. Most inspectors are glad to share their knowledge, and you'll be able to ask plenty of questions.
Inspection Timing and Results
Homebuyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to buy the home unless such problems are remedied.
You could include a clause in your purchase agreement that makes your purchase contingent upon satisfactory inspection results. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home's price or the contract's terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won't affect the sale price.
Suppose you bought a house and later discovered, to your dismay, that the stucco exterior concealed a nasty case of dry rot. Or suppose that when you fired up the furnace in the winter, you discovered a cracked heat exchanger leaking gas into your home. The best way to avoid unpleasant surprises like these is to arrange for a home inspection before you buy.
Home Inspections Help You Avoid Unpleasant Surprises
A good home inspection is an objective, top-to-bottom examination of a home and everything that comes with it. The standard inspection report includes a review of the home's heating and air-conditioning systems; plumbing and wiring; roof, attic, walls, ceilings, floors, windows, doors, foundation and basement.
Getting a professional inspection is crucial for older homes because age often takes its toll on the roof and other hard-to-reach areas. Problems can also be the result of neglect or hazardous repair work, such as a past owner's failed attempt to install lights and an outlet in a linen closet.
A home inspection is also a wise investment when buying a new home. In fact, new homes frequently have defects, whether caused by an oversight during construction or simply human error.
Getting an Inspector
Real estate agents can usually recommend an experienced home inspector. Make sure to get an unbiased inspector. You can find one through word-of-mouth referrals, or look in the Yellow Pages or online under "Building Inspection" or "Home Inspection."
Home inspections cost about a few hundred dollars, depending on the size of the house and location. Inspection fees tend to be higher in urban areas than in rural areas. You may find the cost of inspection high, but it is money well spent. Think of it as an investment in your investment – your future home.
Some builders may try to dissuade you from getting a home inspection on a home they've built. They may not necessarily be trying to hide anything because most builders guarantee their work and will fix any problems in your new home before you move in. Some builders, in fact, will offer to do their own inspections. But it’s best to have an objective professional appraisal - insist on a third-party inspector.
An Inspection Will Educate You about Your House
Education is another good reason for getting an inspection. Most buyers want to learn as much as they can about their purchase so they can protect their investment. An examination by an impartial home inspector helps in this learning process.
Ask if you can follow the home inspector on his or her rounds. Most inspectors are glad to share their knowledge, and you'll be able to ask plenty of questions.
Inspection Timing and Results
Homebuyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to buy the home unless such problems are remedied.
You could include a clause in your purchase agreement that makes your purchase contingent upon satisfactory inspection results. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home's price or the contract's terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won't affect the sale price.
Monday, August 2, 2010
5 Feng Shui Concepts to Help a Home Sell
To put the best face on a listing and appeal to buyers who follow feng shui principles, keep these tips in mind.
1. Pay special attention to the front door, which is considered the “mouth of chi” (chi is the “life force” of all things) and one of the most powerful aspects of the entire property. Abundance, blessings, opportunities, and good fortune enter through the front door. It’s also the first impression buyers have of how well the sellers have taken care of the rest of the property. Make sure the area around the front door is swept clean, free of cobwebs and clutter. Make sure all lighting is straight and properly hung. Better yet, light the path leading up to the front door to create an inviting atmosphere.
2. Chi energy can be flushed away wherever there are drains in the home. To keep the good forces of a home in, always keep the toilet seats down and close the doors to bathrooms.
3. The master bed should be in a place of honor, power, and protection, which is farthest from and facing toward the entryway of the room. It’s even better if you can place the bed diagonally in the farthest corner. Paint the room in colors that promote serenity, relaxation, and romance, such as soft tones of green, blue, and lavender.
4. The dining room symbolizes the energy and power of family togetherness. Make sure the table is clear and uncluttered during showings. Use an attractive tablecloth to enhance the look of the table while also softening sharp corners.
5. The windows are considered to be the eyes of the home. Getting the windows professionally cleaned will make the home sparkle and ensure that the view will be optimally displayed.
Source: Sell Your Home Faster With Feng Shuiby Holly Ziegler (Dragon Chi Publications, 2001)
1. Pay special attention to the front door, which is considered the “mouth of chi” (chi is the “life force” of all things) and one of the most powerful aspects of the entire property. Abundance, blessings, opportunities, and good fortune enter through the front door. It’s also the first impression buyers have of how well the sellers have taken care of the rest of the property. Make sure the area around the front door is swept clean, free of cobwebs and clutter. Make sure all lighting is straight and properly hung. Better yet, light the path leading up to the front door to create an inviting atmosphere.
2. Chi energy can be flushed away wherever there are drains in the home. To keep the good forces of a home in, always keep the toilet seats down and close the doors to bathrooms.
3. The master bed should be in a place of honor, power, and protection, which is farthest from and facing toward the entryway of the room. It’s even better if you can place the bed diagonally in the farthest corner. Paint the room in colors that promote serenity, relaxation, and romance, such as soft tones of green, blue, and lavender.
4. The dining room symbolizes the energy and power of family togetherness. Make sure the table is clear and uncluttered during showings. Use an attractive tablecloth to enhance the look of the table while also softening sharp corners.
5. The windows are considered to be the eyes of the home. Getting the windows professionally cleaned will make the home sparkle and ensure that the view will be optimally displayed.
Source: Sell Your Home Faster With Feng Shuiby Holly Ziegler (Dragon Chi Publications, 2001)
Buying a house? Step 11
Buying Step 11: Moving
Even the smallest home contains a lot of furniture, clothes, kitchen equipment, pictures and other items. For a short move, it may be worthwhile to transport small goods by yourself, but larger items may require a professional mover. Your REALTOR® can give you advice on the moving process.
How Do You Plan a Move?
The time to plan your move begins once you've decided to buy a home. Some of the things you do to prepare your home for sale can actually help with the moving process, e.g., cleaning out closets and the garage, basement and attic.
Your planning will be guided by how far you plan to move:
• Moving locally: If you move yourself, you'll need to get moving supplies and organize a van rental.
• Moving a long distance: You'll likely require an interstate mover and the use of a large van.
• Moving internationally: Contact the embassy of the country you’re moving to for information. Be aware that some items that are entirely common at home can be prohibited in foreign countries. Ask about customs protocols, duties and taxes.
Planning is essential: stock up on boxes, packing materials, tape and markers. Always mark boxes so that movers know where goods should be placed and you know what’s inside the boxes.
Hiring a Mover
If you need to hire a mover, ask for recommendations from your REALTOR® and friends and associates. There are a number of factors to consider. Money is one issue: you'll want to spend as little as possible, but choosing only on the basis of cost can be a mistake. Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references from past clients who had a similar volume of goods to transport.
Get mover estimates in writing. Be aware that it's possible to get discounts through membership organizations and, sometimes, on the basis of your profession.
Always confirm mover credentials. Movers should be licensed and bonded as required in your state, and employees should have workman's compensation insurance. It’s a good idea to check whether a given mover is approved by the Better Business Bureau - many aren’t.
There is also the question of how many movers to use – usually either 2 or 3. Naturally, 3 movers will cost more, but the time saved might mean that using 3 is more cost effective than using 2, who would take longer. Additionally, it’s good to find out what the minimum number of hours you’ll be charged for, given that this could determine how many movers you use.
Moving Preparation Checklist
Moving is a big job and checklists can make it more organized and easier. Here are some of the major items to consider:
• Yard sale: Get rid of excess furniture and other goods by having a sale before you move.
• Postal: Get mail forwarded to you, and inform important people and companies (bank, insurance, etc.) of your new address.
• Utilities: Prearrange to have utilities cut off at your old home and hooked up at your new home. Check whether there are any deposits that should be returned to you. Find out what your hook-up fees will be.
• Boxes: Number boxes so that all items can be counted on arrival. Make a list of boxes by number and note their contents.
• Medicine: Keep medicines and related prescriptions in a place where they will be available during the move.
• Children: If you’re moving with children, make sure that children have some of their favorite things - toys, blankets, games, music, etc., - that will keep them happy.
• Pets: If you have pets, bring along food, water dish, carrier and other items your pets will need.
• Money: If you're moving more than a few miles you should have enough cash or credit to cover travel, food, transportation and lodging.
• Valuables: Make sure historical, antique, breakable or valued items get special handling and packaging.
• Important papers: Keep important papers with you so they do not get lost in the move.
• Contact Numbers: Have address books readily available in case you need help.
• E-mail: If you have a laptop computer with a modem, make it accessible during your trip to pick up business and personal e-mail.
Even the smallest home contains a lot of furniture, clothes, kitchen equipment, pictures and other items. For a short move, it may be worthwhile to transport small goods by yourself, but larger items may require a professional mover. Your REALTOR® can give you advice on the moving process.
How Do You Plan a Move?
The time to plan your move begins once you've decided to buy a home. Some of the things you do to prepare your home for sale can actually help with the moving process, e.g., cleaning out closets and the garage, basement and attic.
Your planning will be guided by how far you plan to move:
• Moving locally: If you move yourself, you'll need to get moving supplies and organize a van rental.
• Moving a long distance: You'll likely require an interstate mover and the use of a large van.
• Moving internationally: Contact the embassy of the country you’re moving to for information. Be aware that some items that are entirely common at home can be prohibited in foreign countries. Ask about customs protocols, duties and taxes.
Planning is essential: stock up on boxes, packing materials, tape and markers. Always mark boxes so that movers know where goods should be placed and you know what’s inside the boxes.
Hiring a Mover
If you need to hire a mover, ask for recommendations from your REALTOR® and friends and associates. There are a number of factors to consider. Money is one issue: you'll want to spend as little as possible, but choosing only on the basis of cost can be a mistake. Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references from past clients who had a similar volume of goods to transport.
Get mover estimates in writing. Be aware that it's possible to get discounts through membership organizations and, sometimes, on the basis of your profession.
Always confirm mover credentials. Movers should be licensed and bonded as required in your state, and employees should have workman's compensation insurance. It’s a good idea to check whether a given mover is approved by the Better Business Bureau - many aren’t.
There is also the question of how many movers to use – usually either 2 or 3. Naturally, 3 movers will cost more, but the time saved might mean that using 3 is more cost effective than using 2, who would take longer. Additionally, it’s good to find out what the minimum number of hours you’ll be charged for, given that this could determine how many movers you use.
Moving Preparation Checklist
Moving is a big job and checklists can make it more organized and easier. Here are some of the major items to consider:
• Yard sale: Get rid of excess furniture and other goods by having a sale before you move.
• Postal: Get mail forwarded to you, and inform important people and companies (bank, insurance, etc.) of your new address.
• Utilities: Prearrange to have utilities cut off at your old home and hooked up at your new home. Check whether there are any deposits that should be returned to you. Find out what your hook-up fees will be.
• Boxes: Number boxes so that all items can be counted on arrival. Make a list of boxes by number and note their contents.
• Medicine: Keep medicines and related prescriptions in a place where they will be available during the move.
• Children: If you’re moving with children, make sure that children have some of their favorite things - toys, blankets, games, music, etc., - that will keep them happy.
• Pets: If you have pets, bring along food, water dish, carrier and other items your pets will need.
• Money: If you're moving more than a few miles you should have enough cash or credit to cover travel, food, transportation and lodging.
• Valuables: Make sure historical, antique, breakable or valued items get special handling and packaging.
• Important papers: Keep important papers with you so they do not get lost in the move.
• Contact Numbers: Have address books readily available in case you need help.
• E-mail: If you have a laptop computer with a modem, make it accessible during your trip to pick up business and personal e-mail.
Thursday, July 29, 2010
How to Hold a Successful Garage Sale
Garage sales can be a great way to get rid of clutter — and earn a little extra cash — before you sell your home. But make sure the timing is right. Garage sales can take on a life of their own, and it might not be the best use of your energy right before putting your home on the market. Follow these tips for a successful sale.
1. Don’t wait until the last minute. You don’t want to be scrambling to hold a garage sale the week before an open house. Depending on how long you’ve lived in the home and how much stuff you have to sell, planning a garage sale can demand a lot of time and energy.
2. Get a permit. Most municipalities will require you to obtain a special permit or license in order to hold a garage sale. The permits are often free or very inexpensive, but still require you to register with the city.
3. See if neighbors want to join in. You can turn your garage sale into a block-wide event and lure more shoppers if you team up with neighbors. However, a permit may be necessary for each home owner, even if it’s a group event.
4. Schedule the sale. Sales on Saturdays and Sundays will generate the most traffic, especially if the weather cooperates. Start the sale early, 8 a.m. or 9 a.m. is best, and be prepared for early birds.
5. Advertise. Place an ad in free classified papers and Web sites, and in your local newspapers. Include the dates, time, and address. Let the public know if certain types of items will be sold, such as baby clothes, furniture, or weightlifting equipment. On the day of the sale, balloons and signs with prominent arrows will help to grab the attention of passersby.
6. Price your goods. Lay out everything that you plan to sell, and attach prices with removable stickers. Remember, garage sales are supposed to be bargains, so try to be objective as you set prices. Assign simple prices to your goods: 50 cents, 3 for $1, $5, $10, etc.
7. If it’s really junk, don’t sell it. Decide what’s worth selling and what’s not. If it’s really garbage, then throw it away. Broken appliances, for example, should be tossed. (Know where a nearby electrical outlet is, in case a customer wants to make sure something works.)
8. Check for mistakes. Make sure that items you want to keep don’t accidentally end up in the garage sale pile.
9. Create an organized display. Lay out your items by category, and display neatly so customers don’t have to dig through boxes.
10. Stock up on bags and newspapers. People who buy many small items will appreciate a bag to carry their goods. Newspapers are handy for wrapping fragile items.
11. Manage your money. Make a trip to the bank to get ample change for your cashbox. Throughout the sale, keep a close eye on your cash; never leave the cashbox unattended. It’s smart to have one person who manages the money throughout the day, keeping a tally of what was purchased and for how much. Keep a calculator nearby.
12. Prepare for your home sale. Donate the remaining stuff or sell it to a resale shop. Now that all of your clutter is cleared out, it’s time to focus on preparing your house for a successful sale!
1. Don’t wait until the last minute. You don’t want to be scrambling to hold a garage sale the week before an open house. Depending on how long you’ve lived in the home and how much stuff you have to sell, planning a garage sale can demand a lot of time and energy.
2. Get a permit. Most municipalities will require you to obtain a special permit or license in order to hold a garage sale. The permits are often free or very inexpensive, but still require you to register with the city.
3. See if neighbors want to join in. You can turn your garage sale into a block-wide event and lure more shoppers if you team up with neighbors. However, a permit may be necessary for each home owner, even if it’s a group event.
4. Schedule the sale. Sales on Saturdays and Sundays will generate the most traffic, especially if the weather cooperates. Start the sale early, 8 a.m. or 9 a.m. is best, and be prepared for early birds.
5. Advertise. Place an ad in free classified papers and Web sites, and in your local newspapers. Include the dates, time, and address. Let the public know if certain types of items will be sold, such as baby clothes, furniture, or weightlifting equipment. On the day of the sale, balloons and signs with prominent arrows will help to grab the attention of passersby.
6. Price your goods. Lay out everything that you plan to sell, and attach prices with removable stickers. Remember, garage sales are supposed to be bargains, so try to be objective as you set prices. Assign simple prices to your goods: 50 cents, 3 for $1, $5, $10, etc.
7. If it’s really junk, don’t sell it. Decide what’s worth selling and what’s not. If it’s really garbage, then throw it away. Broken appliances, for example, should be tossed. (Know where a nearby electrical outlet is, in case a customer wants to make sure something works.)
8. Check for mistakes. Make sure that items you want to keep don’t accidentally end up in the garage sale pile.
9. Create an organized display. Lay out your items by category, and display neatly so customers don’t have to dig through boxes.
10. Stock up on bags and newspapers. People who buy many small items will appreciate a bag to carry their goods. Newspapers are handy for wrapping fragile items.
11. Manage your money. Make a trip to the bank to get ample change for your cashbox. Throughout the sale, keep a close eye on your cash; never leave the cashbox unattended. It’s smart to have one person who manages the money throughout the day, keeping a tally of what was purchased and for how much. Keep a calculator nearby.
12. Prepare for your home sale. Donate the remaining stuff or sell it to a resale shop. Now that all of your clutter is cleared out, it’s time to focus on preparing your house for a successful sale!
How to Hold a Successful Garage Sale
Garage sales can be a great way to get rid of clutter — and earn a little extra cash — before you sell your home. But make sure the timing is right. Garage sales can take on a life of their own, and it might not be the best use of your energy right before putting your home on the market. Follow these tips for a successful sale.
1. Don’t wait until the last minute. You don’t want to be scrambling to hold a garage sale the week before an open house. Depending on how long you’ve lived in the home and how much stuff you have to sell, planning a garage sale can demand a lot of time and energy.
2. Get a permit. Most municipalities will require you to obtain a special permit or license in order to hold a garage sale. The permits are often free or very inexpensive, but still require you to register with the city.
3. See if neighbors want to join in. You can turn your garage sale into a block-wide event and lure more shoppers if you team up with neighbors. However, a permit may be necessary for each home owner, even if it’s a group event.
4. Schedule the sale. Sales on Saturdays and Sundays will generate the most traffic, especially if the weather cooperates. Start the sale early, 8 a.m. or 9 a.m. is best, and be prepared for early birds.
5. Advertise. Place an ad in free classified papers and Web sites, and in your local newspapers. Include the dates, time, and address. Let the public know if certain types of items will be sold, such as baby clothes, furniture, or weightlifting equipment. On the day of the sale, balloons and signs with prominent arrows will help to grab the attention of passersby.
6. Price your goods. Lay out everything that you plan to sell, and attach prices with removable stickers. Remember, garage sales are supposed to be bargains, so try to be objective as you set prices. Assign simple prices to your goods: 50 cents, 3 for $1, $5, $10, etc.
7. If it’s really junk, don’t sell it. Decide what’s worth selling and what’s not. If it’s really garbage, then throw it away. Broken appliances, for example, should be tossed. (Know where a nearby electrical outlet is, in case a customer wants to make sure something works.)
8. Check for mistakes. Make sure that items you want to keep don’t accidentally end up in the garage sale pile.
9. Create an organized display. Lay out your items by category, and display neatly so customers don’t have to dig through boxes.
10. Stock up on bags and newspapers. People who buy many small items will appreciate a bag to carry their goods. Newspapers are handy for wrapping fragile items.
11. Manage your money. Make a trip to the bank to get ample change for your cashbox. Throughout the sale, keep a close eye on your cash; never leave the cashbox unattended. It’s smart to have one person who manages the money throughout the day, keeping a tally of what was purchased and for how much. Keep a calculator nearby.
12. Prepare for your home sale. Donate the remaining stuff or sell it to a resale shop. Now that all of your clutter is cleared out, it’s time to focus on preparing your house for a successful sale!
1. Don’t wait until the last minute. You don’t want to be scrambling to hold a garage sale the week before an open house. Depending on how long you’ve lived in the home and how much stuff you have to sell, planning a garage sale can demand a lot of time and energy.
2. Get a permit. Most municipalities will require you to obtain a special permit or license in order to hold a garage sale. The permits are often free or very inexpensive, but still require you to register with the city.
3. See if neighbors want to join in. You can turn your garage sale into a block-wide event and lure more shoppers if you team up with neighbors. However, a permit may be necessary for each home owner, even if it’s a group event.
4. Schedule the sale. Sales on Saturdays and Sundays will generate the most traffic, especially if the weather cooperates. Start the sale early, 8 a.m. or 9 a.m. is best, and be prepared for early birds.
5. Advertise. Place an ad in free classified papers and Web sites, and in your local newspapers. Include the dates, time, and address. Let the public know if certain types of items will be sold, such as baby clothes, furniture, or weightlifting equipment. On the day of the sale, balloons and signs with prominent arrows will help to grab the attention of passersby.
6. Price your goods. Lay out everything that you plan to sell, and attach prices with removable stickers. Remember, garage sales are supposed to be bargains, so try to be objective as you set prices. Assign simple prices to your goods: 50 cents, 3 for $1, $5, $10, etc.
7. If it’s really junk, don’t sell it. Decide what’s worth selling and what’s not. If it’s really garbage, then throw it away. Broken appliances, for example, should be tossed. (Know where a nearby electrical outlet is, in case a customer wants to make sure something works.)
8. Check for mistakes. Make sure that items you want to keep don’t accidentally end up in the garage sale pile.
9. Create an organized display. Lay out your items by category, and display neatly so customers don’t have to dig through boxes.
10. Stock up on bags and newspapers. People who buy many small items will appreciate a bag to carry their goods. Newspapers are handy for wrapping fragile items.
11. Manage your money. Make a trip to the bank to get ample change for your cashbox. Throughout the sale, keep a close eye on your cash; never leave the cashbox unattended. It’s smart to have one person who manages the money throughout the day, keeping a tally of what was purchased and for how much. Keep a calculator nearby.
12. Prepare for your home sale. Donate the remaining stuff or sell it to a resale shop. Now that all of your clutter is cleared out, it’s time to focus on preparing your house for a successful sale!
Understand Agency Relationships
It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. Ask what type of agency relationship your agent has with you:
Seller's representative (also known as a listing agent or seller's agent)
A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
Buyer's representative (also known as a buyer’s agent)
A buyer’s agent is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split with the seller’s agent.
Subagent
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
Disclosed dual agent
Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.
Designated agent (also called appointed agent)
This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
Nonagency relationship (called, among other things, a transaction broker or facilitator)
Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Seller's representative (also known as a listing agent or seller's agent)
A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
Buyer's representative (also known as a buyer’s agent)
A buyer’s agent is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split with the seller’s agent.
Subagent
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
Disclosed dual agent
Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.
Designated agent (also called appointed agent)
This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
Nonagency relationship (called, among other things, a transaction broker or facilitator)
Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Common Closing Costs for Buyers
Common Closing Costs for Buyers
You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:
• Down payment
• Loan origination
• Points, or loan discount fees, which you pay to receive a lower interest rate
• Home inspection
• Appraisal
• Credit report
• Private mortgage insurance premium
• Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording
• Title insurance policy premiums
• Land survey
• Notary fees
• Prorations for your share of costs, such as utility bills and property taxes
A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.
You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:
• Down payment
• Loan origination
• Points, or loan discount fees, which you pay to receive a lower interest rate
• Home inspection
• Appraisal
• Credit report
• Private mortgage insurance premium
• Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording
• Title insurance policy premiums
• Land survey
• Notary fees
• Prorations for your share of costs, such as utility bills and property taxes
A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.
Buying a house? Step 10
Buying Step 10: What's Left to Do After Closing?
You've done it. You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you're a first-time buyer or a repeat buyer, there are several more steps you'll want to take.
Safeguard settlement papers: Your settlement papers are extremely valuable, so hold onto them. In the short term, they can help establish tax deductions for the year in which the property was purchased. In the long term, they will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.
Transfer utilities: Also at closing, determine the status of your home’s utilities, such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by the seller as of closing, and services to be transferred to your name for billing. Usually such transfers can be done without turning off utilities. REALTORS® can provide contact numbers and related information.
Confirm your property deed records: About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.
Photograph or video record your possessions: Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure your records.
Get proper insurance coverage: You should have fire, theft and liability insurance. As the value of your property increases such coverage should also be increased. Again, speak with your insurance professional for details.
Expect a “broom clean” home: It is generally understood that sellers will leave homes "broom clean" when moving out, not "vacuumed" or "spotless." Broom clean makes sense because it means the house is ready to be painted and cleaned.
Enjoy your home: Lastly, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what's most important is that homeownership should be a wonderful experience. Enjoy!
You've done it. You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you're a first-time buyer or a repeat buyer, there are several more steps you'll want to take.
Safeguard settlement papers: Your settlement papers are extremely valuable, so hold onto them. In the short term, they can help establish tax deductions for the year in which the property was purchased. In the long term, they will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.
Transfer utilities: Also at closing, determine the status of your home’s utilities, such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by the seller as of closing, and services to be transferred to your name for billing. Usually such transfers can be done without turning off utilities. REALTORS® can provide contact numbers and related information.
Confirm your property deed records: About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.
Photograph or video record your possessions: Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure your records.
Get proper insurance coverage: You should have fire, theft and liability insurance. As the value of your property increases such coverage should also be increased. Again, speak with your insurance professional for details.
Expect a “broom clean” home: It is generally understood that sellers will leave homes "broom clean" when moving out, not "vacuumed" or "spotless." Broom clean makes sense because it means the house is ready to be painted and cleaned.
Enjoy your home: Lastly, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what's most important is that homeownership should be a wonderful experience. Enjoy!
Wednesday, July 28, 2010
Understanding Capital Gains in Real Estate
Understanding Capital Gains in Real Estate
When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
• Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
• Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
• Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home’s adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
• You have lived in the home as your principal residence for two out of the last five years.
• You have not sold or exchanged another home during the two years preceding the sale.
• You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
• Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
• Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
• Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home’s adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
• You have lived in the home as your principal residence for two out of the last five years.
• You have not sold or exchanged another home during the two years preceding the sale.
• You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
Buying ahouse ? Step 9
Buying Step 9: Signing the Deal: Closing / Settlement / Escrow
It might seem as though once a sale agreement has been signed that the buying process is complete. Not only is it not over yet, but some of the most complex aspects of a real estate transaction now begin.
Once a contract for the purchase of a home has been accepted, a series of inspections and checks are typically required to satisfy buyers and lenders. REALTORS® can help buyers complete the transaction process by assisting with the many requirements found in a typical sale agreement. The REALTOR® also helps the buyer prepare for closing, that is, finalizing the sale.
What’s in a Sale Agreement?
A sale agreement sets a purchase price for the home and a series of terms and conditions. For instance:
• Contracts routinely depend on the ability of a buyer to obtain financing and/or sell their current home, which is why most sellers prefer buyers with mortgage preapproval letters.
• A growing percentage of transactions involve a home inspection, or a physical review of the home by a trained and independent observer. Generally the buyer’s agent arranges the inspections, which the buyer typically pays for.
• Lenders will establish numerous conditions before granting a loan. They will want a title exam, title insurance to protect against title errors, termite inspections, surveys and an appraisal to assure that the home has sufficient value to secure the loan.
When Should You Close?
With online transaction management now available, closings can occur within a week in some areas - at least in theory. In practice, it takes time to arrange financing, conduct inspections, obtain appraisals, locate replacement housing, contact movers, pack and actually move.
While instant closings are not practical, neither are closings too far in the future. The problem with closings much past 60 days is that loan rates are difficult to lock in. If mortgage rates go up, it's possible that the buyer will no longer be able to afford the home and thus the deal may fall through.
The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.
What Happens during Closing?
Before closing, buyers typically have a final opportunity to walk through the property to ensure that its condition has not materially changed since the sale agreement was signed.
“Closing” is also known as "settlement" or "escrow." It is usually a brief office meeting to sign the paperwork needed to complete the sale transaction. All necessary papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties in the transaction to verify their interests.
Settlement is increasingly computerized and automated. One of the best parts of settlement is that there is very little that buyers and sellers need to do. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery. Some areas have services that allow most of the transaction to be completed online. If buyer and seller are present, they may be at the same table, or they may complete their papers separately.
Whatever the process, the outcome of the closing is the following:
• Property title is transferred from seller to buyer.
• The buyer receives the keys.
• The seller receives payment for the home.
• From the amount credited to the seller, the closing agent subtracts money to pay existing mortgage and other transaction costs.
• Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. Usually the closing agent also completes the paperwork needed to record the loan.
• Transfer taxes are paid and other claims settled (including closing costs, legal fees and adjustments).
It might seem as though once a sale agreement has been signed that the buying process is complete. Not only is it not over yet, but some of the most complex aspects of a real estate transaction now begin.
Once a contract for the purchase of a home has been accepted, a series of inspections and checks are typically required to satisfy buyers and lenders. REALTORS® can help buyers complete the transaction process by assisting with the many requirements found in a typical sale agreement. The REALTOR® also helps the buyer prepare for closing, that is, finalizing the sale.
What’s in a Sale Agreement?
A sale agreement sets a purchase price for the home and a series of terms and conditions. For instance:
• Contracts routinely depend on the ability of a buyer to obtain financing and/or sell their current home, which is why most sellers prefer buyers with mortgage preapproval letters.
• A growing percentage of transactions involve a home inspection, or a physical review of the home by a trained and independent observer. Generally the buyer’s agent arranges the inspections, which the buyer typically pays for.
• Lenders will establish numerous conditions before granting a loan. They will want a title exam, title insurance to protect against title errors, termite inspections, surveys and an appraisal to assure that the home has sufficient value to secure the loan.
When Should You Close?
With online transaction management now available, closings can occur within a week in some areas - at least in theory. In practice, it takes time to arrange financing, conduct inspections, obtain appraisals, locate replacement housing, contact movers, pack and actually move.
While instant closings are not practical, neither are closings too far in the future. The problem with closings much past 60 days is that loan rates are difficult to lock in. If mortgage rates go up, it's possible that the buyer will no longer be able to afford the home and thus the deal may fall through.
The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.
What Happens during Closing?
Before closing, buyers typically have a final opportunity to walk through the property to ensure that its condition has not materially changed since the sale agreement was signed.
“Closing” is also known as "settlement" or "escrow." It is usually a brief office meeting to sign the paperwork needed to complete the sale transaction. All necessary papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties in the transaction to verify their interests.
Settlement is increasingly computerized and automated. One of the best parts of settlement is that there is very little that buyers and sellers need to do. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery. Some areas have services that allow most of the transaction to be completed online. If buyer and seller are present, they may be at the same table, or they may complete their papers separately.
Whatever the process, the outcome of the closing is the following:
• Property title is transferred from seller to buyer.
• The buyer receives the keys.
• The seller receives payment for the home.
• From the amount credited to the seller, the closing agent subtracts money to pay existing mortgage and other transaction costs.
• Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. Usually the closing agent also completes the paperwork needed to record the loan.
• Transfer taxes are paid and other claims settled (including closing costs, legal fees and adjustments).
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