Tuesday, March 29, 2011

Ten Essential Things To Keep In Mind When Pricing Your Home To Sell

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Of all the essential things that will need to be done when you embark on the process of selling your home, knowing where you stand in terms of price is quite possibly the most important. Too many homeowners make the mistake of inaccurately pricing their home, mainly because they lack a true understanding of the market or what should be the ideal scenario in their own case. Keeping these tips in mind as you decide what the selling price of your home should be will undoubtedly benefit you in the long run.

1 . Use online tools and calculators to help assist you in determining the fair market value of your home and others in the vicinity. By fully researching all the variables that go into the vale of a property, the edge gained will be invaluable. Examples of useful sites are www.trulia.com, www.realtor.comwww.yahoorealestate.com and www.zillow.com.

2. Conduct a Competitive Market Analysis, whether by using the services of your real estate agent or relying on an appraiser. Gaining independent appraisals or having a CMA done on your home before putting a property on the market are key success-leading factors in pricing your home accurately.

3. Think like a buyer. By adopting the mindset of a buyer, you will leverage the things in your home that would matter most to potential buyers. An important part of this is to remove the emotion out of the sale. Rather than focus on things that may have emotional importance you to, such as the granite countertops in your master bathroom, for example, keeping your eye on the ball for the major things that buyers would appreciate like a 3-car garage or a large yard, will help you determine a more appropriate price range.

4.  Look beyond the comparable features. Rather than hone in on things that are standard, consider the unique aspects of your home, whether good or bad – and price accordingly. Is the property located near a busy intersection? Are there power lines nearby? Is the neighborhood school system a good one? Looking beyond comparable items will allow you to dig deeper and evaluate the price based on truly unique items.

5. Know your local market. When you study and are aware of the statistics not only in your neighborhood but the local area in terms of the supply of homes percentages, number of foreclosures and short sales and other important data, you will be in a far better position to place your properties price to stand out from the competition.

6. Set a fair price. Be realistic and once you have done all your homework, completed the needed research to determine market trends and property values, the condition of your property and what buyers are paying these days for similar homes, decide on a number. Taking all emotion out of the equation, be ready to accept that anything achieved above your number will be an added bonus and anything below is a part of the process that comes with selling your home.

7. Price ahead of the curve. When the market was on an upward trend in 2001-2006, sellers could price their homes at higher than normal price and the market would eventually catch up to them. Given the current downward market, it’s the exact opposite. If you do not price properties slightly below fair market value you end up chasing the market down, resulting in a constant price reduction maneuver. Today’s sellers are finding it advantageous to price their property one or two percent below fair market value to be ahead of the curve.

8. Sweeten the deal. Throw in fringe benefits that will really make your home stand out from the rest when buyers consider their best choice. Whether you offer owner financing, the inclusion of six month’s paid homeowners’ insurance dues or even strike a deal involving the sale of all or some of your furniture. When you offer extra benefits to a potential buyer, those often end up being the “make it or break it” factor.

9. Less is sometimes more. Contrary to what it may seem, homes which have been priced 5-8% below the market price tend to generate multiple bids – in fact, banks will many times underprice their properties to create bidding wars with potential buyers. Keeping in mind that you face the possibility of losing a small amount off the top, the more inherent benefit of pricing below the market is that you can get multiple bids and get that property bid up above asking price.

10. Fix-ups add valueNo matter what you choose to do, to what extent and how much you spend – any attention given to sprucing up your existing property will significantly enhance your leverage in assigning a more premium price to the sale. Anything from landscaping enhancements to steam cleansing of carpets, removing cobwebs and even applying a fresh coat of paint – all these actions ultimately work toward a higher asking price of your home.
For some homeowners, a few of these tips prove invaluable while for others, all of those mentioned are pivotal in helping them assess your property’s selling value. It’s important that you look at your situation, your own neighborhood, the market in your local and regional vicinity – and based on these factors further fine-tune the advice we’ve given here. At the end of the day, you will gain the advantage of differentiating your property from that of the competition. Ultimately, you’ll find it easier to arrive at a figure when you have the guiding hand of these useful insights gained from years of real estate experts’ experience.

Monday, March 21, 2011

Should I Wait Till Prices Rise Or Does Selling My House Now Make Sense?

Many people are of the impression that waiting for six months to a year will result in a more stable market and a higher property value. This may not be entirely true, depending on how much equity you are expecting on your property. Looking at past real estate trends, the average number of years homeowners must wait may be longer than you think. Here are a few things to think about when deciding the right time to sell your home.

Do You Have a Choice?

Often people don’t have a choice in the matter. So, the first thing you should do is to assess whether you are able to withstand either staying in your home or selling it right away. If you are facing a new job that would require relocation and maintaining two households is not practical, then it may be a good idea to sell your home now, regardless of the current value. On the other hand, if the reason you would like to sell is in your hands, such as retirement, then you may want to wait a few years till the value matures and the return on your investment is stronger than it is today.

History Helps Us Gauge The Future

To understand where we are headed, it’s important to understand the history. With respect to the real estate industry, the lending market has seen significant changes over the past ten years and this intense shift in trends has affected the housing market of today.

Specifically, a closer look at the market between 2001 and 2006 reveals that buyers were getting into homes with little to no money down, regardless of bad credit with some buyers actually falsely reporting the amount of money they earned per month. Still, these buyers were qualified for loans by most lenders and the end result was an influx of homeowners who couldn’t afford their homes.

In hindsight, that housing phenomenon, which is a thing of the past now, was a trend that redefined the housing market, as we know it today.

By early 2007 the national “mortgage meltdown” occurred. Lending institutions realized the loan programs and application parameters were way too lax, causing far more damage than they had anticipated. As a result of the loans that were being approved without much consideration of buyers’ qualifications, homes were over valued and sellers had no equity plus couldn’t afford payments. Further they were losing their properties and even today many people are suffering the mortgage meltdown because of those lending trends.

Looking At The Here And Now

Lending institutions today process “full documentation” loans, something that is far different from the overly lenient loans of the previous decade. The level of detail and depth that goes into researching applicants’ qualifications now, is much higher than before. Lenders now perform detailed background checks, making sure that your salary is what you say it is, checking tax returns and references and also carefully reviewing your credit history. Very importantly, buyers that are getting into homes through loans obtained from lending institutions are people who can actually afford the home. This never mattered before.

Keeping this very important fact in mind, it makes sense then that the only way for prices to go back up is for buyers to have a higher income. Based on this, many homeowners’ expectations that their property will miraculously gain 20% to 30% of value on the market within the next year or so are unrealistic. Unless they suddenly experience a significant jump in income, the chance that their properties will gain that much value is next to impossible. The average annual income increase these days is around three to five percent.

Once our market is completely at the bottom in terms of prices, we can expect home prices to rise to somewhere in the 3-5% range, which is about the same as the average salary increase.

What Does This Mean Exactly?

The best way to illustrate how this plays out in terms of property value versus time needed to increase the value, is through this example:

With a property valued currently at about $450k, the homeowners are looking to retrieve at least $600k on it when they sell, the value of the home when they purchased it during the housing market boom. Their misconception is that the home’s value will return to its original purchase price value, within a year or so.

Given that property value increases coincide with the job market and wages earned, based on a 5% appreciation per year – on the $450k property it would take about six years for it to reach the hopeful $600k value again. So, to get to that price, the homeowners would have to hold on to the property until 2017 before they sell. Not a mere six months to a year.
Prior to making any decisions about whether to sell now or later – it makes sound financial sense to begin looking at your options today. Consult with your real estate agent to ascertain where you stand in the market today, how your home’s value compares to your expectations of when you sell it and when would be the best time for you to sell.

Thursday, March 3, 2011

Five Things You Can’t Afford to Miss About the 2011 Real Estate Market!

There is no shortage of experts telling you what is happening with the current real estate market – just flip on the tube for the latest market reports, read any newspaper or magazine for a glimpse of what’s happening or log on to blogs and online experts’ take on things. But the common denominator that sets the information in this article is that these predictions are geared toward our local area.

Prediction Number 1

Entry-level home sales will dominate the marketplace. For first time homebuyers, there are some excellent loan programs out there right now; 30-year fixed interest rates and in some cases, rates that haven’t been this low in over 60 years! With entry-level home prices slashed nearly in half, the obvious expected trend is that these homes are going to fly off the listing pages and make very many new home buyers happy campers.

Prediction Number 2

Recovery is the current hot buzzword. Especially for the national real estate market. After keeping an eye on the real estate scene for the last five years now, it’s finally time to report that the markets in some areas of the country are finally recovering. Our local area, however, is still a bit behind and like many other areas in the nation we are at least 12-18 months away from recovery. Still, the two markets we’re looking at now are entry-level and high-end. First time buyers are experiencing a flat market as it lurks on the bottom of the scale. Concurrently, high-end home purchases are seeing a very soft market and we expect to see property values drop a fair amount – as much as anywhere from eight to twelve percent.

Prediction Number 3

2011 is the year of the short sale. Since lenders are wary of accepting foreclosure applications these days, the new trend seems to be heading into more and more cases where a short sale takes place. In other words, lenders are accepting less than what is owed on the property rather than go the foreclosure route. There are several reasons banks and lenders are shying away from foreclosures, including reviewing their processes and paperwork plus examining other liabilities. Not to mention that current loan modification figures show a significant number (almost half) of such loans are heading toward default. Consequently, banks and lender confidence has dropped, resulting in more short sales. Further, within the high-end market, people who availed adjustable rate mortgage financing or are about to have their loans due, are feeling the burden of their luxury homes. To ease the burden, they are going to consider short sales. For more visit the link below for more on short sales.

Short Sale FAQs.

Prediction Number 4

Cash buyers will win. At a time when banks and lenders are low on confidence seeing that the recent wave of loan modifications being defaulted on has occurred on a significant scale, cash will always be king. As is customary in home purchases, especially during an uncertain market, the bidding wars begin and at the present time cash bids on homes will be taken further – literally all the way to the bank, so to speak. Recently, there was a sale where out of four bidders on the house one was a cash offer. Though it was the lowest amount, the winning bidder was the cash bid because it would close in less than fifteen days.

Prediction Number 5

Move-up sellers and move-down sellers have an advantage! Sellers who are looking to enhance their existing level of home or those who want to scale back – are seen coming into this market at this time. Move-ups will experience the same amount of money being spent yielding a bigger and better house. Move-downs will see sellers being able to hold on to a lot more cash after the purchase.
While the national scene is generally on the road to recovery, when you focus on a certain region in particular, the trends vary. By keeping up on the predicted trends for 2011, especially for our area, you can stay ahead of the game and maybe even come out on top!