How To Buy A House Without Going House Poor

How much house can you really afford? Is it the amount the bank tells you when pre-approving your loan? That’s what most people go by, oftentimes spending up to their max approval amount to get as much house as possible – or to be able to afford something at all in tight markets.

The debt-to-income (DTI) ratio, along with your credit score, is what is used by lenders to determine your loan approval and amount. The Consumer Financial Protection Bureau’s (CFPB) efforts to keep this number low notwithstanding, it has been rising to levels that are concerning to industry insiders who fear a widespread wave of home buyers overextending themselves and becoming unable to support their mortgage payment and other obligations.

The CFPB’s Qualified Mortgage (QM) Rule went into effect in 2014, intended to curb over leveraging by capping a borrower’s debt-to-income (DTI) ratio at 43 percent. “This means that a borrower’s total debt expense (including total mortgage payment) does not exceed 43% of their gross income (before taxes are withheld),” said the National Association of REALTORS (NAR). The rub: Many loans Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), are exempt from the 43 percent DTI limit.

The impact higher DTIs are having on the market is clear; a new WalletHub report “analyzed data from 2,533 U.S. cities and ranked all of them on the basis of a ‘WalletHub Home Overleverage Score,'” said 24/7 Wall St, finding that, in many cities, over leveraging is becoming the norm. “The score was derived from a city’s median mortgage debt, median house value, median income, mortgage debt-to-income ratio and mortgage debt-to-house value ratio.” The top 10 are all well over the 43 percent threshold, with the top three – San Luis Obispo, California at 59.62; Williamsburg, Virginia at 58.76; and Brooksville, Florida at 57.44) pushing 60 percent.

Getting in over your head with a house, either from the get-go when first purchasing, or later on with a home equity line that increases your monthly payments, is a dangerous scenario for homeowners (and for the market in general). So how do you keep yourself in check to make sure the house you’re buying is one you can actually afford and that you’re not in danger of becoming house poor?

Do your own calculations

The bank may be telling you that a $350,000 house is within your means, but are you OK with the monthly payment attached to that price? No one is more familiar with your spending habits than you. Are you really going to be able to cut $500 a month in discretionary spending (eating out, movies, clothes shopping, morning lattes) to comfortably make your new house payment?

Don’t forget about the extra expenses

If you’re buying your first home, you may not be estimating your new monthly expenses accurately. Did you include the HOA fee, if the community in which you’re looking to buy has one? What about any special assessments, if there are any? And private mortgage insurance (PMI) if you have an FHA loan and are putting less than 20 percent down on your home. That couple hundred dollars could put you over the top.

Have you also considered your utilities? You may not be accustomed to paying gas and electricity and water and trash if you’ve been living in an apartment. There could also be an increase in the cost of electricity if you have more square footage to heat and cool.

Watch out for HELOCS

A home equity line of credit (HELOC) can seem harmless. I mean, it’s your money, right? And you’re using it improve your home, which will only raise its value, right? But what seems like a great idea can also get you in trouble when you tap your home equity. You may be calculating the additional payment for now, but what happens later?

That’s the conundrum thousands are facing right now, as “HELOCs are resetting higher rates and over leveraging homeowners,” said Inman. “An analysis by Black Knight Financial shows that 1.5 million home equity lines of credit will see interest-only draw periods end this year with outstanding unpaid principal balances that average $62,500 per HELOC. The data reveals that average borrowers whose lines of credit reset will face an additional cost of $250 per month, more than double the current average payment.”

Keep an open mind

Finding a house you can afford may be challenging – especially for first-time buyers and those in competitive markets that push the affordability index. If you have tight parameters for your house hunt that are making it hard to find something within your budget, consider:

  • Extending your area search. You may not be aware of (but your Realtor probably is!) adjacent cities or communities that offer a similar lifestyle at a lower price or up-and-coming areas that provide a great value because they’re still slightly under the radar.
  • Buying a condo or townhome instead of a single-family home. Some buyers have an automatic aversion to condos and townhomes because they don’t like the idea of living attached. But your real estate agent may know of properties that are end units, that have private yards, and that are two-story units with no one above or below you. It may be that this is your best bet for homeownership you can really afford at this point, and you may find you like it far more than you expected – especially because so many of these communities come with great amenities like a pool and gym, plus front-yard landscaping that is taken care of, saving you time and money.
  • Looking at fixer-uppers. A little-known loan called an FHA 203(k) mortgage may be your “in” to a home you can afford and make your own. The bonus is that it’s also great for borrowers who may not have the credit and/or down payment to qualify for conventional loans. “The FHA requires a credit score of at least 580 if you want to make the minimum down payment; if you have 10% down, your score can be as low as 500,” said Interest.com. “You can borrow more than the home is worth, as long as the repairs will increase its appraised value. The most you can borrow is 110% of what an appraiser estimates it will be worth after renovations, or the cost of the home plus the estimated renovation cost, whichever is less, minus your down payment. The minimum down payment on an FHA loan is 3.5%.”

Written by Jaymi Naciri

 

Is This The Ultimate Example Of ‘What Not To Do’ When Listing Your House For Sale?

There’s a new home listing that’s been making the Internet rounds this week, and it’s a must-see for anyone who is selling their house, considering selling their house, or just wants to do a little point-and-stare. Oh, and for mannequin lovers. Let us explain.

The house in question is a large, gated estate on Jones Creek in the desirable Houston-area city of Richmond. I’ts listed for $1,275,000. At five bedrooms, five baths, and 7,406 square feet, with two acres of pastoral grounds backing to a scenic creek with a cattle ranch on the other side, and features including an art studio, game room, trophy room, swimming pool, outdoor kitchen, and a garage apartment, it’s seemingly a gem.

But that assumes you can actually see any of what the home has to offer. The owner of the home, whose identity is undisclosed, is an artist. And the home is her canvas. Oh, and her tools aren’t paint, they’re…well, see for yourself.

Did you notice the figure hanging on the stair railing? That’s a mannequin. And he’s not alone. In fact, one notable real estate insider has even teased a contest to guess the number of mannequins in the home. “Our team has been chatting about this house now for a few days,” said CandysDirt. “Home stagers are running for Xanax.”

It definitely begs the question, “What is art and what is clutter?” It also makes you wonder what the initial conversation was like between RE/MAX FINE Properties agent Diana Power, who’s listed the home, and her seller. We assume it, at least, included the words, “de-cluttering,” and “staging” and “storage.

It goes without saying that this array of art and accessories may be just a tad excessive and perhaps also a little bit distracting. And maybe also kind of weird, or at least eccentric. It makes for a great spectacle – and certainly brings a lot of attention. But will it sell the home? “She has lots of collections,” Power told Huffington Post. “It’s not hoarding or clutter; it’s art.”

But that’s hardly the end of the discussion, and it brings up a few more keys for selling your home.

Mind your curb appeal

A house that’s picture-perfect on the inside but questionable from the street isn’t doing a seller any favors. It takes just a few seconds to form a first impression. If the mannequin standing at the front gate (presumably, the community’s HOA either limited the number of mannequins to one or made sure it was inside the gate, or both) doesn’t raise an eyebrow, perhaps the knocked-down and haphazardly restacked mailbox will. I mean, we presume it was knocked down and haphazardly restacked. It could be “art,” after all.

 

Don’t creep people out

Yes, the clutter in this master bedroom is overwhelming. But beyond the sheer amount of stuff in the space, why is there a mannequin at the foot of the bed? Even more curious: all the dolls stuffed into the bookcases. One look and I’m heading right back out the door. You?

Bonus question: Where do you even get all those mannequins?

 

 

Wait. Foot-of-the-bed mannequin has a friend. Or two? Who’s that climbing under the table?

Show off the goods

Most sellers, and, certainly their agents, would insist on framing that view out to the pool and creek. But, between all the taxidermy (real or faux), pelts, knickknacks, dolls, blankets, and furniture, it’s hard to even focus the eye, even with that grand expanse of glass.

 

Maybe this serene view of Jones Creek makes it all better? Is that a mannequin riding the lawnmower?

 

This home has great features throughout. In the living room, there are beautiful built-ins, gleaming hardwoods, an elegant fireplace, and detailed dental molding all around. But you have to look hard to notice any of it.

“You can see the charm of the house underneath it all, from its $300,000 foundations to the way the windows are framed in cement and stone,” Powers told ABC13. “I think that the person who will end up buying this house can see the forest from the trees.'”

Let’s test that theory in the kitchen. This gourmet space has professional grade appliances and a huge island – and every inch of it has been covered with something to distract potential buyers from the great features.

At least the seller staged a mannequin at the island to showcase the eating bar. That is a mannequin, right?

 

 

 

Look at the features in this library. Behind all the books, papers, rugs, birdcages(?), and a mannequin that is WALKING ON THE CEILING, there are some stunning bookcases, and French doors that lead out to a patio and pool – if you can manage to get to them.

Does it make you more interested in seeing the home, and, if you do want to see it, is it only to count the mannequins?

And, P.S., don’t get any ideas about trying to buy the home with everything in it. The owner has stated she’s “taking everything” with her when she moves on.

Written by Jaymi Naciri

The Do’s And Don’ts Of Tapping Your Rising Home Equity

If you bought a home recently, it may already have increased in value. Equity growth goes hand-in-hand with pride of ownership (and fun stuff like tax breaks) when it comes to homebuyer goals, so say a big, “Yay!”

“Nearly 91,000 homeowners regained equity in the first quarter of 2017, according to real estate data firm CoreLogic’s latest housing report, said Realtor.com. “Since the end of the most recent housing crisis, 9 million owners in total have regained equity, the report notes. About 63 percent of all homeowners have seen their equity increase since the first quarter of 2016, with the average owner gaining about $13,400 between then and the first quarter of 2017.” According to Frank Martell, president and CEO of CoreLogic, that’s the “largest increase since mid-2014.”

But, before you go making plans for all that equity, either by doing a cash-out refinance (if possible and prudent) or getting a home equity loan, take a pause. That money may be best left right where it is. If you still want to tap that equity, here are some of best – and worst – ways to use it.

Home renovations

When your home has equity, it can be tempting to use it for home renovations, which, presumably, will further raise your home value – or at least make your home prettier or more functional. Knowing which renovations pay you back is key to making smart choices. Review Remodeling magazine’s Cost vs. Value Report, which “compares average cost for 29 popular remodeling projects with the value those projects retain at resale in 99 U.S. markets.” You can then take your research further, viewing data for your regional area. This will help you decide if that $50,000 kitchen is a good investment, or if that attic renovation you were considering will be a bust from an ROI standpoint.

A new car

That fancy new car is calling your name, right? Does it make sense to use some of your home equity to finance or buy it outright? Ask yourself this: Is this a car you can’t afford without using your home equity? Can you afford to pay the difference in your current monthly payment and what will be your new payment – plus the monthly cost of the car?

“During the housing bubble, consumers used home equity borrowing to pay for everything from boats and gambling junkets (clearly bad) to cars and kitchen renovations (not so bad), said Interest.com. “The problems these homeowners experienced during the financial crisis and recession taught us that even some ‘not so bad’ spending should be scratched from our list of acceptable uses. So, while we used to say that financing a car with a HELOC was OK, we no longer believe that. Besides, auto loans are now one of the few types of consumer loans that are cheaper than home equity loans or lines of credit.”


Additions

Adding on to a home can be a great way to make it more livable, especially if the space is inadequate for your family. The Cost vs. Value Report can be useful here, too. You might be surprised to learn that a midrange bathroom addition typically only pays back an average of 53.9%. But, if you bought an older home that only has one bathroom, adding another could have a much higher ROI that makes the addition worth it.

When it comes to larger undertakings, “Studies show that nearly all of the cost of a mid-range two-story addition may be recovered at the time of sale,” said The Spruce. “The key here is ‘may be recovered,’ as there is no predicting the real estate market years in advance. While this might seem like a ‘no-brainer,’ it needs to be mentioned. More space means higher heating and cooling costs, more windows to wash and gutters to clean, increased property taxes, and more house to clean. Even though additions offer the potential for higher cost-value ratios than other renovation projects, you still may not recover the full cost of the addition when you actually sell.”

Vacation

That European cruise or trip to Machu Picchu sounds like a great idea, especially because you’ve got some cash to pay for it with the rising equity in your home. But consider this: You may be paying back the money you spend on that vacation long after you return home.

 

 

 

 

 

 

 

Written by Jaymi Naciri

10 Totally Free Tips For Getting Your Home Sold Quickly

Sell Your Home

 

 

 

 

 

 

Staging your home is a critical step in getting it sold, but all the recommended updates and upgrades can get pricey. Thankfully, there are tricks you can use to make your home look bigger, better, and brighter, without spending a dime.

  1. Fix up your floors

Don’t want to pay to replace or refinish your floors? No prob. Grab a brown crayon to fill in divots. A one-to-one mix of olive oil and vinegar rubbed directly on scratched areas will also help make it look new. You can also use canola if you don’t have olive, but then use a one-part vinegar, three-part oil mixture. Or, try this hack that uses walnuts to fix scratches. No, seriously.

Floors look great but don’t sound so hot? “Fix creaky wood floors with a generous dusting of baby powder,” said One Crazy House. “Work it into the cracks until the floor is no longer noisy.”

 

  1. Make it sparkle

Presumably, you already have cleaning supplies, sponges, and paper towels in the house. Now all you need is some elbow grease to make your home look shiny and new.

When selling your home, you need to take the cleaning beyond your typical weekly run-through. Think “Spring cleaning” turned up a notch or two. Remember that potential buyers will be looking everywhere, including inside drawers and cabinets. Make sure they’re crumb-free and well organized. They may also open your refrigerator. While this can seem intrusive, you don’t want to give them a reason to walk away, so make sure to tidy up the inside, wipe up any spills, throw away rotten food, and put a nice big box of Baking Soda in there to absorb any leftover smells.

  1. Let the light in

Everyone is looking for “natural light,” so show off what you’ve got by opening up those blinds and drapes. Did you just reveal a bunch of dirty windows and sills? Ewww. Grab that cleaning spray and make them shine. An old toothbrush is a great way to get gunk out of corners and in window tracks.

If your place isn’t light and bright, even with all the blinds and drapes drawn, you’ll need to depend on artificial lighting. This is no time to have lightbulbs out. Go hit that stash in your laundry room cabinet and switch out for fresh bulbs.

  1. Declutter

Home stagers will tell you there is no more important step when preparing your home for sale. “If you are serious about staging your home, all clutter must go, end of story,” said Houzz. “It’s not easy, and it may even require utilizing offsite storage (or a nice relative’s garage) temporarily, but it is well worth the trouble.”

Do a walk-through with an outsider’s eye, or ask a friend or family member to help since they’ll be more objective. Anything that isn’t used regularly or is taking away from the open feel of the house can be packed away. Small appliances and anything else hanging out on countertops can be put in a cabinet if you’re not ready to stick it in a box. You want people to see the bones of the house, not your blender.

 

  1. Depersonalize

While, you’re decluttering, keep personalization in mind. Buyers want to be able to picture themselves living in the home, and they might not be able to do so if they can’t take their eyes off your wall of taxidermy.

 

 

 

 

 

  1. Create closet space

Even if you have the world’s largest walk-in closet in the master bedroom, you can give buyers the impression that there isn’t enough space by overfilling it. Stagers recommend taking half of your clothes and shoes out and packing them away to create some airiness. Does the idea of packing up your stuff freak you out? You’re going to have to do it when you move, anyway. This is just giving you a head start.

  1. Remove the stink

Does your home greet guests with a big whiff of cat box? Potential home buyers might just turn right back around and get in the car. You also want to make sure your animals aren’t irritating those who are touring or impeding them from entering certain rooms. Don’t want to board them? Surely you have a friend or family member who’d love to watch your pets during showings, right?

  1. Pull those weeds

You really can’t overestimate the importance of curb appeal today. Even if you don’t want to spring for a few bags of mulch and some colorful flowers to frame your door, there are easy and free steps you can take to give buyers a great first impression. Dispose of any visible weeds, leaves, and other unwanted stuff hanging out in the yard. Give your bushes a trim and mow the yard. If you can’t power wash your home, at least wash the outside of the exterior windows that are within eye level.

And don’t forget about the area closest to your front door. Sweep that stoop and make sure your welcome mat is actually welcoming, instead of dusty and dirty

  1. Address your furniture

Some of the most common problems in homes when it comes to furniture: 1) It’s ugly; 2) It’s old; There’s too much of it; The arrangement is uninviting. Ugly and old might be hard to overcome when you’re trying not to spend money, but the rest you can do something about.

“Sometimes when sellers are trying to make a small room seem like it’s more spacious, they have a tendency to push all of their furniture against the walls to leave a big open space in the middle. This type of arrangement may leave a lot of open space, but ultimately leaves the interior design looking unfinished — a big turn off for buyers. In this situation, it’s better to create furniture groupings. First, envision the way the space should be used,” said Freshome. “Do you have a huge flatscreen TV that requires a lot of seating? Is there a corner in your living room that would serve perfectly as a reading nook? Group the furniture in ways that would make sense for the intended use. Then, make sure that there are clean and direct pathways through the room. You want potential buyers to be able to envision themselves living in your home and one of the quickest ways to do that is by creating a cozy seating area that’s fit for conversation.”

If the problem is that you’ve created a crowded space by using too much furniture, ditch a few pieces in a friend’s garage for the time being (or, even better, donate them!) to create an intimate seating area. You can always bring those pieces back into your new home.

  1. Borrow stuff

If, at the end of the day, your home still isn’t looking show-ready, maybe it’s time to raid a friend’s house. Have a loved one who has an extra couch that’s more neutral than yours or a couple of great accessories? It’s time to test their love for you.

Written by Jaymi Naciri

 

The First Offer May Be The Best Offer

Versions of this column have appeared before. It is still true. And for many, still relevant.For Sale Sign

Sometimes when everything goes right we have trouble accepting that fact. Perhaps nowhere is this phenomenon more clearly illustrated than in the case where a seller receives a good offer right away.

The annals of real estate are well stocked with stories of sellers who refused to take a good, but not perfect, first offer, and who then waited a long, long time before finally accepting something else at a considerably lower price. And most agents who have been around for a while know to shudder when a good strong offer is made almost at the outset of a listing; for the seller’s reservations are almost inevitable. “Did we list it too low?” “If someone will offer this much so soon, maybe we should wait a while and see if we can get more.” Etc.

When we read of Silicon Valley listings routinely selling at above list price, and while we are still in a period when multiple-offer situations are commonplace, it is understandable that such thoughts come to mind. Nonetheless, they are generally unfounded, especially if the market is anywhere near “normal”, as ours is today.

As an antidote to the ill effects of the “curse of the first offer”, a couple of observations might be kept in mind.

First, the fact that an offer is received early in the listing period — even in the first few days — doesn’t mean that the property has been listed too low.

It is easy to overlook how very efficient the residential real estate marketplace has become. Modern multiple listing systems (MLS) provide agents, and thus their buyer clients, with virtually instant access to information about existing inventory and about what has newly come on the market. In the old, old days a buyer’s agent did not become aware of new listings until “the book” (i.e. the compilation of MLS listings) was published. There might have been a lag time of ten days or more from the time the listing was taken.

Today, a good buyer’s agent will have electronically entered a “profile” of his client’s needs and price range into the system. Then, whenever he logs on to the MLS, he will be notified if a listing has been entered that matches that profile. In a low-inventory market such as we have had recently, buyers’ agents will log on a half-dozen times a day, or more, to see if an appropriate new listing has been entered. Moreover, in most systems the buyer’s agent is able to place the buyer himself on a similar notification.

The point is that potential buyers learn quickly of the existence of an appropriate new listing. Thus a flurry of activity at the outset of the listing does not necessarily imply a too-low price; rather, it reflects the efficiency of the system.

Secondly, an early first offer does not imply that the seller should hold out for full price.

We all know that there is typically a bit of a dance in the pricing and negotiating for a property. Sellers, with the concurrence of their agents, will usually list their property for an amount that is both higher than what they believe its value to be and higher than what they would be satisfied to receive. Why? Because they know that buyers almost always want and expect to pay less than the listed price

However, when an otherwise acceptable offer comes in near the outset of a listing period, sellers are frequently tempted to hold out for full price, or much closer to it than would normally be expected. Caution should be exercised in this regard.

For one thing, as we have noted, exposure of the property to buyers occurs pretty quickly nowadays, and sellers shouldn’t assume that there are going to be more, much less higher, offers as the listing period progresses.

Secondly, there often can be a transactional benefit to “leaving something on the table.” A real estate transaction is a process. These days, with inspections and disclosures, there are almost always “second negotiations” during the course of escrow. A buyer who feels ground down in the purchase negotiation may well be more difficult to deal with as other issues arise.

Written by Bob Hunt

Is Now The Best Time Ever To Buy Your First Home?

If you’ve been thinking about buying your first home, talk of rising mortgage rates may have you worried. But, the reality is that this may be one of the best opportunities for first-time buyers in recent memory. Conditions were already good for first-timers with new, super-low down payment loans. But the FHA’s announcement that they would be cutting mortgage-insurance premiums makes buying even more advantageous.

“The annual fees the Federal Housing Administration charges to guarantee mortgages it backs are being cut by a quarter of a percentage point,” said Bloomberg of a statement released by the Department of Housing and Urban Development (HUD). “With the reduction, the annual cost for most borrowers will be 0.60 percent of the loan balance.”

According to HUD, “The fee cut would save new FHA-insured homeowners an average of $500 this year. The cut would take effect on Jan. 27.”

What other factors should you be paying attention to if you’re looking to buy your first home?

Mortgage rates

Yes, rates are up from their lowest point. But the average 30-year fixed-mortgage rate right now is 4 percent, down a bit this week and waaaaaay down from decades ago when they were in the teens. You’ll pay a few bucks more per month now than you would have at this time last year, but, if you’re getting an FHA loan, those new mortgage interest cuts will help.

Man pondering

More than anything, it’s important to be realistic. We’re not anywhere near gloom-and-doom time, despite some of the more hysterical talk out there. In fact, today’s rates are still near historic lows, which make buying a home more affordable than rent in many cities.

But, if you need to find a way to lower your monthly payment on your future home, and you’re not eager to search for less expensive homes, remember that your credit helps determine your mortgage-worthiness, and the better it is, the better your interest rate. If you’re not being offered the best rate out there, it’s time to…

Get your credit in order

Have great credit? Great! Your lender will be pleased and, presumably, you will be, too. But many of us need some help in this area, and even a small bump in your score can make a big difference not just to the rate you get but also whether you will qualify for a loan at all.

“The homebuyer’s credit score is among the most important factors when it comes to qualifying for a loan these days,” said Bankrate. Your lender will be able to give you tips for improving your score, which can range from checking your report for errors to paying off old delinquent accounts.

It’s also important to keep in mind that what you consider to be responsible credit management may not necessarily be seen as a positive when you go to qualify for a loan. “Just because you pay everything on time every month doesn’t mean your credit is stellar,” they said. “The amount of credit you’re using relative to your available credit limit, or your credit utilization ratio, can sink a credit score. The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers would have a lot of credit available, with less than a third of it used.”

 

Couple looking at house

Low down payment loans

For many first-time buyers, the down payment is the largest barrier to homeownership. But new loans with lower down payment requirements are helping to eliminate it.

The most popular loan for first-time homebuyers continues to be through the FHA, for a number of reasons: Because this loan is government-backed and because it requires only 3.5 percent down if you meet their credit and income requirements, and a minimum of a 620 credit score.

The new Affordable Loan Solution Mortgage from Bank of America gets those down payments even lower—to three percent—and without Private Mortgage Insurance (PMI). But, there are restrictions related to income that “could rule out a lot of potential borrowers,” said The Street.

“The program, a partnership between Bank of America, Freddie Mac, and non-profit Self-Help Ventures Fund, is targeted towards low – and moderate – income borrowers. To qualify, borrowers can’t make more than the HUD area median income and must have a credit score of 660 or higher. As an example, for 2016, New York City-based borrowers with a household of one would need an income below $65,200 to qualify for the program.”

SoFi, an online lender that started out focusing on student loan refinancing, has also gotten into the mortgage game, offering a loan that has a higher down payment at 10 percent, but without PMI.

Investigate situation-specific loans

Are you a veteran, a police officer, or a firefighter? There may be a special loan for you with conditions that can make purchasing a home easier and more affordable. There are also specific loans for those who are buying a home that has (or needs) energy-efficient features, one that can be bundled with home improvement funds, and another from the USDA that can save those who are moving to a rural area money.

“This one may surprise you,” said nerdwallet. “The U.S. Department of Agriculture has a homebuyers assistance program. And no, you don’t have to live on a farm. The program targets rural areas and allows 100% financing by offering lenders mortgage guarantees. There are income limitations, which vary by region.”

 

Written by Jaymi Naciri

 

Room for Improvement When You Sell Your Home

hccor-raney-richardson-neutral-living_lg

Sell Your Home

If you’re getting ready to sell your house, you may not have extra cash to spend on home improvements.  But some basic improvements can be inexpensive, and the results are worth it.  Minor upgrades, such as painting the living room or changing the hardware on kitchen cabinets, can make a house much more attractive.  Consider these simple ideas from Frontdoor.com and HGTV.

 

Flowers for LandscapingYard Sale: When buyers pull up to your home, the first thing they’ll notice is the front yard.  Improve your homes’ curb appeal by brightening it with flowers.  Place ceramic pots with colorful blooms on either side of the front door for a warm welcome.  If the front door looks worn from the elements, spruce it up with a fresh coat of paint.

 

 

Under Counter Lights

Joanne Jakab Interior Design

See the Light:  Proper lighting can help make your home more inviting and comfortable to buyers visiting your home.  Assess the ambiance to determine where there could be more, less, softer, or stronger light.  For instance, kitchens often have useless dark spaces under cabinets.  Consider installing under-cabinet lighting, which will brighten up cooking space while adding a dramatic effect to the kitchen.

Brush Up: A new coat of paint can change the entire look and feel of a room.  Choose neutral colors that appeal to a wide range of tastes and easily blend with many styles of home decor.  Neutral color schemes also allow buyers to envision their own personal style in a new home.  Consider beige, light gray or bone white to create a warm and comfortable living space.

CRS (Council of Residential Specialists)

Home Sellers: How Your REALTOR Does It Better

As you think about selling your home, it may have crossed your mind that you should just sell it yourself. In 2015, approximately 89% of home sellers hired a REALTOR®. What do they know that you don’t?

To sell your home yourself, you’ll be competing against experts who have more tools and connections than you do. In addition to multiple listing services, broker Websites, real estate Websites, personal Websites, and professional-grade videos and photos, real estate professionals network with each other to sell many homes before they are introduced to the marketplace.

You’ll have to perform all the jobs a professional would do for you, along with adopting a professionalism you haven’t been trained for, all while holding down your own job. When will you have time to study the market, create a marketing plan, buy advertising, show your home, and negotiate with buyers?

It’s no problem for a Realtor when a buyer wants to see your home at any time, but will your boss let you take off in the middle of the day to show your home? Will she allow you to use the company’s graphics and editorial team to whip out a top quality listing presentation for you? Will you have the long-term price trends to defend your price to buyers?

You won’t know whom you’re allowing to see your home. Even if you could arrange a time to show your home to buyers, how do you know they aren’t coming into your home to steal your prescriptions or worse?

Serious buyers are vetted through their real estate agents and bankers so only buyers who are qualified to buy your home can be allowed to see it. Do you know how to put a buyer through instant credit checks so you’ll know whether or not they’re suitable before you let them in your home?Agent with clients 2

Real estate transactions are rife with opportunities to make legal mistakes. Do you know what you have to disclose to the buyer to be compliant with state laws? If you did add-ons yourself and didn’t get a building permit, you might be in violation of city codes that could come back to bite the buyer and you.

Closing in a garage doesn’t mean you can add square footage to your home without subtracting market value for no longer having a garage. Your local taxing authority should reassess your home so that the size and amenities match the marketing materials and disclosures you’ve provided about your home.

Once you have a contract, you have to get to closing and many contracts don’t make it that far. The buyer can decline to buy for a number of reasons, including FHA or VA requirements that your home might not meet. An agent can help negotiate problems and make sure every entity in the pipeline is doing their jobs in a timely fashion so there are no bad surprises.

Those are only a few of the many reasons sellers hire real estate professionals.

Written by Blanche Evans

The Sweet Spot Of Pricing Your Home

Pricing Your Home is An Art and A Science

When you and your REALTOR® sit down to begin pricing your home, you’ll be looking at competitive homes that are the most similar in size, location and amenities as your home. You may find that prices can be thousands of dollars higher or lower. It’s tempting to pick the highest price and say, “Let’s list it here.” But what if your home doesn’t sell at that price?

High prices are a strategy that can work in an accelerating market, but it’s risky. Your home can sit for months without selling and you’ll end up marking the price down, perhaps lower than it should have sold for in the first place.

Pricing your home is a science. The science is choosing the right price at which your home will sell quickly. How do you do that? By analyzing your local market conditions and where your home fits in the spectrum.

The only way your home will sell at the highest price possible is if your buyer agrees to your home’s value. To best determine market value, you have three important tools: CMAs, appraisals, and your REALTOR’s®knowledge of the market.

Selling Your Home

The comparative market analysis

A comparative market analysis (CMA) is a side-by-side comparison of similar homes for sale as well as homes that have recently sold in your neighborhood. REALTORS® use CMAs to compare the features that make each home unique, including age, location, number of bedrooms, baths, room sizes, updates, condition, etc.

As a seller, you should be able to see where your home fits — in the top or lower price range of similar homes. For example, if a similar home to yours has been recently renovated with a new kitchen, expect it to sell for more than your home if your home has not been improved.

The appraisal

An appraisal is a market analysis performed by a professional appraiser using a variety of sources, including multiple listing system data and conforming loan formulas.

Appraisers most often work for lenders to determine market values, so that lenders can weigh the risk of making a loan to a homebuyer. Appraisals come after an offer is made when the buyer applies for a loan. Even though the buyer pays for the appraisal, the lender uses it to determine whether or not to make the loan at the contract price.

Other market data

Your REALTOR® has access to data that may not be public through the Multiple Listing Service. This data is provided to broker members to track market trends over weeks, months and years. Some brokers pay data companies for specific markets that help them plan their business, such as the number of listings on hand, which zip codes are the hottest, and whether closings are trending up or down over last month or last year.

Your REALTOR® uses all this data to help you hit the sweet spot of pricing. That’s high enough to reflect your home’s value, but attractive enough to buyers to get it sold quickly.

Written by Blanche Evans

Top 3 Reasons A Buyer Choose Their Home

What Makes A Buyer Choose Your Home

You may think buyers will love your home because of your extraordinary taste in home furnishings or the incredible job you did with your home addition. Nope, it’s not the décor or the vast add-on that gets them to commit, although they may help. There are three top reasons a buyer chooses to buy a home — price, condition, and location.

Price

Let’s start with Price. To choose the right asking price for your home, you need to know if your neighborhood is in a buyer’s market or seller’s market. A buyer market is characterized by large inventories of six months’ supply or higher, few buyers making offers, low offers, and many other concessions asked of sellers. A seller’s market is characterized by low supply of six months on hand or less, heavy buyer traffic, multiple offers, and close to full price or full price offers.

Bankers, buyers’ agents and buyers all have access to the same market information that your agent has given you. If you overprice for the current market, your potential buyers won’t get to see your home, and even if they do, they won’t get their loans approved.

Condition

Allow your real estate agent to help you market your home by putting it in the best condition possible. Buyer pet peeves may be easy items to fix, but you don’t want your house to go to the bottom of their list because you failed to paint, mow, replace the carpet, etc. Sometimes you have to invest a little money to make money.                                                                                            Buyer Home Choices

Remember, today’s buyers are more skeptical about buying a home, so creaky steps, dripping faucets, and outdated wallpaper just give buyers a reason to skip your home.

Location

You can’t do much about your home’s location, but you can make your home more attractive with lovely landscaping, fences to block out ugly views and sounds, a lower price and immaculate condition.

If you do have a great location, don’t overprice. People expect to pay more for a great location next to schools, transportation, shopping and restaurants, but if you overprice, they will scrutinize the price and the condition.

It’s hard not to be sentimental about the home you’ve lived in for years, but to buyers, your home is a commodity. Like you, they simply want to make a good deal on a home they love.

You’ll quickly find out what real estate agents and their buyers think of your home. If you get a quick offer, you know you priced it right for the location, condition, and the current market.

If you don’t get an offer within a couple of weeks, or whatever period is normal for your area, there’s something wrong. Look at your price and condition and see if you can make your home a little more desirable.

Written by Blanche Evans