The “20% down payment” myth

Money management guru Dave Ramsey advises that “The ideal way to buy a house is the 100 percent down plan—pay cash for the whole house.” Wouldn’t it be nice if all of us could participate in that plan?

The fact is, in February of this year, 77 percent of American home buyers used a mortgage to purchase their homes, according to RealtyTrac.com.

With a mortgage, however, comes the need for closing costs and cash upfront for a down payment. Many would-be homeowners hesitate applying for a mortgage, thinking they need 20 percent of a home’s purchase price as a down payment on the loan.

If you’re among them, we have good news for you: you can buy a home with zero down payment (if you qualify) or with a very-low down payment–3.5 percent in many cases.

Let’s take a look at some of the alternatives to the 20 percent down payment.

There are several ways to buy a home with NO down payment

Did you or your spouse serve our country in the military? If so, you may qualify for a loan guarantee from the U.S. Department of Veterans Affairs (the VA).

Because the VA guarantees to repay a portion of the mortgage should the borrower default, lenders offer attractive rates and terms and a zero down payment loan.

The VA-backed loan is available to qualifying veterans, those currently serving and surviving spouses. Learn all the details at VA.gov.

USDA

The United States Department of Agriculture (USDA) offers several home loan options for low- or moderate-income borrowers. Neither require a down payment and the “catch” is that the home you purchase must be in a qualifying region, typically rural.

The home must also be “modest” for the area and generally excludes homes with swimming pools and other high-end features.

But, it’s an ideal way to become a homeowner, if you qualify. Learn more about these programs online at USDA.gov.

 

Use down payment assistance programs

If you don’t qualify for the zero down programs, you may want to look into some of the many down payment assistance programs available.

You’ll find many are offered by federal and state government entities as well as local municipalities.

Federal programs include help for teachers, fire fighters, medical personnel and police officers. There are programs for Native Americans, Alaskans and Hawaiians as well.

We’re happy to give you information on regional programs – reach out for more information.

Consider programs with a low-down payment requirement

If you don’t qualify for one of the zero down payment programs, pursue a mortgage through one of the programs with low down payments.

FHA

Lenders are far more amenable to loan money to borrowers with less-than stellar credit when the government guarantees the repayment.

The Federal Housing Administration (FHA), a department within the U.S. Department of Housing and Urban Development (HUD), a loan program you’ll want to pursue if this sounds attractive to you.

Although the program has experienced several changes over the years, it’s still the most widely used mortgage program by first-time home buyers.

The down payment requirement for an FHA loan varies, from 3.5 percent to 10 percent of the loan amount. Which you’ll pay, depends on your financial situation and, naturally, each lender’s requirements.

The biggest drawback of the FHA mortgage program is that you’ll pay for being what lenders call “high risk” or “sub-prime” borrowers. This payment is in the form of a mortgage insurance premium (MIP) – an extra payment tacked onto your mortgage payment each month.

In the past, it was possible to get rid of the MIP when you reached a certain amount of equity. That changed in recent years and now the insurance remains for the life of the loan, if you pay less than 10 percent down when you purchase.

If you pay more than 10 percent down, MIP is cancellable in 11 years.

With a conventional loan, on the other hand, you can dump the MIP when you reach 20 percent equity in the home.

Fannie Mae and Freddy Mac

Fannie Mae and Freddie Mac started backing loans with a 3 percent down payment back in 2014 and 2015.

To snag one of these loans, you’ll need to purchase private mortgage insurance, your credit score will need to be at least 620 and you’ll need to agree to participate in home ownership counseling classes.

Questions? Feel free to reach out to us. We’re happy to help.

7 tips when selling your parents’ home

One of the hardest things in life for us to come to grips with is that our parents have advanced into old age.

At some point in the not-too distant future, they will leave the home, whether through death or hospitalization. Then, it’s up to you to dispose of their belongings and the home.

Depending on family dynamics, selling a parent’s home can very easily be a situation fraught with potential problems.

Let’s look at some tips to make it easier.

Get it on the market as quickly as possible

There are several reasons this is easier said than done, and we’ll get into some of those below, but the longer the house sits unoccupied, the more carrying charges you’ll incur, such as property taxes, utility bills and vacant home insurance.

Get a head start

You won’t be able to obtain clear title on the property until a personal representative is appointed and is given the documents required to dispose of real property. While you wait, however, you can save time by making repairs and interviewing real estate agents.

Check out the home’s mechanicals

Elderly homeowners often can’t keep up with routine home maintenance, and the last thing you need during the sale process is a costly surprise, such as faulty heating or plumbing.

Be ready to dispose of stuff

Your parents likely will have accumulated many things over the years. Hopefully, they won’t have been hoarders, but even so, you’ll have plenty of things that neither you nor your siblings want.

It could be outdated furniture or your dad’s dragon collection. Every member of the family with an interest in the home should be involved in the sorting and disposal process.

It can be very sad to toss out things that meant so much to our parents and some family members may take it harder than others.

If you grew up in the home, bring tissues

Nothing we say will prepare you for the emotions you’ll feel when all is said and done and you close and lock the door to the family home for the last time.

Feel free to ask your listing agent for copies of the listing photos to keep as mementos. You may also want to take some of your own to remember special parts of the property that mean a lot to you.

Trust your real estate agent to list the home at its market value

Heirs often have dollar signs in their eyes and want to set the asking price too high, which can lead to the house staying on the market much longer, increasing those carrying costs.

Ensure that everyone is on the same page when it comes to the asking price and how far everyone is willing to negotiate on price. This will save time during the process.

Don’t DIY it

As tempted as you might be to make money from the sale, especially if you have several siblings to divide it up amongst, let professionals help you. Surround yourself with experts, especially if you hope to make any money from the situation.

If you’re the estate’s personal representative, hire a probate lawyer to help with the many filings the court will require, and hire an experienced real estate agent. An agent is especially essential if you and your siblings live out of town and can’t be there to hire people to clean out the home and fix it up.

Give the home a nip and tuck

Although your parents’s home may be dated, place limits on the money you spend to fix it up. Giving the kitchen a total makeover, for instance, probably isn’t worth the cost involved.

But it will pay off to clean thoroughly, paint the walls and remove old carpeting throughout the house, especially if there are hardwood floors underneath.

We’re happy to help in any way we can. Feel free to contact us if you need suggestions on how to ready the home for the market and for a free determination of its current market value.

What Happens After My Offer is Accepted?

After all the back-and-forth on price and haggling over concessions and repairs, it’s finally over and your offer to purchase the home was accepted.

Now, the real work begins.

Granted, you and the seller are no longer front and center on the home purchase stage; there are some details you’ll need to attend to after the offer is accepted.

For the most part, however, this is the point where real estate agents really earn their money and a good one proves that he or she is worth every penny.

Once you sign the purchase agreement and hand it to your agent, he or she will return to the office, check it over for accuracy and ensure signatures and initials are in the proper places and then get going on all the time-sensitive duties.

Escrow Opens

Quite simply, escrow describes a holding of funds or other items by a neutral third party to a transaction until they are distributed according to the principal parties’ instructions.

In the typical residential real estate transaction, the principals include the seller, buyer and lender.

To open escrow, the agent or her transaction coordinator calls the escrow officer, typically employed by an escrow or title company, to arrange delivery of the purchase agreement and your good faith deposit.

This is the point at which the clock begins ticking toward the closing date specified in the purchase agreement.

By the way, not all states use escrow. In non-escrow states, a real estate attorney handles these duties.

Title Company

Next, a title search will be ordered. This is, in a nutshell, a search of the home’s chain of title (from the present owner back to the original owner).

The title company is looking for any problems with the home’s title, now or in the past. An example would be a lien against the property, or an additional loan against it.

The title company will issue what is known as a Preliminary Title Report and deliver it to the escrow holder.

It’s up to the seller, however, to clear any problems. If he or she can’t or won’t, you can cancel your agreement to purchase the property.

Appraisal and Loan Process

While all of the above is happening, your lender will send out an appraiser to determine the value of the home and begin processing your loan.

It’s important to return your lender’s phone calls as soon as possible.

The Home Inspection

You’ll order a home inspection (or we can do it for you). Take your time when reviewing the inspector’s report and get all of your questions answered. We’ll be with you every step of the way.

Any adverse conditions revealed in this report, which may require repairs, will have to be negotiated with the seller.

Contingency Removal

While all of the above is happening on your behalf, without your involvement (other than to review the Preliminary Title Report and the home inspection and sign off on them), the next step in the process requires your involvement.

It’s time to remove the contingencies in the purchase agreement. Contingencies are events that must occur, according to the date listed in the contract, before the sale can close. Typical contingencies include:

  • Final loan approval – failure to obtain a loan will kill the deal.
  • Inspections – repair issue that arise from the home inspection are typically open to negotiation between the sellers. If the seller refuses to remedy any concerns you have the right to cancel the contract with the full return of your earnest money deposit.
  • The successful sale of your current home.
  • Appraisal – if the home fails to appraise for the amount you are borrowing from the lender you can negotiate with the seller for a lower price, pay a larger down payment or walk away from the sale.

Once the contract contingencies are removed you can still walk away from the deal but you will forfeit your earnest money deposit and possibly be liable for damages if your contract includes such a clause.

Just two more steps and we’ll be at the closing table!

Homeowners Insurance

If you haven’t yet shopped for homeowners insurance, it’s time now to take care of it. Ask friends and family which broker they use, if they’re happy with the price they pay and the service they receive.

Final Walk Through

You have one final chance to walk through the home to ensure that it is in the same condition (or better) as when you agreed to purchase it.

This is when we ascertain that all the agreed-upon repairs were performed and that no damage was done to the home during the seller’s move.

We’ll be there with you.

Closing

At closing you’ll sign a mountain of paperwork, but when all is said and done, you’ll be a homeowner.

Congratulations!

Shopping for a home? 10 tips to help you avoid impulse buying

When we think about the impulse purchase, most of us picture a grocery store. After all, retailers purposefully set up their stores to encourage us to pick up and purchase items on a whim.  

If you, like millions of consumers, like to shop for fun, if you are status conscious or if you find that you spend money without thinking about what you are buying or why you’re buying it, you may be an impulse shopper, according to Ian Zimmerman Ph.D. at psychologytoday.com.

It’s one thing to grab a candy bar at the checkout stand in the grocers, but to grab a new home? Not good.

We see the tendency often in our real estate business. Clients who have a wish list that they swear is set in stone yet fall madly in love with a home that offers few of the items on the list.

Let’s look at ways to avoid giving in to the impulse to buy a home that doesn’t match your wants and needs.

The wish list

The most important features you want in a home go at the top of your home-shopping wish list. These are the non-negotiables – the extra bedroom, perhaps, or a community amenity you need.

These items should be in big, bold lettering so that when you glance at your list, there’s no way to miss them.

Not all these tips may apply to your situation, so use them as a guide to help you shop intelligently for that new home.

  1. Many homebuyers insist that appliances be included in the purchase of their new home. If you are among them, we’ll need to find out how old they are. Then, be nosy – peek inside the oven and inspect the refrigerator. This will give you an idea of how well the homeowner has cared for them.
  2. After the kitchen, home shoppers tend to spend a lot of time in the bathroom. Check these rooms carefully to ensure they will fit your needs. If you use electrical outlets a lot, check that there are enough and that they’re in the proper place for your needs. A blow dryer plugged into a socket 3 feet from the mirror won’t cut it. Is there adequate bathroom storage and lighting? If not, how challenging would it be to add these features?

  3. Speaking of storage, does the home offer enough of it? Check the closets, pantry and other storage areas to ensure they meet your needs.

  4. Flooring is often a sticking point in a home sale. Whether it’s not the material you’d hoped for (carpet instead of wood, vinyl instead of carpet, etc.) or the flooring is damaged, it’s important to not overlook this inspection. Flooring is pricey.

  5. Don’t be so awed by the kitchen’s staging that you fail to ensure it meets your needs. Picture yourself using it – does it flow the way you need it to? Is there enough storage?

  6. Lighting is another often-replaced item in a new home. Determine if it’s adequate and how much of it will need to be replaced.

  7. The condition and age of the HVAC system and the water heater are important as well. This is another very expensive fix or replacement.

  8. How do the schools in the area stack up against others in the region? Even if you don’t have school-aged children, nearby schools can impact the home’s value.

  9. Check your wish list for items you must have. For instance, if appliances are on the list, find out if they’re included in the sale. Never assume and always ask.

  10. Never allow yourself to become so enamored with a home that you ignore major problems on the home inspection report. These don’t necessarily have to be a deal breaker. With the right agent, negotiations may bring about a solution.

This is a very cursory overview of ways to keep your wits about you when shopping for a home for sale.

You can find a more in-depth checklist at the U.S. Department of Housing and Urban Development’s website. We suggest you print several copies – one for each home you view.

A critical early step toward buying your dream home

Shopping for a new home can be overwhelming. Finding a real estate agent, looking at homes online, and applying for loan approval, there is a lot to do, and it can be difficult to know where to start.

Believe it or not, there is a first step that every home buyer should take–before they start interviewing real estate agents and before they look at even one home online.

Know What You Can’t Live Without

Make a list of everything you want in a home. If you are part of a couple, you should each have your own list.

When you have completed your home purchase wish list, take a look at each item. Ask yourself,

“Is this something that I really need in order to enjoy life in my new home?”

Then, get rid of anything that you know you can do without, and still be perfectly content.

The Tough Decisions

Now it is time to prioritize the wish list. The top two items should be those items on which you will not compromise, as living without them would make you miserable. For some folks that might be a gourmet kitchen or space for a garden.

The bottom two items should be those that you are willing to compromise on.

Now, compare your home purchase wish list with your partner’s. Anything that is on both of your lists is a priority and should probably be moved to the top.

Inevitably, though, there will be items each of you will need to compromise on, thus the little “bargaining chips” at the bottom of the list: sort of a “I’ll give you the garage in exchange for the fireplace” type of thing.

It’s Not Set In Stone

One thing that may surprise you is that this list will change as you begin to actually view homes. You may discover a feature in a home that you didn’t consider when you wrote the original list.

It’s very common that some buyers say they absolutely need to have a certain feature in a home yet the home they finally choose lacks that feature.

Don’t feel as if this list is set in stone, but do inform us if anything changes.

The wish list works well to help cut down your confusion when presented with an array of homes to view. It also helps your agent to keep focused and not waste everyone’s time by showing you homes that don’t fulfill your desires.

You’ve just taken the first step to make sure that your new home is one that fulfills at least most of your wishes. That house is out there. Count on it.

4 Tips to Maximize your Home-Selling Profit

One thing I know for certain: homeowners that sell their homes quickly and for top dollar are happy. Let’s face it, selling a home is hard work and nobody wants to be in that position for any longer than they absolutely have to.

Thankfully, there are steps you can take to get in and out of the selling process quickly and with maximum profit at the closing table.

Tip #1 – How to Maximize Profit

While it’s important to clean and stage a home for maximum profit, it won’t get you anywhere if it’s akin to putting lipstick on a pig.

Squeaky doors, dripping faucets, torn window screens and damaged baseboards all add up to a price reduction. So before you get out the cleaning supplies (or schedule a cleaning crew) fix all the little things that – believe me – homebuyers will notice.

Then you can clean the house – from top to bottom. Make it look like you have a full-time cleaning staff with clean windows, floors and walls.

Clean and organize cupboards and closets – yes, they will look inside. Clear the countertops of anything that isn’t decorative.

Tip #2 – Think like a Homebuyer

Buyers won’t jump through hoops to get information about your house. Most give up after one phone call. While your agent has a lot to do with this, you can do your part as well.

Don’t make it difficult for potential buyers to view the house. Make the home available for showings; even at the last minute and even if it’s not a convenient time for you.

Does your agent answer the phone or return phone calls promptly? You should know this before you even hire an agent. It should be part of the process of elimination.

Call each agent under consideration and never hire one that doesn’t return your call promptly. If they don’t return a potential listing client’s call they will certainly not return a homebuyer’s call.

Here’s a bonus tip: Many agents use their listings to drive traffic to their web site, not to help sell the home.

To accomplish this they put as little information as possible in the ad for the listing, hoping that the potential buyer will want to more and click through to the agent’s website.

When you hire an agent make it clear that your house is not to be used as “link bait” to bring in more customers for the agent. Tell him or her that you want all details of your home listed in all print and web advertising. 

Tip #3 – Always Sell First

I typically advise my clients to sell their home before moving. This is because studies show that vacant houses take longer to sell. This is the same reason many homeowners pay decorators to stage their homes.

Buyers want homes that they feel they can move right into and a vacant home doesn’t give them that feeling.

Tip #4 – Price it to Sell

Although location, location, location is every real estate agent’s mantra, price, price, price is that of every homebuyer – they simply will not buy an overpriced home.

Determining a price range that will attract buyers while at the same time not “give away the farm,” requires the services of a real estate agent.

Only with access to the local MLS and knowledge of current market conditions and the neighborhood can you be sure that your home is priced appropriately.

I’m happy to meet with you to discuss what I do to sell homes quickly and for top dollar. A consultation is free, there is no obligation to use my services and it’s only a phone call away.

Is that included in the purchase of the home?

Marcy, a first-time homebuyer, was over-the-moon excited about finally moving into her new home.

The day arrived, the movers were actually on time and, for the first time since the final walk-through, she opened the door to her home.

Since she had a case of water bottles with her, she headed straight for the refrigerator to ensure they were kept cool for her hard-working crew.

But there was no refrigerator – just an empty space where it stood just weeks earlier during the walk-through. Marcy panicked. The stove was there and the built-in microwave above it. The dishwasher was there.

She then ran to the laundry room, only to find empty spaces where that gorgeous washer and dryer once stood. Marcy grabbed her phone to call her real estate agent who told her that those appliances weren’t included in the sale.

“If you wanted them, you should have said something and we could’ve negotiated with the seller.”

Marcy was, again, a first-time homebuyer. She had no idea that appliances were something that needed to be “negotiated.” After all, as a tenant, they were always in the homes she rented.

The tragic fact is that Marcy, like many new homeowners, spent all of her savings on the down payment and closing costs with nothing left to pay for appliances. Thankfully, her parents stepped up with an offer of a loan.

It’s the buyer’s agent’s job to educate his or her clients about a process they may find completely foreign. To have neglected to do so, and then blame Marcy for his shortcomings, is beyond belief.

Why aren’t appliances included in the purchase price?

Sometimes they are. Many times, they are not, and here’s why: if they aren’t built-in, they are considered “personal property.”

When you buy a home, you are buying “real property,” which is the land, the home and anything else permanently affixed to both.

A rose bush planted in the backyard is considered a “fixture,” because it is affixed to the land.

A rose bush planted in a pot on the patio, on the other hand, isn’t a fixture, it is personal property and may or may not be included in the sale of the home.

Other examples of fixtures include:

  • Chandeliers that are attached to the ceiling
  • An outbuilding, such as a shed
  • Wall-to-wall carpeting (but not the Persian throw rug that isn’t glued to the floor)
  • Garage door opener

If the item is glued, nailed, bolted or otherwise attached to the home, it is typically considered a fixture and must be included in the sale of the home. But, there’s a “butt.”

The seller can exclude items from the sale by mentioning it in the listing agreement or the purchase agreement. It turns out that the washer, dryer and refrigerator in Marcy’s new home, were excluded in the purchase agreement.

Marcy isn’t a lawyer and was depending on her real estate agent to decipher what she was reading before she signed it.

Yes, you can ask that personal property be included in the sale

Many a real estate agent get-together includes conversations about the crazy things some homebuyers have asked sellers to leave behind.

From wanting the seller’s family dog to requesting that the entire contents of a home (even soap and toilet paper) be included in the sale, everything is negotiable.

The sellers are under no obligation to include any personal property and, depending on the type of market and how motivated they are, they may hold firm during negotiations. But, there’s no harm in asking, right?

Keep this in mind if you’re thinking of selling your home. If you want to hang on to your great-grandmother’s chandelier (or anything affixed to the home), remove it and replace it with something else before the home goes on the market.

5 myths too many home sellers believe

More than half of today’s home sellers are selling a home for the first time, according to Zillow’s Consumer Housing Trends Report for 2018.

That’s a whole lot of home sellers who may not understand the pitfalls that await them because they either don’t understand the process or have bought into myths they read on the internet.

If you hope to sell your home during your preferred timeline and for the most money possible, you need to:

  • Fully understand the selling process, from the paperwork to marketing methods
  • Choose the right real estate agent
  • Divorce yourself from your emotions
  • Don’t buy into the myths you’ll hear from others

You would be surprised how many first-time and even some repeat home sellers harbor certain myths. Let’s bust some of those right now.

1. Zillow’s “Zestimates” are accurate

Zillow.com, an online real estate aggregator, turns 13 years old this year. From the beginning, consumers have misunderstood the site’s limitations when it comes to home valuation.

In fact, too many buyers and sellers rely on the company’s “Zestimates” when deciding what a home is worth.

Big mistake

Zillow doesn’t employ an army of real estate agents who go through each home on the market, which is what is required to help pinpoint a home’s current market value.

Nor is Zillow able to seek out, via the MLS, valid and relevant comparables of each home, another requirement when determining market value.

Instead, it relies on an algorhythm – an automated valuation tool that uses public records and information from “users.”

Far from exact, Zillow’s Zestimates are frequently way off the mark. In fact, in 2016, former Zillow CEO Spencer Rascoff sold his Seattle, Washington home for 40 percent less than its Zestimate.

That particular Zestimate was off by $700,000

The discrepancy illustrates perfectly why a home must be evaluated in person to come up with an appropriate market value.

That Zestimates are accurate is a myth.

2. Real estate agents are all alike

This is the myth that leads real estate consumers to choose the first agent they speak with, a very common practice according to studies performed by the National Association of Realtors.

In an age when consumers over-research even which toothpaste to buy, this is amazing.

All licensed real estate agents attend real estate school which teaches them the legal aspects of selling real property. That’s it.

It doesn’t teach them how to effectively sell a home. It doesn’t teach them marketing techniques.

So, while an agent will walk away from those classes with an understanding of riparian rights, he or she may be clueless as to how to actually sell a home.

The differences among agents is astounding when you look into it. Some feel that a sign and a lockbox will do the trick. Others do a bit more. Then, there are listing agents who’ve studied and used various marketing methods and, through trial and error, have found one that is proven and effective.

The home seller is paying the same fee for the lazy or novice agent as he or she would for the powerhouse agent.

Not choosing the latter is like paying for a new Rolls-Royce Phantom and driving a 2011 Ford Fiesta off the lot.

Take your time when interviewing listing agents — we are definitely not all alike.

3. Videos are an important aspect of home marketing

While 88 percent of homebuyers use online websites when searching for homes, according to a National Association of Realtors survey, only 26 percent of them say they visited an online video site.

In fact, among the online tools that buyers find “very useful”, “video” didn’t even make the list:

  • Photos
  • Interactive maps
  • Virtual tours
  • Neighborhood information

Listing videos don’t offer the flexibility of virtual tours, which is most likely why homebuyers prefer the latter.

With a virtual tour (especially the 3-D tours), buyers are able to perform a virtual walkthrough of the home, viewing what is important to them, not the videographer.

Yes, you’ll no doubt run up against internet claims that all homes must have a listing video – a myth started by the video production industry, with no statistics to back up their claims.

4. I don’t need to replace the appliances, I’ll just give the buyer a credit so he can do it himself

If you plan on including your appliances in the sale of your home, and they need replacing, do so before the home goes on the market.

A recent survey of housing trends finds that nearly half of homebuyers find energy efficiency a desirable feature. Efficiency-rated windows are popular as well as energy-efficient appliances.

These features are strong selling points. So much so that 75 percent of millennial homebuyers place “updated appliances” at the top of their list of “must-haves,” according to a Bank of America survey.

5. I don’t need to clean and/or stage the garage

While you will hear a lot about how bathrooms and kitchens “sell homes,” it’s the garage that nearly half of homebuyers say is their hot button, according to research from Zolo.com

And, believe it or not, 10 percent more women than men name a garage among their must-haves in their new home.

Garages are extremely important to millennia homebuyers as well, according to that Bank of America survey, with 65 percent of them valuing a garage over an extra bedroom.

Yet far too many home sellers use the garage for their excess “stuff” when preparing the home for the market.

It makes more sense to shove all that junk into the master bedroom

In reality, the wisest choice is to rent a storage unit.

We’re happy to answer any questions you may have about the home selling process. Reach out to us anytime.

Should we renovate or remodel our home before selling?

One of the most common questions we hear from our listing clients is whether or not they should renovate or remodel their homes prior to putting them on the market.

Whether your goal is to make more money off the sale of the home or to help it to sell faster, part of our services to our clients is to help you figure out where to focus your time, energy and money.

Make repairs first

Concentrate first on making needed repairs. The buyer will most likely ask for these fixes, especially if they are for problems that show up on the home inspection report, so making them before listing the home helps avoid delays during the transaction.

Being proactive is always a smart move in real estate

Some of these tasks include fixing peeling paint, broken windows, torn screens, dripping faucets and loose or missing handrails.

Any problems that affect health and safety should be addressed first. Then, use what’s left of your budget to make the cosmetic fixes that are attractive to homebuyers in your home’s price range.

 Consider minor upgrades

“Don’t spend money that won’t yield a return on the investment. The best expenditures for most markets are paint, carpet, light and plumbing fixtures,” Matthew George, the chief appraiser of Eagle Appraisals Inc. in Denver, Colo. tells The Wall Street Journal.

Decide which room or rooms require the most updating and start with those. Minor upgrades, such as new appliances or kitchen and bathroom countertops will do more to change your sales price compared to redoing the kitchen or bathroom entirely.

In fact, a major kitchen or bathroom remodel is a money pit, according to Remodeling Magazine. The magazine’s 2019 Cost vs. Value Report warns that you’ll spend $ 66,196 on a kitchen remodel, on average, yet you’ll only recoup 62.1 percent of that when you sell the home.

You’ll do better on a minor kitchen remodel, spending $22,507 and realize an 80.5 percent return.

There is simply no way you will make back what you spend when it comes to remodeling or room additions.

In fact, the repair or renovation task that returns the most is a new garage door (97.5 percent). To get the details about the study, visit remodeling.hw.net.

Save money or time?

In a real estate transaction, time is most definitely money. The longer a home sits on the market, the better the chances that the homeowner will end up taking less than planned to get it sold.

The most common reason a home doesn’t sell is that it’s overpriced. Second to that, however, are homes that aren’t in decent condition.

Keep in mind that the first week that the house is on the market is known in the industry as “the honeymoon period.” This is when new listings receive the most attention and the more people that view the home, the quicker it will sell.

A recent study from a large real estate analytics firm finds that homes get four times as many visitors in the first week they’re on the market than they do one month after listing.

With repairs and cosmetic fixes out of the way, your home may be the belle of the real estate market during that first week.

We’re happy to meet with you and offer suggestions on which repairs to make first and on which tasks to focus on after that.

Confused about how to price your home?

We recently received an email from a former client. He’s considering selling his home and, like many home sellers do, he went online to see if he could figure out how much the home is worth.

“Zillow values my home at $325,000,” he writes. “Yet, one of my neighbors recently sold his home, which is almost identical to mine, for $365,000.”

He went on to say that he is quite confused about the home-pricing process and wondered if we could help him out.

First, the online real estate portals offer only “estimates” of a home’s value. They have never seen your home or any other home for which they determine an estimate, so they are rarely correct.

It’s all about market value

One thing Mark got right is that he understands that the price he sets for the home should reflect its current market value.

The only way to know what that is – what a willing buyer will pay to a willing seller for a home like his – is by figuring out what they’ve paid for similar homes in the recent past.

This means we need to look at sales prices of similar homes. And, there’s more that goes into determining if a home is comparable to yours than meets the eye. We look at the same criteria that professional appraisers do.

  • The age of the home: Sold homes that are within three years (either side) of the age of your home.
  • The size of the home: Yes, we look at the sold homes’ square footage, but the number of bedrooms and bathrooms also plays a role in determining market value.
  • The home’s location: We try to find sold homes in close proximity to the subject property, but will consider a wider range, if necessary. The location within your particular neighborhood may also impact its market value.
  • Upgrades, amenities and condition: We’ll compare your home to the sold homes with an eye toward any upgrades performed, whether similar amenities are offered and, most important, how the condition of the homes compare.

Next, we’ll do the number crunching to determine if your home is worth more or less than the sold homes.

WWTAS?

What will the appraiser say? He or she, after all, has the final say in how much your home is worth in today’s market. No lender is going to approve a loan for more than a property is worth.

This is why we are so thorough in our determination of the appropriate price for your home. An inaccurate evaluation on your agent’s part can lead to a failed real estate transaction, just when you thought it was a done deal.

The appraiser will visit your home to perform an inspection. He or she may or may not take photos while in the home. The appraiser will certainly consider the home’s landscaping, “location, structure and even appliances,” according to the pros at LexurAppraisal.com.

The inspection process can take “anywhere from 20 minutes to 3 hours depending on the size and details of the property,” according to Rachel Guthrie at GoHomeside.com.

If you hire an experienced listing agent, the suggested list price should match or come very close to the appraised value of the home. This is why it is so important to interview more than one agent for the job of selling your home.