As we find ourselves in the midst of National Home Improvement month, HouseMaster, one of the first and largest home inspection franchisors in North America provides homeowners with simple tips on how to maintain and update their homes with fixes they can inexpensively do on their own.
“One of the biggest mistakes homeowners make is letting small problems turn into big ones,” said Kathleen Kuhn, President of HouseMaster. “Home maintenance is crucial since a home is typically the largest investment an average person makes in their lifetime. Proper home maintenance can alleviate the need for large and often costly repairs.”
HouseMaster provides homeowners with the following tips that can all be completed for under $25 and can save homeowners thousands down the road.
Be aware of termite damage. Homeowners who diligently check their property and foundation can alleviate serious termite problems. Before selling or purchasing a home, look closely for any signs such as “mud tubes” or wood damage. Also, moving wood piles and debris away from the home can eliminate termite problems.
When it rains, it pours. One of the most common places for water damage is in a bathroom. When grout breaks down, water can easily get behind the tiles and cause them to come loose. An easy solution to this is to re-grout, caulk and use sealant on bathroom tile and surrounding fixtures. In other cases where water penetration is affecting the foundation of a house, a splash block is a cost efficient solution to direct water away from the foundation.
Clean the gutters. Stained siding under a gutter indicates overflowing, which can cause structural damage. In addition, overgrown vegetation on gutters can cause clogging or potential carpenter ant or termite issues. Trimming vegetation away from the house and cleaning gutters offers many advantages and minimizes the risk for potential costly repairs in the future.
Replace or seal worn or lifting roof flashings. Flashings deteriorate over time and can allow water penetration resulting in expensive damage to the underlying roof structure. For under $25 you can replace roof flashings or apply sealant to the problem area.
Seal your deck. If not properly maintained, decks are very susceptible to the effects of weather exposure. Once wood becomes rotted, it is more likely to be infested by termites, carpenter ants, etc. Applying deck sealant is an inexpensive way to protect your deck and prevent future damage.
Saturday, May 22, 2010
Sunday, January 17, 2010
What Home Sellers Don't Tell Buyers
As buyers ease back into the battered real-estate market, they're often hitting a stumbling block: fibbing by home sellers.
Eager to unload their abodes, some sellers exaggerate the size of their lots or their houses. Others minimize their property-tax or utility bills, conveniently forget about pests, or downplay flooding problems or noise.
Real-estate experts say that while such misrepresentations aren't new, the tough market of the past few years has made buyers more wary, partly because they can't expect rising home prices to bail them out of costly mistakes. As a result, deals are taking longer, and more of them are falling apart as buyers find properties sometimes aren't all they're supposed to be.
More than 30 states have disclosure laws requiring sellers to tell prospective buyers and agents about leaky roofs and other problems, according to the National Association of Realtors. But there's often a gray area involving the disclosure of problems the seller may not know about, such as a long-ago flood or hidden mold.
States are also increasingly passing laws requiring homeowners to disclose environmental issues, such as the presence of radon gas, a contaminant linked to lung cancer, and underground fuel tanks. In California, the checklist of required disclosures is so long that a cottage industry has sprung up of firms that help sellers prepare the forms.
Given the complexity of disclosure laws, it's not surprising that potential buyers don't hear about every problem in a house. Besides the issue of fibbing, sellers may genuinely not know about problems. And even if they do, the laws generally don't apply to bank-owned homes transferred in foreclosures, which now constitute a larger share of sales.
Buyers need to do their own due diligence and not rely exclusively on what sellers and agents say. They should hire an independent home inspector or home-inspection engineer, one not referred by the seller—and be aware that real-estate agents typically represent the seller.
Here are some of the common misrepresentations and white lies that buyers may hear as they shop for a house, according to real-estate experts and state regulators:
This House is on Two Acres
Disputes about property dimensions; how many square feet in a house or condo, or its exact boundaries; are common. Sometimes buyers don't learn the exact dimensions until the lender's appraisal.
Listing agents usually accept a seller's word on property dimensions, says Diane Saatchi, a senior vice president at Saunders & Associates, a real-estate firm in Bridgehampton, N.Y. "We tell everyone to verify," she says. Smaller dimensions also can cause an appraisal to come in lower than the agreed-upon purchase price. Low appraisals are a leading cause of ruined deals in today's market. A properly worded appraisal contingency in the purchase contract would allow you to scuttle the deal or find other financing if the appraisal comes in low, says New York real-estate attorney Michael Xylas.
"We Don't Have Pests"
A basic home inspection generally doesn't include a peek inside walls or underground for termites and mold, which are among the top complaints. Inspections for mold and radon gas also generally aren't included; usually buyers must order these inspections separately. Other inside-the-wall problems include faulty wiring and old plumbing, which also may require specialists.
James Holtzman, a financial adviser at Legend Financial Advisors Inc. in Pittsburgh, says sellers of the 1901 house he bought in August 2006 said its electrical wiring was completely upgraded, yet an electrical inspection revealed only one of three floors had been totally upgraded. The seller then knocked $6,000 off the sales price before they went to contract so Mr. Holtzman, 35 years old, could pay for the necessary work.
"This Place Never Floods"
Even arid states such as Arizona and New Mexico have occasional flash floods, and water and drainage problems aren't always obvious. June Walbert, 52, a certified financial planner at USAA, a financial-services company, says her San Antonio house received a clean bill of health from a home inspector before she bought it six years ago. But 10 days after she moved in, the sewer backed up, flooding the house, and she had to fork over $2,800 for repairs. "It was a rude surprise," says Ms. Walbert, who adds she asked her home inspector and the seller for compensation, but didn't get it.
Bill Richardson, outgoing president of the American Society of Home Inspectors, says a general home inspection wouldn't catch that unless the sewer line was visible from the basement or water backed up into sinks and tubs or toilets.
"Taxes and Maintenance Costs are Low."
Home buyers often gripe about tax and utilities bills that are higher than sellers said they were. Homeowner association and condo dues and assessments are also common complaints. Sometimes sellers simply underestimate the bills, or forget to include recent or expected increases, agents and brokers say. Taxes can also be deceptively low because of unrecorded improvements like decks and finished basements. Ask to see recent bills, and check with the tax assessor's office for up-to-date information.
"This is a Quiet Neighborhood."
Sellers may play down distractions that could drive you crazy, such as barking dogs or idling buses. A charming park by day could be a teen hangout at night. Your best bet is to view a property at different times of the day. "I can't tell you how many times in my career buyers didn't go there in the night time, even though I told them to. You spend more time in the house at night than during the day," says Ms. Saatchi, the New York real-estate agent. Talk to neighbors and peruse the local newspapers and blogs to get a feel for a place, and check with police for crime.
"There's Going to be a Golf Course, a Pool and a Party Room."
Builders of many developments that broke ground during the housing boom ran out of money before the project was completed. Many homeowner and condo associations also are strapped because of delinquencies and defaults. Some states require upfront disclosures about this, but you should also ask neighbors, not just sellers, about any promised facilities. Also, check titles to be sure that specific parking spaces, storage units or other facilities are included in a property sale.
Eager to unload their abodes, some sellers exaggerate the size of their lots or their houses. Others minimize their property-tax or utility bills, conveniently forget about pests, or downplay flooding problems or noise.
Real-estate experts say that while such misrepresentations aren't new, the tough market of the past few years has made buyers more wary, partly because they can't expect rising home prices to bail them out of costly mistakes. As a result, deals are taking longer, and more of them are falling apart as buyers find properties sometimes aren't all they're supposed to be.
More than 30 states have disclosure laws requiring sellers to tell prospective buyers and agents about leaky roofs and other problems, according to the National Association of Realtors. But there's often a gray area involving the disclosure of problems the seller may not know about, such as a long-ago flood or hidden mold.
States are also increasingly passing laws requiring homeowners to disclose environmental issues, such as the presence of radon gas, a contaminant linked to lung cancer, and underground fuel tanks. In California, the checklist of required disclosures is so long that a cottage industry has sprung up of firms that help sellers prepare the forms.
Given the complexity of disclosure laws, it's not surprising that potential buyers don't hear about every problem in a house. Besides the issue of fibbing, sellers may genuinely not know about problems. And even if they do, the laws generally don't apply to bank-owned homes transferred in foreclosures, which now constitute a larger share of sales.
Buyers need to do their own due diligence and not rely exclusively on what sellers and agents say. They should hire an independent home inspector or home-inspection engineer, one not referred by the seller—and be aware that real-estate agents typically represent the seller.
Here are some of the common misrepresentations and white lies that buyers may hear as they shop for a house, according to real-estate experts and state regulators:
This House is on Two Acres
Disputes about property dimensions; how many square feet in a house or condo, or its exact boundaries; are common. Sometimes buyers don't learn the exact dimensions until the lender's appraisal.
Listing agents usually accept a seller's word on property dimensions, says Diane Saatchi, a senior vice president at Saunders & Associates, a real-estate firm in Bridgehampton, N.Y. "We tell everyone to verify," she says. Smaller dimensions also can cause an appraisal to come in lower than the agreed-upon purchase price. Low appraisals are a leading cause of ruined deals in today's market. A properly worded appraisal contingency in the purchase contract would allow you to scuttle the deal or find other financing if the appraisal comes in low, says New York real-estate attorney Michael Xylas.
"We Don't Have Pests"
A basic home inspection generally doesn't include a peek inside walls or underground for termites and mold, which are among the top complaints. Inspections for mold and radon gas also generally aren't included; usually buyers must order these inspections separately. Other inside-the-wall problems include faulty wiring and old plumbing, which also may require specialists.
James Holtzman, a financial adviser at Legend Financial Advisors Inc. in Pittsburgh, says sellers of the 1901 house he bought in August 2006 said its electrical wiring was completely upgraded, yet an electrical inspection revealed only one of three floors had been totally upgraded. The seller then knocked $6,000 off the sales price before they went to contract so Mr. Holtzman, 35 years old, could pay for the necessary work.
"This Place Never Floods"
Even arid states such as Arizona and New Mexico have occasional flash floods, and water and drainage problems aren't always obvious. June Walbert, 52, a certified financial planner at USAA, a financial-services company, says her San Antonio house received a clean bill of health from a home inspector before she bought it six years ago. But 10 days after she moved in, the sewer backed up, flooding the house, and she had to fork over $2,800 for repairs. "It was a rude surprise," says Ms. Walbert, who adds she asked her home inspector and the seller for compensation, but didn't get it.
Bill Richardson, outgoing president of the American Society of Home Inspectors, says a general home inspection wouldn't catch that unless the sewer line was visible from the basement or water backed up into sinks and tubs or toilets.
"Taxes and Maintenance Costs are Low."
Home buyers often gripe about tax and utilities bills that are higher than sellers said they were. Homeowner association and condo dues and assessments are also common complaints. Sometimes sellers simply underestimate the bills, or forget to include recent or expected increases, agents and brokers say. Taxes can also be deceptively low because of unrecorded improvements like decks and finished basements. Ask to see recent bills, and check with the tax assessor's office for up-to-date information.
"This is a Quiet Neighborhood."
Sellers may play down distractions that could drive you crazy, such as barking dogs or idling buses. A charming park by day could be a teen hangout at night. Your best bet is to view a property at different times of the day. "I can't tell you how many times in my career buyers didn't go there in the night time, even though I told them to. You spend more time in the house at night than during the day," says Ms. Saatchi, the New York real-estate agent. Talk to neighbors and peruse the local newspapers and blogs to get a feel for a place, and check with police for crime.
"There's Going to be a Golf Course, a Pool and a Party Room."
Builders of many developments that broke ground during the housing boom ran out of money before the project was completed. Many homeowner and condo associations also are strapped because of delinquencies and defaults. Some states require upfront disclosures about this, but you should also ask neighbors, not just sellers, about any promised facilities. Also, check titles to be sure that specific parking spaces, storage units or other facilities are included in a property sale.
Thursday, November 26, 2009
Home sales rise to highest level in 2.5 years
Home sales nationwide are now up nearly 36 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.
The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.
Without adjusting for seasonal factors, sales were up 21 percent from a year earlier and were up in all four regions of the country. The gains were led a 26 percent increase in the Midwest. Sales were up 25 percent in the Northeast, 23 percent in the South and 10 percent in the West.
The housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.
Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.
The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.
The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.
The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended.
"The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"
Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.
The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.
But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.
"When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."
Another concern is that job losses are pushing once creditworthy homeowners into default. Borrowers with prime, fixed-rate loans accounted for one in three new foreclosures in the second quarter, the Mortgage Bankers Association said last week. Nationwide, a record 14 percent of homeowners with a mortgage were either behind on their payments or in foreclosure.
The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.
Without adjusting for seasonal factors, sales were up 21 percent from a year earlier and were up in all four regions of the country. The gains were led a 26 percent increase in the Midwest. Sales were up 25 percent in the Northeast, 23 percent in the South and 10 percent in the West.
The housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.
Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.
The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.
The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.
The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended.
"The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"
Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.
The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.
But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.
"When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."
Another concern is that job losses are pushing once creditworthy homeowners into default. Borrowers with prime, fixed-rate loans accounted for one in three new foreclosures in the second quarter, the Mortgage Bankers Association said last week. Nationwide, a record 14 percent of homeowners with a mortgage were either behind on their payments or in foreclosure.
Friday, October 16, 2009
Answering the biggest real estate questions.
10 Questions Answered
1. Is this the bottom of the housing market?
The housing market appears to be bottoming, with home sales and prices rising, though from very low levels. Many economists say that the worst might be behind us, but the market could bounce around at the bottom for years before rising again. Some analysts are even warning about serious troubles ahead. Mortgage defaults are rising, and prices could plummet if too many foreclosed homes are dumped on the market at the same time. Millions of so-called pay-option adjustable-rate mortgages (ARMs) could also default in the next few years, adding to the problem.
2. If you have a less-than-perfect credit score, how hard is it to get a mortgage these days? And what interest rate are you likely to pay?
Getting a mortgage isn't as easy as it was during the housing boom, but that's not necessarily a bad thing. Lenders reserve the best rates for borrowers with at least a 720 FICO score. But it's possible, with a score in the 600s, to secure a mortgage at a higher interest rate as long as the borrower has an otherwise solid portfolio. It helps to be buying in a neighborhood where prices have been relatively stable. Lenders are not eager to write loans for condos in South Florida or Las Vegas, said Keith Gumbinger, vice-president of mortgage and loan information publisher HSH.com.
3. What exactly is the government doing to help struggling homeowners stay in their homes?
The Obama Administration's $75 billion Making Home Affordable program, announced last February, got off to a slow start but has since helped 500,000 borrowers modify loan terms to include more affordable monthly payments. The government is providing incentives to loan servicers who lower borrowers' monthly payments to 31% of their gross earnings.
4. Will the real estate market fall off a cliff if the $8,000 tax credit is allowed to expire at the end of November?
The credit has given a boost to home sales, but it doesn't account for all the improvement. The National Association of Realtors and the National Association of Home Builders are lobbying hard to convince the public and Congress that the housing market is doomed unless the credit is not only extended but expanded to include all buyers. But there's evidence the housing market has hidden strength. The tiered Case-Shiller price index shows improvement not just in the lowest-priced homes impacted by the tax credit but even in higher-price categories.
5. If you are facing foreclosure, do you have other options?
The foreclosure process is not only long and painful, it could damage a homeowner's credit score so badly that it won't recover for years. A better option, as long as the lender agrees, is a so-called deed-in-lieu of foreclosure, which means that the borrower gives up the property and the bank gives up the right to recover any more money after the transaction is complete. The damage to a borrower's credit score is slightly less severe and the bank might even agree to let the borrower remain in the house as a tenant until the house is sold. A short sale is an even better option but requires cooperation from the lender. The bank must agree to let the house be sold for less than what is owed and forgive the difference.
6. Are lenders still waiting until borrowers are well behind on their payments before offering to modify the loan?
Under pressure from the Obama Administration, lenders have added workers to work out lower payments for struggling borrowers. But customers still complain that banks won't help unless a loan is seriously delinquent. The backlog of cases is so large that loan servicers have little time to work on preventing defaults. Lenders find that one way to be certain the borrowers they're helping are really tapped out is to focus on mortgages that are at least nine months delinquent, said Guy Cecala, chief executive officer of Inside Mortgage Finance.
7. Home prices have already plunged in Miami, Phoenix, Las Vegas and other former bubble markets. But what about other cities where prices soared during the boom but haven't fallen much since? Could they be next?
It's hard to imagine prices dropping much more in Nevada, Arizona, or South Florida because they've already fallen so far. But some economists are starting to wonder about other markets such as New York City, where home prices are way out of line with local incomes. Real estate consultant John Burns said the worst-hit markets have already fallen back to 2002-2003 prices. The other markets will probably follow, especially with unemployment rising.
8. Which direction are interest rates likely to move in the next year?
The Federal Reserve launched a program to buy $1.45 trillion of mortgage securities this year, and it has helped to keep interest rates at—or near—historically low levels. But the money should be used up by the first quarter of next year. Interest rates are then likely to rise, possibly drifting up a full percentage point by the end of the year, said Guy Cecala, chief executive officer of Inside Mortgage Finance.
9. Why are home builders building new homes when they can't sell their old ones?
The supply of unsold new homes, which has been dropping for 28 straight months, now represents 7.3 months at August's sales pace (a two-year low). The inventory levels are falling because new home sales have been outpacing new construction. Now, builders are getting more active. But David Crowe, chief economist for the National Association of Home Builders, said they're concentrating on projects for first-time buyers rather than more expensive homes favored during the housing boom.
10. Which is considered the better investment, a new home or an existing home?
Builders have discounted prices so much that the premium for a new home in some markets has nearly disappeared. New homes that went up during the housing boom were large and packed with amenities that are rarely found in older homes. Assuming a new home and a used home are about the same size and are in the same location, a new home is probably the better investment (assuming that it's well built).
1. Is this the bottom of the housing market?
The housing market appears to be bottoming, with home sales and prices rising, though from very low levels. Many economists say that the worst might be behind us, but the market could bounce around at the bottom for years before rising again. Some analysts are even warning about serious troubles ahead. Mortgage defaults are rising, and prices could plummet if too many foreclosed homes are dumped on the market at the same time. Millions of so-called pay-option adjustable-rate mortgages (ARMs) could also default in the next few years, adding to the problem.
2. If you have a less-than-perfect credit score, how hard is it to get a mortgage these days? And what interest rate are you likely to pay?
Getting a mortgage isn't as easy as it was during the housing boom, but that's not necessarily a bad thing. Lenders reserve the best rates for borrowers with at least a 720 FICO score. But it's possible, with a score in the 600s, to secure a mortgage at a higher interest rate as long as the borrower has an otherwise solid portfolio. It helps to be buying in a neighborhood where prices have been relatively stable. Lenders are not eager to write loans for condos in South Florida or Las Vegas, said Keith Gumbinger, vice-president of mortgage and loan information publisher HSH.com.
3. What exactly is the government doing to help struggling homeowners stay in their homes?
The Obama Administration's $75 billion Making Home Affordable program, announced last February, got off to a slow start but has since helped 500,000 borrowers modify loan terms to include more affordable monthly payments. The government is providing incentives to loan servicers who lower borrowers' monthly payments to 31% of their gross earnings.
4. Will the real estate market fall off a cliff if the $8,000 tax credit is allowed to expire at the end of November?
The credit has given a boost to home sales, but it doesn't account for all the improvement. The National Association of Realtors and the National Association of Home Builders are lobbying hard to convince the public and Congress that the housing market is doomed unless the credit is not only extended but expanded to include all buyers. But there's evidence the housing market has hidden strength. The tiered Case-Shiller price index shows improvement not just in the lowest-priced homes impacted by the tax credit but even in higher-price categories.
5. If you are facing foreclosure, do you have other options?
The foreclosure process is not only long and painful, it could damage a homeowner's credit score so badly that it won't recover for years. A better option, as long as the lender agrees, is a so-called deed-in-lieu of foreclosure, which means that the borrower gives up the property and the bank gives up the right to recover any more money after the transaction is complete. The damage to a borrower's credit score is slightly less severe and the bank might even agree to let the borrower remain in the house as a tenant until the house is sold. A short sale is an even better option but requires cooperation from the lender. The bank must agree to let the house be sold for less than what is owed and forgive the difference.
6. Are lenders still waiting until borrowers are well behind on their payments before offering to modify the loan?
Under pressure from the Obama Administration, lenders have added workers to work out lower payments for struggling borrowers. But customers still complain that banks won't help unless a loan is seriously delinquent. The backlog of cases is so large that loan servicers have little time to work on preventing defaults. Lenders find that one way to be certain the borrowers they're helping are really tapped out is to focus on mortgages that are at least nine months delinquent, said Guy Cecala, chief executive officer of Inside Mortgage Finance.
7. Home prices have already plunged in Miami, Phoenix, Las Vegas and other former bubble markets. But what about other cities where prices soared during the boom but haven't fallen much since? Could they be next?
It's hard to imagine prices dropping much more in Nevada, Arizona, or South Florida because they've already fallen so far. But some economists are starting to wonder about other markets such as New York City, where home prices are way out of line with local incomes. Real estate consultant John Burns said the worst-hit markets have already fallen back to 2002-2003 prices. The other markets will probably follow, especially with unemployment rising.
8. Which direction are interest rates likely to move in the next year?
The Federal Reserve launched a program to buy $1.45 trillion of mortgage securities this year, and it has helped to keep interest rates at—or near—historically low levels. But the money should be used up by the first quarter of next year. Interest rates are then likely to rise, possibly drifting up a full percentage point by the end of the year, said Guy Cecala, chief executive officer of Inside Mortgage Finance.
9. Why are home builders building new homes when they can't sell their old ones?
The supply of unsold new homes, which has been dropping for 28 straight months, now represents 7.3 months at August's sales pace (a two-year low). The inventory levels are falling because new home sales have been outpacing new construction. Now, builders are getting more active. But David Crowe, chief economist for the National Association of Home Builders, said they're concentrating on projects for first-time buyers rather than more expensive homes favored during the housing boom.
10. Which is considered the better investment, a new home or an existing home?
Builders have discounted prices so much that the premium for a new home in some markets has nearly disappeared. New homes that went up during the housing boom were large and packed with amenities that are rarely found in older homes. Assuming a new home and a used home are about the same size and are in the same location, a new home is probably the better investment (assuming that it's well built).
Monday, September 28, 2009
How to Set a List Price for Your Home
How to Set a List Price for Your Home
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, your REALTOR® will help you set your list price based on:
-pricing considerations
-comparable sales
-market conditions
-offering incentives
-estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your REALTOR® to "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
TIP: Never say "asking" price, which implies you don't expect to get it.
Price Against Comparable Sales in Your Neighborhood
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA): The list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a "Comparative Market Analysis" (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal: A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is it a Buyer’s Market or a Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
Your REALTOR® can tell you whether your area is currently in a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set a Schedule for Lowering the Price
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR® and work out an advance schedule for lowering the price if need be.
If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Offering Incentives to Hasten a Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution.
If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
payoff figure on your present loan(s)
broker's commission
prepayment penalty on your mortgage
attorney's fees
unpaid property taxes
Buyer’s/Seller’s Costs: Additionally, your REALTOR® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
-title insurance premium
-transfer taxes
-survey fees
-inspections and repairs for termites, etc.
-recording fees
Homeowner Association transfer fees and document preparation
home protection plan
natural hazard disclosure report
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates.
Your REALTOR® will assist you in estimating what your final closing costs will be.
Call 910-231-5987 for more information on our Local Market
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, your REALTOR® will help you set your list price based on:
-pricing considerations
-comparable sales
-market conditions
-offering incentives
-estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your REALTOR® to "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
TIP: Never say "asking" price, which implies you don't expect to get it.
Price Against Comparable Sales in Your Neighborhood
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA): The list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a "Comparative Market Analysis" (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal: A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is it a Buyer’s Market or a Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
Your REALTOR® can tell you whether your area is currently in a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set a Schedule for Lowering the Price
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR® and work out an advance schedule for lowering the price if need be.
If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Offering Incentives to Hasten a Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution.
If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
payoff figure on your present loan(s)
broker's commission
prepayment penalty on your mortgage
attorney's fees
unpaid property taxes
Buyer’s/Seller’s Costs: Additionally, your REALTOR® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
-title insurance premium
-transfer taxes
-survey fees
-inspections and repairs for termites, etc.
-recording fees
Homeowner Association transfer fees and document preparation
home protection plan
natural hazard disclosure report
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates.
Your REALTOR® will assist you in estimating what your final closing costs will be.
Call 910-231-5987 for more information on our Local Market
Monday, September 21, 2009
Buying Bank Owned Properties
Finding and filing properties
Develop a system to keep track of properties that interest you. A good tracking system is important as most foreclosure buyers pursue many properties, sometimes over a period of several months.
After you find a property online, it's a good idea to drive by the property to get a better idea of the property's condition and the type of neighborhood. Some buyers and investors who have driven by the property have found notices posted there that provide more information about the bank who now owns the property. You'll also see if the property is listed with a real estate agent.
Researching the potential bargain
When you find a property that interests you, perform some preliminary research to make sure the property represents a good bargain opportunity. Your research should not take more than one or two days because you do not want to delay too long before contacting the foreclosing bank. The key pieces of information you need to gather are the estimated market value of the property and the bank's break-even amount.
The bank's break-even amount includes the unpaid balance of the loan, any fees and costs incurred during the foreclosure process and any other liens the bank had to pay off to take ownership of the property. The unpaid loan balance plus any foreclosure fees and costs are included in the opening bid.
Contacting the bank
You or your real estate agent should initiate contact with the bank to express your interest in the property. Before you expend the time and effort to contact the bank, make sure you're fully prepared to buy.
At this stage of foreclosure it's more likely the property will be listed for sale on the Multiple Listing Service (MLS), so make sure you or your agent checks the MLS. If the property is listed for sale, you can contact the listing agent directly. Keep in mind that the potential bargain often diminishes if a listing agent is involved.
If the property is not listed with a real estate agent, you'll need to take some pro-active steps to contact the foreclosing bank directly. The bank's main focus is not selling property, which means you may need to do some digging to find the department or person at the bank who manages repossessed property.
When you call the foreclosing bank, you should ask for the REO (Real Estate Owned) department, bank-owned homes department or asset management department. Be patient and persistent at this point because it may take some time to get through to this department.
If you have trouble contacting the bank by phone, another option is to overnight or fax a letter to the bank stating your interest in the property. Some buyers and investors include a check made out to a local escrow company to get the bank's attention. This check is usually a small percentage of the total purchase price and should be refunded if no transaction takes place, but it shows you're a serious buyer.
Negotiating a purchase agreement
Once you make contact with the bank's asset manager or REO officer, you should arrange to walk through the property (with your agent if applicable) to make sure it fits your criteria as a buyer. If both you and the bank agree to proceed, you should start negotiating the terms of the purchase agreement. A real estate agent can be a valuable resource during the negotiating process.
If state law allows a redemption period for the owner after the bank takes ownership of the property, you may have to wait until the end of the redemption period - several weeks or several months, depending on the state. During the redemption period the owner can regain ownership of the property by paying the total amount owed to the bank plus any applicable foreclosure expenses.
The bank's primary goal is to at least break even on all the costs that it has sunk into the property. That includes the unpaid balance of the loan, the expenses associated with the foreclosure proceedings, other liens and repairs to the property. Your goal as a buyer is to purchase the property below market value, minus any estimated repair costs. This is often possible if you contact the bank quickly and are a prepared buyer ready to make a purchase.
In the recent real estate market, buying directly from the bank has not been as profitable as buying during pre-foreclosure or at the public auction. That's not to say there aren't good deals available. And many buyers and investors prefer to buy directly from the bank because it's typically a more predictable process than buying during pre-foreclosure or at a public auction.
You'll probably get a better bargain if you're willing to buy the property "as is," meaning you're willing to buy the property in need of repairs disclosed by the seller. Of course you'll still want to figure estimated repair costs into your final purchase offer.
Banks may be more willing to sell at a below-market price if they have a glut of foreclosures, which are non-performing assets from their perspective. If you're an investor or buyer looking for more properties to purchase, you should let the asset manager or REO officer know to contact you in the future if the bank needs to quickly unload foreclosure properties.
Closing the deal
Once you've arrived at an agreement with the foreclosing bank, you can put the agreement in writing. You should have a local real estate agent or real estate attorney help if you're not familiar with how to draw up a purchase agreement.
Any purchase agreement should make closing of the deal contingent on a full title search conducted by a title company or attorney. The purchase agreement should also allow for a professional inspection of the property before closing the deal.
An escrow company, who acts as a third party, can manage the transfer of money and property ownership. Assuming that you have your financing secured, this should be a fairly smooth process.
For additional information please call Francesca Holt 910-231-5987
Develop a system to keep track of properties that interest you. A good tracking system is important as most foreclosure buyers pursue many properties, sometimes over a period of several months.
After you find a property online, it's a good idea to drive by the property to get a better idea of the property's condition and the type of neighborhood. Some buyers and investors who have driven by the property have found notices posted there that provide more information about the bank who now owns the property. You'll also see if the property is listed with a real estate agent.
Researching the potential bargain
When you find a property that interests you, perform some preliminary research to make sure the property represents a good bargain opportunity. Your research should not take more than one or two days because you do not want to delay too long before contacting the foreclosing bank. The key pieces of information you need to gather are the estimated market value of the property and the bank's break-even amount.
The bank's break-even amount includes the unpaid balance of the loan, any fees and costs incurred during the foreclosure process and any other liens the bank had to pay off to take ownership of the property. The unpaid loan balance plus any foreclosure fees and costs are included in the opening bid.
Contacting the bank
You or your real estate agent should initiate contact with the bank to express your interest in the property. Before you expend the time and effort to contact the bank, make sure you're fully prepared to buy.
At this stage of foreclosure it's more likely the property will be listed for sale on the Multiple Listing Service (MLS), so make sure you or your agent checks the MLS. If the property is listed for sale, you can contact the listing agent directly. Keep in mind that the potential bargain often diminishes if a listing agent is involved.
If the property is not listed with a real estate agent, you'll need to take some pro-active steps to contact the foreclosing bank directly. The bank's main focus is not selling property, which means you may need to do some digging to find the department or person at the bank who manages repossessed property.
When you call the foreclosing bank, you should ask for the REO (Real Estate Owned) department, bank-owned homes department or asset management department. Be patient and persistent at this point because it may take some time to get through to this department.
If you have trouble contacting the bank by phone, another option is to overnight or fax a letter to the bank stating your interest in the property. Some buyers and investors include a check made out to a local escrow company to get the bank's attention. This check is usually a small percentage of the total purchase price and should be refunded if no transaction takes place, but it shows you're a serious buyer.
Negotiating a purchase agreement
Once you make contact with the bank's asset manager or REO officer, you should arrange to walk through the property (with your agent if applicable) to make sure it fits your criteria as a buyer. If both you and the bank agree to proceed, you should start negotiating the terms of the purchase agreement. A real estate agent can be a valuable resource during the negotiating process.
If state law allows a redemption period for the owner after the bank takes ownership of the property, you may have to wait until the end of the redemption period - several weeks or several months, depending on the state. During the redemption period the owner can regain ownership of the property by paying the total amount owed to the bank plus any applicable foreclosure expenses.
The bank's primary goal is to at least break even on all the costs that it has sunk into the property. That includes the unpaid balance of the loan, the expenses associated with the foreclosure proceedings, other liens and repairs to the property. Your goal as a buyer is to purchase the property below market value, minus any estimated repair costs. This is often possible if you contact the bank quickly and are a prepared buyer ready to make a purchase.
In the recent real estate market, buying directly from the bank has not been as profitable as buying during pre-foreclosure or at the public auction. That's not to say there aren't good deals available. And many buyers and investors prefer to buy directly from the bank because it's typically a more predictable process than buying during pre-foreclosure or at a public auction.
You'll probably get a better bargain if you're willing to buy the property "as is," meaning you're willing to buy the property in need of repairs disclosed by the seller. Of course you'll still want to figure estimated repair costs into your final purchase offer.
Banks may be more willing to sell at a below-market price if they have a glut of foreclosures, which are non-performing assets from their perspective. If you're an investor or buyer looking for more properties to purchase, you should let the asset manager or REO officer know to contact you in the future if the bank needs to quickly unload foreclosure properties.
Closing the deal
Once you've arrived at an agreement with the foreclosing bank, you can put the agreement in writing. You should have a local real estate agent or real estate attorney help if you're not familiar with how to draw up a purchase agreement.
Any purchase agreement should make closing of the deal contingent on a full title search conducted by a title company or attorney. The purchase agreement should also allow for a professional inspection of the property before closing the deal.
An escrow company, who acts as a third party, can manage the transfer of money and property ownership. Assuming that you have your financing secured, this should be a fairly smooth process.
For additional information please call Francesca Holt 910-231-5987
Saturday, August 29, 2009
Take the Stress out of Homebuying
Buying a home should be fun, not stressful.
As you look for your dream home, keep in mind these tips for making the process as peaceful as possible.
1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.
2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price, and a good home won’t stay on the market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.
4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live.
As you look for your dream home, keep in mind these tips for making the process as peaceful as possible.
1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.
2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price, and a good home won’t stay on the market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.
4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live.
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