What You Must Know About Home Appraisals

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  What You Must Know About Home Appraisals

  Understanding how appraisals work will help you achieve a quick and profitable refinance or sale. Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

Americans Bullish on Home Ownership Despite Economy, So Why Won’t Washington Listen?

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  Americans Bullish on Home Ownership Despite Economy, So Why Won’t Washington Listen?

  If you’re worried about the future of home ownership in America, you have good reason. The nation’s economy is struggling. But it’s not just the rising unemployment rate (up to 9.2% in June 2011) that’s deferring home ownership for many. Some outlandish proposals on Capitol Hill are also weighing heavily on the hearts and minds of home owners, sellers, and potential buyers. Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

Energy Pricing: Make Your Home The Next To Sell In Your Community

What is an Energy Price?

Simply put, an Energy Price is a price that will clearly identify a home as the outstanding value in a community, or put another way, it will make it the most likely property sell next.  Ideally, an energy price results in multiple competing offers that puts the Seller in the catbird seat.

How do you know your price is not an energy price?

      -      Few or No showings

-      Lookers, but No Offers

-      More than 2 weeks on the market with little or no activity

These three also may indicate that agents are using your home to sell alternatives on the market in your area.

-      Feedback

-      You have a deadline (job transfer, another home under contract, etc), and time is running out

-      You can’t make the upgrades that competing homes offer

-      The competition has changed.  Competing homes have reduced their prices, but you haven’t.

How do we establish the price of a home?

The value of your home is almost entirely dependent on what someone is willing to pay for it, how much it appraises for, and how long you are willing to wait to find that person. Most sellers are not in the position to wait for the "ideal" buyer who will pay their "ideal" price. They want to find the optimum price at which their home will sell in a limited amount of time. Today, a market cycle is about 3-6 mos, and appraisers will give the greatest weight to homes that have closed within that time in determine the value range of yours. 

Location is critical.  Bear in mind that a community is not only determined by radius.  For example, Coral Gables and Coconut Grove are adjacent to each other, yet they are completely different markets.

Then, we look at square footage, number of beds and baths, and lot size. Next, we'll want to look at amenities sought by buyers. An attached garage, a wood-burning fireplace, an updated kitchen and baths, and spacious rooms are among the factors that generally increase a home's value. Most buyers want good schools, proximity to work and lifestyle, and quiet safe neighborhoods. Any pluses or minuses in these areas will affect the price.

Perhaps equally important are your reasons for selling and how long you can wait. Typically, the most interest is generated in the first two weeks a home is listed. If you want to sell your home fast, you'll want to price it so that it stands out among comparable homes on the market (Energy Price).  Sellers who try to hold out for the highest price in a fluid market like this one, however, usually regret it. We call that “Chasing the Market”, or as they say in boxing, “Leading with your chin”. 

In the first two weeks, you will attract those buyers with the greatest level of motivation to buy; those that have a real need to act immediately.  After that, you start to see investors, bargain hunters, and people who tend to look for signs of desperation.  When an offer comes in, more times than not it will be a low ball offer.  Then you have little choice but to negotiate the best deal you can.

Remember, it is always best to negotiate from a position of strength.  For a Seller, that is when the house is fresh on the market, buyer interest is high and the Seller has the most amount of time on his side.  The energy, therefore, favors the Seller. 

Finally, sometimes time works against both Buyer and Seller.  We have such a situation right now.  As of October 1, 2011, limits on government backed home loans (Fannie, Freddie, FHA, VA) are scheduled to be slashed by act of Congress.  For example, loan limits for FHA mortgages will drop $78,750 from $423,750 to $345,000.

What does this mean?

For Sellers:

-      Less Buyers, Downward pressure on prices in all value ranges, as lender risk increases and rates likely go up.

For Buyers:

-      Harder to qualify for loans, and less money available to borrow at a higher cost.

Remember, if interest rates go up 1%, principal must come down 10% in order to keep the same monthly payment.  This hurts both buyers and sellers. 

Therefore, if you are a serious Buyer or Seller, there is a window of opportunity that closes in about 75 days.  Now is the time to act.  If you are a Seller, Energy Price your home now to be the next one to sell in your community.  If you’re a Buyer, there’s no point in sitting on a fence that may be collapsing under you.  Act now.   

We are in mid-July.  Buying a home with financing takes about 30-60 days to close, short sales notwithstanding.  On the outside, it will be the middle of September before you can close a deal you made today.  Fortunately, my skills and experience has earned me the ability and reputation for closing your deal a lot closer to 30 days than 60. I'm here for you.  Let me help.

Thank you for your time.

7 Reasons to Reduce Your Price

One More Reason:   Interest rates are likely going up, which historically creates downward pressure on property values.  A 1% increase in the mortgage interest rate needs a 10% decrease in principal to maintain the same monthly payment.  If you need to sell your home soon, Sellers should seriously consider price positioning their properties to be the very next one to sell in their respective communities.

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  6 Reasons to Reduce Your Home Price

  While you’d like to get the best price for your home, consider our six reasons to reduce your home price.
  Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

3 Green Home Improvements That Really Pay Off

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  3 Green Home Improvements that Pay Off

  Forget big savings on your energy bills if you make green home improvements. Instead, choose green retrofits and home improvements that offset rising energy prices. Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

7 Home Improvement Trends That Make Your Home Work For You

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  7 Hot Home Improvement Trends that Make Your Home Work for You

  Home improvement trends embrace energy efficiency, low maintenance exteriors, and double-duty space. Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

A Short Term Window of Opportunity for Sellers

Experts claim that banks will need 90-120 days to begin to release the foreclosure homes onto the market that have been held up due to the legal issues that surfaced several months ago.  This leaves a window of opportunity for Sellers to sell their homes before the downward pressure on prices occurs as a result.

Read the article:

http://kcmblog.com/2011/06/21/a-window-of-opportunity-for-house-sellers/#more-8264

Is the economy worse than what we think?

The author believes we are in for 18 months of further decline in prices, but increases in interest rates, food, energy and potentially higher taxes will make it more costly to finance and operate a home.

Click to view:

Is the Economy Worse than We Think? - KCM Blog

Home Improvement Goes Mobile: Your Digital Toolbox

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  Home Improvement Apps for iPhone, Android, and BlackBerry: Your Digital Toolbox

  Downloadable iPhone and Android apps offer ways to maintain, improve, and save money on your home. Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

When Will Happy Days Be Here Again?

The Economy: When Will Happy Days Be Here Again? - Knowledge@Wharton

This is one of the most comprehensive and honest articles I have read in a long time regarding the economy and the real prognosis for recovery.  I urge all my readers to take a few minutes to read it.  As it relates to real estate, I was drawn to the following paragraphs:

For Buyers:

"With the excess of supply and low prices, there is diminished need for new homes, and construction has dropped from about one million units a year in a healthy economy to about 500,000, according to Wachter. Commercial construction has also slackened. In the six recessions prior to the latest one, construction has been a key factor in the recovery, Wachter points out. Construction employment typically rises by more than 30% in the two years after a recession ends; in the two years since the end of the latest recession, however, construction jobs have fallen an additional 10%. "That is historically unprecedented," she says.

Bottom Line:  Aside from foreclosures and short sales and the issues, difficulties and delays that they entail, newly constructed homes represent a significant "sweet spot" for the shrewd homebuyer.  Developer/Builders are providing enormous incentives to move their projects to completion.

"The future may also produce a different housing profile. In 2004, the U.S. hit its peak in home ownership, with about 69% of households owning rather than renting. Currently, the figure is around 64% and likely will fall two or three points lower, to a level consistent with most of the post-World War II era, Wachter predicts. But there is some danger that the new normal could be even lower, she adds. That would mean a significantly higher portion of the population would be subject to the uncertainties of rent increases -- and cut off from the long-term financial benefits of ownership, a key to getting into the middle class and staying there."

Bottom Line:  If you are a potential buyer, the time is now.  Prices and interest rates are low. Inventories are high.  While lending practices are tighter, long term buying conditions are fantastic.  Home ownership, historically, has been a key component to capital preservation and socio-economic stability.  Don't buy a house as part of a three to five year plan to untold wealth and prosperity.  Real estate is a long term play.  Buy a home as part of an overall long term strategy to build a strong foundation of economic strength for yourself and your family.  Also, owning your own home should also provide a sense of permanence and stability for you and your family.  We've learned how bad it can get for those who buy above their means. Therefore, only buy what you can afford.  Finally, strive to pay off your home as soon as you can.  Avoid compounding debt by borrowing against your equity in the future.  Past generations had it right.  Debt, when it comes to your primary home, is not a path to wealth.   

For Sellers:

Federal programs have failed to keep as many troubled borrowers in their homes as the government had hoped, often because homeowners who do receive payment reductions later default anyway. Given all the problems in real estate, Wachter doesn't expect any significant improvement in construction before the end of 2013, indicating the new normal for housing and the economy will not appear until 2016 or 2017.

Bottom Line:  If real estate will not begin to stabilize on a national level for five or six years, and I have to believe based on all indications, it is likely to be true, waiting a few months to see what happens in the market may not be a wise decision.  Selling now may actually be more financially prudent.

Caveat:  National trend analysis is a "macroeconomic" exercise, while real estate is a "microeconomic" reality.  In my primary market (Coconut Grove and Coral Gables, FL), prices have flattened in most price segments and sales activity is very strong.  Every commmunity is different.  Seek advice from a knowledgable and experienced Realtor. 

For Both Buyers and Sellers:

In fact, the economy has been changing for decades, but in recent years the effects were masked by the housing bubble, which temporarily supplied lots of low and semi-skilled jobs in construction, real estate sales and mortgage origination.

Conclusion: Unskilled or semi-skilled real estate professionals are an endangered species.  The business has evolved into a proverbial minefield of challenges, and only those who know how to navigate through them will survive.  Maintain high standards in selecting a Realtor and /or mortgage expert.  They will make all the difference in your real estate experience.   

7 Mortgage Interest Deduction Myths

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  7 Mortgage Interest Deduction Myths

  Think losing the mortgage interest deduction would be no big deal? We bust seven myths to show why the cost is bigger than you think. Read

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®