Real Estate Answers

Selling A Home In A Tough Economy

2010-10-20T09:16:00.000-07:00

The environment for home sales becomes more difficult with each passing month. Some estimates put 11 million mortgages, about 20% of the U.S. total, underwater, meaning that homeowners owe their banks more than the underlying properties are worth. Home repossessions reached more than 100,000 for the first time in September. Rising foreclosure rates continue to further depress housing prices.

The federal government let its tax benefit for homeowners expire in April and has not renewed it since them. The program did boost sales earlier this year. Shoppers must now face a market without the credit in which many home prices continue to fall.

The clamor over flawed foreclosure paperwork and robo-signers could further chill the housing market. People who might buy have bought a home in foreclosure will now worry about obtaining proper documentation and effective transfer of title.

24/7 Wall St. spoke with experts at real estate research firms Zillow.com and RealtyTrac to find the best way to sell a home. We also interviewed management from the National Association of Realtors, a number of real estate brokers, bank managers and elected officials in affluent communities. What emerged from these conversations and our research is the following: successful home sellers often do the same small number of things correctly. Often, these tactics are the difference between finding a buyer and not.

1. Pick the Best Broker
Many people who decide to sell contact a real estate brokerage with a sterling reputation or go to one that has the largest number of listings. Frequently, when potential sellers call these firms, they are turned over to the first available broker in the office. That person is often not the best representative. As a matter of fact, what is a successful broker doing in the office anyway? There are a small number of brokers in most markets who have a better track record than their peers. Most of them have been brokers for a long time and did not lose their jobs when the housing bubble collapsed.

2. Get an Appraisal
Sellers should obtain an appraisal for their home before they put it on the market. One of the major reasons house sales fall apart is that the bank assesses the home for less than the buyer has agreed to pay. For example, a buyer and seller agree on a price of say $250,000. Then the buyer goes to his bank to get a mortgage. But, the bank appraises the house for $200,000. Now, the buyer has to put up more money. Sellers who get their own appraisals get a realistic idea of what price a bank would value a house at before they enter into a sale. Most appraisers already do some work for banks. An appraisal often tells a seller what a "safe" price is. And an appraisal's average cost is only about $200.

3. Get the Right "Comp"
Sellers must make sure that foreclosures in their area are included in the "comps" the Realtor gives them. Traditionally, a broker will give a seller a list of similar properties in the market and that information is part of what is used to set a price. What brokers do not always do is put the price of any foreclosed properties that are comparable into the calculation. A typical foreclosed home sells for 25% to 30% less than similar inventory in the same area. If sellers don't take that into consideration, their home will not be priced competitively and they put themselves at a disadvantage. Sellers wind up slashing prices after their overvalued properties are on the market for several months without success.

4. Tax Assessment
Low property taxes are critical to finding buyers. Property taxes in most cities, towns and counties have gone up for years as home values appreciated. This revenue is used to run schools and other local services. However, now home values have dropped sharply, and the appraisals by local authorities on which taxes are based are too high. Many cities have a process for homeowners to request lower appraisals, and as a consequence obtain a reduced property tax. Some states even have a board of appeals for homeowners who do not think they were treated fairly. One way for people to get local authorities to cut the tax assessment of their home is to put it on the market at below the appraised price. If the home does not sell for several months, they can present empirical evidence of the lower value. A home assessed for $300,000 that goes on the market for $275,000, but does not sell for a year, is probably not worth $300,000.

5. Conserve Utilities
Turn the lights off! Most buyers ask for utility bills. "Energy wasters" who sell a home will rue the times they forgot to turn off lights, turn down the air conditioner or left the TV on all day. It would be ill-advised to fake the amount of energy being used by simply living in the dark and cutting utility costs to nearly zero. However, careful and prudent use of energy can cut bills by enough so that a buyer does not have sticker shock about what it costs to maintain electricity, gas or oil to run a house.

6. Sell "Green"
Not very many homes are actually built with environmentally friendly material or heated by solar panels or wind. But those that are have a special appeal to the crowd that buys green cars such as the Prius. A seller may have one of only a few "green" homes in their town or city. That may make it highly desirable to many shoppers.

7. Curb Appeal
This item appears on most lists, and many sellers don't bother to take the advice to prune the hedges or clean the gutters. But it is even more complex than that. Walk to the road on which your home is located. Now walk toward the house. What does a buyer see for the first time? Most sellers never bother to look at their homes through a buyer's eyes. Do the shingles need a paint job? Are the shutters looking shoddy? "Love at first sight" is no less rare with homes than with people.

8. Everything Is Negotiable
Negotiate the fee with the broker. The fee paid to a Realtor for selling a home is traditionally 6%. Sellers often believe that they can get that down to 5% or even 4%. But, in a market where brokers are desperate for business, pressing for 3% or even 2% may work. Whatever the savings are, they can materially affect how much a seller can drop the price of his home and still walk away with a profit.

9. Get an Inspection
Sellers should do some of the inspection work and testing before their home goes on the market. Inspectors for buyers are often aggressive when they report what is "wrong" with a home to their clients. For as little as $250, an inspector will go through your house and tell you what the inspector is likely to flag such as a roof leak or old, energy-wasting windows. That gives the seller a chance to fix the problem for less than the buyer may want to lower the price by, or at least know the items that a buyer will use to negotiate down the price.

10. Hire a "Stager"
For as little at $200, you can hire someone who can make your home look better by moving pictures, furniture, lights and addressing problems that may make the home show poorly. These people are cousins to the men and women who "fix" expensive homes before magazines come in to photograph them for stories. "Stagers" have lists of tricks that few Realtors and almost no homeowners know. The "better" your home looks, the more appealing it will be to potential buyers.

11. Fix It First
Sell a house that does not need any work. In a market in which people count every penny and worry about job security, fewer buyers want homes that are "fixer uppers" that require work that could cost thousands or even tens of thousands of dollars to address. These days, a buyer choosing between two homes will most likely take the one that needs the least work. It may cost some money to get your home to the point where a buyer can walk in and do almost no work. However, it may be the difference between selling a home and having it languish on the market.

Source:24/7 Wall ST Author: Douglas A. McIntyre, 10/18/2010

2010-05-18T09:16:00.000-07:00

I thought it would be good to share this article on positive afirmation and manifistation ideas with fellow Real Estate Entrepreneaurs. Actually, anyone who is self employed or has to be a "self-starter" in their employment might benefit.

"I don't know why I'm sabotaging myself.”
This sentiment is extremely common amongst both seasoned and new entrepreneurs.

Let's look at some problems and some solutions:
The first example of self sabotage that comes to mind is carrying around a belief, "I am not good enough". If you don't think of yourself as good enough you will project a lack of self-confidence. Your prospective clients pick up on this and are not attracted to work with you. This then becomes a self-fulfilling prophecy. As you see yourself losing transactions, you tell yourself, "I must not be good enough."

What is the way out? What is the solution to this form of self sabotage?
The first thing is to find is where does this belief originate.
Here's a typical example "if I have the belief that I'm not good enough then I'll have more connections and acceptance from people."That does not seem to make sense until you dig down a little deeper and find out the origin of that belief "I'm not good enough". Perhaps you learned as a child, that your job was to help others, to be a caretaker. You were conditioned to think that you needed to be in the background, helping others shine but not yourself. Once you become aware of where this self sabotaging belief comes from you'll have the power of choice. You can choose to keep on thinking "I'm not good enough" or, you can work on letting that belief go and replace it with some updated Empowered Beliefs.

Another example of self sabotage is getting involved in interactions with your clients that are not win/win. The reason so many people do this is that they have the mistaken idea that if they are always nice and always accommodate their clients, then they will succeed.Nothing could be further from the truth. It takes too big a toll on you. You will be embroiled in stress you'll be exhausted and in many cases your health will suffer. You will also begin to feel very resentful.Your motto should be "it's either win/win" or no deal. That is straight from Steven Covey, author of "the seven habits of highly effective people.

"What is the solution? How do you implement this? In every interaction, taking inventory on how you feel inside. Listen to your gut feelings, as they will always tell you the truth. If you don't feel good inside then you have fallen into a lose/win and you need to extricate yourself.How do you do that? If you are working with a reasonable client, you say "I only do interactions that are win-win. For this to be a win for me we would need to make this adjustment______________. What would it take for this to be a win for you?If you can't come up with a win for both people, then pull out and put your energies elsewhere.

Why did we get in the habit of lose/win? It always starts with the beliefs you carry on a subconscious level. You think you're not good enough or if you think you have to please people, then you will tend to take on interactions that are not win/win. Change your beliefs and you change your reality. The irony is getting your client's approval isn't that helpful, they won't respect you if they can walk all over you. Win their respect by always committing to win/win.

Another example of a self sabotaging strategy that many people fall into is to focus on what you "don't want .”How would you know what you were doing that?
Look for the following signs:
1. You'd be feeling stressed and frustrated.
2. You would be focusing on circumstances outside of you, like the economy or the marketplace.
3. You would be focused on scarcity, not abundance.

If you are feeling anything less than hopeful and optimistic then most likely you're fretting about the lack of transactions, the lack of clients, and the lack of money in your bank account and so on until your consciousness is saturated with feelings of lack and scarcity.Since our beliefs create our reality, if you're focusing on scarcity, what are you going to attract? More scarcity. Every time you start feeling bad about what you don't have in your life, your energy is contracting and becoming negative. That is not attractive to more business, in fact it repels business.

What is the solution?It is a three-step process:
1. Notice the focus on lack and say STOP to interrupt or thought pattern.
2. Take a DEEP BREATH.
3. Put in a positive new thoughts like:"Money comes to me easily and effortlessly""I do work I love and I'm richly rewarded”

After that, take a few minutes to write down what you DO WANT. Write down the money you want in the bank, the number of transactions you want in a month and so forth. Take a moment to feel how good it feels to have what you want and you will attracted to you.

A common belief that causes success minded professionals to get burned out is the subconscious belief, "to be successful, you have to work long hard hours, struggle and sacrifice."We usually absorb that idea at a very young age, subconsciously, from our parents most of our parents either told us that message and drummed it into our heads or they just modeled it for us and we were sad to see how hard they had to work.

Most of our parents did not have the concept of working "smarter", not harder.So, what do you do if you notice that your sabotaging yourself in this way?The first step is to be aware that you are carrying this belief. Then recognize that it's only a belief, not a fact, and a belief can be changed.

Remember your beliefs create your reality. If you believe that you have to work hard, then you will if you believe you have to work smart, then you will.To make the paradigm shift, keep in mind this quote from Mark Allen, "in an easy and relaxed manner and in a healthy and positive way, I create total financial success, for the highest good of all."Let that idea be your mantra, and remember to breathe deeply, throughout the day reminding yourself to relax and work smarter not harder.

To summarize, all self sabotaging strategies can be changed. The power to change a belief is always in the present moment. No matter how many years you have been sabotaging yourself, you can change it now. This article has given you some tips and solutions. The bottom line is to identify your self limiting beliefs, why you put them there in the first place, release them, and replace them with Empowered Beliefs that you can install immediately.
RIS Media, May 17, 2010

Housing Market Shows Signs of Stability

2010-02-11T08:57:00.000-08:00

WASHINGTON, Alan Zibel, AP Real Estate Writer – A real estate industry group says home prices rose in 40 percent of U.S. cities in the fourth quarter of last year, as massive federal spending helped the housing market show signs of stability.

The National Association of Realtors said Thursday that the median price for previously occupied homes sold rose in 67 out of 151 metropolitan areas in the October-December quarter versus a year ago. That's a sharp improvement from the third quarter, when prices rose in only 20 percent of cities surveyed.

The national median price was $172,900, or 4.1 percent below the fourth quarter last year. That was the smallest year-over-year price decline in more than two years.

RE Broker & Agent Confidence Relitively Optimistic

2010-01-15T07:55:00.000-08:00

RISMedia (01/08/10) On a scale of one to 10, Point2 Technologies' Real Estate Confidence Index settled at a reading of 5.91 in December -- down a bit from the previous month but still relatively optimistic. The national gauge hit a high of 6.03 percent in November. The December results suggested that industry professionals were encouraged by the federal government's newly expanded tax incentive and its positive impact on lower-priced homes but discouraged by the upcoming expiration of the initiative, which runs through April of this year. Factors contributing to favorable sentiment also included more stringent loan underwriting, which was viewed as critical for sustained market recovery. On the other hand, continued pressure on property prices in several markets because of low appraisals and high foreclosure inventories contributed to the faltering lack of confidence in the market. Additionally, in a trend that has been documented for more than six months, realty brokers and agents based in U.S. cities with a major military presence continue to take a relatively more upbeat stance on the business climate.

2009-11-09T13:09:00.000-08:00

A Quick Understanding of the 1st Time Homebuyers $8,000 Tax Credit Extension & New Credit for Long-Time Homebuyers

On November 6, 2009, President Obama signed into law an extension of the $8,000 first-time homebuyers tax credit until April 30, 2010. Binding contracts for the purchase of a principal residence signed by April 30 must close by June 30 to qualify in order for the first-time homebuyer to qualify for the credit. For qualifying purchases in 2010, taxpayers will have the option of claiming the credit on either their 2009 or 2010 return.

The new law added several new provisions that apply to persons purchasing homes on or after November 7, 2009:

Homebuyers with higher incomes can now qualify for the credit for homes purchased after November 6, 2009.
Income limits have been increased to $125,000 for individuals and $225,000 for couples filing jointly. These income limits were formerly $75,000 and $150,000, respectively. The credit phases out for individual taxpayers with a modified adjusted gross income between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers.
The new law adds a $6,500 credit for long-time homeowners who want to trade up, that is, current home owners who have lived in their home for five of the past eight years and who buy a replacement principal residence by April 30, 2010.
Qualifying home purchase prices must not exceed $800,000.
The extended tax credit for first-time homebuyers remains at $8,000 and requires that the buyer have not owned a home in the past three years, as before.
Purchasers claiming the credit will need to attach documentation of the transaction to their tax returns in order to help combat the tax credit fraud that has been experienced by the IRS to date.

Extended Homebuyer Tax Credit ResourcesFor additional information, the following resources – which can be expected to be updated frequently over the upcoming days and weeks – offer examples of fact situations, filing options and other details:
NAR The Basics: Extended Home Buyer Tax Credit 2009/2010: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit
Internal Revenue Service: http://www.irs.gov/newsroom/article/0,,id=204671,00.html
NAR FAQ Regarding Tax Credit Changes: http://www.wra.org/pdf/government/2009_NAR_FAQ_TaxCreditChanges.pdf
NAR Comparison Chart: http://www.realtor.org/wps/wcm/connect
WRA Tax Credit Extension Video: http://wra.org/video/tax_credit_extension/tax_credit_extension.html

Preparing Your Home For Sale to Put Your Best Foot Foward

2009-11-09T11:32:00.000-08:00

In preparing your home for sale, there are generally three areas of focus; de-clutter/clean, minor repairs/paint, and de-personalizing. A small investment of time and money in these three areas could make the diferrence in both the time on the market and the final selling price.

De-Cluttering/Clean:
Starting in either the basement or attic, pack-up all items through-out the home that are not needed on a daily basis, storing them in a neat manner in a section of the basement/attic. Think of this as preparing yourself for the move. This way when your house is sold you will already have a jump on the moving thing. If you do not have designated storage area, such as a basement ot attic, you may want to consider renting a storage area until your home is sold.

Also consider having a garage sale. No matter what time of year, there are plenty of garage sale customers. A summer time sale is typically held outdoors or in the garage. So where would you hold one in the winter? Indoors, maybe in the basement or wherever you have the most open space in your home. A winter garage sale can bring even more customers as there is no competition. After the sale, donate or discard un-purchased items.

Once you have de-cluttered, give your entire home a "deep" cleaning; counters, appliances, cabinets, bath fixtures, windows (glass & frame, inside & out), ceiling fans, floors and carpets.

Don't forget the outdoors. The drive-by is still as important as ever in selling your home. Make sure that these areas are also neat and tidy to give the right impression to the potential buyer. One that says that this house is ready for them to move into and enjoy knowing that "it has been well cared for".

Yes, the garage will also need to be tidied. Remember part of what you're selling is usable square footage..with the emphesis on usable.

Minor Repairs/Paint:
Attend to any minor repairs that are needed. Each repair in and of itself may not be a big deal but when added together they give the buyer the impression that there is going to be "a lot of work to do". If even had buyers go so far as to label a house a "fixer upper". It is not unusual for minor repairs to be a factor in turning away potential buyers or costing thousands in the final sale price.

In these days of HGTV and the DIY channel, it is especially important for your home to have a little "wow" factor and one of the easiest and inexpensive ways to get it is with paint. For example; paint one wall in a room a color 3-5 shades darker than the nuetral color of the rest of the walls.

De-personalizing:
Some real estate experts believe that it is important to remove ALL personal items - photos, etc. I'm not so sure. I think it is a balance. A photo of a treasured family moment can evoked strong feelings of "home" and after all this is one of the emotions that you're trying to evoke in a buyer. However, a home filled with photos on the walls, furniture and even kitchen appliances is too, too much!

Speaking of kitchen appliances, while your home is on the market avoid using them as bulletin boards. Again it is about balance, a drawing made by a child placed on the "frig" for display. But when combined with everything else, like teacher notes, doctor appointment slips, etc., etc. it is way too much and definately does not leave a positive impression.

There is no formula to guarentee the successful sale of your home but hopefully focusing in these three areas - de-clutter/clean, repair/paint, and de-personalize - will go a long way in getting it done.

NAR Frequently Asked Questions Homebuyers Tax Credit Changes

2009-11-06T07:49:00.000-08:00

I wanted to share this information just in from the National Association of REALTORS® Government Affairs Division. Here are answers to some of the most frequently asked questions on the changes to the Homebuyer Tax Credit

Question: Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a
new home. I have lived in my current home for more than 5 consecutive years and
am within the new income limits. I will go to settlement on November 20. If
President Obama has signed the bill by the time I go to settlement, will I qualify for
the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The povision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a firsttime homebuyer but was not within the prior income limits at the time I
entered into my contract to purchase on October 30, 2009. I will be covered,
however, by the new income limits. If the new rules have been signed into law by the
time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase,
which is the settlement date. So if the new rules have been signed when you go to settlement,
you should be eligible for the credit (or a portion of the credit if you're within the phaseout
range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I
have found a home with a nonnegotiable price of $825,000. Will I be able to use any
of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount
above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an
absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting
since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the
other eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000
and lived there until 2008 when he got a divorce. Whether John has been renting or bought in
the interim, he WOULD INDEED be eligible for the credit because he owned a home and
occupied it as his principal residence for 5 consecutive years out of the last 8 years. The
keyword here is "consecutive." As long as he lived in that house for 5 years straight what he
did since 3 years doesn't impact eligibility.

Question: I am an eligible firsttime homebuyer. I entered into a contract to purchase on
November 1, 2009. Do I have to go to closing before December 1? How does the
extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Home Selling Tips

2009-10-29T12:46:00.000-07:00

We've all watched the HGTV shows, read a magazine article, been given the "secret" to successfully selling a home...but yet some sellers still just do not get it! Putting your best foot forward is crucial to selling a home, especially in a "buyers" market.

We've all heard the age old saying "it's the little things that matter most" or "it's all in the details". When it comes to selling a home, truer words were never spoken. I have been with many a customer touring a home only to be greeted with a foul odor coming from who knows where from who knows what or have endured the frustration of turning on light switches to lights that do not work (simply because the bulb was burned out). Now one might say, hey what's the big deal? Everyone has dirty laundry, don't they? And you've had a light bulb burn out now & then, haven't you? So what's the big deal?

The big deal is that I am selling my house. And every little detail leaves an impression. The foul smell coming from my laundry may simply mean my sons a hockey player but in the mind of a buyer it could leave the impression that I am not a good house keeper and a house that is not well kept can deteriorate faster. Or, the burned out light bulb could say to the buyer that if I can't make sure all the lights are working when I know someone is going to be looking at my house, then what other maintenance or repairs am I neglecting? Neither of these impressions represent the reality of what is going on but they do represent the reality seen by the buyer based on his/her impressions. There is an old marketing saying, "you don't change someones reality you change their impression.

So as you prepare your home for sale and especially right before an Open House or private showing, do make sure to take stock in all the impressions that all the little things are making.

2009-10-05T14:08:00.000-07:00

IT APPEARS TO BE WORKING SO LETS NOT STOP!

The $8,000 new home buyer tax credit stimulus seams to be working as evidenced by the three straight months of increases in home sales when compared to the same period last year. As such and with still more home foreclosures to come, it would be wise to extend the program into the new year.

The 10% tax credit (up to a maximum of $8,000) for first time homebuyers will expire on December 1, 2009. To meet that deadline buyers must close on their new home on or before December 1,2009.

This program has had a major impact on housing sales. Without it, who knows where our economy would be. Yes, I know that we still have many problems with the American economy but trust me without this program things would be much worse.

So...again I say it appears to be working so why stop now! If you agree let your Senators & Congressmen know how you feel. Do your part to keep this momentum moving.

Stimulus Tax Credit - Laughing all the way to the bank!

2009-07-30T13:11:00.000-07:00

You've probably heard that now is the best time to buy a house, especially for first time home buyers. Why? It's simple - interest rates are at all time lows, real estate inventories are abundant and the US government is offerring up to an $8,000 tax credit.

What is a tax credit?

Incentive for first time home buyers.
Applies to home purchases for use as a principle residence of $80,000 and up between now and 12/1/2009 (for homes under $80,000 the credit would be 10% of the purchase price)

Who is eligible?

1st time homebuyers (any person who has not owned or purchased a home in the 3 years prior to the day of purchase)

How does it work?

Every dollar of a tax credit reduces income taxes by $1 In other words the tax is directly applied against the total tax owed.

Is there an income restriction?

Yes, for those filing form 1040 as single or head of household the income cannot exceed $75,000. Married couples who file jointly may have income of no more than $150,000.

What is a principal residence?

Generally it is the home wherean individual resides at least 50% of the time.

Are there property location restrictions?

Yes, the home must be located in the United States.

Do I have to repay the 2009 Tax Credit?

No. There is no repayment for 2009 tax credits.