Are You Selling at The Right Price, this is a question that we are faced with at every listing appointment we go on. There are many factors that play a role in setting the right price and frankly many of them are not understood by the home seller. Some home sellers feel that if their neighbor sold for a certain price, then they can go above that price because of course their home has this or that update etc… This is normal as home sellers feel and rightly so sometimes that they have more to offer in their home. I always listen to the home seller and try to be open minded to their way of thinking, but I also arm myself with comps and numbers that state my case as well then we can sit down and decide as a team what the best course of action will be. It is always good to explain to the home sellers the issues that can arise during the appraisal process and the possibility of having the home on the market too long which can make buyers concerned that either the seller is hard to work with or that there is something wrong with the home. Below are some ideas that can help sellers understand the pricing aspect and hopefully help them get their home sold more quickly.
As a home seller, you want to get the highest price you can for your home. Remember, though, home buyers want to pay the least they can get away with. To attract their interest, you need to list your home at the right price — its fair market value. How can you know what the right price is? Ultimately, it’s what someone else is willing and able to pay for it. Working with a professional real estate agent is the most reliable way to discover the true value of your home.
Multiple Factors Determine Value
A real estate professional has a variety of resources to draw from in deciding on a price that will get your home sold at top dollar. Here’s what we would do to calculate your home’s worth.
Evaluate your home — its location, rooms and lot size.
Look at the condition and appearance of your home’s interior and exterior. We can suggest inexpensive repairs or updates to help you get top dollar for your home.
Compare your home with similar properties in the area that are currently for sale or have recently sold.
Review your home’s assessed value, its previous sales prices, average maintenance and utility costs, and local taxes.
Consider current market conditions, interest rates and lending criteria.
Factor-in local real estate trends, economic conditions and any local data that could make homes more valuable, such as job growth in the area.
Some of the items that should not be considered in a comparative price analysis include the original cost of the home, money spent for improvements, or how much cash you would like to net from the sale. While these factors are important to you, they have no bearing on the fair market value a buyer will be willing to pay.
Overpricing Can Lead To Underpricing
>t’s not only important to find out what homes have been selling for, it’s also important to learn at what prices homes go unsold. Overpricing is the single, most detrimental mistake you can make when listing a home for sale.
We’ve seen it time and again: Sellers sometimes list their homes at prices above the market, hoping some out-of-town buyer will make an uneducated decision. Other sellers want to overprice to give themselves lots of room for negotiating with buyers. In fact, these strategies seldom work to the seller’s advantage — their homes languish on the market while buyers compete for other comparable homes listed at reasonable prices. Overpricing sellers eventually have to drop their price, often below market, to regain the attention of buyers who’ve already written these homes off their list
Stay Ahead Of The Trends
A sound pricing strategy gets ahead of the trends. If you live in an area where home prices are dropping, it’s a good idea to price a little below the price of the last comparable home sold in your area. On the other hand, if prices are on the rise, you can set your price just above the price of the last similar home sold and expect to get what you ask for.
Keep Your Values Straight
When deciding on a sales price for your home, don’t make the mistake of relying on its “assessed value” as a guide. The assessed value of a property is your local taxing authority’s valuation of a home’s worth — it’s seldom accurate. In fact, assessed values are often lower, sometimes much lower, than current market values, especially in areas where home prices have been rising rapidly.
A Note Of Caution
Most real estate agents will run a comparative market analysis on your home before you list with them. They’ll present their recommended price as part of an overall marketing plan in their sales presentation to you.
Don’t make the mistake of selecting a real estate agent only because he or she came in with the highest market valuation of your home. Some unscrupulous agents will “high ball” the sales price simply to get your listing, knowing you’ll eventually have to drop your price to secure a contract.
This doesn’t mean you should automatically reject the agent who recommends the highest price. It simply means you should look closely at the how price was developed and at the overall marketing plan for getting your home sold at that price
Ready for the next power outage with these simple tips.
Many of us experienced the powerful storms that hit our community last Friday and I for one was not prepared for the almost three days of no electricity. We realize how important electricity is to our lives when things such as basic electricity is missing and the horribly inconvenience it can cause. The storms that hit South East Michigan seemed to be a normal occurrence with the weather changing from a muggy to cooling down, but the winds from this storm were close to 70 mph leaving more than 400,000 homes without power and more than 2000 downed power lines. Needless to say it was a rough weekend for many of us and so I thought it appropriate to share these tips to help get through the next power outage with this information. Please share and be safe when strong storms hit and be ready for the next power outage.
This month, take some time to prepare a storm survival kit for your home. The kit can be placed in your pantry, basement or storm cellar for safe keeping until you need it. Be sure to rotate the items that might become stale and plan to have enough on hand for each member of the family for a few days.
Food that needs no refrigeration or cooking is perfect for the kit. Items like canned tuna fish or meat, crackers, box juices, granola bars and canned fruit are suitable. You should also include a supply of pet food for your pets.
Water is an important part of your kit. You’ll want to have a gallon in storage for each person in the home. Keep a hand-operated can opener (not electric) in the kit, along with basic utensils.
Once your food and water needs are taken care of, fill another box with these items you might need when all the stores are closed or the power goes out:
With these items safely in storage, you’ll have everything you need to face any home emergency this spring. While you’re thinking about home safety, take the time to talk with your insurance agent. Has your policy kept up with your changing family or growing possessions? Ask about flood insurance, which may not be part of your current homeowner’s policy.
- Battery-powered lantern or heavy-duty flashlight,
- Portable radio
- with fresh spare batteries
- in secure holders, and matches
- effective on different types of fires
- to catch drips
- Toilet paper
- Hurricane lamps or candles
- An ABC-rated fire extinguisher
- Heavy-duty gloves and a change of clothes
- Extension cords with ground-fault interrupter sockets
- A basic tool kit
including duct tape, electrical tape, pipe clamps, a propane torch, a tarp, staple gun, rope, can of roof tar, tube of silicone caulk, pipe joint compound, plastic sheeting and thin strips of wood
- Extra blower belt for the furnace and wheel belt for the vacuum.
Another important part of disaster readiness is to get to know your neighbors. Although it may seem unrelated, knowing people in your neighborhood can help you in time of emergency (or you may be able to help them). Even if the only “emergency” you ever encounter is running out of sugar when baking a batch of cookies, you’ll benefit from a good relationship with those who live near you.
Money Diet 7 Easy Ways To Reduce Your Loan Payment And Increase Your Savings
There are many ways to reduce the amount of money you send each month to your mortgage company. You just have to know where to cut the fat. Check out these seven money-diet tips to discover how you can slim down your monthly mortgage payment.
1. Refinance to a lower interest rate. Even a half-percent drop in your interest rate could save you hundreds of dollars a year. Drop a whole percentage point, say from 6% to 5% on a $150,000 mortgage for 30 years, and you’ll save more than $1,100 annually. Get a lower rate and save even more! Remember, though, you may have to pay closing costs to refinance. Make sure you’ll live in your home long enough to recoup those costs.
2. Refinance to two loans. If you took out a jumbo loan (one that is larger than local conventional loan limits in your area) when you purchased your home, you probably paid a higher rate than what was then available for conforming loans. Currently, a non-conforming jumbo loan is anything higher than $417,000 in most parts of the country. If you want to refinance above that amount, you can get around the higher jumbo rate by taking out two mortgage loans instead.
For example, say you want to refinance $500,000. You could take out a first mortgage for $400,000 at the lower conforming-loan rate. Then, you would take out a second mortgage or home equity loan for $100,000. Although the rate on the second may be higher than rates available for a jumbo, you’ll be paying that rate on a comparatively small amount of money. Overall, your rate for the entire $500,000 in loans will be lower than for a jumbo. That will mean a lower total monthly payment.
3. Double up on a small down payment. Refinancing to two loans also makes sense if you put a small down payment on your home. If you paid just 10% down on a $150,000 property, for example, you’re probably paying a private mortgage insurance (PMI) premium with your monthly mortgage payment. Once you have 20% equity in your home, you can drop that payment (as we’ll discuss later). But with less than 20%, it might pay to refinance to a 75/15 mortgage. Under this scenario, you would take out a first trust for 75% of the home’s value and a second trust for 15% of its value. With neither loan showing less than 20% equity in the home, PMI won’t be required.
4. Review your ARM calculations. Industry experts say consumers can lose money to calculation errors lenders sometimes make when re-computing adjustable-rate mortgage payments as they change year to year. Dust off your closing papers and look up the current rate to find out what you’re supposed to be paying according to the adjustments and caps stipulated for your loan. If you find a mistake in your favor, contact your mortgage company to have your payment changed to the lower amount.
5. Drop Private Mortgage Insurance (PMI). If you bought your home with less than a 20% down payment, you probably have private mortgage insurance. PMI can cost hundreds of dollars monthly on some loans. The Homeowners Protection Act of 1998 says your lender must automatically cancel PMI when your equity reaches 22% on the loan pay-down schedule. But you can also drop your PMI once your equity reaches 20% through market appreciation and payments. If your home has been appreciating, and you think you owe less than 80% of its current value, contact your lender. Chances are you’ll have to pay for an appraisal (about $300 to $400) to prove your home’s current worth. But after that, you’ll see monthly savings in a lower mortgage payment without the PMI premium.
6. Get a longer term. Although this method may not suit everyone, if you need to increase cash flow by reducing your monthly payment, you could extend the term of your current loan. For example, if your balance is down to $100,000 on a $150,000 30-year mortgage that you took out 18 years ago at 7.5% interest, your monthly principal/interest payment would be $1,048.82. If you refinanced the $100,000 12-year balance with a 30-year loan at even the same interest rate, the longer term would lower your principal/interest payment to $699.21. That’s a big drop in payment, but it also means you’ll be paying on your home 12 years longer than before refinancing. And, of course, your total interest expense on the purchase of that home will be much higher.
7. Correct an outdated tax assessment. You’re probably paying a portion of your annual real estate taxes with your monthly payment to your mortgage holder. Have you checked your tax assessment to make sure you’re not paying too much? The taxing authority could be calculating taxes on your house with incorrect information, e.g., counting an extra bedroom, bathroom or finished basement that you don’t actually have. This would increase your tax bill and your monthly payment. Keep track of your tax assessment and challenge it if it doesn’t reflect actual property values in your area.
Listing your home can seem like a complicated process and some home sellers have their own theory about listing agents and even agents all together. Understanding how the process works and how your listing can work for you is the first step in realizing its not as complicated as one would make it seem. I hope this information will help in understanding the listing process and how your home listing can work for you.
Unlike many other professionals, real estate agents are only paid if they are successful — if the home sale goes through. A lawyer who loses a case, for example, may still expect payment, as do doctors who may not be able to cure their patients. Real estate agents, however, receive no payment unless a home is sold and makes it to settlement.
Agents work many hours before and after a sales contract is signed, in hopes of receiving compensation at the end of the process. Because they want to serve clients to the fullest, most agents work on commission.
Understanding Your Listing Agreement
Once you find an agent you want to work with, you’ll sign a “listing agreement” specifying the commission or fee to be paid and other contractual terms. The agreement is not between you and the agent, however, but between you and the broker the agent represents.
By law, only licensed brokers are allowed to receive a brokerage commission or fee. The salesperson you work with (your “listing agent”) will receive a share of the commission when the home sale goes to settlement. If another agent brings the buyer to the table, that salesperson (and his or her broker) will also receive part of the commission
Your agreement will stipulate compensation by either a commission or fee. Buyers and sellers may not realize that there are no set commissions — no “going rate.” Real estate brokers cannot discuss between themselves how much they charge for commissions, nor are they allowed to set commissions. To do so would violate anti-trust laws and threaten a broker’s license.
Traditionally, it’s said that the seller pays the commission, yet some would argue that it’s the buyer’s loan that creates the cash to pay the commission. Either way, the funds brought to the table from the buyer’s loan and the seller’s equity pay the real estate companies involved
Money Well Spent
In addition to the compensation, the terms of your listing agreement will detail how long the contract will remain in effect and the specific services contracted for. A full-service agent or company usually:
- Lists details about your home and listing agreement in the Multiple Listing Service (MLS).
- Provides and prepares all forms to list the property for sale.
- Educates the sellers on the sales process.
- Fronts all advertising and marketing expenses.
- Conducts analysis of the home in preparation for sale.
- Prepares a home brochure and finance sheets for distribution as needed.
- Assures that all buyers are at least pre-qualified, if not pre-approved for a loan, before making an offer on the home.
- Negotiates all aspects of the contract, including: price, finance terms, contingencies, seller subsidy (if any), home inspections, etc.
- Monitors various professional inspections, including pest, radon gas, home and others.
Sometimes agents will conduct all the work above, only to have the buyers’ contract fall through. Then the process starts all over again, in hopes the sale will go through the next time around.
When Is Compensations Earned?
Although the commission or fee may not be paid until settlement, it is considered to be “earned” when your agent brings a “ready, willing and able buyer” to you, even if the buyer has been working with a different agent in the home search process.
A “ready” buyer is defined as a person who wants to purchase the home within a designated time frame. “Willing” means the buyer has signed a contract with terms agreeable to the seller. “Able” means the buyer qualifies for the financing required to purchase the home.
Once these stipulations are met, the listing agent has earned his or her commission. Still, the agent’s work is not done. Following the contract comes all the work to get the transaction to settlement.
After You List
Getting your home listed, of course, is just the beginning. You and your agent will then begin work on a marketing plan and a time-table for implementing it. Your agent will help you decide about the best asking price for your home, based on current market conditions. He or she will also advise you about what you can do to improve your home’s chances for selling quickly at the best possible price
Many soon-to-be-sellers ask us how much time, effort and money they should put into Home Seller fix ups. In general, there is no hard and fast rule. It can depend on what type of buyer you are trying to appeal to. If your target buyer is a “fixer-upper” buyer, then obviously your cash outlay may be considerably lower than for a “move-in condition” buyer.
The Three Phases Of Fix-ups
Requires a minimum cash outlay, typically requiring more elbow grease than money. Includes: Mow the lawn. Trim the bushes. Edge. Clean closets, storage areas, garage. Wash windows. Scour the kitchen and bath.
Middle of the road.
The basics plus cosmetic repainting of dingy rooms, repairing broken fixtures, replacing worn carpet, etc.
At this level, major refurbishments come into play, like installing a new roof, updating kitchen cabinets, replacing old systems and appliance.
Why should I replace and update now when I’ll be moving out soon?
Because you’ll increase both the value and the marketability of your home.
Because many of these repairs would be required by the buyer or the buyer’s home inspector anyway. Now is a better time to fix up than the last minute when you’ve got the sale of your home hanging in the balance.
You’ve now got the luxury of time and can seek out the best professionals to help with your projects.
Do buyers like a furnished house better?
If you have a choice, it is usually better to sell your home while it is still furnished. That way, prospective buyers can more easily imagine how it will look when they move in, even though their furnishings will be different. Generally homes that are furnished sell more quickly and for a higher price than vacant homes.
If you have to move out before you sell your home, consider leaving some furniture behind to help give the house a lived-in feel.
Is it better to replace the carpet or offer a carpeting allowance to buyers?
Replacing the carpet to help the house sell faster is a favorite with real estate agents. And there’s a good reason. Taking a shortcut by offering a carpeting allowance doesn’t have the visual impression – or sales impact – of new carpet. Here are some guidelines to be sure the new carpet has the maximum effect:
Select neutral colors.
The color should be neutral or a dull color tone to help the room look bigger. When carpeting several adjoining rooms, the same carpet should be used, if possible – again to make the house seem larger and more unified.
Select high quality pad.
The pad under the carpet is important, and not a place to cut corners. A good pad is dense and resilient, and gives an expensive feel to almost any carpet. Pads come in a variety of materials including rubber, foam, felt, and jute.
Select fiber carefully.
Choose a fiber that suits the area where the carpet will be installed. Carpets are made of a variety of man-made and natural fibers, and often are comprised of popular combinations of fibers. Nylon is durable and resilient, and suitable for high-traffic areas. Olefin is economical and stain-resistant, good for active families. Polyester is soft and elegant, and appropriate for a higher-style area. Wool is a warm natural fiber, luxurious and expensive.
Select loop to match use.
The type of loop should depend on the use. A sheared loop like plush works in more formal areas; a continuous loop, such as Berber, is suitable for children’s play areas.
What’s a cheap and easy way to make your home more attractive to buyers?
Turn on all your lights, both inside and out, when showing your home to possible buyers. Open curtains, drapes and blinds. Light not only helps prospects see your rooms better, light helps buyers see your home as warm and inviting