Called out to do a market analysis for a couple planning on selling their home, the agent did a careful market study and went back to them with an estimate of pricing. The analysis came in much lower than the homeowners thought it would.

The homeowner got upset with the agent for pricing their home so low. The agent gave them an honest assessment of the market based on what buyers are willing to pay. The buyers set the value, the agents don’t, and the sellers don’t. Supply and market conditions set the pricing.

One of the best pieces of advice I can give a seller who is getting ready to sell is to have an appraisal done by qualified fee appraiser to determine value. This is an independent non-biased opinion. Many of these appraisers do the appraisals for the mortgage companies. (We can supply names and contact information for local appraisers)

The recent mortgage environment has seen many of the lenders cutting the sales prices that buyers and sellers agree on because the mortgage appraiser is not able to successfully show the value agreed to in the contract.
So even if you found a buyer who may be willing to pay an inflated price, the mortgage lender’s appraiser could in fact dispute the sales price as higher than market value. By that time you have lost valuable market time caused yourself added stress and may loose your willing and able buyer.

Feel free to contact me for more sound real estate advice!

Linda

Thinking of selling your home? The competition can be tough out there. There are currently more sellers than buyers, so just like a used car, the shiny one that runs great will get chosen over the rusty and dusty one that sputters.
If you are thinking about selling, you may be thinking about buying also. Walk through your home as if you were a buyer and make notes of the things that you as a buyer may have concerns about. Are your colors too strong for the average buyer? Is your home clean and neat? Do you have too much clutter? Are there any needed repairs inside or out that you have been avoiding? The way we live in our homes is much different than the way we need to present our home to buyers and agents, so here are my tips on how to get your home ready to sell:

Tip #1–Removing Clutter

Get rid of the clutter and extra furniture that may be overcrowding your rooms. Here’s how:
First get 3 boxes or plastic bins;
Mark one Keep (this will be the beginning of the packing process. If you are going to move, this is a good time to start organizing what will move with you. Pack away all the extra knick knacks, books, trophies, collectibles, etc. that you want to save and move with you.
Mark the second one Trash
Mark the third one Give to Charity.
This method has worked for many sellers I have worked with in the past.

Tip #2–Neutralize Your Interior

You have purged through all the rooms in your house (don’t forget the closets) and separated and packed the items you want to save and taken them to storage. You have given unwanted items to Charity or recycled and called the trash collector for that extra pick up.
Now you can see your walls and trim. If you have strong or out of date colors or wallpaper, it is best to neutralize. This does not necessarily mean white walls. A soft cream or linen color or even a light taupe will highlight your furnishings. A neutral color is most likely to please a buyer since most buyers do not want to have to paint or redecorate because of the busy lifestyles we all lead today. The trim should be painted a crisp white. If it is already white, dust and clean and re-caulk along stairs. And don’t forget your flooring: outdated, stained carpeting should be cleaned or replaced.
You are now making progress towards getting the best price for your home without spending a lot of money.

Tip #3–Touch Up

If your home already has neutral colors throughout and fresh paint but there are scuff marks or kid’s art on the walls, one of the least costly tips I give sellers is to use the Mr. Clean eraser (found in the cleaning product aisle of the grocery or wholesale stores). There are no chemicals or detergents in it. It will easily clean bath tile soap scum, appliances and remove scuff marks on walls and trim. You will be surprised how easy and fast it works. If your cleaning will be extensive you may want to buy a large quantity. You can find them at BJ’s Wholesale Club.
Happy Cleaning!

Tip #4–Make A Great First Impression

There will still be more to come to enhance your interior, but the exterior is just as important since it will be the “The First Impression” to a buyer.
Walk across the street to view your home. Remember to think like a buyer. Does the roof look good, are there any sags? If your roof just looks dirty there are companies that will clean roofs with a special detergent that continues to clean every time it rains. If it looks worn or sagging call a roofer (we have companies we recommend) to inspect it. You may as well know now if it will become an issue to a buyer.
Is your siding clean and free of mildew and mold? If not, a power washing can do wonders. Is your landscaping over grown and covering windows or attaching itself to your house? If so, cut it back. In some cases you may need to pull out over grown bushes and replace with new smaller ones.
Make sure your front door and steps and/or porch are clean. The front door should be shiny and clean and fresh. Storm doors should have screens without holes and glass without fingerprints. Get rid of those pesky spider webs. Add a pot of flowers or evergreens.
And of course the grass should be cut regularly with clippings bagged and taken away. Weeds should be pulled and fresh mulch added to all beds. Deck should be power washed (sanded if a lot of splinters) rotted boards should be replaced and stained to match.

Tip #5–Have a Pre-Listing Home Inspection

Many of us have that nagging repair in our home that we just have not taken care of. Maybe it’s a light switch that no longer works, or a window that does not stay up on its own, or that door that always sticks and never was quite right. And along with the items you know about, homes sometimes contain hidden issues that need fixing. After fixing the items you know about, I strongly encourage all potential sellers to have a qualified Home Inspector perform an inspection prior to placing their home on the market.

Every item that needs repair, no matter how small, could make a buyer feel that the home needs work. And a buyer’s estimate of how much a repair costs is almost always higher than the actual cost. Whatever the item(s) may be, you need to take care of all them before the first potential buyer visits your home. Keep in mind too that once a buyer requests a repair as a result of their Home Inspection, a licensed contractor is required to do the work and the paid invoice provided to the buyer. So even if you are handy around the house, you will not be able to make the repair yourself at this point.

These tips may seem like “common sense” type things to do. However, some sellers get overwhelmed, just want to place the home on the market, and cut corners. Cutting corners in your preparation will delay your sale and cut into your profit. Contact me to discuss selling your home today!

Linda

Due to the precipitous decline in the housing market over the past few years, many homeowners who would otherwise sell their homes are renting them out. This may be because prices are too low, or because they have to move before they can sell due to a job change.

Such accidental landlords should understand that if they rent out their homes too long before they sell them, they could lose the biggest tax break available for most people: the home sale exclusion.

Homeowners who qualify for the home sale exclusion don’t have to pay any income tax on up to $250,000 of the gain from the sale if they’re single, or up to $500,000 if they’re married and file a joint return. Of course, this exclusion is useful only for homeowners who have equity in their homes, not the millions who are “under water” and will receive no profit if they sell their homes.

To qualify for the exclusion, a homeowner must satisfy the ownership and use tests. This means that during the 5-year period ending on the date of the sale, the homeowner must have: owned the home for at least 2 years (the ownership test), and
lived in the home as a primary residence for at least 2 years (the use test).

However, the homeowner need not be living in the house at the time it is sold. The two years of ownership and use may occur anytime during the five years before the date of the sale.

This means that a homeowner can move out of the house for up to three years and still qualify for the exclusion. Moreover, a homeowner can rent out a home and count that time as ownership time.

This rule has a very practical application: A homeowner may rent out a home for up to three years prior to the sale and still qualify for the exclusion. However, the exclusion works a bit different for homeowners who have rented out their homes.

They cannot exclude from their income the part of their gain equal to the depreciation they claimed (or could have claimed) while renting the home. Moreover, if the home is rental property at the time of the sale, the sale must be reported to the Internal Revenue Service on Form 4797: Sales of Business Property.
Example: Connie purchases a house on Feb. 1, 2007, and lives in it for two full years. She then moves to another state to take a new job. Rather than sell the house in a down market, she elects to rent it out.

If she sells the house by Feb. 1, 2012, she’ll qualify for the $250,000 home sale exclusion because she owned and used the house as her principal home for two years during the five-year period before the sale. If she waits even one more day to sell, she will get no exclusion at all.

Thus, accidental landlords who have equity in their homes need to sell them before the three-year rental period expires, or they’ll lose the home sale exclusion. If they can’t or don’t want to sell, they would have to move back into the home to preserve the exclusion.
Homeowners who don’t qualify for the exclusion will have to pay a 15 percent capital gains tax on their gain from the sale (assuming the home was owned for at least one year).

You’ve made a decision to buy a house. From now until you close, you want to keep your nose clean when it comes to getting your home financed. Even if you have good credit, there are things you can do to make lenders think twice. It’s your responsibility to make sure that doesn’t happen.
Here are 10 things you don’t want to do while you’re in the process of buying a home.

1. Don’t change your job before applying for a home loan. Along with that, now is not the right time to become self-employed or quit your job. You want to show lenders stability, which means you’ll be less likely to default on the loan.
2. Don’t change banks. Like your employment, you want your banking history to show stability.
3. Don’t buy a car or truck or any other form of transportation that you have to finance. Buying one increases your debt-to-income ratio and that’s something loan officers don’t want to see.
4. Don’t buy furniture on credit before buying your house. Like financing a car, charging big-ticket items increases your debt-to-income ratio and now is not the time.
5. Don’t be late on your credit card payments or charge excessively. You need a track record of responsibility and show that you can manage your money.
6. Don’t make large deposits into your bank accounts. Lenders like the money that will be your down payment to be sitting in your account for at least two months – what they call “seasoning” – so that the funds don’t just appear out of the ether.
7. Don’t lie on your loan application. Sounds simple, right? But don’t leave out any debts or liabilities you have or fudge your income. It’s fraud.
8. Don’t co-sign a loan for anyone. Even if you’re not the one making the payments on that loan, it increases your debt-to-income ratio.
9. Don’t have inquiries made into your credit. Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, it usually doesn’t affect your credit score because the assumption is you’re rate shopping. But opening credit accounts within a short period of time represents some risk and your credit could take a hit. It’s probably not a huge factor in your calculating your ability to repay a loan but why take a chance at this juncture?
10. Don’t spend your money for closing costs. Part of the price of financing a loan is the closing costs and you’ll likely have some responsibility for paying them. Make sure you have enough for your share of the obligation.

Mark

Understanding Short Sales