Triangle Raleigh Real Estate News

Interested in Buying a Foreclosed Home?

2011-04-03T16:56:00.000-05:00

Interest in buying a foreclosed home is on the rise, but so are concerns about the risk involved in the process. In a December survey, Trulia found that 49 percent of Americans were at least somewhat likely to consider buying a foreclosure, up from 45 percent in May 2010. But the number of US adults who believed there are disadvantages to buying foreclosures had also increased, from 78 percent to 81 percent over the same time frame. Among those folks who had qualms about purchasing a foreclosure, the top concerns were:

•that buying a foreclosure might involve hidden costs,

•that the buying process itself is risky, and

•that the home might continue to lose value, after escrow closes.

While there certainly are risks that run with buying a foreclosed home, the most risky way to do it is also the least common method: at the foreclosure auction itself. Auction buyers often don't have the opportunity to fully vet the foreclosure to ensure that they are receiving clear title and/or to make sure they're not getting a lemon. With that said, most foreclosures are resold not at the foreclosure auction, but as an REO (short for Real Estate Owned - by the bank), listed by a real estate broker on the Multiple Listing Service.
When you buy an REO in this way, you have lots of opportunities to use some tricks of the trade, so to speak, to avoid some of the traps you may fear. Here are my Top 4 Tricks and Traps for Foreclosure Buyers:

1. As-is means as-is, period. (Most of the time.) Banks have very little interest, inclination or even the logistically necessary resources to execute repairs on your home. Many of these homes are managed by an asset management company in another state, and may not even have a local person besides the agent who can handle large repairs. Generally speaking, bank-owned homes are sold on a very strict "as-is, where-is" basis, which just means that you should expect to take possession of it, if you buy it, in exactly the position and location it is, no matter how defective. Do not walk into a viewing of a foreclosed home, notice how the plumbing is all ripped out of the wall, and make an offer for it, assuming you'll be able to get the bank to "fix" the issue later. Usually, if the bank is willing to do any repairs to a foreclosed home, they do so, on the advice of the listing agent, prior to the home being listed.

Out of hundreds of foreclosure transactions I have personally been involved in, I have seen exactly four where the bank did agree to do some level of repairs at a buyer's request. Every one of those times, the repair was to fix a health-and-safety endangering property defect, like a gas-leak or an electrical fritz. And every one of those times, the property defect was highly non-obvious - not something even a diligent buyer could have detected visually prior to making an offer. Maybe another few times I've seen a bank agree to a small price reduction due to surprising condition problems. And dozens of times, I've seen transactions fall apart or buyers take on the property’s repair costs, when they request repair credits, price reductions or actual repairs from the ban seller.

If a foreclosure you're considering has obvious property damage, have your contractor stop by with you or gather whatever information you need to get as comfortable as possible with your offer price, assuming that the bank will not be chipping anything in for repairs, before you make the offer.

2. The bank speaks no evil. When it comes to real estate disclosures, the fact is, the bank speaks not much of anything! Many states exempt banks and other types of corporate homeowners from making substantive disclosures about the condition of the property. Even in jurisdictions where the bank is not legally exempt, most banks will simply write across the required disclosures something to the effect that the bank has no knowledge of the property's condition. (Before you protest with a "that's not fair!!" keep in mind that the bank never lived in the property, so most often truly does have no idea of any important facts or details about its condition or location, the things an average home seller would be required to disclose.)

Even in a normal transaction, it behooves a buyer to be thorough in having the property inspected and meticulous about reviewing the resulting inspection reports. But buying a foreclosure ups even that ante, as you have no seller disclosures to highlight particular problems you should have looked at, and none of the usual legal recourse you would have if a “regular” seller made incomplete disclosures. Get a property inspection. A pest inspection. A roof inspection. A sewer line inspection. A pool inspection, if you have a pool and care about its condition.

Yes - all these inspections cost money, but the drama and thousands each of them can save you is well worth it. And read your state’s buyer inspection advisory or similar document (ask your agent), just to make sure you’re aware of all the inspections that are available to you, and work with your agent to determine which ones make sense, and which are not appropriate.

Some insider tips:

•Vacant foreclosures often have their utilities disconnected. Work with your agent to make sure the utilities get turned on - even for a single day - so that your property inspector can run the water taps, test the stove and dishwasher, see if the water heater and electrical outlets work, and so forth.

•If appliances are there, the bank will probably leave them there, even though they may not have technical “legal” ownership of them, so they may not be included in the contract, like in a "normal" home sale.•However, the bank will not give you any sort of warranty on appliances, so try to obtain any warranty coverage you want or need elsewhere - from a home warranty company or, potentially, the original manufacturer/retailer.

3. The contract terms, they are a changin'. One thing squarely in the wheelhouses of local real estate pros are local market standard practices. From negotiating practices to which party pays which closing costs, every market is different, and experienced local agents are experts on this information. If you’re buying a foreclosure, though, the bank will often require you to use it’s own purchase contract, rather than the more commonly used state forms. Many times, this is done to advise the buyer of the bank’s refusal to make substantive disclosures (see above) and to change some of the normal practices for your area to the bank’s standard practices.

For instance, if you are buying a home in a contingency state, where you would usually have to sign a document proactively releasing contingencies, the bank’s contract will probably change that, so that your transaction operates on an objection period. In "objection" based transactions, you have a certain period of time in which you must either speak up about your concerns with the property and/or cancel the deal, or you will automatically be presumed to be moving forward with the deal and your deposit money will be forfeited if you change your mind after that date.

If you’ve been making offers on non-foreclosures on the standard contract form, or you’ve bought homes before and think you know the drill, please - I implore you - READ every word of the contract you sign when you buy a home from the bank, and ask your broker, agent or attorney to explain anything that doesn’t make sense.

4. Expect the unexpected. When you buy a foreclosure, you might end up working with the bank’s escrow company, instead of a company you or your agent selects. And the bank's escrow provider might be slow or disorganized. C’est la vie. The bank might rush you for your deposit money, but take their own sweet time coming up with the necessary signatures on their end to close the deal. Par for the course. You might expect that the bank would be desperate for buyers, and instead find out that there are 20 offers on the same REO. Or, you might be the only offer and still get your aggressively low (but still reasonable) offer rejected, only to have the bank reduce the list price of the home to the same price of your offer! (They often want to see if exposing it to other buyers at the new, lower list price might generate more interest and higher offers.)

When you’re buying a foreclosure, expect glitches, expect your calendar to be derailed, expect the bank to be inflexible and possibly even unreasonable. It’s not overkill to ask your broker or agent to brief you on the common complications they see in REO transactions. Having realistic expectations may keep you from pulling your hair out. And if the transaction turns out to run smooth as silk? You’ll be pleasantly surprised.

Homes Are Getting Smaller, More Energy Efficient

2011-01-25T09:51:00.000-05:00

Reporting from the 2011 International Builders Show, Erica Christoffer for HouseLogic

What do home buyers want today and in the future? The answer: smaller, more energy-efficient homes.

The average size of a new single-family home in 2010 was 2,377 sq. ft., down from 2,438 sq. ft. in 2009 and down from the peak of 2,520 sq. ft. in 2007 and 2008, according to U.S. Census Bureau data presented yesterday at the International Builders’ Show in Orlando by Rose Quint, assistant vice president of survey research for NAHB.

And the trend will only continue, Quint said, with the 2015 new home size currently projected at 2,150 sq. ft. with fewer bathrooms and smaller garages.

It’s hard to say whether home sizes will decline to 1970 levels of 1,500 square feet. But Quint says she believes smaller sizes are here to stay based on demographics. The U.S. population was 310 million as of April 2010. That’s expected to rise to 322 million in 2015 and up to 422 million by 2050. The population is also getting older and more diverse. In 2010, 25% were over the age of 55, which is expected to grow to 31% by 3050.

This rising segment of older home owners who won’t want to care for a huge space, Quint said, and then you have Generation Y buyers who are very energy conscious. “People are coming to realize, ‘Let’s buy what we need,’” said Quint.

The Census Bureau data matches NAHB’s findings that builders expect to build smaller homes with more green features in the next five years. Low-energy windows, water-efficient features, engineered-wood beams, joints, or trusses, and Energy-Star ratings for whole home are expected to be more prevalent.

Builders also expect an increase in living room size as well as more planning for universal design features with homes more easily adaptable for future improvements.

Jill Waage, executive editor with Better Homes and Gardens, also presented her magazine’s 2011 consumer preferences survey, which was taken the first week of December. According to Waage, the top three improvement priorities home owners want were a laundry room, additional storage, and a home office.

“The connection to outdoor living space is also really important,” Waage says.

Other trends included in the Better Homes and Gardens study: built-ins, media space for flat screen TVs and gaming systems, and areas wired for technology. Buyers also want combined kitchen, family room, and living room open space. Universal design features, she said, will be incorporated in much more subtle ways.

5 Tips for Fall Lawn, Tree and Shrub Care

2010-09-10T06:45:00.000-05:00

5 Tips for Fall Lawn, Tree and Shrub Care to Prep for Spring

By Stephanie AndreRISMEDIA, September 10, 2010--Now that fall is fast approaching, it's time to start thinking about preparing your lawn for the winter months and even the spring. According to TruGreen, it's important that homeowners understand how to care for their lawns, trees and shrubs in fall before the end of the growing season.

The experts at TruGreen offer five fall green space tips to homeowners to better prepare their outdoor living rooms for spring's vigorous growth.

ASSESS
Thoroughly walk your property and inspect lawn, trees and shrubs as these plants prepare for dormancy in late fall and early winter. Identify problem areas in need of treatment, pruning or replacement. Note patchy areas, where grass has thinned out or is in need of valuable nutrients and appears as light green. Also look for weed and pest infestations and overgrown shrubs and trees, especially those with the potential for interfering with roof and power lines. Consider a qualified expert, such as TruGreen, to properly gauge your lawn and landscape needs.

AERATE & PRUNE
Help your lawn breathe through fall core aeration to strengthen roots and to prepare for a hardy spring workout. Conduct corrective pruning of trees and shrubs in fall to enhance plant appearance and vigor, and thin rather than top-shear and overgrown shrubs and flowering trees to preserve their overall shape.

REPLACE
Fall's favorable weather conditions, as well as moist and warm soil temperatures, create the ideal opportunity for successful seeding of bare lawn areas and overseeding of healthy grass to improve your lawn thickness and density. Replace dead or floundering plants in fall for a healthier landscape and improved curb appeal in spring.MOW &

MULCH
Mow your lawn into the fall and avoid removing more than one-third of the leaf blades with each cut. Return grass clippings and back to the soil for added lawn nutrients and use tree leaf compost to nourish plants.

FEED
A good fall feeding gives roots of lawns, trees and shrubs the energy needed to prepare for a healthy spring green revival. Keep fertilizer on target to prevent run-off and sweep fertilizer granules that may reach pavement back onto your lawn. Use a trained specialist, such as TruGreen, for insect and disease control measures customized to your region to help trees and shrubs thrive.

5 Reasons Homeownership Trumps Renting.

2010-09-03T13:20:00.001-05:00

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:·

Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.·

Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.·

Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.·

Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.·

Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)

REALTOR® Magazine-Daily News-How Much Will Home Owners Insurance Cost?

2010-04-27T10:01:00.001-05:00

REALTOR® Magazine-Daily News-How Much Will Home Owners Insurance Cost?

Thinking of Making an Offer on a Short Sale? What You Need to Know

2010-02-19T15:44:00.000-05:00

Are you looking to buy a new home? Are you thinking that now's a great time to find bargains? That's true, but it pays to know a little about the seller's situation before you make an offer.

If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You're a good candidate for a short-sale purchase if:

· You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

· Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

· You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:

· Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

· A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)

· Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.

Some of the other risks faced by buyers of short-sale properties include:

· Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.

· Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.

· No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.

The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.

* Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights reserved.

7 Reasons to Own Your Home

2009-06-05T13:42:00.000-05:00

7 Reasons to Own Your Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Online resources: To calculate whether buying is the best financial option for you, use the “Buy vs. Rent” calculator at www.GinnieMae.gov.

Cost vs Value Report 2008-09

2008-12-19T13:30:00.006-05:00

Check Out This Article from Remodeling Magazine! Click the Link Below!

The results of the 2008–09 Cost vs. Value Report from Remodeling Magazine are available and according to them surprising results.

"A sluggish real estate market, and an increasing number of foreclosures while our survey was in the field this summer, led us to expect that the ratio of a remodeling project’s cost to the value it retains at resale would drop substantially more than the 8.02% (6.1 points) decline experienced in 2007."

http://www.remodeling.hw.net/remodeling-market-data/remodeling-cost-vs-value-report-2008-09.aspx

$7,500 Home Ownership Tax Credit

2008-11-24T09:49:00.004-05:00

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) along with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices has the pieces in place for first time home buyers to buy now.

Buyers have until July 2009 to make a purchase that qualifies. The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009.

The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years.

To find out all the details access the IRS link: http://www.irs.gov/newsroom/article/0,,id=186831,00.html

Tax Benefits of Homeownership

2008-09-06T09:02:00.003-05:00

Tax Benefits of Homeownership

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership.

Here’s how it works.

Assume:
$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)______$12,577 = Total deduction

Then, multiply your total deduction by your tax rate.
For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million.

In addition, deductions are decreased when total income reaches a certain level.

RALEIGH, NC: RANKED #5 _ FORBES TOP 10 RECESSION PROOF CITIES

2008-05-14T12:18:00.003-05:00

Raleigh, N.C. is ranked #5 by Forbes in their Top 10 Recession Proof Cities.
According to Forbes the following information is of note.
The Median home price: +4%
Unemployment: 4.2% (from 3.7%)
Key growth: Professional and business Services, +7.4%; education and health, +6%
Stable home prices and growth across the different sectors of its economy have kept Raleigh strong. In the last 12 months, all industries measured by the U.S. Department of Labor have grown except for the city's small information sector.

The Secret to Pricing Your Home to Selll

2007-11-01T20:23:00.000-05:00

Contrary to popular belief, when selling your home its value is determined by one thing and one thing only - what a qualified buyer is willing to pay for it. No more and no less. Sure, many sellers will argue that their home has an insurance replacement value, or an appraised value, or a tax assessed value, but unless your insurance agent, your banker, or your tax assessor is willing to write you a check for the home - guess what? None of that matters. A home without a buyer has no value in the market place. Sure it might have a value to you the seller, and it might have a value to your banker, and to your insurance agent, and to your appraiser. But none of these people are buyers.

So here is the secret to pricing your home to sell - It's not what you think the home is worth that matters, it's what a reasonable buyer will think your home is worth that will ultimately determine if your home will sell.
Now you maybe thinking - Hey wait, if I left it up to a buyer, they would pay me as little as possible for my home. True, they would. But in the real world every buyer knows that you, the seller, have no obligation to sell your home at any price. To purchase your home the buyer will have to make you an offer you can't or won't refuse. One that will motivate you to pack up your Ken and Barbie collection, hire a local mover, and wave good bye to a home full of memories.

But here-in lies the trap that many sellers fall into (myself included), which is the mistaken idea that we can hold out for an inflated price and eventually the market will come to us. Wrong! Buyers are under no obligation to buy any particular home, and no amount of marketing, open houses, websites, or signage will motivate a buyer to purchase an overpriced home. Why? Because they can buy one of your neighbors homes for less! This reveals one of the most important considerations in pricing your home - Price VS Time.

Understanding Price VS Time
The age old dilemma that has faced buyers and sellers since the dawn of private property rights is a simple question: What is more important price or time? Believe it or not this conundrum underlies and controls every sellers decision to sell, and every buyers need to complete a purchase. For sellers this boils down to the need to sell within a set time frame or instead to hold out for the best possible price, and as you might guess, for buyers it's the need to buy within a set time frame or to purchase a home for the lowest possible price.

A seller who would like to sell for top dollar should be prepared to potentially wait longer for a buyer willing to pay a premium price. Like trying to sell ice during December, a seller might have to give the stuff away just to get rid of it, but if they wait long enough, say until mid-August when temperatures crest over 100 degrees suddenly that same ice can have real value. On the flip side, a seller who needs to sell quickly, and doesn't have time to wait, should expect to discount their price somewhat because of the limited time they have to expose their home to the market.
What's the difference? Timing!

Buyers are in the same boat. A buyer who has the luxury of shopping for a home over a long period of time can probably wait to find a bargain, while another buyer who must buy a home in the next few weeks will probably be willing to pay a premium. Again it boils down to price vs time. So you might ask yourself what is your highest priority - Selling quickly or selling for a higher price?

To be honest when I pose this question to my own clients they often smile coyly and then answer - I want both! The funny thing is that they aren't kidding! This sticky situation often reminds me of one of my first jobs after graduating high school, which was working graveyard at a local lumber mill. Like clock work every night, the foreman would come by to monitor my production. We called him Perry, which could have been his last name or his first name because he never clarified it. Over the roar of the machinery Perry would cup his hands together and yell "You need to put out more wood!" Finally after an especially tough day, I looked him back in the eye, and yelled back "Do you want quantity or quality?" Throwing his yellow hard hat down on the concrete floor and then kicking it for emphasis he snarled back "I want both!"

Like Perry, most of my clients want their cake with the icing generously slathered on top. Because of this, many homeowners will attempt to put the responsibility of getting both top dollar and fast sale on the back of their hired gun, the real estate agent. The result can be summed up in one word - frustration. Why? Because no matter how much a seller yells, screams, and kicks a real estate agent, they don't do miracles. This is why successful sellers understand that while a real estate agents job is to provide marketing, expert advice, and negotiating services, in the end they don't own the property. They don't make the final decisions on pricing. The seller does, and ultimately the seller's asking price will in large part determine how slowly or quickly the home will sell.

To frame this discussion in a different way, consider what you will do should you arrive luggage in hand at the end of your listing period and the home has not yet sold. At that point are you more likely to give it a little more time or adjust your price? I know - Neither, I'll just fire the agent! To be honest, this is exactly what many sellers' do, they fire their agent and reboot the marketing. Does it work? Sometimes it does, but often these sellers end up three months later in the same slow boat to nowhere. Successful sellers on the other hand take ownership of their pricing decisions by making a clear decision about which is more important to them, selling quickly or selling for top dollar.

Successful sellers have learned that to price their home accurately means they need to think like a buyer, they need to get inside a buyers skin and look at the world through a buyers eyes. For instance, imagine for a minute that you are moving to another area of the country, to a city that you are completely unfamiliar with. If you were faced with buying a home in strange city what would be your first step?

If you're like most buyers you would probably start online by viewing listings at websites like www.realtor.com or www.yahoo.com/realestate to get a general feel for local home prices. Next you might narrow your search down to a specific community or neighborhood by comparing utility costs, school reports, and crime statistics with other online tools like www.homefair.com or www.neigborhoodscout.com. Feeling good about your findings you might then venture out into the real world to begin viewing homes in person.

As a typical internet empowered real estate buyer you will look at an average of nine homes over eight weeks with the assistance of a real estate professional. By the end of your journey, like many buyers, you become so knowledgeable about the market that by the last showing you are able to guess, with reasonable accuracy, each homes listing price before your agent can even tell you.

So what happened here? As a buyer you went from a blank slate, with no impression of the market to having the ability to predict listing prices. A big leap sure, but this description is exactly what most buyers' experience. But this is only the build up, the next step for buyers who have found their dream home is to review a Comparative Market Analysis.

A Comparative Market Analysis is a report that compares a specific home, often called the "subject home" with other homes in a specific neighborhood. This analysis is then used to provide an anticipated sales price or price range for the subject property. Although not formally called an appraisal, the report provides a similar function by giving home buyers and home sellers a clear understanding of the market data that might affect their opinion of value.

Keep the Housing News You Hear in Perspective

2007-08-15T06:27:00.000-05:00

Keep the Housing News You Hear In Perspective

Blanche EvansRealty Times Columnist

Realtors Bob and Nancy Hunt liked what they heard at a recent Orange County Association of Realtors meeting. Local economist Gary Watts gave a talk where the main message was - keep news about housing in perspective.

The popular press has called an end to housing for some time, says Watts:
"The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000." Business Week, 1969

"The median price of a home today is approaching $50,000 ... housing experts predict price rises in the future won't be that great." National Business, 1977

"The golden age of risk-free run-ups in home prices is gone." Money Magazine, 1985

"A home is where the bad investment is." San Francisco Examiner, 1996

"We want to share some of his other observations," said the Hunts. And they did so by sending out a newsletter to their contacts filled with interesting facts and figures Watts gave during his talk.
Among the "gems," say the Hunts, were the following:

Since the year 2000, Orange County homes have appreciated over 100 percent.

The average Orange County appreciation rate over the past 37 years has been 14.9 percent yearly.

2005 was the peak subprime lending year in Orange County, when subprime loans represented about 23 percent of all loans funded.

Nationally, the delinquency rate on sub-prime loans (13.77 percent) and conventional loans (2.57 percent) combined produces a delinquency rate of 4.84 percent. The record low is 4 percent.

The California delinquency rate is currently 3.25 percent.

In 2006, the California foreclosure rate was 1.17 percent.

Out of 5,680 properties that entered foreclosure in 2006, only 697 were foreclosed upon.

As of July, only 13 percent of properties listed in the MLS were bank-owned.

"Half-full? Half-empty? It depends on who is looking at the glass," say the Hunts. "Just remember, there is another perspective than the one we receive from the news media."

Copyright © 2007 RE/MAX International Inc. 8/14/07

What Buyers Want: Top Home Preferences

2007-08-12T10:21:00.000-05:00

Daily Real Estate News August 7, 2007

What Buyers Want: Top Home Preferences

More home buyers want extra garage space with two or more spaces in their homes, according to the “2007 Profile of Buyers’ Home Feature Preferences,” which was released Tuesday by the NATIONAL ASSOCIATION OF REALTORS®. The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR's last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What's more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.

NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types. What They're Shopping For Other priorities for today’s home buyers include:

Air conditioning: three out of every four respondents surveyed ranked this as “very important.”

Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.

Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.

Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.

Energy efficiency: especially among new-home buyers — 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.

Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.

Regional PreferencesWhat home buyers want in the South, however, is not always what buyers in the West want. The survey identified some of the following regional preferences in home features:

Home buyers in the South and Midwest viewed central air conditioning as a priority, with 91 percent and 81 percent, respectively, saying this feature was very important.

Sixty-six percent of buyers in the South thought a walk-in closet in the master bedroom was very important, while 61 percent of Midwesterners valued an oversized garage.

In the Northeast, the highest percentage of buyers placed a premium on a backyard or play area (53 percent), followed by central air conditioning at 41 percent.

Two-thirds of buyers in the West want oversize garages (66 percent), followed by central air conditioning at 59 percent.

Fixing up the NestAccording to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom. New-home owners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,” says Paul Bishop, NAR manager of real estate research.

“Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.”Indeed, more than half of home buyers said they believe their home has high investment potential, and another four out of 10 say it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.

Generational DifferencesAge was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent). On the other hand, most buyers between the ages of 25-34 wanted a backyard or play area (60 percent). More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34. Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.

Home GrowthOverall, the survey also revealed that while homes are getting bigger, the number of bedrooms is shrinking. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during that same period.

The median age of the home reported in the current survey is 12 years, down from 15 years in 2004.

Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says. — REALTOR® Magazine Online

Questions to Ask Any Real Estate Agent

2007-05-23T20:08:00.000-05:00

Eight Questions to Ask ANY Real Estate Agent Before Signing ANYTHING

by Eric Bramlett

Everywhere you look, there are advertisements for Real Estate, and for Real Estate Agents. We're everywhere!

The reason is pretty simple: It's not extremely difficult to get your real estate license, a college degree is not required, and the income potential is pretty high.

Unfortunately, this means that there are a lot of BAD Real Estate Agents out there. The BEST way to find a good professional - in any industry - is to ask for a referral from a trusted friend or colleague. This does not, however, mean that any person referred to you is a quality professional - everyone has a brother, sister, aunt, uncle, or cousin who is in the business, after all - but it will increase your odds. There are a few questions that you should ask ANY Real Agent before signing a buyer's agency or listing agreement.

1. How long have you been in the business?

Pretty much any average person could decide they want to get their license today, and have that license in their mailbox a month later. Because of this, your Real Estate Agent's experience is VERY important. A new Agent will learn a LOT their first year, and will continue to learn more with every transaction. Don't automatically choose against a newer Agent - they typically bring a lot of energy to the transaction, and they will have LOTS of time for you. However, if you do decide to use a newer Agent, make sure they have a great support system behind them.

2. Are you a Realtor?

Not all Real Estate Agents are Realtors. Members of the National Association of Realtors have to adhere to a strict code of ethics, or otherwise face having their membership revoked. Also, you must be a member of the National Association of Realtors to have access to the MLS (Multiple Listing Service) which is what gives Realtors access to almost every home for sale in their market area.

3. What certifications do you hold?

There is an "alphabet soup" of advanced certifications that Real Estate Agents can earn. While it doesn't automatically mean that they are a good Agent, it does mean they are serious about their job. Keep an eye out for GRI - this is the most time consuming certification to obtain.

4. What is your specialty?

Real Estate Agents typically categorize themselves as either "commercial" or "residential" which are vastly different. Even among Residential Real Estate Agents, though, agents will specialize in Buyers, Sellers, or Renters. Some Residential Agents successfully handle Buyers & Sellers, but make sure they come with plenty of satisfied customers. Agents typically cut their teeth working with renters.

5. Can I have a list of past customers?

Take the time to call a few of an Agent's past customers. Ask for their strengths and weaknesses (and make sure they don't share the Agent's last name.)

6. Who is your Broker? Can I call him/her?

Real Estate Agencies are moving towards the "mega-brokerage" mentality which means that many Agents today have never met their Broker. If an agent doesn't have their Broker's cell phone number, find out who they will call if they run into questions.

7. How many sales did you complete last year?

A good agent will complete at least 25 sales per calendar year. You want to make sure that the agent helping you through the largest purchase or sale of your life is a GOOD agent.

8. Is this your full-time job?

It always surprises me how many people are willing to let their office mate down the hall handle the purchase or sale of their home. You need someone who handles real estate transactions full-time, day in and day out, to make sure that your best interests are taken care of.
There are plenty of fantastic Real Estate Agents working today. Unfortunately, the incompetent Agents really stand out. (Did you hear about the Agent who contracted the wrong house?) Make sure that you find your Agent through a trusted source, and ask any Agent these important questions.

2007-05-01T12:05:00.000-05:00

Are You Hard to Insure?

WHAT PROMPTS an insurer to deny coverage?

The reasons for rejection fall into a handful of categories, but they all boil down to one maddening fact: Companies don't like to sell insurance to people who are likely to use it.

In some cases, there isn't much you can do to remedy the situation — if you live in an active flood plain, for instance. But some things you do have control over. After all, do you really need that woodburning stove? Here's a list of things you might think about changing — if you can —

Things That Will Cost You

Potential Hazards Exposure to things like earthquakes and floods is obviously a problem. But anything on your property that could bring about liability claims could also cost you. For example, you may be refused coverage or will certainly have to pay more if you own an unfenced swimming pool, expecially if it has a diving board or a water slide. State Farm considers a trampoline a potential risk.

Unsafe Conditions

The insurer may deem your home or neighborhood unsafe due to anything from the crime rate to the incidence of fire in buildings like yours. Insurers will certainly want to know if fire-resistant materials were used to construct your home — something to keep in mind if you're thinking of buying a fixer-upper. They will also check to see if you maintain your property. Signs of disrepair, such as cracked steps or a leaky roof will be taken into consideration when agents are deciding whether to write or renew a policy.

Mean Pets

Believe it or not, unleashed or unfriendly dogs are seen by insurers as potential causes of liability claims. "If we investigate a home and find that a dog seems to be threatening, or if someone owns a pack of dogs," says State Farm spokesman Jerry Parsons, "then we might decline coverage."

Wood-burning Stoves Wood-burning stoves have become a much sought-after item among home shoppers looking for coziness or charm. But, due to danger of fire, insurers see nothing charming about them. If you own one, most companies will either increase your premium or, if you live in an area far from hydrants or a local fire station, may refuse your business altogether.

Heavy Claims Filing

As unfair as it seems, this is a primary reason for denying coverage. Insurers may consider several claims filed within a couple of years as a sign that you are not taking care to protect your home and possessions, or even that you are engaging in insurance fraud, says Peter van Aartrijk, a spokesman for the Council of Independent Insurance Agents. Many companies would rather see one very large claim than several small ones. Say you have a $50,000 claim in your recent past for damage from a house fire caused by faulty electrical wiring. You can probably find a new policy fairly easily, since in all likelihood the electrical system would have been brought up to current building codes in the course of repairs. But if every six months or so you file a claim for the loss of a ring, a watch or a set of golf clubs, finding a new homeowners policy is going to be something of a challenge. Try using an independent agent who will not only shop around for you, but can also make a case to underwriters that you are a responsible homeowner, and have just had a string of bad luck.

From SmartMoney.com

The Rent Back Offer

2007-03-04T10:55:00.001-05:00

Buyer’s Corner: The rent-back offer

Question: What exactly is a “Rent-Back” offer, and when should they be used?

In most real estate transactions, the buyer takes possession of the property at or shortly after closing. A rent-back is an offer made by the prospective buyer to allow the seller to remain in possession of the home for a longer period of time.

Why rent-backs benefit the seller
Many sellers find themselves making the dreaded double-move: first from the sold property into interim rental housing, then from the rental into a newly purchased home. Moving twice in a short time span can be costly, and not just in a financial sense. Most sellers in this position would welcome the chance to avoid any additional hassle, especially after having gone through the sometimes-draining process of putting their home on the market.

How a rent-back offer can benefit the prospective buyer
Because they are somewhat unconventional, making a rent-back offer to the seller can give the buyer some much-needed negotiating leverage. If moving into the home right away is not critical for the buyer, a rent-back offer may convince the seller to make concessions in return (by lowering the price or altering contingencies in the contract, for instance).

Rent-backs versus delayed closing
An alternative to offering a rent-back for sellers who are not ready to move into their new home is to delay the closing until the seller can move. However, it may be to the benefit of both parties to close sooner rather than later. Beside the peace of mind that a closed transaction gives both buyer and seller, closing gives the seller financial flexibility that may be crucial to them.

Buyers in competitive markets can use rent-back offers as a way to set themselves apart from the crowds of other serious buyers, and without getting into a bidding war.

Details and considerations
The amount of rent the seller pays the new owner in these arrangements is negotiable. In most cases (and if the buyer is not competing with other offers), the offer asks for the seller to cover ownership costs (mortgage payment, property taxes and homeowner’s insurance). It’s important to remember that the monthly ownership costs for the new buyer will likely be higher than they were for the previous owner, especially if they had owned the home for some time.

If it works to the buyer’s overall advantage, it’s not unusual for the seller to pay the new owner less than the monthly ownership costs. In rare cases (usually in highly competitive markets), buyers may offer a no-cost rent-back to the seller for short periods.

Regardless of the financial arrangement, the length of occupancy should be explicitly denoted in the closing contract. Some areas have specific occupancy arrangement contracts that should be filled out for this purpose as well.

Home Staging for a Faster Sale and Higher Sales Price

2007-02-26T17:24:00.000-05:00

The overall appearance of a listed property, both inside and out, plays a crucial role in a successful sale. That simple fact is the driving force behind one of the fastest-growing trends in the real estate industry: home staging.

While factors such as location and asking price affect a listing’s success, they are often out of a seller’s control and are unlikely to convince a buyer to commit to a listing that they find aesthetically unpleasing. Sellers have long known that improving their home’s appearance increases the likelihood of a faster sale or higher closing price. Home staging is simply the process of using professional consultation and assistance to enhance a home’s visual appeal.

What is Staging?It takes more than simple cleaning to make most homes attractive to wide range of buyers. A coordinated home staging highlights your home’s strongest suits, masks its shortcomings, and generally helps the buyer imagine how the home might look if they lived there.

Home Staging is commonly misconceived as a form of home decoration. In fact, the opposite is true: the purpose of home decoration is to individualize spaces in your home, whereas one goal of home staging is to reduce the personal touches you have added. By presenting furnishings, room arrangements, and decorating styles that are more universal, the staging makes it possible for your home to impress a wider range of buyers.

Some examples of common home staging techniques:
· Re-painting bright walls to neutral, space-opening colors
· Removing excess furniture/furnishing to open up spaces
· Rearranging existing furniture to improve room flow
· Removing/Replacing family photos, art and personal decorations
· Adding new lighting and/or window treatments
· Replacing current furniture with rented pieces

Where does one find staging help?The home staging profession has developed over recent years into a full-time real estate support industry. Thousands of individuals have studied to earn the Accredited Staging Professional (ASP) designation from the International Association of Home Staging Professionals. These professionals provide services ranging from simple consultation to a full re-working of a home’s interior and exterior.

Benefits of a staged home:

Initially, home staging was primarily a tactic used by sellers of luxury properties who wanted to distinguish their homes from other high-end listings. Today staging is common within nearly every price range and niche market.

Home staging is particularly beneficial if your home is either currently vacant or is still your primary residence and has been for some time. In the case of vacant homes, staging livens up empty spaces and provides a visual frame of reference for buyers. If you have lived in a property for several years, staging simplifies each room and allows the home’s quality to speak for itself.

Ultimately, staging provides sellers an effective means of securing a competitive advantage.

How Do You Feel About Having Your Home Staged?

ZILLOW'S PRICE ESTIMATES: HOW GOOD ARE THEY???

2007-02-21T15:18:00.000-05:00

Zillow Inc. launched about a year ago and many people are familiar with the computer-generated estimates of home values created on-line. It has become an addition for some people to constantly look at their own property, friends, neighbors, etc. But is it accurate?

A Wall Street Journal analysis of 1,000 recent home sales shows that Zillow's "Zestimates" often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible--off the mark by more than 25% on one in 10 homes.

The Journal looked at transaction prices recorded for 1,000 recent home sales in seven states, using data from First American Real Estate Solutions, a data provider in Santa Ana, Calif., and compared those prices with Zillow estimates, which didn't yet reflect the sales. The median difference between the Zillow estimate and the actual price was 7.8%. (That was close to the 7.2% median "margin of error" reported by Zillow itself on all transactions involving homes whose value it has estimated.) (Source: RealEstateJournal.com) Full Story . . .

What do you think? Have you used Zillow? Are Zillow estimates accurate?