Honesty Will Help Sell Your Home

Originally posted 2010-01-08 05:00:38. Republished by Blog Post Promoter

One quality that you should be looking for in your listing broker is honesty, so if a broker does not give you a realistic view of the value of your home do not hire them.  The broker should provide a detail comparative market analysis.  The analysis should be of the last 30 days of homes with similar features.  Here is why.

Today’s market is very volatile, so if you do not need to sell don’t.  You may find that surprising statement coming from a real estate broker, but there are several factors that makes this statement the best advice for any seller.

In previous years, a seller could list his or her home for as much as the seller wanted as long as the buyer was willing to pay the price, it sold.  The seller also could list the home at a number higher than the Realtor recommended that the seller list the home at, and it would sell.   The seller would term this pricing strategy as “wiggle” room. The reason this stragedy was successful was because it was a seller’s market back in 2003 to 2005.

Those tactics started showing the first signs of soften in 2006 when homes that were listed started remaining on the market for 3 to 6 months before selling.  Prior to 2006, it was not uncommon to have a bidding war on homes.  Several changes in the market happened in 2006 that influenced the market today and turn the market from a seller’s market in 2006 to a buyer’s market in 2009:

• increased in foreclosed homes
• changes in appraisal methods
• increase in minimum credit score to purchase a home

At the end of 2008, there were an upheaval of foreclosures and sharp economic downturn; thereby, prompt mortgage companies to tighten their belt and not allow financing.  Those changes affect buyers being able to qualify for a loan due to the credit score requirement to increase to 620.

The belts were so tight that the government had to step in.  I would like to find out if you think the changes to the mortgage industry that the government mandated helped or hurt buyer? seller?

Beware, Predatory Lending Still Alive and Well

Originally posted 2009-01-18 02:18:45. Republished by Blog Post Promoter

Recently, I attended a closing where the owner felt that the lender was performing predatory lending.  I agreed, as a matter of a fact, I pointed it out.  One of the signs of predatory lending in his deal was that the terms of the loan was not what the owner agreed to.

The owner immediately called the lender.  From his demeanor, the lender was trying to convince him that the deal was the best the lender could do for his situation.  This statement was met with the owner informing the lender that the owner’s present lender was offering a no closing cost deal, as well.  After several more exchanges, the owner agreed to allow the lender time to meet the terms of the orginial agreement. 

The lesson here is to read the documents you are signing.  Do not take anyone’s word on what the documents state.  When viewing documents look for the interest rate, term and cost for acquiring the loan.  Question all items that you do not agree with.

The above scenario is one of many signs of predatory lending.

Other signs of predatory lending are:

• The lender tells the client that the product or loan the lender is offering is the only chance that the client has to get a loan or refinance.  Remember if a lender does not give you a choice they are not the right lender for you.
• The lender states the home cost more than others in the area.  Remember, the home can not be sold to you for more than what it appraises for.  Futhermore, the appraisal is an opinion of value based on homes of similar, size, age, etc. as the property you are purchasing.  Still yet, your Realtor can provide a comparative market analysis to let you know the value of the home.
• The lender ask you to sign a blank document.  Never sign a blank document.

Lastly, if it seems to good to be true it often is.  Read all documents that you sign and get second opinions by having your Realtor, attorney, and/or accountant review the rate, term, and contract before you sign to ensure your rights are protected.

To Sell or Not To Sell

Real estate is in the media a lot lately.  It has been in the media as a negative item for much too long.  The reason is that unlike stock or bonds real estate will never go to zero.  Yet, it will appreciate and depreciate, but most importantly it will always have value.  Even though in the present market the value has depreciated by as much as twenty seven percent in some markets, a lender, a homeowner, can still get value from the sale or refinance of the home.   It is, however, very important to be abreast of how much the value has depreciated to determine if right now is the best time to sell or refinance your home. 

 

If you are considering becoming an investor this is the best time to be an investor due to the depreciated value.  There are great deals in this market.

 

However, as a seller, it is not the best time to sell.  The value that most sellers paid for their homes a few years ago is no longer possible in the market.  Therefore, if you do not have to sell do not sell.  If you must sell price the home at a list price that is median of the comparative market value.  What does that mean, you ask?  Let’s examine. 

 

It is important to get a realistic view of values.  When the seller is viewing the comparative market analysis provided by the Realtor.  It is important to make sure it an analysis of sales from the last six months of similar properties to your home.

 

In addition, it is equally important to know how many properties that are actively listed that are similar to your home. 

 

To get a realistic view of the value of your home, we will examine the absorption rate.  The absorption rate will evaluate pricing categories ranges for properties that are similar to your home.  Let’s say you and your Realtor want to list your home between 175-200k and 225-250k.

 

Next, we pull up all properties regardless of features that are active, pending, and sold between these price ranges.   We will also pull up the total number of closed properties within the zip code of the subject or potential listed property as well as, all the actively listed properties in that zip code.

 

The information that is gather through this evaluation you will be able to get a view of where the competition is for properties that are in the same price range as your home.    The goal of this absorption rate analysis is to track where the money is.   Remember, most buyer search and purchase homes by specific price point not by features along. 

 

Now, back to our example, let’s say that over the last six months a total of 18 homes sold.  Then, you would divide “18” by 6 (for last 6 months).  This will give you the average number of homes that sold over the last 6 months.  The answer in this case is 3 homes.

 

We also want to know the average number of active listings.  For this example, the number of active listing is 24.  Then, you would divide 24 by 3 (# of solds on average for last 6 months).  The answer is 8.  8 is the total months of inventory for the price point. 

The latter information should indicate that this is a buyer’s market.  In a buyer’s market, the buyer must be aware that being in a buyer’s market doesn’t make the buyer’s job any easier.  It just gives the buyer more flexibility.  Remember in a buyer’s market, there may be several buyers for one property or only one buyer for a property.

If there are no other buyers for a property by virtue of the length of time the property has been on the market then a low offer may come in to the seller.  Sorry sellers.  However, sellers that do not mean that you have to give your properties away, but it may mean that you may have to settle for less than you anticipated selling your home. 

 

Another thing that makes a buyer’s market advantageous to the buyer and not to the seller is that there are a lot of homes to choice from that may meet the buyer’s criteria. 

 

It is important to evaluate the pricing of your homes in several different ways to help get your home sold as quickly as possible.  Your home can sell even in this market, but it has to be priced right.