Thursday, February 27, 2014

How Much Is Your Home Really Worth?


 
If you’re thinking of selling your home, you may be fantasizing about the profit you’ll reap from the sale or calculating exactly how much you’ll need to pay off your current mortgage and have enough left over for a down payment on the next house.

Before your fantasies run amok you need to realize that, while you can estimate the value of your home in a variety of ways, the true value is only what a buyer will pay for it. That said, there are several ways to get a strong idea of how much a buyer will pay for the property in current market conditions.

What Your Home Isn’t Worth

Many homeowners find it confusing that there are various numbers floating around that indicate their home value. Here are a few:

§  Property tax assessment. Each jurisdiction uses a formula to establish home values for a tax assessment, but this price rarely correlates with the market value of your home. Your tax assessment can be higher or lower than the current market value.

§  Homeowners insurance value. Insurance estimates are based on the cost of replacing your home without the land, so this value is skewed compared to market value.

§  Mortgage balance. Your mortgage balance simply reflects your home loan. The difference between your loan payoff and the market value of your home is your equity.

§  Neighbor’s home value. Even if your neighbor’s home is similar to yours, it’s not likely to be identical. A REALTOR® can help you evaluate your home’s worth in the context of other nearby properties.

§  Cost when you purchased the home. Regardless of how long ago you purchased your property, the value can have gone up or down.

§  Desired value. You can always try to put your home on the market for your desired price, but if you’ve over- or under-priced it, you’re shortchanging yourself. because you’re either selling too low or your house could sit on the market and eventually sell for less than if you priced it correctly in the beginning.

Comparative Market Analysis

A REALTOR® can do a comparative market analysis with recent market data to help you estimate your home value. When you sell your home, an appraisal will be required by the buyers’ lender, so keep in mind that your home has to appraise for the selling price or, depending on how your contract is written, you’ll have to renegotiate the sale or the buyers will need to come up with extra cash.

A CMA is both an art and a science. While it’s based on data, it also requires local market knowledge and intuition about which homes to compare and how to interpret the prices. Most REALTORS® will look for recent sales of homes that are similar to yours, preferably within the past two or three months, up to about six months. In addition, a REALTOR® can look at other homes currently on the market and homes that didn’t sell that were taken off the market to compare values.

The comparison of your home with others should include not only the size and the number of bedrooms and baths, but also the condition of your home, the neighborhood and the proximity to amenities. If you do not understand the comparisons a REALTOR® is making, ask to see some of the homes currently on the market or look online at photos of the properties.

While it may be tempting to list your home with the REALTOR® who tells you it can sell at the highest price, a smarter way to sell your home is to price it as accurately as possible from the beginning. Studies show that an overpriced home that lingers on the market will end up selling for less than the estimated correct price.

Compliments of Realtor.com By: Michele Lerner

 

Tuesday, February 25, 2014

8 Costly Home Seller Mistakes


8 Costly Home Seller Mistakes

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Homeowners who want to sell their home know they need to get the place spruced up for marketing, but a tougher challenge for some sellers is to get mentally prepared for putting their residence on the market. After all, if you’ve been happily living in your home for years, it can be emotionally hard to detach yourself from your memories and look at the place as a commodity you’re selling.

For a smoother sales transaction that garners the most possible profit from your sale, avoid these common, yet costly, seller mistakes: 
 

1. Skipping a home inspection. Depending on the age of your home, scheduling a pre-listing home inspection could save you a lot of time and aggravation. You can address issues on your own time and budget before negotiating with a buyer to fix problems.


2. Skimping on your sales prep. While you may be tempted to “test the waters” and put your home on the market without painting it or making minor repairs, your home is likely to languish on the market and get a reputation for having a major problem. A thorough, professional-level cleaning should be your bare minimum seller prep. Your eventual sales price is likely to be lower if you don’t sell within the first few weeks after you list your home.


3. Choosing the wrong REALTOR®. Instead of picking a REALTOR® who’s a friend of a friend, a relative or perhaps someone who’s great at working with buyers, take the time to pick a REALTOR® with an excellent reputation for listing homes. Your payoff will be much larger if you list your home with a REALTOR® with local market knowledge and sales expertise.


4. Neglecting to ramp up your curb appeal. If you polish and primp inside your home but neglect to pull weeds or paint your front door, you run the risk of potential buyers leaving without ever entering your home.

5. Withholding information from buyers. If you hope that the buyers or their inspector won’t find out about the leak under your bathroom sink or the fact that your basement gets flooded every winter, you run the risk of a nasty negotiating period, or  worse, a lawsuit after the settlement.


6. Overpricing your home. If you’ve hired the right REALTOR®, someone who can give you a strong market analysis and help you determine a reasonable price for your home, then you can avoid overpricing your home. If you don’t listen to your REALTOR® and base your listing price on an inflated view of your home’s value, you’re likely to end up selling after multiple price drops for less than you would have if you priced it right the first time.


7. Being unprepared for your next step. Whether you should buy your next home or sell your current home first is only one part of the preparation you need to make to move. You need a back-up plan in case your transaction on either end takes longer or shorter than you think, and you need to understand your mortgage payoff and the closing costs you must pay.

8. Letting your pets and kids spoil a sale. Part of your emotional detachment from your home is recognizing that while you love Fluffy and your darling twins, buyers want to visualize themselves and their own family in your home. Bribe your kids if you have to, but make sure the house is neat and as neutral-looking and smelling as possible. Take the kids and your pets out (or lock up your pets) when prospective buyers are visiting – you never know if someone who is terrified of dogs or cats will be turned off from making an offer because of your adorable pet.

Selling a home can be challenging, but with the help of a reliable REALTOR® you can avoid making mistakes and reap the rewards of your sale.

Friday, February 7, 2014

Buying a House? 10 Financial Things You Shouldn’t Do

10 Home Financing Slipups

Great Article from Realtor.com and Diana Lundin 

You’ve decided to buy a house, and you need financing. Even if you have good credit, you should keep your finances shipshape until closing so that lenders won’t think twice.
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Here are 10 things to avoid while you’re buying a home:
1. Don’t change your job before applying for a home loan.Also, now is not the right time to become self-employed or to 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. As with your employment, you want your banking history to show stability.
3. Don’t buy a car that you have to finance. Buying a vehicle or any other form of transportation through a loan increases your debt-to-income ratio, and loan officers don’t want to see that.
4. Don’t buy furniture on credit before buying your house. Charging big-ticket items increases your debt-to-income ratio. Save your money for the down payment.
5. Don’t be late on your credit card payments or charge excessively. You need a track record of responsibility that shows you can manage your money.
6. Don’t make large deposits into your bank accounts. Lenders like it when the money for your down payment has been 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 or fudge your income. It’s fraud.
8. Don’t co-sign a loan for anyone. Even if you’re not making the payments on that loan, co-signing increases your debt-to-income ratio.
9. Don’t apply for new credit cards or prompt any other inquiries into your credit rating. Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, that usually doesn’t affect your credit score, because lenders assume that you’re rate-shopping. But opening credit accounts within a short period of time represents some risk, and your credit could take a hit. Inquiries are probably not a huge factor in calculating your ability to repay a loan, but why take a chance?
10. Don’t spend money you’ll need for closing costs. Part of the price of financing a loan is closing costs, and you’ll likely have some responsibility for paying them. Make sure you have enough for your share.
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