How to Price Your Home

How to Price Your Home Pricing decisions should be grounded in reality rather than wishful thinking. When the time comes to price your home for sale, you may be tempted to start with the price you paid for it, add a healthy markup and call it a day. Here are four strategies to help you figure out how much your home is worth:
 
1) Abandon your personal point of view. How much will a ready, willing and able buyer be willing to pay for your home? Buyers don’t care how much you paid for the home, how many memorable moments you and your family shared in the home, how much cash you need for the down payment on your next home or how much time and money you’ve invested in your home’s hardwood floors, fresh paint, lush landscaping or other improvements.
 
2) Consult a Professional Invite a real estate agent to visit your home and give you their opinion of its likely selling price. Ask for a “comparative market analysis” (CMA), which shows the prices of comparable recently sold homes, on-the-market homes and homes that were on the market, but weren’t sold. The on-the-market homes are the “competition” for your home. Some agents will suggest a flatteringly high price to “buy” your listing only to demand a price reduction a few weeks later. It’s just better to get a blunt and honest pricing valuation.
 
3) Do your own market research. Go to open houses in your neighborhood and try to make an impartial assessment of how those homes compare to yours in terms of location, size, amenities and condition. Assuming all the asking prices were the same, would you buy your home or someone else’s?
   
4) Consider market conditions. Are home prices in your area trending upwards or downwards? Are homes selling quickly or languishing? Will your home be on the market in the spring home-buying season or the dead of winter? Are interest rates attractive? Is the economy hot or cold? Is the job market strong? And will you be selling in a buyer’s market or a seller’s market?

The Truth about Selling For Sale By Owner

The Truth about Selling For Sale By Owner For most people, a for-sale-by-owner (FSBO) transaction simply isn’t in the cards. Granted, some people are able to sell their own homes without the services of a real estate agent. But often overlook the fact that they would have made more money if they had contacted a Realtor®. Here are five reasons why you wont have success doing a For Sale By Owner:

1) FSBOs can’t list their home in the MLS. FSBOs aren’t permitted to put their home in the multiple listing service (MLS) because these industry membership organizations are open only to licensed real estate brokers and agents. FSBOs are also locked out of many home search engines and Web sites, including the gigantic Realtor.com. Sure, a determined FSBO can put a for-sale sign in his or her front yard and run a tiny advertisement in the local newspaper, but the home won’t receive nearly as much exposure as it would through the MLS.

2) Agents won’t show FSBO homes. In a typical home sale, the buyer’s agent receives a percentage of the commission that the seller pays the listing agent. Without a listing agreement, there’s no guarantee that the buyer’s agent will be compensated for his or her services, unless the buyer has signed a buyer’s brokerage agreement that specifically provides for such compensation. Even if a FSBO offers to pay the buyer’s side of the commission, most agents won’t want to go through a transaction with an unsophisticated self-represented seller across the table. And the buyer’s agent does not want to represent both parties for twice the work! They can go down the street and sell any other house for half the work and twice the pay! That means the pool of potential buyers for FSBO homes is limited primarily to unrepresented and probably unqualified prospects.

3) FSBOs usually overprice their home. Like most homeowners, most FSBOs honestly believe their own home is worth more than comparable homes in the same neighborhood. Usually, they’re wrong. A real estate agent can provide an update on market conditions, an assessment of the likely selling price of the home and tips for improving the home’s buyer appeal. Overpricing a for-sale home is a sure way to deter potential buyers.

4) Buyers will feel intimidated. Potential buyers will spend less time in a for-sale home if the owner is present during the showing, and they’ll be shy about discussing its pluses and minuses with their own agent if the owner is within earshot. Buyers will also be less inclined to make an offer if they know they’ll be negotiating directly with the seller. Having an agent on each side creates an effective emotional buffer between the seller and buyer.

5) FSBOs are likely to stumble into legal trouble. Real estate transactions are fraught with potential liability for unwary sellers, particularly in states that have extensive disclosure requirements (e.g., California). A FSBO who overlooks even one required form or legally mandated disclosure could face a protracted and expensive buyer lawsuit after the transaction closes.

What is Escrow and Title?

What is Escrow and Title? Escrow is a non-biased third party that collects, holds and delivers documents and monies in accordance with dated and written instructions in a real estate transaction. They handle loan documents and funds, prepare documents, obtain signatures, and records documents. Best example: A neutral third party that ensures the buyer gets the home and the seller gets the monies.
 
Title is legal term meaning ownership. Deeds to land are sometimes referred to as title deeds. If a person has good title to a property, their proof of ownership is beyond doubt. Title insurance protects the lender against any claims that arise from arguments about ownership of the property and is used for homebuyers.

Understanding Contingency Removal

Understanding Contingency Removal Once you have an accepted offer on a home, you have 17 days to decide you want to proceed with the home purchase or back out. If you back out before the 17day mark, you can keep your good faith deposit that was included in your offer to purchase the home.
 
During the 17 days contingency removal period, you are allotted time to conduct a home inspection to ensure the home you are purchasing is structurally sound and up to code; also to make sure there is nothing seriously wrong with the property. You will also be required to get a home appraisal to make sure your home is worth the amount of money you offered to purchase the home. These are both out of pocket expenditures and can range from $350 to $500 each and $750 to $1000 total.
    
The last and most time consuming item you need to address during your contingency removal timeframe is securing your underwritten loan approval. This means your loan is guaranteed in writing by a loan underwriter. If for some reason you do not complete all three items before the 17 days is over, you are at risk of losing your deposit if you choose to proceed with the home purchase or you will have to cancel the contract.

Choose a REALTOR®

Choose a REALTOR® To sell real estate, a person must be licensed by the state in which they work. Before a license is issued, minimum standards for education, examinations and experience, which are determined on a state by state basis, must be met. After receiving a real estate license, most agents go on to join their local board or association of REALTORS® and the NATIONAL ASSOCIATION OF REALTORS®, the world’s largest professional trade association. They can then call themselves REALTORS®.
    
The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics (which in many cases goes beyond state law). In most areas, it is the REALTOR® who shares information on the homes they are marketing, through a Multiple Listing Service (MLS). Every home for sale in San Diego County is usually listed with a REALTOR and put on the Multiple Listing Service. Working with a REALTOR® who belongs to an MLS will give you access to the greatest number of homes.

Understanding Agency Relationships

Understanding Agency Relationships You’d probably wonder what agency relationships might have to do with you, regarding buying or selling real estate. Most people are unaware of the importance of these types of relationships, unless they do a lot of buying and selling of real estate and have become educated in the importance of knowing what side your agent is on. The buyer’s side, the listing side or both!
 
If a real estate agent represents the seller of a property, they have established an (seller-agent) agency. This agent has been hired by the seller to represent them, not you. You can work with the seller’s agent when you purchase a home and it established a dual agency. So, how does a buyer protect themselves? Hire a Buyers Agent of course!
A buyer’s agent has the fiduciary responsibility to represent the buyer in a real estate transaction.
 
The advantages of using a buyer’s agent are great. Services that are provided to a Buyer-Client are as follows:
 
Helps Buyer with loan pre-approval.
Physically shows Buyer properties for sale.
Pays full attention to the Buyer’s Needs.
Informs the buyer all that is learned about the seller.
Focuses on expanding the range of choices to satisfy the buyer’s needs.
Find the best property for the client.
Promote the buyer’s search.
First opportunity to view new listings.
All properties are available and viewable, and the sales price is negotiable.
Give advice with FACTS.
Compare competing properties.
Negotiate on behalf of the buyer.
Share all known information about the seller.
Negotiate approved purchase agreement to safeguard buyer-clients.
Attempt to solve problems to the buyer-client’s satisfaction.
 
All real estate agents can represent either the buyer or the seller. When you are looking to purchase a home, please select someone who is going to work for YOU and not the other party.

Buyers, Don’t Forget Your Pre-Approval Letter!

Buyers, Don’t Forget Your Pre-Approval Letter! Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. But the reasons for this advice aren’t always clear, and buyers sometimes are dismayed by the amount of paperwork involved. Here is some of the reasoning behind the advice:

1) A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a “pre-qual” from a Web site is just as easy. Enter some information, click “submit” and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight.

2) You’ll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there’s no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors — down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on — are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.

3) You’ll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you’ll be able to obtain a mortgage.

4) Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you’re a well-qualified buyer who is serious about purchasing a home. The increased likelihood of a closed sale — and a commission — will naturally motivate your agent to devote more time and energy to you. In fact, some agents won’t even show property to buyers who don’t have a pre-approval letter.

5) A few caveats: Pre-approval letters aren’t binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, apply for credit or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.