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Telltale Signs That You’re Ready to Sell

February 23, 2015 By Roy Hernandez Leave a Comment

It doesn’t matter how the decision comes about to sell your home; when you’re ready, you’re ready.

Knowing when to move on from a relationship is an essential life skill. I’m not talking about romance, but an even deeper relationship: the one you have with your humble abode.

Selling your home is just as big an undertaking as buying one — in many cases, even more so! You’ve made memories in your home, and that can make it hard to see the proverbial writing on the wall.

So how do you spot the telltale signs of an impending property breakup?

You browse your heart out

Surfing real estate listings online has become a favorite pastime. Real estate photos these days are as Pinterest-worthy as any magazine spread, and it’s easy to scroll away the hours looking at pretty pictures of houses.

If you find that your search filters have become more detailed, that you’ve signed up for a Trulia account, and that you’re bookmarking houses with abandon … you may be doing a bit more than just dreaming.

Sometimes the decision to sell your home isn’t a conscious one; it simply becomes apparent through your actions.

Brandon Wilson, a recent home seller in Dallas, found himself in this exact situation.

“I was spending so much time online looking at houses, it practically became my job. Even though I felt happy with the home I had, I finally realized that all the amenities I wanted in my current home could actually be mine if I just moved; I listed my house for sale the next week.”

You obsess over every for-sale sign

Most of us know a real estate professional in our neighborhood. It’s natural to ask about the market in general terms — we all want to know what our house is worth, don’t we?

Even if you aren’t ready to sell your current home, looking at homes for sale can be a fun way to spend a Saturday.

However, if you find yourself cornering the local real estate pro at every neighborhood get-together to discuss market valuations, then you may be more serious about moving than you think.

The same can be said for spending every waking hour driving around to open houses. It’s natural to be curious occasionally about homes for sale in your neighborhood, but if you’re starting to feel like you should have your own HGTV show, then it’s time to move on.

You’re desperate to “right-size” your home

Everyone says time flies, and this is definitely true in real estate. We often find ourselves in a situation that was perfect five years ago but just isn’t filling the bill now.

Maybe you’ve added a family member or two or the kids have all moved out; whatever the change, the outcome is the same — it’s time to “right-size” your home.

If you fantasize about the free time and road trips you could take if you didn’t have 3,000 square feet to maintain, or if every morning you long for a bathroom you didn’t have to share with three kids and a dog, it’s time to list and make your dreams come true.

The first step? Get clear on the reasons that your house is no longer the one for you. Then you can embrace the process and start implementing a plan to make your fantasy home a reality.

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U.S. Home Sellers Return for Spring as Buyers Get Relief

February 20, 2014 By Roy Hernandez

By Prashant Gopal, Bloomberg, Feb 7, 2014 5:58 AM PT

Suzanne Baker and her siblings bought a foreclosed home in Atlanta two years ago, added a fourth bathroom, then waited for values to rebound before considering a sale. Now, she says, they’re ready to cash in.

The family last month listed the four-bedroom house in the affluent Buckhead neighborhood for $710,000. It was purchased as an investment for about $375,000 in late 2011, before bulk buyers snapped up many of the area’s distressed homes, helping to drive up prices in Atlanta by more than 25 percent.

“The market is back up,” Baker said. “We think we can make a good amount of profit so we’re going to try.”

For two years, a shortage of sellers like the Bakers has propped up prices across the U.S. as shoppers jostled for a dwindling supply of houses. Now, as the market’s busiest season approaches, escalating values are spurring more listings as homeowners regain equity lost in the worst crash since the 1930s. While new-home construction at a third of its 2006 peak will keep inventory tight, the supply increase is poised to damp price gains while higher mortgage rates cut into demand.

Related:

For would-be buyers, more choice would mean relief from the bidding wars of last year, when the supply was at a 12-year low leading into the key spring season. The period traditionally starts in mid-February, with deals picking up in the following months as weather in much of the country starts to warm.

Prices “won’t be rising as much as they were rising last spring.” said Jed Kolko, chief economist of San Francisco-based Trulia Inc. (TRLA), operator of an online property-listing service. “It will be a less frantic market with more inventory and fewer investors.”

Tightest Markets

The number of available homes climbed on a year-over-year basis in each of the last four months of 2013 after 30 straight declines, according to the National Association of Realtors. The increase in December was 1.6 percent.

Inventory rose the most in some of the tightest areas, from Arizona and California to Georgia and Florida, where leaps in prices erased negative equity and encouraged homeowners to lock in profits, according to a separate report from Realtor.com, the property-listings website for the Realtors association.

In Sacramento, California, where asking prices climbed 11 percent last year, listings jumped 58 percent in December, according to the website. The supply rose 35 percent in the Minneapolis area; 31 percent in Orlando, Florida; 27 percent in Atlanta; 24 percent in Dayton, Ohio; 23 percent in Oakland, California; and 21 percent in Phoenix.

Slowing Gains

“Rising inventory is the primary reason that we expect the pace of price gains to drop back,” Paul Diggle, property economist for Capital Economics Ltd. in London, said in a telephone interview.

Prices nationwide will climb 4 percent this year compared to 2013’s expected 11 percent gain, according to Diggle. Increasing mortgage rates also will weigh on prices because the higher costs will push some buyers out of the market, while forcing others to look for cheaper deals, he said.

Diggle’s firm projects 30-year fixed mortgage rates of 5 percent by the end of the year. That compares with the average this week of 4.23 percent, according to data from Freddie Mac. Rates will climb as the Federal Reserve scales back bond purchases that have bolstered the housing recovery by holding borrowing costs down, he said.

While rates have leveled off after reaching a two-year high in August, a jump from near-record lows in May has contributed to cooling demand. In December, contracts to buy previously owned houses fell by the most since May 2010, data from the National Association of Realtors show. Completed purchases rose 1 percent from November for the first gain in five months.

Buyer Enthusiasm

“Buyer enthusiasm has really softened in the past three months,” said Lawrence Yun, the Realtors group’s chief economist, who said colder-than-normal weather may be partly to blame. “In some markets, prices may rise further and buyers will want to catch it” before the increases put them out of their budget.

In Southern California’s Inland Empire, east of Los Angeles, homeowners got a jump on the spring selling season and began listing properties earlier than usual, said Paul Reid, an agent with brokerage Redfin.

Sellers are “nervous about what the spring is going to bring,” said Reid, who is based in Temecula, California. “They don’t know if everybody will list this spring then you’ll have a big counterbalance toward too much inventory, or if there’ll be a crunch again. They figure they’ll get out ahead of the market, list, sell and be done with it.”

Weak Demand

Rising inventory may unlock sales in severely constrained markets such as California’s Silicon Valley, where homes spend a median of 18 days on the market, according to Redfin data.

While those types of areas will benefit from more supply, demand in much of the country remains relatively weak and won’t recover without stronger job growth, said Sam Khater, senior economist for CoreLogic Inc.

Adjustable-rate mortgages, used by first-time buyers in past decades to purchase more expensive properties, may not be an option because of stricter lending standards adopted after the housing crash, he said.

“More supply will not create its own demand,” Khater said. “It will slow prices to a more sustainable rate of growth, but it won’t make the market more affordable. Once prices reach their natural state, future price appreciation will depend on income increases.”

Job Growth

The U.S. gained 113,000 jobs last month, less than economists’ forecast for a 180,000 increase, even as the unemployment rate fell to a five-year low of 6.6 percent, Labor Department data showed today. The jobless rate for Americans in their early 20s, many of whom are living with their parents longer rather than renting or buying homes, was almost 12 percent.

First-time buyers accounted for 27 percent of completed home purchases in December, down from 30 percent a year earlier, according to the Realtors group.

An increase in supply would indicate the housing market is moving toward more normal conditions as it rebounds from the five-year slump that started to turn around in 2012.

“Inventories had been very, very low and still are despite this turnaround,” said Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Pennsylvania. “It’s part of the process toward normalization, although the weakening in demand needs to be watched very carefully because if demand does not pick up in the spring, that’s going to call into question the strength of any recovery.”

More Homebuilding

For homebuilders, the spring selling season traditionally starts the weekend after the National Football League’s Super Bowl, which was played five days ago. Companies are stepping up production, adding to the options for buyers. New-home starts, which rose 15 percent in 2013, will jump 25 percent this year, according to Brad Hunter, chief economist of Metrostudy, a research firm that tracks construction.

While sales are poised to rise as the economy improves, higher mortgage rates and aggressive builder price increases slowed demand in the second half of 2013, he said.

“It’s going to be a good season for homebuilders, maybe just not as good as last season,” Hunter said. “There are more projects operating this year than last year so it’s a more competitive environment.”

PulteGroup Inc. (PHM) and D.R. Horton Inc., the second- and third-largest U.S. homebuilders by market value, said January sales were encouraging.

‘Very Positive’

“We’re right on the cusp of a strong spring selling season,” Donald Tomnitz, chief executive officer of Fort Worth, Texas-based D.R. Horton, said last week on the company’s earnings conference call. “The spring selling season has started a little early, for our company, and that’s a very positive thing.”

In Atlanta, home starts surged 67 percent in 2013 — the biggest jump on record — and many of those properties will be completed this year, said Eugene James, Metrostudy’s director in the region.

Buyers of existing homes will face less competition from investors, who have caused shortages in many areas. Bulk purchases will start to slow as the foreclosure crisis fades and bargains disappear, according to Khater of CoreLogic. Multibillion dollar private-equity firms such as Blackstone Group LP — which helped drive up prices by buying thousands of single-family homes to rent in Arizona, California and Florida are already are looking elsewhere.

Phoenix Investors

In the Phoenix area, institutional buyers purchased 44 properties in December, down from a peak of 831 in July 2012, according to Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W.P Carey School of Business.

Active listings, excluding homes under contract, jumped 34 percent in December from a year earlier, while foreclosures and other distressed properties — the main source of supply for investors — fell 24 percent, Orr said.

Price gains in the area are easing, with a 20 percent increase in 2013 compared with 31 percent in 2012, Orr said. Home sales in December fell 11 percent from a year earlier and the decline may have been much higher in January, he said.

“Demand is still weak and supply has been growing faster than last year,” Orr said in an e-mail. “I’m not seeing any likelihood of further price gains in the near term. Sales concessions are on the rise and list-price cuts are widespread.”

Orlando Shift

In Orlando, sellers aren’t getting as many offers as they did a year ago, said David Welch, a Realtor with locally based Re/Max 200 Realty. The market has changed since October 2012, when the Orlando Sentinel reported that a bank-owned property drew 64 offers before fetching $86,000 — about 23 percent more than the asking price.

The median home price in December was $160,150, up 21 percent from a year earlier, according to the Orlando Regional Realtor Association. Sales dropped 5.2 percent, while new listings rose 24 percent.

“Prices have gone up quite bit,” Welch said. “That house that was a great investment a year ago has gone up 20 percent and may not be anymore.”

For Baker, the director of a nonprofit community revitalization group in Atlanta, the timing seems right to jump into the market and sell her family’s investment. The house, which she and her siblings used off and on in the past two years, is now vacant, and as a part-time student working on a master’s degree in social work, she can use the extra cash.

“We’re trying it now and we’ll see what bites we get,” Baker said.

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30-year rate climbs to 4.47 percent

December 23, 2013 By Roy Hernandez

From OC Register December 19th, 2013.

RATE NEWS

From Freddie Mac’s weekly survey the 30-year fixed rate climbed to 4.47 percent and .7 point from last week’s 4.42 percent and .7 point. The 15-year fixed rose to 3.51 percent and .6 point from last week’s 3.43 percent and .7 point.

BOTTOM LINE: In the past year—assuming a well-qualified borrower received the average 30-year conforming fixed rate on $417,000 — you would have saved $263 had you funded your loan a year ago on the previous rate of 3.37 percent and payment of $1,842 compared to today’s 4.42 rate and payment of $2,105. Today’s 15-year fixed rate of 3.51 percent and monthly payment of $2,983 is $173 higher than last year’s payment of $2,810 on the previous rate of 2.65 percent.�

APPLICATION NEWS

The Mortgage Bankers Association weekly survey reports a 6 percent drop in loan applications compared to last week. Purchase loans now represent 34 percent of all applications. The Federal Housing Finance Agency announced (Fannie’s and Freddie’s regulator) announced shockingly large increases to loan level pricing adjustments as well as a separate guarantee fee increase. Simply stated, these loan point taxes could increase your loan costs in certain instances by .85 point to 1.6 points. Ouch!

WHAT I SEE: From rate sheets hitting my desk that are not part of Freddie Mac’s survey: Locally, not-so-well qualified, self-employed borrowers can get their income cleared on conforming and jumbo loans with a letter from their CPA and a current P & L on conforming and jumbo loans. Well-qualified borrowers can get a 30-year fixed rate at 4.25 percent and 1 point or 4.625 percent and zero cost. Or take a 15-year fixed at 3.25 percent and 1 point or 3.625 percent and zero cost. The 5/1 ARM for conforming or jumbo is very attractive at 3.5 percent, no-cost and some borrower rebate money on higher loan amounts.

WHAT I THINK: My 2014 top 10 predictions, in consultation with my crystal ball, are now etched in stone, with numbers 1 through 5 posted today. I’ll reveal 6-10 next week.

1) Home prices in Orange and Los Angeles Counties will drop between 6 and 8 percent in 2014. This will be due to a continuum of the current housing sales slowdown (that’s code for the housing economy is rapidly flattening), very untimely higher taxes on mortgages in the form of loan level pricing adjustments and guarantee fees and higher FHA mortgage insurance charges (that were introduced in 2013), as well as the tighter underwriting standards that start January10, aka the Qualified Mortgage and Ability-to-Repay rules.

2) Interest rates will rise in the first half of the year, touching 5 percent. The second half of the year will see a nosedive with 30-year fixed rates dropping to 3.25 percent to provide housing CPR and regain a market pulse.

3) In a new twist, lenders will be mandated by their regulators to do property occupancy inspections to be certain the home is really being rented (as rental properties are exempt from the new Qualified Mortgage rules).

4) Loosey-goosey underwriting programs will creep back in on particular programs that will include cruddy credit, very high ratios and tax preparer letters instead of IRS income proof. This is akin to the fast and loose stated income world of old.

5) Home equity lines-of-credit (HELOCs) will be rampant next year. In addition to traditional usage as a second lien, they will be marketed for owner-occupied first trust deed purchases and refinance loans, as well as rental financing, as that is another program exempt from Qualified Mortgage and Ability to Repay rules.

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Update on mortgage cancellation debt, short sales, IRS, and FTB liabilities

December 5, 2013 By Roy Hernandez

12/4/13. The good news just keeps continuing. Letter from California Assosiation of Realtors:

As we anticipated, C.A.R. today received a letter from the California Franchise Tax Board (FTB), obtained by the State Board of Equalization, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.

Last month, in a letter to California Sen. Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. Now with the FTB’s clarification, underwater home sellers also are assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.

We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California. We would like to thank Sen. Boxer and BOE member George Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®

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Great news from IRS for sellers that short sell

November 15, 2013 By Roy Hernandez Leave a Comment

November 15, 2013

Dear Roy,

As the new president of the CALIFORNIA ASSOCIATION OF REALTORS®, I’m pleased to be the first to inform you of some very good news.

We have been working with California Sen. Barbara Boxer to protect distressed homeowners from debt relief income tax associated with a short sale in California. As part of this effort, Sen. Boxer requested the Internal Revenue Service (IRS) to provide guidance on whether mortgage debt forgiveness in a lender-approved short sale would be taxable income under federal law, given California’s recent non-recourse laws for short sales, which were hard fought victories by C.A.R.

The IRS has clarified in a letter that California’s troubled homeowners who sell their homes in a short sale are not subject to federal income tax liability on “phantom income” they never received. The IRS recognizes that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. This clarification rescues tens of thousands of distressed home sellers from personal liability upon expiration of the Mortgage Forgiveness Debt Relief Act of 2007 on Dec. 31, 2013.

C.A.R. is seeking a similar ruling from the California Franchise Tax Board (FTB), which has been awaiting the IRS action; we anticipate the FTB will act promptly. Short sales may raise other tax issues and, as always, you should advise your clients to speak with their tax professional regarding the tax consequences of a short sale.

C.A.R.’s Legal Department has prepared a Realegal to further explain the IRS’s clarification.

I know you join me in expressing our thanks, as well as those of our troubled homeowners, to Sen. Boxer for her leadership on this issue. I will keep you informed and provide additional details as I have them.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®

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New FHA guidelines coming: Purchase 1 year after “Economic Event”

November 15, 2013 By Roy Hernandez Leave a Comment

Read the full article HERE

The financial crisis took its toll on Wall Street and Main Street alike. Mistakes were made and bills went unpaid on both sides of the fence, but Main Street sees Wall Street bailouts and asks “where’s my bailout?” Specifically with respect to the housing market, borrowers who have had bankruptcies, foreclosures, deeds-in-lieu, short-sales, or other adverse credit have heretofore been unable to quickly reestablish themselves as worthy borrowers. That’s changing.

Late last week, The Department of Housing and Urban Development on Thursday unveiled a new set of guidelines under the FHA program specifically geared toward homeowners and prospective homeowners adversely impacted by the Great Recession. The “Back to Work” program, as it’s called, doesn’t constitute a free pass for those who would otherwise be unable to qualify for financing, but it does reopen the housing market to a great many borrowers who would otherwise have been waiting for 3-7 years to tick off the clock–depending on their initial credit issue–before being able to qualify for a mortgage. In FHA’s words:

“As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

The program will require prospective borrowers to thoroughly document the nature of the “Economic Event,” that it resulted in derogatory credit, and that there has been a satisfactory recovery from the Event per the new guidelines.

Lenders will consider the Economic Event to have caused the derogatory credit if:

The prospective borrowers had satisfactory credit prior to the event onset
The prospective borrowers’ derogatory credit occurred after the onset of the event
The prospective borrowers have reestablished satisfactory credit for at least 12 months since the the end of the event

Lenders will consider borrowers to have reestablished satisfactory credit if:

The borrower has no late housing or installment debt payments for the past 12 months
Open mortgage accounts are current and have been paid on time for the past 12 months
Borrowers have adhered to the agreement of any open modification plan for the past 12 months
Complete a course of Housing Counseling in person, via telephone, via internet, or other methods approved by HUD (who provides a list of Counseling agencies).

For the purposes of this program, an “Economic Event” is defined as “any occurrence beyond the borrower’s control that results in loss of employment, loss of income, or a combination of both, which causes a reduction in the borrower’s household income of twenty (20) percent or more for a period of at least six (6) months. The Onset of an Economic Event is the month of loss of employment/income.” Lenders will verify the reduction in income or loss of employment with at least one of the following:

A written termination notice
Other publicly available documentation of the business closure
Documentation of the receipt of Unemployment Income

Additionally, lenders have to verify a 20 percent loss of income due to the Economic Event by documenting borrowers’ income prior to the event. This requirement can be satisfied either with a written “Verification of Employment” form with income details provided by the employer or signed tax returns (or W-2s).

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4 Ways to Know Whether to Sell or Stay Put

October 24, 2013 By Roy Hernandez Leave a Comment

Every real estate market creates its own buyer and seller personas, or profiles. When the market is slow and prices are low, it brings out ‘the wheeler-dealer’ and ‘the lowballer,’ as well as the ‘paralyzed panicker’ in some buyers.

But sellers aren’t immune.

And in a warm or hot market climate, the rise in home prices makes some sellers wonder whether they should exercise the freedom of finally having some home equity and make a move, or if it’s a better idea to stay put in hopes they can sell for more, next year or later.

Truth is, whether any given person should sell their home or stay put at any given time is a highly personal decision. Market dynamics should come into play, but that should be considered in the context of your personal life, career, family and financial plans.

Trying to figure out whether to sell or stay put? Here are four ways to know which decision is right for you.

1. Sign You Should Sell: You frequently crave a neighborhood upgrade. I have known people who have liveed in “up and coming neighborhoods” for 20 years, and are still waiting for it to up-and-come. Others own homes on streets or in subdivisions they used to love that have changed dramatically because the city has been built up in a different direction, the area was rezoned, or because a school, freeway, commercial development, airport or train station was brought in. And still other home owners fall out of love with their neighborhoods because their job has moved, making their commute a pain.

In any event, if your home’s location is seriously misaligned with your life or your tastes, that fact is one you face all day, every day, for the duration of the time you live in the property. It can become a serious source of life dissatisfaction and resentment that rears its ugly head every time you make your monthly mortgage payment. As I see it, dissatisfaction with your neighborhood or a serious neighborhood-life disconnect can be a strong reason to sell and move, assuming you can make a move to a neighborhood that would better serve your life in a financially responsible way.

2. Sign You Should Stay: You can totally afford a new house – if you sell a kidney. A few years back, a friend of mine wrote a book called Life Would be Perfect if I Lived in That House (Vintage 2011). In it, she told how her mother was so addicted to the grass-is-greener promise of moving to a new home that she would actually take her family Open House hunting, even when they were visiting towns they had no interest in moving to! She went on to relate her inherited real estate addiction to the national trend of “moving on up,” so to speak, with financial recklessness – the trend that many believe led to the Great Recession.

There’s nothing wrong with being a real estate aficionado, but it’s important to watch to make sure grass-is-greener-at-that-house syndrome isn’t motivating you to make a financially unwise decision to sell and move.

If you are considering selling your home and moving up, do your own financial home work. Run your own budgets, income and expense reports and other financials to understand what level of increased financial obligation, if any, your household finances can afford to take. Consider whether you might want to set up some savings, investing or debt elimination targets before making a move. Work with your financial planner, tax professional and your real estate and mortgage pros to fully understand all the financial implications, short- and long-term, of selling and moving before you put the sign up in the yard.

3. Sign You Should Sell: Space-wise, your family is too close for comfort. (And things will get worse before they get better.) I marvel at how much stuff the smallest infant seems to need. I once went to a baby shower that generated so many strollers, packable playpens and sheer gear that it took 2 SUVs and a station wagon to cart it all home – for a kid that ultimately weighed in at 6 pounds and some-odd ounces.

If you have very young children and you’re already tripping over each other, chances are good that their space needs will grow as they do, even after all the baby gear is gone. School-aged kids and teenagers develop their own hobbies and need space for studies and sports – and on top of that, many parents of young children can realistically anticipate moving their own parents in at some point in time.

If you’re struggling to find a space for everything (and everyone), project your space needs out five years into the future. If you think you’ll need less space in five years (e.g., because your kids will likely move out in that time frame), it might not make sense to buy a bigger home now. But if it looks like you’ll need more space before you need less, that can be a sound rationale for making a financially rational move.

4. Sign You Should Stay: You could fix what ails your home with relatively modest remodeling projects. If your home is bothersome primarily because things don’t function very well or its aesthetics are out of whack with your style, you might be tempted to sell and move. Here’s a tip-off: your “dream home” is the Open House one block over that is nearly identical to your home in location, size, architecture, bedrooms and baths, but is impeccably decorated and updated. If you find yourself in this situation, you might very well be able to resolve your issues by investing less than you would spend on the transactional costs of selling and buying another home into some small-to-medium-scale remodeling projects on your current home.

On a budget, painting, landscaping, replacing exterior trims and interior hardware and updating your kitchen appliances will likely give you the biggest boost in home love for your buck. Similarly, you can get a major enjoyment boost out of your home for very little money by bringing a handyperson in to fix all those niggling little items that make a home seem worn out, including:

drawers that stick
handles you have to jiggle
drafts that need stopping up, and
scrapes and scuffs that make a place look rundown.

That said, when you consider what you would spend on commissions and closing costs to sell one home and buy a nearly-identical new one, you might be able to justify a larger updating/upgrading budget. If you have a little more dough to spend, consider a kitchen or bath remodel, having some custom organizers built in, or putting in the wood floors or deck you’ve always wished for. You might be surprised how fast home hate can turn to love when you start pampering your property.

Sellers: What factors influenced your decision to sell?

Top schools equal higher home prices

October 14, 2013 By Roy Hernandez Leave a Comment

Any good parent wants their child to attend the best school possible, but when it comes to finding a home in a top school district, how much more are buyers willing to pay? A recent study performed by Redfin suggests that many parents are willing to shell out even more than you might think. If you’re trying to sell a home and want to get the most for it, you might want to consider “selling” the school first.

Schools have always played an important role in the buying and selling of real estate. More recently though, premiums for homes served by top-ranked schools have been going up, indicating that buyers place remarkable importance on the quality of schools when buying a house.

An analysis by Redfin illustrates the steep price premiums that homeowners are willing to pay for homes served by top-ranked schools, offering the latest concrete evidence that buyers place remarkable importance on the quality of schools.

The sky-high premiums help explain the ongoing race among listing sites to provide razor-sharp school information.

They could also add fuel to a debate over whether buyers and the real estate agents representing them give too much weight to rankings, which school officials say don’t always provide a complete picture of the differences in the quality of education provided.

Redfin’s study found that buyers pay an average of $50 more per square foot for homes served by top-ranked schools than for those served by average-ranked schools. It also found found that, even within the same neighborhoods, buyers will pay substantially more for homes served by top-ranked schools than they do for comparable homes served by average-ranked schools.

“Homes just a short distance apart with nearly identical attributes are selling for drastically different prices,” the report said. “We’ve looked across the country at homes that have sold in the last three months and found five examples where the prices vary on identical homes by as much as $130,000.”

Not accounting for home size, San Jose, San Francisco and Los Angeles, Calif., carry the highest price premiums for top-ranked schools while Queens, N.Y., Raleigh, N.C., and Eugene, Ore., carry the lowest of all the metros that Redfin analyzed.

The report adds to a growing body of evidence that suggests that many homebuyers are ready to shell out substantial cash for access to top-notch schools.

Three out of 5 homebuyers who responded to a recent realtor.com survey said that school attendance boundaries would be a factor in choosing a home, and most of that group said they’d be willing to go above budget or give up amenities to have their children go to their school of choice.

The online survey, conducted this summer, found that of those who said school attendance boundaries were important:

23.6 percent would pay 1 to 5 percent above budget.
20.7 percent would pay 6 to 10 percent above budget.
9 percent would pay 11 to 20 percent above budget.
40.3 percent would not go above budget.

Some school officials have questioned whether buyers and their agents are relying too heavily on test scores and school ranking sites when pricing listings.

The San Francisco Chronicle has reported that buyers in San Mateo County, Calif., are willing to pay premiums of $200,000 or more for homes served by schools that score only slightly better than other schools in the same school district. School district officials told the newspaper that homebuyers and their agents may read too much into simplified school rankings offered on real estate sites, and are working with Realtors in the hopes of helping them gain a better understanding of what qualities make for a good school.

A Canadian real estate agent who’s branded herself as her community’s “#1 schools advisor” has rankled school district officials and parents by posting not only standardized test scores on her website, but devising her own system for ranking them. The ranking system penalizes schools with lower household income and parental education levels, or a higher prevalence of single-parent households and English-as-a-second-language (ESL) students.

The increasingly evident focus among buyers on school quality has helped spur a push by listing services to offer deeper school-centric features and data.

Zillow rolled out a school search boundary tool earlier this month that lets users filter home searches for public, private and charter school attendance boundaries by their ratings from a national school rating site.

A handful of other sites, including realtor.com, Trulia and Century 21 Real Estate, offer school-based search tools.

For its study, Redfin analyzed listings on multiple listing services that sold between May 1 and July 31; school zone boundaries provided by Maponics; and additional school data provided by Onboard Informatics and GreatSchools.

8 Top Home-Selling Mistakes People Often Make

September 9, 2013 By Roy Hernandez Leave a Comment

It’s a challenging market for home sellers right now. Buyers have a lot of options—and they don’t have to buy what you’re selling. Your house is likely just one located in a sea of for-sale signs, so you can’t be sloppy about putting it on the market.

Luckily, we’ve rounded up the dos and dont’s that will help you collect thousands (if not hundreds of thousands!) for your place.

1. Don’t … ask for too much money.

Yes, you know what you paid for the house. But that doesn’t mean that it’s still worth that amount—or that it’s appreciated in value since you bought it. “Your house is only worth what the market is willing to pay you,” says certified financial planner Ellen Derrick of LearnVest Planning Services, who has bought and sold at least eight homes, including investment properties. “It doesn’t matter what’s in it. And it doesn’t matter what your mortgage is.” Your realtor has an eye on the market and knows what kind of prices homes—just like yours—are garnering now. Pricing your home too high will discourage interested parties from making an offer, and your property could sit for months, which isn’t your goal.

What to do: Have a few realtors give you a price on the home (or get a comparative market analysis), and—this is key—don’t ignore them. Keep in mind that even if you’ve made pricey improvements to the home (granite countertops, stainless steel appliances), you may not get your money back if you’re the only home on the block with such upgrades. If comparable kitchens in the neighborhood don’t have similar upgrades, buyers aren’t expecting fancy perks in yours, and may not be willing to pony up for the difference.

2. Don’t … skip the marketing.

You may think that all you have to do is take one photo of the house, stick a “For Sale” sign in your yard and buyers will come pouring in the door. Au contraire. “The only way to guarantee that you’re going to get the highest price for the house is to use all of the marketing options available to you,” says Holly Mellstrom, a realtor in Pelham, NY. “This means Internet advertising, 30 pictures of your house, public open houses and even postcards.” The more people who see your house, the better your chances are of selling it. In an age when buyers start their searches online, counting on drive-bys and word of mouth isn’t enough anymore.

What to do: Don’t wait until the last minute to notify a realtor that your house is for sale. If you can, give her at least a month of lead time, so she can research comparable homes and set a good price. “Give them time to book their favorite professional photographer,” Mellstrom says. “And give them time to photograph your house on a day the sun is out.” In fact, if you live in a seasonal area, and you know that you’re going to put the house on the market in February, have photos taken in September, when the grass is still green and the trees have leaves.

3. Don’t … go it alone, unless you know what you’re doing.

If you’ve bought and sold half a dozen homes of your own or you live in a sought-after neighborhood where they sell in two days, you might be able to pull off a For Sale By Owner. If you aren’t a seasoned pro, however, let a professional take the reins. “Some people don’t buy and sell houses more than once or twice in a lifetime, and there’s a lot of money at stake,” Mellstrom says. “And there are so many disclosure laws now. Depending on the laws in your state, you’re really accepting some liability by trying to sell it yourself, unless you have a friend or an attorney who can guide you through the process.” A realtor also knows what’s selling around you, and for what price. She can tell you whether an offer is reasonable, and help you negotiate smartly. Plus, you may not save as much as you think in the end. “People who buy For Sale By Owner houses automatically discount the price they’re willing to offer because there is no realtor involved,” Mellstrom says.

What to do: If you can, get a realtor recommendation from a friend or colleague. Check references, conduct interviews and go with someone with a proven track record.

4. Don’t … neglect to fix things that are broken.

If sellers walk through your house and spot a handful of items that need immediate repair, they’re going to wonder how well you’ve maintained the things they can’t see. The entry way is a big tip-off. Got a loose hand rail on the steps, sagging screen door or jiggly door knob? Fix them. Clear your gutters, patch holes in your walls and address dripping faucets.

What to do: Do a walk-through of your own home, pretending that you’re seeing it for the first time. What things have you always meant to fix? Now is the time. Spend a few weekends dealing with all of those niggling projects to get your home in show-worthy shape.

5. Don’t … get emotionally involved.

Yes, it’s your house. Yes, you sweated blood and tears to get it just the way you wanted it. But, no, that does not make it someone else’s “perfect,” particularly when you’ve made some unique decorating decisions. You want the space to look as neutral as possible, so buyers can envision themselves in the space. So even if those teal walls in the bedroom look knock-out great with your duvet, they probably won’t match anyone else’s things. Let go of the features you love, and make it a house most people could love—and that might mean painting all of the walls a soft, neutral color. “My office at home is a robin’s egg blue,” Derrick says. “But if we get ready to sell that house, you can bet I’m repainting it.”

What to do: Have a realtor walk through your home, and when she tells you what you’ll need to change to make it marketable, listen to her. Start thinking about your house as a commodity, not an extension of your identity. If buyers don’t love it, it’s not a personal insult. It’s simply a deal that didn’t work out.

6. Don’t … leave your stuff everywhere.

You want buyers to feel like they could move into your house tomorrow—with their things. And your collectible tchotchkes, photos and utility bills make the space feel a little too personal. “That first impression is really important, and if they’re greeted with a huge photograph of you on your wedding day 25 years ago over the fireplace, that’s really distracting,” Mellstrom says. “It sends the message to the buyer that ‘This is my house, not your house.’”

What to do: Before you put the home on the market, get a few boxes and grab every extraneous thing you see: photos, knick-knacks, books. If it helps, take a few pictures of each room, and try to view them through a buyer’s eyes. What could you remove from each room to make the space feel bigger? “You want it to look like a hotel room,” Derrick says. “Hotel rooms look comfortable, but they don’t look like they’re somebody else’s comfortable.” Also? Don’t hang out at showings. While you may want to tell prospective buyers about all of the things you’ve done to the house, it’s best to leave them be. If there’s some information you think is important for them to know, leave a flyer on the kitchen counter.

7. Don’t … get offended by a lowball offer.

Just because someone came in with a really low bid is no reason to walk off in a huff. Now’s your chance to negotiate. “Buyers are trying to buy your house for the lowest price possible,” Mellstrom says. “Don’t blow them off. They might love your house. You can’t blame them for trying.” In other words, it’s not personal, and it’s not a slam on your housekeeping. It’s a business transaction.

What to do: Come back with a counteroffer. Typically, most buyers will come back with a second offer, which is a better indication of what they’re really willing to pay.

8. Don’t … lose a sale over something stupid.

It’s possible to get 99% of the way through a home sale, only to stall out at the end over a minor detail. Don’t be that seller. “I’ve seen people throw away getting a $450,000 house sold over somebody wanting to take the mantle instead of leaving the mantle over the fireplace,” Derrick says.

What to do: Unless it’s an heirloom that’s been in your family for generations, remember that you can probably find another one—but you may not find another buyer at that price. To be safe, if there are things you’re feeling like you can’t live without, such as the curtains you found at a crazy flea market or the light fixture you discovered at an antiques store, replace them with something else before you show the house.

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5 Reasons Your Home’s Staging Might Not Be Awesome (Even if You Think it Is)

March 28, 2013 By Roy Hernandez Leave a Comment

Nowhere in life is the old adage that beauty is in the eye of the beholder truer than in real estate. One woman’s dream home might be a mid-century modern, Mad Men styled contemporary, while another’s includes all the gingerbread charm of a classic Victorian. But when it comes to prepping a home to be viewed and (fingers crossed!) sold, there is both art and science to staging a home before its listed to maximize its appeal to the broadest number of target buyers.

The challenge is this: staging is an investment, one every seller can’t afford to make (although studies have shown professionally staged homes sell faster and for more than non-staged counterparts). So many take it on as a do-it-yourself project which, like all DIY home improvement projects, can be fantastic or, mmm, not – depending on the approach, skill, and resources of the “self” who does it.

The only thing worse than not staging your home for sale at all is to spend your time and money doing the work only to have buyers react badly to it. Here are a few common scenarios in which sellers think their staging is awesome and buyers, well, beg to differ:

1. You used beat up or ugly furnishings and decor. Great staging – DIY or professional – includes choosing furniture that shows the home off in its best light, and positioning the furnishings optimally, too. Sometimes this can be done using certain pieces of the seller’s furniture, other times, furniture must be rented or otherwise obtained. One area in which budget-minded sellers like to save money on staging is by finding cheaper alternatives than renting new furniture from a staging company or store.

In this era of Craigslist, eBay, Freecycle, estate sales and other peer-to-peer online stores and trading sites, there is an abundance of access to used furniture at great prices. I have no bone to pick with the smart sellers who use these tools to replace their own furniture with something that is in better condition, more attractive or a smaller scale than their own, so as to highlight how much space their home truly offers. That said, using old, floral sofas from Craigslist’s Free Section, unattractive thrift store “artwork” or even your own truly worn out, old furniture is a recurring reason buyers cite for focusing on how bad the staging is vs. the house itself.

What’s worse, the furnishings you might think was THE BEST BARGAIN EVER might actually give your nice home a worn-down, unkempt feel to the buyers who come to see it.

2. You created distracting themes and scenes. My friend Barb Schwarz is the head of the International Home Staging Professionals Association; she defines staging as “preparing a home for sale so the buyer can mentally move in.” The goal is for buyers to visualize the new-and-improved versions of their lives that your home will help them realize, so some pro stagers will set up objects to communicate the lifestyle activities that a home facilitates. It’s not bizarre to see a breakfast table and chairs on the patio of a home with lovely views, a crib and baby gear-vignette in a small room suitable for a nursery, or a popcorn maker and recliners to show off a media room’s theater-readiness.

Occasionally, though, these scenes and vignettes can go rogue, creating borderline bizarre scenarios that distract and detract more than they help.

A beach scene (ball, umbrella and all) in a midwestern bedroom, a lively Parisian mural and Eiffel tower replica in a California condo and bizarre collections (taxidermy, anyone?) are all real-life examples of staging scenes that have done more harm than good.

3. Your house is neither clean nor clutter-free. For various reasons, some homes just take time to sell. And if you’re living in a home that is on the market for long, it can be challenging to ensure it is perfectly pristine at all times, meaning every single time a buyer enters it. And it doesn’t take a truly filthy house to turn a buyer’s impression of your home from awesome to awful. The little messes that a family accumulates through daily living can be perceived by buyers as distracting at best – disgusting, at worst.

If your home is well staged, do not underestimate the power of piles of clothes, mail, paperwork, dishes or kids’ toys to deactivate the home-selling power of all the hard work and money that went into preparing the property in the first place.

4. There are glaring gaps. Sometimes a home’s staging leaves a glaring gap, an elephant in the room house, so to speak. This often happens when sellers run out of time and money to prepare a place, but it can be avoided through smart advance planning and budgeting for your pre-listing property preparation.

Rooms – Listen, I personally live in a house that is beautiful everywhere until you poke your head into my young adult son’s room. So I can relate. This situation might be okay to live with, but it’s a real home staging fail for a property that’s on the market. Don’t let there be one or two rooms that it looks like the stager – or house cleaner – missed. And this goes for the garage, closets, cupboards and drawers, too. Buyers like to look inside these areas to see how much space they have – if they are crammed full of junk, it creates the impression that the house lacks storage and order.
Exterior vs. interior. Some homes have amazing curb appeal, but look like they’ve been run over roughshod on the inside. And the opposite is true: some look like Martha Stewart handled the inside and junk man extraordinaire Fred Sanford was in charge of the yard. Neither of these is ideal.
Multi-sensory gaps. If your home is beautiful to the eye but smells bad, is strangely hot or cold, or has a noise issue (think: neighbors’ music, freeway noise or strange in-house creaks or whirrs), buyers might appreciate the visuals but fixate on the multi-sensory challenges. Especially if you have pets, you might want to ask a friend or your agent to step in from the outside and give you a gut check on whether your home is smelly – you might be so used to it you can’t trust your own senses.

5. You lacked a neutral, expert eye. Home decorating and home staging are two different things. When you decorate your home, you customize it with your specific tastes, preferences and aesthetics in mind. When you stage it, you aim to neutralize your home’s look and feel so it appeals to more buyers and doesn’t have turn-off potential.

Schwarz puts it this way: “Decorating a home is personalizing it. Staging a home is depersonalizing it.”

I cannot count the number of beautifully decorated homes I’ve seen where the seller must have thought they needed to do zero staging, and where the seller was simply wrong. Their very personal tastes in Elvis quilt art, red lacquer furnishings or sewing machine collections had been beautifully executed for them, but also were so highly personal, so very specific that it was near-impossible for a buyer to envision their own lives or families or homes or activities taking place in that space.

This is one reason I encourage even sellers who are on a tight budget and can’t afford pro staging and sellers whose homes that have been beautifully decorated to at least have a home staging consultation with their agent and a professional stager. These pros can call out little “edits” (furniture or decor items you should remove) and give you advice about what buyers love and hate to see in a home that you might be able to execute yourself at a surprisingly low cost.

From Trulia Real Estate, author Tara Nicholle Nelson (broker in San Francisco)