Monthly Archives: July 2016

Smart Tips for Home Buyers

Here some tips for home buyers:

1) Get pre-approved for a mortgage before you make an offer. When you are trying to buy a house in a competitive market, your offer to purchase should contain as few conditions as possible. An offer that is conditional on obtaining financing is often a deal killer. The seller may accept a competing offer for less money rather than take the risk that you won’t be able to raise mortgage money. A pre-approval letter from your lender tells the seller you are ready and able to commit.

2) Know when to quit. When you act on emotion, rather than reason, you may end up paying too much money. This can happen when you fall in love with a particular house and start fantasizing about how great it will be to live there. Another reason you may be driven to pay too much is that a bidding war triggers your competitive instincts and you must buy the house at all costs which you will regret later.

3) Set enough money aside to cover closing costs without having to forgo eating for a couple of months. You’ve put together a down payment. Be aware that there is also a long list of expenses you may have to pay at closing, depending on where you live and who your lender is. “Closing costs can add up to between two and six percent of your loan,” says LendingTree’s Chief Consumer Officer, Ed Powell. He advises you to ask your lender or mortgage broker to give you a Good Faith Estimate of the loan-related fees you’ll have to pay. Get your real estate agent to compile a list of other expenses.

4) Try to coordinate the date you take possession of your new home and your moving date. If possible, avoid a situation where you’ve got to camp out with relatives or find a short-term rental because you must vacate your old house or apartment before you can move into your new digs. Moving once is enough.

5) Insist on a home inspection. The first really cold day you spend in your new house is way too late to find out that the furnace doesn’t work. The one condition you should always include in an offer to purchase is a home inspection. Find out how much it will cost to fix any defects and have the seller fix them before you agree to buy or deduct the estimated cost from the final price you offer. If the seller won’t help bear the costs and you want to go ahead with the purchase, make sure you can afford the necessary repairs on top of your mortgage.

Some Reasons You Should Auction Your Home

It’s a strategy you may want to consider if it’s important that you sell quickly.
You may be wondering why on earth you would want to do such a strange thing. But a home auction doesn’t involve a lot of people standing around on your front lawn bidding on your house and contents, urged on by a fast-talking guy with a gavel. Rather, it is a sealed-bid marketing strategy that can be very effective in specific situations.

What’s involved is a very intensive period of marketing your home, followed by a pre-arranged date on which all prospective purchasers submit their offers. With the guidance of your real estate agent, you pick the most promising offer and begin negotiating with that bidder, giving them just a few hours to respond to your counter-offer. If you can’t make a deal, you immediately begin working with the bidder who made the next-best offer, again making a quick counter-offer and requesting a quick response.

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The idea is to compress the time the house is on the market and achieve a fast sale at a good price. Because all bids must be submitted on the same date, prospective purchasers know they will likely have competition and have a strong incentive to make their first offer their best offer, or close to it. This usually means a short negotiating period, as well as a short listing period.

This strategy isn’t for everyone. But it may be just the thing if you want to curtail the period during which prospective purchasers can view your home, or have a deadline for selling.

If, for instance, you have small children and find it hard to keep the house tidy, an auction allows you to limit viewing to a week or two, during which your agent holds open houses on weekend days and you permit second visits on weekday evenings. Or perhaps you have purchased another home with a quick closing and want to sell your current home fast, to avoid the need for bridge financing.

The auction strategy works best when:

– Demand for homes in your area is strong.
– Your home is attractive and well-maintained.
– You have set a realistic asking price.
– You have a clear idea of what is acceptable to you in terms of the purchaser’s financing, the
– Closing date and inclusions (such as appliances).
– Your agent is comfortable with the strategy and willing to put time and resources into
– Aggressively promoting your home through advertising, open houses and word-of-mouth.
– Your agent is an excellent negotiator.
– You have confidence in your agent and are decisive by nature.

If an auction is an option you’d like to consider, discuss it with your real estate agent, who will be able to tell you whether or not it is a suitable strategy for you.

Resale Value With Remodeling and Repairs

As a living space, our homes’ design and condition affect our lives daily. As an investment, its value in the marketplace is something we seek to preserve and enhance. When considering home repairs and improvement projects, we must consider both the benefits the job will add to our daily lives and the amount of resale value the job is likely to add, as well.

Home Repairs, Maintenance, and Remodeling
For basic home repairs and maintenance that are needed around the home, your decision is relatively simple. In general, a well-maintained home yields better day-to-day service and provides long-term financial returns. Home repairs are best taken care of as soon as they are noticed: problems are solved while still small, and the home remains a safe and comfortable place in which to live.

Decisions to undertake renovations, remodeling, or other major home improvements are more complex. The best starting point is your own desire. How much more do you think you will enjoy your home if you go ahead with the project? If you are planning to stay in the house ten years or more, most of your decision should be based on how much the enhancements will improve your lifestyle. If your expected length of stay in the house is shorter than ten years or is quite uncertain, or if the contemplated project is quite large, you need to pay more attention to the improvement’s impact on probable resale value.

Every home market is different, but you probably know quite a bit about your market simply because you live there. With that knowledge and an understanding of the Five D’s (Distance, Deficiency, Distinctiveness, Demand, and Degree) you should be in a position to sort out the advice you’ll get from contractors, neighbors, magazines, and family members.

Resale Value from a Distance
Distance encompasses the issue of how good the property looks from the street, before people get out of their cars to take a closer look. There are thousands of houses from which prospective home-buyers can choose. If they don’t have any interest at first glance, they may not come in and find out that the home is just right for them! Some people call this aspect “curb appeal.” Things that make your home more attractive from a distance generally have a high rate of return. Landscaping, the front entrance, and the condition of the paint or siding are the biggest factors in curb appeal. Good landscaping does not require anything particularly elaborate, but if you want to increase resale value, most homes will need a touch up here and there.

The front entrance can be a big draw and seems to play a large role in curb appeal. The door should be in great shape and have a fresh coat of paint. New hardware can also upgrade its appearance. If the houses on your street look alike, it might be worth adding more elaborate door trim, flanking windows, or a sharp-looking stoop or porch. The front walk and steps should also be in good repair, as should the house paint or siding.

Home Repairs to Decrease Deficiency
Deficiency refers to whether or not your house is flawed in some basic way, and often defines how your home compares to nearby homes. If you have one bath and everyone else has three, adding a bath is likely to have a relatively high return. Obvious deficiencies will usually reduce the value of your home substantially. Deficiencies like no air conditioning, an old, battered roof, or a wet basement get noticed right away and prospective buyers tend to lower their offering prices by an amount greater than the actual cost of the remedy. Resale value is strongly linked to how many of these deficiencies you can mend before showing the house.

Home Repairs to Add Distinctiveness
Distinctiveness is the one thing most people like to talk about. It’s what you and your realtor talk about when you describe the house to others. Homes generally sell better if they have two or three special or distinctive features. Things like a walk-in closet, a whirlpool bath, a nice fireplace, or a grand foyer can separate your home from the crowd and stir interest in buyers. These special features become very important in a competitive market where a lot of similar homes are for sale.

Remodels that are in Demand
While the special features that make up distinctiveness are important, they are of no help and can even lower the value if they are not features widely in demand. You may think a whirlpool in the living room will give your home a terrifically distinctive character, but prospective buyers might not agree. Anything zany or out of character with the neighborhood should be avoided. An ornate fireplace with a sculpted marble mantel may add plenty of value in an upscale neighborhood, but the same fireplace may be seen as difficult to clean and energy inefficient in a working-class neighborhood. Limit improvements to those for which there is well-documented demand and look at new model homes to verify that features you’re considering adding are present in those homes.

How Degree Affects Resale Value
Degree is the final D. No matter what you do, don’t overdo it. If the front entrance is quite attractive already, doing it over in a new color will rarely be worth the cost. Whether enhancing how your home looks from a distance, adding distinctiveness, or addressing deficiencies, one can usually get a fairly high rate of return up to some point. After that point is reached, the rate of return drops off markedly. If your house is the only one on the street with only one bath, spending $4,000 to add a new bath might yield a return of $6,000 to $8,000 in terms of resale value. However, adding a bath that costs $15,000 may also yield an increased value of only $6,000 to $8,000. If the house already has a number of special features, each added one is likely to have a smaller impact on resale value.