How to price to sell and still make a profit

The asking price you set for your home significantly affects whether you will profit in the sale, how much you will profit and how long your home will sit on the market. Your real estate agent’s knowledge of the overall market and what’s selling – or not selling – will be invaluable in helping you determine the price. The objective is to find a price that the market will bear but won’t leave money on the table.

Here are some points to consider: Time. Time is not on your side when it comes to real estate. Although many factors influence the outcome, perhaps time is the biggest determinant in whether or not you see a profit and how much you profit. Studies show that the longer a house stays on the market, the less likely it is to sell for the original asking price. Therefore, if your goal is to make money, think about a price that will encourage buyer activity (read: fair market value).

Value vs. Cost. Pricing your home to sell in a timely fashion requires some objectivity. It’s important that you not confuse value with cost – in other words, how much you value your home versus what buyers are willing to pay for it. Don’t place too much emphasis on home improvements when calculating your price, because buyers may not share your taste. For instance, not everyone wants swimming pools or four-car garages.

Keep it simple. Because time is of the essence, make it easy for the buyers. Remain flexible on when your agent can schedule showings. Also, avoid putting contingencies on the sale. Though a desirable move-in date makes for a smoother transition between homes, it could cause you to lose the sale altogether.

Routine Maintenance of Your Home

While all of us are not currently in the market to buy or sell, studies show that we most likely will be within the next 7 years.  With that in mind, it’s always good to be keeping the care of your home before you so you don’t have any costly surpises awaiting you when it’s your time to go on the market.  With warmer weather here to stay, now is the time to get outside and see what needs to be maintained in your home.

As a starter, what does the paint look like?  Keeping a fresh coat of paint on your home instantly makes it more appealing to potential buyers and shows that you are a responsible and caring homeowner.  That will at least peak interest to see the inside of the home.

Have a regular termite inspection done.  Even though you may not see any visible signs of termites yet, that doesn’t mean they may not be eating away already on a corner of your home.

Change your air filters.  Not only does this keep your air conditioning cooler, it also cuts down on problems that arise with the unit itself. 

Seal any cracks in windows, doors or tile areas on the inside or outside of your home with caulk or sealant so water won’t be able to seep into walls, ceilings or floors. 

Regualrly inspect your pipes, hoses and air ducts.  Be sure there are no holes or leaks in these to keep from having water damage or increased utility bills.

Keep an eye on your homes foundation.  All homes will do some settling over time and the changes in weather contribute to this.  Do your best to make sure no major shifts occur that could be costly to repair.

Keep your lawn looking good.  Putting fertilizer on your lawn and killing the weeds gives an added curb appeal to your home.  As does keeping fresh flowers and well manicured shrubs.  These items contribute to the whole feel of your home and will cause future buyers to remember your property when they think of well maintained homes.

Even if you do all of these things, home damages do occur.  The best thing to do in these cases is to fix the problem immediately.  A hole in a wall or a slightly leaking pipe may not seem like a big deal at the time.  However, the longer you wait to fix these common problems, the more potential damage can be done and only adds to the final repair bill.

If you do decide to list your home on the market soon, don’t forget to give us a call first.  Part of our listing appointment includes looking at the home and offering suggestions for ways to make your home more appealing to potential buyers.  While trends do change, it’s our job to stay on top of what sells.  Let us help you whenever you’re ready!

Exterior improvements give more of a return when remodeling

There is an annual report that examines the cost versus value for home remodeling.  The report is helpful for those who are considering making improvements to their homes, especially if their home is one that they consider selling in the near future.  Historically, bedrooms and bathrooms are where people consider spending their money but the return on the remodel investment is not necessarily there.

According to the 2009 Remodeling Cost vs. Value Report the best return for your money are exterior improvements that often are lower cost projects to begin with.  Adding decks, replacing siding, new doors and windows are among projects that recoup the most money when re-selling a home.  The return on these projects is typically 80% or more.

The annual report shows how important first impressions are.  If you are considering selling your home make sure that the exterior is as eye catching as it can be.

Click here to learn more about remodeling costs versus value at The National Association of Realtors’ website.

An organized closet can make the difference when trying to sell a home

When considering selling real estate the question surfaces, what can I do to improve my home and make it more appealing to a prospective buyer?  Looking at your closets might be the answer.  Closets may be the small improvement your home needs when getting ready to sell.

Newer homes tend to have bigger closets and they aren’t just dark spaces with doors any more.  Today’s closets, thanks to companies like California Closets and other offshoots, are filled with light and organized spaces like drawers, shelves, shoe racks and hanging bars that hang at different heights to accommodate different articles of clothing.  Some closets come across as small rooms.  Regardless of whether you have a new home or an older home, if your closets aren’t organized they can be.

Closets can be do-it-yourself projects or created by a contractor or a closet company.  Remodeling closets can be an inexpensive re-model that can add value to the sale of your home without breaking the bank.

The appraisal process often baffles and angers consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn’t always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.

In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be compared in size and value.

For example, there is no set dollar figure associated with a great view, pool, spa/hot tub, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $25,000, but the local marketplace supports the value of a pool at $8,000, then that item will be compared as [$8,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren’t uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months to a year. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.

New FHA Appraisal Mandate

Value on a home as provided by a certified real estate appraiser in a written report is critical to a mortgage loan.  Effective February 15^th, a change in FHA appraisals takes place.  Essentially FHA has implemented the same rule as FannieMae and FreddieMac, which are conventional loan agencies.  FHA is a government agency.  Prior to this new FHA mandate a lender could order an FHA appraisal from a certified FHA appraiser of their choice, who typically was someone with whom they had an established relationship.  Not anymore.  Beginning Monday the 15^th, all FHA appraisals must be ordered from an entity, an independent company, who maintains a roster of appraisers approved and certified by FHA. This mandate by FHA affects all lenders nationwide.  Failure to adhere and comply with this mandate will result in administrative sanctions, something no lender originating government loans wants to have happen.

HUD, and therefore FHA’s intention, is appraiser independence from any influence pertaining to value, condition of the property, etc. In order to ensure appraiser independence, lenders who are FHA approved are prohibited from compensating, choosing, or even retaining an FHA roster appraiser.  Even substantive communication between the lender and appraiser is no longer acceptable in order to avoid conflict of interest or even the appearance of such. The intent is to prevent a lender’s influence on an appraiser which could have an impact on valuation of a home. Because mortgage lenders are typically compensated based on production, and an appraisal report is essential to loan approval, FHA has begun to use these safeguards in an effort to protect the integrity of the loan collateral.

Those of us in the residential real estate industry have seen significant changes in the last year and a half.  This is yet another change, and while it sounds daunting compared to what we’ve been used to, it remains to be seen if it creates obstacles.  My expectation is we’ll likely be assigned appraisers we already know and who understand how to help us work though any issues, just as they always have.  Some turbulence is to be expected and I will continue to always be here for you to work through any appraisal problems we encounter.

Post submitted by Rena Rogers with Pine State Mortgage, (770) 387-4504

Home Updates-What’s the New “In”?

Are you thinking of doing some updates in your home?  Usually within about five years of the new “hot” item on the maket, something else comes along to replace it.  If you’re wanting to keep the value of your home up or are looking to sell soon, it would be a good idea to think about what may need updating in your home.  Remember, potential buyers will be comparing your home to new construction, so knowing what is “in” will help you get the most money on the sale of your home.

From my experience of being in homes the last 22 years, there are two top priorities for holding the value of your home and making it more desirable to the majority of buyers.  The first is to think about what is on your walls and the second is to think about what is on your floors.

This may be tough news for some of you, but the days of wallpaper and border are gone.  The new homes these days come standard with neutral wall colors and that’s what buyers compare your home to when they are browsing the market.  If you have wallpaper or border in some of your rooms, consider taking them down and priming and painting them with a good beige, taupe or other neutral color that can go with any decorating style.

Additionally, many new homes come with wood floors or laminate wood floors throughout the house.  This can help keep down smells if there are pets, they are easy to clean and they do not need to be replaced like carpet does.  This is especially true for buyers  looking at your home as an investment property and are considering renting it out.  When most tenants move out, the walls need to be touched up and often carpet needs to be replaced.  By having wood laminate floors, the risk is greatly reduced that the owner will need to replace the flooring before the next tenant moves in.  This can save them a lot of money and give them an added incentive to buy your home.

So, before you hang more wallpaper or install more carpet, think about what potential buyers will be comparing your home to.  Hopefully that will help you get more when you’re ready to sell.

As you can see in the graph below, the median home price for sold homes in the last six months decreased by about $15,000.  While that is a loss of about 12% on the amount the homes sold for, we also have to look at the seasonal pattern of real estate that is depicted in this graph.  During the summer months, homes sold for more than in the winter.  Usually there are more homes on the market in the summer and more people are ready to move then.  So, don’t be discouraged by this downward shift.  As we pay attention over the next few months, as we head into Spring I’m sure those numbers will start to climb once again.

The Market Value of Your Home

With the economic twists and turns over the last couple of years, more people than ever are wondering “What is the value of my home?”  Many factors contribute to the value of your home, including the cost of homes recently sold near you, what comparable homes are selling for in the area, if there are any foreclosures in your neighborhood and the condition of your home. 

Homes that have recently sold in your neighborhood are a huge indicator of what your home may be worth.  Additionally, if there have been any foreclosures in your neighborhood, that can alter to price of your home as well.  If you are wondering what a home in your neighborhood sold for we can tell you what that home sold for for free when you fill out the info in the link.  

If you are wondering what the fair market value of your home is, we can run a free “Comparitive Market Analysis” to give you the fair market price.  Remember, if you are looking to sell your home, properly pricing it in the beginning greatly reduces the amount of time it will take your home to sell.

Let us help you determine what your greatest investment is currently worth.