Price it Right

We recently met with a real estate agent to discuss selling our home. We were surprised at the price she suggested as we were thinking we could get at least $20,000 more. Shouldn’t we begin high with a price and go down if we have to?

Your logic seems to make sense and I hear it frequently from sellers – “Let’s begin high and then we have room to negotiate down.” It’s understandable as well because, of course, you want to get as much as you can for your home.

There are a few problems with this thinking, however. In our digital world, sold prices are common knowledge to all. Buyers know what homes are selling for. They know that your neighbor’s property, similar to yours, just sold for $280,000 in the spring. So why would they pay $300,000 for yours?

Most buyers do not want to offer substantially less for a home, even if they love it or can afford it. Instead of offering less, they will usually move on to another home which they feel is priced realistically.

Another factor is the appraisal most buyers will need in order to get a mortgage. Even if you get a buyer who is convinced your home is worth more, if the appraiser (who has to use sold prices to determine the value of your home) decides it’s not worth that much, you may need to come down anyway so your buyer can get financing.

Trusting your agent to price your home appropriately is only the first step in selling it. You are also hiring her to help you prepare it to sell, market it well and guide you through the process to settlement.

Posted in Uncategorized | Leave a comment

List Now or Wait for the Spring?

We have been working all summer to prepare our home to sell and plan to list it sometime in the fall.  However, my sister told me we should wait until the spring because that’s the time most people buy.  What do you suggest? 

It is generally understood in real estate that spring is the best time to sell.  But that does not necessarily mean you should wait until spring to list your home.  In fact, because many are waiting, there are more homes for sale in the spring and the competition is greater. If, as you said, your home is ready to put on the market, then I would consider doing that early in September after folks are back from summer vacations and life is less busy for prospective buyers.

Next to spring, fall is the busiest real estate season.  Autumn offers certain benefits to home buyers, including year-end tax breaks (both mortgage interest and property taxes are deductible from gross income) and pleasant weather conditions for moving.  Buying a house before the deep freeze of winter sets in is very appealing to most.  Moving is hard enough without dealing with icy roads, snow storms or sweltering summer heat.

It is important to meet with a good real estate agent to discuss how to best stage your home, price it correctly and market it well.  Her expertise will have you packing and moving on before the long, dreary winter.

Posted in Uncategorized | Leave a comment

Rent or Buy?

My husband and I have been renting since we got married a few years ago.  Our landlord is not renewing our lease so we need to find another rental.  When searching, we have not found anything decent for an affordable price.  A friend of ours recently purchased a home and suggested we do the same.  Why are rentals so high and is buying a better idea? 

Rental properties have increased in price in the last few years because of supply and demand.  More people are renting for several reasons:

1 – Those who have foreclosed or short saled their properties are not able to purchase because they cannot get a mortgage for a time.

2 – With home values plunging in 2008, some are not convinced that purchasing is a good financial decision.

3 – With mortgage companies tightening up on who qualifies for financing, it is more difficult to get a mortgage.

I suggest if you plan to stay in the area a few years,  that you look into purchasing. If you have good jobs and credit, contact a reputable real estate agent in the area you want to live to discuss the process.  Before you know it, you will be unpacking boxes in your own home (instead of someone else’s) and building equity instead of financing your landlord’s property.

Posted in Uncategorized | Leave a comment

Appraisal Problems

We put our home up for sale and had a buyer within two weeks with a price close to what we were asking.  About four weeks later, we found that, because the appraisal came in lower than the purchase price, the buyers were not interested in paying what they said they would pay on the contract.  How can someone sign a contract agreeing to a certain amount and then change their mind? 

Most home buyers are purchasing with a mortgage because they don’t have the money to buy without borrowing from the bank. If this is the case, the contract will be contingent on a mortgage which means, if your buyers are not able to get the mortgage, they are not able to buy your home.

Part of the mortgage process is an appraisal, a value given to your home by a licensed appraiser.  He makes an appointment to come by your house, measures, evaluates and finds other properties similar which have sold in the last year.  His report places a value on your home which the bank uses to determine what they will lend you.  If that value is less than what you agreed to pay for the house, your buyers have the right to offer less or purchase elsewhere.

As the seller, you can hold to your price and hope the buyers see the value and have money to pay the difference.  However, if you do this, you risk losing your buyers which means you’re back to square one with showings, hoping for another buyer.  And, unless higher valued homes are scheduled to settle in the near future, this scenario may be repeated.

In this market of lower values, appraisals can get in the way of contracts, especially if homes which have sold in your area are not of the quality or location of yours.  A good agent will guide you through the process, working hard to bring you the most value for your property with the least headaches.  Then, before you know it, you will be packing and moving on, with the appraisal issue only a faint memory.

Posted in Uncategorized | Leave a comment

Buyer Agency

We recently met with a real estate agent who discussed what she called “buyer agency” with us.  The contract she wanted us to sign committed us to using her as our agent if we buy a house.  If we sign the contract, does this mean if we find a home we want to buy that is not listed with a real estate agent , that we need to pay her? 

The contract you’re referring to is called a “Buyer Agency Contract” and the answer to your question is “yes.”  If you sign a buyer agency contract with a real estate agent, you are agreeing to use that agent and pay her for any home you purchase during the contract dates, no exceptions.  Signing it makes sense if you’re sure of the area you want to purchase in and have found a buyer’s agent who you feel comfortable with, who will work hard for you and who knows the area.

However, if you have not decided where you want to live, you may want to wait until you have narrowed down your search.  Any agent who shows you a home can serve as your buyer’s agent. Without a contract, you have the latitude to look for homes in different areas and use the agent you feel knows the most and works the best with you for the particular home you chose to purchase.

If a home is listed with a real estate agent, it is customary for the listing agent to split her commission with the buyer’s agent.  In that situation, the buyer’s agent gets paid by the commission promised to the listing agent (which comes from the seller).  However, if a home is being sold by the owner who is not using an agent, the buyer who has signed a buyer agency contract must either agree to pay his agent out of pocket or convince the owner to pay her.

Posted in Uncategorized | Leave a comment

Homeowner’s Associations Are Not All The Same

My wife and I are looking at homes in communities that have homeowner’s associations because we like the idea of not having to take care of our property.  We have found a huge difference in, not only the dues, but what they pay for.  Can you explain?

Many communities are governed by homeowner’s associations which provide bylaws, rules and regulations that buyers agree to when owning a property in that community.  These associations vary greatly in the amount of rules, the dues charged and what the dues include.

Some communities have rules many pages long, listing items such as a date to put away your grill or discard your potted plants, details concerning what kind of holiday decorations are permitted and the number of bird feeders allowed.  Others paint with broad strokes, allowing residents to work out the details.

Many communities require a flat fee when purchasing in addition to monthly or annual dues to provide for reserves. Neighborhoods with pools or those with dues that cover all exterior maintenance are substantially more.  If the association was involved in litigation, fees are higher as attorneys need to be paid.

A good agent will help you understand exactly what the dues and fees are and what they cover.  She is familiar with the Uniform Condominium Act of PA which requires that the association documents, financials and insurance be provided to you as part of the purchase process.  This protects you against buying a home without knowledge of what you’re committing to.

Paying attention to this will offset any surprises when the boxes are unpacked.  And if it’s the dead of winter and the dues include snow removal to your garage door, enjoy the warmth of the indoors while others do the work.

Posted in Uncategorized | Leave a comment

Septic System Inspections

I am planning to sell my home but have heard nightmare stories from coworkers concerning septic inspections.  My home is about 40 years old but I have had no problems with my septic system.  Should I be concerned about this?

It is true that older septic systems have more difficulty passing inspections because standards have become more stringent.  In addition, results of inspections vary according to what inspectors feel is important.  Some will consider your system satisfactory but add a number of concerns which creates worry in the minds of your buyers.

No one wants to own a home with a nonworking septic system.  If a report shows it’s working now, but because of this or that, it may not be working in the future, you suddenly have created doubt in the minds of those interested in your home.   In addition, some inspectors will go so far as to add recommended work with costs, just in case you want to hire them to do the work, creating a conflict of interest.

This sounds like doom and gloom but it doesn’t have to be.  When meeting with a real estate agent to discuss listing your home, the concerns about a septic inspection should be part of the conversation.  One way to offset a negative septic inspection report would be to get your own inspection before you put your home on the market, using a septic inspector who is reasonable and fair, especially one who is not profiting from projected problems.

Like many other facets of selling, a passing septic inspection report is not guaranteed. But working with your agent to offset problems will many times result in an easier, more profitable sale.

Posted in Uncategorized | Leave a comment