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What does it take to sell my house?

It takes two things working together to sell a house and one will not work without the other. A Fair Price and Exposure.

Price is determined by many factors which include condition of the house, location, market demand, competition nearby, motivation of the buyer and seller, comparable sales, etc. Many sellers think that if they price their house high, that will give them room to negotiate the price down to an amount that they can be happy with. Buyers have a price range in mind and do their searches within that range. If a house that should be in that price range is priced too high, it won’t even be seen. Even if the buyer looks slightly above their price range, they will still only offer what they perceive the value of the house to be. So why not price the house correctly in the first place and take advantage of all those buyers that have a specific price and location in mind. The truth is that the market sets the price, not the seller and not the agent. Remember, it also has to appraise for the sale price and appraisers are very conservative in the current market. Keep in mind that the nicest houses almost always sell fastest.

Exposure is referring to getting the word out to the public. Most home buyers today are computer savvy and do their research and searching on the internet before they ever get into their cars to go look at a house. Newspapers used to be a primary method to expose the public to houses for sale. They are becoming a useless method of advertising because of the decreasing readership, and are being replaced by the internet. If the listing information is not detailed and does not have pictures of the inside rooms as well as the yard, they probably will skip right over it and the house will get limited showings. Brochures should be a part of every listing because they offer the opportunity to give more information about the house and illustrate what the advantages of the house are to the buyer. If a house is getting good exposure and potential buyers are looking at it and it still is not selling, you have to take a close look at the price.

Buyers today are very savvy and are looking for the best value for their money. If you can deliver a good product, at a fair price, it will sell. Remember, you only get one chance to make a good first impression. You have to stand out from the competition.
 

What is the best day of the month to close on your new home?

The reason that some people like to close at the end of the month is that they will need less money out of pocket at the closing. This is because they will need less “prepaid interest” on the mortgage.

Interest on the mortgage begins accruing on the date you close on your house. Since most mortgage payments are usually due on the first of the month, if you close early in the month, you will have to pay the interest on the mortgage from that date, until the end of the month. This interest will be paid in advance at closing.

On the other hand, if you close at the end of the month, say on the 29th, you will only pay a day or two of prepaid interest at closing. Interest will then begin accruing and will be due a month later. It doesn’t really cost any more to close early in the month, you just have to pay interest sooner.

If closing costs are an issue, then it is probably better to try to arrange a closing for late in the month. Keep in mind also what the seller’s needs are. The seller may not be willing to wait until the end of the month to close the transaction. In a market where houses are in great demand ( a seller’s market ), you may have to close earlier in the month to make your offer more attractive to the seller.
 

What Every First Time Homebuyer Should Know

Buying your first home is an important and exciting investment in your future. It can also be a scary and intimidating adventure. The problem is that you don’t know what you don’t know, and that lack of knowledge can cause you to make significant and costly mistakes. It doesn’t have to be that way though. There are many skilled professionals available to give advice and guide you through the process. There is also a lot of general information available from many different sources including the internet, books, videos, etc. but there is no substitute for the experience of someone who has done it before and is willing to guide you through the process from beginning to end. A real estate professional who specializes in working with first time homebuyers knows the steps and knows how to steer the new buyer through the maze to a successful conclusion.

Many buyers believe that the first step after deciding to buy a house is to go on the internet and start looking at houses. The process really begins long before that step is reached. Part of the decision to buy a house has to be asking yourself the question “can I afford to buy a house at this time, and if so, how much can I afford?” There are many factors that have to be considered in order to answer that question and the best source for help in answering that question is a loan officer from a reputable mortgage company or lending institution. All lenders are not the same so it is important to choose one with a stellar reputation that will be there when it is time to deliver the money to the seller. With the upheaval in the credit and financial markets in recent months, lending rules have changed dramatically. So not only do you need an experienced real estate agent, you need an honest, dependable lender that knows the new, ever changing, rules and is there to help the new buyer select the right loan program for them.

It isn’t enough for an agent to be able to write an offer and present it to the seller. Agents who help first time homebuyers must also be willing to be teachers who can take the time to fully explain the myriad terms used in real estate and guide them to a successful purchase. With an uncertain future in real estate, it is important to not pay too much for a house. You need good advice from an experienced agent to help you offer the right amount for your dream house. If the market continues to go down, you don’t want to be stuck with a house that is worth less than you paid for it. Buying a house isn’t complicated but there is a definite process that must be followed or the buyer most likely will lose direction and become frustrated. Remember, you are probably buying the most expensive investment in your life and you want it to be a successful, enjoyable experience.

WHAT IS AN APPRAISAL AND WHY DO I NEED ONE?


In order to loan you money, the lender holds your house as collateral for the loan. In the event you fail to make payments on that loan, they have the right to foreclose, take possession of your house, and resell it. Since the lender doesn’t know what the house is worth when you buy it, they hire an independent third party to evaluate the property and give them an unbiased opinion of the value. Banks use licensed appraisers that have extensive experience in specific marketplaces. They do this to protect their investment so that if they have to foreclose in the future, they have a reasonable chance to get their money back. By the way, an appraisal protects you as well. When you buy a house you want to be sure you are not paying too much for it or you will probably have a hard time getting your money back when you sell in the future. The FHA addendum in the contract provides a value that the house must appraise for. If the appraisal comes in lower than that amount, you have the option of withdrawing from the contract without penalty. If you are not going with FHA financing, you should make sure your agent includes an addendum that specifies what the house must appraise for with the offer. You are not prevented from buying a property that under-appraises, but the bank will not lend any more money than what the appraisal comes in at. If you still want to buy the property, you would have to make up the difference between the sale price and the appraised value.



WHAT IS THE DIFFERENCE BETWEEN AN APPRAISAL AND A HOME INSPECTION?

Home inspections and appraisals differ in many ways and both also offer you some protections. An appraisal is primarily intended to give an opinion of value for the property. This protects the lender and you from overpaying for a property. The purpose of the home inspection is to identify significant flaws in the condition of the property. The home inspection says nothing about the value of the property. Good home inspectors will also point out to the buyer the positive aspects of the house as well as regular maintenance items that the new homeowner should pay attention to. They check to be sure the major systems (electrical, plumbing, heating and air conditioning) are functioning properly and that there are no health and safety issues with the property. If any problems are encountered, the buyer has an opportunity to have them addressed prior to the appraisal being done. Unlike an appraisal, a home inspection is not required, but it is highly recommended.

6 Common First-Time Home Buyer Mistakes

1. They don’t ask enough questions of their lender or agent, and end up missing out on the best deal. Find out how much you will qualify to borrow and get a Pre-Approval letter from your lender.

2. They don’t choose the right lender. Not all lenders are the same and there is more to choosing a lender than finding the lowest rate and lowest fees. Ask any Realtor and they will tell you that the right lender can make the process smooth and efficient and the wrong lender can make the transaction a nightmare.

3. They don’t act quickly enough to make a decision and someone else buys the house. As the market picks up and we approach the end of the $8,00 tax credit, houses are selling faster and opportunities are being missed by those buyers who act too slowly.

4. They don’t find the right agent who’s willing to help them through the homebuying process. Experience counts when it comes to agents. This is a trick market right now and you need an agent that will help you find the right house, at the right price. There is a process that has to be followed in the right order or your purchase won’t be successful.

5. They don’t do enough to make their offer look appealing to a seller. This is an important point. Your agent should sell your offer to the listing agent. I always include a detailed letter with all the offers I submit for clients that lists all rhe reasons why the seller should consider the offer

6. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years. This is another reason to choose an experienced agent. I always point out to my clients that they will be selling the house that they buy sometime in the future. There are certain qualities that a house must have if they want to be able to appeal to a wide range of buyers in the future.

www.REALTOR.org/realtormag Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS® . Copyright 2003. All rights reserved.

 

 
Tax Benefits of Owning a Home
Before a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone.

Here’s why:

Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners’ tax liability by reducing income. The deduction includes interest paid on both a first and a second home.

Interest on home equity loans is also deductible — whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World.

Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capital gain taxed at 15 percent — less if the seller’s tax rate is less than 20 percent.

Home owners can itemize. That opens up opportunities to deduct a host of other items that wouldn’t be deductible if the taxpayer took the standard deduction.
 

 (This is still valid advice)

How to buy a home with bad credit

All you need is good income, buyer's agent, financing alternative

By Robert J. Bruss
Inman News

If you want to buy a house or condominium, the current buyer's market means it is a great time to be a buyer. Sellers are eager to sell. Equally important, their real estate agents are anxious because home-sales volume is down in most cities.

Even if you have bad credit, if you have good income you can probably buy a home. Working with a savvy buyer's agent is the best way to (1) find a house or condo you want to own and (2) then finance it, especially if you are "cash challenged."

MAYBE YOUR CREDIT ISN'T AS BAD AS YOU THINK. Before shopping for a home, it pays to check your credit reports from all three nationwide credit bureaus, Experian, Equifax and Trans Union. You can get one annual free credit report from each company at www.annualcreditreport.com.

However, those free credit reports will not provide your very important FICO (Fair Isaac Corp.) credit scores. Today's mortgage lenders look primarily at your FICO score, rather than your credit reports.

FICO scores are based on (1) the length of your credit history (the longer the better so don't close out your oldest credit cards); (2) the percentage of available total credit currently being used (50 percent or lower is considered good); (3) your on-time payment history; and (4) number of recent credit inquiries (don't apply for credit within six months before buying a home).

Don't be fooled by credit scores other than FICO. Most lenders look only at FICO scores, which range from 350 to 850, to determine eligibility.

If your FICO score is 700 or above, you will get the best mortgage interest rate. Between 620 and 700 you should be able to get a home loan, but at a slightly higher interest rate. Below 620, however, each lender has its own rules.

The best place to obtain both your FICO score and all three credit reports is at www.myfico.com. For about $45 you can instantly receive this vital information for home buyers.

Study your credit reports and follow the directions to correct any errors. For example, a few years ago my FICO score was depressed because one credit bureau said I owed unpaid real estate taxes on a property I had sold. Although it was a hassle to get that error corrected, my FICO immediately shot up after that derogatory item was removed.

Each credit bureau has 30 days to "verify" any incorrect information you challenge. If the creditor doesn't verify a bad report such as a late payment (most don't reply within 30 days), the credit bureau must remove it from your report. Be sure to check all three reports and ask for corrected copies after 30 days.

CONSIDER GETTING PREAPPROVED IN WRITING FOR A MORTGAGE. If you have a FICO score of 620 or higher, the next step is to get preapproved (not just prequalified) in writing by an actual mortgage lender.

Business is slow now so lenders will welcome your inquiry. Most lenders won't charge any upfront fee because they know you are likely to come back when you find the house or condo you want to buy with your preapproved mortgage.

Mortgage brokers, mortgage bankers and direct lenders such as banks and credit unions can arrange your preapproval letter or certificate. Despite what you read in the newspapers and hear on TV and radio, mortgage lenders are still eager to make loans.

Just because a lender preapproves you does not obligate you to borrow from that money source. But the lender's preapproval will show your maximum available mortgage, thus focusing your home search on affordable residences.

Your lender can also help compare mortgage choices, such as VA, FHA, PMI (private mortgage insurance), conventional mortgages and special programs, such as loans for first-time home buyers.

However, don't be surprised if the preapproval includes reasonable conditions such as (1) a satisfactory appraisal of the home and (2) reverification of your income and credit, just to be sure you didn't quit your job and buy a new Rolls Royce.

ALTERNATIVES TO OBTAINING A NEW MORTGAGE. If your FICO credit score is low or you don't have enough cash for a substantial down payment, that's no reason not to buy a home as long as you have sufficient income. But you will probably have to consider alternative home-finance methods.

Whenever possible, buy from a motivated home seller. Signals of high motivation to sell include job transfer to another city, divorce, unemployment, death or birth in the family, retirement and pending foreclosure. Depending on the situation, here are easy purchase methods to consider if you have bad credit:

1. BUY THE HOME "SUBJECT TO" OR ASSUME THE EXISTING MORTGAGE. Even if the home seller is behind on a few mortgage payments, buying a home by taking over payments on the existing mortgage and paying the missing payments is one of the easiest purchase methods.

For example, suppose you are considering purchasing a $250,000 house that has an existing first mortgage of $200,000 with a monthly payment you can afford. If you have $50,000 for a down payment, that's great. But if you don't, offer what you have, such as $15,000, and ask the seller to carry back a $35,000 second mortgage.

Some "subject to" buyers worry the existing mortgage lender might enforce the due-on-sale clause. That is highly unlikely in the current market. If it should happen, however, you can either refinance with another lender or pay a modest assumption fee, typically 1 percent of the mortgage balance, to assume the existing mortgage.

2. LOOK FOR FREE-AND-CLEAR HOMES FOR SALE. At least 40 percent of U.S. homes are free and clear with no mortgage. When these homes come on the market for sale, their elderly sellers often don't need lots of cash. Instead, they are looking for steady retirement income secured by a mortgage on the home they are selling.

Your buyer's agent can check listings in the local MLS (multiple listing service) that show zero or low mortgage balances. These homes are ideal candidates for your purchase offer with a 10 to 20 percent down payment and a seller-financed mortgage for the balance. Most sellers won't bother to check your credit reports and FICO score. But if they do, be sure to emphasize the positives such as your good income.

3. LEASE-OPTION (RENT TO OWN) THE HOME. If the house or condo seller doesn't need lots of cash but does need a renter to cover the mortgage, property tax, insurance and maintenance costs, a lease-option for one or two years is ideal for both buyer and seller. If you have bad credit, the rental period will give you time to clean up your credit.

A major lease-option advantage for buyers is the rent credit toward the purchase price. As an owner, I usually give a 33 percent rent credit. For example, if a house rents for $1,500 per month, a $500-per-month rent credit is fair to both parties. It's like a "forced savings account" for the tenant-buyer.

To find lease-options, look in the "houses for rent" and "houses for sale" newspaper classified ads. When you inspect a house for rent that you would like to buy, ask the owner, "If I lease this house (or condo), will you give me an option to buy it?"

Because many landlords will gladly sell, you can create your lease-option on terms you like. More details are in my new special report, "How to Profit from Lease-Options (Rent to Own) If You are a Property Buyer, Seller or Realty Agent," available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

March 2007

By Laura Smitherman

sun reporter

Originally published March 23, 2007

Gov. Martin O'Malley signed into law yesterday a ban on new ground rents in Maryland, while the General Assembly worked to pass a package of bills that would phase out existing ground rents and ensure that the system could no longer be used to seize the houses of unwitting homeowners.

In his first bill-signing since taking office in January, O'Malley sat in the governor's reception room, flanked by Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch.

Vernon Onheiser, who almost lost his Canton home over what began as $24 in unpaid ground rent, also attended the event, along with state legislators and Attorney General Douglas F. Gansler.

"It felt good working together for the working people of our state so they won't have to lose their homes because of some unscrupulous efforts to twist around a ground rent and eject the family," O'Malley said, holding up the hands of Miller and Busch.

O'Malley and the legislature sought to reform the ground rent system after an investigative series in The Sun revealed that some ground rent holders had levied large fees and seized hundreds of homes of residents who had fallen behind on payments, in some instances over minimal debts.

The bill - the first in a package of ground rent bills that is expected to reach O'Malley's desk - prohibits new leases that require homeowners to pay rent on the land under their houses to a person, charity or business. Under a system that dates to Colonial times, Maryland has about 115,000 ground rents, most of them in Baltimore and some in a few counties.

The emergency legislation takes effect immediately.

"This has been a big problem in the city, and I think this brings the kind of relief we need," said Sen. Catherine E. Pugh, a Baltimore Democrat.