Q: When buying a home, how can you be sure it is fairly priced?
Say your family has outgrown the capacity of your refrigerator. You've decided to buy a new one, however it's been ten years since you've shopped for such an appliance. You're not locked into any particular brand, and prefer a model with about 24 cubic feet of storage space. You visit several appliance dealers and learn their refrigerators range in price from $975 up to $1,600. Some offer larger meat drawers while others have "in-the-door" ice and water. You first decide which features are most important, then compare similar models against each other for price and value. Having made your comparisons, you make your purchase with confidence. Buying a home and feeling good about the price you pay is a similar experience. Since no two homes are alike, you first choose a price range which offers the size home you expect to find. You then compare the features, age, condition, location, and amenities against the price asked. Quickly, you learn to differentiate between homes which are priced "above the market" and those which are fairly priced. If you finance the home, your mortgage lender will have the home appraised, adding credibility that the price you have agreed to pay is indeed a fair one.
Why Some Homes Don't Sell!
Q: Ever have friends tell you the listing on their home had expired without a sale? Wonder why some homes sell while others languish on the market?
Homes remain unsold because they 1) are priced higher than the market will bear, 2) are being offered in less than showroom condition, or 3) are not being promoted effectively to the buying public. Overpricing and poor condition most often thwart a sale, and may be interrelated. Consider pricing. No matter how clean and well-maintained a home, when priced higher than other similar homes in the same condition, it will not be selected. When was the last time you offered to pay more than a product or service was worth? No matter a seller's hopes or dreams for a financial windfall, most homes sell only for what they are worth - not a dollar more. When buying a home, most people are looking for their perception of a "castle" - their dream home. Sellers who offer their home with dingy paint, pet-stained carpeting, and leaking roofs only invite distressingly low offers from bargain-hunting investors. Effective marketing can best be accomplished by a knowledgeable real estate representative, one who aggressively promotes listed homes. A fairly priced home offered in mint condition will most certainly sell when properly promoted.
Missed The Boat?
Q: If you are planning to buy a home soon, have you missed the low interest rates of the past few years?
Not yet! Long-term mortgages are still at their record-setting low rates. Thirty-year fixed-rate loans are in the 5% range, while 15-year commitments are even lower - at or near 4.5%. These are 40 year lows! How much longer they will keep such a low profile is anyone's guess. What does this mean for homebuyers? Payments can be calculated using the “mortgage calculator” link on this website. Affordability is the second great benefit of today's low rates. Foreclosures comprise at or near 50% of the sales in today’s market. This has brought home prices down, thus increasing affordability. We will come out of the recession and prices will eventually start to rise, along with interest rates---Don't miss the boat!
Paying Cash?
Q: Do you think a "cash" offer buys more? Is a cash offer more attractive to sellers?
Whether or not you have the financial strength to pay cash, you can still gain the advantage of cash with very little effort. To sellers, receiving cash simply means getting all of their equity from the house, without selling financing. The source of the final settlement check is of no consequence to them. It doesn't matter if the bulk of it comes from a mortgage lender. The real benefit of a true cash offer is that sellers need not worry the buyers will not qualify for a loan. There are no last minute surprises where cash is involved - no unexpected mortgage rejections. So - what if the buyers were approved for their mortgage before even approaching the sellers? They inspect the sellers' home, make a firm offer, and present a mortgage approval letter from the lender. Voila! The first step in any home purchase today should be a visit to the mortgage company. By providing the required financial information up-front, before even looking for a home, buyers can gain the advantage of making a "cash" offer. Planning to buy a home? Want the sellers to take you seriously? Obtain your mortgage approval first for a very satisfying home purchase experience.
Dance the Two-Step!
Q: What is the actual process to purchase a home?
Ready to buy your next home? Although many activities are involved in a home purchase, there are only two major steps to owning a home - the contract and the closing. First comes the contract. Once you have selected a real estate agent, been pre-qualified for a mortgage, and seen a selection of suitable homes, the time comes to make a purchase decision. Your formal decision to make the purchase is expressed as a written Offer to Purchase. This Offer, when accepted by the sellers, becomes the contract which governs your real estate transaction. It contains the purchase price, financing terms, any special conditions, and a final closing date - the date on which the final settlement takes place and possession is delivered. Once signed, all further activities are carried out in accordance with the terms of the contract. Those activities may include an appraisal of the home's value, a survey, inspections, a title search, required repairs, final loan approval, and a pre-settlement walk-through inspection of the home. The second and final step is the closing or settlement. Once all the terms and conditions of the contract have been met, buyers and sellers conclude the transaction. The buyers provide the purchase funds, while the sellers sign and deliver the deed to the property. Possession is most often delivered at the closing.
Help Yourself
Q: What can sellers do to help get their home sold?
Selling a home is a serious and sometimes complex undertaking. It involves some rules of etiquette as well as obligations. Although your real estate representative is responsible for providing a motivated, financially qualified purchaser, some important decisions rest with you, the property owner. There is no rulebook of selling etiquette, yet the marketing process moves along more smoothly when certain accommodations are made. For example, owners who maintain their home in near-perfect order on a daily basis insure their home will not be rejected by buyers because of poor condition. Access to the home on short-notice makes a difference to highly motivated purchasers who must make a fast decision. Keeping pets outdoors avoids distractions during showings. Prospects also prefer to see homes without the owners present. Learn how to offer a "buyer-friendly" home from your representative. Two primary obligations should also be considered by property owners. First, honor your commitment to sell by considering ALL offers seriously, no matter how unsuitable they may seem at first glance. Ask your representative to explain both the positives and negatives of every offer. Finally, give a prompt answer to all offers. Do the math, decide what is acceptable, and know your selling limits before you receive any offers. This allows you to make a more objective assessment when offers are received, and avoids losing an acceptable offer because of indecision.
Avoid Committee Work
Q: Who should decide when buying your first home?
Have you ever served on a committee? Place any ten decisive leaders into a committee structure, and quite often no decision can be reached at all. What do committees have to do with home buying? Say a young family decides to buy a home. The husband and wife work well together and can easily reach a joint decision. They decide, however, to include their parents, an uncle, and a friend in their home search, even though they will not occupy the home. The committee has been formed. Each member approaches the various homes from a different perspective - forming value judgments - and expressing them. Soon - there is no hope of reaching a consensus and the entire home purchase scenario is "tabled" for lack of a decision. The committee has performed well. What went wrong? The two decision makers who are ultimately responsible and will live in the home have ceded their authority to others who have different interests in the final outcome. The purchasers are left with confusion, indecision, and no new home. When buying your first home, value the advice and judgment of others in making your decision, but make YOUR choice the final say... Leave young children out of the loop at first because they will like or hate them all. Your own leadership will provide a rewarding home buying experience.
Keep Talking
Q: What's the best negotiating strategy when selling?
Ever have a disagreement and felt like just walking out - leaving the situation unresolved? Ever hang up the phone abruptly - cutting off the other party from responding to your position? To sell your home successfully - be prepared to keep talking - no matter what a prospective buyer's position may be. When a buyer chooses your home, the first step is to make a formal written offer. If the offer is satisfactory, and you accept it, the offer becomes a binding contract. Often, however, some aspect of the offer may not be acceptable, in which case you have two choices. You may choose not to respond at all, or you may make a "counteroffer," typically a verbal counter-proposal meeting your requirements. No response at all is the equivalent of "hanging-up" on the other party. It may leave them angry and confused about your intentions. To make the most of every offer, always keep the conversation moving. Make a counter-offer, even if it involves little movement from your initial position. This assures the buyers that you are taking their offer seriously, even though your position may be somewhat rigid. If the buyers are committed to the purchase, your counter-offer may be accepted. If not, it may trigger another counter-offer. No matter what, keep the conversation in motion. A satisfactory transaction is the likely outcome.
