Real Estate Information Archive

Price, condition and terms are factors that any owner must consider when marketing their home.  Price is usually the easiest to adjust to compensate for shortcomings in location or condition of the home.  Improving the condition of the property is more time consuming but updates to kitchens, baths and other things can appeal to a buyer.

One of the most overlooked marketing factors are terms which are also referred to as financing concessions.

Paying part or all a buyer's closing costs is the most common financing concession.  By doing so, the buyer doesn't need as much cash to get into the home which can be attractive to more buyers. 

There is another financing concession that is not used very often in today's market but it is still allowed and can increase the marketability of a home. A temporary buy-down of the interest rate makes a lower payment for an initial period.

It is still a fixed-rate mortgage that the buyer must qualify for at the note rate and there is no negative amortization.  The seller pre-pays the interest in advance at closing so the buyer has lower payments in the initial period.

Instead of lowering the price of the home, let's say the seller has decided to offer $6,875 worth of financing concessions that the buyer can apply any way they want.  One way might be to get a 2/1 buy-down which means that the first year, the payment would be based on 2% less than the note rate of the mortgage and the second year, it would be 1% less than the note rate.  The third through thirtieth years, the payment would be the actual note rate.

On a $275,000 home with a 3.5% down payment at 5% for 30 years, the first year's mortgage payment would be figured at 3% which would be $305.76 less than normal.  The second year's payment would be figured at 4% and would be $157.65 less than normal.  The third through thirtieth years, the payment would be the normal payment of $1,424.59.

It would save the buyer $5,560.90 in interest in the first two years and there would still be $1,314 of the financing concession to apply toward the buyer's closing costs.

The financing concessions paid by the seller give the buyer lower payments for the first two years and less money needed for the closing cost.  An added bonus for the buyer is that the buyer can deduct the pre-paid interest the seller paid as qualified mortgage interest.

Some lenders may tell you that temporary buy downs cannot be done.  They've been around for over thirty years and can still be done today on FHA, VA and conventional loans.  Call (859) 647-0700 if you need a recommendation of a trusted mortgage professional or check out a 2/1 Buydown with your own numbers.

No one wants to waste water or money.  For that reason, take a few minutes every other month to do the following inspections:

1. Check to see if cutoff valves on sinks and toilets are working properly. 
   
   Many times, builders will put individual cutoffs on supply lines to sinks and toilets.  It is reasonable to expect them to work but after some time, they can corrode which prevents opening and closing.  It is a good idea to test them occasionally before you need them in an emergency.
   
   
2.  Fill each sink with a few inches of water to see if they drain in what you feel is a normal time.
   
   A slow-draining sink can be an indication of a clog that builds up around the insides of the pipe.  Common causes are food, grease, hair and soap scum.  Plunging can take care of some slow-running sinks.  After partially filling the sink with water, seal the plunger over the drain and pump it up and down a few times.
   
   
3.   Inspect each toilet to see if they are leaking water from the tank into the bowl.
   
   Toilets that continue to run after being flushed can use a large amount of water in a month's time.  Generally, the problem comes from a flapper that doesn't seat properly.  Sometimes, the chain is keeping it from closing properly or the flapper itself may need to be replaced.
   
   Another issue could be that the flush valve needs to be replaced.  These can be purchased at Lowe's or Home Depot for about $20.00 and are relatively easy to change out.  There are lots of instructional videos on the internet and it can save money if you give it a try.

If you need a recommendation for a good plumber to take care of something you discover, please feel free to call me at (859) 486-3300.

Imagine a homeowner consulting with their agent about the price to place on their home. The agent suggests that the market data indicates that $200,000 to 210,000 would produce a quick sale by pricing it properly. The owner puts a $210,000 price on the home.

The first person who looks at the home offers $205,000. When the seller receives the offer, he comments that he thinks he priced the home too low and counters for  full price. The counter-offer is rejected, the home stays on the market and at the end of the first month when based on market conditions, the home should be sold, no other offers have been made.

It may be human nature that when an offer is received so quickly, the first thought to come to mind is that it was priced too low. A more appropriate thought might be that it was priced correctly. In some cases, when a home comes on the market, there is increased competition (real or perceived) among the buyers waiting for the "right" home to come on the market. The home can sell for a higher price than if it sits on the market for several months.

There may be stories of sellers who turned down the first offer and ended up receiving a better offer that would net more money. However,  real estate professionals say the first scenario occurs frequently.

The wisdom of experience advises owners to find a real estate professional that they trust and have confidence. Allow that professional to become familiar with your home and compare it to similar homes in the market that have sold recently and ones currently on the market. Determine the demand for homes in the area compared to the inventory. Decide on a price that will allow the home to sell within a relatively short period of time. And lastly, be satisfied if your home sells quickly near the price you put on it.

As people near or enter retirement, one of the decisions that typically comes up is whether to sell their "big" home and buy a smaller one. If you know anyone who has been faced with that situation, selling one home and buying a smaller one may not save enough money to make it worthwhile.

There are sales expenses on the property being sold and acquisition costs on the replacement home. Generally speaking, homeowners may not mind a home with less square footage, but they usually don't want to give up amenities or locations that they've become accustomed.

After a little number crunching, the move may not make enough difference in savings and they end up staying in their current home even if it doesn't fit their needs anymore.

What if while this couple were still in their peak earning years, they acquired a home in an area where they would consider retiring and rent it during the interim. They could put it on a 15-year mortgage and possibly, even accelerate the principal payments to have it paid off by their anticipated move.

In the meantime, they could continue living in the "big" home until it is time to make the transition. Sell the "big" home that may be paid for by then and avoid up to $500,000 of capital gain. Take part of the proceeds and remodel the rental/transitional home and invest the proceeds for retirement income.

Ideally, the former rental would be mortgage free by this point, so the retirees would not have a house payment. Even if at this point, they changed their mind about retiring to this particular home, they still have a property that acted as a hedge against rising prices and have sufficient equity to purchase something else without using the proceeds from the "big" home.

It is difficult to know what the situation will be years from now when a person retires. It is clearly advantageous to have a plan that allows for options and choices. To find out more about purchasing your retirement home today, give me a call at (859) 647-0700.

Businesses must treat customers fairly if they expect to do business with them again or get recommendations to their friends. Customers of stores like Nordstrom’s understand that a salesperson is an employee and represents the company.

The line becomes less clear in some industries, especially ones that involve real estate. Agency is a legal relationship authorizing a person to act for or in the place of another. It involves responsibilities that exceed treating a person fairly. 

The duties a buyer or seller can expect to receive from a real estate salesperson or broker include but are not limited to honesty, accountability, full disclosure, representation and reasonable skill and care. Buyers and sellers might additionally expect representation, obedience, loyalty and confidentiality.  State laws can differ on specific duties.

Mortgage and title officers are limited in their duties to the buyer to honesty and accountability and specific requirements under the federal Real Estate Settlement and Procedures Act.

A special relationship with a real estate agent makes it advantageous to have them coordinate efforts with the other professionals in the home buying process. Since most buyers’ and sellers’ transactions are infrequent, the agent can bring valuable experience to the transaction.

Every buyer and seller should discuss the level of service they expect from the real estate professional they work with. Another good question is what happens if the purchase and sale are within the same company. 

There is a common body of knowledge among real estate professionals that indicates that the longer a home is on the market, the lower the price will be. Many sellers discount this belief in the beginning because they feel confident their home will sell quickly.

Lowering the price is the most obvious thing that can be done to encourage buyers but it might be good to look at what builders do. Builders offer a variety of incentives such as upgrades, seller-paid closing costs, interest rate buy downs, washers, dryers, refrigerators or big screen TVs.

Interestingly, much of the resale market doesn’t employ these techniques. According to the latest NAR Home Buyers and Sellers Profile, 64% of sellers did not offer any incentives at all.

21% of sellers offer a home warranty. 16% of sellers offered assistance with closing costs and 6% offered credit toward remodeling or repairs. 

The attached chart indicates that while 80% of sellers were not willing to offer incentives in the beginning of their marketing period, as weeks passes and their home hasn’t sold, closer to half did add incentives.

The ideal outcome is to maximize proceeds in the shortest time possible with the fewest unexpected issues. This involves having a firm understanding of current, local market conditions and crafting a marketing plan that will insure results.

There is so much at stake, the value of a trusted real estate professional is essential.

Second Homes Treated Differently

While a principal residence and a second home have some similar benefits, they have some major differences. A principal residence is the primary home where you live and a second home is used for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.

The Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest and property taxes on a principal residence and a second home. The interest is limited to a maximum of $1,000,000 combined acquisition debt and a combined $100,000 home equity debt for both the first and second homes.

The gain on a principal residence has a significant exclusion for taxpayers meeting the requirements. The gains on second homes must be recognized when sold. Even if you sell a smaller second home and invest all of the proceeds into a larger second home, you'll need to pay tax on the gain.

Tax-deferred exchanges are not allowed for properties having personal use including second homes.

If the home is owned for more than 12 months, the gain is taxed at the long-term capital gains rate. If the home is owned for less than 12 months, the gain is taxed as ordinary income which would be a considerably higher rate.

The article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.

Unfortunately, in today's slowly recovering economy, many homeowners continue to find themselves in financial trouble. As a Member of the Top 5 in Real Estate Network®, I have worked with many clients over the past few years to help resolve their financial dilemma in the best way possible. There are many options available to distressed homeowners -- unfortunately, most people are not aware of what these options are.

To help clarify confusion and shed light on optimal homeowner options, real estate finance expert Marian Anthony, answers five questions distressed homeowners often have:

1. Should I intentionally default on my home mortgage?
You’ve probably heard of people "intentionally" or "strategically" defaulting on their mortgage, willing to take the hit to their credit in favor of freeing up cash flow in the short-term. Rather than defaulting, however, homeowners should talk with their real estate professional about the potential for a short sale. A short sale could lead toward the debt showing as "settled" on your credit. Walking away and allowing the bank to foreclose still allows the second lender to render a judgment -- and possibly garnish your wages. You may also have to file for bankruptcy to recover from the credit nightmare.

2. As a borrower, what are some ways I can gain leverage with my lender?
One way to gain leverage with a lender is to establish a "substitute mortgage" -- a security pledge that is offered to the seller's lender with a third party for a lesser amount of the current payment. Over time, this will result in a significant amount of collected funds that can be used as negotiating leverage to release the borrower from the debt, or dictate terms for a favorable loan modification.

3. Why have loan modifications and foreclosures become the predominant answer for so many in distressed property situations?
The reason why loan modifications and foreclosures have become the answer for so many is because many real estate professionals erroneously consider the short sale process to be too complex. It is essential to work with a real estate professional who is equipped with the right forms and contact information, and who knows how to orchestrate a short sale transaction.

4. Why is a short sale strategy more advantageous than a foreclosure?
The reduced payoff in a short sale can release you from the debt obligation. This often allows you to re-establish your credit faster and re-enter the market much wiser. A foreclosure can ruin a homeowner's credit and take much longer to recover from.

5. I’ve heard borrowers in default need a 'General Public Disclosure?' Why?
Many people are not aware of the alternatives available to them when facing foreclosure. Knowing your options, as detailed on a General Public Disclosure document, can make all the difference in establishing a deal that's in the homeowners' best interest.

Remember that every distressed homeowner's situation is unique; therefore, it is essential to contact a real estate professional -- and often an attorney -- to determine the best possible solution for you. I am happy to assist, so please feel free to contact me, and please pass this important information on to others in need.

In today's technology-centric world, the idea of hosting an open house to help find a buyer for your home may seem antiquated. As a Member of the Top 5 in Real Estate Network®, however, I have learned from experience that an open house -- when done correctly -- can go a long way toward getting your home sold quickly for an optimal price.

Why? Because while technology is integral to marketing your home, no video or virtual tour will ever compare to viewing a home in person. That's why it's essential to focus on the very tangible assets of your home during an open house -- the things that will connect with a potential buyer's senses. Work with your real estate agent to make sure you emphasize the following areas of your home so that open house visitors can connect in a very visceral way:

• Fragrance - Move beyond the played-out strategy of baking cookies in the oven and instead, seek to emphasize potential natural fragrances associated with your home. Have your open house while your magnolia tree, hyacinths, lilacs or rose bushes are in bloom. Make sure your lawn is freshly mowed. Open windows to let in sea or lake breezes. Arrange some freshly cut pine branches from a tree in your yard decoratively in a vase. Make sure your hardwood floors are cleaned and polished. All of these are subtle, yet powerful, scents associated with the true meaning of home.
• Warmth - Nothing says home better than a room basking in sunlight. Make sure curtains are pulled aside and blinds raised to let natural sunlight bathe key rooms in the home. Take advantage of a home's wood stove or fireplace when appropriate.
• Touch - Open house visitors will open all sorts of doors, cabinets and drawers and come in contact with banisters and window frames. Make sure all metal substances, like brass door knobs, and wood finishes, such as your master staircase, are brilliantly polished, clean and smooth to the touch.
• Sound - Every home has certain sounds associated with it -- good and bad. Take advantage of any natural water nearby by keeping a strategic window or two open, or install indoor and/or outdoor fountains. Hang a bird feeder in close proximity to an open kitchen window. If you own a grandfather or cuckoo clock, make sure it's wound. Conversely, unplug any electronics that might make disturbing humming or beeping noises, and close any windows that let in displeasing street noise.
• Sight - While odds are most visitors have already seen your home online, nothing compares to this in-person visit. Inspect your house from all angles, starting at the front curb or driveway, all the way through to the basement, attic, and back door. Make sure your home looks its best from every angle -- even inside closets and cupboards. As you can imagine, less is more. Clean out the excess and arrange subtle vignettes that help visitors envision themselves living life in the various nooks and crannies of the home.

Thanks to technology, we can narrow down who is truly interested in our home prior to an open house. But make sure your open house grabs potential buyers on a deeper level than what they can experience online. For more ideas, please e-mail me, and feel free to pass these tips on to others who might be interested in selling their home.

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If your home is on the market, or if you're planning to sell your home in the near future, you might be discouraged by the national media's rampant reports of increasing inventory and languishing sales.

While there is, indeed, plenty of inventory currently on the market, there are steps you can take as a home seller to ensure your home sells more quickly, while still garnering the maximum sales price possible. As a member of the Top 5 in Real Estate Network®, I have many years of experience working with home sellers and have learned a few strategies that really work toward securing a buyer more quickly.

1. First, for your home to sell more quickly, it must be exposed to the maximum number of buyers possible, so make sure your home is listed with a local brokerage that has a comprehensive understanding of your market area and knows how to employ technology to increase exposure. Find out how they will market your home online, what listing portals they will use, how they will utilize social media, how many pictures they will post, videos, etc.
2. While it's understandable that you’d like the largest downpayment possible from a buyer, be willing to accept a smaller downpayment, provided the buyer has been preapproved for a loan. This can make a huge difference to cash-strapped buyers.
3. Do some legwork and ask your real estate agent for a tour of competitive properties. This will help distinguish what features of your home you should highlight or what small changes you can make to give your home an edge over the competition.
4. Choose your battles and understand where certain concessions might work in your favor. In a slow market, for example, it may be better to pay a "seller contribution" to help buyers offset closing costs than to lower the sale price. While a seller contribution may be smaller than a price reduction, it is often more attractive to buyers who need cash to close.
5. Consider including some value-added items in the sale of your home, such as the swing set in the backyard, the washer and dryer, or items of furniture that buyers fall in love with and/or really need. A few freebies might be just what you need to close the deal.

If you would like to learn other ideas for selling your home more quickly, please contact me. Also, please forward this email on to anyone else in your network that has concerns about effectively selling their home.