Home Selling in a Market Dominated by Foreclosures and Short Sales

How to Compete Against Bank-Owned and Short Sales Homes

By Elizabeth Weintraub, About.com Guide

PattiDuty.com

In a market dominated by foreclosures and short sales, pricing is key to home selling.

© Big Stock Photo

If the house for sale next door to you is a bank-owned home, but all the other homes for sale in the neighborhood are not, you don't have much of a problem. However, if most of the homes that have recently sold in your area were bank-owned homes and short sales, you have a problem. That problem is you must compete with foreclosures and short sales to sell your home.Your home's market value is directly related to distressed sales if those short sales and foreclosures dominate the neighborhood. Prior to the real estate bubble of the mid-2000's, appraisers would often ignore the distressed sales when appraising a home. Since then, appraisers pay close attention to the number of distressed sales that have closed and those presently for sale. What's a regular seller with equity supposed to do to compete?

Pricing a Home With Equity Against Foreclosures and Short Sales

Pricing a home is at best a mix of facts, science and emotions. It's a combination of wearing a seller's hat and stepping into the buyer's shoes. Bear in mind that it doesn't matter much how much you think your home is worth if a buyer disagrees. Try answering these 3 questions:

• What would make a buyer buy your home over a foreclosure or a short sale?
  
• Why would a buyer's lender appraise your home for more than a foreclosure or short sale?
  
• How much more is your home worth than a distressed sale?

You might be surprised at the answers. The truth is your home is not worth a whole lot more than a foreclosure, even if you put in upgrades, if all the recent sales are foreclosures and short sales. Appraisers don't give a huge allowance for upgrades like they used to do.Buyers want a good deal. They might buy a home that needs carpeting, for example, if adding the cost of new carpeting still makes that bank-owned home's price attractive. On the other hand, if your home, with equity, is in tip-top shape and priced within the range of distressed sales, a buyer is much more likely to choose your home.However, say, a bank-owned home priced at $200,000 needs $10,000 worth of work or improvements. If your home doesn't need any work, a buyer might offer only $210,000 for your home.

Examine the Foreclosed and Short Sale Comparable Sales

• Look at every similar home that has sold in the neighborhood over the past three months to determine comparable sales. The list should contain homes within a 1/4 mile to a 1/2 mile and no further, unless there are only a handful of comps in the general vicinity or the property is rural.
  
• Pay attention to neighborhood dividing lines and physical barriers such as major streets, freeways or railroads, and do not compare inventory from the "other side of the tracks." Where I live in the Land Park neighborhood of Sacramento, for example, identical homes across the street from each other can vary by $100,000. Perceptions and desirability have value.
  
• Compare similar square footage, within 10% up or down from the subject property, if possible.
  
• Compare homes with similar ages. One neighborhood might consist of homes built in the 1950s, co-mingled with another ring of construction from the 1980s. Values between the two will differ. Compare apples to apples.

reposted by:

Patti Duty, Texas Realtor (940)577-2733

patti.duty65@gmail.com

www.PattiDuty.com

Housing starts continue to see annual gains

Housing starts continue to see annual gains in July

Construction permits for new homes at highest level in 4 years
By Inman NewsInman News®

Housing starts, though dipping 1.1 percent in July from June, were up 14.2 percent on a year-over-year basis, continuing a steady upward trend.

July groundbreakings were at a seasonally adjusted annual rate of 746,000, down from June's adjusted rate of 754,000, but up from July 2011's rate of 614,000, according to the latest numbers from the Census Bureau.

Single-family housing starts were down 6.5 percent from June to July, to a seasonally adjusted rate of 502,000, but still a 17 percent increase from a year ago and 42 percent above their March 2009 bottom of 353,000.

July also saw the most single-family construction permits filed by builders (513,000) since August 2008, according to the National Association of Home Builders.
Housing starts have been rising on an annual basis since September 2011 and are now 56 percent above their trough in April 2009 -- 478,000 -- according to census records dating back to January 1959.

Source: Calculated Risk

The sustained housing-start improvement over the last several months "confirms that recent previous increases are part of a sustained trend, not a temporary blip," said Jed Kolko, chief economist and head of analytics at real estate search portal Trulia.

Calculated Risk's Bill McBride credits the lack of new construction during the housing downturn with helping spur a recovery this year.
"The record low level of completions over the last four years -- and record low level of housing units added to the housing stock -- is an important reason for the budding recovery in housing," McBride wrote in a blog post.
"The last four years have seen record low completions, and 2012 will also be very low. This low level of completions means that a significant portion of the excess vacant housing supply has been absorbed. And completions in 2012 will still be very low even with the 20-plus percent increase in housing starts."


Source: Calculated Risk

Regionally, the West led the way in July with a 48.1 percent annual jump in housing starts, to 197,000. The Midwest followed with a 28.6 percent increase, to 117,000. The South had the biggest volume of housing starts by far last month, 355,000, up 16.8 percent from a year ago.
The Northeast was the only region to see housing starts decline on a yearly basis, by 10.5 percent to 77,000.

For single-family housing starts, all regions except the Northeast showed year-over-year increases, led by the West (26.1 percent), then the South (20.9 percent), and Midwest (12 percent). In the Northeast, single-family housing starts fell 14.6 percent.

reposted by:

Patti Duty, Texas Realtor  (940)577-2733

patti.duty65@gmail.com  

www.PattiDuty.com

Sweet smell of Success!! Smells can affect if your home sells or not

You have only ONE chance to make a FIRST IMPRESSION!!!

It is called first impression because there is only one, the first one, and that's it!

The average buyers views home an average of 4 minutes, MAKE THOSE MINUTES COUNT!
Once the inital sight of house is past whether it be by photos on internet or driving by, the first
thing people notice is smell. I believe most people don't even realize that they are associating the house with smells, good or bad.
I have shown many houses, some of which the buyer did not even get past the first room and turned and walked out.  In most cases, the seller lives in their home and does not even notice the smell.  Here are some things to look out for.
Pet Odors
Garbage Odors
Last Night's Dinner
Smoke Odors
Musty Odors
Moldy or Mildew Odors
Is this what you want buyers to associate with your Home?
The same is true with making a good first impression. A clean home smells clean. I have a few tricks as well, I add carpet fresh in hidden places, nice but not too overwhelming. Or you can put cinnamon sticks in oven or microwave, or use citrus scents. I have even used those oil lamp burners/candles.
Remember, you don't have much time to grab their attention. The worst thing you can do is assume that the buyer can look past it. They can't look past it if they are smelling it! They can't look past it if they don't go all the way in! Don't let the buyer be turned off before they even get through the door.  If you can, crate and take pets with you. Keep garbage out and away from house. Don't smoke in house or near entrance as you can smell from quite a distance. Keep house aired out. Spray some sort of freshners or burn candles when home or use the carpet fresh. Make sure your home smells good or inviting as well as looks good and you are sure to impress lookers and leave a lasting impression.
- Patti Duty

The 5 Biggest Mistakes Homeowners Make when selling their Home

The Five Biggest Mistakes Homeowners Make

Making small price reductions again and againNothing smacks of desperation more than incremental price drops. The longer a property is on the market, the more jaded the buyers become. The more times the price is cut, the staler the offering appears. Buyers reason that a lot of people must have seen it and that a lot of people must have rejected it. And if that is the case, then why even bother to consider it?

Instead, slash the price. Find out what your house is worth by looking at similar properties in the neighborhood and price it 10% below them. The most enticing houses on the market are the newest and the cheapest. If you can be both, you’ll offload yours in no time at all.

Hiring the wrong brokerThere are many ways of finding a good broker. Personal recommendations from friends and colleagues are often the best way to go. If someone outside the real estate business with nothing to gain is bringing up a broker, you can be pretty sure you’re on to a winner. The best brokers — the top 10 percent — do 90 percent of all the business. So don’t get stuck with a lemon. You want someone with enthusiasm and drive, someone who will give you the attention you need and steer you through the whole messy process with courtesy and professionalism.
Waiting it outIf you decide to wait, you are joining the thousands of other homeowners who have also decided to wait. When a few decide it’s time to take the plunge, you are already too late. If you need/want to sell now, then sell now. There will never be a better time.
Showing your house before you get rid of your clutterYou wouldn’t try to sell your car without first clearing it out, would you? Trying to sell your house when it is full of clutter is the same thing. People don’t see charming family mementos and alluring bric-a-brac; they see visual noise, like empty soda cans and banana peels strewn on the back seat of a Chevy. The buyer doesn’t want to see your house; they want to see their house of the future. Find a temporary home for all of your cherished possessions and let the house speak for itself.
Not taking the first quick bid This happens time and time again. The buyer gets a bite early on and they are suddenly filled with confidence. It feels like you’re standing over a pond packed with a million hungry fish. The first offer doesn’t seem great and you naturally assume there are bigger and juicier fish to be had. So you throw the tiddler back in. Big mistake. That “tiddler” is often the catch of the day.

By Barbara Corcoran

TODAY

reposted by:

Patti Duty, Texas Realtor (940)577-2733

patti.duty65@gmail.com

www.PattiDuty.com

ADVANTAGES OF HAVING A HOME LOAN OR MORTGAGE

What are the Tax Benefits of Having a Home Loan?

Should I Get A Mortgage If I Can Pay Off My Home

Having a mortgage to payoff isn't necessarily a bad thing. Photo: iStock

Many people dream of a day when they no longer have a mortgage. It is a wonderful feeling to own your own house, have no debt, no worry of losing your home. However, there are tax advantages to having a mortgage loan that might make you change your mind.

There is something to be said for security. Achieving a life-long dream of owning a home is a valid concern and should be taken into account. It is an attractive prospect to be able to go to sleep at night without worrying about monthly payments, knowing that you have a home to pass on to your children.

However, every cent of interest that you spend is tax deductible (if you itemize). You will need to get with your accountant to determine how this might affect you, but it can be a substantial benefit.

If you purchase a home, there are various tax benefits. You may write off the following:

     

- Mortgage Loan Interest

- Real Estate Taxes

- Capital Gains on the Sale of Your Primary Residence

Mortgage loan interest

When you own a home you may deduct the interest you pay for the mortgage loan, if you itemize. The interest is tax deductable on the home you live in, as well as a second home (but not for an investment property) on a loan up to $1,000,000.

In addition if you get an equity line (a loan from a lender using equity as collateral), you can write off interest on a loan of $100,000. There is no requirement of how you spend that money. You can use it for home improvements or a vacation to Italy. Either way you get a tax deduction.

Real estate taxes

If you buy a home, you will probably need to pay property taxes to your local government. There are a few states that do not require this tax, but most do. This fee that you pay is tax deductible.

Capital gains on the sale of your primary residence

If you live in a home and choose to sell it, you do not need to pay taxes on $500,000 of the profits if you are married ($250,000 if you are single). It is required that you live in the home (and don’t use it as a rental) and that you have lived there for at least two years.

You do not need to purchase a new home, nor are there any age requirements for this to work for you. In addition you can qualify for this tax advantage every two years.

Why pay interest at all, if I can pay off my home?

Some may argue that you need to pay interest in order to take advantage of the tax benefits. If you can save that money, why get a mortgage loan if you don’t need one?

If you can make more money with the money you would use to buy a home, that would be better for you. For instance if you are paying 6% for your home loan and get decent tax savings, your interest rate might end up being the equivalent of 5%. Now let’s say you can find a secured investment that could make 8%. Wouldn’t it make sense to invest your money there, instead of putting it into the walls of your home?

Let’s say you can only earn 5% on an investment. It would still be a good idea to get a mortgage and invest your money. The reason is that you are keeping your money liquid. If you put all your available funds into a home and there is an emergency, you will need to wait weeks or months to access those funds.

When you add up all these tax savings with your accountant, you might save thousands of dollars each year. You need to crunch the numbers yourself and see what works best for you and your family.

By Laura Sherman    reposted from realtor.com
reposted by:

Patti Duty, Texas Realtor (940)577-2733

patti.duty65@gmail.com

www.PattiDuty.com