How to Evaluate an Offer On Your Home

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For most homeowners selling their home the thought of negotiating an incoming offer is a matter of settling in on a price that both sides can agree upon.  But did you know that there is another key aspect of negotiations aside from price that could have even greater impact on the sale?  The terms of your contract hold equal weight and importance as price in the sale of your home and are critical to a successful sale.

Here are five essential things to consider when navigating through the negotiation process after an offer comes in on your home.

Preapproval

After the housing market crashed in 2007 lenders, buyers and sellers have proceeded very cautiously. Lenders are staunchly following stringent requirements, buyers and sellers are savvier than ever before and what seemed like formalities in the process before are now becoming necessities.  Preapprovals are one of the things that did not always need to be done in advance of buyers finding a home. But as you receive your offer on your property, be sure that your buyer has a preapproval from a reputable lender.  The letter should indicate what the buyer can afford and how much the lender is willing to loan them, assuming they meet all requirements at the time of application.

Down Payment

One of the requirements lenders have today is to have an appraisal done on the home to equate its value with the selling price.  Unless the buyer has a significant down payment available, a less than ideal appraisal can stand to affect the sale altogether, even causing the deal to break down.  Check to see how much your buyer is able to put down on the house and add up the down payment with the loan amount to see if they equal your asking price.

Existing Home

Does the buyer have an existing home they need to sell?  This can be a problem for you as a seller if they want to include a contingency in the contract that absolves them from the commitment of buying your home if their home does not sell.  This can wreak havoc on the sale of your property, as it would require you to leave the terms of your sale up to the success of another sale.  It would be best to avoid offers that include existing home contingencies.

Closing Date

When does the buyer want to close on the home?  If the requested closing date extends beyond 90 to 120 days then it might be time to reconsider the offer.  Lenders have timing guidelines that dictate a 45-day policy, within which buyers must apply for a loan before closing.  Anything longer than that would get in the way of the lenders’ policy leaving the seller hanging in limbo during those off weeks.  When a buyer cannot meet the contractual obligation to get a commitment within 45 days, it might be a good idea to forego the offer altogether rather than to risk the sale.

Cash Transaction

Some buyers offer cash rather than opt for financing and though it is an attractive offer at first, you need to make sure that the buyer has the cash.  Asking your Realtor to verify the availability of those funds will become a necessary additional step before you can move on in the offer.  In some cases, buyers opt for alternative financing and when the time comes to verify the funds they are unable to do so.  The risk is too great so unless you can be sure the cash is there, it is a better idea to move on to the next offer.
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Navigating through offers is a tricky process – especially in today’s market. It is no longer just a matter of coming to agreement on a sale price, rather both parties must agree to all aspects of the terms.  For customized guidance on your real estate endeavors, contact us today!

Five Mistakes Sellers Make That Cost Them the Sale of Their House

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Who does not want to get top dollar for their home?  The truth is that with the countless homes that have been on the market during the past several months – in many areas, just getting an offer is great news.  But regardless of your location, it is important to avoid making mistakes that could cost you the sale of your home.  Here are five things that sellers do wrong (and what you can do right) that end up in an unsold house.

Pricing

You want as much money as you can but that ends up backfiring when homeowners overprice. The price should be set at middle or low end of the range for your home to be able to sell. It’s important to review area comparable sales to gauge what other homes in the same neighborhood have recently sold for. Overpricing helps other homes in the neighborhood sell and it also slows down your offers.

Staging and Photographs

Staging has become more popular – arranging furniture and removing personal items from the house.  It allows buyers to look at the home with a blank slate and be able to envision their own lifestyle in the home.  Another benefit of this is that the home’s features will be in plain view for buyers rather than being buried beneath mountains of the seller’s stuff. High quality photographs are another part of effectively selling a home.  Almost all buyers begin their property search on the Internet and photos are pivotal to the process.

Access to Property

Restricted access to the property will hinder successful sales because buyers will not be able to get in and see the home on their own schedule. If you have a busy schedule that may seem difficult to work around, meet and discuss alternatives with your Realtor such as installing a lock box on the front door or setting up specific blocks of time each week that allow for some level of predictability without sacrificing accessibility to your home.

Attendance of Seller at Showing

One of the cardinal rules of real estate transactions during showings is that the seller must not be present while the buyer is reviewing the property. If you happen to be present when a buyer shows up, leave quickly and do not interact with the buyer or their agent. If that is not possible for some reason, make yourself as scarce as possible by either going to an area of the home that they have already looked at or go outside for a little while.

Rejecting First Offer

The first offer you get on your property is usually the best offer you will get on your property. It is important to look at that first offer as your best one and keep in mind that the longer the home remains on the market, the lower the offers are going to get. Offers come in between 15 to 20 percent lower than the asking price but the home usually sells within about 5 to 10 percent of the asking price.
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If you would like us to review your home and provide suggestions on how you can improve your chances for a successful sale, contact us today!

How Do You Know If Your Home Is Still a Good Investment?

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Most of the news we see in real estate today is either about how good a time it is to be buying a new property or about how home values are super low and the impending shadow inventory that is soon to be expected on the market. Little attention, however, is paid to the position of existing homeowners with no immediate plans to sell their homes.

A question that is on the minds these days of many current owners of property is whether their home is still a good investment.  We know that Warren Buffet mentioned buying as many single-family homes as he could, but that is an investment class and refers to buyers of new properties.

It turns out that the financial viability on a property that you own today is largely dependent on your plans and time frame.

Planning to Move In the Next Two Years?

Most property owners today would rather wait until housing values rise again however there are often unforeseen circumstances that dictate otherwise.  In some cases job relocation forces the need to sell a home premature to the owners’ original plans. Other times it could be a matter of the homeowners needing to liquidate their asset because they need cash. The tough economic times faced by many today, in fact, forces a lot of homeowners to sell earlier than they would have liked.

If you are in a home that you plan to list on the market sometime in the next twelve to twenty four months, then the sooner you do it the better off you will be.  Housing values and home prices have been declining and though the decline has slowed down, it does not seem to have hit bottom yet.  Another factor to consider is that once the banks begin unloading their foreclosure inventory, there will be far more competition than you have today to contend with.

How Long Can You Hold Off To Sell?

In a nutshell, the longer you wait to sell – the better you will be in terms of return on your investment.  For homeowners that are looking to wait as long as possible but would prefer to sell sooner the best minimum time frame would be to sell in three to five years or longer, if possible.

Ideally, waiting until the market stabilizes, fewer homes (both traditional listings and distressed properties) are on the market and a shift toward a sellers’ market will all be strong factors in your investment success.
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Once again, if you are concerned with your existing home being a good investment or not – keep in mind that in terms of selling, if you can hold off until at least 3 to 5 years that would be ideal.  If you must sell in the next 12 to 24 months, then the sooner you sell, the better.  Maybe seizing the opportunities that exist right now with affordability and low interest rates, perhaps buying up is a good option for you right now.  If you are unsure as to your options or would like to explore something new, contact us today – but hurry, because timing is everything!

What Determines the Value of Your Home?

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Basically, a home's worth is determined by its market value. How is "market value" determined? Most often, it's figured by a comparison ("comp") with homes similar to yours in the surrounding area. So, if the homes in your neighborhood average, say, $250,000, then it's likely that the value of your property will fall in the same range. But market value is also determined by a number of factors including the following: 

External Factors 

There can be several external factors influencing the value of your home. One is "curb appeal", or the first impression your property makes upon prospective buyers. A home that's in excellent condition on the outside will make a great first impression; a home in poor repair instantly loses its appeal to buyers. Other factors can include lot size, popularity of an architectural style of property, water/sewage systems, paved roads, sidewalks, etc. 

Internal Factors  

The condition of a home's interior also has a huge influence on prospective buyers. When you've demonstrated "pride of ownership" and kept up the maintenance (quality paint, trim, molding, etc.), a buyer's interest will immediately perk up for the simple reason that they know your care and concern will result in less cost and maintenance for them. Other internal factors include construction quality, condition of appliances, size and number of rooms, heating/cooling type, energy efficiency, etc. 

Supply and Demand 

"Supply and demand" simply refers to the number of homes for sale versus the number of buyers. When there are more homes than there are buyers, prices tend to be lower. When there are a lot of buyers chasing few homes, then prices tend to rise. In effect, supply and demand affects how quickly your home will sell. Location More than likely, you already know the old saying, "There are three main factors in real estate - location, location, location." While that's not the whole story, desirability is a big factor for home buyers. They may want to live in particular school district known for its education excellence…a great and safe neighborhood with rising property values…etc. 

But I Know My Home Is More Valuable Than a Lot of Comparable Homes in My Neighborhood  

Aren't Allowances Made for This? Definitely! Sometimes, it can be difficult to find homes exactly comparable to your own. So, dollar adjustments are made for the differences between your home and comparable properties. 

Where Do I Find Sales Comparison Information? 

The easiest source to access is your Realtor. After all, it's his or her business to know such information! But, there are also other sources you can tap into in order to get a complete picture of your home's value in comparison to others in your neighborhood. Here's an overview of them:

1. ) The Local Assessor's Office  

It's very likely that your local assessor will be able to provide the sales history of a particular house, neighborhood, or style of architecture. Many assessors also provide lists of recent sales which you can browse and compare to the assessment roll. Today, many municipalities provide local sales and assessment information online making it very easy to access. Check with your local government agency to find out if they provide this service. 

2.) Online Private Companies  

You can search for these companies using the Google search engine and the keywords "comparable home sales" or "comparable sales." Some companies offer free information; others charge a nominal fee. If you wish to get more specific, you can Google "real estate database" and type in the name of your particular state to get additional property information. 

3.) Your Local Newspaper  

It's likely that your local newspaper is a great source of specific real estate information. Look for quarterly sales reports in the real estate or business sections.

The Key to Getting the Price You Want (or Close To It) for Your Home 

The key to getting the best value is finding and matching the right buyer to your home. And that's the job of the Realtor! He or she should work hard to qualify those buyers upfront so the right people are viewing your property! In other words, the Realtor should weed out "lookers" and other unsuitable buyers as a first step in working with you. See how I do that for you by calling me today!

Market Recovery Largely Depends on How Bank-Owned Properties Are Managed

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Lately, the real estate market has been reading like the famous Charles Dickens quote “It was the best of times, it was the worst of times…” with all the ups and downs we have experienced over the past several years.  All in all, things seem to be getting better but when you compare it to the boom that feels only like yesterday to some of us, the question of recovery looms over heavily.

Why is it that the market is taking so much time to recover?  And if we can expect some better times ahead, when can we hope to break out some champagne?  The truth is that with all the rollercoaster activity ranging from national and local jobs rates plummeting, to housing values subsequently declining to record lows and a mix of scandals in between – no one really knows what’s next.

Two things, however, greatly impact how our real estate market performs and they are the economy, specifically the unemployment rate as well as how banks will handle the myriad properties they now own as a result of millions of foreclosures.

More Jobs = More Money = More Home Sales

The formula is simple.  The greater number of jobs, the stronger our housing market will be because when people have money to spend, they go out and buy things – like homes.  The bigger question is how long will it take to bring out jobs numbers back to what they were pre-recession?  And even though in many states we are seeing a slow and steady improvement in unemployment figures we still do have a long way to go.  It is also unclear what impact the 2012 election will have on job growth and consequently, the real estate industry.  Also potentially impacting consumer confidence in the near and semi-distant future is European financial markets performance.

Banks Are Expected To Unload Countless Foreclosed Properties

When the robo-signing scandal first broke out in 2010 and early 2011 no one really had any idea how it would impact the housing industry.  Now, sixteen months later banks have reached a settlement with state and federal regulators.  The money banks will need to come up with, however, will have to come from somewhere.  An overwhelmingly negative impact that looms if banks choose to unload the plethora of properties held after foreclosures will hit the housing market hard.

As they try to liquidate their properties the resultant backlash on the nation’s inventory has the potential to hurt the real estate industry severely.  Too much supply and not enough demand will end up in a property dumping ground situation that leads to even further declines in housing values.

The alternative, though not expected to be followed through with by most banks in this situation, is for them to hold on to at least some of their inventory in an effort to boost values, allowing prices to level off and ultimately resulting in market recovery.
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Right now it’s anybody’s guess as to what will happen next.  And despite slightly improved unemployment numbers the Fed has decided to continue the low interest rates hoping to continue pushing our economy in the right direction. What this means for buyers is that it is still one of the best times to buy.  Sellers should consult with their Realtors to decide on an individual basis what is best for them.

Should You Sell Now or Later?

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One of the most common questions I get asked is whether or not a person should sell their home now or wait until later.  Of course, this is a personal question depending upon a number of factors including where you're moving to and why.  Many people are downsizing or moving out of the area, so circumstances are specific to different people.

The only time that waiting to sell your property is beneficial is if the market is appreciating. As I explained recently, the current trend on Long Island shows that the real estate market is still down. That means that there are very few good reasons to wait to sell your home in the current market situation.

We're currently in a time that I like to refer to as diminishing equity.  This means that there are more people who are getting closer to having little to no equity in their existing home.  Some of these people should have sold their homes one or two years ago, but they have waited hoping that the market would improve.  Now, people are in a situation where they really need to move but have no equity in order to do so.  In fact, there are many homeowners who are on the cusp of not being able to sell at all.

If you are thinking of moving anytime within the next five years, my advice would be not to wait any longer than is necessary.  So who should sell their home now?

One group that could benefit from selling now are retirees.  You are likely to sell your home today for more money than you could in the foreseeable future.

Move-up buyers are another group that could benefit the most of the current market situation.  Most of the time, move-up buyers are looking to buy a larger or more expensive home.  The percentage of price decline is greater the higher you go in price range.  The number of buyers for these high-priced homes is smaller.  For people who are moving up, the amount of home for the money is at an all-time high.

If you're not sure what category you fall into when it comes to selling your home now or in the future, give me a call.  I'm always happy to answer any of your real estate questions.

Pricing Trends of Homes Sold In Long Island – 2011 and Beyond

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As we say goodbye to 2011 and look ahead to the New Year, how did inventory levels and average home prices compare to the previous year? Here’s a look at where we stand in terms of inventory and home prices as well as what we can hope to see happen in the coming 12 months.

Inventory Finally Beginning to Stabilize

The big news we are seeing is that finally, after a long time of increasing inventory, our current inventory levels are beginning to level off. Based on our Multiple Listing Service data, we reported home listings at about 14.5 months as of November 2011. Considering the year prior, in 2010 it was 14.8 months – not much different.

*The number of months reported as inventory translates to the number of months it would take to sell currently listed homes if the selling pace were to remain at the present rate.

Home Prices Dropped a Small Amount

Not surprising news, the average overall selling price of homes sold in the Long Island area including the borough of Queens, dropped 3.2% year over year from November 2011 as compared to 2010. In terms of actual price, the figures went from an average of $426,000 in 2010 down to $412,000 in 2011.

Nassau County home prices came in at a 1% drop from the same time last year – from $503,000 in November 2010 versus $498,000 in 2011. In Suffolk County, the drop was a bit steeper at 2.7% with prices going from $371,000 in November 2011 to $361,000 on average the same month in 2011.

Looking Forward to the Year Ahead

All indications seem to point to similar trends this year, with some leveling but not any significant price appreciation. The good news is that we are closer than we were just a few years ago when the mortgage meltdown crisis occurred in early 2007. The bad news is that it will still take at least five or six years before we can expect similar home values and average price levels – but it will happen eventually.
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In summary, though it is still somewhat of a softening market in terms of pricing, the situation is not as bad as many people had anticipated. With the spring market a few short weeks away beginning in February and lasting several months, we can expect to see heightened activity in the market. Unemployment rates have slowed as well so all indications seem to signal better times ahead. Given that home appreciation values generally coincide with the job market because the more people earn, the more they can afford to spend on housing, lower levels of unemployment is a strong sign for a better future in our real estate market.

If you are considering selling your home, be sure to contact a qualified, reputable Realtor that knows your prospective area well and has the proven experience to show it! Please do not hesitate to contact our office for a customized consultation as to how we can fulfill your real estate needs today. We look forward to hearing from you!