The price is the thing. Getting maximum value for your home. Part 3

What external factors affect the value of a home?

External influences on value:

· Interest rates

· New listing

· Area competition

· Local economy

· Builder offerings

· Neighbor’s price

 A common mistake that many owners make is to focus solely on their home when determining 

value.  Yet in dynamic markets, many influencing factors are completely out of their control.

We’ve witnessed recent dramatic market change in which the economy, interest rates and financial

 markets have negatively affected values.

The simple act of a neighbor reducing a price can lower street values.  A subdivision of new 

construction can lure buyers away from existing homes and lower their value.

What about internal influences on home value?

Internal influences on value

· Location

· Size

· Amenities

· Condition

The classic determinants of value are the intrinsic characteristics of location, size and amenities. 

 The cliché “The three most important factors of value are location, location, location.” has basis in fact.

Again, many sellers cite their home’s amenities and conditions as a reason to overprice.

The price is the thing. Getting maximum value for your home. Part 2

How does the property in your neighborhood affect the price of your home?

The value of a larger home is reduced by the influence of smaller surrounding homes.

Sometime owners will brag that their home is the “biggest on the block” as a way of puffing value.

Actually, when a property is oversized for the neighborhood, it often experiences the adverse effects of regression — the value is reduced through the influence of less expensive homes.

In contrast, progression demonstrates that value can be increased by the more expensive surrounding homes. The value of a smaller home is increased by the influence of larger surrounding homes.

How can the correct price attract buyers?

Think of it in these terms. When the price is too high, it doesn’t attract. Like a magnet, buyers are attracted when the price moves closer to market value. As you move your price closer to market it will reach the point at which it attracts buyers and produces a sale.

The price is the thing. Getting maximum value for your home. Part 1

Pricing your home for market is an inexact science but we have many sources from which to draw to get as accurate a price as possible.  Many times the question is asked “Can we get back all the money we’ve put into our home?”  The answer is a definite “well, that depends.”  It depends on the following…

  • When were the improvements made?
  • At that time were you planning to sell or stay?
  • If you had known then that you were going today, would you still have made improvements?
  • If the improvements were removed, what percent of today’s buyers would put them back and pay what you did?

Another related question is, “Shouldn’t I expect to get back what I put into it?”  And that also depends.  Let’s say a builder built a $500,000 home on a lot and included a well that cost $20,000.  Then a similar home was built on the next lot but the well went through harder rock and to a deeper water table costing the builder $40,000.00.  How much is the home worth?  $500,000.  Even though the cost of building it was an additional $20,000.

According to the principle of substitution, value is determined not by what a seller puts in a home, but by what a buyer gets out of the home.  In both cases they get water.

What It Takes to Bring Your Home to Market

By all appearances, putting a home up for sale seems a simple process.  Once it is on the market you see the information, the pictures, the description, the sign, and postings on the internet including Facebook, Zillow, Trulia, Realtor.com, Twitter and many other sites – as well as email blasts!  Sounds pretty methodical.  However, there is always a back story.  This is where the preparation is critical because you only get one chance to get it right and make a good impression.  Here is what I mean by preparation:

Accuracy is the key component.  You have to make sure the person or persons wanting to list and sell the home actually owns it, right.  I have found that is sometimes not the case and you better know that before you go any further.  Also, it is critical to know your numbers.  Number information includes legal property description, size of the home, copy of the floor plan, annual taxes and HOA fees, sales and mortgage history, outstanding liens and mortgages, schools that serve the area, proximity to shopping, major highways and entertainment outlets.  There is also the need to analyze sales for the immediate area and compare the home with other homes that recently have sold.  Information like that includes style, square footage, lot condition, concessions, price per square foot, list price vs. sales price and the timeline for the sale. 

These are just some of the sales preparation tasks that have to be done before a home can be listed for sale, and I have done them for our areas. Choosing me as your broker gets this information, and many other important pieces of the puzzle, to you in one piece.

I have determined there are over 150 actual items like this that are involved in a sale, and I will be listing them here on a regular basis. If you like what you see, check with M&R Realty to put this list into action for selling or buying your home with me as your broker.  More to follow…

Home Inspection Information for Sellers and Buyers

Selling a home should always include at a minimum a home inspection.  My recommendation is to have a home inspection, termite inspection, roof inspection and heating and air inspection.  If you are selling your home, it is a good idea to get a home inspection prior to the sale to discover any issues that could stall or stop a sale.  As a seller you can do an inspection for obvious items that need attention.  If you are buying a home, you want to make sure you are not purchasing a home with an expensive problem or safety issue.

Usually home inspections will uncover some items that will need to be addressed to complete the sale.  This is part of the negotiation process.  Most defects are minor and easily fixed with a minimum of expense.  This is important to make sure the buyer is satisfied and that the sale closes.

Home inspections should include a thorough inspection of the exterior including the roof, exterior siding or brickwork, windows, interior of every room, inspection of the attic and a complete examination of the crawlspace if not built on a slab.  A good inspector will check for the following:

  • Structural Defects
  • Flooring
  • Walls
  • Windows and Doors
  • Attics and Basements
  • Plumbing
  • Appliances
  • Roof
  • Electrical
  • Heating and Air

Home inspections will range in cost from $300 to $1,000 depending on the location, size and structure of the home.  This is a buyer’s expense as the buyer wants the home inspector to be working for them.  The buyer should choose the home inspector and can do so from referrals or the interviewing of multiple inspectors.

Home inspections will take time and that will depend on the size of the home and the inspector.  The buyer should be at the home inspection to get instant feedback from the inspector and have a better understanding of the condition of the home.

After the inspection is complete, the inspector will produce a report and will review it with the buyer.  This provides the buyer a chance to ask questions and get more details from the inspector.  Should there be defects that are outside the scope of the inspector’s ability to suggest a repair, the buyer can ask for a referral for a specialist.

From my point of view, a home inspection is not optional.  It is a critical part of purchasing a home.  Expect that there will be items that need attention and keep in mind there will be a difference in items that are cosmetic and those that are structural or that make a home unsafe.

Buying a Home! What could possibly go wrong!

Every year many people go on trips or vacations.  Some take cruises or just drive across the country.  One thing you can count on is something unexpected happening.  Anyone who goes on a trip will do a certain amount of planning in order to arrive on time and hopefully within budget.  Obviously you can’t plan for everything but you can think about things in advance that might happen or go wrong.  The same is true during the purchase of a home.  These are a few things that might go wrong while buying a home.  

Concerning the Buyer

  • Can’t find a home in a suitable price range.
  • Credit issues from the past might be a hindrance.
  • Interest rate rises that preclude buyer from purchasing.
  • Employment situation changes.
  • Other financial setback that hinders the purchase.

Concerning the Seller

  • Seller changes their mind.
  • Does not have clear title to the property.
  • Delays move-out date.
  • Misrepresents the condition of the home.
  • Did not complete repairs as agreed.

Concerning the Lender

  • Does not properly prequalify the buyer.
  • Documentation is lost.
  • Lender requires a second appraisal at the last minute.
  • Underwriting requires additional documentation late in processing.

Concerning the Appraiser

  • Appraiser is not local and does not know the area.
  • Insufficient comparable sales for the area.
  • Not finishing the appraisal in a timely manner.
  • Appraisal comes in too low to complete the transaction.
columbia sc, house home for sale buy home

The Closing

What Happens When You Close on the Purchase of Your Home?

This question comes up a lot but not necessarily in this direct manner.  It usually comes up in bits and pieces and it is important to address it as early in the sales process and then continue to provide updates as the sales process moves toward the closing.

Closing is the final step in the purchase of your home and it is the culmination of many steps that will take place up until that day.  There will be multiple parties that will be involved in this process which can include you the purchaser, your agent, the seller, their agent, your lender and their staff of underwriters, the appraiser and the attorney you choose to close on the purchase of the home.  This process usually will take approximately four to six weeks.  During that time you will have been pre-qualified or pre-approved by your lender.  A home will have been chosen and a contract negotiated.  You will have signed an application with your lender and they will have had you sign certain documents required by federal law.  These documents help protect your rights and the rights of parties involved.  You will need to thoroughly review and understand these documents in order to know your mortgage’s terms and conditions.  Some common documents that you will encounter include the closing disclosure for the final terms of your loan; the promissory note which tells you what you are agreeing to, the total you owe, the interest rate on your loan, when the payment is due, where it is due; there will be state and local government-mandated documents regarding your rights; and then the security instrument or mortgage which confirms those rights and responsibilities as a borrower.

Finally your real estate attorney will meet with you to review these documents and you will sign each one as it is explained.  Finally a prepared deed will be signed by the seller and recorded at the local county courthouse and you will have taken ownership of your home.

Columbia sc house for sale

Prequalifying

It’s a habit that upon meeting with a buyer we don’t talk very long until I ask the question, “Have you a lender and have you been prequalified?”  Most of the time they answer in the affirmative but sometimes not.  Sometimes they say that they just want to look at some homes.  It is difficult for me to find time in my schedule just to show homes if someone has not established a timeline for purchasing a home.  A serious buyer will understand the importance of getting prequalified.  I always explain the importance of getting a lender to do the prequalification and provide written proof for them.

Getting prequalified accomplishes several important things.  Mortgage prequalification provides an immediate overview of a prospective buyer’s creditworthiness.  This provides the buyer and their agent a view of the price homes they should consider. The danger of not being prequalified is looking at homes and finding one you like only to find out it is not in your budget.  This will be a potential letdown for a buyer when they have to now view homes that are less than what they had in mind.  \

Here are some benefits of selecting a lender and getting approved.

  • You have a clear understanding of your purchasing power.
  • It lets you know if you may have some potential credit issues that can cause a delay in purchasing. The sooner a buyer knows this the quicker they can work to resolve any credit issues.
  • With prequalification you can write an offer immediately without delay. Most sellers will not consider an offer if it is not accompanied with a lender preapproval letter.
  • You also gain knowledge of the different lending options that are available and allows you to prepare a budget that will fit your financial situation.

DIY Remodeling for the Homeowner

Call a contractor? No, thanks!

One of the many benefits of being a homeowner is the ability to change your home to suit your tastes—but armed with DIY Network, HGTV and YouTube, more homeowners are taking on the work themselves, according to the National Association of REALTORS® (NAR) 2019 Remodeling Impact Report.

DIY Equals Happy Homeowners

From complete control to personal pride in the project, do-it-yourself home improvements are more often satisfying, according to the report. In comparing “Joy Scores”—a happiness meter on a scale of 1-10—DIY home improvements scored a 9.9, while professional projects scored a 9.6. Ninety-seven percent of DIY homeowners felt “a sense of accomplishment” in their project.

From the report, the three most common DIY home improvements were:

  • Closet Renovation
  • Basement Finishing
  • Hardwood Refinishing

Additionally, homeowners are more likely to DIY for their pet than for themselves, the report shows. The most popular projects include built-in beds and dishes, and a pet pool.

Whether you DIY or hire a professional, if you’re considering a remodel, consult with your REALTOR®, John Smaby, 2019 NAR president, recommends. He or she can advise you on the best improvements to make.

“One of the pleasures of homeownership is the ability to take on projects to customize a house that truly make it your own,” says Smaby. “Those taking on remodeling projects to get the most bang for their buck on resale should speak to a local REALTOR®, as they have unique and instrumental insights into which projects and upgrades bring the most value to homes in your area.”

Here are more findings from the report:

NAR_2019_Remodeling_Impact

Mortgage Rates Spike

From: RIS Media

The average 30-year, fixed mortgage rate spiked this week, to 4.58 percent—a high not hit in four years, according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®). The average was 4.47 percent the prior week.

The average 15-year, fixed rate, at the same time, was 4.02 percent, while the five-year, Treasury-indexed hybrid adjustable rate was 3.74 percent—also increases from the prior week.

“Mortgage rates are now at their highest level since the week of Aug. 22, 2013,” says Sam Khater, chief economist at Freddie Mac, who notes the rate represents an 11-point surge. “Higher Treasury yields, driven by rising commodity prices, more Treasury issuances and the steady stream of solid economic news are behind the uptick in rates over the past week.”

According to Khater, the climb in costs is not deterring homebuyers.

“Despite the increase in borrowing costs, demand for home purchase credit remains solid,” Khater says. “The Mortgage Bankers Association reported in their latest mortgage applications survey that activity was up 11 percent from a year ago.”

Source: Freddie Mac