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Monday, October 31, 2011

Pricing Your Home Right: Art or Science?

When you and your REALTOR® sit down to analyze comparable homes and recent sales, you may find that prices of homes similar to yours can be thousands of dollars apart. 

It’s tempting to pick the highest price and say, “Let’s list it here.”
 That’s a strategy that usually works in an accelerating market, but what if your neighborhood is flat or declining? Would you pick the lowest price and list it there? Probably not.
 That’s why pricing your home is as much an art as a science.

The science of home price analysis

 As a home seller, the science is choosing the right price at which your home will sell. How do you do that? By analyzing your local real estate market conditions.
 You want the highest price, while the buyer wants to pay the lowest price. The only way your home will sell at the highest price possible is if your buyer agrees to your home’s value.
 To best determine market value, you have three important tools: CMAs, appraisals, and your REALTOR’s® knowledge of the market.
 The comparative market analysis
 A comparative market analysis (CMA) is a side-by-side comparison of similar homes for sale and recently sold homes in your neighborhood. CMAs are composed of data compiled for comparison purposes by your REALTOR’S® multiple listing service (MLS.)
 REALTORS® use CMAs to illustrate the range of homes in the marketplace and the features that make them unique, including age, location, number of bedrooms, baths, room sizes, updates, condition, etc. As a seller, you should be able to see where your home fits – in the top or lower price range of similar homes.
 Buyers get CMAs from their practitioners to help them understand the selection in the market, and to prepare them to make an offer on a listing.
 CMAs are typically used by buyers and sellers before an offer is made.
 The appraisal
 An appraisal is a market analysis performed by a professional appraiser using a variety of sources, including MLS data and conforming loan formulas.
 Appraisers most often work for lenders to determine market values, so that lenders can weigh the risk of making a loan to a home buyer. Appraisals come after an offer is made when the buyer applies for a loan.  Even though the buyer pays for the appraisal, the lender uses it to determine whether or not to make the loan at the contract price.
 Buyers have one advantage over sellers when it comes to appraisals – their bank has the last word. If the appraisal doesn't meet the contract price, the bank refuses to make the loan, unless the seller agrees to a new contract price. 
 You can hire an appraiser to help you determine at what price a bank will loan a buyer money to buy your home.
 The art of the deal
 It’s your REALTOR’S® knowledge and experience in the local market that can take the numbers and put them with other market conditions. She or he will help you read the market, and help you choose the right price, based on current trends analysis and news.
 Her experience with current customers tells her how buyers are behaving today. Are they paying top dollar, or saying they’re waiting for prices or interest rates to drop?  
 His network of contacts provide valuable intel into whether other sellers have run into problems. He helps you avoid the same issues. For example, did another seller lose a deal due to an inadequate disclosure or bank appraisal?
 Your REALTOR® knows your motivation, what you need to get out of the home financially, and your terms. While it’s her job to help you meet your goals, it’s also her job to help you face the realities of the current marketplace, whatever they are.
 His job is to help you price your home high enough that it sells quickly, without sitting on the market longer than you can afford. By the same token, his job is to make sure that you don’t list so low that the market questions the condition of your home.  
 And that’s where the art of the deal comes in – putting all the moving parts of the market together.  

It’s an art and a science

Ultimately, you are the one who will choose your listing price, based on your understanding of all the data. And the results will tell the tale.
 You can’t list and sell your home for any more than a buyer is willing to pay.
 And that makes pricing it right both an art and a science.

clear skies,
Doug Reynolds

Thursday, October 27, 2011

Getting Ready to Sell Your Home

People will say to me, “I am thinking about selling my home, but I do not even know where to begin to get it ready to put on the market-- I have so much stuff that I need to do.” Getting your house ready for sale does not have to be a stressful event.

Take Another Look

Look at what you have around you and figure out how to make it better in a cost-effective, attainable, creative way. The choices and work you do in your home will pay off in a big way now and down the road.

You live in a home every day – so it is difficult to see the good things about it anymore. You need to get rooms down to basics again to see the potential.
You may walk right past your fireplace and miss the great mantle or you don’t notice the wonderful kitchen space that lies underneath all those piles of stuff or you don’t even appreciate the great view of the back garden that is obscured by old drapes. The truth is that spaces can get tired and you can get to a point where you do not see it anymore. You need to generate some excitement.

I have seen the power of redesign transform lives. It’s been said that change is good and if you are feeling stuck then just move because motion creates change.

Focus on One Room At a Time

Getting rid of clutter is the first order of the day. Focus on one room at a time. Create four piles: Tag Sale, Good Will, Storage and Trash. Don’t spend too much time mulling over an item – just sort it and get it out. This simple process will motivate you. 
Once the clutter is gone, look at the good pieces of furniture and the ones that no longer work in the room. If the sofa is great, keep it for the room, but if the side chairs are worn and very tattered, sell them. In getting your house ready for market; simpler is better.
There also may be good pieces that can be used in another room. If something has good potential than use it again to help you set the stage of your new look.
Once you have removed the extras and “get rid of” items, go back in and empty out the room because for some people, it is easier to see the room and build from scratch. Having the room empty allows you to see what needs attention. Think of yourself as a potential buyer walking through your home for the first time with a REALTOR®. You want to direct what people see when they come into a room.
Notice what they may notice, which may include: walls that need new paint or simple touch-ups; trim that needs to be added; wall-to-wall carpet that is stained or a light fixture in the dining area that needs new shades, etc. In most cases, a little soap and water goes a long way.
Now bring in the key pieces, whether it be the sofa, a bed, a desk, an armoire. You want to play around with the placement of the furniture. Your goal is to create inviting areas that your eye is drawn to as you enter into that new room.

The Final Touch

The final touches of accessories that you already own can be brought in,  such as art, lamps, books, props, throw pillows, etc.  You could buy a few new items to finish off the space if you wish – but you don’t have to go overboard.

Walking into the room should affect all the senses. So put the music on that sets the tone, have a fire going in the fireplace, buy some fresh cut flowers, dim the lights to make the room more inviting, brew some fresh coffee or bake some cookies to really capture the essence of home. Even in these economic times, you realize there is much you can do yourself to make change happen. 
With these simple preparations, your home will be ready to sell at a good price
clear skies,
Doug Reynolds

Wednesday, October 26, 2011

How credit influences your home financing options

Whenever a new buyer client calls,  I ask if they have been pre-approved for a loan yet.  Most reply “no.”  From there I explain that before you begin looking at potential homes, you need to get pre-approved.  For most buyers, it’s a fairly easy process of speaking with a loan officer on the phone for 10 – 20 minutes.  Some buyer might need to provide the loan officer with some simple documentation and then within a few hours to a day or so, the loan officer should have a pre-approval for the buyer.  At that point, the buyer will know their max purchase price, what their monthly payments would be, what the current interest rate is, what costs they will have in getting the loan and what type of financing would be best for them.  Also, most buyers don’t have a loan officer already and need help getting pointed in the right direction.  That’s when I recommend 2 or 3 excellent loan officers for them to contact.
clear skies,
Doug Reynolds

Here’s some info for you to glance over before starting the pre-approval process.

How credit influences your home financing options

One of the most important steps in buying a house is financing the purchase. Your credit is one of the first things that lenders examine when considering you for a loan. Making payments on time is the most important way to establish good credit. A pattern or history of frequent late payments can lead to a poor credit score that could negatively affect your ability to be approved for future loans, or result in home financing at a higher interest rate. Conversely, having a good credit score will let you secure a home loan at a lower interest rate.

Your credit report
When you are being considered for a home loan, mortgage lenders will review your credit report, which displays your credit history and credit score. Your credit score, also called credit rating, is based on a summary of your overall credit history. It is shown as a number that provides lenders with a fast and objective way to predict how likely you are to repay a loan.
Lenders use your credit report to decide on the following:
·         Whether or not to approve you for a loan
·         The type of loan for which you qualify 
·         The interest rate to charge you

The importance of good credit
Your credit history will follow you throughout your life. Therefore, making good credit decisions along the way will help a great deal when you're ready to realize the dream of home ownership.

JUST SOLD!!! $230,000 for 8246 Lake Forest Drive, Sacramento Ca 95826

I just sold 8246 Lake Forest Drive, Sacramento Ca 95826.  The house is in College Greens, one of my specialty neighborhoods.  My seller client bought the house in the summer and spent the past few months remodeling the house.  The home sold in 4 days for over list price!  Take a look at the amazing transformation.

8246 Lake Forest Flyer

Monday, October 24, 2011

How to Come Up With a Game Plan for Buying a Home in the Sacramento Area

Doug Reynolds, a Sacramento Area Realtor, sits down with Erick Perpich to discuss the best way to start thinking about buying a home in the Sacramento Area. Erick Perpich is a local loan officer with Republic Mortgage, a direct lender in Folsom. Erick explains that even if your credit is bad or you don't have enough money for a down payment, it is in your best interest to talk with a loan officer to see where you are at today and come up with a game plan for moving forward and getting you into the position to buy. The game plan might only take a month or a year but there are strategies available to speed up the process. Along with that, there are some down payment assistance programs that can help certain buyers with the down payment and closing costs. Give Erick a call today to discuss your personal game plan for buying a home in the Sacramento Area.
Erick Perpich
Republic Mortgage

clear skies,
Doug Reynolds

First-time Home Buyers Dominate the Market

In some areas of the country, housing is selling like hotcakes, driven higher by the first-time home buyer segment of the market. Typically, first-time home buyers average about  40% of all home buyers, but in 2009, they composed an unprecedented 47%, according to the just-released National Association of REALTORS® 2009 Profile of Home Buyers and Sellers.
Affordability was among the most cited reason for buying a home. Incomes decreased from 2007 to 2008, and tax incentives, particularly the first-time home buyer tax credit – promising up to $8,000 in tax rebates, or as additional funds to pay toward closing costs and down payments, played a key role. 
Among key characteristics found:
• More than half of first-time buyers were between the ages of 25 and 34. The median first-time home buyer is 30.
• The median income for first-time home buyers is $61,600. Most first-time home buyers make between $35, 000 and $44,999 (14%) and $55,000 to $64,999 (also 14%.)
• Non-traditional households outnumber traditional households for first-time home buyers. Forty-nine percent of first-time home buyers are married couples. Twenty-five percent of first-time buyers were single females; twelve percent are male, and 12% unmarried couples. One percent is classified as “other.”
• Most first-time buyers moved to their new home from a rented apartment or house (78%) and 18% from living with parents, friends or other relatives, reflecting the affordability of owning vs. renting.
• The number one reason cited by first-time buyers for buying a home was the desire to own (62%.) The second reason given was affordability (10%.)
• Among the reasons cited for buying now, first-time home buyers reported that it was “just the right time” – (40%), affordability improved (27%), and mortgage financing options were available (14%.)
Between 2008 and 2009, many areas of the country reported some of the largest inventories in decades, providing home buyers with plenty of options. What did first-time home buyers choose to buy and why?
• First-time buyers prefer detached single-family homes with no shared walls (74%) but 26% chose attached homes that have at least one wall shared with another home. The larger number of singles may account for a greater attraction to and acceptance of attached home lifestyles and shared amenities.
• Fifty-two percent of first-timers chose a suburb, while 22% chose urban areas. One quarter chose either small towns or rural life.
• The median priced home purchased by first-timers was $156,000. Most first-timers spent between $125,000 and $148,999 (16%), followed by $150,000 to $174,999 (13%.)
• The median home purchased by first-time buyers was 1,600 square feet and built in 1991. Size mattered most to first-timers (20%) followed by price (19%) and distance to job and lot size (tied at (16%.)
• The median length of time first-time buyers expect to occupy their homes is 10 years.

Readiness to buy is the primary reason people buy homes, but the quality of the neighborhood remains the most important factor in which homes they choose to buy.
clear skies,
Doug Reynolds

Thursday, October 20, 2011

How-to’s: How Much Home Should You Buy?

Conventional wisdom suggests that buying a home is a long-term investment and that you should buy as much home as you can possibly afford. It’s possible to build equity over time, but that depends largely on what you pay for a home, how robust your market is, and how long you occupy the home. 
To choose the right home, you have to try to see as far into the future as possible:
How long will you likely live in the home?
How large is your family likely to grow?
What activities will you have and what space requirements?
Where do you want to live – near work, near family, in a certain school district?
You should have a fairly good idea of the number of bedrooms, baths and living areas you want as well as other features you want your home to have.
Now it’s time to look at affordability. How much can you buy, and how much home can you get for your money? 
The trick with buying a home is getting as much as you can on your wish list without becoming “house poor.” House poor means you can afford your house payments but you can’t afford to do anything else.
That’s why lenders have a conforming loan standard that they use as a benchmark for prequalifying you as a borrower. This is true whether you’re a first-time home buyer or a millionaire move-up buyer. 
To qualify you, lenders use two ratios – income to mortgage debt, and income to total debt.
Qualifying to buy a home is only the first step. You will want to be able to handle whatever comes you way - repairs, rising utilities, remodeling or other updates, and ongoing maintenance. 
Under some circumstances, you can borrow more money with an adjustable rate loan, or other loan products, but keep in mind that any loan outside conforming standards are likely to be higher risk and carry higher costs to defray risks for the lender.
Sometimes, a conforming loan can actually be too expensive for your needs. If you’re relocating, and believe you’ll only be living in your home three to four years, a fixed-rate loan may cost more than you need. You may be better off with a hybrid loan that gives you a lower fixed rate for the first five years, and then adjusts after that.
Talk to your lender and see what you can qualify for before you go shopping for a home.
If mortgage interest rates go up, that could impact the amount your lender will loan you. You may qualify for a smaller amount, which means buying a smaller home or a home in a less expensive neighborhood.
It’s really about affordability. The more comfortable your payments are, the more likely you are to enjoy your new home.

clear skies,
Doug Reynolds

Wednesday, October 19, 2011

Finance FAQ

Below are some of the frequently asked questions that are posed by homebuyers who are new to the process of buying a home:

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What is a mortgage?

A mortgage is a loan used to buy a home or other real estate property, with the home serving as the collateral for the loan, acting as the guarantee that the loan will be repaid.

What's in a payment?

Payments are comprised of principal, interest, property taxes, and possibly mortgage insurance. In the cases of condominiums, maintenance fees may apply as well. However, the real question is: how much can you repay over how many years? Consider how quickly you could repay your loan. Is it 15 years, 20 years, 25 years, or 30 years? Typically, the sooner you repay the loan, the more you'll save on interest payments. However, the longer you extend the term of your financing, the lower your monthly payments may be. When choosing a loan term, consider your budget, your long-term spending patterns, your income over the life of the loan, and how long you plan to stay in your home.

What is a fixed rate (mortgage)?

The interest rate is set for the full length of the loan and doesn't change.  Therefore, since the monthly mortgage payment for principal and interest stays the same for the life of the loan, it's easier to plan a budget using this sort of loan.

What is an adjustable rate mortgage (or ARM)?

An adjustable rate mortgage (ARM) usually starts with a lower initial interest rate than traditional fixed rate loans. After a set initial payment period—anywhere from one to 10 years—the interest rate may change periodically based on market conditions. As the rate changes, so does your monthly payment.In addition, ARM loans feature an adjustment "cap" that limits how much the interest rate can go up, protecting you from large increases in your monthly payment. If you plan on being in your home for a shorter period of time, or expect your income to increase over the years, an ARM loan may be right for you.

What is the property appraisal?

A professional appraisal is done to determine the value of the home or other type of real estate. An appraisal is based on the home's condition and selling prices of comparable properties in the area.

What is the best mortgage for me?

The best mortgage is one that you can afford without cutting in on other necessities, and has interest rates and terms and conditions that give you peace of mind. Use the handy mortgage calculator found at the bottom of each property listing on our site to get a good idea of which mortgage is the most affordable for you.

How much will my mortgage be?

The size of your mortgage and the monthly payments that you will incur are determined by the price of your home minus the down payment, spread over the term of the mortgage at the interest rate chosen.

clear skies,
Doug Reynolds

Monday, October 17, 2011

Selling Tips in a Buyer’s Market

A buyer’s market means it’s the seller’s turn to be flexible, especially with sale terms. Purchase price, closing dates, move-in dates, storage, appliances, window treatments, points and fees may all require a little negotiation. Whatever the terms, don’t let personal feelings stand in the way of a good deal.

The basics
In a buyer’s market, curb appeal, cleanliness, overall good condition and updates are especially crucial. Any little flaw should be taken care of before the first buyer drives up.
·         Attend open houses in your neighborhood to see what “sell-ready” really looks like. If you’re shy, ask Realtor to walk you through a few sell-ready examples.
·         Back home, start with the exterior to ensure you’re making a good first impression. Reseed or throw down some turf on lawn patches, change the lights in the lamppost, and if necessary, reset the walkway stone.
·         Clean the interior beyond your standards. Even if they are impeccable, rent an industrial carpet cleaner or hire a professional cleaning service. Brighten the interior ambience with light fixture updates, as new lighting is one of the most inexpensive and noticeable improvements you can make prior to listing.
·         Fix leaky faucets and make sure the water pressure is strong in both the kitchen and bathrooms.
·         If necessary, a great way to improve the appearance of your home is to paint. Use only neutral colors that can easily lend themselves to different d├ęcor and styles of furniture.
Don’t reject low offers; negotiate
·         Don’t dismiss lower-than-expected offers. Instead, consider buyer incentives that help you meet your asking price. Offer to pay the buyer’s closing costs, moving costs or loan origination fee. These can help the buyer with upfront costs. As well, you may consider offering a limited home warranty that covers HVAC systems and some appliances for a definitive period of time.
·         Be careful of purchase offers that are contingent on the buyer selling their home first. Their home may be in a softer market than yours and you could be in for a long wait. Be sure that the purchase agreement includes a contingency-release clause. This way you’ll be able to sell if another buyer comes along.
·         Work with your Realtor to find creative solutions to make a deal come together. The purchase price is just part of the deal. Anything that makes your property stand apart from the competition will give it an edge in a buyer’s market.

clear skies,
Doug Reynolds