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January 19, 2019April 22, 2019

Winter home sale prep

winter home prep — Winter home prep (infographic from cdc.gov)

The winter holidays are over, so there shouldn’t be any more disruption to your winter home sale, right? A winter home sale may not have much competition during the winter months, but the weather could potentially put a stopper on buyer visits. And in the aftermath of this week’s snow storm, you might have second thoughts about your winter home sale. But since you’re one of the savvy home sellers, you know that weather is fleeting and winter home buyers are serious. You know to focus on the winter home sale prep.

Selling during the winter is not much different than selling during any other time of year. In other words, home sale prep is required. And just as you would during the summer, you should prepare for home buyers to visit your home during a winter home sale. Instead of the heat and thunderstorms of summer, you should prepare for the cold and snow of winter. Your home should be warm enough to make visitors comfortable to help them envision living in your home. Also, consider having a large mat in the entrance where visitors can wipe their shoes or remove them, so as to help keep your home clean.

Decluttering and maintaining a clutter-free home during a home sale is a challenge. But during the winter, when we tend to retreat inside and “nest,” maintaining a home ready to view can be a test of your will. Give yourself more time for home sale prep before a home buyer comes knocking. Consider a daily quick onceover through the house to help maintain order. Limiting buyer visits to specific times of day can help you feel in control, as well as designate a daily private time when you can relax.

Weather permitting, winter open houses are still appealing for home buyers. And during the winter when there are few homes listed for sale, there are even fewer open houses making your open house a destination. Summer or Winter, an open house is an ideal way to have many home buyers visit your home in a concentrated time period. You should coordinate visiting times and open houses with your agent to eliminate surprises.

Regardless of how well you care for your home, maintenance issues are always a concern during a home sale. More so during the winter. If your HVAC system is not working efficiently, it may not be heating your home evenly and consistently. Aging shingles can cause of ice dams, and allow water penetration into the home. Blocked gutters and downspouts can cause safety issues by causing standing water and ice on walkways. Poorly insulated doors and windows cause drafts and cold spots in the home.

Prepare your home for a winter sale and address maintenance issues before the house goes on the market. Have your HVAC system serviced and cleaned. Have a licensed roofer check your roof for missing or damaged shingles. Consider having a pre-listing home inspection to spot concerns.

Recent inventory shortages and buyer demand has made winter a great time to sell your home. However, some home buyers still believe that they can lowball a winter home sale. And there is a good chance that you will a receive a lowball offer. You prepare for these buyers by strategizing with your agent on negotiating tactics. If you receive a lowball offer, don’t get offended. Instead, take the opportunity to start a dialogue with the buyer. If the home buyer is serious, they will negotiate in good faith.

Original published at https://dankrell.com/blog/2019/01/19/winter-home-sale-prep

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

January 12, 2019July 23, 2019

Occam’s razor home selling

Occam's razor and selling a home — Staging is one of the four basics of home selling. (infographic from nar.realtor)

Many home owners are preparing to sell their homes this year. And in doing so, home sellers are looking for new and exciting ways to sell their homes fast and for top dollar. But the reality is that selling a home is not rocket science. There really isn’t a secret trick or approach to selling a home. Rather, it’s more like magic, where properly performed fundamental tasks can set the stage for a satisfying experience. If you don’t know how Occam’s razor (or what it is) can help you get the most from your home sale, pay close attention.

Unfortunately, it’s a human trait seek a complex solution to a simple question. In other words, applying Occam’s razer to your home sale can save you time and allow you to get out of your own way. Occam’s razer is a tool that is often used to figure out solutions and devise scientific theories. It has become popularized as the “keep it simple stupid” method. However, Susan Borowski’s history and explanation of Occam’s razor, written for the American Association for the Advancement of Science, gives it teeth (The Origin and Popular Use of Occam’s Razor; aaas.org; June 12, 2012). Borowski states, “Occam’s razor doesn’t necessarily go with the simplest theory, whether it’s right or wrong; it is not an example of simplicity for simplicity’s sake. It merely tries to cut through the clutter to find the best theory based on the best scientific principles and knowledge at the time.”

In other words, focus on the tried and true fundamentals of selling a home. Anything above and beyond may not necessarily help to sell the home faster or for more money, but could help make the process more enjoyable. That in mind, let’s consider these four basic concepts:

First, consider the condition of your home. Do you have deferred maintenance issues? Does your home need a makeover? Homes that get top dollar are “turnkey.” Many home buyers are willing to compete and pay more for recently upgraded and renovated homes. Selling a home with deferred maintenance or lacking recent updates can not only turn off many home buyers, but can encourage low-ball offers. A pre-listing home inspection can help you identify maintenance issues. Also, consider consulting with a design professional to help you understand which updates (if any) are necessary to help your home sale.

Next, work on the home’s presentation to give it a clean and spacious feel. Decluttering is one of those tasks that can be overwhelming, but it’s importance cannot be overstated. Decluttering will force you to decide which items to keep in the home. Additionally, staging your home can help balance space, furniture and décor. This can help home buyers envision living in the home.

Deciding on a list price is often a conundrum. Although enticing, don’t be seduced by the agent who tells you the highest sales price without understanding their rationale. The housing market can turn on a dime. If your home isn’t priced correctly, it can languish on the market. There are many aspects that go into deciding a price, so work with a respected seasoned agent to go through the market details and scenarios.

Finally, when the home is ready to list, how is it to be marketed? Today’s MLS listing syndication takes advantage of the fact that most home buyers actively search homes on the internet. Don’t rely on gimmicks that promise activity on your listing. A complete marketing plan will take into account the factors we discussed here, and apply strategies to attract motivated home buyers.

Original published at https://dankrell.com/blog/2019/01/12/occams-razor-home-selling/

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December 13, 2018April 23, 2019

Home market value

It’s normal for homeowners to wonder about their home market value. After all, home sales and prices have been making headlines for well over a decade. But you certainly can’t get a home market value from a headline, nor can you assume it from a neighbor’s sale. The reality is that your home market value could vary depending on whom and when you ask.

A timely and important review article by Michael Sanders recently published in the Appraisal Journal asks the question “what does Market Value Mean?” (Market Value: What Does It Really Mean?; Appraisal Journal. Summer2018, 86:3, p206-218). The article correctly points out that determining “market value” can realize different results depending on the scope and purpose of the appraisal. You can see how this might be problematic if you’re trying to determine a home’s value when divorcing or trying to sell an estate property. Some mortgage lenders even have different value criteria depending on the loan product and purpose.

Sanders suggests that “market value” undergoes scrutiny when valuations are difficult and appraisals are questioned (e.g., during a recession). However, having a discussion about the meaning of “market value” now, when there is relative market stability, is probably meaningful for the industry and consumers. Interestingly, the semantics of “market value” have changed through the years, and ultimately depends on the application. He points out at least twelve similar but different legal definitions of “market value.”

Sanders suggests that Richard Radcliff, an appraisal pioneer of the 1960’s, was ahead of his time by advocated for most probable price valuations. An ongoing debate in appraisal circles is whether “market value” is the highest price or probable price. However, it wasn’t until the 1980’s when appraisal articles academically contemplated the association of “probable sale price” and “market value.”

Sanders quotes Richard Ratcliff saying, “appraisal is largely the predicting of human behavior under given market conditions.” Sanders quips about an “ideal world”, where “appraisers would apply market value definitions using a relatively consistent and objective standard, and reflect conditions in the market as they exist, rather than how others might wish them to be.”

Although the accepted dictionary definition of “market value” is the price a buyer is willing to pay for your home, market value and sale price could be different (and often is). And according to Sanders, an appraised “market value” isn’t necessarily the price for which your home may sell.

At this point you may be asking yourself, “how much is my home really worth?” For the answer, you may have to ask a Realtor.

Realtors use market data to prepare comparative market analyses (CMA) that can help buyers and sellers decide on a sale price. Although a CMA is not an appraisal, it is a technical and methodical professional analysis that provides a snapshot of the market. The CMA is typically more refined in scope than an appraisal, such that it is usually limited to a neighborhood and home criteria. Additionally, depending on the location and availability of comparable sales, it can provide a 30, 60, and 90-day probable sale price range based on market trends.

If you’re planning a home sale, a Realtor’s CMA may be your best source of information to decide on a listing price. Even mortgage lenders have relied on Realtor CMA’s, in the form of Broker Price Opinions, to help decide on sale prices for short sales and bank owned homes.

Original published at https://dankrell.com/blog/2018/12/13/home-market-value/(opens in a new tab)

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November 17, 2018April 25, 2019

Home sale renovations

According to the National Association of Realtors (nar.realtor), the average time a homeowner stays in their home is ten years. This is higher than the seven-year average prior to the great recession (but is less than the thirteen-year average immediately following the recession). Needless to say, many homeowners are approaching (or have exceeded) their ten-year stint, and are likely selling their home during the spring and will likely be doing home sale renovations.

Any home sale preparation in today’s housing market should include some home sale renovations. If you haven’t replaced the home’s systems (such as the roof or HVAC) while you lived in your home, there’s a good chance that they are approaching or have exceeded their average life expectancy.

Additionally, the décor and fixtures in your home are likely outdated. The home sellers who make the mistake of not updating or renovating before they list inevitably face home inspection issues. They ultimately find that the home takes longer to sell at a reduced price.

Let’s face it, remodeling can be expensive and overwhelming, especially when it’s for home sale renovations. According to the NAR’s 2017 Remodeling Impact Report, about $340 billion was spent on remodeling projects in 2015. Although a majority of homeowners would remodel their home themselves, thirty-five percent would prefer to move instead of remodeling their home.

The Report cited functionality and livability as the top reasons for home sale renovations. It’s a no-brainer that home buyers prefer homes that are functional, comfortable, and sustainable. Aesthetics is not enough for a home to be appealing to today’s home buyer, it has to fit their life style. Additionally, home buyers want efficient systems in their new homes that can help save on utility costs.

Home sale renovations should focus on functionality and livability

What projects will get buyers who will pay top dollar into your home? It should be no surprise that the number one interior project, listed by the 2017 Remodeling Impact Report, is a complete kitchen renovation. Other essential interior projects include renovating bathrooms, installing new wood flooring, creating a new master suite, replacing the HVAC system, and finishing a basement or attic.

It also shouldn’t be a surprise that the Report listed replacing the roof as the top exterior project. Other exterior projects in high demand include new windows, new garage door, new siding, and installing a new front door.

If you want to add value to your home, even if it’s not for home sale renovations, check the 2018 Cost vs. Value report (costvsvalue.com). The report can give you insight to which remodeling projects are the most popular, and estimates how much of the cost you can potentially reclaim when you sell your home.

There’s no doubt that renovating your home can be expensive. Although the costs of home sale renovations can tempt you to cut corners, don’t. Cutting corners on renovation projects can actually cost you more. You may have to repair, or even re-do the project if not finished adequately. Home buyers are savvy, and can spot low quality materials and poor workmanship.

Also, make sure to get permits when required. If the home buyer doesn’t ask you, the home inspector will likely recommend that the home buyer check for permits.

Although many homeowners don’t mind a DIY project, many hire home improvement professionals. When hiring home improvement professionals, check with the Maryland Home Improvement Commission (dllr.state.md.us/license/mhic) to ensure they are licensed contractors. You should also ask for proof of their insurance, including Workman’s Comp insurance, in case there is an accident on your property while completing the project.

If you hire a contractor who will accept payment when the house sells, read your contract carefully and thoroughly. Do your due diligence. There may be provisions in your contract that you may not be aware of, such as added costs, charging interest, and setting/lowering the sale price.

Original article is published at https://dankrell.com/blog/2018/11/17/home-sale-renovations

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October 11, 2018April 26, 2019

Quick sale investor promise?

Is a quick sale to a real estate investor worth it?

House flipping is a misunderstood industry. Sure, these investors promise a quick sale, but legitimate home flipping is valuable to the real estate industry and the community. Home flippers revitalize run-down homes, and market appealing homes to home buyers. In a low inventory housing market, home flips have become a significant percentage of home sales in a low inventory market.

House flipping data

ATTOM Data Solutions (attomdata.com), the data solutions behind Realtytrac, recently released its Home Flipping Report for Q1 2018. The report indicated that there were 48,457 U.S. homes that were flipped, which represented 6.9 percent of all home sales. Although the number of homes flipped decreased 3 percent from last year, the percentage of flipped homes in the home sale inventory increased! The number of flipped homes decreased to a two-year low, but the home flipping rate is the highest since 2012. The average gross profit of $69,500 is at the highest point since ATTOM started collecting the data in 2000.

Given the stats and profits, it was just a matter of time for the mom and pop home flipping business to become corporatized. Using the power of the internet and corporate financing, companies such as Opendoor, Offerpad, and recently Zillow have become players in house flipping business. Whether corporate flippers are profitable or have a sustainable business model is for another column. But, there is no doubt that home sellers are seduced by one-click instant offers and promises of a quick closing.

How real estate investors operate

House flippers are known to buy foreclosures and other financially distressed properties. However, these real estate investors also go after other properties too, as long as it’s financially feasible (it’s a business after all). Other types of targeted homes include estate sales, divorce sales, long-time rentals, and outdated or obsolete homes. So, if you haven’t already received a letter offering you a quick offer and fast closing, it’s just a matter of time.

For some home sellers, a quick sale to an investor is fitting. The seller is disposing of a home that would otherwise continue to be a financial burden and deteriorate further. However, many realize they can sell for more on the open market (MLS).

Is a quick sale to an investor all it’s cracked up to be?

If you’re thinking of selling your home (or even currently selling), you might be fascinated by the idea of a quick sale. But for most, the dream of selling for a large sum and closing quickly is just a fantasy. You should realize that home flipping is risky business, and the investors build their costs into their offer. So, be prepared for a really low offer. A typical investor offer is about 70 percent of the home’s value minus rehab, carrying, and marketing costs.

Before you sell to an investor, do your due diligence. Compare multiple investor offers. Verify that the investor is legitimate. Be wary of investors who include extended contingencies. Be aware that “wholesalers” will tie up your home while looking to sell their purchase contract to other investors. Although most investors promise “cash” deals, the reality is that most investors actually borrow money. It is not uncommon for investors to back out or default on a deal because their financing doesn’t come through. Most important, have your attorney review any contract before you sign.

Also, talk to a Realtor. You could possibly sell your home for more than the investor’s “instant” offer. Marketing your home on the MLS at a price appropriate for its condition could net you more.

Original is located at https://dankrell.com/blog/2018/10/11/quick-sale-promises/

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