Monthly Archives: January 2017

Know More About Home Appraisals

There are any number of reasons why you might want to get a home appraisal. They can reduce your property taxes, aid in selling or buying a home, facilitate divorce proceedings, and enable home refinancing (including preventing foreclosure). Of course, depending on your circumstances, you may be hoping for a lower or higher home appraisal. Regardless, you should know a little about the process and how it works, both to decide if a home appraisal is in your best interest and to take any possible steps to influence the final appraisal number.

Home Appraisers

Given that home appraisals are often used by mortgage lenders, local governments, and real estate agencies, it should come as no surprise that these individuals go through a regulated licensing process. The Federal National Mortgage Association (FNMA) sets and maintains guidelines to help ensure a uniform appraisal process. That said, a home appraisal is essentially nothing more than an opinion about what your home and property is worth, albeit the opinion is supposed to be an objective one.

This is done primarily by looking at how comparable-sized homes are selling in your neighborhood. Generally, at least three of these comparable homes must be considered to generate a valid appraisal. Naturally, a home appraiser will adjust the final value for specific home improvements and the general condition of your home, but this home comparison starts the baseline value of your home.

Preparing Your Home for Appraisal

There is generally less that can be done to influence a home appraisal than most people think. Clutter and dirt has no effect on a home appraisal unless it has begun to affect the structural integrity of the house. Most home appraisers have seen it all when it comes to appraising a still furnished home, so there’s no need to be embarrassed by your clutter. The most hideously painted walls, too, won’t make a bit of difference. Neither will the most posh home furnishings.

On the other hand, the general condition of your floors and walls will have an impact on the value of your home. Fix any damage in the drywall; clean your floors to make them look as well-maintained as possible. If you’re trying to get a higher home appraisal, make sure you have paperwork on any home improvement projects that aren’t obvious. If the laminate flooring, for example, still has three years left on its installation warranty, show this to the home appraiser. Some general outdoor landscaping may also be in order, but otherwise don’t spend a bunch of time or money on smaller items that won’t have any bearing on your home appraisal.

Conducting Your Own Home Appraisal

While you can’t guarantee what your home appraisal will be, doing your own research can help you predict where your appraisal may come in at. This can be useful in deciding whether hiring a home appraiser is worth the cost. If you’re not at least in the ballpark of where the property value needs to be to refinance your home, it’s probably best to save what money you do have. At the same time, know that mortgage brokers may pressure the home appraiser to overprice the home to get a larger loan amount. In the rare circumstance that an appraisal needs to be challenged, doing your own research can also help your cause.

At the same time, if you’re getting your home appraised to sell it yourself, you’ll want to let the appraiser know this. Typically, home appraisers run to real estate agencies to get their home comparisons. If you can tell the home appraiser specifically what other homes have sold for in your area, that’s even better. As objective as the process is supposed to be, these factors can have a dramatic effect on the final value the appraiser reaches.

Know Some Reasons Your House Isn’t Selling

It’s heading towards late summer and your house still has that “For Sale” sign out in the front yard. Remember, it’s not your house anymore, so you may have rearrange a few things in order to make it seem like somebody else’s dream home. Here are the top five reasons houses don’t sell, and how to go about addressing these particular predicaments.

It’s a Buyer’s Market

All real estate is local. So depending on what part of the country your house is in, it could be that the buyer’s have the leverage in that area or neighborhood. A high price can quickly turn off a buyer and prevent them from entering the door. It’s the hardest thing you’ll have to ever do but don’t be afraid to lower the asking price. You or your realtor will need to check what recent, comparable homes have sold for in the last few months to get an accurate picture of what buyers will pay for your home. In areas where it’s a buyer’s market, you will need to aggressively price your home in order to catch the eye of the limited amount of buyers. Keep in mind that it is the market and facts that dictate how much your home is worth, not what you think it should sell for based on the money you’ve invested in it.

Adverse Investments

You’ve spent a lot of time fixing your home, but did the money go to the right places? For example, there’s nothing wrong with sprucing up your landscaping, but if you have a backyard full of decks, fountains, and streams, yet your kitchen is dated and falling apart, you may be not be getting the proper mileage out of your remodel. Even an outdoor pool isn’t a great bargaining chip since only 20% of buyers (aside from the Southwest) look for this in a house. So if you’re struggling to sell and still have equity built up, think about renovating a few key areas. The biggest sellers are kitchens and bathrooms. Other rooms may take a fresh coat, but these two areas are crucial. And don’t get crazy with granite counters or hardwood floors (this could actually inflate the price, making it less marketable). Instead, refinish the cabinets. Replace a vanity with a pedestal sink. Get a couple new appliances. These small investments instantly double the appeal of a room.

Don’t Live in the Dark

You have a great house but can anyone see it? It’s amazing how sellers spend time and money on renovations only to not highlight these selling points. What’s even more remarkable is what a little light can do to a room. Open up the space by adding natural light or larger windows (even if this means just opening the drapes). Take down the dark, busy wallpaper and wood paneling: not only is this stuff probably outdated, it can make a room feel claustrophobic. Repaint the walls a lighter shade and install light fixtures (or add more if needed). Install spotlights in your yard or track lighting under the cabinets to highlight counter space. Buyers want their future house to be open, airy, and inviting, so just a few brightening installations can help a small room become roomier.

That Is So You!

Two words you never want to hear at an open house: “That’s . . . interesting!” Yes, you’ve made your house a home. You’ve made it part of your personality. That’s great, but when you’re selling it’s not about you. Therefore you have to remove your life from the space and allow the buyer to imagine their life moving in. It’s hard to cut the apron strings, but keep your as home neutral as possible. This doesn’t mean you have to paint every wall white (this sterile remodel can actually decrease its value), but strange never sells. Take down the animal heads from the study. Remove the keg fridge from the kitchen. Most people don’t own a ping pong table, so get it out of the living room and into the garage. Get rid of the leopard-print rugs. Take down the “interesting” art pieces. Eliminate anything that appears unusual to the rest of the general population.

You’re On Stage

Staging is important to conceal the blemishes and highlight the features. It’s not unethical to put your best foot forward. You’re just trying to get buyers interested; inspections and negotiations come later. So hide the eyesores: put a slip cover over an old couch, cover the A/C unit with a window treatment, or place a rug over a stain. Then enhance the selling points: clean the windows, cut the grass, set out flowers in the kitchen, and light candles in the bathroom. And if you’re already moved out, rent furniture for the open house: a furnished home always looks bigger and better than an empty space.

Know Best Time to Buy a House

You know you should buy a home. Eventually. But timing matters when it comes to such an enormous and potentially life-changing purchase. Which begs the question: When is the best time to buy a house? Does such a moment exist when all lights turn green, guaranteeing this is a decision you won’t regret?

While there’s no crystal ball in real estate, there are some fairly easy-to-read signs that a home purchase is something you should consider. Let’s dive into some of the factors that can influence whether the time is right for you to pull the trigger.

Your finances

For many people, knowing when to buy a home all comes down to the numbers. Here are the biggest pieces of that equation.

You have a down payment: If you need a mortgage to buy a home, you should know that most lenders will want you to show them the money—that is, have a sizable down payment. For most conventional loans, you’ll need to scrape together 20% of a home’s price, or $60,000 on a $300,000 home. Amassing that cash can be challenging, but know that some lenders can require as little as 5% down. You also may want to check into down payment assistance programs; many homeowners are surprised to find that they qualify.
You can afford a monthly mortgage: How much you can afford in monthly mortgage hinges on your income and debts. Higher income is good, of course; higher debt is bad. Check out a mortgage calculator for an easy way to plug in your salary and debts to see how much home you can afford in your area.
You have a good credit score: Your credit score is a measure of how well you’ve paid off past debts. Lenders look at this number to prognosticate how well you’ll pay them back, too. If you have no credit history, you should get some fast (lenders will want to see at least a year of payments under your belt). If your credit score is poor, you may want to do what you can to bring it up to snuff, because a higher credit score means you’ll stand to land a better loan.
Market conditions

Housing markets go through highs, lows, and bubbles—much like stocks. As such, you may be wondering whether current market conditions are conducive to buying (e.g., “Wow, you can buy a whole townhouse for under two hundred grand?”) or a total rip-off (e.g., “a two-bedroom for a half-million, seriously?!”).

Sadly, the adage for stocks applies to housing, too: It’s impossible to perfectly time the market. Yet there is still something to be said for considering economic conditions.

“You should never buy a home you can’t afford, but sometimes market conditions offer a little incentive to get off the sidelines,” says Mark Abdel, a real estate professional with Re/Max Advantage Plus in Minneapolis–St. Paul.

You’ll want to consider the following:

Inventory: Look through listings for your area. If the majority of houses have been sitting on the market for more than six months, then the market is slow and prices should be OK. But if many properties get snapped up in months, or even weeks, this suggests you’re in a seller’s market—and that’s where buyer bidding wars could drive up prices. Of course, they could just continue to climb, or they may have peaked and go down. Local real estate agents can give you the lay of the land and their predictions, but just remember it’s anyone’s guess what could happen next.
Interest rates: Interest rates on home loans also fluctuate depending on market conditions. Currently interest rates are fairly low but have been inching up fast, which has many thinking of buying a home before they rise even higher. Make sure to check out interest rates in your area.
Renting vs. buying: A final factor to consider is whether it’s cheaper to own or rent, based on the market conditions in your area. You can figure that out with our rent vs. buy calculator.
Does time of year matter?

Conventional wisdom says to buy during the peak seasons of spring and summer, when there may be more options. But that also translates into more competition and potentially higher prices. That’s why you shouldn’t neglect fall and winter for home shopping, especially if the other conditions above line up.

“Buying off-season usually gives buyers more negotiating power for both the price and the closing date,” Abdel says, because off-season sellers are often more motivated to sell and therefore may be more willing to make a deal.

How long should you stay put?

Last but not least, one final factor to consider regarding when to buy a house is whether you plan to stick around. Buying a home carries a bunch of upfront costs, so it’s generally best you don’t sell soon after you’ve closed the deal. Typically home buyers should expect to stay in their house at least five years to make this investment worthwhile.