Understand first of all that there "IS" a difference between price and value. Price is the amount you are asking for the property. Value is buyer perceived, and this perception of value is influenced by many factors such as location, features, condition, comparison to other purchase option, etc. By attending to details that can have a positive impact on the value, sellers can significantly increase their chance of attracting qualified buyers willing to pay the asking price.
Some tips to achieve a positive impact on value are:
The perceived size impacts value, even more so than actual square footage. Open floor plans make a room feel bigger than larger spaces with smaller rooms. Showing property that is furniture free, or at reduced clutter, helps to make the space feel bigger.
Vacancy increases sale-ability. Property is easier to show and easier to sell, and quicker to take possession of when it is vacant at the time it is offered for sale. Evidence of problems to take possession of the property -- such as encroachments, or tenants who won't allow buyer tours -- negatively impact value. Vacancy also helps the buyer walk through the property imagining ownership. Sellers should remove personal trinkets and family pictures as well as being conveniently absent during a buyer tour.
Cosmetics are important:
Fresh paint will always add more value than it costs.
Clean or new carpet/flooring adds more value than it costs.
Landscaping adds more value than it costs. At the very minimum, make the entrance area neat.
If you can, add some colorful flowers and new sod.
Take care of the obvious! The spot on the ceiling from the roof leak takes thousands of dollars from the perceived value and the offer price.
Condition affects value. Do a seller's home inspection to identify and fix the problem BEFORE closing. No point holding up your check a few extra days; plus a failed buyer's inspection could cost you the sale. Buyers will often bargain down your asking price to accommodate for property condition and repairs.
If you can, remodel/update the kitchen and master bathroom. These two areas have a big impact on home buying decisions.
Strategic renovations impact value and your bottom line. Don't spend more money to renovate the place than you can recapture in value on the sales price.
Thursday, January 27, 2011
Wednesday, January 26, 2011
Homeownership Is Still A Great Investment
Even in today's economy, it's a fact that homeownership remains one of the best investments you can make.
If you're a homeowner, perhaps you identify with budgeting, living paycheck to paycheck. In fact, it's cheaper nowadays to buy a home instead of renting.
Uncle Sam has thrown you an amazing tax shelter that's beyond compare. You may deduct the mortgage interest paid on your loan and deduct the property taxes paid to your state. These deductions are based on you itemizing your deductions on your tax return. And if you are not a homeowner yet, this tax benefit is significant enough to make you look seriously at home ownership. There are of course, exceptions to every deduction. One of the complexities of home ownership tax deductions surrounds points.
Points are one type of fee paid at closing to your lender. If you pay points when you buy your new home, these may be deducted in full in the year of purchase. However, if you refinance your loan, the points must then be deducted over the life of the new loan.
Appreciation:
As a general rule, homes will appreciate about three or five percent a year. Now with our current economic downfall, this obviously isn't the case, but if you wait it out, the real estate market is gonna come back. Homes will begin to appreciate again and this is why it's so important to take advantage of low prices now.
Some years appreciation will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region. You might say five percent may not seem like that much at first but look around at financial institutions and tell me where you can do better?
Say you bought a $250,000 house with a comfortable mortgage. Suppose you put as little as five percent down...that would be an investment of $12,500.
At an appreciation rate of 4% annually, a $250,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $12,500. Your annual "return on investment" would be a whopping (80%) eighty percent.
Additionally, you are making mortgage payments and paying property taxes, along with a couple of other costs. And remember those tax deductions? Well, with all the deductibles you're eligible for, the government is essentially subsidizing your home purchase.
Homeownership's Greatest Tax Advantage:
Probably the greatest advantage of home ownership occurs when you decide to sell your home. If you have owned and lived in your personal residence for two out of five years, you can sell the home and not be taxed on a profit up to $250,000 for singles and $500,000 for couples.
As you can see, homeownership has its perks and just about every homeowner receives a tax refund every year. Yes! You actually save money while Uncle Sam hands over a check, just because you bought a home.
If you're a homeowner, perhaps you identify with budgeting, living paycheck to paycheck. In fact, it's cheaper nowadays to buy a home instead of renting.
Uncle Sam has thrown you an amazing tax shelter that's beyond compare. You may deduct the mortgage interest paid on your loan and deduct the property taxes paid to your state. These deductions are based on you itemizing your deductions on your tax return. And if you are not a homeowner yet, this tax benefit is significant enough to make you look seriously at home ownership. There are of course, exceptions to every deduction. One of the complexities of home ownership tax deductions surrounds points.
Points are one type of fee paid at closing to your lender. If you pay points when you buy your new home, these may be deducted in full in the year of purchase. However, if you refinance your loan, the points must then be deducted over the life of the new loan.
Appreciation:
As a general rule, homes will appreciate about three or five percent a year. Now with our current economic downfall, this obviously isn't the case, but if you wait it out, the real estate market is gonna come back. Homes will begin to appreciate again and this is why it's so important to take advantage of low prices now.
Some years appreciation will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region. You might say five percent may not seem like that much at first but look around at financial institutions and tell me where you can do better?
Say you bought a $250,000 house with a comfortable mortgage. Suppose you put as little as five percent down...that would be an investment of $12,500.
At an appreciation rate of 4% annually, a $250,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $12,500. Your annual "return on investment" would be a whopping (80%) eighty percent.
Additionally, you are making mortgage payments and paying property taxes, along with a couple of other costs. And remember those tax deductions? Well, with all the deductibles you're eligible for, the government is essentially subsidizing your home purchase.
Homeownership's Greatest Tax Advantage:
Probably the greatest advantage of home ownership occurs when you decide to sell your home. If you have owned and lived in your personal residence for two out of five years, you can sell the home and not be taxed on a profit up to $250,000 for singles and $500,000 for couples.
As you can see, homeownership has its perks and just about every homeowner receives a tax refund every year. Yes! You actually save money while Uncle Sam hands over a check, just because you bought a home.
Tuesday, January 25, 2011
Downsize Your Lifestyle To Upgrade Your Life
Many people are responding to our economic downfall by spending less money. Downsizing in every which way they can. Less has really become "More"; in fact, Less is the new trend.
Cutting back on your spending can easily leave you feeling deprived if you view it in a negative light. But focusing on the fact that you can't afford the lifestyle you'd like right now will only lead to a worse quality of life. The question is what are you willing to change in your life to achieve your goals?
Shifting your focus away from what you wish you had, though, frees you to take a closer look at what you actually do have right now. It's then that you can discover hidden treasures in your situation. Could it be that living with less money could lead to more satisfaction? That's what our family has found. Downsizing our lifestyle has led to a richer life than we ever could have experienced if we'd spent lots of money.
Here are some ways you can downsize your lifestyle to upgrade your life:
Move to a less expensive home. Freedom from the pressures of a large mortgage payment is priceless. The monthly mortgage payment is generally the largest single expense consumers face. It routinely accounts for 30% or more of your gross income. A small home also means less space to have to clean, lower utility bills and property taxes, and fewer repairs to handle. How many of your resources are tied up in your house? If you make the right move, you might be able to trade in your house and use the profit from the sale to purchase your next home in cash.
Eat out less. But the benefits of eating at home aren't just financial. When you make your own meals, you can control what ingredients go into them and prepare food in healthier ways than you'd typically find at restaurants. If restaurant meals are breaking your budget, try eating all your meals at home for a certain period of time and see how much money you have saved.
Eliminate extras. Unnecessary indulgences like fancy coffee shop drinks and high tech gadgets that do what you can do yourself can waste a lot of your hard-earned money. When you let go of them, you learn how to separate what you truly need from what you merely want.
And finally, change the way you think about life and money.
Think about these mind set changes; if it cost money, then do not buy it. Find it for free or do without.
Ask yourself, do I really need it and can I really live without it?
Remember, life is not over when you eliminate a few material possessions.
Cutting back on your spending can easily leave you feeling deprived if you view it in a negative light. But focusing on the fact that you can't afford the lifestyle you'd like right now will only lead to a worse quality of life. The question is what are you willing to change in your life to achieve your goals?
Shifting your focus away from what you wish you had, though, frees you to take a closer look at what you actually do have right now. It's then that you can discover hidden treasures in your situation. Could it be that living with less money could lead to more satisfaction? That's what our family has found. Downsizing our lifestyle has led to a richer life than we ever could have experienced if we'd spent lots of money.
Here are some ways you can downsize your lifestyle to upgrade your life:
Move to a less expensive home. Freedom from the pressures of a large mortgage payment is priceless. The monthly mortgage payment is generally the largest single expense consumers face. It routinely accounts for 30% or more of your gross income. A small home also means less space to have to clean, lower utility bills and property taxes, and fewer repairs to handle. How many of your resources are tied up in your house? If you make the right move, you might be able to trade in your house and use the profit from the sale to purchase your next home in cash.
Eat out less. But the benefits of eating at home aren't just financial. When you make your own meals, you can control what ingredients go into them and prepare food in healthier ways than you'd typically find at restaurants. If restaurant meals are breaking your budget, try eating all your meals at home for a certain period of time and see how much money you have saved.
Eliminate extras. Unnecessary indulgences like fancy coffee shop drinks and high tech gadgets that do what you can do yourself can waste a lot of your hard-earned money. When you let go of them, you learn how to separate what you truly need from what you merely want.
And finally, change the way you think about life and money.
Think about these mind set changes; if it cost money, then do not buy it. Find it for free or do without.
Ask yourself, do I really need it and can I really live without it?
Remember, life is not over when you eliminate a few material possessions.
Monday, January 24, 2011
Buying Unfinished Homes
Unfinished homes present a great way to save a ton of money and get yourself a new home in the process. If you buy an unfinished home, you can keep your monthly mortgage payment low and also lower your initial investment. You may also be able to buy a larger foundation size as well, which you can easily add on to and save money in the process.
Normally, unfinished starter homes leave the upstairs area unfinished. The question here is just how much equity you want to put into an unfinished area. Before you make a purchase, you should always decide how much money you have to finish what needs to be finished.
If the home you are looking at has plans for a garage, you can save thousands if you decide not to go with the garage; and the best part is – you can get it finished at half of what the builder is charging. On the other hand, if there is another attached room that is planned to go onto the house, you can save just as much if you decide to forgo it. There are always ways that you can save money just by looking at the plans. Unfinished homes may have other planned on additions as well, in which you can save a lot of money just by leaving them out.
This is something that you should always keep in mind. When builders acquire a piece of property that they plan to build a home on, they will do everything they can do to make as much money as possible on their homes. You might be able to get them to agree to some of these ideas, although they probably won’t agree to all of them. Building homes can be a very profitable business - which is why most companies like to build their homes exactly as the plans call for.
As most of us already know, buying an unfinished home provides an excellent way to get into the housing market and get your very own home. Unfinished homes also allow potential buyers the chance to grow into their home along with their family. If you are interested in saving money, you should be sure to talk to the builder. This way, you can go over the plans and decide what doesn’t need to be there.
In most cases you can save a lot of money and still get a home that will provide years and years of memories for yourself and your entire family.
Normally, unfinished starter homes leave the upstairs area unfinished. The question here is just how much equity you want to put into an unfinished area. Before you make a purchase, you should always decide how much money you have to finish what needs to be finished.
If the home you are looking at has plans for a garage, you can save thousands if you decide not to go with the garage; and the best part is – you can get it finished at half of what the builder is charging. On the other hand, if there is another attached room that is planned to go onto the house, you can save just as much if you decide to forgo it. There are always ways that you can save money just by looking at the plans. Unfinished homes may have other planned on additions as well, in which you can save a lot of money just by leaving them out.
This is something that you should always keep in mind. When builders acquire a piece of property that they plan to build a home on, they will do everything they can do to make as much money as possible on their homes. You might be able to get them to agree to some of these ideas, although they probably won’t agree to all of them. Building homes can be a very profitable business - which is why most companies like to build their homes exactly as the plans call for.
As most of us already know, buying an unfinished home provides an excellent way to get into the housing market and get your very own home. Unfinished homes also allow potential buyers the chance to grow into their home along with their family. If you are interested in saving money, you should be sure to talk to the builder. This way, you can go over the plans and decide what doesn’t need to be there.
In most cases you can save a lot of money and still get a home that will provide years and years of memories for yourself and your entire family.
Thursday, January 20, 2011
Buying A Home At A Discount
Real estate is no exception when we talk about how inflation has affected each and every aspect of our life. At first, buying a home was only a matter of selecting your area, surveying places around it and making a decision. Times have changed now and the first thing that you bring under consideration is affordability. Not that you didn’'t worry about finances back then, but you at least knew you weren’'t over paying for your property. So the name of the game, when it comes to buying real estate today, is not only to get the best house of your liking but also to get the best financial deal for yourself.
Short Sales:
So what do you do to get a discount while buying your dream home? The first step that you can take in order to find good financial deal on your next house is reviewing Short Sales.
A short sale means a sale that falls short of the amount owed on the mortgage. They happen only when the seller can't come up with the cash to pay off the difference. Most important, though, is that they can happen only when the lender agrees to accept the reduced payoff. However, it doesn’'t mean the lender will agree to sell to you in all cases.
Lenders aren't in the business of accepting less than they are owed, so few short sales make it to the finish line. The best way to go about it is to hire an agent who has experience with short sales. He knows how to find people who are looking to sell. First, find out if the bank even has a clue that the seller is trying for such a deal; it would be a complete waste of time to try and bargain with the seller just to have the bank refuse the deal.
Foreclosures:
Another way to look for a discounted deal is to look for foreclosures. Everyone has heard about foreclosures and the overwhelming inventory available. Situations like this usually give rise to discounted prices, especially in today’s times, because of the large inventory of homes sitting on bank books.
Buyer Beware; this process is lengthy and buying a foreclosed home can be full of pitfalls. If you have this picture in your mind of a well-maintained family home, surrounded by a white picket fence that is owned by an elderly woman who couldn'’t keep up with mortgage payments, think again. Those types of foreclosures are few and far between. Unless you are a licensed general contractor, bring someone who is highly knowledgeable about construction with you.
Many foreclosed homes need repairs and most have been gutted by squatters looking to sell the best features of the home. Assuming that you'’ve done all your homework and you still want to purchase that foreclosed property, your real estate agent will make an offer to the bank.
Best advice before getting to this point is while seeking that foreclosed home, get your financing complete with pre-approvals. The deal will go a lot smoother if the bank sees that all the foot work has been completed.
Short sales and foreclosures are just two options available to you. And, while they may be challenging deals to put together, they can be a great avenue towards home ownership.
Short Sales:
So what do you do to get a discount while buying your dream home? The first step that you can take in order to find good financial deal on your next house is reviewing Short Sales.
A short sale means a sale that falls short of the amount owed on the mortgage. They happen only when the seller can't come up with the cash to pay off the difference. Most important, though, is that they can happen only when the lender agrees to accept the reduced payoff. However, it doesn’'t mean the lender will agree to sell to you in all cases.
Lenders aren't in the business of accepting less than they are owed, so few short sales make it to the finish line. The best way to go about it is to hire an agent who has experience with short sales. He knows how to find people who are looking to sell. First, find out if the bank even has a clue that the seller is trying for such a deal; it would be a complete waste of time to try and bargain with the seller just to have the bank refuse the deal.
Foreclosures:
Another way to look for a discounted deal is to look for foreclosures. Everyone has heard about foreclosures and the overwhelming inventory available. Situations like this usually give rise to discounted prices, especially in today’s times, because of the large inventory of homes sitting on bank books.
Buyer Beware; this process is lengthy and buying a foreclosed home can be full of pitfalls. If you have this picture in your mind of a well-maintained family home, surrounded by a white picket fence that is owned by an elderly woman who couldn'’t keep up with mortgage payments, think again. Those types of foreclosures are few and far between. Unless you are a licensed general contractor, bring someone who is highly knowledgeable about construction with you.
Many foreclosed homes need repairs and most have been gutted by squatters looking to sell the best features of the home. Assuming that you'’ve done all your homework and you still want to purchase that foreclosed property, your real estate agent will make an offer to the bank.
Best advice before getting to this point is while seeking that foreclosed home, get your financing complete with pre-approvals. The deal will go a lot smoother if the bank sees that all the foot work has been completed.
Short sales and foreclosures are just two options available to you. And, while they may be challenging deals to put together, they can be a great avenue towards home ownership.
Wednesday, January 19, 2011
Update on the Region's Home Sales
Bargain prices and low interest rates helped Southern California home sales surge 20.5% last month over November, but activity lagged far behind that of December 2009.
San Diego based MDA DataQuick said 19,528 homes sold last month in the 6-county area, up from 16,208 sold in October but down 12.5% from the 22,328 sold a year ago.
Sales have increase an average of 12.9% since DataQuick began compiling statistics in 1988, the firm said.
"Ultra-low mortgage rates, coupled with lower prices, gave the market a boost this fall, helping to explain the above-average gain in closings between November and December," DataQuick President John Walsh said. "We will see the potential for sales to perk up this spring if rates stay low and brighter economic news lifts consumer confidence."
The region's median home price increased 0.3% to $290,000 last month from $289,000 in December 2009 and grew 1% from $287,000 in November, stated DataQuick.
In Los Angeles County, homes sales tumbled 14.9%, from 7,679 sold in December 2009 to 6,536 last month. The median price fell 2.7%, from $339,000 to $330,000.
Neighboring Ventura County saw a 15.1% dip in sales, from 896 to 761. Prices remained stagnant, edging up from $289,000 to $290,000.
The firm said the sluggish job market and tight credit conditions were keeping the median from appreciating much over the previous year's prices.
The median was also being tugged down by weak sales of new homes, which reached their lowest level for a December since DataQuick began keeping records.
Note: This article originally provided by The Associated Press
San Diego based MDA DataQuick said 19,528 homes sold last month in the 6-county area, up from 16,208 sold in October but down 12.5% from the 22,328 sold a year ago.
Sales have increase an average of 12.9% since DataQuick began compiling statistics in 1988, the firm said.
"Ultra-low mortgage rates, coupled with lower prices, gave the market a boost this fall, helping to explain the above-average gain in closings between November and December," DataQuick President John Walsh said. "We will see the potential for sales to perk up this spring if rates stay low and brighter economic news lifts consumer confidence."
The region's median home price increased 0.3% to $290,000 last month from $289,000 in December 2009 and grew 1% from $287,000 in November, stated DataQuick.
In Los Angeles County, homes sales tumbled 14.9%, from 7,679 sold in December 2009 to 6,536 last month. The median price fell 2.7%, from $339,000 to $330,000.
Neighboring Ventura County saw a 15.1% dip in sales, from 896 to 761. Prices remained stagnant, edging up from $289,000 to $290,000.
The firm said the sluggish job market and tight credit conditions were keeping the median from appreciating much over the previous year's prices.
The median was also being tugged down by weak sales of new homes, which reached their lowest level for a December since DataQuick began keeping records.
Note: This article originally provided by The Associated Press
Tuesday, January 18, 2011
6 Common Mistakes Homebuyers Still Make
Getting a new home is easy but tricky at times. Many buyers are encountering stumbling blocks en route to their chosen house. This is because they commit minor mistakes along the way that hinders smooth processing. This can be prevented only if you are familiar with these common mistakes.
1. Having no pre-arrangements with the bank for mortgages before making an offer is the most popular mistake. Communicate with a bank to know the price range you are capable of paying and other mortgage details that you need to know.
2. Knowing your exact budget is critical. Most people look around for houses even without the budget in mind. First thing you need to know before finding a home to purchase is how much you can pay for a new home. You can save much time if you trim down your list of houses based on its price; imagine finding that dream home only to find out you won’t be approved for the mortgage?
3. Getting unreliable and inexperienced real estate agents is a big no-no. Choose an agent that has the background to back him or her up. Also, consider the real estate companies you are dealing with. Make sure that they have a good standing in terms of the services they are providing.
4. Most people are shopping around within a limited market. You can find homes for sale anywhere such as internet, print ads, and even on TV. You may also want to ask for help from your agent to provide you a list of preferred houses. You can save time if you know what kind of house you are looking for.
5. Purchasing a home long distance without thorough inspection is a mortal mistake. After choosing a home, it is a must to visit it personally so that you can see it in a closer view. Some pictures only show the good angles of the house. It can be very deceiving at times. Check the structure and foundation to ensure safety. Also, look around the neighborhood and get comfortable with it.
6. Buyers tend not to compute the total cost of the house. Other expenses such as home insurance, association dues and even lawyer's fee for proper documentation of the purchase should be considered. We are not talking about coins here. These range from hundreds of dollars to even thousands. You need to prepare your pocket for it.
Buyers are usually not aware of all the details. It is your home and you are responsible for it. You need to know and understand everything about it, from home warranty to insurances and even the history of the house.
Tuesday, January 4, 2011
Equity Sharing For First Time Home Buyers
Looking to take advantage of the low interest rates coupled with a healthy inventory of low-priced homes? Are you worried about the down payment requirements? Consider Equity Sharing.
Equity Sharing is a creative approach for those who can afford a monthly mortgage but have not saved up enough for the initial down payment. It is also a way for people to make relatively a low risk investment in real estate which provides wonderful tax benefits.
For example, an equity-sharing arrangement enables parents or another party to contribute all or part of the down payment for the intended occupants; the rules will probably differ depending if you are equity sharing with your parents or an investor.
The investor will be listed on the title and are paid rent for their ownership stake, which can be put toward such expenses as insurance, maintenance, and property taxes that can be deducted from their income taxes.
For an agreed number of years, the first-time homebuyer will live in the home, and keep it up; at the end of the agreed term, the occupier buys out the investor by repaying his contributions plus an agreed percentage of the appreciation. If the occupier doesn't want or can't afford the buyout, the property is sold, each owner gets their contributions, and any profits are shared.
Equity sharing's greatest advantage to a first time homebuyer is to become a homeowner long before he/she could save up money for a down payment. The Investor's greatest advantage is to earn a portion of the home's equity appreciation without paying its expenses...a win-win if the contract terms are agreed upon.
Most Importantly: Consult a Real Estate Attorney
When buying real estate with another person, first time homebuyers need to decide how title will be held, and your decision will determine what is written on the deed to the property.
Usage Rights are very important because they are the most common subjects of shared ownership disputes particularly among groups of friends or relatives.
The donation of funds to purchase the home will determine how much each co-owner will contribute to the purchase of the property and how the future rights and benefits of this ownership will be allocated among the co-owners.
Sure, this arrangement sounds good, especially when a first time homebuyer finds their dream home but remember, no matter how friendly co-owners might be, it is essential to have a formal backup plan in case things don't turn out as planned.
Equity Sharing is a creative approach for those who can afford a monthly mortgage but have not saved up enough for the initial down payment. It is also a way for people to make relatively a low risk investment in real estate which provides wonderful tax benefits.
For example, an equity-sharing arrangement enables parents or another party to contribute all or part of the down payment for the intended occupants; the rules will probably differ depending if you are equity sharing with your parents or an investor.
The investor will be listed on the title and are paid rent for their ownership stake, which can be put toward such expenses as insurance, maintenance, and property taxes that can be deducted from their income taxes.
For an agreed number of years, the first-time homebuyer will live in the home, and keep it up; at the end of the agreed term, the occupier buys out the investor by repaying his contributions plus an agreed percentage of the appreciation. If the occupier doesn't want or can't afford the buyout, the property is sold, each owner gets their contributions, and any profits are shared.
Equity sharing's greatest advantage to a first time homebuyer is to become a homeowner long before he/she could save up money for a down payment. The Investor's greatest advantage is to earn a portion of the home's equity appreciation without paying its expenses...a win-win if the contract terms are agreed upon.
Most Importantly: Consult a Real Estate Attorney
When buying real estate with another person, first time homebuyers need to decide how title will be held, and your decision will determine what is written on the deed to the property.
Usage Rights are very important because they are the most common subjects of shared ownership disputes particularly among groups of friends or relatives.
The donation of funds to purchase the home will determine how much each co-owner will contribute to the purchase of the property and how the future rights and benefits of this ownership will be allocated among the co-owners.
Sure, this arrangement sounds good, especially when a first time homebuyer finds their dream home but remember, no matter how friendly co-owners might be, it is essential to have a formal backup plan in case things don't turn out as planned.
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