Focus Professionals, Inc Real Estate Blog

Selling your home involves more than listing it a price appropriate for the property and market, and more than getting a Realtor to list it on MLS… Part of a good real estate agent’s magic is setting the stage for the sale… not surprisingly, this is called “staging” although in some cases it involves “curb appeal” as well.

If a homeowner thinks buyer prospects aren’t turned off by their maroon flocked wallpaper, boldly painted rooms, the pool table in the living room, heavily furnished rooms, stuffed to the brim closets, and the like, he is out of touch with reality.  Those things should be changed before the house is put on the market. 

Here’s the reality of good staging vs. “as-is.”  One study showed us that well-staged homes sell in an average of 42 days.  Those that aren’t take more than 3 times as long.  And staged homes seem to also bring from 6 to 22 percent more in the selling price.

So let’s look at some of the most obvious areas that should be addressed when a home is being staged for the market.

The Drive Up Appeal

Be sure the lawn is alive, well, plus always looks as if it were just cut.  Keep the flower beds weeded and covered with fresh mulch; the hedges and trees trimmed; attractive potted plants by the entrance.  Freshen up the paint or stain on the front door, or replace it with a fancier one.  If the door hardware looks worn, replace it.  Make sure the street gutters are clean and without weeds growing in them.  Keep children’s toys, bicycles, trash cans and the like out of the yard.

What Is Seen the Minute the Front Door Is Opened

First the foyer.  Make certain it doesn’t have a coat tree full of coats, a table with keys and cards and today’s mail on it.  If there’s room, have fresh flowers, live plants there to welcome and impress your visitors.

(more…)

I recently posted the following on Active Rain and wanted to include it here, since this is a more localized forum, and since this sort of issue is coming up frequently these days. Caveat Emptor, as they say… buyers beware… well, sellers should beware too… misleading a seller about the value of a home just to get the listing, and sellers giving listings to agents that simply promise what ever the seller wants to hear, is bad business… especially for the seller.

We hope this sort of thing has costs to the agents that do it… we know there are costs to the sellers. See our site for discussions about valuing a property, and be realistic, whether that means don’t sell, sell, refinance, or how to finance when purchasing your next home.

You know, I realize that many of the recent first time home buyer sales have used 100% financing to acquire their new homes, and that without that sort of loan program, many of these buyers would not have been able to purchase their homes at all. Never the less, I am pleased that it is becoming harder, if not impossible, to obtain that sort of financing now. 

Why, you ask?

We have seen a tremendous increase in foreclosures in our market, and the vast majority of those are houses that were purchased with no money down in the last 3 years. Years ago, when I bought my first property, there was no such thing as 100% financing. Virtually all home buyers had to come up with at least 10% down on the purchase. Most came up with more than that. Whether by intention or by accident, this resulted in home owners starting out with at least that much equity in their homes. So whether the value of the home went up, down, or stayed the same, the home owner could sell the house without having to fork over cash at the closing. Not so any more.

In our area, we were competing for a listing with several other agencies, in an area called Island Park, in Portsmouth RI, and virtually all but one came in around the same value for the CMA… all but one. All were lower than the owner expected she could sell the property for. All but one. The one of course that won the listing is the one that came in high on the CMA, at exactly the price the owner wanted to sell at. This owner has no ability to afford the payments on the current mortgage, and with late payments, cannot refinance either. We know this because we were working with the owner on the mortgage side as well as on the real estate side. Of course, the now listing agency referred the client to another mortgage lender, as it turns out, at the same office as our agent.

The problem with this, in our opinion, is that the listing agency has basically misled the client on the value of the home, just to get the listing. The home owner will be unable to purchase another home, and most assuredly will not get the price they are asking.

But the agent will soon enough tell the seller that the house cant sell at the asking price, and will most likely tell them to reduce the price… a strategy used by some unethical agents in every market, I imagine, just to get the listing. Of course, if they do sell the house, the woman will have to rent.

How is this relevant to the “no money down” issue I started this post with? The listing agent has told the seller that they can get that sort of financing on the new purchase. Of course, they have no idea about her credit situation, her late payments, or the fact that if she sells the house for less than she wants, she will still need to come up with cash at closing. She cannot come up with that cash, and the sale will, in all probability, be for less than she owes on the house.

For every 5 houses we show buyers, 1 is bank owned. That is an enormous number of houses that have been foreclosed in recent times… 20% of houses we show… While this is not an Official Statistic, it is our own experience. The price range is insignificant, as we have the same number of foreclosed or bank owned properties at prices above $600K as we do for homes below $300K.

What we have seen is that a good number of these bank owned homes had previously had negative amortization loans for the primary mortgages… if you are unfamiliar with what that loan product entails, let me just say that it is marketed as a way of keeping payments low, and of getting extra equity out of the house. What it really is, is a way of having monthly mortgage payments that do not completely cover the interest. By extension, this means that the equity in the home is not increasing, but is in fact decreasing with every month that goes by… the difference between the amount of interest owed each month and the payment amount is added to the principle of the loan.

In short, a negative amortization loan leads to decreasing equity in the home, which means that over time, even in an appreciating market, your home becomes worth less than you owe.

The math is not too hard, but reads poorly on the web… example, if your interest payment should be $100 per month, and you only pay $80 per month, your payment amount is less, but the total amount owed on the house increases by $20 each month, so unless the house appreciates faster than that, you will be behind the eight ball soon enough.

An then the interest rate increases. Payments become too high to afford, and you cant sell the house because in order to do so you will have to actually fork out cash from your pocket.

This is what, in part, has led to the many bank owned properties for sale that we see now.

Please… be careful in selecting your mortgage program… do your due diligence, and work with a trustworthy loan officer, who understands your needs, and who has your interest at heart.

The new United States national new housing sales report is out. Here are some of the statistics:

• U.S. new-home sales unexpectedly fell in February, dropping to their lowest level in nearly seven years and calling into question whether the housing slump has resumed.
• Sales of single-family homes decreased by 3.9% to a seasonally adjusted annual rate of 848,000, the Commerce Department said Monday. Wall Street expected a 6.7% increase in demand.
• The drop followed a 15.8% plunge in January and carried the annual sales rate to its lowest level since 793,000 in June 2000. The median home price dipped year over year and inventories grew.
• Year-to-year, new-home sales were 18.3% lower. Recovery from the slump could be hampered by the subprime market mess. Delinquency rates for subprime mortgage loans rose at the end of last year. Wall Street is worried tighter lending standards for borrowers with less-than-sterling credit could slow home sales in the future.
• Keeping new-home sales from falling farther last month was demand in the West, which soared 24.6%. A month prior, sales in the region plunged 25.8%. Elsewhere, new-home sales in February fell 26.8% in the Northeast, 20.0% in the Midwest, and 7.0% in the South.
• The average price of a home last month increased to $331,000 from $310,100 in January. The median price was $250,000, higher than $243,200 in January but below $250,800 in February 2006.

There were an estimated 546,000 homes for sale at the end of February, representing an 8.1 months’ supply at the current sales rate — the highest supply since 9.4 in January 1991. In January, an estimated 538,000 homes were for sale, a 7.3 months’ inventory.

This data means that home buyers are still at advantage, in this strong buyer’s market, despite mortgage issues. Although the issues pertaining to sub-prime mortgage lenders are likely a factor contributing to the data trends.

More analysis to come.

When we check credit for our clients, or even if we are not going to pull the credit, we recommend to all of our clients to call 888-567-8688 or go online to https://www.optoutprescreen.com and sign up for this free service to stop the credit bureaus from selling your personal and private information.  Everyone seems to know the “do not call” list, but it appears that very few people have heard of the opt out list for credit reports.  Signing up for this list ensures that your credit profile and personal information is not sold by the credit bureaus to 3rd parties. 

With all the identity theft and credit fraud that goes on in this country, we as responsible mortgage brokers (or Realtors) should be protective of our clients private information and should take every step possible to ensure their privacy.  In addition to having our clients sign up for this service, there’s a simple checklist we use to make sure we are doing our part in protecting client privacy. We:

• Shred all unnecessary docs that have, address, soc #’s or acct information
  
• When we go home at the end of the day, we do not leave docs with client info on our desks.  We clean our desks and lock our files.. (we don’t leave things out for the cleaning crew)
  
• Make sure our screen savers are password protected.
  
• Password protect (or encrypt) any email that has private client data.
  
• We are mindful of conversations we have with colleagues about clients while in public places, you never know who is sitting in the next restaurant booth over.
  
• Make sure your staff is doing all of the above.
  

The biggest vulnerability comes from support personnel and staff, who may not share the same level of responsibility as you.  Review these simple items with them and don’t tolerate disorganization that can comprise a clients personal information. 

Now go to it…