Tips & Tools : Price

Location, Location, Location

RE.com Tips & Tools — Thu, 07 Jun 2007 15:02:00 GMT

Location and subtle characteristics may explain why one home is worth more than another.

Location is arguably the most important quality that determines the relative value of individual homes. That’s because each location is unique and can never be altered even by the owner.

How location affects house prices
The impact of location begins with the desirability of the city and locale where the home is located. For instance, places that have a mild climate or lucrative employment opportunities tend to have higher home prices than places where the weather is harsh or high-paying jobs are scarce. Geographical factors such as a beachfront or mountain views naturally affect home values too. And of course, being located in a good-quality school district can be a positive factor for any home.

All else being equal, a larger home, a larger lot or more acreage typically would be more valuable than a smaller home, a smaller lot or less acreage in the same neighborhood area. But location also involves more subtle aspects such as the position of a home within a neighborhood or subdivision. Where the home is along the block can affect home values as can street conditions or traffic patterns. For example, a home on a corner lot may be larger, but also may be subject to more traffic or less privacy. A home at the end of a street junction may be exposed to oncoming headlights after dark, or a home next to an apartment building may be along the sightlines of upper-level windows or balconies.

Even more specifically, your home’s position on its lot and the lot’s elevation are significant as well. A higher elevation may offer better drainage of rainwater away from the home and could expose the home to welcome breezes (or, on the other hand, unpleasantly strong winds). A home on a terraced lot may offer a pleasing view and more sunlight which could improve the home’s value. But keep in mind that if a flight of stairs is the only means of access to such a home, than the positive impact may be negated.

Location affects individual units too
The location of a condominium or other attached unit within a complex or building also can affect the value of that home. Upper-level units tend to offer more sunlight and privacy, better security and less noise while lower-level units may have a larger patio and be easier to access, especially if the property lacks an elevator. The location of a secured, attached or private parking garage can also affect the value of attached housing units.

How development can help or hurt home values
A location near major highways, vacant lots, railroad tracks, construction sites or other potential hazards to the safety of young children can impair a home’s value.

Home prices can also be affected by the proximity to parks, shopping centers, highways, public transportation and other amenities. And future development of new roads, public transit, commercial districts or more residences may be significant as well. New development may be desirable to some, but also could impair views or open space or bring more traffic and noise to the neighborhood.

Find out how much your home is worth at http://www.realestate.com/homepricecheck.

How to Find the Right New Home Community

RE.com Tips & Tools — Thu, 15 Feb 2007 18:36:00 GMT

You need to look at a variety of factors when shopping for a home in a new home community.

Buying a new home is an important decision. And with so many new home communities being built today, it can be a confusing one. Consider the following to be sure you choose the one that’s right for you:

1. Location

Location is always the most important factor when shopping for a home. And it can be more important than ever when shopping for a new home community. Many new home communities are located outside a town’s central urban or suburban areas. There may not be much around them. Check to see if there are future shopping centers planned, if there is good road access for you to get to work and, if you have children, find out how far away it is to the nearest school.

2. Price

Before you fall in love with a beautiful model home, better make sure it’s in your price range. And remember, the base price you see listed won’t include the cost of all those tempting upgrades the developer is likely to offer. So before you go house hunting, it’s always wise to get pre-approved for a mortgage. That way you will know exactly how much you can afford to spend and you will be in a position to make an offer as soon as you find the perfect home.

3. Special features

With so many new home communities going up close to one another, it’s important to carefully compare the features of each before deciding on the one that’s right for you. With resale in mind, you also want to choose a new home community that stands out from the rest. Does the community that you are interested in have a pool or walking trails? Are the homeowner’s dues more reasonable compared with other nearby communities? Those same features that appeal to you now are likely going to appeal to another buyer down the road

How Do I Price My Home?

RE.com Tips & Tools — Tue, 06 Feb 2007 16:03:00 GMT

About to put your home on the market? Here are the factors you should consider when determining how much to list it for.

The ten main factors that influence the value of your home are:

1. Interest rates: The lower the interest rates, the more buyers can afford to pay.

2. Supply and demand: Are ’for sale’ signs springing up all around the neighborhood? If there are a number of homes similar to yours on the market, consider them your competition. What can you do to set your home apart and make it desirable for a majority of potential buyers? On the other hand, a small number for sale can result in competing bids that send prices up.

3. Economy: Is the economy improving or sliding? This will affect buyers’ confidence in their ability to manage debt.

4. Location: Are you in a desirable neighborhood, with key services such as schools, doctors, and shopping nearby? Are there factors that make your neighborhood less desirable, such as environmental issues or traffic problems?

5. Condition: Have you updated features and kept up with repairs? Is the house clean? Does your house make a good first impression? (This is called "curb appeal.") How much can you reasonably do to fix it up for sale?

6. Timing: Do you need to sell quickly or can you choose your time?

7. Size: Will your home appeal to a growing family or to those who are downsizing?

8. Amenities: Does it include features that are popular, such as low-maintenance landscaping or granite counter tops?

9. Terms: How flexible are you with respect to the sale? What’s excluded? If you are downsizing and have substantial equity, have you considered offering financing? Carrying financing can make your home very appealing and help you sell for the maximum price.

10. Attitude: How committed are you to selling now?

To determine your home’s value:

Research the housing market in your area. Browse the Internet, local newspaper ads and free ’For Sale’ publications. Visit open houses in your neighborhood to get a general idea of the current market.
Get a comparative market analysis (CMA) from a REALTOR®. A CMA compares homes that are currently available and those that have sold in your neighborhood in the past year. The more similar the features -- square footage, number of rooms, lot size, etc. -- and the more recent the data, the more accurately it reflects the current market. Don’t confuse listing price with sold price -- the most important factor in the CMA. REALTORs® usually do CMAs for home sellers at no charge.
Have your home appraised. An appraisal estimates your home’s market value. A lender will require an appraisal to finance a prospective buyer. For residential properties, a professional appraiser will either compare your home to similar properties that have sold in the area or, for new properties, estimate how much it would cost to replace the existing structure if it were destroyed.

To maximize your home’s value:

Eliminate clutter and clean. The more you can clean your home and keep it tidy, the easier it will be to show, and the more buyers who will see it at its best.
Paint and repair. First impressions count. Improve the appearance of your home with a coat of fresh paint. Take the time to fix any dripping taps, broken tiles or cracked widow panes.
Consider hiring a home stager. A professional home stager can help you enhance the selling potential of your home by showing you how to arrange your home to appeal to buyers. Whether it’s rearranging furniture, minimizing belongings, lending you accessories or renting furniture, they work with you to show off your home’s best features. Many will also coordinate hiring professionals to do cleaning, painting and minor repairs.

What’s the right price?

Generally, aim for your list price to be within 2.5 to 5 percent of what you expect the selling price to be. Pricing strategies vary with the market. If it’s sluggish, price lower. If it’s active, price close to your expected selling price to stimulate competing offers.

Remember, your home is easiest to sell when it’s first listed. During the first couple of weeks, you’ll get a flurry of interest on the part of agents eager to preview it for their clients. If you price it too high and they can’t sell it, your home may linger on the market and become old news. Prospective buyers may think you’re becoming desperate and lower their offers. As a result, you could end up having to accept less than you normally would have received.

Bill Yeager
Regional Vice President, Realty Services

Step 2: Determine Your Home's Value

RE.com Tips & Tools — Thu, 18 Jan 2007 16:22:00 GMT

You need to know what your home is worth to set the listing price.

Setting a listing price is one of the most important parts of the home selling process. Knowing your home’s value helps you determine its price.

What determines home value

Many factors go into determining home value. The square footage and number of bedrooms and bathrooms plays a large part. Typically, larger homes with more bedrooms and bathrooms increase the home value. There are several other features that help determine home value. Does your home have a magnificent view? Is it on a private lot or cul de sac, or close to public transportation? All of these can add to its value. School districts can greatly affect value, and the age and condition of the home are also factors.

Another factor in home value is the current number of comparable listings on the market. The fewer the listings, the more valuable your home, particularly if it’s in a desirable location or has amenities hard to find in your area. Supply and demand can make your home worth more, allowing you to set a higher price when you sell. Conversely, if there are many homes similar to yours on the market, that can lower the value, especially if there aren’t many buyers.

How to find your home value and set your price

There are many tools available to help you determine your home value. The most obvious is your real estate agent. Your agent should have a good understanding of the current market in your area, allowing them to review comparable homes and estimate how your home sizes up. If you want to get an idea of your home’s value before talking with an agent, you can use the Home Price CheckSM tool from RealEstate.com to get a value for your home, based on prices for comparable homes in your area. It might be a good idea to use this for comparison with the price that your agent recommends.

When comparing your home to similar ones, make sure you look at more than square footage and the number of rooms. Take into account features such as molding, the condition of the home, the slope of the lot, etc. when looking at comps.

One final factor in determining your price is your time. If you are not in a hurry to sell, you can price your house higher because you have the luxury to wait for the right buyer. Just make sure you don’t price it too high – you don’t want to scare away prospective buyers. However, if you are in a time crunch, it may be better to price your home on the low end in order to sell quickly. Selling quickly may be more valuable than whatever additional money you would get from a starting at a higher price.

How to evaluate home sales offers

RE.com Tips & Tools — Tue, 16 Jan 2007 21:37:00 GMT

Q: I'm about to put my home on the market. What factors should I consider when I'm evaluating sales offers?

A: Obviously, you want to get a good price. But the closing date and other conditions can be just as important. Sometimes a lower price with fewer restrictions can be a better deal. Here are the major factors to consider:

Price. It’s important to know how an offer compares to the recent sale price of homes in your area. You can find out what your home is worth, free of charge, through LendingTree. Request a free home value estimation or market analysis by a pre-screened agent.
Timing. A closing date that meets your requirements, such as your need to move right away, or at the end of your child’s school year, might be worth more to you than the highest price.
Who pays for what. An offer that requires the buyer to pay for expenses you might normally cover, such as closing costs or legal fees, might add up to more dollars in your pocket than an offer with a higher price. Other costs that might be negotiable include the broker’s commissions, the price of a home inspection, lawyer’s fees, the title search and taxes.
Items included in the deal. Most buyers expect you to include everything permanently installed or attached to your property, such as light fixtures or a built-in dishwasher. The selling price should be slightly higher if your buyer also wants items such as your refrigerator, washer-dryer, chandeliers, furniture and curtains.
Is the buyer pre-approved? Even the best price will quickly lose its luster if your buyer can’t come up with the funds on closing day. To protect yourself, make sure the offer specifies that the buyer has been pre-approved for a mortgage big enough to purchase your home.
Size of the deposit. A serious sales offer comes with a deposit (also known as "earnest money" or "a binder") which is held in trust by your lawyer or the buyer’s real estate agent until the closing date. It can be anywhere from 1 to 10 percent of the selling price, but a higher percentage indicates a higher commitment on the part of the buyer.
Inspections and repairs. Don’t be put off if the offer is conditional upon a home inspection. The buyer usually pays for this. It offers reassurance that your home’s structure is sound and that your heating, electrical, plumbing and other systems work. And homes that sell "as is" usually go for a lower price than homes that have been inspected. Warning bells should start going off, however, if the offer requires you to pay for additional specialized home inspections and the cost of repairs. It can be expensive if the buyer wants you to pay for a roof inspection, inspection for termites or other vermin, inspection for earthquake or flood protection, and/or inspection for the presence of lead-based paint or radon.
If the offer is conditional. An offer that says the sale is contingent on sale of the buyer’s home is risky. It means the deal won’t close unless the buyer sells his or her home, usually within a certain period of time. If the buyer can’t or decides not to sell, your deal will fall through.
Clauses that can cost you money. Be leery of clauses that say you have to pay extraordinary costs, such as the cost of a home appraisal or the cost of the buyer getting a mortgage. Also, be careful that your closing date doesn’t require you to move out before you are able to move into your new home, or you could end up paying for expensive interim accommodation.

It’s important to sit down with your REALTOR® and go over every offer. A good agent will explain what every clause will mean to your bottom line. They are also skilled negotiators. They can often respond to an unacceptable offer with a successful counter-offer that includes a better price or fewer conditions.

Bill Yeager

Regional Vice President, Realty Services

7 tips to sell your home

RE.com Tips & Tools — Tue, 16 Jan 2007 15:23:00 GMT

Price, condition, competition, access -- these and other factors can mean the difference between a speedy sale and no sale.

You’re set to buy a new home, but you can’t go ahead with your plans until you find a ready buyer for the home you currently own. With more homes on the market today, how can you make sure yours will outshine the competition? Here are some suggestions:

1. Price. Real estate agents emphasize the importance of pricing your home "to sell," which means at the market price, not a higher speculative price that you merely hope to receive. Market-level pricing is especially important when the supply of comparable for-sale homes in your area exceeds the demand to buy those homes.

2. Condition. Homes that are in great shape typically sell more readily than comparable homes that are in need of repairs or that have out-dated décor. If you’re looking for a quick sale, clean out your clutter, pack up your personal items, neutralize any unusual colors and make any necessary repairs before you put your home on the market.

3. Feedback. Some real estate agents will pass along feedback they’ve received from prospective buyers who’ve seen your home. A specific complaint from one or two individuals might not be material since no home will ever appeal to every buyer. However, a number of similar criticisms from multiple buyers might merit consideration.

4. Competition. If you’re able to figure out why other homes on the market sold before yours did, you might be able to use that information to make your home more attractive to buyers. Tip: Open houses are a great way to check out other homes on the market in your neighborhood.

5. Marketing. Don’t underestimate the importance of Web sites in selling your home. Ask your real estate agent for a list of Web sites on which information about your home will appear. Make sure the information is correct and presents the best features of your home. Photos are important too.

6. Showings. Very few buyers will purchase a home they’ve never stepped inside, and some real estate agents will bypass a home that’s too difficult to show. If you severely limit the days and times when your home is accessible, you may also severely limit the number of people who might choose to buy it.

7. Bonus. Real estate agents disagree on the wisdom of buy-side bonuses, which are extra payments or gifts that reward the agent who finds a buyer for your house. Some agents believe bonuses are effective while others suggest your money would be better spent in additional spiffying-up of your home. Ask your agent for advice.

How to pick the right house

RE.com Tips & Tools — Fri, 12 Jan 2007 16:48:00 GMT

Is the house you have fallen in love with really the right house for your needs and lifestyle? Here are 10 criteria to consider.

Shopping for a home can be a lot of fun, especially when many attractive homes are on the market. But before you make an offer on the one that’s captured your affections, consider these criteria:

1. Price. Just because you can buy a more expensive house doesn’t mean you necessarily should do so. The more money you spend on mortgage payments, property taxes, homeowner’s insurance, and repair and maintenance costs, the less you’ll have to spend on your other wants and needs.

2. Character. Some neighborhoods are citified while others are suburban or rural. Some have matured with the passage of time while others are brand new. Some are staid while others are funky. Choose a place to live that suits your personality and lifestyle.

3. Location. The age-old joke that the three most important factors in buying real estate are location, location and location may be too tired for laughs, but it’s nonetheless true: A poor location is the one characteristic of your home that no amount of money or effort can ever alter.

4. Zoning. Local laws set limits on the number and size of housing units that can be built on residential lots. That means some areas may be open to mansion-sized homes or higher-density housing (e.g., duplexes or apartment buildings) while other may have restrictions that prohibit such uses.

5. Lot. A house that’s next to a shopping mall, school, park, transit stop or other non-residential use may or may not be desirable, depending on your preferences. A home on a corner lot might be larger and more private than neighboring homes, but could also be subject to more traffic noise.

6. Incurable Defects. Any problem that would be outrageously expensive or impossible to fix is called an "incurable defect." Examples include an airplane flight path, bizarre floor plan, inadequate parking or inordinately loud traffic noise. Don’t buy a home with an incurable defect unless you’re willing to live with that condition as long as you occupy that home.

7. Environmental Hazards. Some houses are plagued by wood-eating pests, high levels of radon, molds, lead-based paint or other potential hazards. If you’re concerned about any of these conditions, hire a qualified expert to inspect the house. Find out whether the house is located in a flood plain or a high fire-risk area.

8. Size. Square footage is important, but so are the relative sizes of the various rooms and the use of space throughout the house. A staircase, multiple hallways or odd alcoves could make a large house seem smaller than its square footage. Check out the closets, too.

9. Floor Plan. Some houses have an efficient and pleasing arrangement of rooms while others have odd configurations that may seem maze-like or dictate inconvenient traffic patterns. A two-story house can offer more living space for those who don’t mind the extra exertion every day.

10. Condition. An attractive, well-maintained house will cost more than a similar house that’s not in great shape. If you don’t mind hiring contractors or making repairs yourself, you might be able to buy that less-attractive house at a discount. Otherwise, you might prefer to purchase a house that’s in good condition.

Negotiating the Best Price

RE.com Tips & Tools — Thu, 11 Jan 2007 21:57:00 GMT

It takes a keen understanding of the home-buying process to be good at negotiating. Be sure you have it down before you make any offers on homes

Be sure you have the process down before you make any offers on homes. Here are tools and information the best negotiators use:

CMAs — Comparable market analyses

Once you’ve found a home you want to buy, the first step in negotiation is to assess the fair value. CMAs show what similar properties in the area have sold for. Your real estate agent will have access to CMAs and can share them with you.

Generally, CMAs list houses in a particular location that are currently on the market, have sales pending, have expired from the market or have sold. It is the "sold" properties you need to look at because the list price and the offer aren’t necessarily the best indicators of what the house will sell for. There can be a big discrepancy between the two figures.

The CMA often gives you general information about the houses being compared: number of bedrooms and baths, square footage, the listing price and the sold price. Make sure you focus on houses similar to the one you’ve selected — both in description and location. The more recent the data, the better.

Condition

Once you have the CMA, drive by all of the properties listed in the sold column. Condition has a lot to do with the ultimate selling price of a house. Does the home in which you’re interested shine above or fall below those sold? Make a realistic comparison of condition, then adjust your thinking up or down according to what you see.

Extra amenities

Does the house you’ve chosen have more or fewer amenities than comparable homes? Although amenities won’t affect the value as much as location or condition, they can be a factor. Be wary, though. An outdoor hot tub may have been a major motivating factor in your choice of a house, but it won’t add much to the value of the property when you resell.

Motivation

A good negotiator gathers as much information as possible on the house and the sellers. The owner’s reason for selling is at the top of the list. Does she have to sell? Want to sell? Just throwing it on the market at a high price to see if it’ll move? If your agent representing you in the transaction is a buyer’s agent, they can try to secure this information for you. If you’re working with an agent representing the seller, they typically can’t disclose this information without the seller’s consent.

Preparation

Great negotiators always prepare themselves. The most important factor is your frame of mind. Never let emotions override common sense during negotiations. Set a realistic limit and stick to it. If the price isn’t to your liking or is outside your budget, walk away.

In addition to your emotional frame of mind, your finances should be in order. An offer carries more weight if there are no dangling financial problems and if you’re prequalified for a mortgage.

Realism

Make a realistic offer. Nothing turns a seller off more than a low-ball offer on a house that is fairly priced. Often, negotiations will stop, rarely to be revived again.

An example: Mr. and Mrs. Buyer find the perfect house after looking for months. The house is listed at $155,000.

Mr. and Mrs. Buyer have a CMA that shows average selling prices in the neighborhood to be $148,000 to $153,000. Ignoring the CMA, they offer $120,000.

Mr. and Mrs. Seller, annoyed at the low offer, counteroffer at full selling price, $155,000. The Buyers, still wanting to steal this house, make a second offer of $125,000. The Sellers, very frustrated, don’t move from their $155,000 price.

Suddenly, there is word that another offer is forthcoming from the Smiths. The Buyers up their offer to $154,000 and the Sellers accept.

A first offer in the $150,000 range (remember, the CMA showed $148,000 to $153,000) may well have been accepted by the Sellers. If this is the case, the Buyers have paid $4,000 more than necessary.

Sizing Up an Offer to Purchase Your Home

RE.com Tips & Tools — Thu, 11 Jan 2007 21:56:00 GMT

Sure you want to get a good price for your home, but there are other factors to consider when evaluating offers.

Sometimes when you’re selling your home, you’re better off accepting a lower bid with fewer conditions than a higher offer with a lot of strings attached. Ask your agent for advice when deciding which offer to accept, and keep in mind the following:

Price

Know what you can expect for your home based on its location. If the listing price is accurate, purchase offers should be very close. Free market evaluations are available through recognized agents.

A pre-approved buyer

A top-dollar offer is worthless if the buyer hasn’t got the financing on closing day. Ask your agent to stipulate that all offers specify the buyer is pre-approved for a mortgage.

Closing date

Whether it’s coordinating with a job transfer or the end of the school year, you want a closing date that meets your needs. Otherwise, you may have to spend money on an apartment or hotel while waiting to move into your new home.

Bonus payments

The seller usually covers legal and closing costs. However, if a potential buyer offers a lower price that includes such fees, then that offer may be worth considering. Other costs that might be negotiable are the broker’s commissions, the price of a home inspection, the title search and taxes.

Extra costs

Watch out for any clauses that ask you to pay for something out of the ordinary, such as the cost of the buyer getting a mortgage or a house appraisal.

A conditional offer

A purchase offer that is contingent on the sale of the potential buyer’s current home is risky -- if the buyer fails to sell the home, usually within a fixed period of time, your deal could fall through and you would have to put your home back on the market.

The deposit

The deposit that accompanies serious offers is called a “binder” or “earnest money.” It is held in trust by your lawyer or the buyer’s real estate agent until the closing date. Although the amount ranges from 1 to 10 percent of the selling price, a higher percentage indicates a stronger commitment on the part of the buyer.

A home inspection

The potential buyer usually pays for a home inspection. He or she wants to know that such things as the plumbing, heating and electrical systems are in working order. Homes that sell "as is" usually go for a lower price than homes that have been inspected. If an offer requires you to pay for additional specialized home inspections and the cost of repairs, however, be wary. Extensive inspections and repairs can be expensive.

Included in the deal

Most buyers expect their offer to include everything permanently installed or attached to your property, such as a built-in bar or dishwasher and most lighting fixtures. But you may be able to negotiate a higher price if you also include portable appliances, such as a refrigerator or washer/dryer set, window coverings, chandeliers or even furniture in the deal.