Archive for October, 2009
The Residential Real Estate Selling Process In Austin Texas
Decide to Sell
Deciding to sell your home is a big decision. The first step in this process should be to understand your motivations expectations financial considerations goals and what you plan to do upon the sale of your home. Many people begin the sale process with unrealistic expectations or unclear goals. It then becomes difficult to meet their goals because these goals have never been clearly defined. You must begin to view your house no longer as your home but as an investment property that you want to market.
Setting the Price
Of course one of your most difficult questions is the listing price of your house. What price should you ask? This is an important part of the sales process. If you set the asking price too high you may scare away buyers. Agents who feel that your house would not be a good investment may not even show the house. After the house sits on the market for a while people begin to feel that there is something wrong with it because it hasn’t sold. Even if you could sell your house for an inflated price many times a lender won’t approve a loan on a house that doesn’t appraise for that amount and the sale might fall through at the last minute. If you under price the home you won’t realize the maximum potential of your investment.
Marketing Plan
Decide on incentives that to be offered to buyers determine the best places to advertise and determine how to show the home. Remember that that goal is to sell the home for the highest price in the least time with the fewest hassles.
Prepare the Home for Showing
There are two important ways that you can have an impact in making your house attractive to buyers: property condition and listing price. After deciding on a listing price setup an appointment with a decorating company. They will give you some suggestions for making your house look its best. This process is called “staging.” The suggestions might be simple such as clearing cluttered counter tops. Or they might be more involved such as painting front doors or repairing obvious defects.
The staging company will look at your house from room to room and will offer advice on how to make each room show great. They will also look at the exterior street appeal backyard and garage. They have a lot of tips that can make your house shine. After this meeting you will have a list of what you should do to prepare your house for sale. Following these suggestions in a timely manner will ensure your home shows at its best.
Remember that “staging” addresses the appearance of the house and not necessarily other problems which might become evident during an inspection. An inspection will uncover most defects that eventually may have to be repaired. In this way you can have the repairs done before a potential buyer’s inspection uncovers a defect that might cause a buyer to either change his mind or to want a substantial repair allowance deducted from the price. It is a signal to buyers that you are a responsible reputable seller. It also allows you to have plenty of time to schedule any work that might need to be done.
Offer a residential service contract to buyers. This guarantees the major appliances in your home as well as other systems and structures. You can also include coverage for your house while it is on the market so you don’t have to pay for any unexpected repairs.
Marketing the Home
Now the fun begins. Here are some ideas that can be used to promote your home.
It is important for you to keep your house in perfect condition everyday because buyers or agents might come by at any time. Keep the kitchen clean make your bed every morning and keep clutter out of sight. It is especially important to keep pets and pet odors under control. Some wonderful added touches are fresh flowers and potpourri or freshly baked cookies.
As agents and potential buyers begin visiting your home either virtually on the Internet or in person try to obtain feedback from the buyers. Make changes to the showing state condition and price as feedback deems necessary.
The Offer and Negotiation
You have an offer now what? Sometimes the buyer will offer you the asking price and have no special requests. In this case you sign that you accept the offer. Sometimes the buyer’s offer is a lower price and might have other requests. You should consider what is best for you and make a counter offer. Consider carefully your response because if you counter offer there is no guarantee that the buyer will respond again. Also remember that once agreed upon and signed by all parties an offer becomes a legally binding contract. Never get involved in oral offers and negotiation. If you verbally accept an offer a buyer has no legal obligation to buy the house and may want to continue to bargain with you to see how low a price you will accept.
No matter how well you have prepared your house and how fairly you have priced it there is always the possibility of receiving a low offer. It could be a limit to the buyer’s ability to purchase. Don’t take it personally and react angrily. This is business it’s not personal. You can either reject the offer or make a counteroffer. Try to find out as much as you can as to why the offer was low. Certainly if other offers come in very low or if your home is not being shown or not receiving any offers consider adjusting the pricing.
Once the buyer and seller agree on the terms the buyer will have the home inspected. If there are any problems that are found during this time period then the buyer can withdraw from the contract. The buyer might request that you complete certain repairs before closing or that you contribute a certain sum of money at closing to cover these repairs. If this happens try not to let contract fall through. After the limited time period is up the buyer is legally bound to buy your house unless they are denied financing. In the event of cancellation the buyer would lose any earnest money. One exception to this is in the case of the buyer not receiving funding from the lenders. In that case then the buyer is not held responsible. For this reason always ask the buyer’s agent for a letter showing that the potential buyer has been prequalified for a loan and once a contract is signed ask the buyer’s agent to keep you informed of the buyer’s loan application progress.
Closing
The exciting day is finally here! Verify in advance that all of the paperwork is in order. Request a copy of the HUD1 statement sheet so that you can read over it before closing. Feel free to ask any questions either before the closing or during the closing itself. Typically this is when you relinquish possession of the house so take the keys to give to the new owner.
About the writer:nbsp;nbsp;Joe Cline is a real estate broker investor and REALTOR with Coldwell Banker Austin Texas.
Joe holds his Broker’s license the ABR designation the CRS designation the CMMS designation Cendant Mobility Marketing Specialist designation and the Cendant Mobility Referral Specialist designation.
Find out more about Austin real estate and Lakeway Real Estate.
The Great American Real Estate Giveaway
As the media reminds us on an almost daily basis many sectors of the real estate market are in the midst of one of worst adjustments since the Great Depression. This is evidenced by the most recent California Association of Realtors CAR publication on existing home sales which reported a price decline in the median selling price of 35.3 from a year earlier. During the worst 12 month period during the Great Depression U.S. housing prices fell by a less dramatic 10.5. For investors with high tolerance for risk it may now be time to embrace the timeless proverb buy low sell high and start sifting through the wreckage for bargains. And while bargains exist they are not available universally across all locations or property types. Investors must know where to look have proper guidance and understand the proper methods for valuation. The sectors with the most opportunity are single family residential properties SFRs in class B or Bminus locations of suburbs outside major metropolitan areas. Properties in many metropolitan markets have adjusted very little while towns in extended metropolitan areas MSAs have deteriorated acutely.
Using the San Francisco MSA as an example CAR statistics released for June 2008 indicate a year over year decline of 4.3 for San Francisco proper. Comparatively the median selling price in Vallejo California a suburb about 30 miles outside of San Francisco has decreased a much more dramatic 37.3 year over year. Vallejo is still accessible to San Francisco via public transportation including frequent commuter bus routes Ferry access casual carpool access and BART access from the Richmond California station. Furthermore the statistics do not fully reflect the willingness of banks and distressed sellers to negotiate on a case by case basis in these markets. As an example one of our investors is currently purchasing a SFR in Vallejo for 104500. In this instance the property is being acquired for a 65 discount relative to the implied valuation on June of 2007 based on comparable sales from First American Title Company. Although this 65 discount is tantalizing it should not be a deciding factor in the decision to purchase the property.
Using a discount to market value approach is a fools approach to valuation at this point in the current environment because it assumes that historical prices were rational. A discount to market value wont pay the mortgage and it doesnt ensure that the home will be affordable to prospective buyers when an investor is ready to sell. Investors should alternatively use an income approach or an affordability approach to valuation.
For example consider the Vallejo property discussed previously. From an income approach assuming a 30 downpayment the cash on cash return is about 11.6 per year and the cap rate is 9.54. From an income standpoint this is an attractive cash yield. It handily exceeds the national average money market rate of 2.99 annual percentage rate and the 2.90 average dividend yield for SP 500 nonzero dividend stocks. This additional return offers substantial compensation for the additional risk and management responsibilities required for this investment.
From an affordability standpoint the medium household income in the zip code is 50030 per year. Most lender underwriting guidelines consider that 2833 of household income is an allowable limit for housing related expenses rent or mortgage plus taxes and insurance. Using this guideline as a benchmark the average household in this zip code can afford 15000 per year 1250 per month toward housing related expenses. The mortgage payment for the Vallejo property will be approximately 550 plus monthly expenses of 200 taxes insurance and repairs/maintenance which is comfortably below the affordability implied limit of 1250 per month. Assuming a 90 loan to purchase price and a 7.0 fixed rate mortgage this property could be purchase by the median household for up to 182000. This represents a 70 premium to the purchase price of 104500. As a cautionary note valuation based on affordability wont guide market values until the mortgage market returns historical underwriting guidelines. Further details of this transaction are posted on our website www.unitedinvestors.com >> education center >> sample property.
About the writer:nbsp;nbsp;Brian Topley CCIM is Chief Investment Officer of United Investors real estate investment advisors based in San Francisco CA. United Investors advises individual and institutional investors in the purchase leasing management and disposition of bank owned/foreclosure properties. He may be reached at www.unitedinvestors.com or 415 2742521.
This information is intended merely to be a general discussion not deemed to be investment or legal advice. Real estate investments are not suitable for all investors and involve significant risks. Individual investors should consult their tax advisor CPA and financial advisors prior to making any investment decisions.
The Garage: Storage Or Mess?
When putting homes on the market many people fail to prepare one room in their home. While not technically a “room” as such the garage is a part of the home that is often overlooked….by sellers. Chances are that if you have been in your home for many years you have collected a fair amount of “stuff.” Where does most of this surplus “stuff” end up? You guessed it in the garage.
For most people the garage is a holding pen for years of accumulated clutter. Now this may not seem like a big deal but when selling a home clutter can be a big problem. If you are one of those people that tend to be a bit of a packrat then cleaning out your garage will be a good project to undertake. Don’t forget that when your home is viewed every room including the garage will be under scrutiny. Maybe its time to sort through the stuff and decide what is worth keeping.
Another aspect that is commonly overlooked in garages is the general condition of the garage itself. Dingy walls and stained floors take away from the overall aesthetic quality of the home and buyers will notice this. Give the garage a coat of paint or if you are really up to the task there are some amazing garage organization systems that improve the look and organization of garages a thousand fold. Prospective buyers will appreciate the added attention to the overall cleanliness of the home.
About the writer: Adam Coyle is a representative of Smith Bowden Real Estate serving the Madison Wisconsin real estate community. Smith Bowden specializes in helping buyers invest in properties and expand their real estate portfolios. For more info check out www.smithbowden.com.