Five Tips to Selling Your Home in a Buyer’s Market

Five Tips to Selling Your Home in a Buyer’s Market: Selling a house in an extremely competitive market is

[adrotate banner=”30″]
Selling a house in an extremely competitive market is possible, especially if a seller is prepared to take action to help facilitate attracting a buyer. In a housing market where ‘for sale’ signs are springing up like mushrooms after a downpour, it’s not enough to hire a realtor who only puts a sign in the yard, enters the information about the home on the local multiple listing service (MLS), and waits for a potential buyer to find the home.

In a buyer’s market, it is imperative that sellers do everything in their power to stack the odds in their favor. In some instances, It may even be wiser to keep the home off the market until they are fully prepared to offer it for sale. Potential buyers may not reappear to see your freshly painted entry. How should you prepare yourself for this competitive market?

Here is a brief rundown of a must-do list to get your house noticed and sold:

The Right Agent

Rushing into choosing a realtor could be your first mistake in a competitive market. You must begin by interviewing several agents in order to choose the best realtor available for your individual circumstance, especially in such a competitive housing market. Begin by asking some standard questions to find out what marketing plans are offered, what internet presence can be expected, a list of past clients as references, and what type of administrative and communication systems are in place.

The realtor who understands the market, who is not interested in appeasing your over-priced value on your house, and who can explain what it means to sell a house in a buyer’s market is the agent for you. Choose the agent that gives you the straight talk while keeping a good rapport with you, and you will have a successful relationship and sale.

Price, Price, Price

Do not overprice you house! No, the buyers will not make an offer if you’re overpriced. No, you can’t come down later.. well, you can but by then you’ve lost all the buyers who never came to see your house because it was overpriced.

I cannot stress this enough. If you want to sell your house, you must get aggressive with price.

[note color=”#FFFFCC”]The first 30 days of your house listing are the most critical. All the people who have been looking for a new home (but haven’t found the perfect house yet) are going to look at yours.. Plus all the real estate agents. If your house is overpriced from the get go, you’ve shot yourself in the foot. [/note]

Repairs

It’s time to prepare the home for sale. Aggressive sellers will hire a home inspection company to conduct what is termed a “pre-inspection” of the house. This pre-inspection will identify potential defects in the home that will eventually show up through a buyer’s inspection, possibly terminating any offers on the table.

By discovering defects and making the corrections well before a buyer has an opportunity to back out, the home will get a second and third showing, resulting in more offers. When a pre-inspection is conducted, it is best to inform potential buyers of it by leaving a copy of the inspection report at the home as well as have it posted on the multiple listing service. Don’t forget to do those little repairs, too. It’s not just about whether the a/c works; buyers notice things like broken light switches and squeaky doors. It may seem trivial to you, but potential buyers are thinking if you can’t take care of the little stuff, who knows what else might be wrong with the house.

[adrotate banner=”29″]

Curb Appeal

In addition to making repairs to the actual home, taking a look at the landscaping and entry is another key to selling a home in a buyer’s market. Landscaping and your front door has a big impact on the first impression a buyer will get when they first see the home. Regardless of whether you think something like a few flowers and a fresh coat of paint is trivial, your buyer may not. Having a potential buyer come back for a second look because they felt welcomed by the first impression they got at your front step can make the difference between selling and sold.

Photos of your home will be posted on the internet, printed on flyers, and used in other publications if you have an aggressive agent. Simple things like potted plants, trimmed shrubbery, and neat entries make a difference. Photographs aren’t very forgiving. You can’t make up for that peeling paint or pile of dead leaves with a clever description of your home or even cinnamon rolls baking in the oven. Pictures are not forgiving, so be sure your landscaping and entry are meticulous, even if you have to postpone your listing until you get it done.

Staging

Take a look at your home from a buyer’s perspective. I know this is hard to do because you have an emotional attachment to your home. But, consider coming into your home for the first time as a new owner. You may have furniture that perfectly matches your purple walls, but not everyone does. You may have the perfect kids’ rooms for your toddlers, but not everyone has toddlers.

Invest in neutral tone paint and cover up all those lovely colors. You also need to take a look at replacing carpeting, putting away all your knick-knacks, rearranging your furniture, and even storing most of your items to clear the way for a buyer’s imagination.

Many sellers benefit from hiring a home staging professional. These experts are trained to see the potential, and for understanding how difficult it is to de-personalize your home while it’s on the market. A home staging expert is trained to see homes through the buyer’s eye and will present the home so that the buyer actually looks at the qualities and features of the home, rather than be distracted by the stuff the owner either loves or has become immune to.

[adrotate banner=”29″]

When selling a home in a buyer’s market that is saturated with a large inventory of homes for sale, it is imperative sellers take proactive steps prior to putting a for sale sign in the yard. Interview and hire the best realtor, review and repair any defects of the home, and properly stage the home so you will maximize the interest each time you show your home.

Mortgage Refi – Don’t Make My Dumb Mistake!

Thinking about a mortgage refinance? That’s all well and good, but don’t make the dumb mistake that I made whenever

Mortgage Refinance

Thinking about a mortgage refinance on your house? As much as it drives me crazy to get a new loan, with the interest rates at an all time low, we really have no choice but to consider refinancing our home loan, right?

That’s all well and good, but don’t make the dumb mistake that I made whenever I got a mortgage refinance.

Quite frankly, even with the current low interest rates, I was ignoring the possibility of refinancing my mortgage, until we got a ‘looks too good to be true’ letter in the mail about refinancing one our investment houses.

Rats! Now we needed to consider a refi.

Let’s break it out before the interest rates start climbing back up again.. And they will, you know! Remember when 6% interest was considered to be good? Heck, we got a 9% interest on our first house and were thrilled about it. So don’t fool yourself thinking that these ridiculously low mortgage rates will last forever.  Trends turn.

Should you refinance? Look at your options here.

First, a disclaimer:  I am not licensed.  I am not an expert.  Hopefully this article will get you thinking about if you should do a mortgage refinance… and avoid my past mistake! Consult with a professional before making a decision.

Whew.. now that that is out of the way.. let’s move forward. There are two key points to consider.

Mortgage Refinance – Point 1

How much is it going to cost? In the past, refinancing your mortgage cost as much as it did to get the original loan.. Not necessarily true today.

But you still need to know pretty much the exact cost to obtain a new mortgage.  Mortgage companies tend to classify the costs under a whole variety of names. It they state your closing costs will be… let’s say $3000… you still need to dig a little deeper. Let’s pretend you currently owe $200,000 on your mortgage.  Ask what the total costs are to get the refi.. don’t say ‘closing costs’, but ‘total costs.’

If they still say $3,000 I ask one more time but it in a different way like: “You’re saying that if my mortgage is $200,000, and the closing costs are $3,000, I don’t bring a penny to closing, AND my mortgage will be $203,000 plus the better rate?”

My point here, is that it’s imperative to get the true (total) costs for the mortgage refinance so you can make an informed decision about what is best for you.

I’m including a home loan calculator so you can do a little figuring, because once you know the cost to get the new loan, you still need to know if it’s to your benefit.

You’ll also want to know the break-even point of adding the closing costs to your original loan.

For example, if the closing costs for the refi are $3,000, and you’ll start paying $150 less per month, it will take 20 months (3000 div. by 150 = 20) before you actually break-even.

After this break-even point, you’ll benefit for every month you live in your home.  So if you’re planning to be in your home for a minimum of 20+ months, a mortgage refinance might be a good idea.

But, wait! Not so fast, because there is one more piece of the puzzle.

Mortgage Refinance – Point 2

How many years are added to your new loan? Dumb mistake alert! Most people don’t even consider this. They simply base their decision off the break-even point. Big mistake! Let me tell you why.

Say you started with a 30 year mortgage and now you have 23 years left to pay on it. So you go out and get a new 30 year loan. Do you see where I’m going with this? Adding 7 years to the life of your mortgage is probably not going to save you money in the long run.

So what should you do? How about a new 20 year loan? Or even a 15 year mortgage.  Check out refinancing here.

The embarrassing fact is that while my husband and I are in the business… investing and building homes almost our entire adult lives… we didn’t figure this out until a few years ago. Can you believe it? We should have known better! And it cost us big time.

If you want to learn from our mistakes, I highly encourage you to consider the length of your new mortgage.

Ideally, you want to reduce your monthly payment AND the time left to pay on the loan. Quite frankly, with the interest rates where they are at the time of this post, that may very well be possible!


30-Year Fixed, FHA Loans, VA Loans

Is a Reverse Mortgage Right for You?

A Reverse Mortgage can put cash in your pocket in your senior years but before making the decision, you’ll want to explore reverse mortgage

A Reverse Mortgage is a government-insured mortgage commonly known as a home equity conversion mortgage (HECM). It’s a program designed for homeowners over 62 that allows you to access your home’s equity like cash but instead of making payments, you receive income.


There are pros and cons to a Reverse Mortgage… just like most things in life.

Reverse Mortgage Benefits

Income and credit are not factors – Your age and the amount of home equity determine how much income you’ll get.

You don’t make a mortgage payment as long as you live in your home.

Insured by FHA, and available in adjustable and fixed rates.

Reverse Mortgage Negatives

Loan limit of up to $625,500 for your Reverse Mortgage,.
Reverse mortgage are typically more expensive than ordinary mortgages.

NOTE: If the deed to your home has only one spouse’s name on it, then add the other spouse to the deed.  A reverse mortgage is repaid when the last person on the deed moves out of the property permanently or passes away.  Which means the reverse mortgage would become due if the deeded spouse died or left the property even though the other spouse is still living in the house.


One Reverse Mortgage

Reverse Mortgage Eligibility

To be eligible for a reverse mortgage a borrower must be 62 or older, own their home without a mortgage (or have a low loan balance), and have no other liens against the home.

The borrower continues to be responsible for property taxes, homeowners insurance, and upkeep of the home; failure to do so can result in foreclosure.

How do you receive Reverse Mortgage Payments?

There are five options available:

  1. Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  2. Term – equal monthly payments for a fixed period of months selected.
  3. Line of Credit – unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
  4. Modified Tenure – combination of line of credit with monthly payments for as long as you remain in your home.
  5. Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Alternatives to a Reverse Mortgage

Because reverse mortgages can be complicated and expensive, they are not an answer to every 62+ year old’s situation. You might want to consider other strategies before committing:

  • Take out a home equity loan
  • Decrease expenses by moving into a smaller home or a condo.. or even an apartment
  • Seek property tax credit or abatement based with your senior status

money for reverse mortgage houseNOTE: We are not experts at SmallHouseLife.com. Do not use the the information in this article to make a decision about Reverse Mortgages. Consult with a professional first! We’re affiliates to some of the links found on this page.

Some of the information found in this article was obtained from occc.state.tx.us and hud.gov

Leave ‘Is a Reverse Mortgage Right for You’ to Small House Life Home

How Someone Else Can Pay Your Mortgage

How to get someone else to pay off your mortgage. A simple, conservative way to have your small house mortgage paid off by downsizing and using..


small house with keysSound radical? It’s not…

I’ll show you a simple, conservative way to have someone else pay off your small house mortgage by using your home equity wisely.

It all began with a phone call from a dear friend in the real estate business. She called to update me on what she’s doing in our troubled economy and we got to talking about downsizing. My husband and I are currently selling our big fancy house to simplify our lives. She and her husband are considering downsizing from their big fancy house.

We got to talking about our different options and what downsizing to a smaller house could do for us financially.

I suggested an idea to her and she liked it so much, she encouraged me to share it with my readers. Of course!

Alright, here’s the great idea! 🙂

Take the equity from selling your big house and pay cash for a modest home. Well, what’s special about that? This home is not going to be the one you live in. You’re going to lease it out.

Now, find a small house that you want to call home and purchase it with a mortgage.

Your renters will pay off your mortgage. You might say.. well, if I just used the equity to pay cash for my own home, I wouldn’t need renters to pay it off. True. But look at the difference in the two scenarios.

BTW, we are using equity for cash but if you like this idea, you can use any funds available.
[box title=”Get qualified advice before proceeding!” color=”#336699″] Figures below are ESTIMATES for illustration purposes only. This article is designed simply to consider possibilities. I am not a licensed financial planner or accountant.[/box]

PLAN A – $160,000 Equity

157,000 pay cash for new home
3,000 closing cost
——————————–
You now own your personal home free and clear.

Hurray!! Actually this is pretty darn cool and there is absolutely nothing wrong with doing it. We just believe there could be a better way.

PLAN B – $160,000 Equity

157,000 obtain mortgage for new home
4,000 closing costs are typically more when acquiring a loan
8,000 down payment
———————-
$1,211. monthly payment <<approximate only! I figured this at 4% interest, 30yrs. and with high Texas property taxes. Interest rates fluctuate, as do taxes, insurance and such.. These numbers are meant to give you an idea of how this can work.

$145,000 pay cash for new rent home
3,000 closing cost
———————-
$1200-1300 monthly rent <<have qualified real estate professional advice you on what this price home would rent for in your area.

Use the rent money from your tenants to pay your mortgage.  Sweet.

Added Benefit: Once the mortgage is paid off, you also own an income producing property that can enhance your quality of life. Double sweet!

In a nutshell, here is the difference between Plan A & B:

Plan A, you own your own home without debt, and in thirty years you are in the same position financially.

Plan B, you own one home without debt and another one with a mortgage.  In thirty years (or 15 or however long it takes to pay off the mortgage)  you have an extra house that provides income.

Do you like this article? Get our Weekly Magazine

Early each Sunday morning (7:00a.m. CST .. that’s Texas time!) your personal copy of Small House Life magazine will be delivered to your email. You’ll get the the latest Small House posts at your fingertips, along with specials and highlights just for our subscribers. Won’t you join us?

NOTES

You might wonder why we used the personal house with a mortgage and rent house free and clear.  Generally you can get a better loan on a personal house as opposed to an investment property.

If you really want to be prudent when considering Plan B, you’ll set aside approximately 10%  of the monthly rent each month for potential repairs and vacancy. Being a landlord is not for everyone, but it can open up some interesting financial possibilities.

I’ve owned rental property almost my entire adult life and I’ve found the key is to properly screen potential tenants.  Also, so that I’m not chasing down rent checks, I use an auto debit company that takes the rent out of the tenants bank account and puts it into mine each month.  Plus when you sign on thru this link, we both get two free months of service! Sweet. 🙂

Amortization Calculator to figure different priced houses, interest rates, etc.