Archive for October, 2009

Real Estate Home Appreciation – Last 12 Months

Last Updated: 10/5/2009

The median home price, the point at which half of all homes are sold for more and half are sold for less, dropped in all regions but the West, as well. The price increased to $220,500 in the West, up from $217,900 in July, but it is still down 12.2 percent from last year.

The median price in the South dropped to $157,400 from $162,100 and is down 11 percent from August 2008.

In the Midwest, the price rose to $155,900 from $149,900 in July. In a year-over-year comparison, the price is off 10.4 percent.

The Northeast region’s median price declined the most of any area, dropping more than $10,000 to $241,100 from $251,500. Since last year, the price has fallen 10.5 percent.

Data Source: National Association of Realtors

Monthly Fluctuations in Median Home Prices by Region Overall

We have been receiving so many questions, I thought it might be a good time to weigh in on the First-Time Homebuyer issues, including the IRS tax credit and financing information.

IRS Tax Credit

It is always best to refer clients to the website www.irs.gov for information regarding their tax situation.  If they use the search box, and type in “Form 5405” they will get the most current and correct information for filing.  There is a “Ten Facts” page that can be printed and handed out, and I have been using that to answer questions as they come up.  As we all know, the deadline to close and record is November 30.  Borrowers should be under contract by October 20 to be sure they can close on time.  We have no information right now to indicate the desire of Congress to modify or extend this program, although hope remains high.

Financing

MassHousing has simplified their first-time homebuyer loan, with expanded income limits, lower rates and cheaper PMI.  They offer 30-year fixed-rate financing for first-time buyers with annual incomes up to $90,315 per household.  They will, in limited cases with excellent credit (720 score or higher), go to 100% financing, but the buyer must still have 3% of the purchase price of their own money – even if they are not putting it into the purchase.  For this reason, it is best to assume 97% when calculating your loan amount.

We continue to be a preferred MassHousing lender, and can provide additional information to buyers as needed.

PMI – Private Mortgage Insurance

As a credit union, we enjoy preferred rates from all PMI companies – up to 25% less than banks for the same loans.  We can often save buyers the equivalent of .25% in rate with lower PMI premiums.

We offer Job Loss Protection as an added benefit on all loans insured through MassHousing or Genworth PMI.  This coverage pays the borrower’s monthly payment for up to six months if they become unemployed and qualify for state unemployment insurance.  If you are a borrower who is afraid to buy due to the current job environment, we can help you. Ask us for more information.

This is still a historic time in our industry: LOW RATES, LOW PRICES, and AVAILABLE FUNDS TO LEND.

Maureen A. Phillips
Assistant Vice President
Greylock Federal Credit Union
mphillips@greylock.org

by Rana Cash with additional comments by Paul Harsch

Decreased home values makes it a difficult time to sell. It’s a buyer’s market, with home prices extraordinarily low. But sellers are not at a complete loss. Despite challenging times in real estate, homeowners can make some wise decisions along the way that will improve their chances of selling their home more quickly and getting more money for it. This important top-ten list was compiled by Rana Cash in an interview with Dana Bauguss, 2009 president elect of the Georgia Association of REALTORS®. The 11th item on the list is courtesy of Paul Harsch, President of Harsch Associates.

Lots of homeowners cry when they sell.  Sometimes it begins before the sign is stuck in the yard.  Why?  Sellers have developed relationships with their homes.  Homes hold treasured memories so it is no surprise for Sellers to become emotional.  However, some Sellers cry for another reason.  They sob because they are victims of the top ten selling mistakes and they can’t sell their home.

1. Sellers don’t hire a real professional. The biggest mistake sellers can make is they don’t hire a REALTOR® to professionally market their home, Bauguss said. Harsch adds that there are significant differences in levels of skill and commitment, even among REALTORS® which can yield major differences in results to the sellers. All real estate licensees are not the same. Only those who are members of the National Association of REALTORS® are properly called REALTORS®. No matter who you hire, as a seller you need to interview the agent for the “job” of selling your home and review marketing plans.  Selling (and buying) your home is one of the largest financial investments you’ll make.  Considering the small upside cost and the large downside risk, sellers need to hire a professional. For more insights in to what differentiates the “professional” from the rest, read the article on our blog comparing professionals with “hobbyists”.
2. Sellers price their home too high. Pricing a home is an art.  Of course market value is based on comparable sales but market movement, demand, location and condition are factors also.  If the home is overpriced then buyers won’t look at it or they will submit lowball offers.
3. The house isn’t ready for showing. Sellers need to listen to their real estate agent and do everything on the list to prepare the home to sell at least two weeks before the first showing.
4. The home is in bad condition. Sellers need to get their home ready to sell.  They need to do more than make the beds and clear the dishes out of the sink.  Minor repairs and quick fixes can boost the chance of a quick sale.  If buyers see deferred maintenance then they will wonder what else is wrong with the house.  So fix sticky doors, dripping faucets and torn screens. Harsch adds that even homes in poor condition will easily sell if priced accordingly.
5. Sellers need to get rid of the clutter. Throw out anything that is not needed and pack away most of your decorative items.  Make your closets as big as possible by packing out of season clothes.
6. The home needs deep cleaning. Make everything extra clean inside and out.  Clean fingerprints and appliances. Mop and wax until the house sparkles.  Tidy the yard and add flowers for color.  Make sure there is great curb appeal and an inviting front door.  A great first impression will make the buyers think the house has been maintained.
7. The house smells. The seller needs to get rid of all smells. Sellers are so comfortable with their homes they can’t smell the odors.  Clean the carpet and drapes and open the windows.
8. Sellers don’t stage their home. The house needs to be staged and depersonalized so the buyer looks at the house and not the seller’s belongings. View this professional staging PHOTO GALLERY.
9. Sellers hang around during showings, inspections or appraisals. When buyers are looking at your home, they want the seller gone! They need to talk about your house, talk to the inspector and be able to think out loud.  Sellers don’t need to chit chat with buyers or the selling agent.  This is a huge mistake!  You will tend to look desperate, needy or controlling.  Remember you have hired an expert for representation so you can and should stay out of the picture.  If you stay, this will cost you money.
10. Sellers refuse to drop the price. If the home has been on the market for more than 30 days without an offer, the seller should be prepared to lower the price. Of course setting a sensible market price to begin with is the first important step so if that was done at the outset, offers should have come in and been taken very seriously. High end homes, homes placed on the market from November to February  or properties with very unusual characteristics may not fit this “30 day rule”
11. Sellers fail to negotiate the first offer to conclusion. “The first buyer is usually the best.” These words of wisdom have been proven true time and time again but even more so in a soft market. Sellers who turn down the first buyer in hopes of someone who will pay more usually lead to disappointment. This problem is even more pronounced if the property was overpriced to begin with. Now the seller thinks the early offer is too low, is an indication that offers will get better as time goes on. Not so.

Selling a property is as much an art as it is business. Working with a real pro can and usually does make a major difference in the final outcome, in terms of the bottom line, ease of transition, fewer complications or surprises, and overall happiness at the end of the closing.

Please contact us at info@harschrealestate.com if you have any questions about this article’s contents or Berkshire real estate in general.