Sellers: What Every Seller Should Know About Comparable Sales

What Every Seller Should Know about Comps

RISMEDIA, Saturday, October 17, 2015— “Comps” – or recent comparable sales – give real estate practitioners and appraisers the information they need to price a home at fair-market value. Though comparable data are clear-cut to a professional, how many sellers understand the various tangibles and intangibles that inform these comparisons?

If the gap between seller perception and appraiser opinion is any indication, the answer is few. As a recent Quicken Loans Home Price Perception Index (HPPI) report http://rismedia.com/2015-10-13/homeowners-overvalued-their-homes-for-the-eighth-straight-month-in-september/ shows, homeowner estimates averaged 2 percent higher than those of appraisers – a considerable margin in markets with ballooning home values, says Quicken Loans Chief Economist Bob Walters.

“It may not seem like homeowners assuming their home’s value is 2 percent higher than appraisers’ opinions is significant, but it could make a huge difference in metro areas with higher average home values,” Walters explains.

But this broad brush stroke doesn’t paint a clear picture of every metro area. In Phoenix, for example, which this summer marked the longest streak of year-over-year gains, seller perceptions are more closely aligned with those of professionals.

“In a market that is going up, there isn’t that much of a difference with seller opinions,” says REALTOR® Steffy Hristova of Scottsdale, Ariz. “If the seller has time, the market is moving in the direction they desire. It is harder with sellers who are behind the market – the market moves, but they always think the market will be better tomorrow and it’s too early for them to sell now.”

In those instances of disconnect, the onus is on the agent to educate the seller. Hristova accomplishes this by helping sellers “visualize the data,” presented on one page if possible, and in some cases applying a simple, straightforward formula.

“I adjust the price according to the following schedule: if there are showings and no offers, 4 to 6 percent off; if there are low showings, 6 to 12 percent off; if there are drive-bys only, 12 or more percent off,” says Hristova.

Breaking down the factors that play a role can also be beneficial for the seller. Market activity generally determines the window, but comparable sales can stretch back one month to three months or more. Hristova gleans insight through resources supplied by her regional MLS and

The Cromford Report, provider of residential real estate research and analysis in the Greater Phoenix Area.

“I review statistics from the MLS daily and from available and reliable research sources, study the market dynamics in the neighborhood and in the substitute market for the object property, and review the demand and supply numbers for the zip code and neighborhood and the sales trends,” Hristova explains.

Square footage, a go-to data set for both real estate agents and appraisers, is also on Hristova’s radar. Sellers can expect their home to be evaluated against properties with similar square footage, as well as a like number of bedrooms and bathrooms. Real estate agents may take into account some of the more ambiguous features the appraiser may not consider, as well.

“I focus on the hidden gems of the object property – the ‘wow’ items, the unique design or special appeal of the property,” says Hristova. “It could be the floor plan, specific updates that are particularly attractive, landscaping features, undergrounding wiring, etc. I also analyze potential negatives – types of financing available, location within the neighborhood, proximity to noise, etc.”

And because no two sellers are alike, individual circumstances also warrant consideration. “Will they wait? Will they provide easy access? Will they be willing to repair items?” Hristova asks.

These and other facets, like age, location, lot size, workmanship and energy-efficiency, can all serve as means for comparison. Age, in particular, can be a key variable, because it can indicate the condition (or decrepitude) of the home. According to Trulia, comparables for age are typically pulled within a five-year range.

For sellers, bear in mind comparable data reflect the activities of both buyers and sellers, no matter which the market currently favors. And as Warren Buffett so eloquently sums up:



This post was originally published on RISMedia's blog, Housecall. Check the blog daily for winning real estate tips and trends for you and your clients.hatShou

Renovations: How to Renovate Your Home Without Exceeding Neighborhood Value

How to Renovate Your Home without Exceeding Neighborhood Value

by Courtney Soinski

Before you decide to renovate your home, it’s important to understand that not all renovations will increase the value. It is certainly possible to over-remodel, and you don’t want it to exceed the value of your neighbors’ homes. Here are some ways to get the highest return on investment (ROI) possible when the time comes to sell your home.

Projects always worth your while

There are specific renovation projects that can deliver the greatest effect on your ROI, regardless of the real estate market’s current state or the value of surrounding homes. According to real estate expert Robert Stammers in a recent article in Investopedia, these can be projects such as an addition of a wood deck, kitchen and bathroom upgrades as well as window replacements.

Factor in location

A common mistake that homeowner tend to make is renovating their homes to the point where it exceeds the value of surrounding homes. The fact of the matter is that people look in a specific neighborhood because of its proximity to nearby businesses or recreation and it’s in their price range. If improvements done to your home are much higher than homes around you, it’s unlikely that they’ll want to pay more for those improvements, even if they’re interested.

Make improvements that will add value over time

Some home improvements, like upgrading the technological features of a home, will not have a lasting impact, and may even bring down the home value. These types of renovations are at a higher risk of becoming obsolete and outdated as years pass. Technology and styles change all the time, so focus on improvements that are less likely to be impacted by time and are worth your investment.

Renovations that will pay you back

Regardless of whether a homeowner is planning to sell or not, the ultimate objective of taking on a renovation is to revel in the enjoyment you get from living in an updated home while gaining considerable profit from that investment. There are many tools out there that show the kind of profit you can expect from specific home remodels. A perfect example of this is Remodeling magazine’s “Cost vs. Value” annual report.

Here are some of the findings from the 2015 Remodeling     Cost Vs. Value report:

Projects that deliver the highest percentage of return on investment

• Entry door replacement (steel): 101.8%
• Garage door replacement: 88.4%
• Siding replacement (fiber-cement): 84.3%
• Siding replacement (vinyl): 80.7%
• Deck addition (wood): 80.5%

Renovation projects that deliver the lowest percentage of return on investment 

• Sunroom addition: 48.5%
• Home office remodel: 48.7%
• Master suite addition: 53.7%
• Garage addition: 54.7%
• Bathroom addition: 57.8%

Buyers: What to Do After Buying Your Dream Home

What to Do after Buying Your Dream Home

                 

Ocean City MD & DE Beach Homes and Lifestyle

RISMEDIA, Tuesday, October 13, 2015—

It's finally yours. The paperwork's all signed and you've secured one of the most important investments of your life: your dream home! What happens next? Most new homeowners often find it difficult to transition into their new house or home, but the next five steps are key to a seamless move into the home you've been coveting.

Step 1: Moving Out and Moving In

Is there anything more stressful than buying a home? Try prepping and packing your current home! It's usually the most dreaded aspect of moving for most, so it's best to determine the type of move you're making and choose the right moving service to help you get your stuff from your old house to your new home without added stress. It's important to consider your move size (is it a large or small move?), if you can afford to hire movers (check out Free Moving Quote for general rates and pricing), or if you want hands-on control of every aspect of the moving process. This should help you determine what type of moving company to choose.

Step 2: Make Sure the Deed is Done

Make sure to check with your county registrar-recorder and confirm that your home deed was recorded. You'll want it on public record that your dream is now a reality, right? Along with confirming the proper filing of your deed, take extra care in ensuring the proper filing of your own documents related to the home sale. Prepare special folders in your filing cabinet to safely store the information for taxes and other occasions that may arise.

Step 3: Protect Your Assets

Investing in home security is huge. You'll want to protect your home from any disasters and theft. You can check Angie's List for top-rated local home security companies. Research home insurance providers to set up protection for your dream home, as well.

Step 4: Meet the Neighbors

You're not only moving into your perfect place, but you're also joining a new community of homeowners, and possibly an entirely new location. Get to know your neighbors, make yourself familiar with your new town or city, or just cross your fingers and wait for the welcoming committee.

Step 5: Live Your Dream

Welcome home. Enjoy your new sanctuary by spending time rewarding yourself after all the hard work you've done, including home hunting, moving, and getting settled.

Chan Plett is a professional content writer for the Web and self-proclaimed moving expert, after having moved nearly once or twice every year for the past eight years. She's written for Nordstrom, Eventbrite, and several online blogs.

Buyers: 7 Crucial Facts about FHA Loans ...

7 Crucial Facts about FHA Loans

                                                

RISMEDIA, Monday, October 05, 2015— (TNS)—FHA loans are popular with mortgage borrowers because of lower down payment requirements and less stringent lending standards.

Simply stated, an FHA loan is a mortgage insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

Why People Get FHA Loans 

Because of that insurance, lenders can — and do — offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements.

Following are seven facts that borrowers should know about FHA loans.

Less-Than-Perfect Credit 

Minimum credit scores for FHA loans depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5 percent, the borrower needs a credit score of 580 or higher.

Those with credit scores between 500 and 579 must make down payments of at least 10 percent.

People with credit scores under 500 generally are ineligible for FHA loans. The FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Ask your FHA lender or an FHA loan specialist if you qualify.

Minimum Down Payment is 3.5 Percent 

For most borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of the home. That’s a “huge attraction,” says Dennis Geist, senior director of compliance and fair lending at Treliant Risk Advisors and formerly a vice president of government programs for another lender. In late 2014, Fannie Mae and Freddie Mac reduced minimum down payments to 3 percent from 10 percent, but such loans have limited availability.

FHA borrowers can use their own savings to make the down payment. But other allowed sources of cash include a gift from a family member or a grant from a state or local government down-payment assistance program.

Closing Costs May Be Covered 
The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an inducement for the borrower to buy a new home.

Lenders typically charge a higher interest rate on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to figure out which option makes the most sense.

Lender Must Be FHA-Approved 

Because the FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs — even on the same FHA loan.

Costs, services and underwriting standards will vary among lenders or mortgage brokers, so it’s important for borrowers to shop around.

2-Part Mortgage Insurance 

Two mortgage insurance premiums are required on all FHA loans. The upfront premium is 1.75 percent of the loan amount — $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan. It can be financed as part of the loan amount.

The second is called the annual premium, although it is paid monthly. It varies based on the length of the loan, the amount borrowed and the initial loan-to-value ratio, or LTV.

Annual premiums for FHA loans:

—15-year loan, down payment (or equity) of less than 10 percent: 0.7 percent.
—15-year loan, down payment (or equity) of 10 percent or more: 0.45 percent.
—30-year loan, down payment (or equity) of less than 5 percent: 0.85 percent.
—30-year loan, down payment (or equity) of 5 percent or more: 0.8 percent.

Extra Cash Available for Repair 

The FHA has a special loan product for borrowers who need extra cash to make repairs to their homes. The chief advantage of this type of loan, called a 203(k), is that the loan amount is based not on the current appraised value of the home but on the projected value after the repairs are completed. A so-called “streamlined” 203(k) allows the borrower to finance up to $35,000 in nonstructural repairs, such as painting and replacing cabinets or fixtures.

Financial Hardship Relief Allowed 

FHA insurance isn’t intended to be an easy out for borrowers who feel unhappy about their mortgage payments. But loan servicers can offer some relief to borrowers who have an FHA-insured loan, have suffered a serious financial hardship and are struggling to make their payments. That relief might be a temporary period of forbearance, a loan modification that would lower the interest rate or extend the payback period, or a deferral of part of the loan balance at no interest.

Marcie Geffner writes about mortgages and other personal finance topics for Bankrate.com.

©2015 Bankrate.com
Distributed by Tribune Content Agency, LLC

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Buyers & Sellers: Who Owns Your Mortgage?

TRULIA'S BLOG \ MONEY MATTERS

How to Protect Yourself When Your Mortgage Is Sold

By Andrea Murad | September 30, 2015

If your loan was sold to a new lender or servicer, that’s not necessarily a bad thing.

                  

Although you may have signed on with a certain lender when you bought your house, you may find that after a while, your mortgage statements start coming from a new company. While it can be unnerving to see this new name asking for payment, fear not! The practice of selling mortgages in the secondary mortgage market is very common.

In fact, the majority of mortgages are sold in the secondary market after they’re originated. Regardless of which company owns your loan, a loan is a loan — and what’s on your mortgage note hasn’t changed.

But just so you can rest easy, here are answers to common questions you may have about your mortgage changing hands.

Why would a lender sell my mortgage?

The adage that “it takes money to make money” holds true, especially for lenders. Lenders need capital to originate new mortgages, and most mortgages have 30-year terms. If a company were to wait for borrowers to pay off their loans, it would need an exorbitant amount of capital to fund new mortgages. So instead of waiting 20 to 30 years for a borrower to pay down a mortgage, most lenders sell the loans they originate to an investor, such as a government-sponsored enterprise (for example, Fannie Mae or Freddie Mac).

Home mortgages aside, banks and finance companies sell just about every loan they originate so they can raise money to make more loans. Auto loans, credit card loans, and student loans are all fair game to package into bonds that can be sold to both domestic and international investors. Without investors willing to buy these loans, banks and finance companies wouldn’t be able to lend you money from the get-go.

Is it legal for a lender to sell my loan?

Yes, it’s perfectly legal for a lender to perform a mortgage transfer, but not every lender sells every loan. Some lenders hold higher-balance nonconforming loans on their balance sheets; sometimes these same loans are sold to investors so that the lender can free up cash and originate more loans. It really depends, and borrowers cannot stipulate that their mortgage won’t be sold to another lender or that the servicer won’t ever change.

The Real Estate Settlement Procedures Act requires that a lender disclose plans to transfer servicing for your loan to another lender in the Mortgage Servicing Disclosure Statement. If you didn’t receive this document when you applied for your loan, your lender should have mailed it to you within three business days of your application.

How do I find out if my loan has been sold?

Lenders are required to notify borrowers within 30 days of the sale. This notice will include the name and contact information for the new owner of your loan, when your loan will be sold, and whether the sale will be included in public records.

Is the servicing sold too? Are the servicer and lender the same company?

Your lender and the servicer aren’t always the same company. A lender originates the loan and provides the capital for you to buy your new home or refinance your existing home, while the servicer handles the day-to-day maintenance of your loan — things such as processing and recalculating payments, managing escrow accounts, and beginning foreclosure proceedings.

Sometimes the servicer will remain the same after a loan is sold. If the servicer changes, you’ll receive notice of the new servicer that includes details on where to send payments and contact information for questions.

Will my payment change if my loan is sold?

Unless you have an adjustable-rate mortgage, no. Whether your loan rate is fixed or adjustable, your payment may also change if you pay your taxes and insurance through an escrow account and what’s due changes. All other loan terms will remain the same.

What if I send my payment to the wrong lender?

If your payment is already in the mail, you won’t be charged a late fee for mailing your check to your old lender. There’s a 60-day grace period after your mortgage is transferred.

What if I don’t receive any notices, and my servicer has changed?

For borrowers, the transition between lenders and servicers is usually pretty seamless, but that’s not to say mistakes don’t happen. When thousands of loans are transferred from one company to another, issues can arise. If your lender or servicer changed and you weren’t notified, then you can file a complaint online with the Consumer Financial Protection Bureau.

Borrowers should feel confident that they are protected if their loan is sold in the secondary mortgage market. The handoff to a new lender or servicer should be as painless as receiving a few letters in the mail, and being cognizant of where and when to send your payment each month.

- See more at: http://www.trulia.com/blog/how-to-protect-yourself-in-a-mortgage-transfer/?ecampaign=cnews&eurl=www.trulia.com%2Fblog%2Fhow-to-protect-yourself-in-a-mortgage-transfer%2F#sthash.tqmawez4.dpuf

Buyers: Tips for Negotiating your Home Purchase

7 Negotiating Tips for Homebuyers

Remember these tips during the deal-making process of your home purchase.  

By: Tara-Nicholle Nelson  HGTV

                        

#Ocean City Md - Susan Antigone-ShoreFun4U with Long & Foster -OC  Beach Resort Property

#1: BE QUICK ON THE UPTAKE

It is critical to respond to counteroffers as soon as possible and to avoid making a counteroffer with any term that is not truly a deal breaker. Delays in responding leave space open for another buyer to step in and create a bidding war, or even more likely, for the seller to perceive that other serious buyers might be out there. A seller's mere perception of a hint of a whiff of the scent of a potential bidding war is a homebuyer's number one nemesis, ratcheting up the possible sales price in the seller's head on an exponential basis.

#2: CUT IN THE MIDDLE (WO)MAN
When you want to ask or tell the seller something, always always always go through your real estate agent, who will communicate your request or concern to the seller's agent. I know it seems inefficient, but it is truly a rookie move to contact the seller directly. It's just not done, mostly because the terminology is tough to master and legally sensitive. Also, some seemingly innocent and minor changes to your agreement with the seller might create problems with your lender; your real estate agent is better equipped than you to see these red flags. You hired your agent, so use him/her! It will prevent the catastrophic misunderstandings (read: drama) that can result when you or the seller says something even slightly different than what you each actually mean!

#3: GAUGE THE SITUATION WHEN DEALING WITH A DEVELOPER/BUILDER
A lot of this talk about negotiating and price and terms, etc. may be moot when you're buying a newly built home. By and large, the builder/developer dictates the terms on which they will sell you a home in their community, and you either take it or leave it. The list price is the price you pay, though in many markets, developers and builders are willing to negotiate if they have a large amount of inventory.

The builder will have a standard contract with a standard required deposit, standard contingency removal or objection periods, and a standard set of disclosures that they make to every buyer. The larger the builder, the more set they will be in their ways and to their price. That said, it doesn't hurt to ask for concessions or upgrades. Furthermore, builders hate getting sued, so they generally try to create a standard contract that affords you most or all of the same protections your real estate agent would build into a contract for you.

#4: GET THE DIRT ON PENDINGS
When the sold comps aren't that similar or sold a long time ago, or there is a very similar pending comp, you can go nuts wondering what price the buyer of that pending comp agreed to pay for the place. Sometimes the listing agents of pending comps can be sweet-talked into giving up the dirt. Your real estate agent can call them up, explain the situation, and ask obliquely for contract price hints, like "Did it sell for over (or under) asking? About how far over (or under)? What was the list price to sales price ratio? And how much competition was there? Did you have multiple offers?" And you can also make some educated guesses; the longer it was on the market, the less likely it sold for the asking price. The opposite is true, too. If it went off the market really quickly, it probably sold at or over the asking price.

#5: CHECK THE COMPS
The more money you offer, the more likely the seller will accept. Your real estate agent only gets paid if the seller accepts, so you can see why some agents tend to include or emphasize the highest priced comparables, even if they aren't the most similar comps for your property. Ask your agent for a copy of your Comparative Market Analysis (CMA) and ask for the full MLS listing details of the several most similar comparables. That way, you can decide for yourself how similar they really are!

#6: MAKE YOUR REAL ESTATE AGENT WORK FOR IT
If you are competing with other wanna-be buyers for a property, your real estate agent's prep work and presentation of your offer can be critical to your success. Hopefully you interviewed several real estate professionals and hired one you can trust and know will go the extra mile for you. Always communicate with your agent to ensure you both are on the same page in terms of expectations and deal breakers.

#7: CRUNCH THE NUMBERS
Before you finalize your decision about how much to offer, have your mortgage broker run a monthly payment on your offer price and estimate your property taxes and insurance. Often, buyers inch up in price during the house hunt and in the course of formulating their offer, so it's important to have a final check on the exact monthly and annual obligations you will incur if your offer is accepted.

Also, if you're seriously debating between offering two different prices and are having a hard time making the decision, ask your mortgage professional to run the payment, taxes and insurance on both of the prices you're considering. You might be surprised at how small (or large) an impact a $5,000, $10,000 or $50,000 difference in purchase price has on your ongoing payments, and it may help ease your decision making between the two amounts you are thinking about offering.

Buyers: Are you interested in lower mortgage interest rates?

Mortgage Interest Rates Decreased in August

RISMEDIA, Friday, October 02, 2015— Nationally, interest rates on conventional purchase-money mortgages decreased from July to August, according to several indices of new mortgage contracts.

The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 3.99 percent for loans closed in late August, down 3 basis points from 4.02 percent in July. 

The average interest rate on all mortgage loans was 3.99 percent, down 2 basis points from 4.01 in July. The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.20 percent, unchanged from July.

The effective interest rate on all mortgage loans was 4.15 percent in August, down 2 basis points from 4.17 percent in July. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage. The average loan amount for all loans was $303,300 in August, down $1,300 from $304,600 in July.



FHFA will release September index values Thursday, October 29, 2015.

For more information, visit www.fhfa.gov.