TFA Blogger, Author at Title First Agency

Beware Overpricing Your Home!

We all want to get the most money possible when we put our homes on the market so it’s natural to want to ask for top dollar. After you and an experienced realtor review the comps from your neighborhood, you believe you should price it high so that you have room to come down and still make some good money. But the most important part of selling a home is knowing the current market value so you don’t price it too high. There are problems associated with listing your home too high that can actually hurt the sale.

Problem #1: Listings get the most showings in the first 30 days of being on the market. If a home is priced too high, buyers may choose to ignore it or put it in a “wait and see category.” The longer the home sits unsold, though, the more negatively it is viewed. Buyers will think it must be overpriced or there is something wrong with the home. If you wait too long to drop the price, most of those “wait and see” buyers will have already moved on and there will be a smaller pool of buyers interested in your listing as the days on the market increase.

If the home is on the market too long, potential buyers will think they are in a better negotiating position and you may end up receiving a lowball offer, which can be frustrating. Even if you can negotiate up, it will be for far less than your original asking price. If you want to attract as many potential buyers as possible, it’s important that the home is priced correctly from the onset of its going on the market.

Problem #2: An overpriced home helps your competitors. When a buyer looks at your home and then visits another that is priced the same but comes with more features, your competitor’s home will look like a much better deal.

Problem #3: If your home sits on the market for too long, neighbors and potential buyers will assume that there is a problem with it. The home will be stigmatized, and buyers will either be too turned off or too afraid to check it out.

No one wants to buy a house that nobody else seems to want. A house that sticks on the market for months often generates suspicions that some undisclosed feature or element is making it unsalable.

Problem #4: A buyer is interested in your house and willing to pay the price you are asking. But they need to get money from the bank to pay for it. All banks demand an appraisal of any property they loan out money for, and yours will not be the exception. The market runs the appraiser and they will appraise your property in accordance with it. When the appraiser comes back with a noticeably lower market value than the price the buyer is offering the bank will likely refuse to give the buyer a mortgage. This can lead you from a safe sale to an unsuccessful mortgage application leaving you with no option but to seek more buyers.

The Bottom Line: Find an experienced Real Estate Agent and listen to their advice for pricing your home, stay realistic in your pricing and accomplish your ultimate goal of selling your home. Know that 75% of real estate marketing is the price you set in the beginning. All of the marketing and advertising in the world will not sell an overpriced home.

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What Home Inspectors Look For

As a homebuyer, you get to choose your home inspector, so it’s important to find a good one who’s experienced and educated. Ask your realtor for a couple of recommendations and then do a simple search on google to find any reviews there may be.

An inspection is the buyer’s greatest opportunity to determine the home’s condition. You will get a full picture of the home from the inspector spending time documenting the big and the little issues. This is not a test that the house passes or fails, but rather it’s a way to identify problems that will need to be dealt with.

Foundation: A home inspector takes a close look at the structural integrity of the home you want to buy. Part of that means he will be looking for cracks, moisture, water damage, and sticking windows and doors, which could reveal that the foundation of the home is shifting or sinking. The inspector won’t have the final say as they can’t officially diagnose or offer repair solutions for the foundation issues. They identify and find all the hidden problems and gather the overall sense of the issue and if it is believed to be serious, a structural engineer would need to come out. Most of the foundation repair companies won’t charge a fee to come to inspect in the hopes that you will hire them to fix the problem.

Roof: The inspector will check if the peak is straight and level. if the roof is sagging between rafters, if shingles show any signs of deterioration, if roof vents are visible, and if there is any loose flashing near the chimney. He will want to make sure the roof is well-constructed and will protect you from the elements. As part of the report, you can expect to be provided with an estimate of how many good years the roof has left before the consideration of replacing it.

Plumbing: He will look inside and outside the house and he will check to see if the water is running from the taps including the spigots, see that they drain empty, and make sure that the toilets flush. The inspector will look for any leaks around the plumbing, pipes, and fixtures. There will be an assessment of the toilet flappers, dripping faucets, and leaky showerheads.

Electrical: One of the leading causes of house fires is the electrical system, so expect this to be a very thorough examination. In addition to checking the electrical panel to make sure wiring and grounding are up to code, the inspector looks for corroded wires and correct amperage ratings. Common electrical issues include exposed wiring, painted outlets, reversed polarity, aluminum wiring, and lack of GFCI protection.

HVAC: Inspectors will check the thermostat, air conditioner, furnace, heat pumps, and ducts to assure that all are in working order. He will look at service records and determine the system’s age, evaluate the cleanliness of each component, and the safety mechanisms.

The Bottom Line: There is much more to a home inspection than those above but these are the most costly to repair or replace if issues are found. With this report, you are more able to identify what you can or can not take on if you buy a home. Furthermore, a home inspection can uncover potentially life-threatening problems like mold or faulty wiring that could cause a significant fire.

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DIY Quick and Easy Reboot to Sell Your Home

If you are preparing to put your home on the market, it might not make sense to complete any big home improvement projects. Once you have met with your realtor and are convinced there aren’t any major repairs to make, consider doing some easy refurbishing yourself to make your home more appealing to buyers. These updates shouldn’t take long to accomplish, and they won’t break the bank.

The First Impression: Start with the first thing potential buyers will see online, driving by, or coming to a showing – your home’s curb appeal. Check all your landscaping and keep your grass cut. Clear your yard of dead plants, weeds, sticks, and leaves. Trim the trees and the bushes and consider adding a few bags of dark mulch around them. If your home has a front porch, adding a couple of pots of seasonal flowers on the front porch can make a huge difference. Update and possibly remove any accessories such as a doormat, wreath, or rug.

The Front Door: A little sanding, a fresh coat or two of paint, clean or paint the trim, and put on a new doorknob. A knocker will add some charm. Fix or replace any exterior lighting that needs some help.

Bathrooms and Kitchen: Outdated lighting and plumbing fixtures can drag down the entire vibe of a home. But by replacing the old fixtures with either timeless or trendy ones, you breathe fresh life into the space. If your cabinets have old and tired hardware, replace them for a quick, easy, and cheap facelift. Regrout and replace chipped tiles. This may take some extra elbow grease but will make your tile look new and give it a fresh look that buyers love.

Fresh Paint: Brighten up your home with a new coat of paint in a color palette that will appeal to today’s buyers. Doing this will help in covering up stains, marks, scratches, and any odors. Choose a warm neutral color to appeal to the widest range of buyers. Talk to your realtor for advice on what is currently popular. Painting can be done on a weekend and absolutely won’t break the bank.

Flooring: A huge selling point for potential homebuyers. Remember that odors linger especially in rugs and carpets and worn, dirty, or badly colored carpeting can turn a buyer off in seconds. If you have good hardwood floors, consider ripping out the carpet and exposing the wood. If that isn’t an option, your realtor should have recommendations on who or what to use to bring life into your carpeting – replacing or deep cleaning it.

Window Treatment: Get rid of any town window shades, dreary curtains, bent mini-blinds, and dusty old drapery. Remove and replace with simple white mini-blinds or wood blinds. Easy fix and refresh that can be done in a day.

The Bottom Line: Adding any or all of these updates can easily and cheaply get your home ready to sell with confidence. If you want to sell your home as quickly as possible you’ve got to put your best foot forward for potential buyers, especially those who come in to take a physical walk-through of the property.

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Community Matters When Buying a House

When a home-buying budget is tight, there’s always the temptation to buy a fantastic, big house in a less costly area. However, buying a home in an undesirable neighborhood might be a huge mistake, especially when it’s time to resell in the future. Choosing the right neighborhood is one of the most decisions you will make. Of course, there will always be issues you wouldn’t be able to discover until after you’ve moved in. But there are ways to scout out red flags ahead of time.

When you see homes that are rundown throughout the community, it could be a sign that the residents have given up and the neighborhood is in rapid decline. A street that is full of homes with broken/cracked windows, overgrown, unkempt yards, home vacancies, gutters filled with leaves and vines, sagging rooflines, pooling water in yards, homes with obvious chipping paint & broken fences should sound off an alarm. It’s a clue that the neighbors don’t take pride in their homes and with no upkeep, they can end up decreasing the property values for the entire street.

Are there too many houses that are for sale in the neighborhood? When driving through notice if there is an abundance of “for sale” or “for rent” signs. If everyone is trying to sell, it’s probably not a coincidence. There are plenty of reasons this could be going on, but it’s important to have your Realtor dig in and find out the details. Also, check with the local police department and find out about the crime – a real reason people would be making a mass exodus from the neighborhood.

How is the local school system? Are there fewer students enrolling? A sure sign of a healthy community is a blossoming school. Another reason to have a good, knowledgeable Realtor with you – he/she should know all these details or at least where you can find the information about the schools.

Most streets have some cracks and bumps but are you noticing big potholes in the neighborhood? This could mean that this is an area of neglect in the city. Is the local park a mess? If you can see that there is no organization to take care of the streets, the parks, and any public spaces in the neighborhood it is a sure sign that the property values are headed down.

Drive through the neighborhood on a beautiful day. Do you see people out and about? Are kids playing ball in yards? Bike riding? Is anyone sitting on the front porches? A big red flag if you don’t see people. This could signal that residents stay inside and don’t allow their children to play outdoors because they don’t feel safe outside. Again, check with the local police department.

The Bottom Line: Attention to the surroundings of any neighborhood is important. Often, the focus is on the home and how perfect it is for you, but a huge part of the way you live is where you live. Drive around, contact the local law enforcement agency, speak with local real estate agents, and do online research.

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A Home & Its Title Chain

Does the seller have the legal right to sell this home? Is the home’s title free of judgments, liens, or bankruptcies that would prevent the seller from transferring a clear title to the buyer? How can you be certain?

Every property has a history of owners. That history is called an ownership chain, or more often, a title chain. When a link in the chain has a problem, it’s called a title defect, or a cloud on the title. No matter how small the problem is, any title issue must be resolved in order to offer a clear title to the buyer.

When purchasing a home, you may view title insurance as an unnecessary cost. However, title insurance provides protection for both the seller and the buyer against title defects. Title insurance, as the name implies, insures against property title defects or ownership defects. Some title problems may not become apparent for years. Others can hinder the sale of your home, and may even limit who you can sell your home to.

The title company will examine public records of the home being sold, sometimes going back 50 years or more, to look for past deeds, wills, trusts, divorce decrees, bankruptcy filings, court judgments, and tax records that may be defective or outstanding. The results of the search will be compiled into a preliminary title report that will be given to the buyer, seller, real estate agent, lender, and attorney involved in the sale.

Common Issues

PUBLIC RECORDS: Mistakes and errors happen but you do not want it affecting your home. The errors can be disastrous and cause you an undue financial burden to resolve. Simple clerical or filing errors could affect the deed or survey of your property.

UNKNOWN LIENS: Prior owners of your property may have left unpaid bills. And, even though the former debt is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the sale. This is an especially worrisome issue with distressed properties.

ILLEGAL DEEDS: While the chain of title on your property may appear perfectly sound, it’s possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or one who is reported single but in actuality married. These instances may affect the enforceability of prior deeds, affecting prior (and possibly present) ownership.

MISSING HEIRS: When a person dies, the ownership of their home may fall to their heirs or those named within their will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may contest the will for their own property rights. These scenarios – which can happen long after you have purchased the property – may affect your rights to the property.

FORGERIES: Unfortunately, we don’t live in a completely honest world. Sometimes forged or fabricated documents that affect property ownership are filed within public records, obscuring the rightful ownership of the property. Once these forgeries come to light, your rights to your home may be in jeopardy.

UNDISCOVERED ENCUMBRANCES: At the time that you purchase your home, you may not know that a third party holds a claim to all or part of your property – due to a former mortgage or lien, or non-financial claims, like restrictions or covenants limiting the use of your property.

UNKNOWN EASEMENTS: You may own your new home and its surrounding land, but an unknown easement may prohibit you from using it as you’d like or could allow government agencies, businesses, or other parties access to all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.

BOUNDARY/SURVEY DISPUTES: You may have seen several surveys of your property prior to purchasing, however, other surveys may exist that show differing boundaries. Therefore, a neighbor or other party may be able to claim ownership of a portion of your property.

UNDISCOVERED WILL: When a property owner dies with no apparent will or heir, the state may sell his or her assets, including the home. When you purchase such a home, you assume your rights as the owner. However, even years later, the deceased owner’s will may come to light and your rights to the property may be seriously jeopardized.

The Bottom Line: The experts at Title First oversee and perform thousands of closings each year. When using Title First, you can sign confidently on the dotted line knowing that all details of your title transfer and closing are in proper order. We are here to answer any questions you may have about buying or selling a home, and our team will guide you through the entire process.

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Don’t Be Caught Surprised & Unprepared: Closing Costs

Closing costs add up to anywhere from 3% to 6% of the purchase price. This means if your home is $400,000 and your closing costs are 4%, you’ll owe $16,000 at closing.

Some examples of costs common during a closing:

Application fee — The application fee covers the cost of administering the transaction and handling the documentation.
Appraisal fee — A licensed appraiser inspects the home to determine its worth. This appraisal fee typically costs a few hundred dollars.
Credit report — As part of the due diligence to determine your credit worthiness and determine the interest rate for your loan, the lender will pull your credit report. This fee is rolled into your closing costs.
Homeowner’s insurance — Homeowner’s insurance is typically required to protect the home from loss or damage. Up to one year’s worth of insurance is due at the closing.
Private mortgage insurance (PMI) — PMI is designed to protect the lender in case you default on your loan. Until you own a certain percentage of the home, private mortgage insurance may be required by your lender.
Property taxes — Depending on your location, you may be required to pre-pay 60, 90, or 180 days worth of property taxes when you close on your house.
Transfer tax — Typically a percentage of the sales price or fair market value of the house, this tax fee is collected and paid when the title passes from the seller to the buyer.
Underwriting fee — Also known as a loan origination fee, this fee is charged by the lender for preparing the mortgage loan.
Title search services: A title search verifies the seller’s legal right to transfer the property to the buyer and flags and liens that may have to be cleared before the sale can be completed.
Real estate attorney’s fees: It’s customary and advisable (and mandatory, in some jurisdictions) for both buyer and seller to hire attorneys to review sales contracts before a home sale is completed. In more complicated sales—if a home is occupied by tenants at the time of the sale, for instance, or if the sale is contingent on the seller completing certain repairs or improvements—attorneys may play a more active role, crafting contract provisions to protect their client’s interests.
Agents’ sales commission: Real estate agents representing the buyer and seller typically split a commission of 5% to 6% of the sales price.

The Bottom Line: There are steps you can take to bring down your closing costs:

Schedule your closing at the end of the month. Part of your closing costs is prepaid interest charges on your mortgage for the remaining days of the calendar month. If you schedule your closing toward the end of the month, you’ll only pay these charges for a few days.
Ask the seller to cover some of the costs. In a buyer’s market, and/or if your seller is particularly eager to complete the sale, you can ask them to cover some of the closing costs.
Compare your loan estimate and your final closing disclosure form. Check for inconsistencies and new charges. If something doesn’t look right, bring it to the attention of your lender.

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Refinancing Your Home

When you refinance, you get a new mortgage to pay off your existing mortgage. Refinancing works just like getting a mortgage to buy a house, but free from the stress of home buying and moving. As a homeowner, you will have the opportunity to choose among all the types of mortgages that are available to home buyers.

Refinancing your home allows you to change the terms of your mortgage to secure a lower monthly payment, rearrange the loan terms, consolidate debt, or even take some cash from your home’s equity to put towards renovations or bills.

Is it worth it? The general rule of thumb says that you’ll benefit from refinancing if the new rate is at least 1% lower than the rate you have. More to the point, consider whether the monthly savings is enough to make a positive change in your life, or whether the overall savings over the life of the loan will benefit you substantially.

Are there any good reasons NOT to refinance? Refinancing loans come with closing costs just like a regular mortgage. Freddie Mac suggests budgeting about $5,000 for closing costs. That will include appraisal fees, credit report fees, title services, lender origination/administration fees, survey fees, underwriting fees, and attorney costs.

If your closing costs are $5,000 and you save $500 per month on your new mortgage, it would take 10 months to break even. However, if you only saved $200 per month, your “break-even point” would be 25 months (just over two years). Stay in the home for less time than that, and you won’t truly be saving money long-term.

There are lenders that offer a “no-cost refinance” but it usually just means that the closing fees are being wrapped up into the amount of your loan.

Before you decide to refinance it’s important to understand how the process works and to evaluate the pros and cons of your individual situation. For example, many homeowners are surprised at the amount of documentation needed to get approved. And some people aren’t aware that there are some refinance options requiring very little paperwork.

The Bottom Line: During this era of economic uncertainty, refinancing your mortgage can give you some breathing room by lowering your monthly payments and/or saving you money over time. When you refinance, it means you’re essentially taking out a brand new loan on your property, often for the remainder that you owe. While refinancing sounds great on paper, it may not always put you in a better position. It’s best to weigh the pros and cons, taking your personal situation into account.

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Home Upgrades You Should Skip

Don’t expect to recoup most of the money you put into home improvements when it comes time to sell. Do them for you and your family to enjoy because the truth is that some renovations can actually reduce the value of your home.

Here are a few of the most common home improvements that could possibly turn out to be mistakes. While they may add to the house’s appeal, they won’t add value. In some cases, they could even act as a detriment when the property goes on the market.

Swimming Pool

Even living in the hottest climates, a pool can seem like endless hours of entertainment. You can even picture yourself and all your friends and family enjoying a hot day poolside, but unfortunately potential homebuyers may not. They are possibly thinking of the hours of upkeep, expensive costs and the dangerous liability a pool can add.

Eliminating Rooms

Enlarging a room, for example a master bedroom, by knocking down walls and combining a neighboring room is never a good idea unless you plan on living in the home forever. Even if the other bedrooms are small, you can expect to add 15% more onto your property value with each extra bedroom. Aside from square footage, the total number of bedrooms a home has is a primary driver of the sales price. Generally, people search for new homes based on the number of bedrooms they need.

Expensive landscaping

Upscale, professional landscaping won’t add value to your home. Instead keep your lawn well-maintained with trimmed and pruned bushes, shrubs and trees.

Having to hire a professional landscaping company for monthly upkeep may cause disinterest for buyers. Keep it simple with native plants that require little water and maintenance. Landscaping choices are a personal preference,and some buyers will inevitably see only the money required to keep that beautiful backyard well maintained.

Invisible Improvements

Pricey projects that make your house a better place to live, but that nobody else would notice or care about, like replacing plumbing or the HVAC unit. Most buyers just assume that these systems are in good working order. They will rarely pay extra just because they were recently installed. Necessary, not not showy, improvements, like new paint and carpet, don’t add value because buyers already expect these features to be in good condition. They don’t feel they should have to replace the wear and tear you caused while living there.

If any essential system (like the HVAC unit) needs to be replaced, you should certainly do it—but don’t expect to recover the cost by getting a higher price for your house.

Wall to Wall Carpeting

It so happens that home buyers cringe at a carpet upgrade. People are turning away from carpeting because of the dangerous chemicals used to process it, not to mention the fact that it’s considered an allergen hazard—a serious concern for many people, especially families with children.

Not only will you not recoup the cost of wall-to-wall carpeting, but—if carpet is the primary flooring throughout—it can actually lower the value of your home.

The Bottom Line: Renovations and improvements can improve your home but they come in many different forms. Certain upgrades are worth the investmen and others simply don’t add value when it’s time to sell. When making changes always keep in mind what will appeal to a future buyer when the time comes to sell your home. Before you jump into all the things you’d like to fix or renovate in your home, you need to do your due diligence. Reach out to your favorite Realtor and get her opinion.

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Should You Sell Your House or Rent It Out?

If your home isn’t selling, you might be tempted to ask your Realtor if you should consider renting it out. While it is impossible to predict with perfect accuracy where your housing market is headed, your Realtor can help you to make an informed prediction. If your home’s value will increase in the next few years, so it would be a great idea to consider renting it out now and selling later. But, there are a lot of factors to consider.

How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations?
Because of the economy, many homeowners can no longer make their mortgage payments. What percent of tenants do you think can no longer afford to pay their rent?
Have you interviewed a few experienced eviction attorneys in case a challenge does arise?
Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner-occupied home?
Will you allow pets? Cats? Dogs?
How will you actually collect the rent? By mail? In-person?
Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?
Do you have a list of craftspeople readily available to handle these repairs?
How often will you do a physical inspection of the property?
Will you alert your current neighbors that you are renting the house?
How much time do you have? When you rent out your home, you still have obligations as an owner. You need to make sure that you’re able to meet your tenants’ needs, such as repairs or emergencies while following all landlord and tenant laws. It helps to contact an experienced lawyer to learn more about these laws, too.
Are you financially prepared? Can you cover the cost of the mortgage if a tenant misses rent or if the house sits unoccupied for a few months? What about the cost of emergency repairs?
How much do you need to charge? You may want to charge enough rent to cover the cost of your mortgage, taxes, and insurance. If it’s feasible, you might want to set a rent that can partially cover repairs and earn extra income. Make sure that you’re able to ask for enough to prevent it from costing you money — and ask a real estate agent about fair market values in your area. If your rent amount is above fair market value, you may not find a tenant.
Can you afford the upkeep? Before putting your house up for rent, make all the needed repairs. Take care of any other minor improvements that make the home presentable and allow you to get the rent amount you want.

The Bottom Line: There’s no right or wrong answer when it comes to deciding whether to rent or sell your house. Meet with your Realtor and evaluate your unique situation and make the choice that’s right for your needs and your financial future

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Eleven Top Tips in Real Estate

Columnist Leslie Sargent Eskildsen sums up more than 500 commentaries on home buying and selling from 12 years of advice columns. Read the entire article here.

Do the math when it comes to the money: Know your maximum down payment, anticipated closing costs and target monthly total payment (PITIA – principle, interest, property taxes, homeowner’s insurance, and homeowner’s association dues).

Get pre-approved for a loan so you not only know what loan amount you qualify for based on your income, assets and credit score, but also the anticipated interest rate.

Refine your requirements: The more precise you can be about what you want and don’t want, the easier it will be to find the short list of options when you are ready to buy.

Flip the switch from selling your home to selling a house: It is crucial to your success as a seller to file away all of the memories you’ve created and look at your house as an asset you are leveraging to get you to your next destination, rather than the sentimental family home.

Protect your property: When you are getting ready to invite complete strangers into your home, protect yourself and your valuables. Stash away jewels, firearms, prescription meds and small electronics to keep them out of sight and inaccessible. Install security cameras and review the record after each showing.

Expect to be overwhelmed: Whether it’s a never-ending stream of showings making your life significantly more chaotic, or receiving multiple offers within days or not getting any showing requests at all, there will be a lot added to your plate during this process.

Keep calm, carve out the time to deal with the extra work, and give yourself some grace: But don’t procrastinate or dillydally – this is a short-term project and will be over in a few weeks or months.

Expect a bump in the road: Something unexpected is likely to happen. Termites, slab leaks, roof leaks, unpermitted additions and closing delays are just a few examples of unexpected conditions you may encounter along your journey.

Trust that these can usually be remedied with creativity, negotiations and money.

Put in the work: Clean the carpet or replace it with new white carpet to make your rooms look better.

Clean the walls, floors, windows and cabinets. Declutter. Remove all personal photos.

Get matching towels. Get matching bedding, with a ton of complimentary pillows.

Trim the trees, fertilize the lawn and fill the beds with flowers.

Market conditions matter: The primary factors to be aware of when buying or selling are supply, demand and interest rates. It’s Econ 101 from there.

Read the contract: Yes, it is long. Yes, it is tedious. Yes, you should read it.

If you must ask if it needs to be disclosed, it should be disclosed: Barking dogs, slow draining patios, rickety fences, noisy neighbors as well as the broken faucet in the shower.

There are pages of disclosures to prod your memory, but they don’t cover everything. Disclose everything you can think of that might influence the value or desirability of your house.

Start packing as soon as possible: Even before the sign goes in the yard, start packing.

Sort your things into items to pack for the move to the new home, donate to a local charity, or throw away. This is arguably the most difficult part, so getting ahead of it might ease the process.

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