Your Home’s Value and Your Neighbors

How Your Neighbors Affect Your Home Value

When selling your home, one thing that affects whether you can sell your home and how fast you can sell your home is your home’s value. Most people know that a home’s value can be affected by your home, but did you know that your neighbor’s home can also affect your home’s value? Here are four things about your neighbor or your neighbor’s home that can affect your home’s value.

  1. Physical problems

The curb appeal of your neighbor’s home is almost as important as the curb appeal of your home. Any visible signs of disrepair or damage can turn off any potential home buyers from visiting your property. The more damage to your neighbor’s home and yard, the more impact it has on your home’s value. If you are in a neighborhood with a homeowner’s association (HOA), there are most likely guidelines that each homeowner must follow. If a neighbor isn’t following the guidelines, you can report them to the local HOA and they will handle the situation.

  1. Financial problems

A single foreclosure on the same street as your house can affect your home’s value. Delinquent neighbors can also hike up prices of homeowner’s association fees. Finally, if you live in a condo, neighbors who don’t pay maintenance fees can affect your unit’s value.

  1. Legal problems

Your home value is greatly affected by the record of your neighbors. Many communities keep a list of registered sex offenders that is open for public inspection. If you end up with one of these people as your neighbor, it can not only make your home value drop significantly, but it can also take you longer to sell your home. Your home’s value will also decrease if your neighbor has been convicted of any crimes.

  1. Miscellaneous problems

Your neighbor might just be a nuisance. Common problems include neighbors who frequently make noise or have loud parties. Living near any closed-down or vacant businesses or other buildings can also affect your home value, as well as living near loud nightclubs, landfills, or other undesirable businesses and/or facilities.

Seven Home Staging Mistakes

Home Staging Mistakes

Home staging is the act of preparing a home for sale. The goal of staging is to make the home appealing to several potential buyers, helping the home sell faster and for more money. Home staging is an essential part of the home selling process. However, it’s possible for staging to go wrong. Here are seven things to avoid when staging your home.

  1. Beat up or ugly furnishings and décor

Great staging starts with choosing furniture that shows off the home in the best light possible. This includes placing the furniture optimally. Older or beat up furniture can take away from the overall look of the home. If you have older furniture, you may want to consider renting furniture from a home staging company.

  1. Distracting themes and scenes

Home staging helps potential buyers see their new lives. To do so, stagers will often set up scenes to help the vision along, such as a set dining room table or a home office. However, sometimes the scenes can get out of hand. Make sure that the staging makes sense, not only for a home but for where you live. A beach scene with beach décors such as a beach ball, umbrella, and seashells don’t make sense in a Midwest home.

  1. Not clean or clutter-free

It can be challenging to keep a home clean at all times if you’re still living in the home while you’re showing it. Little messes can be distracting for potential buyers, especially if they’re the only spots in the room that has a mess. Even if your home is well staged, these bits of clutter can instantly turn off a buyer.

  1. Using fake everything

You want to make your home feel lived in, so the buyer can picture their life in their new home. However, you shouldn’t convey this message with fake items. Fake fruit or anything inflatable (such as a mattress) can make the home feel not real. It reinforces an idea that the home isn’t real and isn’t a possibility for them to move into.

  1. Not staging to scale

Sellers obviously want their home to seem as spacious as possible. However, you shouldn’t do this by using smaller, lightweight items. In fact, these items can make a room seem smaller. Instead, make sure your furniture and accessories match the room in scale. If you’re still worried about the room looking small, there are plenty of ways to make a small room look larger.

  1. Keeping doors closed

A potential buyer should be able to move through a home without thinking. Many times, a buyer will pass over a staircase to the basement or an upper level because they assumed the closed door was to a closet.

  1. Exterior vs. interior

Both the inside of a home and the outside are important to the sale. One should not overcome the other. Make sure that you pay as much attention to the outside as you do the inside. After all, the outside of your home is what the buyer will make their first impressions of the home on, so it’s important your curb appeal is just as good as the staging inside.

Pricing Your Home for Sale

How to Price Your Home

The most important factor when selling a home is pricing the home. An overpriced home won’t get attention and will lose its freshness in the first two or three weeks. After twenty-one days on the market, interest in a home wanes. Pricing a home too low shouldn’t be too much of a worry. Typically, lower-priced homes will receive multiple offers, which will drive the price up to market price. To properly price your home, here are five factors you should consider.

  1. Comparable listings

To start, list every similar home that was or is listed in your neighborhood over the last three months, within a fourth to half a mile from your home. If you live in an area where there are only a few comparable homes or the property is rural, you can extend this distance. Pay attention to dividing lines, such as major streets or railroads. Don’t compare any homes on different sides of the dividing line.

Compare homes with a similar square footage to yours and ones with similar ages. It’s possible that you can have a home built in 1950 next to a home built in 1990, and the home value will differ between the two.

  1. Sold comparables

Compare the original listing price to the final sales price to see if there were any price reductions. Additionally, compare the final sale price to the actual sold price to determine ratios. Adjust your pricing for house size, configuration, and any additional amenities the home may or may not have.

  1. Pending sales

The sales price for pending sales is unknown until the transaction closes. However, you can call the listing agent and ask for the price. Some listing agents may tell you what the home is selling for. You should also take note of how long the home has been on the market. This can give you an indication of how long your home will stay on market.

  1. Withdrawn and/or expired listings

Why didn’t these homes sell? Look for patterns to see if there was something underlying for all of them or if it was individual reasons concerning the home. If the sellers used a cheap brokerage firm, that could be a sign that the firm didn’t spend the money to advertise their home and you should mark not to use that firm.

  1. Market trends

What is the market trend? In a seller’s market, you should be able to price your home higher than the last comparable sale, since there are less inventory and more buyers. In a balanced market, try setting your price at what the last comparable home sold for. In a buyer’s market, you may want to price your home a little lower, since there are more inventory and fewer buyers.

What to Do If You Get a Low Appraisal

Low Appraisal

An appraisal is an estimation of a home’s value. But what happens when an appraisal comes in under the home’s selling price? Here’s how to deal with a low appraisal.

Why do low appraisals happen?

The first thing you must ask yourself is why the home appraised for less than the home’s sale price. There are a number of reasons why this may occur. Some of the most common are:

  • Declining market values due to fewer buyers and a larger inventory of homes
  • Incorrect evaluation by the underwriter
  • Overpricing by the seller
  • Fallout from a lot of foreclosures and/or short sales in the neighborhood
  • Inexperienced appraiser who doesn’t understand local influence on value
  • Artificially inflated prices, resulting from multiple offers

Solutions for low appraisals

After you figure out why your appraisal may have been lower than expected, it’s time to think of ways to solve your problem.

  1. The seller can lower the price

If the home was overpriced, the seller can lower the price. This is often the best solution to a low appraisal problem. It’s an easy way to satisfy both the buyer and the lender. The seller doesn’t need to lower the price. However, there is no guarantee the new buyer’s lender will appraise the home higher than the first buyer. Additionally, the seller will have to go through the trouble to sell the property again, which can be time-consuming and expensive.

  1. Buyers can make up the difference

A low appraisal does not mean that a lender won’t lend to a buyer. The lender will just lend based on the agreed-upon ratio in the contract at the appraised value. Buyers can make up the difference in a cash payment. In some cases, the lender will not allow the buyer to give cash for the difference. In this event, the lender will have the buyer pay part of the seller’s closing costs.

  1. Sellers can offer a second mortgage

If the buyer cannot come up with the money to pay off the difference, the seller can offer to take out a second mortgage, which the buyer will pay back in smaller payments or in one lump sum at a later date.

  1. Ask for a list of comps

Ask agents involved to put a list together including recent comparable sales in the area at the agreed-to sale price. Once you have the list together, submit it to the underwriter and ask for a review of the appraisal. Try to get comps that are similar to the property in question.

  1. Order a second appraisal

If your loan in an FHA loan, you can ask your lender for a list of approved appraisers. Either the seller or buyer can pay for the second appraisal. The second appraisal may come in higher than the first, especially if the first appraiser was inexperienced. If your loan is a conventional loan, the second appraisal is subject to the rules of the Home Valuation Code of Conduct.

Five Common Contingencies in Real Estate Contracts

Contingency Clauses

A contingency clause is a condition that must be met in order for a real estate contract to become binding. To become part of the sales contract, both parties (the buyer and the seller) must agree to the terms and sign off on the contract. Some of the most common contingencies included in real estate contracts are:

  1. Financing contingency

A financing contingency, or a mortgage contingency, gives the buyer time to apply for and obtain financing to purchase the property. This contingency protects the buyer by giving them the ability to back out of the contract. It also allows them to reclaim their earnest money if they are unable to secure any financing. A financing contingency will state a specific number of days the buyer has to obtain their financing. They have until this date to terminate the contract if need be. If the buyer does not back out of the contract after the specified date, they are obligated to purchase the property, even if they don’t have a loan secured.

  1. Home appraisal contingency

Mortgage lenders often use a home appraisal contingency to ensure that the property is worth the amount the buyer has agreed to pay. A home appraisal evaluates the home’s market value based on certain characteristics. These include the condition of the home, square footage, number of rooms, and the recent selling price of comparable homes. This contingency gives the buyer the chance to renegotiate the purchase price to better reflect the home appraisal or to back out of the deal entirely.

  1. Home inspection contingency

The home inspection contingency is one of the most common real estate contract contingencies. It allows the buyer to back out of the home purchase should they be unhappy with the inspection results. A home inspection assesses the overall condition of the home and determines any necessary repairs and any major health and safety concerns. Minor issues, such as a leaky faucet, can be repaired by the seller before the closing. However, other issues may be more severe and harder to fix, such as issues with the home’s foundation.

  1. Clear title contingency

The title is the legal document that shows who has owned the home in the past and who currently owns the home. Prior to the purchase of a home, a title company will check the title to ensure that it is clear of any liens, disputes, or other similar issues. Most title issues can be solved between the purchase agreement and the final closing. However, there are some that are more problematic. In these cases, the clear title contingency allows the buyer to back out of the purchase.

  1. House sale contingency

A home sale contingency makes the sale of the home contingent on the sale of the buyer’s current home. If a buyer is unable to sell their current home, they have a way out of the purchase contract. However, sellers are often reluctant to accept this kind of offer. In a seller’s market, it is even less likely that a house sale contingency will be accepted. This is because there are more buyers competing in the market.

Should contingencies always be used?

All contingencies shouldn’t be used at once. It is a good idea to include the home inspection contingency in your contract. However, contingencies can often make your offer less appealing to sellers. This is especially true in a hot market when there are a lot of buyers and not a lot of houses for sale. Be aware of the market situation you are in to get a better understanding of which contingencies you should include in your contract.

 

Costs Associated with Selling a Home

Selling a Home: The Cost

Many people save for and anticipate the costs associated with buying a house. However, not everyone thinks about the costs associated with selling a home. Here are the common costs associated with selling a home.

Real estate agent commission

Most agents don’t receive a salary, so this fee pays for the time and resources the agent put into selling your home. A commission typically costs between 5-6% of the total sale cost. The agent commission is split between the buyer’s agent’s brokerage and the seller’s agent. The cost may be split evenly between the two agents or the seller’s agent may get a bit more. The commission includes costs of photographs, signage, and any costs associated with listing the home on a multiple listing service.

Home repairs

If you’re thinking about selling your home, there may be a few repairs you need to get done to boost the appeal of your home and even raise its value. Changes such as painting a bedroom or fixing a leaky faucet may be necessary to sell the home.

Home inspection costs

While you may not be paying for the home inspection, you may be responsible for paying any issues that come to light. Any major repairs can be a huge hit to your wallet. Before placing your home on the market, prepare yourself (and your wallet) for these repairs.

Staging

Staging helps buyers get a clear picture of what the home will look once they move in. A professional stager can help if the home is vacant or if your possessions are outdated.

Utilities

If you plan to move out before selling your home, you should continue to pay for heat and electricity. A home without heat and lighting is difficult to show to buyers, and can even put potential buyers off.

Closing costs

Buyers do pay more in closing costs. However, sellers do have to pay as well. Closing costs for sellers are typically 2% of the home’s price. In addition to this 2%, a seller may also have to pay any outstanding property costs, water and sewage bills, and whatever is remaining on the mortgage.

What is Value Range Pricing?

Value Range Pricing

Value range pricing, or variable range pricing (VRP), is an alternative way of listing your home for sale. Instead of listing the home at a certain price, sellers put up a range instead. While this pricing method is rare, it’s growing in popularity.

Benefits for sellers

Home prices are almost always negotiable, even when the price is listed at a set price, so why not overtly show that flexibility? Value range pricing also allows more buyers to see a listing. Buyers often search for listings by price. If you list your home at $550,000, you’ll be missing buyers who have set their home search to $540,000. Additionally, value range pricing allows a seller to list how low they are willing to go for a sale price. This lets sellers avoid having to field offers lower than what they’re willing to accept.

Benefits for buyers

Buyers can also benefit from value range pricing. This pricing method lets buyers see more homes than they would if homes were set at one price. In addition, value range pricing allows buyers to feel more comfortable with their offers. When there is a range of prices, buyers can make lower offers with confidence that they won’t offend the seller.

Downsides to VRP

For sellers, one major downside to value range pricing is that buyers tend to gravitate to the lower end of the range. For that reason, sellers must understand going into the selling process that they may only receive offers in the lower price range.

Buyers may end up bidding on multiple homes with a low-price strategy. However, since value range pricing attracts many people, this strategy may never pay off. More potential buyers mean more offers. Only bidding in the lower price range may end up hurting in the long run.

When to list a home as a VRP

Value range pricing works well for tepid markets when there is a chance that a home may not get many offers. It doesn’t work well in markets where houses sell quickly and above the list price.

 

How to Sell a Home on a Busy Road

Selling a Home on a Busy Road

Selling a home on a busy street can be difficult. Whether it’s for safety concerns or because of noise, buyers can be turned off by a home in a bustling location. Here’s how to sell a home on a busy road.

  1. Make the inside quieter

Little things can help to cancel out some or all of the noise made by outside traffic. Consider playing soft music or having a fan blowing during a home showing. This works especially well in rooms with windows. In addition, a set of heavy drapes can help to cancel out noise, but the most important thing is to make sure your windows are caulked correctly and have window strips. If you have a serious noise problem, consider purchasing triple-pane or noise-reducing windows.

  1. Try a little landscaping

Landscaping can also work well to drown out the noise and to mask your view of the street. Consider planting trees or shrubs along the roadside. You can also add a tall fence with no gaps around your home. the noise will reflect off these dense objects.

  1. Perfect your “for sale” sign

The good thing about a home being on a busy street is that multiple eyes will pass it every day. To capitalize on this, try to include more information about your home on your “for sale” sign. Try to emphasize your home’s best features, focusing on indoor ones, to give potential buyers more of a reason to check out the home.

  1. Don’t mention it

If a potential buyer doesn’t mention the noise, you shouldn’t either! If they don’t seem to notice or mind the noise, there’s nothing to worry about.

  1. Commercial property

If you’re having trouble selling the home as a residential home, consider selling it as a commercial property. A residential home on a busy street has a lower market value than a comparable property on a quiet street. However, the market value for a commercial property would be comparable to others in the other, because commercial retailers want the drive-by traffic.

How to Sell Your Home in the Winter

Selling Your Home in the Winter

It’s no secret that homes sell better in the spring and summer. However, this doesn’t mean that you can’t sell your home in the winter months! Here are some tips and tricks to sell your home in the winter.

Combat the cold

One thing to pay attention to when showing a home during the winter is the temperature of your home. Make sure the thermostat is set at a comfortable temperature. If needed, add insulation or caulking to eliminate any drafts. If it snows, make sure to shovel all outdoor paths and put down salt to prevent icy pathways.

Staging your home

When staging your home during the winter, all standard recommendations still apply. However, there are a few extra steps you’ll want to take. First and foremost, up the comfort factor in the home. Place throw blankets around the living room and put a focus on plush textures. If you have a fireplace, keep it running during the open house.

Up your curb appeal

Yards and outdoor spaces look less inviting in the winter without the full greenery of spring and summer. Make sure to give some extra attention to these areas to make them look the best. Keep patio furniture out to display how these spaces can be used in warm weather. A patio heater or fire pit can be used to warm up the area.

Make your home more welcoming by using outdoor lighting and make sure existing lights are functioning. Motion-sensing lights work well above the garage and lanterns work well to line your driveway.

Light

Winter tends to be gloomier than spring and summer are, so bringing in light is very important! Keep blinds and curtains open during showings so there are minimal window coverings and allow more sunlight into your space. You can also experiment with different types of light bulbs. Daylight bulbs work well with bathrooms and soft white bulbs work well in living spaces, such as a bedroom or living room. Your color palette in your home determines what will make your home look more appealing.

Seasonal décor

Keep the seasonal décor minimal. While no one expects a home to be completely bare of holiday decorations, a simple look is more appealing. Consider using neutral decorations, such as white lights or a modestly decorated Christmas tree.

Bitcoin and Real Estate

What is Bitcoin?

Bitcoin, created in 2009, is a cryptocurrency that exists in a digital form. Recently, Bitcoin has become more popular in the U.S. and international markets, even extending into the real estate market. One of the biggest draws of Bitcoin is that it holds more volatility than traditional money, such as euros, dollars, and yen.

Bitcoin and the real estate industry

Many companies are starting to experiment with allowing cryptocurrencies to be used for transactions such as rental properties or to buy property. An example of this is ManageGo. ManageGo, a New York-based company, provides technology to residential property managers. Early next year, the company plans to begin allowing people to pay their rent with virtual money.

However, because the currency is so new and the value changes every day, there are some hold-ups about Bitcoin. Real estate professionals must find fluid partners who are comfortable working with bitcoin. There are payment service providers who will convert bitcoins into dollars to mitigate any risk associated for buyers.

If a title company chooses to accept Bitcoin, they are the ones who accept the risk.  Property titles secured through a blockchain could revolutionize by speeding up the mortgage and title process. In addition, it can also help to lessen fraud by preventing document forgery.

Blockchain

The real estate industry has been taking steps to adopt cryptocurrencies and their technologies into the way they operate in the market. This can ultimately change the way that property is bought and sold. While noticeable differences may be years away, several states have already begun changing laws to allow Bitcoin technology into transactions.

Most of the focus today is focused on how blockchain technology could affect the way property titles are recorded and transferred in the sales process. Blockchains were developed as an accounting method for Bitcoin and are now used for Bitcoin and other forms of cryptocurrency. It can also be used for tracking who owns a piece of land, office building, or home.

Blockchain has potential to be a game changer in real estate, especially in the case of the multibillion-dollar industry that provides title insurance and plays a major role in real estate sales.