6 Top Reasons Why You Don’t Want to Overprice Your Home

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Why would sellers deliberately sabotage their chances of selling their homes? It doesn’t make any sense, yet it happens all the time.

Sellers arrogantly slap the highest price on their homes that they think they can get away with. Then they’re surprised when the market slaps them right back with insultingly low offers or none at all.

If you’re a seller getting ready to list your home with a real estate professional, and you’re even thinking of testing the market with a high price tag, it’s time to slap you and get your attention. Here’s what you really set yourself up for:

1. Discourages possible offers – An overpriced home discourages prospective buyers from making offers, if the difference between the asking price and the todays market value is substantial. Many buyers choose not to waste their time on overpriced homes, and prefer to spend their energy looking at homes that appear to be a good value.

2. Lost inquiries and showings – Buyers who learn about the house for sale through signs, flyers or other advertising media will be discouraged with overpriced homes, and will not even inquire about them, nor seek showings. As well, the Buyers agent will concentrate showings based on the stated price-range preferences of the buyers. Just think of your own buying experiences. If you feel you are looking at something that is over priced, you will usually keep looking until you find a better value, and, you will not appreciate or continue to work with a sales agent who keeps recommending overpriced homes to you.

3. Low appraisal versus sale price – Homes that are being financed by buyers must be appraised by the lender. If a home appraises below the buyers offered purchase price, the sale can be endangered… When a home does not appraise, several lenders will penalize the buyer for over paying. It is not unusual for the lender to increase their interest rate, size of the down payment, or deny the loan altogether. This in itself can kill the sale.

4. Helps sell other homes – by overpricing your home you help sell your neighbors house by showing the buyers what a great value “THEIR” home is. This does not help your situation.

5. Lack of showings – Buyers will avoid seeing a home they feel is overpriced.

6. Lower proceeds for seller – it is proven that sellers who chase the market (by overpricing) versus sellers who are more aggressive with their pricing from the get go, end up selling their homes for much less, in the long run. As well, an aggressive sales price moves the home more quickly, thus reducing expensive holding costs.

Overpricing is a risk. Buyers aren’t stupid. Agents don’t work for free. Lenders don’t ignore lending guidelines. So don’t lose out..Don’t overprice your home.

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Five Reasons To Sell Now

(Courtesy of The KCM Crew on February 2, 2015)

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Is spring closer than we think? Depending on which Groundhog you witnessed today, you may have less time than you think to get your home on the market before the busy spring season.

Many sellers feel that the spring is the best time to place their home on the market as buyer demand traditionally increases at that time of year. However, the next six weeks before spring hits also have their own advantages.

Here are five reasons to sell now.

1. Demand is Strong

Foot traffic refers to the number of people out actually physically looking at homes right now. The latest foot traffic numbers show that there are currently more prospective purchasers looking at homes than at any other time in the last 12 months, which includes last spring’s buyers’ market. These buyers are ready, willing and able to purchase… and are in the market right now!

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing supply just dropped to 4.4 months, which is under the 6 months’ supply that is needed for a normal housing market. This means, in many areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will increase in the spring. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. There is less overall business done in the winter. Therefore, the process will be less onerous than it will be in the spring. Getting your house sold and closed before the spring delays begin will lend itself to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 23.5% from now to 2019. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate below 4% right now. Rates are projected to be a full point higher by the end of 2015.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Latest Equity Report Released

(Courtesy of The KCM Crew on January 26, 2015 in KCM Updates)

CoreLogic’s Q3 Equity Report was recently released. As a whole, the country has recovered well from the negative equity situation that existed previously. We now stand at 89.8% equity share as a nation.

According to CoreLogic’s Methodology:

“The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position.”

The President & CEO of CoreLogic, Anand Nallathambi summed up the findings of the report well by saying:

“Negative equity continued to decrease in the third quarter as did the level of homes mired in the foreclosure process. This should hopefully translate into less friction in the housing market as we move forward. Better fundamentals supporting homeownership in the face of higher rents should attract more first-time homebuyers to the market this year and next.”

Below you will find a map of the equity share percentages of each state.

Only 12 states have less than 90% equity share and can be seen in the shades of red on the map below. Seven states did not have enough data to be included in the report: Maine, Vermont, South Dakota, Wyoming, Louisiana, Mississippi, & West Virginia.

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How Soon Can We Buy After A Short Sale

(Courtesy of REALTOR.COM Ask Michele, Buy, Finance |  By: Michele Lerner)

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QUESTION: We had to do a short sale on our home in Nevada last year, but now we have landed on our feet again and want to buy a home in our new location in Oregon. We have enough money saved up for a 20 percent down payment for a house we can afford. Is it possible for us to qualify for a mortgage?

ANSWER: It’s great that you landed on your feet and have been able to save money for a down payment on a new house. Your bigger down payment can be a compensating factor that some lenders will use to qualify you for a loan in spite of a negative credit profile that’s a likely result of the short sale.

Conventional loan guidelines established by Fannie Mae and Freddie Mac say that you must wait two years after the closing date on your short sale to finance another home, if you have 20 percent for a down payment. You would have to wait longer if you had less cash for a down payment (four years with 10 percent and seven years with less than 10 percent). So if you want a conventional loan, you’ll need to wait another year.

FHA-insured loans are available with a down payment of as little as 3.5 percent after a three-year waiting period. Veterans Administration loans, which don’t require a down payment at all, are available after a two-year waiting period.

However, the FHA recently introduced a “Back to Work – Extenuating Circumstances” program to help the many people who lost their homes during the recent housing crisis and recession. You may qualify now for this program if you lost your home due to a job loss or a drop in income or both. This temporary loan program will be available for FHA loans issued between Aug.t 15, 2013, and Sept. 30, 2016.

To qualify, you’ll have to meet standard FHA guidelines for a loan approval and a mortgage lender’s requirements. Typically, this means that your credit score must be 620 or 640 and above and your debt-to-income ratio must be 41 percent to 43 percent or less.  You’ll be required to fully document your job history, income and assets.

In addition, the Back to Work program has other specific requirements. You must:

  • Participate in an FHA-approved housing counseling program.
  • Provide documentation for the “economic event” that caused the bankruptcy, which must have reduced your income by 20 percent or more for at least six months. In other words, you’ll need a W2 or tax returns or a termination letter.
  • Prove that you had good credit before the economic event damaged it.
  • Prove that you’ve fully recovered from the event by having a credit report without any late payments for at least 12 months on installment debt and without any major derogatory comments on revolving credit accounts. Your report cannot show any judgments or collections unless they’re related to medical bills or identity theft.

Consult a mortgage lender to see if you can qualify for this FHA program, but remember that FHA loans require mortgage insurance for at least 11 years, even if you make a down payment of 20 percent. You may want to consider asking a mortgage lender if any exceptions are possible for individuals who want to apply for a conventional loan after a short sale. If not, you should weigh the benefit of waiting one more year to buy a home rather than committing to years of mortgage insurance payments.

Home Sales Rebound for the Holidays, Inventory Shrinks

Sales volume rebounded for December, increasing 21.5% to 1,313 single family home sales. This is nearly an identical rebound from the 21.4% drop from October to November (1,375 sales down to 1,081 sales). This marks an increase in sales after four months of consecutive decline. Equity sale dominate the market, accounting for 87.5% of all sales (1,145 units). The remainder of sales comprised of 80 Short Sales (6.1%) and REO sales (6.7%). For the month, REO sales increased 26.4%, short sales decreased 1.6% and conventional sales decreased 1.4%.

Of the 1,313 sales this month, 202 used cash financing, 661 used conventional (mortgage‐backed) financing, 318 used FHA (Federal Housing Administration), 100 used VA (Veteran’s Affairs) and 32 used Other* types of financing. The average DOM (days on market) for homes sold this month was 41, while the Median DOM was 26. These numbers represent the days between the initial listing of the home as “active” and the day it goes “pending.” Breaking down the Days On Market, there were 709 listings that sold between 1 – 30 days, 287 listings that sold between 31 – 60 days, 160 between 61 – 90 days, 81 between 91 – 120 days and 76 sold after being on the market for over 120 days. See comparison of sales volume for 2013 and 2014 below.

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The month‐to‐month median sales price increased 1.1% from $265,000 to $268,000. The current level is 7.2% above the $250,000 median sales price of December 2013. The current figure is up 67.5% from the January 2012 low of $160,000. When compared to the all‐time high ($392,750/Aug. ’08), the current figure is down 31.7%.n
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Active Listing Inventory in Sacramento County decreased for the month, down 19.2% to 2,427 (from 3,002 listings). Compared year‐to‐year, the current number is up (32.2%) from the 2,836 units of December 2013. Following this drop, the current months of inventory decreased 35.7 % to 1.8 months.

MLS Statistics for December 2014

Home sales in a lull, median sales price stalls, inventory hovers over 3,400

OCTOBER  2014 RESIDENTIAL SALES STATISTICS

Sales volume decreased for the third straight month, closing with 1,375 single family home sales. This is down 1.5% from the 1,396 homes sold last month. Month‐to‐month since July, sales have decreased 1,548 – 1,428 – 1,396 – 1,375, respectively. Compared with last year, the current figure is down .8% (1,386 sales). Making up this month’s total are 1,208 Equity Sales (87.9%), 83 Short Sales (6%) and 84 REO sales (6.1%). For the month, REO sales remained the same, short sales increased 17.6% and conventional sales decreased 1.1%.

Of the 1,375 sales this month, 256 used cash financing, 654 used conventional (mortgage‐backed) financing, 312 used FHA (Federal Housing Administration), 89 used VA (Veteran’s Affairs) and 64 used Other* types of financing. The average DOM (days on market) for homes sold this month was 37, while the Median DOM was 23. These numbers represent the days between the initial listing of the home as “active” and the day it goes “pending.” Breaking down the Days On Market, there were 816 listings that sold between 1 – 30 days, 293 listings that sold between 31 – 60 days, 148 between 61 – 90 days, 69 between 91 – 120 days and 49 sold after being on the market for over 120 days. This breakdown, as well as types of financing, is show in the graphic below.

October 2014 Housing Stat

The month‐to‐month median sales price decreased 1.1% from $275,000 to $272,000. The current level is 7.3% above the $253,500 median sales price of October 2013. The current figure is up 70% from the January 2012 low of $160,000. When compared to the all‐time high ($392,750/Aug. ’08), the current figure is down 30.1%.

Active Listing Inventory in Sacramento County decreased 2.7% for the month to 3,434 listings, down from the 3,529 listings of September. Year‐to‐year, the current number is up (29.1%) from the 2,659 units of October 2013. The months of inventory remained the same at 2.5 months.

California 2015 Housing Market Forecast Preview

2015 Housing Forecast for California

2015 Housing Forecast for California

With more available homes on the market for sale, California’s housing market will see fewer investors and a return to traditional home buyers as home sales rise modestly and prices flatten out in 2015, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2015 California Housing Market Forecast.”

The C.A.R. forecast sees an increase in existing home sales of 5.8 percent next year to reach 402,500 units, up from the projected 2014 sales figure of 380,500 homes sold. Sales in 2014 will be down 8.2 percent from the 414,300 existing, single-family homes sold in 2013.

“Stringent underwriting guidelines and double-digit home price increases over the past two years have significantly impacted housing affordability in California, forcing some buyers to delay their home purchase,” said C.A.R. President Kevin Brown. “However, next year, home price gains will slow, allowing would-be buyers who have been saving for a down payment to be in a better financial position to make a home purchase.”

“Moreover, prospective buyers should know that it’s a misperception that a 20 percent down payment is always required to buy a home. There are numerous programs available that allow consumers to buy a home with less down payment, including FHA loans, which lets buyers put down as little as 3.5 percent,” continued Brown.

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 3 percent in 2015, after a projected gain of 2.2 percent in 2014. With nonfarm job growth of 2.2 percent in California, the state’s unemployment rate should decrease to 5.8 percent in 2015 from 6.2 percent in 2014 and 7.4 percent in 2013.

The average for 30-year fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels.

The California median home price is forecast to increase 5.2 percent to $478,700 in 2015, following a projected 11.8 percent increase in 2014 to $455,000. This is the slowest rate of price appreciation in four years.

“With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “While the Fed will likely end its quantitative easing program by the end of this year, it has had minimal impact on interest rates, which should only inch up slightly and remain low throughout 2015. This should help moderate the decline in housing affordability we saw occur over the past two years.”

“Additionally, the state will continue to see a bifurcated market, with the San Francisco Bay Area outperforming other regions, thanks to a more vigorous job market and tighter housing supply.”