PropertyMaps.com Blog

Must we endure yet another year of housing crisis? What choice do we
have? No amount of optimistic projections and statistical manipulation
can remedy this protracted housing pain. Historically speaking, five to
seven years has been a standard interval for house prices to stabilize
following serious corrections. By that measure, the worst should be
behind us.

There
is some good news: Mortgage rates remain at their lowest point in
nearly 60 years, and prices are settling in several markets. Real estate
is becoming more affordable and needs-based instead of
speculator-driven, making a home primarily a shelter once more.

Meanwhile,
some see another year of value declines in 2011, perhaps up to 7
percent. Several more waves of adjustable-rate mortgages are set to
ratchet upward for homeowners in 2011. “Strategic defaulters” are
surrendering their upside-down loans as a financial strategy, not
because of extenuating circumstances. And unemployment remains
stubbornly high.

Yet, people still move up and still move down —
buying and selling homes to meet those ends. For them, here are 10 real
estate tips for 2011.

[Check out mortgage rates in your area]

Tip 1: Sellers: Redefine “Market Value”

If
your home has been on the market far too long, there’s a good chance
you’re not facing market realities. The value of your home isn’t what
the tax assessor says it is, or the sum on that two-year-old appraisal
you have filed away. It’s not what a similar-size home that sold across
town. It’s what a buyer is willing to pay today. To arrive at that sum,
the sales prices of foreclosures and short sales must be factored into
the equation, along with the average value of seller concessions in your
submarket. These factors are advanced by the Federal Housing Finance
Agency, or FHFA, in its appraiser code-of-conduct revisions to ensure
more accurate documentation of market conditions. If your agent tells
you that you’re overpricing your house, he or she may not just be trying
to grease the wheels for a quick commish, as you might suspect.

Tip 2: Buyers: Hire Personal Peeps

As
tempting as it is to share the seller’s agent to save a couple grand,
don’t. The same goes for using the other party’s inspector and
appraiser. They were hired by the seller and have a fiduciary allegiance
to the person who’s paying them. Don’t automatically opt for real
estate professionals referred to you by your agent either. A huge
capital purchase is not the time for such friendly accommodations.
Briefly interview three of each by phone. Make sure your appraiser and
your inspector (and perhaps a separate termite inspector) are
appropriately state-licensed or state-certified and, ideally, have been
practicing for at least five years and have done more than 200
inspections or appraisals. Compare the results of your inspector’s
findings with the inspection findings of the other party, and you’re
likely to stumble on disparities or omissions.

Tip 3: Sellers: Extend the Selling Season

Spring
is the best time to find the broadest universe of buyers and sellers.
Parents don’t want to uproot their kids from schools mid-term and would
like to settle in a new neighborhood by mid-summer. Many sell at the
same time they buy. These days, “spring” really means late winter. So if
you’re going to sell in 2011, get your house ready for showings by late
February. That will give you nearly five months until this
buying-and-selling group starts dwindling by mid-July.

Tip 4: Buyers: Check the Seller’s Addition

Based
on mounting concerns expressed in Bankrate reader mail, prospective
buyers should add the following move to their due diligence lists when
scoping out a home: Check for illegal additions. Revenue-starved cities
are cracking down on unpermitted work. They focus on current owners, not
the original step-skipping “perps.” Unpermitted room additions, kitchen
remodels and garage conversions are just a few areas that can haunt an
unsuspecting buyer. A good agent, home inspector or appraiser should be
able to spot such unpermitted work, especially if square footage doesn’t
match tax assessor records. If you do buy unwittingly, you’ll be
responsible to bring the work up to code.

[Check out mortgage rates]

Tip 5: Sellers and Buyers: Gather Micro Data

Regional
real estate sales information never tells the full tale of a housing
market. Search local daily newspapers, business journals and websites to
find the latest foreclosed homes, housing backlogs, current versus
historic median selling prices, and the average time on the market of
for-sale homes in your specific ZIP code, submarket or neighborhood. The
website PropertyMaps.com is a good start for this.

On
a broader scale, look at population income levels, unemployment rates
and the contraction or expansion of major local employers. Homes near
universities, hospitals and other major employment centers usually hold
their value better and resell faster. A great product and great
location, at least to some degree, will transcend local trends for
buyers and sellers.

Tip 6: Buyers: Smoke Out Pervs

Do
a sex-offender search. The National Association of Realtors, or NAR,
says it’s the job of local police agencies, not Realtors, to be
gatekeepers of registered sex-offender data. So do your homework. The National Sex Offender Public Registry
contains national offender listings. And know that most agents are
obliged to honestly answer direct questions. So ask: Do any registered
sex offenders currently live anywhere in the neighborhood? Do any former
registered sex offenders live anywhere in the neighborhood?

Tip 7: Sellers: Feel What the Buyer Feels

Put
your ego aside, sellers. Your for-sale home is no longer about you —
it’s about the buyer. So be empathic. What would you expect to see on a
tour of a for-sale home? Even though you’re essentially marketing brick,
mortar and land, the emotional response you elicit in a buyer is often
what seals a deal. Neutral colors allow buyers to picture themselves in
your house. To appeal to their olfactory pleasure senses, employ the
age-old tactic of baking fresh cookies before potential buyers arrive –
then leave them for your visitors to enjoy. Or at least light a candle
or two. To convey an inviting atmosphere, de-clutter the place with
renewed vengeance, stow away your inexpensive or tattered furniture and
box up cherished mementos. Remember that the illusion of space is almost
as important as the space itself.

[Check out mortgage rates]

Tip 8: Buyers: Keep the Dream Alive After Foreclosure

Lost
your home to foreclosure? In most cases, that won’t keep you from
owning another home as far into the future as you likely feared. It’s
true that a foreclosure can remain on your credit record for up to seven
years, but government-backed mortgage guarantors Fannie Mae, Freddie
Mac and FHA typically impose just a minimum of just three years before
they’ll back another home loan — if your foreclosure was due to
extenuating circumstances such as job loss, relocation or illness. Next
time, you might be asked for a bigger down payment, as much as 20
percent, and slightly higher interest rates. So start saving now.

Tip 9: Buyers and Sellers: Set Your Goals in Writing

Certainly
you should get all relevant real estate promises in writing, but that’s
not where we’re headed. Keep a log of the entire process of buying or
selling a home, including your objectives, home-tour dates, buyer and
seller feedback, offers, expenses, contracts, repairs, contractors
hired, agent communiques, neighborhood observations, everything. It will
give you a clearer picture of what you’ve done, what you’re doing and
what to do next. Studies have shown that goals are more likely to become
reality if you write them than if you don’t.

Tip 10: Buyers: Play the Field

Don’t leave yourself
open to heartbreak. Buyers pursuing heavily discounted short-sale and
auction homes should research several prospects, because there may be
plenty of other suitors. Many a would-be buyer has been left at the
altar of lofty expectations after watching another guy or gal swoop up
that perfect home at the last minute for just a little more money. Most
successful auction winners and short-sale buyers start out by targeting
several homes so they won’t be left in the lurch if, or when, one deal
falls apart. With so many parties involved in these transactions,
including brokers, agents, lawyers, loss mitigators, appraisers,
lenders, special servicers and inspectors, a lot can go wrong. Some
Realtors estimate only about one-fifth of attempted short sales are
successful.

by Steve McLinden
Friday, January 7, 2011

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