Real Estate Tips For 2011

Here are 10 real estate tips for 2011

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.

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 City-data.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.

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.