Quick Question: What’s The Right Price?

Important real estate questions can often be asked quickly —”What’s the right sale price?” or “What’s the right list price?”— however, the answers may take a while. A question may be simple to ask, but the answer is usually complex because real estate is complicated.

Even when the person answering is very familiar with the subject, arriving at the “right”— best fit, complete, and accurate — answer may first require asking questions of the quick-question asker, because:

Context is vital: Asking these questions is necessary to clarify location, property type, relevant ownership details, time-frames (seller and buyer), current market, and on it goes depending on what the asker wants to understand and why. For instance, has the asker just started thinking about selling, is the property already listed, or is an offer pending?

Point of View is highly relevant: The questioner may be asking from their point of view, or asking about the other parties involved, asking for a friend or relative, asking out of curiosity…and on that goes. The questioner’s perspective, which may be a buyer’s, seller’s, or professional’s viewpoint, is linked to their intent in asking the specific person they chose to question. This intent is tied to their connection with and potential gains from the real estate in question.

Level of understanding is essential: The questioner’s level of real estate knowledge and experience determines how a complex answer to a “simple” question should be framed for maximum understanding. The answer must take into account the asker’s knowledge of the law, finances, the real estate industry, and related factors like vocabulary.

And all this must be processed quickly. The person asked is expected to respond almost immediately.

As a speaker, writer, and author, I am regularly asked: “May I ask you a quick question?” My answer is as quick as the question may have been: “Yes, of course. I’d be delighted, however, the answer may not be as quick as the question.”

A quick question is often a closed question which grammatically begs a short, factual, even “yes or no” or “either or neither” answer. However, there can be a lot for the answerer (me in this case) to consider before beginning to formulate an answer. For instance here’s a quick question I was asked recently:

“I have a quick real estate question for you, PJ,” began Bill, a stranger who had heard I write this column. “Is it better to list a house at a lower price to entice buyers [into a bidding war] or set a price more compatible with what the hoped-for sale price might be?”

Yes…or no…or either…or neither. The answerer may have an opinion from past experience or a personal preference for the same reasons. However, the accurate answer to the question lies in transforming this general query into a specific response relevant to the asker — Bill in this case — and his intent in asking that question and in choosing me to answer it.

The general answer to Bill’s general question? “That depends on how desirable to identified target buyers Bill’s property is and whether there is a buyers’ or sellers’ market in that location.” At the same time, Bill’s goals regarding the sale are just as important to consider in choosing a marketing strategy for price — list and sale.

The specific answer for Bill’s specific question would first involve collecting property and ownership details, then determining market conditions, then creating a marketing strategy that reflects Bill’s goals. That’s what real estate professionals do. One that is familiar with Bill’s specific property and market, would have a knowledgeable answer for Bill. If this were Bill’s listing professional, Bill would receive specific, high-level details regarding each pricing option, so he could make a confident decision about all aspects of price. Along with market data on actual sales, this information would include details regarding listings competing with Bill’s for target buyer offers.

My answer to Bill — after he answered a few of my questions — was directed to what information and support he could expect to receive from the real estate professional he selected to sell his home. Bill had intended to use the “right” answer to his quick question to select a listing salesperson.

My quick answer concentrated on explaining how either strategy could work. However, I stressed that only a professional with local market knowledge and experience, could provide the information to help him see which alternative would achieve his goals. The question Bill really wanted an answer to was: “How do I identify and select the best real estate professional to sell my home and achieve my goals?” That’s the quick question I answered. Bill told me the answer was exactly what he needed.

My Quick Question: Does this make you afraid to ask me or anyone else a “quick question?” It must not. Sorting out what you don’t know about real estate will ensure your selling or buying success. Real estate professionals are trained to answer quick questions and every other type, so ask away. Listen to the answers. You’ll learn a lot very quickly.

Remember, there are no “stupid questions” in real estate, except those questions you don’t ask and later wish you had.

Resource:

Here is a sampling of articles from my RT column “Decisions & Communities” that explain complexities in simple terms regarding price and selling your real estate:

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The Purchase You Can’t Afford To Ignore

Real estate owners who stay in touch with their neighbors can be first in line when the neighbor of an abutting property wants to sell.

Abutting or adjoining properties are neighboring real estate with at least part of one boundary touching part of your property.

If you own a house, semi-detached, recreational property, or even a condominium unit and the owner of a property bordering on yours considers selling, you want to be among the first to know and to act on that knowledge.

There are strong advantages to owning abutting property as well as your current real estate:

Proximity to neighboring homes may limit what you can do on your property. In turn, an adjoining neighbor’s add-on or build-up may have negative impact on your home. Buy the property beside you and you’ll have renovation “elbow room” and can escape being over-shadowed by a neighbor’s expansion.

Buy the adjoining real estate and you’ll may be able to combine the properties into a large lot that which would enable you to build an even larger home or add more amenities or trees.

Rent out the second property and you’ll have income, deductible maintenance costs, a say in who lives there, and full benefit of that property’s appreciation in value.

Owning adjoining properties is equivalent to having a sound and privacy barrier—breathing space—between your real estate and that owned by others.

Townhomes and condominium units with common walls provide opportunities for expanding space without moving. Check out the legalities of such possibilities when you buy the first property or at least long before an abutting unit is on the market.

If you own a recreational property, buying an abutting property could improve your enjoyment by extending your waterfront or expanding your view. You’ll definitely have control over more of the environment.

Larger properties provide opportunities for development to add multiple units or build up, all of which can increase property value.

You’ve chosen to live in an area you believe in. With two properties you’ll at least double your investment return as local real estate values rise. Buy more—whether you hold separate title on each property or combine some—and you’ll be investing in something you can live on or in and enjoy as it grows in value.

Here’s how buying the house across the driveway worked out for one couple: Mike and Melissa Russell (not their real name) struggled financially to buy their first house: one of the more modest detached two-storeys on a tree-lined residential street in the best neighborhood they could afford. They put location ahead of decor and house size knowing location could not be changed, and decor and size were what renovation was all about.

Years passed and the house became too small for their growing family. Moving was out because they had so many friends in the area, had so many connections to the neighborhood, and their children loved their schools. Then, the elderly neighbor living directly behind their property died suddenly.

The Russells knew the house and decided to approach the estate to buy it. After appraisals to establish fair market value and discussions between their lawyer and that for the estate, the Russells were proud owners of a second house.

They quickly completed cosmetic improvements on the house and rented it to cover costs including taxes, maintenance, and a mortgage designed to be paid off as quickly as possible. The two backyards were combined. The Russells created a large vegetable garden, outdoor kitchen, and patio. Over the years, friends helped the Russells add a pool and a basketball court to maximize the double yard.

After a few years as landlords, they could afford to carry the second house themselves. With the help of friends, the Russells transformed the basement into a sports playroom for the children, added a separate smaller rental unit, and created an office for Melissa’s online business.

Their plans for the future include selling the second home to subsidize travel and modernizing the original house once Mike takes a pension from his job. Living in their original home will mean no downsizing required, renovation without a mortgage, and staying in the neighborhood the Russells have always loved.

Whether you buy the house across your mutual driveway or backyard fence, the end unit beside you in your townhouse row, or the condominium unit above yours, buying abutting real estate should always be considered as a serious option before the opportunity is lost.

Be sure you have done your “homework”. You may only have a short headstart before everyone knows the property adjoining yours is for sale. Here are a few of the questions that help you prepare in advance:

  • The location was an excellent investment for your home, but does this neighborhood warrant further real estate investment?
  • Is staying in this location the best short and long term decision for you and your family?
  • How will you finance the purchase of the second property? Will rental rates cover mortgage payments and other expenses?
  • What municipal bylaws and other legal issues may undermine your projected use of the second property?
  • If you did not make this investment, how else would you put your money to work for your future?

Buying an abutting property is not always the right idea, however, it is always the right thing to consider very seriously when an opportunity to purchase presents itself. Be prepared by considering your options well in advance. You never know when a neighbor will knock on your door and ask…

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How Color Helps Sell Your Home

Yes! Just like curb appeal matters, the colors of your home can and will influence buyers. With that in mind, we explore which colors tend to appeal to the masses.

The color scheme of your home, from the outside in, sets the tone. It’s like going to see a theatre play and seeing an intricately crafted and appropriately painted set for the production. It can immediately intrigue you–before the play has begun and even if you know few details about the play.

When it comes to color, be sure to consider the location. A peach-pink home in a retirement community might be okay, but that same color in an upscale, urban city may be unappealing to younger city dwellers.

The outside of your home is one of the largest areas potential buyers will see. So make your decision carefully and be sure to have a professional paint job done. If you choose white for the exterior, your home is likely to appeal to the masses, according to one study that indicated upwards of 40 percent of people liked white homes.

The great thing about a white home is you have plenty of options to make the home stand out by using an accent color for the trim. The downside is that white gets dirty very fast and shows it more than other colors. So before you list your home, make sure that you have a fresh coat of paint applied or pressure wash the exterior to bring back that newly painted look.

Also take into consideration the color of other homes on the block. Typically, white will not look out of place. However, if you had a purple home on a block where the homes are mostly beige and neutral colors, you’ll get noticed but won’t likely get the kind of attention you want.

Beige with neutral-colored trim is another popular color scheme. Both beige and white are safe exterior colors. They don’t turn buyers off.

There’s also been a trend to paint just the front door a deep, rich color like red. This may not be appealing to all. However, buyers would tend to overlook it because it’s a simple change as well as one that can easily and cheaply be changed to the new buyer’s choice. As long as the colors look good together, this wouldn’t necessarily turn buyers away.

The paint inside your home is equally important. In fact, one good tip for sellers is that if they can do nothing else, they should get some fresh paint up on the walls. The new paint helps showcase the home and gives it a new-home feel.

There are a wide variety of interior colors. Don’t feel like you have to go with only beige. You can be a little more daring, using bold accent colors. Just make sure the paint colors you choose don’t give a dark, closed-in feeling. Aim to create comfort, a sense of calmness, relaxation, and a place where family can unwind. Earth-tone colors convey this very well.

For a more chic and sophisticated look, interior designers often choose from the grey palette. A dark grey color can create a bold statement and attract the eye to a particular area.

Whatever colors you choose, remember that your aim is to appeal to the masses. Test the colors out first. Get opinions from the experts.

Your real estate agent has likely been in hundreds of homes and can offer you some very good guidance.

WRITTEN BY REALTY TIMES STAFF

7 Reasons You Should Buy Your Next Home Right Now

Get off the fence. This might be the best time to buy a home you’re going to see for a while. Here’s why.

Less competition for homes

Tired of having to duke it out for available homes and then losing out to higher offers? That’s a reality in many of today’s hot real estate markets, where bidding wars are the norm. In some micro-markets, all-cash offers are king. It’s hard to compete in that kind of environment, which is what makes the holiday season attractive to home buyers. Less activity during this season diminishes the competition, and can also help you get a deal.

“Since fewer people overall are looking to buy houses, you will have less competition for your preferred house — and this gives you leverage,” said moneytips. “Holiday home sellers often have to adjust their price downward or make other concessions if they want to sell. Keep this in mind as you search for homes. Bargains may be available, and listed prices may be more open to negotiation.”

Ben Carson

President-elect Trump’s nominee for the Secretary of Housing and Urban Development (HUD) post has previously made a number of comments about the agency that could spell wide-sweeping changes for buyers, and not for the better.

Carson referred to Fair Housing as “communism in a 2015 Washington Times op-ed, saying that fair housing policies “mandated social-engineering schemes” that repeated a pattern of “failed socialist experiments in this country,” said the Wall Street Journal. That has housing insiders worried that affordable housing programs, and, specifically, low-rate mortgages from Fannie Mae and Freddie Mac may take a hit.


Chaney Capital
Privatizing Fannie Mae and Freddie Mac would greatly limit available mortgages and have an especially detrimental effect on low-rate mortgages that many buyers depend on to get into the market. “Carson’s appointment could also affect taxpayer-supported subsidized housing, which primarily helps homeless, low-income, and even senior Americans”, according to Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, said Realtor.com.

Interest rates are on their way up

Even if you’re not ready to pull the trigger right this second, get pre-approved to lock in that interest rate now. That’s because rates have already risen some since the election, and all indications are that they’ll continue to rise after the new year.

And, of course, getting pre-approved will allow you to move quickly when you find a home you love instead of being held up by the bank and risking losing the home when someone who is pre-approved swoops in.

Because you’re ready to get your Joanna Gaines on

How badly do you want to rip out a kitchen and start over with something chic and pretty and chef-y in a place of your own? If you’re currently living in an apartment, you may not even have permission to paint the walls, let alone update the kitchen.

The good news about renovations, other than achieving a great new look, is that you can actually get loans to pay for them – and, the interest is a writeoff. “The IRS considers the interest on a home-improvement loan fully deductible, up to $100,000 in debt,” said MarketWatch.


Decoist
Loans to look for include the FHA’s 203(k) program and Fannie’s HomeStyle Renovation Mortgage. “Unlike credit lines, these renovation loans require borrowers to show that the money was spent on the house,” said Bankrate. “In the standard FHA 203(k) program, the borrower hires a consultant to assess the construction plan and to perform an inspection before each draw is made. A ‘draw’ happens when a portion of the money is disbursed to the contractor. Borrowers have up to six months to finish the project and are allowed up to five draws. The HomeStyle program does not require a consultant to monitor the work, only an initial and final inspection.”

The FHA 203(k) can be easier to qualify for, as credit scores can be as low as 660. The HomeStyle mortgage require a minimum 740 credit score for the best rates.

Tax savings

Unless you find a house tomorrow and close much more quickly than is standard today, you won’t be able to reap the tax benefits this year. But there’s always next year—and every year after that. And tax savings can be substantial, amounting to thousands of dollars you’re not saving now.

It’s probably still cheaper than renting

The tax savings associated with homeownership isn’t the only way to save money. “It’s cheaper to own rather than rent in all but eight states and Washington, D.C., according to a GOBankingRates.com study of rent and mortgage costs,” said MSN.

When calculating the difference between renting and owning, make sure you look at as much of an apples-to-apples comparison as possible. Oftentimes, when people are looking at rent, they fail to factor in renter’s insurance, security deposits, pet deposits, and annual rental increases. Those numbers can add up.

Predictable payments

Tired of that rent going up every year? Yeah, that stinks. If you live in Seattle, your rent is forecasted to rise another 7.2% this year, according to Business Insider. In Portland, it’s 6% and Denver 5.9%. Those are the cities that are predicted to have the sharpest rises across the country.

Unless you have an adjustable rate mortgage, which isn’t popular in today’s low-interest-rate, 30-year-fixed mortgage world, or you cash out your equity and raise your principle at some point, your mortgage payment will remain your mortgage payment through the life of your loan. With so many other unknowns and intangibles, it’s nice to know that what’s probably your largest monthly payment is always the same.

WRITTEN BY JAYMI NACIRI

The 4 Things Home Buyers Really Want in Kitchen Cabinetry

A great kitchen design can dramatically increase your property value – if you want to attract prospective buyers, your kitchen is the perfect place to invest money. The trick is to get it to appeal to the majority of people by spending your money on what most of them really want.

Kitchen cabinetry can do much to attract the right buyers. There are four key factors to consider: quality, symmetry, color and layout. If you can get these key elements right with your cabinetry, you’re bound to have a higher home value.

The 4 Things Most Buyers Want in a Kitchen

1. Quality

The number of cabinets you have is not as important as the quality of the cabinetry. The fewer cabinets you add to your kitchen renovation, the less expensive it will be. Choose quality over quantity.

Do: Choose quality hinges and runners, including soft-close drawers, and custom-made cabinetry.

Don’t: Go for large fillers and ill-fitted modular cabinetry.

Open Floor Plan

Keep the cost down by keeping the cabinet count down. Design the kitchen layout to keep it light, bright and with an open plan, without using tons of cabinets.

Note: Excessive internal organizers aren’t essential if you are planning on reselling your home. They are wonderful in adding value to your personal use of the kitchen but are not always a wise choice if you are renovating purely to sell. Internal drawer and cabinet fit-outs are often expensive, and the extra money you spend on these accessories may not come back to you when you’re selling your property.

2. Symmetry

The eye is naturally drawn to appreciate symmetry and repetition. When you’re renovating to sell, keep your kitchen cabinetry simple and appealing. Elegance has a way of being understated, and simplicity is key when you are trying to appeal to the majority of buyers.

Do: Keep the wall cabinetry sizes the same where possible. Drawers look nice when they are large and expansive – if you have multiple sets, keep them the same size, with the same proportion of drawers.

Hale Aina By The Sea

Don’t: Add multiple cabinets in varying sizes. Try to keep the look and feel consistent in the whole space.

3. Light, Bright Spaces

Many buyers here in Australia want an open, light and airy space. A kitchen that is white makes the space feel bigger. White is also a universally appealing color and leaves a blank slate so buyers can reenvision the space.

house A

Do: Keep the space open, bright and light with white cabinetry. If you want some contrast, go for a darker bench top. Backsplashes should be kept fairly neutral too – try to introduce texture instead of color into the backsplash. The more neutral and elegant the space is, the more potential buyers you will attract.

Don’t: Use darker-color cabinetry, which can make the space feel closed. While adding a strong color may suit your taste, it may not be to everybody’s liking. You want to attract as many potential buyers as possible, and while white may not be the most daring color for your cabinetry, it’s the most popular.

4. An Open Layout

Designing your kitchen to have a sensible and open layout is pivotal to increasing property value when you’re renovating to sell. In Australia, the trend is moving toward open-plan living and multifunctional spaces.

Kitchen

Do: Have a large open-plan space with a kitchen island if possible. Buyers often want to multitask in the kitchen. They want to cook, have their kids do their homework and socialize in it.

Don’t: Place your kitchen in a small and poky room. The kitchen is now often the hub of the house, and buyers want to see a kitchen that is interactive and sociable.

Related Articles:

Houzz is the leading platform for home remodeling and design, providing people with everything they need to improve their homes from start to finish – online or from a mobile device. From decorating a small room to building a custom home and everything in between, Houzz connects millions of homeowners, home design enthusiasts and home improvement professionals across the country and around the world.

WRITTEN BY HOUZZ.COM

4 Trends Affecting Millennials and Homeownership

If you’re under the age of 35, everything you know about owning a home could be wrong; but it’s not your fault. Parents of millennial children have taught them what was financially sound when they were the same age — go to college, get married, buy a home and have children; the formula for the American dream.

The American Dream is still real for many, but the details are murkier in 2016. The rising costs of college tuition are making it a riskier investment, young people are marrying later and having fewer kids and the appeal of buying over renting is now less obvious than it was for their parents. Blaming the shift on “a changing economy” is a cop-out, as the trends in millennial home ownership are just as cultural as they are economical. Here are some of the reasons why the nation’s youngest buyers are having an affect on the housing market:

1. Millennials Love Mobility

Economists are calling millennials the “job-hopping generation,” because they are more likely than previous generations to frequently change jobs, even if it requires moving. As unions are in decline and pensions are shrinking, job loyalty is on the fall and millennial workers are free to take their 401(k) accounts elsewhere. Because the next job, and next city, is always on the horizon, more millennials are opting for short-term apartment leases, which allow for freedom of mobility.

2. Millennials Love Cities

Millennials are more likely to buy their first home in the suburbs, not the city. Even outside of price-inflated cities like New York and San Francisco, urban housing costs are skyrocketing and forcing new homeowners outside the city limits. However, renting — still on the rise — is more manageable and gives young people the option to keep living in the city.

3. Millennials Love Incentives

The 2008 recession was a tragedy for homeowners who bought under inflated prices, but a silver lining for anyone buying after the fact. To help boost the economy and the new housing market, the IRS offered a hefty tax credit to first-time buyers until 2011. Just like a tax credit for electric cars, this was just the bump young people needed to buy homes after the biggest recession in nearly 70 years.

But now that the Federal Reserve is expected to raise interest rates for the first time since the recession, that boost in young home ownership could see a sharp turn in the other direction.

4. Millennials Do Not Love Student Loans

Perhaps the biggest hurdle standing in the way of homeownership, student loans account for the largest debt in the United States and are especially harsh on younger people. The more you owe in student loans, the less likely you are to buy a house. However, some programs like Income Based Repayment (IBR), which allows graduates to pay a lower monthly amount until the balance is forgiven in 20 years (10 for public sector workers), is helping ease this burden.

However, now that taxpayers could be on the hook for $108 billion in student loan relief, the future of this program could be in question under the new presidential administration. But if interest rates do go up and IBR is eliminated, the rate of buying from America’s 20- and 30-somethings could go downhill fast.

WRITTEN BY REALTY TIMES STAFF

What Do Rising Rates Mean For Homeownership In 2017?

The Fed raised interest rates last week, causing a ripple of concern among those who are worried about the effects on higher mortgage rates and the greater impact on the real estate market. But what do rising rates really mean for homebuyers? We’ve taken the temperature of several housing experts to get their take on the homebuying landscape for 2017.

Rates will continue to rise… or will they?

“When the rate was raised last week, the Fed predicted it would raise rates three more times in 2017, up from two in its previous forecast. But those predicted increases are just that – predictions, said the Berkshire Eagle. “A year ago, the Fed projected that it would raise rates four times in 2016 but has ended up doing so just once.”

Many housing authorities expect that rates will, indeed rise, and are eyeing a 5% benchmark.

“My forecast is for the 30-year fixed rate to rise above 4.5 percent by year’s end, and worst case scenario, knock on the door of 5 percent,” Matthew Gardner, chief economist at Windermere, told Inman.

Rising rates will impact homeownership…or will they?

Realtor.com predicts that home prices will continue to rise next year, increasing 3.9 percent. Their estimation of how high mortgage rates will go: 4.5 percent. Will the combination of rising prices and rates kill housing market momentum? The Mortgage Reports doesn’t think so.


TFS
The good news of rising rates, they said, is that “home price increases could finally slow. Home shoppers may once again find ‘deals’ in the 2017 market. Home values have been catapulted upward by almost-free borrowing. Home buyers were getting 30-year fixed rates in the low 3s, and fifteen year rates solidly in the 2s. That’s lower than the rate of inflation is likely to be in coming years. Cheap money makes monthly payments lower. Homes are affordable, even at very high prices. In 2017, though, that trend could reverse. Rising payments could mean fewer bidding wars and over-market-price offers.”

That could mean that buyers “have a better chance at securing a home at a reasonable price. Affordability may continue its winning streak, despite rising rates. 2017 should remain a stellar year to be a home shopper.”

But OC Housing News isn’t so sure. “Higher mortgage interest rates lead to lower sales or lower prices, but most likely, lower sales. Mortgage rates fell from mid-2010 through early 2013 just to maintain a low level of demand,” they said. “When interest rates went up, in what was supposedly a strong market recovery, demand immediately dropped off. Assuming a consistent payment, higher mortgage rates decrease the size of the loan and reduce the amount borrowers can bid on real estate. If rising mortgage rates result in smaller loan balances, then either sales volumes will go down, or house prices will go down, or perhaps some combination of both – unless you believe rapid wage inflation is on the horizon.”


TREO
Job growth will counteract the effects of rising rates and home prices…or will it?

It’s the prospect of job growth that has many people talking.

“November’s job growth outpaced October, indicating that the economy is growing at a healthy pace and should continue to do so,” said My Mortgage Insider. “The increase of jobs added is a sign that the economy is healthy. Another encouraging statistic is the decrease in the unemployment rate…from 4.9% to 4.6%. The strong economic conditions are likely going to (continue to) force mortgage rates higher. Generally speaking, mortgage rates are going to increase whenever the economy is doing well or whenever there is confidence in the market”.

The good news for those who are worried about rising rates is that “higher wage growth could offset the effect of higher mortgage rates,” said the Wall Street Journal. Although, for those who were thinking of relocating, the prospects may not sound sound so encouraging. “The fact that so many homeowners enjoy such low rates could also prove an economic brake, creating a disincentive for homeowners to move to a new city in pursuit of a new job if it means their mortgage might be more expensive,” said David Berson, chief economist at Nationwide Insurance.

WRITTEN BY JAYMI NACIRI