Frequently Used Lending Terms

Pre-approval

A pre-approval is paperwork written by a lender indicating the price and type of loan that a buyer may obtain given their monthly income, debt, and credit score. This is different from a pre-qualification, which offers simply an “unconfirmed” estimate. Full approval is typically issued after a buyer is under agreement for a particular property.

Home Loan Commitment

After a buyer is under contract for a property, a home loan provider reviews the financial paperwork and the information on the real estate. A mortgage commitment is later granted to verify that the primary requirements have been successfully reviewed and that the loan will be fully approved upon receipt of a few final items.

Appraised Value

An appraisal is ordered by a home loan provider to verify the purchase price of a property. It is completed prior to a mortgage commitment or approval.

Closing Terms

Closing Costs

There are several typical fees related to buying and selling a property. These are referenced as closing costs. They can include broker commissions, transfer taxes, loan charges, attorney fees, title insurance, and local recording fees. Pre-paid expenses such as home owners insurance are often also lumped into the closing cost category, but they are officially a different type of charge billed at closing.

Title Insurance

Title insurance protects against problems with a title and the fees associated with defending your ownership. Although title searches are performed before a closing, there are defects that affect your title to a property that are not easily found in a title search. Title insurance is a one-time expense at closing that remains valid for the entire time that you remain the owner of a piece of real estate.

Mortgage Insurance (MI)

MI is an acronym for mortgage insurance and is typically required on mortgages higher than 80% of the purchase price. There is commonly an up-front charge and a recurring fee, both based on the starting loan amount. MI stays on a loan until it is paid down to 80% of the sale price.

This is a guest blog post from Bill Tierney, an internet savvy REALTOR who covers the South Shore real estate market for William Raveis Real Estate in their Scituate, MA office. Bill can be reached via email at William.Tierney@Raveis.com or by phone at 781-545-1533. Bill has been a licensed real estate agent since 2004 and has extensive experience.

This is a guest blog post from Bill Tierney, an internet savvy REALTOR who covers the South Shore real estate market for William Raveis Real Estate in their Scituate, MA office. Bill can be reached via email at William.Tierney@Raveis.com or by phone at 781-545-1533. Bill has been a licensed real estate agent since 2004 and has extensive experience.

Where is The Consumer

It has long been my opinion that the volume of real estate transactions rise and fall with consumer confidence, and the bottom line figure on one’s personal financial statement.  Or said differently, if one is confident in one’s career prospects, and one’s bank statement is not dwindling, then one is more apt to make large life decisions such as purchasing real estate.  Hence, an increased confidence level equates to increased levels of real estate activity.

Economic Outlook

While I am far from an economist, I do think if I were to forecast what the Massachusetts Real Estate Market would look like at the end of 2013, then I should review the economic forecast for the balance of the year.  It should also be noted that economists are people I have been known to poke fun at since they have the luxury of tweaking their opinions on a regular basis.

With that said,  I am looking at an economy that is seeing a significant improvement in the unemployment rate, a historically low cost of borrowing money (sometimes known as interest rates) and strong corporate operating environments.  Combine this with some high averages on the various capital market indices such as The Dow Jones Industrial Average, and you start to see a picture that leads to higher level of confidence in major life decisions, such as contemplating a real estate transaction.  When one watches the nightly news, or reads a recap of the day’s events on their mobile device, it is increasingly hard not to see headlines of strong sales from the automakers, home builders, the National Association of Realtors, technology companies and so forth. These are all good signs of positive economic life.

Real Estate Outlook, it is Supply & Demand

How does this all translate to the Massachusetts real estate market?  As I noted above, it is all about confidence.  This confidence appears to have some sustainability, barring an unforeseen geo-political event.  So in my humble opinion, we have the confidence in the economic environment, so what does the Massachusetts Real Estate Market look like for 2013?  I can answer this using the data I have collected from talking to friends and colleagues from other William Raveis Real Estate offices throughout the Commonwealth of Massachusetts.

What I am finding is that we have quickly found ourselves in an inventory starved market.  Once again, buyers, armed with confidence, are back in the market.  However they are quickly finding a dearth of choices from which to pick.  In most markets there are plenty of homes on the market, but many are stale listings, that are either over-priced or book-ended.  By book-ended, I mean they are the lower priced or higher priced properties that require a unique buyer for that particular property.  The middle of the market, where the bulk of real estate transactions occur, is simply starved for inventory.

In simple economic terms, an increase in demand, with supply constant or falling, bodes well for price.  Said differently, with a noted increase in demand due to the confidence of buyers reappearing in the market added to a lack of inventory, or supply of homes for sale, this leads one assuming that a more positive pricing environment as arrived.  Once again we find ourselves in an improved real estate environment whose arrival was neither hyped up, nor celebrated.  Or if this was celebrated and hyped, nobody tapped me on the shoulder to remind me of such.

Should Real Estate Prices Soar?

So, with increased demand and low inventory of housing supply, home prices should soar. This would be true if all other real estate variables held constant.  However, only in economics do some variables get held constant.  There are two other factors that will dampen a sharp rise in real estate variables.  The first of which is the cost of money, or interest rates. Typically a stronger economy leads to higher interest rates.  This has usually been the case in prior economic rebounds throughout history.  I do foresee interest rates moving up from their nearly current historic lows.  But interest rates need to be put in perspective.  With the rate on a 30 year mortgage currently in the three’s, a sharp movement up in rates, let’s say a 50% spike (albeit highly unlikely), would correspond to interest rates in middle to upper four’s.  This would still be considered an attractive interest rate by most accounts, from a historic point of view.

Supply will be the boogeyman that will moderate a large spike in home values in 2013.  What the Massachusetts Real Estate Market will look like for 2013 will be one of improved pricing, and increased transaction activity.  However, supply will increase with the improved pricing as we will see sellers who have yet to be able to sell their home since these sellers have a higher cost basis from making real estate purchases at the height of the bubble in the prior decade.  It is these seller’s whose unforeseen supply will moderate the supply and demand aspects of the real estate market.  When these sellers, those that purchased late in the last real estate cycle, can finally sell properties that have had valuations below purchase cost, or near their break-even levels, this will cause a supply increase that will soften demand.

To sum up with the Massachusetts Real Estate Market will look like for 2013, we will see transaction volume at levels not seen in half a decade, and much improved pricing.   Pricing is a local market by market phenomenon.  I do see us seeing pricing at levels much improved from recent memory, but far from a runaway market.  Interest rates, and the phantom supply noted above will keep the market stable, healthy and balanced.

Appraisal and assessment values are typically mistaken for one another. As a home buyer or home seller, it is helpful to understand the difference between these two terms. The following is the difference between appraisal and assessment values.

Definition Of Asessment Values

Towns and cities charges a tax on residential homes. The calculation of the tax is derived from a percentage multiplied by an assessed value of a piece of property. Assessments are used strictly for levying taxes and does not actually reflect the real estate market condition. Every municipality calculates assessed value using different formulas. They usually include land area, interior living area, and exterior amenities such as garages. Marshfield, MA, the area where I live and work, can re-assess home values and/or increase the property tax percentage at regular intervals.

Definition Of Appraisal Values

An appraisal is a estimation of a home’s market value by a licensed professional employing specialized methodologies. Lenders obtain the services of appraisers to determine the value of a home as opposed to to the sale price. Appraisers always review at least three other houses that recently sold within the same city. Since a town or city’s real estate market can change constantly within a time frame, comparing relevant sales is vital to a valid appraisal.

The Difference Between Appraisal And Asessment Values

The actual price of a  home is ascertained by what a buyer is willing to pay, which can adjust at any time depending on related factors such as availability of options. Buyers should avoid relating assessed values with the price of real estate. Assessed values are used only for tax purposes and do not adjust as often as the real estate market does. Some towns infrequently change assessed values and regularly increase tax percentages instead. Only an appraisal can generate a true indication of the market price of a home.

As a buyer looking at homes for sale, you have the benefit of buyer representation for your property purchase.  Listing agents have a legal responsibility to protect their seller client.  They will treat all non-clients fairly, but they must promote their best interests of their client above any others.  As a buyer, you may have equal service and protection from your agent.  Simply communicating with a real estate professional does not automatically create the relationship.  It is important that you officially enter into a buyer agency relationship.  Below are tips on Buyer Agent Services and the benefits of hiring a buyer agent.

The Benefits Of Hiring A Buyer Agent

The word agent means fiduciary. Buyer agents owe their clients fiduciary duties of confidentiality, care, obedience, accounting, disclosure of material facts, and diligence. They assist their clients through the process of buying a home and provide guidance and support every step. The home buying process can be confusing and emotional. Buyer agents use their experience to develop creative solutions to issues. They understand your interests and goals and translate them into effective communications with other people involved in the transaction. They are essential personal tour guides for what will be one of the most significant events in your life.

Buyer Agent Services

Agents perform many tasks throughout the home purchase process. In the initial stages, they help you consider options, and compare properties. Once you identify a home you would like to buy, they assist with preparing offers, analyzing inspection results, meeting important deadlines and navigating through the financing process. They can also direct you to other experts, such as inspectors, as needed.

Selecting Buyer Representatives

Consider your preferences. Do you like to search properties or have an agent filter through and select them for you? How tech savvy do you want your agent to be? Do you want one with specific specialties? Are you looking at a unique type of property that may warrant additional experience? Do you prefer specific types of personalities? Asking yourself these questions will help you better evaluate Buyer Agent Services available and choose an agent that best suits your needs.

Do you have a buyer’s agent?

Closing costs typically refer to fees charged by lenders and third parties. Pre-paid expenses and escrows are also included in closing settlement statements and are frequently referred to as closing costs, although they are actually a separate category.

Pre-paids

Pre-paid expenses are items that must be paid at closing but actually cover a future time frame.  Common pre-paid items are insurance and interest. Homeowners insurance has a 12-month premium that must be paid in advance. Some buyers submit payment for the amount directly to the insurance company in advance of the closing, while others do so at the closing.  Interest is another pre-paid item.  Mortgage payments are commonly paid in arrears, meaning that they cover a past month.  For instance, if you buy real estate January 15th, your first mortgage payment would be due on March 1st, and it covers the month of February.  So there is no payment covering January 15th-31st.  The interest for that period is charged at closing as pre-paid interest.

Escrows for Home Purchases

Escrows are payments placed in a holding account, known as an escrow account, and disbursed when needed. They are set up to cover regularly billed expenses such as private mortgage insurance (PMI), real estate property taxes, and property insurance. Each month, as part of the monthly mortgage payment, a certain amount is placed into the escrow account. When PMI, taxes, or insurance payments are required, the appropriate amount is removed from the escrow account. This serves two purposes. First, it removes the hardship of borrowers having to budget for the large fees. Secondly, the lender ensures that the bills are paid, which preserves their interest in the home. Escrows are not offered by all mortgage companies, but it is common for mortgages with small down payments.

The cost of pre-paid expenses and escrows may vary based on the season or time of month. Closing close to the end of a month will minimize pre-paid interest. Pre-paid taxes and escrows will depend on the municipality and when tax bills are issued. If minimizing funds required for closing is critical, discuss the time frame with your real estate broker and mortgage broker. For additional information or guidance on the above, check out Bill Tierney’s  website and blog at http://williamtierney.net/ or email at William.Tierney@Raveis.com.

So you have accepted and offer on your home, now what?

Having just accepted an offer on your home is a great and exciting feeling.  You have obviously worked hard to arrive at this point in the sales process.  Without a doubt, you have put in some considerable effort to prepare your home for the market, and anxiously waited through numerous showings.  Now you have an accepted offer.  Congratulations.

I often tell both my buyers and sellers that once we have an accepted offer, we have only achieved a first down, and we have a lot of field to cover before we get the ball over the goal line.  This sports analogy is a clear picture to help both my buyers and sellers focus on the next steps in the home purchase or sale process.  Coming to terms on price is a great first step, but it just that, the first step.  There are several hurdles to overcome before achieving the ultimate goal of closing on the purchase or sale of the home.  Below I have assembled a Post Accepted Offer Check List of items to address to help insure an orderly transaction process.

Engage a Real Estate Attorney

One of the first items I recommend both my buyers or sellers to do  is to engage a Real Estate Attorney.  This is close to a “must do” item on the Post Accepted Offer Check List.   I do highlight that one hire an attorney who specializes in Real Estate transactions, as they are usually staffed for such transactions, and having done such transactions, they can do them in a timely manner.

Real estate transactions are completed in a two step contract process.  First is the Offer To Purchase, and the second is the Purchase and Sale Agreement.  Both are legally binding contracts.  The Offer To Purchase simply states that a more formal contract to  purchase will follow covering the transaction’s details in greater detail.  With the various nuances of a real estate transaction, it is simply wise to seek qualified legal guidance to ensure your interests are protected fairly.

Start The Clean Out

My sellers hear me beg them to clear the clutter from my initial appointment that I have with them back when they are considering selling their home.  I have often told sellers to clear as much clutter out of their home as possible prior to listing their home.  But once a seller has accepted an offer, it really is time to begin the moving process.  I remind all my sellers that a top item on my Post Accepted Offer Check List is that  every home has more contents than the seller believes they have in their home.  Once you have accepted and offer, start packing, and cleaning out your home to ready it for the closing.   This process is usually, and almost always, underestimated in terms of time and effort.  The sooner the seller starts this process, the better the process proceeds.

Schedule Your Fire Safety Inspection

One of the items on my Post Accepted Offer Check List is to remind sellers in that the law requires every home have working and functional smoke and carbon monoxide detectors.  The actual nuances of this law vary depending on the size and age of the home being sold.

Since each town’s fire prevention officer may have a different interperation of the requirements of the law, it can make good sense to have a pre-inspection by a member of the local fire department.  This can assist the seller to know which types of detectors should be located at which locations in the home being sold.  And thus, make for a simple inspection at some point later.

It is the seller’s responsibility to comply with this law.   Typically a certificate of inspection is required to be presented at the closing table by the seller.  This certificate is usually good for 60 days, so it can make good sense to order this inspection well in advance of the anticipated closing date.

Order a Final Sewer and Water Reading

For those homes that have either town water or sewer, or both, there is a need to obtain a final sewer and water reading.  The best time to schedule this reading is two or three weeks prior to the anticipated closing date.  It is easy to reschedule such a reading should a reading need to  be moved further in the calendar, but quite often it can be hard to get a reading done at the last minute.  When it comes to cost, this is an item that is typically accounted for on the HUD settlement statement where the buyer is credited the amount of water and/or sewer charges that the seller may have used up to the closing date if the local municipality is between billing periods.  This is often the forgotten item on the Post Accepted Offer Check List.

Order a Final Utility Reading

If your town has a municipal electrical system, a final utility reading may be required.  Municipally owned utility systems can file a lien on the property serviced for unpaid utility bills.  This can delay a closing.  So if you have a property being sold in a town with a municipally owned electrical system, be sure to order a final reading and account for it on the HUD settlement statement or have the seller settle the final bill and bring a receipt to the closing.

If you can check off each of the above items on the Post Accepted Offer Check List in a timely fashion, then your closing will most likely proceed much smoother and will less stress and last minute run around.

When purchasing a property that is a Short Sale there are some steps in the process that a buyer should be aware of prior to starting the purchase process.  The most important thing to know is, “What is a Short Sale?”  In simple terms, a short sale is a real estate transaction where the property is being sold for less than what is owed on the property via mortgage.  Generally the sale is subject to the approval of the mortgage holder (the seller’s lender).  This third party approval is necessary because the seller is attempting to sell the property for less than what the seller owe’s on the property.  And this seller will need this approval from their lender so that the lender will release the lien the lender holds on the property.  This needs to happen so that the buyer can receive clear title to the property.

Do Not Low Ball Your Offer

While I agree with the conventional wisdom that a buyer can get very good pricing on a short sale home, that does not mean the home can be purchased for pennies on the dollar.  I have noted that short sales often offer attractive pricing because of the perception that a short sale transaction can be excessively time consuming.  There are many in my trade who will steer a buyer away from a short sale,  simply because of the time factor.  While it is true that buying a short sale property will take some additional time to complete, generally speaking it only adds several more weeks to the process if the the listing agent is an experienced short sale agent. I will cover the time factor in more detail below but, suffice it to say that a Short Sale transaction will take some additional time to close.

Do not think that due to the additional time required to complete a short sale transaction,  buyers will be driven away and you’ll be able to make an offer for pennies on the dollar.  As an experienced short sale listing agent, I do factor in the impact the short sale has on the size of the buyer market, and adjust the pricing the property accordingly.   However there is another factor that has to be figured into the process that will not allow a low ball offer to progress in the short sale process.  This is the seller’s lender’s opinion of price.  When an offer is submitted to a lender, the lender will order an appraisal, or a BPO (a Broker’s Price Opinion).  The seller’s lender will only approve a short sale if the offer made is within the ballpark of the BPO.  So if you offer on a short sale is a low ball offer, well below the low end of the market for a short sale property, the seller’s lender will not approve the short sale.  In the end you will only have accomplished wasting your valuable time, the seller’s time, the lender’s time, and the buyer’s agent who should have given you better guidance on pricing.

Do you Home Inspection Early

Some inexperienced real estate agents will attempt to save their buyer money by having the buyer complete the home inspection after the short sale has been approved.    This is poor counsel.  It is wise to do your home inspection early.  The seller’s lender is primarily interested in exiting a bad situation for them.  In this case, the bad situation for them is the non-preforming loan on the home that is attempting to complete a short sale.  The seller’s lender is very interested in knowing that if the short sale is approved, that it will close.  The seller’s lender will be less likely to approve a short sale, if it is still contingent upon a home inspection.  Further, why would a buyer invest the time and effort to get a short sale approved, only to find out the home they have waited out a short sale approval from the seller’s lender has larger issues than they had anticipated?  As well the seller should not accept an offer to complete a short sale that is contingient upon an inspection that will be completed only after the short sale has been approved.  The seller could run the risk of losing the time needed to find the next buyer who will accept the home “as is”.  It makes no sense for any of the parties in the short sale process to wait to complete the short sale process.

Agree to Wait 90 Days for Short Sale Approval

It can take far less than 90 days to complete a short sale if a complete file of the necessary documents is on hand from the beginning of the process.  However, both the buyer and seller should be prepared to wait up to 90 days for the lender to approve a short sale.  There is a lot to the process of buying a short sale property that the lender needs to complete, in order for them to approve a short sale.  The lender needs to look at the seller’s financial situation, and determine that that there is a financial hardship.  The lender needs to have a BPO, or third party appraisal, completed on the property in question.  This valuation needs to come in within the ballpark of the offer.   The seller’s lender needs to determine the total amount of the loss to the holder, or holders, of the mortgage on the property.  And the holder(s) of the note need to approve the agreement to settle for less than what is owed on the property.  All of this can be a quick process if all goes well, but it can, and often does, take up to 90 days to complete.  So, if you are considering buying a short sale property, any and all offers should be prepared to wait at least 90 days for the short sale to be approved.  Any request by the buyer for less time is really unrealistic and simply wastes the seller’s precious time.

Nominal Amounts in Escrow Don’t Fly

Okay, so we now know when buying a short sale property one needs to have a market level offer on the property attempting a short sale.  We also now know to be prepared to wait 90 days for short sale approval, and to get the home inspection out of the way early in the process.  Next we need to talk about how much money needs to be placed in escrow.  This is an area where money talks.  A seller should not accept an offer on a short sale where the buyer is looking to tie up the property and take it off the market for up to 90 days without any recourse.  And the seller’s lender will almost always look at the amount in escrow as  a way to verify how committed, and financially qualified, the buyer is in purchasing the property.  Please don’t think that you can expect a seller to take his/her property off the market while you have nothing of substance to lose in the process.  The custom here in my market is to make an offer with $1,000 down.  And when the Purchase and Sale Agreement is signed, the total amount of escrow is typically at least five percent.  If you are not willing to do do this for the duration of the process, don’t think the seller will take you seriously.  The amount in escrow is  looked at by the seller’s lender and can impact the short sale decision.  If you are committed to buying a short sale property from a  mental point of view, you will also have to commit with your wallet as well.

Sign The Purchase and Sale Agreement

Most lenders will not consider a short sale unless they have a signed purchase and sale agreement with funds in escrow.  As noted above, the funds in escrow do need to be more than pocket change.  In many cases, the seller’s lender will require a signed purchase and sale agreement prior to their starting the short sale process.  So much of what is noted above needs to happen first.  Get the home inspection out of the way.  Be sure to have a healthy and meaningful amount of funds in escrow.  And then know it could take up to 90 days for the short sale to get approved.  And this 90 day clock only starts ticking upon receipt of the purchase and sale agreement to the seller’s lender.  Ask yourself, if you were the seller’s lender, why would you approve a short sale without a contract in hand?  Without a contract in hand, the seller’s lender is only bidding against themselves.  Hence my lenders require a purchase and sale agreement in hand prior to staring the short sale process.

Be sure to choose a qualified REALTOR

When selling your home or condo and you think you may be faced with a short sale make sure you choose to work with a good Realtor, who has some working knowledge of short sale procedures! Buying short sale property can be a complicated transaction and hiring a Realtor that knows what they are doing is critical. Remember as a seller you are not that far away from a potential foreclosure so picking the wrong Realtor could be a costly mistake.  Much of the same can be said for the buyer of short sale property, experience can be the determining factor in the process.

Though there is much more to the process, these are five things that are necessary to be able to commit to when buying a short sale property.

Have you ever gone through a short sale process?

Any good real estate professional who has ever spent time with a prospective home buyer would more than eagerly work with a buyer who is candid and methodical with their approach to the home search process.  Here are 5 Concepts For Home Buyers To Ponder that will improve your relationship with your REALTOR, increase communication, and simplify the home search process.  While none of these concepts are the least bit new, but if put in practice during your home search, you achieve a better experience.

Here is my Home Buyer Check List:

Educate yourself.

For many home buyers, the purchase of a home can be one of the largest financial decisions that one will make in their lifetime.  If you are about to make a large financial decision, you should undoubtedly educate yourself on both the process and the local market, or markets, in which you are searching for a home.

When it comes time to educate yourself on your local market, it may make sense to sign up for a service that will email you a daily or weekly update on the new listings that that have arrived on the market in your price range and specific criteria.  In time this will help you gain a sense of value.  You can Click Here to sign up and receive daily/weekly updates from me.  Next you should understand the local metrics of the market you are searching within.  How many homes sell each month?  And what to they sell at on a relative basis?  Is this basis price per square foot? Or is it in relationship to the tax assessment?  There are a number of ways to price out a homes valuation.  At William Raveis Real Estate we offer a monthly newsletter to inform you of these metrics so that you can be the informed consumer.  Click Here to sign up to receive our monthly newsletter for your particular town or towns.

Give Honest Feedback.

In all but a few cases, the REALTOR who has shown you a particular home does not own the home you have seen.  As real estate professionals, we don’t get offended by your opinion.  There is nothing more productive that you can do in the home buying process than to be completely candid with your real estate professional.  Do not be bashful, you will only confuse your real estate professional by misleading them about your home tastes and desires.  Heck, don’t be afraid to tell your REALTOR you think the home, or some of its features, are ugly!  The more your real estate professional understands your tastes, wants,  and needs, the better your real estate professional can hone in on the home that is “the one” for you.  I have always said, “I don’t help people find a home, I help them eliminate them”  Said differently, the more your real estate professional knows about your tastes, the better they can pair down the list of choices, and then shorten up the list of home that you preview. Thus you only see the homes that truly match your own personal unique criteria.

Keep an Open Mind.

Being a bit open minded while search for your home can do both the home buyer and the real estate professional a world of good.  When I say open-minded, I don’t intend for the contemporary buyer to consider an antique.  However, often the “ideal home” is one street out of target area.  Or, the ideal home is found in the next price point, but it just so happens that “the ideal” home is over-priced, so it didn’t hit your search radar.   Many good real estate professionals can often find that “ideal home” because they know what you want, but sometimes the search criteria needs a simple tweak to find the home that meets the home buyer’s ideal criteria.

Be Prepared to Act.

How many times have you heard, “Well we weren’t really looking, but this home came on the market so…”  There will be those times that you will find the home of your dreams, the very unique one that fits all of your criteria. There is nothing more frustrating for a home buyer to have to go through the home search trying to find “the one” that is good as the home that got away because the home buyer was not prepared to act at the time their dream home came on the market.  Being prepared to act means having your financial affairs in order  Or if you have a home to sell, could it go on the market quickly so that you could move up, or downsize to, your dream home?

Know Your Budget.

However knowledgeable one can be about their market, or ready to act on the rare opportunity to acquire your dream home, “the one”, “the ideal home” you need to know how you are going to pay for it.  Knowing in advance how much home you can afford, and how much home you can afford using different financing programs  will lead you to the homes best suited for your budget.

In today’s market, the one item that nearly all seller’s want demonstrated is how will the buyer fund the purchase, and is there documentation to back it up.  One way to best understand how to determine how much home a home buyer can afford is to sit with a mortgage professional and have them issue you a Pre-Approval Letter.  A reputable mortgage professional, like the ones at William Raveis Mortgage, can meet with you, discuss your financial goals, and help you determine the best financing choices for you.  These choices will enable the home buyer learn what price point is appropriate relative to their financial goals.  And combine this knowledge with a pre-approval letter issued from the mortgage professional and the home search process goes much more smoothly.

Knowing your budget will enable you to avoid the sticky situation of having to back out of an accepted offer due to the inability of the buyer to be able to finance the transaction.  Neither the buyer nor the seller really enjoy when an transaction does not come to fruition due to financing.  As a home buyer,  it is very difficult to have to down in price range after envisioning yourself, and shopping at a higher price point.  Hence, getting a handle on an appropriate price budget will do wonders for simplifying the process.

The above is a simple, not so new, but often over looked Home Buyer Check List. When these Five Concepts to Ponder are practiced in concert, your home search process will proceed in a much smoother and productive fashion.

Recently I have been out speaking with numerous sellers through out the South Shore discussing the home sale process.  Inevitably, the discussion of why one’s home could have a difficult time on the market becomes a part of the conversation.  Here are my top ten reasons homes will not find a buyer.

1. Poor Photography

It should not come as any surprise that nearly 90 something percent of home buyers start their home search online.    Since such a large percentage of buyers begin the home search process online, why would one try to entice a potential buyer to be interested in your home with poor photography?  The small, grainy, unclear, poorly lit photos of your home don’t exactly scream, “Let’s go see this home!” When was the last time you were excited to see a property where you had trouble discerning the details of what was in the photo.  Photography is your online image, you first impression.  The photos of your home need to be stunning, and nothing short of that if you intend to generate interest in your property.

2. Not Easily Accessible

Even the best real estate professionals cannot sell a home they cannot show.  It is imperative that sellers be flexible with the sometimes intrusive process of showings.  We are currently in the middle of a buyers’ market, so when your agent wants to show your home, you really need to oblige the request.  It is very hard to sell a home to a buyer who cannot see the home.  It is a shame to spend time and resources marketing a property so that the phone will ring with a qualified buyer interested in seeing a home, only to find out that the seller cannot accommodate the showing.  Your home will not sell if it cannot be shown.

3. Curb Appeal

First impressions are very important.  How many times have you that in life?  Well, the same goes for your home.  When a potential buyer arrives at your home for the first time, be it a showing, or a simple “drive by”, what does this buyer see?  Is your home shown in its best form?  Regardless of the time of year, the yard needs to manicured, the leaves cleaned up, the mulch freshened up, the ornaments properly placed, and the outdoor furniture arranged neatly.  It is easy for the curb appeal to signal disarray, and this is an immediate turn off.  It becomes harder to sell your home when starting from a negative impression.

4. Nose Appeal

There is no larger turn off  than odor.  I have been teased incessantly by my peers about baking cookies at an Open House.  While I have never actually baked cookies, the concept of a pleasant scent upon the initial steps in the door has never been lost on me.  A fresh clean smell to a home goes further than people care to believe.  It is hard for a buyer to see themselves living in a home the stinks of pet odor, or is musty, or even worse, the smell of mold.  When selling your home, be very cognizant of the things that can give your home a lack of nose appeal.  Before a showing, be sure to take out the trash, think about what your cooking the night before a showing.  Fish, garlic, and other strongly scented  foods can give your home the wrong initial first impression in the form of a not so pleasant scent.  The same goes for the pets.

5. Poor Home Maintenance

First impressions again.  I fear I sound repetitive.  Imagine a buyer walking up your driveway only to be greeted with peeling paint, debris dangling from the gutter, and the walkway to your front door has a tripping  hazard.  Inside you are greeted with loose tiles on the kitchen floor, door knobs that don’t function, and lights that don’t work because the bulbs simply need to be changed.  A lack of attention to some of your homes details are easy for a seller to over look, but to a buyer these little things can be a glaring ad that states the home as been neglected.  And with neglect as  the first impression it makes one wonder what else is wrong with this house?  This is not the thought pattern a buyer should be thinking while viewing your home.  Sellers need to pay attention to the details so that home shows that it very much loved and cared for.

6. A Poorly Cleaned Home

Dust bunnies are not a good impression for a home.  A home that is not totally spotless will turn away more buyers than I have room to write about.  Dirty kitchens and bathrooms do little help a potential buyer to envision themselves living in your home.  Not to mention that a poorly cleaned home can have the previously mentioned nose factor, it can also say poorly maintained.  The “Wow Factor” goes up exponentially with home that is showroom clean.  I am talking well dusted, with the glass on the windows spot free, and the kick-knacks properly placed.  Not a spec of dust anywhere.  A well cleaned home and be one of the simplest, cost effective things, a seller can do to help sell the home.  Dust bunnies are neither cute, nor a strong selling factor.

7. Clutter

Clutter is every real estate professionals enemy.  Clutter says too small in that there is no room to put things away.  Clutter shows a lack of cleanliness, and lack of upkeep.  Too much stuff strewn around a room can be confusing to the eye, leaving a room to be too busy.  If a buyer’s eye gets too caught up on what is in the room, they lose sight of the room itself.  Further the buyer looses the ability to envision their things in said room.    Box it up, put it way, start packing early, but the clutter needs to go, if you want show your home in its best fashion.

8. Wild Colors

A fresh coat of paint goes a long way in a home.   A fresh paint job really makes a room, and a home, looked well cared for by its owner(s).  But the paint color needs to be neutral. I have often said, “Day Glow Orange looks good in the Home Depot logo, but not in your living room.”    Strong and bright colors nearly always elicit comments from buyers, and are rarely are these positive comments.  These colors also detract from the home in that they become an item that needs to be addressed to the buyer.  Or said differently, color can always be changed, but a cost.  And when buyers see another cost over and above the purchase price, this can be detrimental the sales process.  Many buyers will gravitate towards them home that needs the least work post closing.

9. Location

Location is a key factor in the pricing of a home.  Too many sellers overlook, or over value, the location of their home.  While some locations are very sought after, there are those that are not so desired.  Either way, placing too much emphasis on a prime location in pricing is just as dangerous as over looking a home with a lesser location.    A choice location can add something to the value of a home, but in most instances this valuation is not significant.  Conversely, a poorly located home really needs to factor location into its pricing.  Location can be a killer for the sales process of a home.  Over-weighting a good location can be as equally dampening to the ability to sell a home as under weighting a poorly located home.

10. Your Home is Over-Priced

Price is the number one reason a home will not sell.  With today’s buyer able to complete extensive online research about homes and the comparable competing homes for sale, it becomes even harder, if not impossible, to sell a home at an inflated price.   A home that is overpriced by a wide margin will get quickly overlooked.  And an overlooked home, gets less traffic.  And a home that does not get traffic, does not sell.  Price is the issue in the absence of value.  If your home’s price does not present itself in a value frame of light, it will not get attention, and may not sell in today’s market.

In order to make the home-selling process a little simpler, we thought it would be a good idea to post a compilation of some common seller pitfalls.  William Tierney, a Raveis agent in the South Shore, Massachusetts, did just that!  See his comprehensive list below and check out his phenomenal blog, here.

As a local South Shore REALTOR I have had the pleasure of working numerous sellers in getting their home prepared for the market.  Somehow, in someway, there is a common trend where one, if not several, items from below enter the process.  It is almost as if there is a poor “how to” book on selling a home that seller’s have read.  I thought I would write down some common seller mistakes in an effort to help my sellers avoid these same pitfalls.

1)  Setting The Asking Price Based on Need. This is a common mistake that even good REALTORS let their clients make.  In today’s age of technology and the internet, buyers quite often have done their homework.  These buyers have an educated guess as to the value of a home.  So if you price your home based on where you need to sell it, perhaps for economic reasons, and that figure is above the market, you are doing yourself a disservice.  You will lose valuable foot traffic in showings as today’s buyer will deem the home over priced.  Remember, a sale happens where a willing buyer meets a willing seller.  And today’s willing buyer is after a fair market price, this buyer does not care what you need to sell the home.  Need and market value can often be eons apart.

2) Excessive Upgrades Prior to Selling. Many sellers do some significant work to their homes prior to selling, thinking that they will recoup 100% of the costs of the upgrades in the sale.  And study after study shows that this is simply not the case.  There are some upgrades that make sense, and a good portion of the funds expended will get recouped, but often not all of the expense.  Remember, many upgrades are personal choices, so what a seller may like (and have paid good money for), a buyer may see as an item to be addressed since it is not in sync with their personal taste.

3)  Listing with the Wrong Agent. Many sellers pick an improper agent for many of the wrong reasons.  Sometimes the listing agent is a friend.  Or the listing agent is the “big name” in the market, the one with all the listings in town, or at least the one whose signs appear all over town.  Or even worse, the listing agent that is chosen to market the home is the one that said they could sell the house for the highest price.  This is a common mistake.  Seller’s should look for an agent with a well thought out marketing plan that they understand how that plan will sell their home.  The proper listing agent will also understand the local market, the unique selling features of your home, and how to generate buyer traffic through your home.  The agent should also have a good handle on value.

4)  Aggressive Agents Sellers often list with an agent who is too aggressive, and this agent drives buyers away from the home.  Over selling the home at a showing, or putting on the “Hard Sell” can turn off a buyer.  Remember, buying a home is an emotional decision, and today’s buyer will want to discover how the home fits their needs and lifestyle.  A good REALTOR will highlight many of the selling features of a home, but only those that are important to their buyer.  Otherwise the aggressive agent will highlight features the buyer many not deem necessary, and thus make a buyer feel like they could be paying for features that they don’t desire.

5)  Poor Home Presentation. A common seller mistake is a failure to not properly showcase the home.  Sellers need to address all maintenance issues so that the home looks well maintained.  If not, the home lends itself to appearing as if there are other hidden “issues” with the home.  In the same line of thinking, the home needs to be showing ready 24/7.  This means that the home needs to be neat and tidy with all the daily chores properly addressed.  This makes the home appear well loved.  Buyers who fear that a home suffers from a lack of love, or deferred maintenance, will cross the property off their list faster than any good REALTOR can generate interest in your home.

6)  Failure to Give Proper Consideration to The First Offer. Anybody who has ever bought or sold a home knows the feeling of disappointment upon the receipt of the initial offer.  Seller’s often have done a lot of work reading their home for sale, putting in both physical and emotional effort into the sale.  Then the first offer comes in below expectations.  The common seller mistake here is that the offer gets rejected  for being a “low ball” offer.  There is an old adage that says, “Your first offer is often your best offer.”  I will revert back to another old adage, “You home is worth what someone else is willing to pay for it.”   If a seller receives several offers all within a similar price range, then the price of the home has been determined despite the best efforts of the listing agent to garner a higher price.  Your first offer can be a good indication of market value, regardless of the prior market research.

What is Your Advice to Home Sellers?