Why Getting An Appraisal Before Selling Your Property Makes Sense; Plus Some Prep Tips

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At a time when all transactions from the seller’s perspective are a welcome occurrence, it only makes sense to do anything and everything we can to ensure that things go as smoothly as possible.  One area to be wary of is when it comes to the selling price of the home.  It is definitely a buyers’ market these days and buyers know it.  Their savvy comes to the surface when the most important part of the transaction occurs – settling on a price.

Preparedness on the seller’s part is one way to make sure that there are no surprises for either party.  By making sure that the home is accurately priced to begin with, there will be less time wasted in going back and forth, the home will be sold within fewer Days On Market and all sides of the transaction will be happy.

What Exactly is an Appraisal?

An appraisal is when a professional visits a home or property and through a series of steps, observations and comparisons makes an assessment as to what the fair market value is for the property.  Typically this is done at the request of a bank that has been sought to provide a loan to homeowners wanting to purchase the home in question, however more and more often existing homeowners are having their homes appraised prior to listing the property on the market.

Among factors that are considered when determining the fair market value of a home are the physical condition of the home, its structure and functionality – plus also the performance of other homes on the market or those that recently sold in the neighborhood.  A comparison is made based on other, similar homes in the area.

It is important not to confuse a home appraisal with a home inspection.  A home inspection is a detailed account of every last working aspect of the home and its condition, whereas an appraisal is more general. The cost of having an appraisal done is on average anywhere from $300 to $500, with the end result being a detailed report outlining all the factors looked at by the professional appraiser.

What is the Benefit of Getting An Appraisal Done?

In most cases the buyers’ lending institution will have its own appraisal done on a property they have been asked to finance.  However as a seller, if you have had one done in advance, it will give you the advantage and edge of knowing the ballpark range that your home is currently valued at so that you can accurately price your property to sell.  The greatest advantage is that you can go into a transaction with potential buyers knowing that your price is realistic.  There is a growing occurrence of bank-appointed appraisers coming in with values that run less than the listed price and also less than what the buyer and seller had agreed on.  To avoid the unnecessary waste of time, loss of interest in the property on the buyers’ part or the potential loss of sale altogether, it makes sense for the seller to know what to expect in advance.

How to Prepare for an Appraisal

Our tips on how to get ready for an appraisal can potentially yield a better result.

• Complete all maintenance (interior and exterior) including correcting any problems plus maintaining the yard and home’s exterior 
• Share with the appraiser all new installations and improvements made to the home
• Be aware of selling prices of other homes in the neighborhood
• Be ready to explain and demonstrate why your home is different than others in the area
• Maintain up-to-date knowledge of your real estate market prices
• Keep a polite attitude with the appraiser and provide them full access to all areas of your home
• Treat your appraisal day as if it were an open house day, keeping your home in tip top shape, neat and clean so they can see the home for what it is rather than have their judgment be clouded by distractions

Sales Moving, Inventory Growing and Seller Savvy an Increasing Must – A Look At Our Markets

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Here’s a look at how we are doing in the real estate market, in terms of the number of homes that have sold in comparison with six months ago, the size of inventory we are seeing on the market, how that inventory has been performing in terms of sales and how long it is taking on average.

Homes For Sale

Right now in Alameda and Contra Costa Counties things are not looking too bad.  With a current figure of over 8,000 homes for sale on the market as compared to January’s number of available homes at 7,300 – the outlook is good, especially during the summer when it is a better selling season.   With inventory beginning to slowly inch upward we can see the beginnings of stabilization of the market on the horizon.

New Homes On the Market

As we enter the last six months of the year, we are noticing some changes in terms of homes on the market for sale.  Currently there are 8,000 homes listed on the market in the Alameda and Contra Costa vicinity while in January we reported 7,300 homes as being available.  The slow and steady rise in inventory is acceptable but the consequences also mean that prices play “catch up” and dip to accommodate heightened supply and diminished demand.

Homes Being Sold

The number of homes that have gone into escrow in over the last 30 days is 3,300.  Looking back to January, the same figure represents about a third less.  The main thing to keep focused on is that the property market is moving.

Focusing on home sales during the last month we are seeing a total of about 2,500 homes, which compared to the January equivalent of 2,000 is not too bad even though the market is slightly declining.

Market Stats and Days On Market

Looking at the activity in terms of what is coming on the market – right now we are seeing around 200 homes that are coming on in the market each month– but if we look back in January, it was only about 63 new listings during the month.  That’s a significant change and what it means for you, as a seller is the importance of getting right the price you set to sell your home.  The best way to seize the buying market right now during a time like this is to price your home at or slightly below fair market value.

As compared to six months ago when the average Days On Market was around 41, at this time of year we are seeing a slight increase in time that a property remains on the market at about 43.  Analyzing our current inventory levels shows that our supply at the moment is at about three months.  In other words, assuming that no new homes are placed on the market, at the current levels it would take about three months for all the homes on the market right now to sell.  Factor in the additional 200 homes per month that are being listed and you can see how our market is performing in this cycle.
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The bottom line is this:  Inventory is slightly up, prices are continuing to dip, we are seeing some movement in terms of home sales and activity plus our average Days on Market is reasonably level for now.

Keeping It Real In the Real Estate Market – What Buyers Need to Know About Short Sales

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Clearly in this buyers’ market people looking at homes to purchase are considering all options. It is also no surprise that sellers who are faced with financial strife or difficult situations arising from steep drops in the value of their homes are turning to alternatives. From the seller’s perspective, short sales are a way to hold on to some dignity while not entirely messing up their credit outlook. But what about from a buyer’s perspective? In this article, we’ve put together three important aspects of being a short sale buyer that every homebuyer should consider.

What Does the “Short” in “Short Sale” Really Mean?

We have all heard the recent buzz words “short sale” but do you, as a buyer, truly understand what it means? As a buyer, it can mean a great deal for you on a home that would otherwise cost you more than an arm and a leg. Simply put, a short sale is when the amount owed on a property is greater than the amount the property is currently valued at. For owners in this situation, it can engulf them like quicksand given the huge dips in property values lately. For prospective buyers, though, it is an opportunity to buy a home for less, knowing that in just a few years it will gain value.

Example: A home currently valued at $300,000 has a mortgage owed on it for $500,000. Sellers must appeal to the bank to release them of the liability – a difference of $200,000. If approved, the original payoff will be shorted to reflect the new value of the home. This is an alternative to foreclosure but it means that the banks are taking a huge loss and usually the homeowners cannot afford the current mortgage.

Rule Number One – BE PATIENT

Properties that will be considered as short sales usually have the homeowners still living in the home. Their first step will be to approach the lender and apply for a short sale. Consider this: there are many steps from the moment the homeowners put in an application to the time you are given the keys, if approved. The time it takes can be long and arduous – something that makes sense given the large numbers of short sales banks are contending with these days. Be prepared to wait anywhere from 3 months to even a year for the entire thing to process.

Rule Number Two – FLEXIBILITY IS KEY

Short sales are nothing like the traditional home purchase process. Unlike a regular transaction, you will not be given any disclosure statements. Further, and very importantly, once an inspection is performed, the sellers will most likely not be able to afford to pay for any of the necessary fix-ups. Short sales are considered “as is” sales and though they can be risky, the benefits usually outweigh the risks. In addition to the obvious fact that Realtors are very well versed in this relatively new phenomenon, an advantage to using a Realtor for the short sale process is their negotiation skills. Realtors often can convince banks to reduce the price or give credit in cases where there are major issues with the property. Though it is not fool proof, it is definitely a viable option for many and worth the fifty-fifty chance.

Rule Number Three – BE REALISTIC

It is not exactly like you are dealing with the friendly couple selling their home through the regular real estate channels. You will be dealing with a bank, and as cold and harsh as that may sound, it is true that banks simply do not care in many cases. Do your best to keep expectations at bay. Know that incomplete or inaccurate information (on both the buyer’s and seller’s part) can negatively affect the outcome of your potential purchase. Given that they are dealing with dozens of short sales each month these days, banks gladly move on to the next application if something is amiss.

Things To Know About the Not-So-Common Knowledge of Short Sales

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When families find themselves staring at the prospect of losing their home to whatever reason, whether job loss, downsizing, relocation or anything else that is unforeseen – many times they feel cornered and unable to see the options. For years during the current economic state that has resulted in an unstable real estate market, the answer seemed to be foreclosures. But more and more often, short sales are taking over as the alternate choice.

Here are three things worth knowing about short sales:

It Doesn’t Hurt to Ask For An Adjustment

Many people do not realize the benefits of simply engaging in dialogue with their banks. With the large number of distress sales out there these days, banks are far more willing to engage in conversations about alternatives to foreclosure. Foreclosures end up costing lending institutions thousands of dollars to litigate, plus hours of time and resource put in to handle each case. By expressing the desire to explore a loan modification, banks are relieved of this stress and are likely to agree with a loan modification.

Through an adjustment of your current interest rate, you may be able to afford the same home and spare you and your family the difficult process and impending negative impact of a foreclosure. Not only does a loan modification save homeowners money, it also protects their credit from long-term negative affects otherwise experienced with foreclosures.

Know What The Tax Man (Or Woman) Has To Say

Short sales are a great way to spare a family of much pain but there are tax implications. Like anything else, before embarking on this financial shift with the ownership of your home, it is a good idea to familiarize yourself with everything you need to know about the taxes involved. In short, the tax liability works like this: On a mortgage with $200,000 owed that has a short sale of $100,000, there is that remaining $100,000 left that will show up on a 1099 in your name. This translates to income and should be managed with a tax advisor so you understand all there is to know about that real estate income.

All Players Must Agree to the Terms

A lot of times mortgages involve multiple lenders. When those homes are being purchased, surely the thought of needing to do a short sale was not a consideration. Now that you do find yourself looking at a short sale, it is essential to iron out the terms of agreement with all lenders involved.

When there is more than one lender the secondary bank must agree to give the primary lender a portion of the liability on the difference to you. This sounds easy enough but since this can be a matter of lender-specific policy, you may come across a lender that is unwilling to agree to this term of a short sale. By researching in advance the number of banks that are involved and what their respective policies are regarding short sales, you will cover important bases and be far more prepared.
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Short sales are a choice that offers many families reason to hope and a path to dream the reality of living in their own home again, without struggling to manage the mortgage. Armed with the key knowledge necessary to tackle this newest intervention on the real estate woes of many, you can and will hope to succeed in your housing endeavor and look forward to a positive outlook!