Straight Talk About Real Estate

It is now officially a buyer’s market here in the Los Angeles area as well as in all cities around the country. There are more sellers with their houses on the market than there are buyers looking to buy a house to buy.

Then how can you get your house sold?

It is not impossible to sell your house even in this environment. There will always be people who are ready, willing and able to buy. This market condition means your house has to stand out. There are 3 ways to make your house attractive to buyers.

1. Prepare your house to be in turnkey condition. This means, when a buyer looks at it, they feel they can just move in. In a seller’s market, you can get away with walls that need painting or ripped window screens. But now, buyers would not want a house that needs work unless they can get a great bargain on it. Make all necessary repairs, keep up with the landscape maintenance, and add potted flowers for curb appeal.

2. Set your price realistically based on what the market will bare. Forget about the neigbor that sold his house for $30,000 over listed price in 3 days. Treat every offer as a good offer. If an offer comes in low, do not be insulted by the price or terms. Don’t let your pride get in the way of making the deal work. Be ready to negotiate with a buyer as far as you can to make it work if possible.

3. Offer bonuses to the agent who sells the house. This will attract the attention of agents with qualified buyers. The incentive may give them an incentive to show your house.

If you need further advice on your particular situation, contact me.

What are the reasons that homeowners decide to put their house on the market?

Job relocation?
Bigger house or a bigger lot?
Different school district?
Move closer to work?
Downsize?

In today’s market, as it is increasingly becoming more and more a buyer’s market, you must have an urgency to sell before you put your house on the market. This is not the time to put your house on the market to see how much you can get for it. If you are just testing the market, your house will not sell.

Make sure you are truly motivated to sell. Do you have a pressing time frame? Is selling your house the only option? If your answer is yes to either of the questions, then you are a motivated seller. Don’t worry, you will surely be able to sell your house even in today’s market.

Every potential buyer I talk to asks, “The prices are dropping, aren’t they?”

I don’t see prices dropping yet. But buyers are very cautious, therefore, the inventory of houses for sale are staying on the market longer, thus more listings are now available to choose from.

This means if you are a qualified buyer, you finally have a choice. The last few years when houses sold in less than a day, the inventory was so low that you had no houses to choose from. Now that you can choose the house you want, and the interest rate has come down, doesn’t it sound like it is a good tme to buy?

Is your house prepared for the winter? With the children back in school, there is a sense of responsibility and getting work done. Now is a good time do those little things around the house to get it ready for cooler weather.

Read more here for some good ideas of what you can do.

So you want to refinance out of the adjustable rate and hope to get a good fixed rate?

First, check to see if you have a prepayment penalty on your loan.

Many of the loans with teaser rates of 1% have a prepayment penalty clause that requires you to pay 6 months of interest if you pay off the loan early. Now that the 1% is up to 7% or higher, it may possibly be worthwhile to pay that penalty in order to get a fixed rate if you intend to stay in your house longer than 3-5 years.

Who goes to Open Houses?
Chances are, they are your neighbors you’ve never invited to your house, and now is their chance to see what your house looks like!

Open House is mostly a means to bring more business to the agent holding the Open House. Potential buyers will come to the Open House out of curiousity. They like the way the house looks on the outside, and they like the neighborhood. But they have no idea the price or size of the house. Most of the time, the Open House home is above their price range and smaller than they want. The agent there at the Open House has the opportunity to show them other homes and eventually selling them one that is not the Open House home.

With internet marketing, and the accessiblilty of the Multiple Listing Service, Open House is not a very effective means of selling a house.

However, there are circumstances when an Open House would make sense. If the property is in a community or tract of very similar homes, and if there are other homes in that community on the market, you would want to hold Open House if your home is the best one in the neighborhood. As potential buyers tour Open Houses in the area, your house will be the best choice by comparison. This way, your home would stand out and attract a buyer’s attention. It is especially important to hold Open House on the same day that a similar house on the market is having Open House. This is only effective if your house is obviously the better buy. If it is not, you would only be helping your neighbor sell his house.

If you want the security of a fixed rate, but need to keep your payments as low as possible, the Interest-Only payment option is a good choice.

Here is an example:

Let’s say your loan amount is $300,000. Let’s assume a 6.5% interest rate for a 30-year fixed rate. If the payment was based on the loan being fully amortized over 30 years, your monthly would be $1,896. If you pay interest only, the payment drops to $1,625, a significant difference of $271 a month.

This is how this Interest-Only loan works. You pay only the interest on your loan for the first 10 years. No principle is paid. At the end of 10 years, the amount you owe remains at $300,000. At the start of the 11th year, the $300,000 is amortized over the remaining 20 years so that the balance is paid off completely after a total of 30 years of the life of the loan. The good part about this loan is that the interest rate does not change.

Your payment at the start of the 11th year obviously will go up. In this example of a $300,000 loan, the payment will jump to $2,237. This is because the payment will include paying off the principle. So while you pay more, you are finally paying off the debt.

Although this big increase in payment sounds scary, most people who get this loan will sell the house before then. Afterall, who stays in a house longer than 5-7 years these days?

You can also refinance out of the loan since there should not be a prepayment penalty on this type of loan.

You would also hope that in 10 years, your financial situation should be better. Your wages would increase to cover the higher payment.

Again, the beauty of the loan is, you have the security of a fixed rate. In today’s climate of low rates, you would do well to take advantage of a fixed rate.