1. Higher rent on the horizon. This may not seem like much of a positive, but high rent can sometimes motivate a potential buyer to kiss a landlord goodbye and make a down payment on a starter home.

2. Research Triangle Draws. Okay, he didn’t say RTP exclusively – he said academic areas. But that’s us, you know! Smart folks are usually in demand for academia and research so it makes sense that real estate within the Research Triangle continues to be a smart investment.

3. More foreclosures to come but less delinquencies. If the current economic trend continues, most borrowers should make timely house payments. However, the drawn-out legal proceedings in some states could drag out ongoing foreclosures well into the new year. These overdue foreclosures aren’t new – but their timing means that 2012 will have more foreclosures on its ledger.

4. Mortgage rates will increase slowly. Economically, this is a good thing. Why? The potential for inflation pushes up bond and mortgage rates. Global uncertainty can cause rates to fluctuate, but more than likely an economic recovery is a good reason for rates to go up.

5. Government’s keeping the status quo. Don’t expect any political risk-taking in an election year. Bold housing packages or reform are not waiting in the wings. We’ll hear a lot from politicians at this time, but it’s very unlikely we’ll see any significant action.

Looking for a home in 2012? I don’t think prices are going any lower – this could be your ideal time to jump in before mortgage rates increase. Give me a call and let’s talk about what’s best for you.

One of my clients – I’ll call her Amy – wanted to purchase a lower cost townhome in Chapel Hill near UNC, where she worked. She was prequalified for a $102K loan. We found a townhome complex with twelve units for sale. They ranged in price from $109k to $130k, out of my clients price range. But I did some research and found that in the past year, only four units had sold.

Amy and I looked at seven of the homes, then prioritized which ones she liked best.

And then I declared war. I emailed the agents for each of the homes, and told them something like this:

My buyer is an owner occupant who works as a housekeeper at UNC. We saw seven units in the Commons* today. She is pre-qualified to purchase a home up to $102K. Only four Commons units sold in the last 12 months. There are 12 units currently for sale. Obviously some are in better condition than others and the prices vary. If you are interested in selling your unit at $102k, please contact me as I have a very serious buyer. Thank you in advance for your consideration. This is a tough market; I hope we can work something out. Thank you,

Vivian Olkin

Within days, I had four responses, including one for the unit Amy liked the most.

We sign the peace treaty close next month.

*The Commons isn’t the real name of the complex.

Some policies stop coverage after a house is unoccupied over 30 days. Others have a clause that extends to 60 or 90 days, but many will stop coverage if the company isn’t notified.

You can understand why insurance companies aren’t wild about vacant houses. A burst pipe in the kitchen when you’re home is a nuisance to repair and clean up. A burst pipe when no one sees it for a week means extensive water damage. A nest of squirrels in your attic or fireplace could decide the rest of your house looks very inviting and wreak all sorts of havoc before they’re detected.

So what’s a homeowner to do? If a vacant home will be part of your future, take a few steps of precaution:

1. Talk to your insurance company before you move. Can the current policy be extended to cover a vacant house? What’s the time limit for coverage? If available, how is the coverage different? At what point is a separate policy for a vacant house necessary? Unfortunately, a specific separate policy will be more expensive than your current one. Or you may have to go to a separate company for such a policy.

2. Could you rent the house for a short time at a reduced rate? Even allowing a responsible person to stay in your home rent-free may be cheaper than a vacant house policy.

3. A vacant house shouldn’t look vacant. If you have good neighbors who would be willing to physically check inside the house weekly, pick up mail and monitor the outside of your house, you’re fortunate. Otherwise, your realtor may be able to point you to a service to take care of these details.

4. Consider installing an alarm system. Many would-be thieves are deterred by security signs in the front yard.

5. Hire a lawn maintenance service so that the yard and gardens continue to look neat. A shaggy yard is a huge give-away that no one comes home anymore.

With a few safety measures in place, you can rest assured that your vacant house will be safeguarded – until it isn’t vacant anymore.

Speaking of which, if you’re ready to get your house sold, give me a call! I’ll stage and market your house so it won’t have that vacant look, and will showcase your home for a buyer!

The Tale of Two Homeowners

Just over the hill and down the lane lived Family B that also needed to move out of their house to buy a home in a town that was just under an hour’s drive away. Mr. and Mrs. B decided that it wasn’t the right time to sell and made arrangements to rent out their home.

How does a family make its decision? How will you make your decision? Here are a few issues to consider if you are weighing the choice of selling or renting out your current home:

1. Show me the money. Can you afford to keep two properties? If your tenant left, and the house went unrented for a couple months, could you afford to keep paying the mortgage both places? If the property you choose to rent is close by, you may choose to manage the property yourself, saving costs that would be spent with a property management company.

2. Whose market is it anyway? It’s true what your mother told you: timing is everything, and this concept is especially true in real estate. As you know, the current trend is a buyer’s market, and a seller’s challenge. If you’re moving to an area where the housing costs are less than your current neighborhood, you can afford to take a bit less on the sale. However, if you think you may be returning to the same area, you might be concerned that you could be priced out of this market. These are good issues to discuss in detail with your real estate agent.

3. Attachments are complicated. How emotionally attached are you to your house? Renters may not treat your home the way you do. One sweet grandmother looked over a home left by wayward renters and quipped, “Have you seen my living room carpet? Looks like they changed the oil on their Harley there!” I’d like to point out that after she had carpets changed, she still made a profit. That brings up the next two points.

4. Taxes: One of life’s certainties. When you sell, you can enjoy the advantage of tax-free capital gains. On the other hand, renting allows the owner to deduct items like home improvement projects and property taxes when filing taxes. Little items add up.

5. Long range planning. Millionaires often own multiple properties. How did they get started? They bought houses one at a time and kept them. Then they rented them. This is how many of these millionaires became millionaires.

Whether you’re Family A or Family B or something in between, deciding what will be in this chapter of your home’s story isn’t easy. If you’re working on next step in the plot, give me a call. I would love to hear from you and help you write your own happy ending.

Prospective buyers do the same thing for houses – they gauge a home’s interior by what can be seen at the street. It’s called “curb appeal”. People look at the outside of your home and subconsciously decide how well the home has been taken care of, and how attractive it will be inside. Curb appeal can mean the difference between someone asking to see a home, or simply passing it by. “Oh, yeah. If the outside is this great, what does the inside look like?”

Spring and summer are the easiest times to work on your curb appeal. It doesn’t havet to take a lot of money, or a lot of time. Here are a few things that are easy to do to help your home give a great first impression.

• Use flowers. A pot of red geraniums or a spot of yellow daffodils makes your home look cheery and welcoming.
• Trim the bushes. Uncovering the windows will make your home look bigger and brighter.
• Power wash the outside of your home, the walk and driveway.
• Plant flowers and herbs – especially perennials. (Less work next year!)
• Change the light bulbs.
• Put solar lights near the walkway.
• Paint your front door a bright color.
• Make sure your house number is attractive, and while you’re at it, make sure your mailbox looks great!
• Mulch. Mulch is not only attractive, it protects your plants, and is ecologically sound.
• Declutter. Get rid of the old bicycle, the broken flower pots, and the ragged garden hose.

Even if you’re not selling your home, it’s still a good idea to invest a little time, energy, and money on the way your home looks from the street. It will pay off now in the enjoyment you get when you drive up to your home. It will pay off later when prospective buyers see that you’ve kept your house up all along, and haven’t resorted to last minute fixes.

And when you or someone you know is ready to sell a home, give me a call. I’ll help you make the outside and the inside of your home look great – remember, home staging is one of my specialties. Together, we’ll get your house sold.

A. Buyers: Now that you’ve found the perfect house to buy, a CMA is a your best tool to reveal if the asking price is a fair one and what would be a strategic offering price.

A. Sellers: Now that you’ve decided to sell your home, a CMA helps you price your house to your best advantage. Otherwise you could price too high and have your property languish on the market, or price too low and lose potential profit.

Q. What exactly is a CMA?

A. It’s an acronym you hear a lot in real estate offices because a Comparative Market Analysis is an evaluation of a house’s value at a given time. It compares the values of similar type properties. For example, you wouldn’t compare beachfront property with a property across the street. Square footage, neighborhoods, school districts and amenities should all be similar.

Q. What’s in a CMA?

1. Active – A list of active properties will show you the houses similar to yours (or the one you want) currently on the market. The disadvantage of studying this group is that you can’t be certain how accurate the price is. Maybe the price is meant to be a tad high with hopes of negotiation room, or maybe it’s a great deal. Until a property actually sells, you won’t know if the price is a realistic one.

2. Pending- A list of properties that are under contract. As the name implies, it’s not a sure thing, and many realtors don’t like to share this information with you. The advantage of knowing what’s pending is that you have a good indication of the market’s current direction.

3. Sold-A list of sold properties similar to your house should be the most helpful to you. The prices are set, and two parties reached a deal-you’ve got more pieces of the puzzle to work with.

Q. Is a CMA the same thing as an appraisal?

A. No, it’s not an appraisal. Before you secure your loan, you will need to have a state licensed appraiser visit the home and physically assess the property.

If you’re a buyer or a seller of real estate, a CMA is a needed tool for fair pricing. Drop by or call my office, and I will be happy to help you with one at no obligation.

The home inspection is a physical evaluation of the house, done for the home buyer’s benefit. Are there structural problems? Is there asbestos in the walls of that charming cottage that was built 80 years ago? Is the roof sound and does it look to be three years old as the owner claims? These are questions the home inspector takes very seriously – to help a home buyer like you.

Think football for a moment. Appraisal is what the talent scouts do. They’ve heard about this great player and know if he’s a hitter or a playmaker. They know exactly what salary he should demand. Much like a talent scout knows a player’s best qualities and his worth, a qualified appraiser can quote figures for houses in various neighborhoods and let you know what kind of investment you are considering. Their expertise can guide you to a sound piece of real estate. So you can place your nest egg in a nest that not only nurtures you but over the years gives a good return for your initial investment.

Home Inspection can be compared to a medical team’s assessment that’s ordered after the talent scouts have identified the next great quarterback or lineman. A good medical team may find a health problem that might disqualify the hottest new talent no matter how much he can bench press or how fast he can run. The same is true for a good home inspector. He or she reveals potential problems or inconsistencies after conducting a thorough inspection of the house you’re considering.

While “location, location, location” is always good real estate advice, imagine your disappointment if your dream house has a faulty foundation that would cost $45,000 to correct. Sometimes a home inspection might not squash a sale; instead it gives bargaining power to the home buyer.

For example, I know of one house price that went down by $20,000 after the home inspection revealed that the house being listed as a four-bedroom house was actually a two bedroom house. Evidently creativity only goes so far. As Martha Stewart would say from wherever she’s doing community service, “That’s a good thing.”

To make sure you know the game rules, let’s review. An appraisal puts a dollar figure on a house and keeps the bankers happy. A home inspection is a physical examination of the house, and its purpose is to protect the buyer. An appraiser assesses property the way a talent scout scrutinizes top dog players for the NFL draft. A home inspector physically goes over a home, looking for potential problems, much the way a medical team examines top NFL material and looks for hitches or inconsistencies.

Go team!

What’s the best way to set a fair price? Savvy buyers have a comparable market analysis (CMA) conducted on the house (or houses) they are most interested in. As a seller, you should do the same so that you’re prepared to negotiate. A good realtor can walk you through this step. Another strategy is to know your competition – is there an open house that’s sounds similar to yours in the MLS? Check it out! Is that seller asking more or less than you? After visiting, you may discover that the other guy’s floor plan doesn’t compare favorably to yours. Or that family has incredible storage space that may be a huge draw for many clients.

What if I go too low? Talk to your real estate agent, but in many cases, a price that’s a little lower than your competition can be a terrific strategy. More than once, I’ve seen such a situation generate a bidding contest that brought the price up above the original asking price. It’s fun to watch.

If the price is fair, shouldn’t I expect to get the asking price? The answer to that one is: it depends. In today’s market, many buyers are quick to make an offer that’s lower than what you’re asking. Don’t be intimidated by a back and forth discussion, and take your time to consider your options. If you notice “For Sale” signs around town with “Price Reduced” toppers on them, you may be in the middle of a rapidly declining market, and prices may need to be reset. I can help you decide on your best plan in the current situation.

So – is the price right on your home for sale? In Chapel Hill or Durham, I can help you find out. Give me a call today!

Probably the most common problem shared by many sellers in today’s real estate market is an inflated price. It’s easy to make the mistake of zealously setting an idealistic price. You know exactly what money you’ve spent as well as the many hours of weekend “sweat equity” over the years….but clinging to that less than practical figure can cost you in the long run.

Of all the potential pitfalls of selling a home, pricing the house fairly is by far the most common one – and the one issue many clients are reluctant to discuss. Yet the right price can make the difference of selling now or much, much later. If you’re looking to sell your home in the Chapel Hill or Durham area, contact me. I can help you say “The price is right!” and sell your home sooner instead of later.

Tomorrow, I’ll review three frequently asked questions about pricing your home.

The typical FSBO home sold for $153,000 compared to $211,000 for agent-assisted home sales.

That’s a difference of 58,000. Or another way of putting it is that 27% less was earned on the sale of your home, your investment, your nest egg. Ouch!

• The owners who put their own homes on the market worked hard to get their homes noticed and sold. Here are the methods they used:
• Listing on Internet/FSBO website: 51%
• Yard sign . . . 44%
• Friends/neighbors . . . 33%
• Newspaper ad . . . 22%
• Open house . . . 15%

Some folks would think it’s logical that once you save the real estate agent’s usual 6% fee for selling your home, you could lower your price and attract a quick sell. According to the statistics here, it’s not that simple. In fact, many FSBO sellers ran into a plethora of difficult tasks. Here’s what they said was the most difficult:

• Selling within the planned length of time: 9%
• Getting the right price: 15%
• Preparing/fixing up home for sale: 18%
• Understanding and performing paperwork: 15%
• Having enough time to devote to all aspects of the sale: 5%

When it’s time to sell your home, make the choice that will increase your overall selling price. And give me a call!

*Source: 2009 National Association of REALTORS® Profile of Home Buyers and Sellers

PS Still not convinced? Read Seven reasons you should not FSBO.