-- Sent from my Palm Pre
Friday, February 26, 2010
Wednesday, February 17, 2010
REAL ESTATE – Wall Street Journal TIPS
These home sellers figured out how to compete in a real-estate market flush with low-priced foreclosed homes. Hint: Empty rooms don't work. Forget dark carpeting.
By SUSHIL CHEEMA
Buck Usher/Usher Creative
Patrick McAllister and Lisa Cox sold their Seattle home just days after listing it.
Want to know the big secret to selling a home quickly?
Make it look pretty.
Patrick McAllister and his wife Lisa Cox had an edge in that regard. Their 1917 Craftsman house was beautifully renovated with hardwood floors and bright, airy rooms. Carefully chosen artwork hangs on the walls. In the master bedroom a balcony overlooks the Seattle neighborhood of Wallingford.
The couple put their home on the market on a Friday in January, just one month before they planned to relocate to Bangkok where Mr. McAllister is starting a new job as director of housing finance for Habitat for Humanity International.
Two days later the 3,040-square-foot home had three offers and sold for $753,000—$3,000 more than the asking price.
The buyer's real-estate agent says that the couple could have gotten more. "I think if they would have priced it a little higher, they might have gotten fewer offers, but it would have sold," says Mary Durkan of Windermere Real Estate/Northwest.
Ms. Cox was just gratified they sold quickly. "I think any money we might have lost was just made up in peace of mind," she says.
Raif Fluker
See Craig Cahill's Tampa home before and after it was staged, and pics of the Seattle house.
That's the other part of the secret: Price the home to move. This may seem glaringly obvious, but it is increasingly important at a time when foreclosed properties dominate the market. Nationwide, "distressed property," including foreclosures and homes at risk of foreclosure, accounted for 32% of fourth quarter transactions, according to a report out Thursday from the National Association of Realtors.
In areas hardest hit by the housing downturn, such as Las Vegas, more than 50% of the homes on the market are foreclosure resales, typically priced very aggressively, according to data from real-estate site Zillow.com. Last September, foreclosed homes in Las Vegas were discounted 23% from their market value, according to Zillow, and the median sale price of foreclosures was 30% less than that of non-foreclosures.
Since foreclosed properties have the edge on price, it's up to the seller to give their home the edge in aesthetics.
"A lot of foreclosures are sold as is—appliances have been taken out, walls have not been painted, there is not furniture to make it look nice," says Amy Bohutinsky, a vice president of communications at Zillow. "You can go a long way by adding fresh coats of paint, sprucing up the yard, fixing things that are broken. All of these things that would make your home something that a buyer would say, 'I could make my family move in here tomorrow.'" Other simple steps include changing light switches and removing family photographs.
Ms. Bohutinsky also recommends that sellers consider staging—that is, decorating with the buyer in mind—and she says that generally, it's better to furnish rooms than to leave them empty. "You want the buyer to imagine themselves living in the room. That said, when you have furniture, it should be furniture and décor that's pretty neutral and could appeal to a wide variety of people," she says.
Take the case of Craig Cahill, a homeowner in Tampa, Fla., whose four-bedroom, two-and-a-half bathroom home lingered on the market for nearly a year. He listed it at $585,000–he paid $683,000 more than four years ago. But Mr. Cahill said that house, which features a pool and a dock, is more than he needs since he and his wife of 13 years divorced.
Over 11 months he cut the price to $569,000, but didn't really feel comfortable about it. He switched real-estate brokers. The new one, Kathy Delhaes of Century 21 Fisher & Associates, said he could bump the price back up but advised a makeover.
Problem one: Some rooms in the house were empty. After finalizing his divorce last year, Mr. Cahill had decided not to replace furniture his ex-wife had taken. Ms. Delhaes had Mr. Cahill add furniture, which she supplied, to empty rooms.
Problem two: dark carpeting. Mr. Cahill replaced maroon-colored carpets in the master bedroom with a more neutral tone. The bedding got a $150 upgrade, as well.
In all, Mr. Cahill estimates that he spent about $2,500 to pretty up the house—Ms. Delhaes won't charge for any of the supplied furnishings unless Mr. Cahill decides to keep them—and he and Ms. Delhaes bumped the asking price back up to its original $585,000. About three weeks after Ms. Delhaes re-listed it, the home went into contract for an undisclosed amount.
Patrick Sanger, the buyer of Mr. McAllister and Ms. Cox's Seattle home, had only just started his home search when he and his fiancée made their offer. The couple knew they wanted to live in Wallingford because it is convenient to both their schools—Mr. Sanger, 28, will start medical school at the University of Washington in the fall, and his 32-year-old fiancée is currently studying naturopathic medicine at Bastyr University. "We decided to walk our dog around the neighborhood to see what was available and looked online to see if anyone was by chance having an open house," Mr. Sanger says.
Mr. Sanger and his fiancée planned to look at two or three homes that day, but after seeing this home, they immediately forgot about the others. The main attraction, Mr. Sanger says, was its condition. "We knew we weren't going to have a lot of time in the next years, so we didn't want a fixer-upper," Mr. Sanger says. "It had a lot of character, and everything felt very modern and fresh." The furniture and finishings helped make the home stand out, he adds. "The furnishings that are in there now and the art and everything really kind of puts the house in the best light that it could be in—the absolute best light, just because the art and the furnishings are really interesting themselves."
Of course, on moving day those furnishings will be gone. "Sometimes you get overtaken by how beautiful a home looks staged that you forget to think of how practically this will work," Ms. Bohutinsky says.
By SUSHIL CHEEMA
Buck Usher/Usher Creative
Patrick McAllister and Lisa Cox sold their Seattle home just days after listing it.
Want to know the big secret to selling a home quickly?
Make it look pretty.
Patrick McAllister and his wife Lisa Cox had an edge in that regard. Their 1917 Craftsman house was beautifully renovated with hardwood floors and bright, airy rooms. Carefully chosen artwork hangs on the walls. In the master bedroom a balcony overlooks the Seattle neighborhood of Wallingford.
The couple put their home on the market on a Friday in January, just one month before they planned to relocate to Bangkok where Mr. McAllister is starting a new job as director of housing finance for Habitat for Humanity International.
Two days later the 3,040-square-foot home had three offers and sold for $753,000—$3,000 more than the asking price.
The buyer's real-estate agent says that the couple could have gotten more. "I think if they would have priced it a little higher, they might have gotten fewer offers, but it would have sold," says Mary Durkan of Windermere Real Estate/Northwest.
Ms. Cox was just gratified they sold quickly. "I think any money we might have lost was just made up in peace of mind," she says.
Raif Fluker
See Craig Cahill's Tampa home before and after it was staged, and pics of the Seattle house.
That's the other part of the secret: Price the home to move. This may seem glaringly obvious, but it is increasingly important at a time when foreclosed properties dominate the market. Nationwide, "distressed property," including foreclosures and homes at risk of foreclosure, accounted for 32% of fourth quarter transactions, according to a report out Thursday from the National Association of Realtors.
In areas hardest hit by the housing downturn, such as Las Vegas, more than 50% of the homes on the market are foreclosure resales, typically priced very aggressively, according to data from real-estate site Zillow.com. Last September, foreclosed homes in Las Vegas were discounted 23% from their market value, according to Zillow, and the median sale price of foreclosures was 30% less than that of non-foreclosures.
Since foreclosed properties have the edge on price, it's up to the seller to give their home the edge in aesthetics.
"A lot of foreclosures are sold as is—appliances have been taken out, walls have not been painted, there is not furniture to make it look nice," says Amy Bohutinsky, a vice president of communications at Zillow. "You can go a long way by adding fresh coats of paint, sprucing up the yard, fixing things that are broken. All of these things that would make your home something that a buyer would say, 'I could make my family move in here tomorrow.'" Other simple steps include changing light switches and removing family photographs.
Ms. Bohutinsky also recommends that sellers consider staging—that is, decorating with the buyer in mind—and she says that generally, it's better to furnish rooms than to leave them empty. "You want the buyer to imagine themselves living in the room. That said, when you have furniture, it should be furniture and décor that's pretty neutral and could appeal to a wide variety of people," she says.
Take the case of Craig Cahill, a homeowner in Tampa, Fla., whose four-bedroom, two-and-a-half bathroom home lingered on the market for nearly a year. He listed it at $585,000–he paid $683,000 more than four years ago. But Mr. Cahill said that house, which features a pool and a dock, is more than he needs since he and his wife of 13 years divorced.
Over 11 months he cut the price to $569,000, but didn't really feel comfortable about it. He switched real-estate brokers. The new one, Kathy Delhaes of Century 21 Fisher & Associates, said he could bump the price back up but advised a makeover.
Problem one: Some rooms in the house were empty. After finalizing his divorce last year, Mr. Cahill had decided not to replace furniture his ex-wife had taken. Ms. Delhaes had Mr. Cahill add furniture, which she supplied, to empty rooms.
Problem two: dark carpeting. Mr. Cahill replaced maroon-colored carpets in the master bedroom with a more neutral tone. The bedding got a $150 upgrade, as well.
In all, Mr. Cahill estimates that he spent about $2,500 to pretty up the house—Ms. Delhaes won't charge for any of the supplied furnishings unless Mr. Cahill decides to keep them—and he and Ms. Delhaes bumped the asking price back up to its original $585,000. About three weeks after Ms. Delhaes re-listed it, the home went into contract for an undisclosed amount.
Patrick Sanger, the buyer of Mr. McAllister and Ms. Cox's Seattle home, had only just started his home search when he and his fiancée made their offer. The couple knew they wanted to live in Wallingford because it is convenient to both their schools—Mr. Sanger, 28, will start medical school at the University of Washington in the fall, and his 32-year-old fiancée is currently studying naturopathic medicine at Bastyr University. "We decided to walk our dog around the neighborhood to see what was available and looked online to see if anyone was by chance having an open house," Mr. Sanger says.
Mr. Sanger and his fiancée planned to look at two or three homes that day, but after seeing this home, they immediately forgot about the others. The main attraction, Mr. Sanger says, was its condition. "We knew we weren't going to have a lot of time in the next years, so we didn't want a fixer-upper," Mr. Sanger says. "It had a lot of character, and everything felt very modern and fresh." The furniture and finishings helped make the home stand out, he adds. "The furnishings that are in there now and the art and everything really kind of puts the house in the best light that it could be in—the absolute best light, just because the art and the furnishings are really interesting themselves."
Of course, on moving day those furnishings will be gone. "Sometimes you get overtaken by how beautiful a home looks staged that you forget to think of how practically this will work," Ms. Bohutinsky says.
Wednesday, January 27, 2010
$8 million in assets - and can't get a mortgage
By Les Christie, staff writerJanuary 20, 2010: 9:45 AM ET
NEW YORK (CNNMoney.com) -- The wealthy have money problems, too -- yeah they do.
Even refinancing a mortgage for their fancy digs or getting a new loan can be near impossible these days thanks to skittish lenders. And the higher the loan value, the more they worry.
Still, that people with high six-figure incomes, stellar credit histories and gobs of assets get mortgage requests turned down seems weird.
"It's amazing really," said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., "but it makes sense when you think about it."
For one thing, many rich folks have fallen behind on their loans. About 12% of U.S. mortgages of $1 million and larger were late this fall, twice the rate for loans under $250,000 and nearly triple the default rate on million dollar mortgages 12 months earlier, according to First American CoreLogic Inc., a California-based research firm.
Hard to get jumbos
It was so simple to get jumbo loans just a few years ago. The wealthy barely had to pay a 0.2 percentage point premium over a conforming loan, according to Keith Gumbinger of HSH Associates, a publisher of mortgage information.
Lenders made the loans more expensive because they are too large to be bought or backed by the government through Fannie Mae and Freddie Mac. Today the increased risk is worth about 0.8 percentage points, although that is down from the high of about 1.8 points in late 2008.
"The pendulum has swung from one extreme to the other. Banks are going overboard," said Lyle Benson, a financial planner and member of the executive board of the American Institute of Certified Public Accountants.
That includes asking the affluent for down payments well in excess of the traditional 20%, according to Bruno. Some lenders want loan-to-value ratios to be closer to 60%, even 50%, which means putting 40% or 50% down. Or, on a million-dollar home, having $500,000 ready to hand over.
And all the other underwriting aspects of the loan have to be in place as well, something that can be difficult to demonstrate with some wealthy clients, whose income and assets can be complicated.
They could always buy a $24 million condo on Utopia
One client of Benson's, with $8 million in assets, wanted to refinance the mortgage on his primary residence.
A self-made man, he had sold a business and put much of the proceeds in a charitable remainder unitrust that paid him $150,000 a year. He took paper losses in his stock portfolio against that income, however, which lowered his taxable income. The cash flow stayed intact but the income he showed was much lower.
"The loan officer didn't understand it," said Benson, "and the bank declined the loan."
Double decline for second home
Susan Bruno has a client who was turned down for a mortgage twice -- despite an 800 credit score, more than adequate down payment and plenty of income.
The problem was that the client wanted to buy a second home. And because the client would not, could not, swear that he would occupy the home at least 75% of the time, lenders weren't interested.
"Mortgages for second homes have been tough to get the past couple of years," said Gumbinger. "A lot of second-home areas, like in Florida and Arizona, are among the most challenging markets."
Plus, defaults on second-home mortgages are often handled differently than those of primary homes. The mortgage balances, for instance, can be reduced in bankruptcy court -- "crammed down" in industry parlance -- to their market values. That can wipe out a good portion of what borrowers owe, which banks hate. As a result, they often require a 50% down payment for second homes.
All in all, the wealthy simply have financial problems that we ordinary mortals can only dream of. Take the doctor client of Bruno's with a home on 19 expensive acres of Connecticut countryside. He had more land than he needed and some time ago toyed with the idea of subdividing and selling it off.
Well, the market changed and he shelved the idea -- but only after taking some preliminary steps. Last year, when he tried to refinance his mortgage, this rose up to bite him. His bank wouldn't count the sub-dividable land, worth $8 million, as collateral because it was now a separate parcel.
"[His bank] only counted the house and a small piece of land," said Bruno. "His lenders limited him to a loan of $1.3 million."
For Bruno, that's part of a trend of lenders falling back on rules and guidelines that make little sense sometimes when dealing with the individual cases presented by some high net-worth individuals.
"There's no appropriate business judgment these days," she said.
Aren't you glad you're not rich?
NEW YORK (CNNMoney.com) -- The wealthy have money problems, too -- yeah they do.
Even refinancing a mortgage for their fancy digs or getting a new loan can be near impossible these days thanks to skittish lenders. And the higher the loan value, the more they worry.
Still, that people with high six-figure incomes, stellar credit histories and gobs of assets get mortgage requests turned down seems weird.
"It's amazing really," said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., "but it makes sense when you think about it."
For one thing, many rich folks have fallen behind on their loans. About 12% of U.S. mortgages of $1 million and larger were late this fall, twice the rate for loans under $250,000 and nearly triple the default rate on million dollar mortgages 12 months earlier, according to First American CoreLogic Inc., a California-based research firm.
Hard to get jumbos
It was so simple to get jumbo loans just a few years ago. The wealthy barely had to pay a 0.2 percentage point premium over a conforming loan, according to Keith Gumbinger of HSH Associates, a publisher of mortgage information.
Lenders made the loans more expensive because they are too large to be bought or backed by the government through Fannie Mae and Freddie Mac. Today the increased risk is worth about 0.8 percentage points, although that is down from the high of about 1.8 points in late 2008.
"The pendulum has swung from one extreme to the other. Banks are going overboard," said Lyle Benson, a financial planner and member of the executive board of the American Institute of Certified Public Accountants.
That includes asking the affluent for down payments well in excess of the traditional 20%, according to Bruno. Some lenders want loan-to-value ratios to be closer to 60%, even 50%, which means putting 40% or 50% down. Or, on a million-dollar home, having $500,000 ready to hand over.
And all the other underwriting aspects of the loan have to be in place as well, something that can be difficult to demonstrate with some wealthy clients, whose income and assets can be complicated.
They could always buy a $24 million condo on Utopia
One client of Benson's, with $8 million in assets, wanted to refinance the mortgage on his primary residence.
A self-made man, he had sold a business and put much of the proceeds in a charitable remainder unitrust that paid him $150,000 a year. He took paper losses in his stock portfolio against that income, however, which lowered his taxable income. The cash flow stayed intact but the income he showed was much lower.
"The loan officer didn't understand it," said Benson, "and the bank declined the loan."
Double decline for second home
Susan Bruno has a client who was turned down for a mortgage twice -- despite an 800 credit score, more than adequate down payment and plenty of income.
The problem was that the client wanted to buy a second home. And because the client would not, could not, swear that he would occupy the home at least 75% of the time, lenders weren't interested.
"Mortgages for second homes have been tough to get the past couple of years," said Gumbinger. "A lot of second-home areas, like in Florida and Arizona, are among the most challenging markets."
Plus, defaults on second-home mortgages are often handled differently than those of primary homes. The mortgage balances, for instance, can be reduced in bankruptcy court -- "crammed down" in industry parlance -- to their market values. That can wipe out a good portion of what borrowers owe, which banks hate. As a result, they often require a 50% down payment for second homes.
All in all, the wealthy simply have financial problems that we ordinary mortals can only dream of. Take the doctor client of Bruno's with a home on 19 expensive acres of Connecticut countryside. He had more land than he needed and some time ago toyed with the idea of subdividing and selling it off.
Well, the market changed and he shelved the idea -- but only after taking some preliminary steps. Last year, when he tried to refinance his mortgage, this rose up to bite him. His bank wouldn't count the sub-dividable land, worth $8 million, as collateral because it was now a separate parcel.
"[His bank] only counted the house and a small piece of land," said Bruno. "His lenders limited him to a loan of $1.3 million."
For Bruno, that's part of a trend of lenders falling back on rules and guidelines that make little sense sometimes when dealing with the individual cases presented by some high net-worth individuals.
"There's no appropriate business judgment these days," she said.
Aren't you glad you're not rich?
Sunday, January 17, 2010
Thursday, January 14, 2010
Extend Tax Credit
Washington, September 14, 2009
The National Association of Realtors® is calling upon its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year.
Since its inception earlier this year, the $8,000 first-time homebuyer tax credit has brought 1.2 million new buyers into the market—350,000 of whom would not have purchased a home without the credit, according to NAR. The credit is due to expire November 30.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.
Realtors®, the leading advocates for homeownership and housing issues, will be writing to their Senators and Representatives to tell them of the successes with the tax credit thus far and to press them to extend and expand it now.
McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we've made can continue is to extend the credit and to do that now,” he said.
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by November 30. In today’s market, NAR estimates that it generally is taking between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
The National Association of Realtors® is calling upon its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year.
Since its inception earlier this year, the $8,000 first-time homebuyer tax credit has brought 1.2 million new buyers into the market—350,000 of whom would not have purchased a home without the credit, according to NAR. The credit is due to expire November 30.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.
Realtors®, the leading advocates for homeownership and housing issues, will be writing to their Senators and Representatives to tell them of the successes with the tax credit thus far and to press them to extend and expand it now.
McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we've made can continue is to extend the credit and to do that now,” he said.
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by November 30. In today’s market, NAR estimates that it generally is taking between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Sunday, January 3, 2010
Keep Water Flowing, Protect your pipes this winter
Before a freeze:
Wrap all exposed pipes located outside or in
unheated areas of your home, including the
attic.
Remove garden hoses from outside faucets.
Insulate those faucets with hard foam covers
or wrap with cloth or paper.
Cover vents around the foundation of your
home.
Learn where your private water cut-off valves
are and how to operate them.
In sub-freezing weather:
Let hot and cold water drip slowly from inside
faucets during a freeze.
Open cabinet doors under sinks on outside
walls.
If you’re not going to be home:
Turn off water at your private valve and drain
all outside water faucets if your house will be
unoccupied for several days.
Or leave your home heating system on a low
setting. Otherwise, you may return home
from a holiday trip and find your carpet and
furniture soaked because your pipes burst.
Where to find your private water cut-off
valve:
Most of the time, private water cut-off valves
can be found near an outside faucet and
close to your home. However, homeowners
who have had a sprinkler system installed
may find their private cut-off near the sprinkler
system valves, which are usually close to
the property line.
Many older homes have what is known as a
“stop and waste” valve buried in the ground.
A quarter-inch piece of iron with a 90-degree
angle in it protrudes from the buried valves
and serves as a handle. It looks like an
upside down “L” turning the handle will stop
the water flow to your home and drain the
pipes.
Wrap all exposed pipes located outside or in
unheated areas of your home, including the
attic.
Remove garden hoses from outside faucets.
Insulate those faucets with hard foam covers
or wrap with cloth or paper.
Cover vents around the foundation of your
home.
Learn where your private water cut-off valves
are and how to operate them.
In sub-freezing weather:
Let hot and cold water drip slowly from inside
faucets during a freeze.
Open cabinet doors under sinks on outside
walls.
If you’re not going to be home:
Turn off water at your private valve and drain
all outside water faucets if your house will be
unoccupied for several days.
Or leave your home heating system on a low
setting. Otherwise, you may return home
from a holiday trip and find your carpet and
furniture soaked because your pipes burst.
Where to find your private water cut-off
valve:
Most of the time, private water cut-off valves
can be found near an outside faucet and
close to your home. However, homeowners
who have had a sprinkler system installed
may find their private cut-off near the sprinkler
system valves, which are usually close to
the property line.
Many older homes have what is known as a
“stop and waste” valve buried in the ground.
A quarter-inch piece of iron with a 90-degree
angle in it protrudes from the buried valves
and serves as a handle. It looks like an
upside down “L” turning the handle will stop
the water flow to your home and drain the
pipes.
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