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Four Things Sellers Should Do Before the Sign Goes in the Yard

Just like buyers should be pre-approved before they begin to look at houses, Sellers should have their home pre-approved.  The reasons are similar: appeal to the “right” buyers, discover issues with the home early, improve marketability, increase negotiations position and close quicker.

For the seller, there are few things that need to be done before the sign goes in the yard and definitely before prospective buyers see the home.  The first is to understand that once you decide to sell the home that it needs to appeal to the broadest base of buyers and that means depersonalizing your home.

Once the home is sold, you will need to pack your things for the new home.  Think of this as starting the process early.  Get moving boxes and make decisions on what you intend to give away or discard in each room and closet.  Identify and pack those items before the home goes on the market. This will be the first wave of making your home more marketable.

When your home hits the market, it needs to be a neutral commodity and not “your” home.  A good rule of thumb is to remove items that involve religion, hunting and sports.  That means removing personal items like family photos or collections displayed in the room.

Next, in round two, go through every room to remove the items that make too large of a statement or take up too much room.  Pool tables may be appropriate in a game room, but they are not in a dining room or a living room.

Personal collections may have taken you years to accumulate and you’re proud of them but the people who come to see your home will either not appreciate them or they will become distracted by looking at them instead of the home.  The livability of your home needs to be the focal point.  The buyers need to visualize themselves living in the property that will become “their” home.

The four most important rooms to address are the primary bedroom, kitchen, living room and dining room.  These rooms have a major influence on buyers when determining whether “it is the right home.”   Bright colors, possibly used as accent walls, should be neutralized.

After you have depersonalized the home and removed non-essential items that could make the rooms or closets look small, you might want to consider another technique referred to as staging.  Rearranging furniture so the room shows to its best advantage is simple and doesn’t cost a thing.  You might decide that a coffee table or statement piece would be nice and your REALTOR® or stager can suggest a place to rent it rather than buying it.

Once the home is depersonalized and staged, you are ready to have a professional photographer take the pictures that visually describe your home to potential buyers long before they ever look at the home physically.  These will be used on websites, portal sites, MLS, and social media.  Anyone with a point and shoot camera thinks they are a photographer but a pro with the correct wide angle lens, who understands lighting and has an “eye” for what makes a great picture is worth every dime you’ll spend.

One more consideration should be to have the home inspected before it goes on the market.  It won’t replace the buyer’s inspections but it will discover any items that need repair and they should be done before the home goes on the market.  This will probably save you money because it might cost less to repair them than they’ll want in second round of negotiations when their inspector finds it.

Another benefit is that if their inspector identifies a problem area that your inspector did not, you have a basis for legitimate disagreement that could just be personal opinion instead of a “fact.”

While the process of depersonalizing should take part before you put the home on the market, you’ll want you have the benefit of your real estate agent’s experience to help you with the process.  At age 18, a person can expect to move nine more times but by age 45, they may only expect to move another 2.7 times.  Your REALTOR®’s experience can be valuable not only in saving your time and money but actually, make the difference in a successful sale.

If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services.  1008 12th St. SE Salem, OR 97302  503-851-1645

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Real Estate Investing 101

Alternative Investments

In a recent article, The Wall Street Journal reported that investors have rarely been this flush with cash.  The economic uncertainty due to the pandemic and the volatility of the stock market has caused assets in money-market funds to increase to approximately $4.6 trillion, the highest level on record according to Refinitv Lipper.

The question becomes should an investor be “out of the market” until things settle down or should they seek to find alternative investments to produce satisfactory results.  Even in the middle of this uncertainty, residential rental property has been a stable performer.

Rents are continuing to increase along with values.  Investor mortgages are available at 80% loan-to-value at fixed interest rates for 30-year terms.  Most other investments must be purchased for cash or at best, are limited to low loan-to-value loans, at floating interest rates for relatively short time frames.

The use of borrowed funds, especially at today’s low interest rates, contribute to the rate of return and in some cases, increase it.  This characteristic is known as leverage.

Income properties enjoy specific tax advantages like long-term capital gains rates lower than ordinary income rates, standard depreciation, which is a non-cash deduction, as well as expensing many big-ticket items in the year purchased.

Tax deferred exchanges are available for investors wanting to avoid the tax due on sale and defer the profit into the replacement property.

One of the most cited reasons people invest in rental homes is that they feel they are more in control.  They understand a rental home because it is the same type of property and requires the same maintenance as the home they live in.  They can make the decisions to improve it, repair it, what rent to charge and when to sell it.  For most owners, a home represents their largest financial asset.  That familiarity becomes a natural bridge to decide to invest in rental property rather than something they are less familiar.

If you’d like to know more about the benefits, download the Rental Income Properties guide and call us at (503) 851-1645 to discuss what kind of opportunities are available.

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Home Appraisers Size Adjustments & Valuations

How Does It Measure Up?

People are always looking for a “down and dirty” way to determine the value of a home and square footage seems to be one of the most common things used by people whether they are buyers, sellers or real estate agents.  While it seems straight forward, there are several variances that can lead to inaccurate determinations.

The market data approach to value uses similar properties in size, location, condition and amenities to compare with the subject to arrive at a price.  Differences in any of these things can affect the price per square foot.  Appraisers are trained and licensed to make these adjustments but the differences are not necessarily objective and that is where opinions start to influence the value.

Even if a person were to make accurate adjustments, they would be based on the assumption that the square footage of the comparable properties is correct.  That leads to the next area of concern: how was the subject property measured.

It is commonly accepted to the measure the outside of the dwelling on detached housing.  Is it customary in this area to include porches and patios under roof and if so, do they get full value or only partial value?  Is there any value given to the garage since it isn’t living area?  What about other areas that do not have HVAC coverage?

Some areas don’t give consideration to basement square footage at all.  Others might give some value if it is finished or has access directly to the outside like a walk-out basement.  Similarly, attic space could be finished and under HVAC but if the ceiling height is not standard for the home, it may not receive value.

The problems become exacerbated when different comparables are not treated consistently and yet the common denominator ends up being an average of the square foot price of each.   This is calculated by taking the sales price and dividing it by the number of square feet being quoted.

The source of the square footage should be listed to help determine the accuracy.  It could be what the builder said it was to the original purchaser.  If there is a set a plans available, that might seem credible but it is not uncommon for the builder to make changes while the home is being built which could increase or decrease the square footage.

Another source is the tax assessor.  In many cases, they don’t actually measure the home but take the word of the builders or appraisers for it.  If permits were obtained to add on to the home since it was built, it should be reflected in the square footage.  However, sometimes permits are not secured properly.

After reading this, you may think that more doubts have been introduced than solutions and you are correct.  It takes diligence on the part of all parties to determine the correct amount.  The most highly trained person will be the appraiser and they should be measuring the home in its “as is” condition but understand that even a competent person can inadvertently make a mistake.

If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services.  1008 12th St. SE Salem, OR 97302  503-851-1645

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Is it Time to Buy?

It’s Worth Digging a Little Deeper

There are hundreds of thousands of people who believe, for one reason or another, they cannot afford to buy a home currently.  Some people  may not for any number of reasons but it would be very surprising to know how many who can buy but have gotten some bad information along the way.  It’s worth digging a little deeper to find out the facts.

John and Karen have been renting a home for the last five years at $2,000 a month.  During that time, the value of the home they were renting went up by $30,000 in value while the unpaid balance decreased by $18, 400.  Even though they were fortunate enough the rent remained constant over the five years, they missed out on close to $50,000 of equity that the owner realized instead of them.

Another thing to consider with today’s low interest rates, it is quite common for a mortgage payment to be lower than a tenant is paying rent for a similar property.  So, in this example, John & Karen paid more to rent than a house payment would have been and missed out on the equity build-up that occurred due to appreciation and amortization.

The simple fact is when tenants like John and Karen pay their rent, the landlord is the beneficiary of the rent received as well as the equity earned.  Over time, the rent paid by John and Karen and other tenants will pay for the landlord’s rental.  It a great concept and a good investment.

True, not everyone can afford a home.  A buyer needs money for a down payment and closing costs.   They also need to have income and good credit to qualify for the mortgage.  Some of these may seem insurmountable but instead of imagining that buying a home is not in the cards at the current time, talking to a real estate professional is a better route to take.

There are lots of low-down payment mortgages available including 100% financing for qualified veterans and USDA eligible buyers.  It is sometimes more difficult to find sellers willing to pay all or part of a buyers closing costs when inventory is low, but lenders do allow it.  It is a matter of finding the willing seller.

The source of the down payment could be a gift from a family member as long as there is no repayment expected.  It’s amazing how many parents or grandparents might be willing to help a relative get into a home.  Funds for a down payment may be available as loans or withdrawals from qualified retirement programs like IRAs or 401k plans.  It’s worth investigating based on what retirement programs you have.

Good credit is necessary to qualify for a loan but buyers should not assume that theirs is not adequate.  A trusted mortgage professional can assess a situation and may be able to suggest some things that will not only raise the score enough to be approved but possibly, even raise the score enough to qualify for a better interest rate.

There are a lot of misunderstandings about whether a person can or cannot qualify for a home at this time.  Instead of relying on second hand information or something that might be floating around on the Internet, spend some time with a real estate professional who can give you the facts, assess your situation and if necessary, point you in the right direction to get help from a trusted mortgage professional.  Call us at (503) 851-1645 to schedule an appointment where we’ll help you dig deeper to determine whether you can buy a home now.

Download our Buyers Guide to give you more information.

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Are you needing a Forbearance?

Forbearance is Not Forgiveness

Forbearance is a temporary postponement of mortgage payments.  The lender can grant this option to a borrower instead of forcing the property into foreclosure.  The CARES Act provides protections for homeowners with mortgages that are federally or Government Sponsored Enterprise backed or funded such as FHA, VA, USDA, Fannie Mae and Freddie Mac.

A mortgage holder should contact the lender to explain the temporary difficulty they are having making payments and ask for relief under forbearance or other options.  Once the lender grants approval, it is important for the borrower to get the terms of the forbearance agreement in writing to be clear about when the payments will resume and how the missed payments will be recovered.

Generally speaking, homeowners in a forbearance plan will not incur late fees and it should not adversely affect their credit.  Unfortunately, borrowers must be vigilant to see that the lender is protecting them from delinquent credit marks according to their agreement.

Forbearance is easy to receive but not so easy to recover from.  Free credit reports can be obtained on a weekly basis until April 21, 2021 at www.AnnualCreditReport.com.  Reports are available from Experian, Equifax and TransUnion.  This will allow borrowers to monitor whether the lender has inadvertently reported items inaccurately.

Prior to the end of the forbearance period, borrowers should contact their loan servicer, the company that accepts their payments.  Review the terms of the forbearance plan and expectations for repayment.  Verify the unpaid balance and that there are not any payments marked as late or delinquent during the forbearance period.

One more item to discuss with the loan servicer is the payment of the property taxes and insurance.  Since multiple mortgage payments may have been missed and most payments include 1/12 of the annual amounts for these items, there may not be enough to pay for them when they become due.

Since it is estimated that there are over four million borrowers in forbearance currently, it may be difficult to talk to the servicer but starting the process early and being persistent will be helpful.

At the end of forbearance, the borrower needs to resume regular payments and establish a plan with the lender to repay the missed payments.  The terms are negotiated between the borrower and the lender.

One way is through a loan modification which can restructure the loan.  In some cases, it would add the missed payments to the loan balance and recalculate the payments for the remainder of the term.

A borrower could pay the forbearance money in cash but the practicality of that is not realistic.  If the person couldn’t make the payments during forbearance, they probably don’t have the liquidity to pay them afterward.  This option is entirely at the buyer’s election.

Forbearance is a temporary way to postpone the mortgage payments with the understanding that you will be able to resume repaying the loan.  If the circumstances that caused the issue initially become permanent, then, other remedies must be considered.  If there is equity in the property, selling the home may be the way to materialize it for the homeowner.

Please contact us at (503) 851-1645  if you need to know what your home is worth and how long it would take to sell it.  We’re happy to provide this information as a service without obligation so you can be aware of your options.

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Reasons to Refinance

Three Reasons to Refinance

Three reasons to refinance a home include lowering the cost of housing, shortening the term of the mortgage to pay it off sooner or to using the equity to accomplish another purpose.

Replacing the mortgage at a lower interest rate, which is entirely possible in today’s market, would reduce the payment.  On the other hand, shortening the term of the mortgage could make the payments increase but would allow the home to be paid for sooner.  In either case, the equity would not be reduced unless the refinancing costs were rolled into the new mortgage.

Refinancing the home to take money out would increase the mortgage on the property and lower an owner’s equity; careful consideration should be made before doing so.

Mortgage rates are considerably lower than credit card rates and usually lower than short term borrowing like student loans or car loans.  For that reason, homeowners will sometimes refinance to payoff higher cost debt.

Some people refinance for more than their current balance to improve their cash position, possibly, to have funds available in case they need it.  Other reasons could be to use it for an investment such as rental property or other things.  Still others may use it to make capital improvements on their home like remodeling or a pool.

Another legitimate reason to refinance may be to combine a first and second lien on the home that might result in lower payments and a savings in interest.

One more situation that causes a person to refinance a home is to remove a former spouse or co-borrower from the existing mortgage.  In the case of a divorce, a couple may no longer be married and one of the former spouses may have no financial interest in the home any longer but because they signed the note originally, they are still liable along with the other spouse.  This could be an untenable position.

There can be a lot of reasons that cause a homeowner to refinance the home.  The equity is a valuable asset that has powerful borrowing power combined with the good credit and income of the homeowner.  A Refinance Analysis can help you to determine the new payments and how long it will recapture the cost of refinancing.

For the recommendation of a trust lender, give me a call at 503-851-1645.

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Home Sales during COVID 19

Things Have Changed

The soothsayer in Shakespeare’s Julius Caesar issued his famous warning “Beware the Ides of March.”  Who knew that in 2020, around the middle of March, the world, as we knew it, would force such dramatic changes on us from the Coronavirus.

In America, it has brought our economy to its knees as we sheltered in place for over four months.  During this time, changes have affected our lives and many of those changes could be permanent.

Previously, smaller homes were becoming the trend for not only efficiency but upkeep so owners would have more time to do things including travel.  Now, travel is minimal and our world, in some respects, is reduced to our home.

For families with children, their home has become a school.  With so many people working from home, it has become our office or store or studio.  If there is more than one working adult in a home, it needs to have space for each party to work.  The home fitness industry is experiencing record sales in exercise equipment so the home can become a gym.

Since we’re all spending more time at home, it is also the place to recreate.  We’re cooking more; a larger kitchen and dining area would be nice.  We want to enjoy the yard, garden, pool or balcony and our current home may not even have them or we’d like to upgrade.

People are wanting and needing more space to do all of these things at home.  Many experts are anticipating that these changes we thought were temporary may be part of the new normal even after a vaccine and cure have been discovered.

If you have had any of these thoughts and would like to know more about how to buy or sell a home in our current market, we would love to tell you about the many options available while being responsible to stay safe.  Whether it is buying for the first time, moving up or moving on, I would like to help.

If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services.  1008 12th St. SE Salem, OR 97302  503-851-1645

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

The Art of Negotiation

Do you like to negotiate?

Whether you like to or not, buying and selling a home involves negotiation at all stages of the process.  It is not like the retail world where once you decide to purchase, you pay the price.  It is easily the most expensive purchase or sale that most people experience and emotions get involved that could affect the negotiations adversely.

The word “home” by itself conjures up emotions and selling a home you’ve lived in for a while could even complicate things more.  A real estate professional can separate their emotions from the process to be able to help the one they are representing.

The price of the home, the type of financing and concessions, closing costs, personal property, closing dates and possession are just a few of the many things that can be negotiated in a contract.  Since the seller wants to get the most for their house and the buyer wants to pay the least, their objectives are diametrically opposed.

Even after the contract is signed, removing the contingencies can cause considerable negotiations.  The appraisal, the inspections or the repairs could be a source of reevaluating the terms and provisions of the contract.

Negotiating the sale or purchase of a home is a competition; for one person to get something, someone has to give something up.  If you don’t feel comfortable with this, it is important to work with an agent who can bring their skills to the table on your behalf.  As your advocate, they can champion your position.

I’d like to share how my skills, training and experience can benefit you in a sale or purchase.

If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services.  1008 12th St. SE Salem, OR 97302  503-851-1645

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Real Estate Market Recovery

REALTORS Thoughts on the Recovery

The National Association of REALTORS® just released the Market Recovery Survey of a random sampling to close to 100,000 members conducted June 24-26, 2020.  The following statements are the members’ opinion on various aspects of the recovery to the Covid-19 pandemic as it relates to real estate.

In response to the safety of buyers, sellers and agents, REALTORS® are expecting within the next year to have increased demand for the following technologies used to market properties:

  • 67% – Zoom or other video technology to communicate with clients
  • 66% – virtual tours
  • 63% – live virtual tours conducted by agent using video
  • 60% – virtual open houses

Nine out of ten respondents indicated that some of the buyers have returned to the market or never left the market.  Agents currently working with buyers report that slightly more than half of buyer’s timeline has remained the same with about the same level of urgency.  27% believe the buyers have more urgency.

The most popular reason cited by buyers with an increased timeline is that the delay during the pandemic has amplified their demand for a new home.  Others realize that new home features would make their home life more comfortable.  Some buyers are wanting to buy before a potential second peak of Covid-19 occurs.

During the week the survey was taken, three out of four buyers saw the home in person physically while 26% did not.

Roughly 2/3 of the buyers are looking for the same features as they were prior to Covid-19 while new feature considerations include home office, space to accommodate family, larger home for more space, place to exercise and bigger kitchen.

Most buyers are looking for the same type home, however, respondents reported that 13% are moving away from multi-family properties to a single-family home and only 1% are going from SFH to multi-family.

89% of respondents stated that some of the sellers have returned to or never left the market.  Only 23% reported more urgency to sell a home due to the pandemic.

On the commercial side, 2/3 of REALTOR® respondents felt like the demand for office space would decrease and 72% felt that retail space demand would decrease.

The stats mentioned in this article pertain nationwide, although ALL Real Estate is local.

If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services.  1008 12th St. SE Salem, OR 97302  503-851-1645

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers

Home Values

Who Decides Value?

The seller can put a price on the home but the value is ultimately, determined by the buyer. Individually, a buyer could pay over market value because they love the location, or the elevation of the home or the proximity to something that is important to them.  The shortage of available homes resulting in increased competition among buyers could drive the value higher.

Most experts agree initially pricing it properly will generally result in the highest sales price.  If a home starts out too high, it could actually sell for a lower price after it has been on the market for a while.  It gives the impression that there must be something “wrong” with the house because it didn’t sell immediately.

So, how does a seller determine what price to put on the home?  It has nothing to do with what the seller needs to get out of it.  Nor does the price the seller paid for it make any difference now.  Even if the seller made considerable improvements, they may not affect the value of the home.

There are three common sources for a seller to determine market value: an appraisal, a broker price opinion or an automated value model found online.

AVM, automated value models, are mathematical estimates that analyze limited public record data to determine a value.  While this process can easily compare square footage, age, number of bedrooms as objective data, it is much more challenging to make adjustments for subjective data like appeal, quality of construction, floorplan and updating.  Zillow Zestimates are the most common AVMs but there are many others providing similar services.  It is important to note that many of these values are just gimmicks to get website traction and are not all that accurate.

Appraisals can only be made by a licensed appraiser.  Most mortgages require an appraisal as part of the underwriting process to verify that there is ample collateral to secure the mortgage in case of default by the borrower.  FHA, VA, FNMA, Freddie Mac and USDA as well as most private lenders require an appraisal especially for high loan-to-value mortgages.  In some situations where the risk is lower, some lenders may use an AVM.

An appraisal requires the appraiser to visit the property, perform a visual inspection, analyze the property considering three approaches to value and accurately report the property information that is verifiable.

Broker Price Opinion, BPO, as the name indicates, is a price opinion on a property made by a licensed real estate agent.  The determination of whether the estimate accurately reflects the market will depend on the experience of the agent with that type of property and market area.  It is possible that a BPO could be more sensitive to the actual market because it will consider homes currently for sale and recently expired properties as well as comparable sales.

While all three methods, used recent, comparable sales to arrive at a value, the appraiser and the real estate professional can make a series of adjustments for the differences in the comparables.  While the appraiser is highly trained in this technique, the real estate professional also adds credibility to this process based on their experience in how the buying public might react to specific features and the home in general including positive and negative influences.

Current condition of the property is very important for a number of reasons.  In some price ranges, a buyer may only have the necessary down payment and closing costs but is not able to make improvements like paint, floor coverings, appliances or other major items.  In this situation, a buyer would have to live with the house in its current condition until they could afford to make wanted improvements.

Investors may not be deterred by making an additional investment in the home after purchasing it but will probably be motivated to do so only if it will increase the potential profit to be made.

An AVM can be a tool that a homeowner, prospective buyer, mortgage officer, appraiser or real estate agent can use to get a quick idea of price but there are inherent limitations that can only be considered by personal examination balanced with experience in the market place.

Experience and understanding of the subject property and the marketplace are critical to having confidence that a value is accurate.  Any person could go through the same steps to arrive at a value but an experienced, well-trained professional is far more likely to assess all of the variables more accurately.  If you are curious what your home is worth, call us at (503) 851-1645  or email brianandnina@paramountoregon.com for a Broker Price Opinion.

Also, to mobilize us right away to help you move, visit us here:

brianandnina.com/buyers

brianandnina.com/sellers