7 Mistakes to Avoid When Selling Your Home

PrintWhen you prepare to put your home on the market, you hope that everything will go the way you imagine and that is your home will sell for over listing price the very first day it goes on the market. The reality isn’t so rosy. Selling your home – especially if you’ve never done it before – can be surprisingly time-consuming and emotionally challenging. Strangers will come into your home and poke around in your closets and cabinets. They will criticize a place that has probably become more than just four walls and a roof to you, and then, to top it all off, they will offer you less money than you think your home is worth.

With no experience and a complex, emotional transaction on your hands, it’s easy for first-time homesellers to make lots of mistakes, but with a little know-how, many of these pitfalls can be avoided altogether. Read on to find out how you can get the highest possible price for your home within a reasonable time frame – without losing your mind. So if you’re thinking of doing any of the following five no-no’s, stop yourself right now.

Mistake No.1 – Getting Emotionally Involved
Once you decide to sell your home, it can be helpful to start thinking of yourself as a businessperson and a homeseller rather than as the home’s owner. By looking at the transaction from a purely financial perspective, you’ll distance yourself from the emotional aspects of selling the property that you’ve undoubtedly created many memories in. Also, try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state. If you can remember that you are selling not just a piece of property but also an image, a dream and a lifestyle, you’ll be more likely to put in the extra effort of staging and perhaps some minor remodeling to get top dollar for your home.

Mistake No.2 – Hiring the first realtor you meet.
Selling your home is one of the largest transactions you’ll ever have, so why wouldn’t you interview several applicants to help you? You can ask friends and family for referrals, but there are several questions you should ask. Make sure the agents you interview are experienced selling homes in your neighborhood and the type of home you want to sell. To get the listing, potential agents may employ a number of strategies, including suggesting or agreeing with you to list a high price for your home. Don’t fall for it. Choose the agent who is straight with you, about the market and about your home.

Mistake No.3 – Ignoring the market.
Every market is different and those differences can impact the sales price of your home, the number of days your home spends on the market, and whether your home sells or not. You have to face the reality of market conditions to influence the success of your home’s sale. If home prices are going up, you’ll do well, but it will be more expensive to purchase your next home, unless you move to a less expensive market or home. And if prices are going down, you may not net what you were hoping for, but your next purchase may be a bargain, if you stay in the same area.

Mistake No.4 – Trying to Hide Significant Problems
Any problem with the property will be uncovered during the buyer’s inspection, so there’s no use hiding it. Either fix the problem ahead of time, price the property below market value to account for the problem, or list the property at a normal price but offer the buyer a credit to fix the problem. Realize that if you don’t fix the problem in advance, you may turn away a fair number of buyers who want a turnkey home. Having your home inspected before listing it is a good idea if you want to avoid costly surprises once the home is under contract.

Mistake No.5 – Setting an Unrealistic Price
When your home is overpriced, it’s underdressed for the party. Everyone notices that it doesn’t quite fit in. Buyers who can afford your home quickly notice that your home doesn’t quite measure up to others in the same price range. Buyers who could afford your home if it were priced correctly are unlikely to make offers because they’ll be searching in a different price range.

Mistake No.6 – Not Preparing Your Home for Sale
Sellers who do not clean and stage their homes are throwing money down the drain. If you can’t afford to hire a professional, that’s OK – there are many things you can do on your own. Failing to do these things will not only reduce your sale price, but may also prevent you from getting a sale at all. For example, if you haven’t attended to minor issues like a broken doorknob, a potential buyer may wonder whether the house has larger, costlier issues that haven’t been addressed. Have a friend or agent with a fresh pair of eyes point out areas of your home that need work – because of your familiarity with the home, you may have become immune to its trouble spots. Decluttering, cleaning thoroughly, putting a fresh coat of paint on the walls and getting rid of any odors will also help you make a good impression on buyers.

Mistake No.7 – Skimping on Listing Photos
So many buyers look for homes online these days and so many of those homes have photos that you’ll be doing yourself a real disservice if you don’t offer photos as well. At the same time, there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest. Good photos should be crisp and clear, should taken during the day when there is plenty of natural light available, and should showcase your home’s best assets. Consider using a wide-angle lens if possible – this will allow you to give potential buyers a better idea of what entire rooms look like.

Do things right from the beginning and you’ll have a smoother, easier, and more profitable transaction.

Los Angeles High End Home Sales Surging

luxury real estateBy most measures, the housing market these days is a bit sluggish. Prices are flat. Sales are drooping. A lot of people are priced out.

But not everyone. The high end is hopping.

Luxury home prices in Los Angeles continued to soar in the third quarter, posting five straight quarters of double-digit gains, boosted by low interest rates and tight inventory, according to a survey by First Republic Bank.

Luxury home sales in Southern California are hitting levels not seen in decades. The number of homes bought for $2 million or more in recent months is the highest on record. Sales worth $10 million or more are on pace this year to double their number from the heights of the housing bubble.

The value of luxury homes (or homes valued at more than $1 million) in the Los Angeles area jumped 13 percent from the third quarter a year ago and 3.7 percent from the second quarter. The average price for a luxury home in the area hit an all-time high of $2.61 million. The third quarter was strong across most markets from West L.A. to Malibu, prices are very strong and buyer interest is greatest for homes selling for $2 million to $5 million

Low interest rates, a strong stock market and waves of cash sloshing in from overseas are boosting demand for high-dollar homes. A record 1,436 homes worth $2 million or more were sold in the six-county Southland in the second quarter, according to CoreLogic DataQuick.

The biggest difference in the luxury market between now and a decade ago is that the world is smaller. Wealthy international buyers are scooping up second homes, investment properties and safe havens for their cash. And it’s easier for them to scout — and travel — the world to do so.

The Southland scores points with these buyers for its weather, its glamour and a population diverse enough that nearly any transplant can feel at home. And despite its reputation as one of the nation’s least-affordable housing markets, Los Angeles can look like a steal compared with other high-end havens. Private wealth managers around the world think California is a very good market right now, compared to New York or London, L.A. real estate is a bargain.”

But it’s not just foreign money that’s heating up the high end.

A surging stock market has boosted portfolios for domestic buyers in recent years, especially for those who have money to invest. Low interest rates have made mortgages cheap. And banks — still risk-averse — are offering lower rates and better terms to deep-pocketed borrowers than to cash-strapped first-time buyers. Meanwhile, wealthier households have seen their incomes grow faster than average in recent years.

High-end home sales are surging in “Silicon Beach,” too, with tech entrepreneurs and Bay Area transplants scooping up multimillion-dollar homes in Santa Monica, Venice and Marina del Rey. Many of the buyers work in the area and prefer walkable neighborhoods, relatively close to work, to the traditional hubs of Westside glitz.

5 Reasons to Buy a House Now

best-time-to-buy-a-homeThe down payment, interest rate, economic factors, qualification variables can be so confusing. Rising rates, loosening requirements, down payment options, buyer’s market, seller’s market. What does it all mean for you if you want to buy a home? The truth is that while the banks might have a magical formula to determine your mortgage worthiness, determining if the time is right really comes down to three main questions:

Do you want to buy a home?
Are you financially prepared?
Is your credit where it needs to be?

If your answer is yes, then you should take that leap of faith and go for it. Here are six reasons to do it now.

1. Prices are good. In most regional markets, home prices are still gaining, but have slowed. This is good news if you were afraid that big price gains would put homeownership out of reach and also bodes well for your long-term equity once you purchase. Attempting to buy a home when the market is at its lowest point—or to sell at the peak—is tricky. Like trying to time the stock market. ,you might get lucky one or two times, but overall, timing the market does not work. It is all about purchasing power, and that’s a reflection of price and interest rates, which will both be higher in the future.”

2. Rates are low. Mortgage interest rates are still low—for now. A 30-year-fixed-rate loan now averages 4.16%, according to Freddie Mac, but many economists believe we will see 5% rates next year. As interest rates increase, so do your monthly payments. Imagine the unthinkable. paying over 18% interest on a 30-year fixed mortgage.  That was the reality for home buyers in October 1981. The average rate has been 5.18% since the start of this country’s history,” making today’s rates, which hover around historic lows at 4%, sound even better.

3. Loan requirements are softening. It is not quite the look-the-other-way-and-stamp-it-approved levels of 2008, but the overly tough restrictions that followed have loosened. Major lenders are making adjustments, and lowering the minimum FICO score for borrowers applying for loans. You can look to banks that have lowered loan-to-value standards in certain markets for both jumbos and conforming mortgages. For buyers that can mean an easier road to loan approval, even without a ton of money upfront and perfect credit.

4. Fewer buyers around the holidays means less competition. Sellers that are actively looking to sell their homes during the holiday months — namely, October through December — are serious about shedding their residences. This often works in favor of savvy buyers looking to get favorable terms on an aquisition. Having less competition on the buyer’s side can mean lower prices on homes, in addition to fewer counter-offers to compete against.

5. It’s time to move on with your life. The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

How Elections Affect Home Owners

your_vote_counts_button_3One of the very first discussions the Founding Fathers had was about how to balance the rights of all individuals with the rights of those who owned property. They knew that if only property owners could vote, the rights of individuals and minorities might be suppressed … but, if voting extended to non-property owners, the rights of property owners could be unfairly overruled. In the end, they left the question of voter rights to the individual states. Now, nearly 240 year later, with suffrage extended to all citizens, with or without property, the question remains:

“Do elections affect property owners differently than non-property owners?”

Levies

Nearly every municipality imposes property taxes on homeowners for, well, owning homes (and other property). The tax authority typically bases these taxes, or mill levies, as a percentage of the assessed value of the property owned. Proceeds from levies on property fund local services including:

  • Law enforcement
  • Roads, bridges, street lights, and other infrastructure
  • Public schools
  • Emergency services
  • Debris and snow removal

Each locality and school district sets the property tax rates each year to meet the needs of that community. This means that tax rates vary widely from one municipality to another, and even between neighborhoods. They can increase each year, or may even decrease. For homeowners, voting for or against a levy affects property owners in two ways:

The actual tax increase affects a property owner’s bottom line. Yearly property tax increases might push the cost of owning a home higher than the owners plan, or higher than their income can bear. Putting stress on property owners’ financial situation may make it more difficult for them to maintain their property. Homes in distress can bring down the value of an entire neighborhood.

When homeowners vote to increase levies—such as those that provide local services, upgraded roads, improved schools or increased emergency personnel—they are voting to increase the value of their homes and communities, making them more attractive to buyers.

Voting for or against levies is a delicate balance between increasing an owner’s outgo with increasing the property’s value and the community’s desirability. Researching the fiscal impact of the levy you intend to vote on is an important first step in determining how it may affect your bottom line.

Sales Taxes

Taxes based on the sale of goods typically spread the burden of the tax across both property owners and non-property owners. Sometimes, however, a sales taxis for a specific neighborhood or commercial area. If you own property in an area with a higher sales tax rate than one nearby, it can determine how easily you keep your space leased to shop owners since customers may choose to shop elsewhere.

If you are new to home ownership, increases in sales taxes make purchasing furnishings and appliances more expensive. If you are considering upgrades and improvements, renovations or additions, a tax increase may expand your scope costs.

Other Taxes

Taxes specifically affecting homeowners include those like the one embedded in the Affordable Care Act. It taxes the capital gains income of upper-bracket homeowners that sell their home at a sizable profit and even taxes rental income from investment property.

Candidates

Decisions by both national and local elected officials—from state senators to congressional representatives, governors to county commissioners, city council members to school board members—impact the future levies imposed on local property. Knowing your candidates and how they hope to legislate their agenda can affect both your bottom line and your property values.

Not only are elections about national and state officials, international and social concerns or party platforms—they are about local schools, streetlamps, parks and 911 services.

Voting

Do not leave decisions that affect property ownership to others. Take the time to vote in your local and national elections. Balance how a levy can affect your immediate bottom line with the impact it might have on the sale of your property

Out With The Old House, When Buying the New?

Buy-sell-hold-skaffoldThe current housing market, while up in most areas, has one basic problem: low supply. With many buyers choosing to keep their old home when they purchase a new home, fewer homes are on the market, driving up demand.

Buyers that do not need the equity in their current property in order to purchase the home into which they are moving, are choosing to become landlords instead. The financial crisis and ensuing recovery has increased the demand for rental housing. In fact, the cycle of buyers not selling their current home before buying a new one reduces the supply for homes to buy, thereby raising the prices and pricing entry-level buyers out of the market. Unable to buy the home they can afford, they then seek to rent a home that better meets their needs instead, resulting in rental price increases due to higher demand.

For those able to become landlords, it is somewhat of a perfect storm since the ability to demand a higher rent increases the income from your rental property, increasing your equity.

Don’t forget the other advantages of being a landlord too. Since your former home is now a business for tax purposes, repairs, maintenance, utilities, taxes, insurance, some fees, and other costs may be tax deductible. Be sure to consult a qualified tax accountant to find out what your tax liabilities or deductions may be when making your former home a rental. Remember too that collected rents count as business income, so be sure to establish proper accounting records for your property.

Some property owners, especially if they lived in the property, find it difficult to make the shift from homeowner to landlord. They mourn painting over their faux finishes with generic rental neutrals, and seeing a nursery turned into an office. They worry about potential damage to their property, and the associated costly repairs, and they fret about the possibility of months without a renter and having to pay on two mortgages at once.

The best solution toward making this shift is to hire a professional property manager. A professional helps you establish the appropriate rental amounts to cover both the initial mortgage and other costs and repairs that may become necessary. In addition, they offer a buffer between the owner and the renter that keeps the relationship entirely professional. Having a property management service handle your rental and renters can give you peace of mind while ensuring that your former home is in good hands.

As your real estate professional, we can connect you with a property management professional, so let us know what your plans are so we can help.

Luxury Real Estate Defined

luxury real estateWhile the term “luxury” can be subjective, a luxury home or luxury real estate is generally defined as a property priced within the top 5-10% of a given real estate market. In most markets that is a home of value of more then one million dollars in the Los Angeles market it’s defined by an entry-level price of about $2 million.

However, there’s more to luxury than a price tag, a home that may have a unique quality or distinct feature that makes it stand out in the luxury real estate marketing arena. One’s perspective has as much to do with the definition as does the opulence, location or architectural significance of a particular property. We offer the following common characteristics of homes classified as luxury:

Exclusive location

Luxury starts from the ground up, and requires a home to be built on pristine property that usually offers an exclusive view. This includes lakefront, mountaintop and ocean-side real estate.

Natural Materials

There’s nothing mass produced about a high-end home, especially when it comes to the material it was constructed with. Common luxury materials include hardwood, marble and granite – all of which carry a timeless beauty, and are built to last.

Clean Design

Luxury calls for a clean and crisp design that is timeless rather than on-trend. Too much clutter can appear cheap rather than chic. That’s why luxury features the very best of a home’s collection, resulting in a richer look.

Harmony

In an upscale home, every element of the house works together in harmony. A luxury home can be classic, contemporary or transitional, but conforms to a consistent style of architecture, furniture, décor and landscape.

Attention to Detail

Detailed décor finishes off a luxurious look, and is handled with the same amount of care and thoughtfulness as constructing the home. While luxury can be bought, it can’t be mass-produced – so decorating an interior to be luxurious takes time to get to details just right.

Has the Real Estate Market Peaked

Positive Housing MarketOne of the oddest things about this current housing market is the dwindling amount of supply.  For areas like Los Angeles and nationwide, total housing supply has been on a downward trajectory since 2010.  While an environment of rising home prices, less supply, and hungry buyers would lead you to believe that more home building would be occurring, not much of that has actually happened.Though the housing market is recovering nicely, it is not doing quite as well as some analysts had predicted. There has been no shortage of excuses offered as to why this is: the rise in interest rates, more stringent lending standards, the weather. However, we feel that there is one factor that is most responsible for curtailing the number of houses sold – the number of houses available for sale!

Inventory Levels are BELOW Historic Norms

In a recent economic forecast, Freddie Mac addressed this exact issue: “Including newly built homes in the inventory count, the total number of homes offered for sale relative to the number of households in the U.S. has been running at the lowest level in more than 30 years, as shown in the second exhibit. The relatively low for-sale inventory reflects several features of today’s market.” “A supply-constrained market (holding other factors constant) will result in a decline in the volume of sales and an increase in real transaction prices.”

NAR Report Confirms Inventory Constriction

History shows us that a balanced real estate market requires a six month supply of available housing inventory. The National Association of Realtors released their Existing Homes Sales Report last month. The report revealed that we are still only at a 5.5 month supply of homes for sale. We have not reached the 6 month mark in over two years. The recent increase in buyers now looking will again put a strain on this number. .

Bottom Line

While inventory levels remain below historic norms, it will remain a seller’s market. This being the case, if you are considering selling your home, now may be the time to list it for sale.

Luxury Loans Surge To Record Levels

luxury home buyerBanks are handing out mortgages of as much as $10 million to the wealthy in record numbers while first-time home buyers struggle to get loans. Wealthy borrowers are having an easier time getting a mortgage, with banks issuing a record number of mortgages in excess of $1 million while continuing to keep lending tight for first-time home buyers, Bloomberg News reports.

These high-net-worth borrowers do act differently than first-time buyers, who borrow because they have to.  High-net-worth borrowers don’t have to borrow. They choose to, so they’re very strategic about what, why, and when they borrow. The wealthy are choosing to borrow while mortgage rates are still low, with some fetching mortgage rates as low as 3.15 percent for a seven-year adjustable-rate mortgage. By choosing to finance, the wealthy borrowers are avoiding having to liquidate other investments to purchase the home.

In Southern California, millionaires are boosting demand for the largest loans because of an improving economy and brisk sales of luxury homes gives them confidence in the market, said Mark Cohen, a mortgage broker at lender Cohen Financial Group in Beverly Hills. Cohen, whose average loan has increased to $1 million from $800,000 this year, said he gave a $9.9 million mortgage recently to an executive at a publicly traded company in Brentwood

For wealthy home buyers of single-family homes, the number of loans from $1 million to $10 million in the 100 largest metro areas soared by more than 15,000 in the second quarter, the highest point ever, according to CoreLogic, a housing data provider.

The luxury market has been heating up in recent months. During the first half of this year, sales of homes costing at least $2 million in 30 of the biggest metro areas increased to the highest since at least 2006, CoreLogic reports. What’s more, sales of existing homes of $1 million and more rose 8.5 percent in June compared with a year ago, which was the biggest jump among all price ranges, according to the National Association of REALTORS®.

Los Angeles Real Estate Surging

Home-Prices-UpThere is very little doubt that the real estate market is on much firmer ground that it was five years ago. Home values are rapidly rising and a confluence of factors will likely continue to drive the market even higher. Pent-up demand, job growth and still-slow mortgage rates continue to put pressure on home prices. The median price of a home in Los Angeles County rose by 5.9 percent in June, compared with the same month a year ago, while the number of homes sold dipped by 7.5 percent, a real estate information service announced today. According to DataQuick, the median price of a Los Angeles County home was $450,000 last month, up from $425,000 in June 2013. A total of 6,792 homes were sold in the county, down from 7,342 during the same month the previous year.  In many markets price appreciation has slipped into the more sustainable single-digit range, compared with gains exceeding 20 percent this time last year. Home values are rrising and a confluence of factors will likely continue to drive the market even higher. Consider the following:

  • Prop 13 – A voter initiative passed in 1978 amid an anti-tax revolt, it caps California property tax rates at 1.25% and freezes assessed property values at the original purchase price. While no one likes higher taxes, the measure artificially constrains inventory and make prices soar because it offers older homeowners a remarkable disincentive to sell.
  • Greater investment property ownership – Investors flooded the middle market after real estate hit bottom during the financial crisis, gobbling up foreclosures and short sales at bargain basement prices and converting them into rentals – further squeezing what little affordable inventory exists within these markets.
  • Lack of available land – In the most desirable neighborhoods within Los Angeles land is scarce. And when there is development in such neighborhoods, it often involves tearing down a $1 million home and replacing it with one that is three times more expensive.
  • Foreign buyers inflating prices – From locating a property to negotiating price to going through each exhaustive step of the mortgage process, buying a home often takes months. But for wealthy foreign buyers seeking the safe haven of US-based hard assets, and making all-cash offers to sweeten their deals, it only takes weeks.  And by frequently going above market prices in their offers, foreign buyers have helped drive up the price for everyone else.

Introducing: 2014 Innovator Awards Finalists

Inman News is pleased to announce the finalists for the 2014 Innovator Awards. We are humbled to be recognized in the category of Most Innovative Real Estate Agent.

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