How to Get Your Home Sold

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Selling your home is all about attracting buyers to get top dollar for your biggest investment. To maximize your price, remember time is money in real estate. As with any product, when it initially comes on the market, the consumer is more willing to pay full price. The same is true of putting your home on the market. So how do you sell your home quicker? Here are four tips.

First, hire an expert advisor, not just any agent. Align yourself with this expert because they are selling your biggest asset, which will impact your bottom line.  Be sure the agent listens to you. An agent can do a personalized walk-through to let you know what you need to do—and not do—to increase your chances of getting top dollar for your biggest investment. An agent will ultimately save you time.

Second, have a strategy. It’s amazing the amount of planning people put into a one-week vacation, but how resistant they are to planning how to effectively position and sell their biggest asset. The agent will build this strategy so, for example, anyone who is looking for a house in your neighborhood and price range will know about your home, so you’ll sell it faster.

Third, be proactive and at the forefront of the market, which is called positioning.  An expert advisor will tell you how to position your home from a price and condition standpoint. Listen to the feedback when it comes to selling your home.

Fourth, be flexible. This does not necessarily mean be flexible about your selling price, but you can offer a home warranty, be flexible about the settlement date, leave the washer and dryer, and apply some money to the closing. Create a win-win situation. Your flexibility will help you sell your home faster and avoid problems with the buyer.

Give us a call so we can tell you where to be positioned and how to be successful in the market. Please contact us at (443) 375-2224. We’d be happy to assist you. 

Mortgage Debt Relief Act/FHA Changes

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Have you heard the latest news about the Mortgage Debt Relief Act?  Figured I’d share some info on this since it’s been a hot button issue in our country recently.

The fiscal cliff deal that was made during the first week of 2013 is bringing back a popular tax break on mortgage insurance premiums and debt forgiveness for borrowers who go through a short sale, foreclosure, or debt reduction.

 

One of the more watched provisions of the fiscal cliff was the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire on Dec. 31, 2012. 

The fiscal cliff deal extends it for another year; meaning homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.

Its imperative that if you, or someone you know, is in a situation where debt forgiveness is an option, that option is explored & pursued this year because there’s no assurance it will be extended past the end of 2013.

Very Important Changes to FHA

FHA issued a press release at the end of January officially announcing upcoming changes to their mortgage program. Below are the 2 key changes that will be the most relevant for buyers and sellers. At this time, they have not indicated an official date for the changes to go into effect, but I would expect it would be within the next couple of months. I

1     FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent

This will raise the factor for the monthly premium from 1.25% to 1.35%. The formula for calculating the monthly payment is Loan Amount x .0135 / 12

Here are examples of how this will affect monthly payments:

$200,000 Purchase Price….Added Monthly Cost = $16.09

$300,000 Purchase Price….Added Monthly Cost = $24.13

$400,000 Purchase Price….Added Monthly Cost = $32.17

     2.   FHA will also require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan

In my opinion, this is the bigger change, as it will add enormous cost to borrowers over the life of the loan. 

Beginning In 2001 and up until this change is enforced, FHA cancelled required MIP on loans when the outstanding principal balance reached 78% of the original principal balance.  However, FHA remains responsible for insuring 100% of the outstanding loan balance throughout the entire life of the loan, a term which often extends far beyond the cessation of these MIP payments.  Soon, these annual premiums will no longer be dropped at that 78% threshold and will be carried for the life of the loan.

How does that affect the borrower?

Based on current 30 Year Fixed FHA rates of 3.25%, a borrower would be at a 78% loan to value which would make them eligible to have their monthly mortgage insurance dropped after 108 months (approx. 9 yrs). Based on this new change, the monthly mortgage insurance would be required for the full 360 month term of the loan.

Examples of the added cost:

$200,000 Purchase Price….Added Cost Over the Life of the Loan: $54,714.24

$300,000 Purchase Price….Added Cost Over the Life of the Loan: $82,071.36

$400,000 Purchase Price….Added Cost Over the Life of the Loan:$109,431.00

FHA buyers will obviously be looking at higher payments and added long term costs once the changes go into effect which could price them out of their desired price range.  Subsequently, this could affect sellers since they could be faced with a smaller pool of buyers.

If you, or someone you know, is looking to get into the market this year to buy or sell a home, it would be wise to get the ball rolling sooner rather than later.

To switch gears for a moment, I wanted to share our 4 predictions on what we’re expecting in the real estate industry throughout 2013.  Hopefully if you’re thinking of buying and/or selling this year, or know someone who might, this information will be helpful.

1      With pending sales having trended up throughout 2012, we expect that trend to continue throughout 2013

2      With inventory of homes down sharply since the middle of 2011 and the market seemingly starving for homes for sale, we expect to see a modest increase in home prices of 3-5% by year’s end; quick side note, saw a survey conducted by Redfin and 71% of buyers surveyed believe prices will rise by the end of 2013, so that will create sense of urgency which could impact home prices

3      Mortgage interest rates will rise slightly

4      Short sale process will continue to be expedited, resulting in a higher % of short sales and increasing their appeal to buyers

Overall, we’re expecting home affordability to remain at record highs while home selling conditions to continue on the right track of improving.

Please feel free to call, text or email with any questions/concerns. Keep in mind though, we’re not a tax accountants or lawyers, but we’re YOUR Real Estate Experts and always happy to help.