8 Costly Home Seller Mistakes

8 Costly Home Seller Mistakes

Homeowners who want to sell their home know they need to get the place spruced up for marketing, but a tougher challenge for some sellers is to get mentally prepared for putting their residence on the market.

After all, if you’ve been happily living in your home for years, it can be emotionally hard to detach yourself from your memories and look at the place as a commodity you’re selling.

For a smoother sales transaction that garners the most possible profit from your sale, avoid these common, yet costly, seller mistakes:

1. Skipping a home inspection. Depending on the age of your home, scheduling a pre-listing home inspection could save you a lot of time and aggravation. You can address issues on your own time and budget before negotiating with a buyer to fix problems.

2. Skimping on your sales prep. While you may be tempted to “test the waters” and put your home on the market without painting it or making minor repairs, your home is likely to languish on the market and get a reputation for having a major problem. A thorough, professional-level cleaning should be your bare minimum seller prep. Your eventual sales price is likely to be lower if you don’t sell within the first few weeks after you list your home.

3. Choosing the wrong REALTOR®. Instead of picking a REALTOR® who’s a friend of a friend, a relative or perhaps someone who’s great at working with buyers, take the time to pick a REALTOR® with an excellent reputation for listing homes. Your payoff will be much larger if you list your home with a REALTOR® with local market knowledge and sales expertise.

4. Neglecting to ramp up your curb appeal. If you polish and primp inside your home but neglect to pull weeds or paint your front door, you run the risk of potential buyers leaving without ever entering your home.

5. Withholding information from buyers. If you hope that the buyers or their inspector won’t find out about the leak under your bathroom sink or the fact that your basement gets flooded every winter, you run the risk of a nasty negotiating period, or  worse, a lawsuit after the settlement.

6. Overpricing your home. If you’ve hired the right REALTOR®, someone who can give you a strong market analysis and help you determine a reasonable price for your home, then you can avoid overpricing your home. If you don’t listen to your REALTOR® and base your listing price on an inflated view of your home’s value, you’re likely to end up selling after multiple price drops for less than you would have if you priced it right the first time.

7. Being unprepared for your next step. Whether you should buy your next home or sell your current home first is only one part of the preparation you need to make to move. You need a back-up plan in case your transaction on either end takes longer or shorter than you think, and you need to understand your mortgage payoff and the closing costs you must pay.

8. Letting your pets and kids spoil a sale. Part of your emotional detachment from your home is recognizing that while you love Fluffy and your darling twins, buyers want to visualize themselves and their own family in your home. Bribe your kids if you have to, but make sure the house is neat and as neutral-looking and smelling as possible. Take the kids and your pets out (or lock up your pets) when prospective buyers are visiting – you never know if someone who is terrified of dogs or cats will be turned off from making an offer because of your adorable pet.

Selling a home can be challenging, but with the help of a reliable REALTOR® you can avoid making mistakes and reap the rewards of your sale.

New Rules Could Change Your Jumbo Mortgage Options

New Rules Could Change Your Jumbo Mortgage Options

Jumbo loans – high dollar loans typically starting at $417,000 in most areas or as high as $625,501 in higher-cost markets – will see a lot of changes in 2014.

In response to the housing crisis, the Consumer Financial Protection Bureau, acting under the Dodd-Frank financial reform bill, now requires the majority of mortgages to be “qualified” by specific standards. If you’re in the market for a jumbo loan, these new rules could affect your mortgage options, the type of mortgage you get, and the amount of paperwork you’ll need to get approved.

Fewer Options

Certain types of jumbo loans that were common in the past will be harder to find.

Under the Dodd-Frank bill, a mortgage must meet certain terms to be considered a qualified mortgage. Jumbo loans that have smaller monthly payments and a large balloon payment at the end of the loan are not qualified mortgages. Interest-only jumbo loans, which have several months of interest-only payments, also do not qualify under the new mortgage standards.

While not all mortgages must be “qualified,” lenders of non-qualified mortgages run a higher risk as borrowers could contest a foreclosure by saying the lender didn’t assess their financial standing and the risk of the loan. To reduce risk, lenders may require the majority of their jumbo loans to be QMs. Expect to see fewer options and a greater push to “qualified” jumbo loans.

More Scrutiny

Jumbo loans with low documentation requirements won’t be possible under the new rules.

For QMs, a borrower’s debt ratio cannot exceed 43 percent of their monthly pre-tax income, including all major debts such as mortgage payments and car loans. To prove a borrower qualifies, lenders must dig deeper into the borrower’s financial statements. If a lender decides to offer a non-QM jumbo loan, the debt ratio can be higher than 43 percent, but the same scrutiny rules apply and lenders must be able to verify your ability to repay the loan.

Regardless of the debt limit, you’ll need to prove your assets and income through pay stubs, tax returns and bank statements. According to The Wall Street Journal, if you can’t provide enough documentation to prove you can repay, you won’t qualify for the loan, even in the private market.

Higher Down Payments

In recent years, some lenders have offered jumbo loans with a lower down payment so wealthy borrowers could invest their income in other sources, but that will change in 2014. According to the Wall Street Journal, “Most lenders will continue to require down payments of at least 30 percent on private mortgages.” It also warns, “That threshold could rise as more rules are announced.”

Changes to Terms

In the coming months, jumbo loan lenders are likely to push for more adjustable-rate mortgages. However, they may go about it in indirect ways.

Tom Wind, executive vice president of home lending at EverBank told MarketWatch that lenders will slowly increase their interest rates for 30-year jumbo loans. As a result, borrowers are likely to go for an ARM, which has a lower introductory interest rate and can seem more appealing at closing. Since the interest rate in an ARM can jump after the introductory period, lenders stand to make more money in interest from these loans and a borrower may do better overall by starting with a higher interest rate in a fixed rate mortgage.

MarketWatch also reported that lenders have been contacting private insurers about reintroducing private mortgage insurance. That could mean more jumbo loans will start to carry PMI in the near future.

Open House Safety: Preventing Identity Theft

Open House Safety: Preventing Identity Theft

If you’re selling your home, it’s possible that your real estate agent will suggest hosting public open houses. An open house can be a useful part of a seller’s marketing strategy, but there are security considerations to bear in mind.

The majority of people coming through your house will likely be legitimate attendees – either potential buyers or nosy neighbours. Unfortunately, there will always be a criminal element in society and there are people who view real estate open houses as an opportunity for criminal activity. One area where home sellers can be vulnerable is identity theft.

Here are some ways you can protect yourself:

1. Put Your Mail Away – How many of us leave mail, especially bills, out in plain view on a hall table or in a kitchen cupboard? If you are hosting an open house, these items should be out of sight and, ideally, under lock and key. Identity thieves can get a lot of personal information about you with just a few utility bills.
2. Computer Security – Some criminals attend open houses with the goal of trying to get sensitive data from computers. In a matter of seconds, these individuals can gain access to your computer through a variety of means, including hardware keyloggers. Ideally, computers should be removed during an open house, but given that so many people work from home that may seem impractical. At the very least, turn computers off, unplug them and cover them up. All of these steps will make it more difficult for people to quickly access the personal information you have stored on your computer.
3. Pack Up Your Personal Items – It’s currently tax season in Canada and I recently showed a house in which the seller had left her tax return paperwork on her kitchen table. Not good! Think further, though, and even consider removing items that reveal personal details, such as college diplomas. With your name and graduation details, the identity thief already has small details that can be used to gather additional information.

When it comes to open house security, common sense is emphasized and it’s important to discuss these issues with your real estate agent. Find out how he or she screens visitors (some agents request identification and formal sign-ins for anyone coming into an open house,) and make sure that security is on your agent’s mind – as well as yours.

Do Your Part: Top 5 Natural Choices for a Healthier Child

Do Your Part: Top 5 Natural Choices for a Healthier Child

Children are particularly susceptible to dangerous chemicals because of their lower body weight. It takes a much smaller amount to harm their developing bodies. Do Your Part and create a healthier home and a healthier child by reducing your family’s exposure to questionable chemicals. Here are my top 5 alternatives to the dangerous chemicals your child probably comes into contact with every day.
1) Triclosan: It’s found in many antibacterial hand soaps, gels, and body washes. Triclosan is believed to interfere with thyroid function. It is also has been linked to the creation of “superbugs,” which are resistant to antibiotics.
Alternative? Soap and water. Even the FDA says it “does not have evidence that triclosan in antibacterial soaps and body washes provides any benefit over washing with regular soap and water.”
2) Flame Retardants: Chemicals found in flame retardants are linked to serious health issues such as delayed brain development, reproductive problems, and cancer. Flame retardant chemicals can be found on children’s clothing and mattresses.
Alternative? Organic cotton or natural latex. Instead of clothing made with flame-retardants, opt for snug-fitting organic cotton clothing and a working smoke detector. Also, choose a crib or child’s mattress made from organic cotton or natural latex.
3) Pesticides: The EPA warns that most pesticides are especially dangerous to children because they block absorption of nutrients and can even cause permanent biological changes. Recent studies have also linked pesticide exposure to childhood leukemia and birth defects.
Alternative? Vinegar, borax, or food grade diatomaceous earth. Use natural products like these to get rid of pests. Spraying vinegar around doors, windows, and countertops will keep ants away. Borax and sugar will kill roaches. And diatomaceous earth will kill all insects, which means you must use it selectively. Borax and diatomaceous earth are natural but can be hazardous if ingested.
4) Air Fresheners: Why mask bad smells with air polluting chemicals? Most air fresheners can actually leave dangerous levels of hormone disrupting phthalates or formaldehyde (a known carcinogen) behind.
Alternative? Fresh air, baking soda, and soy candles. Getting fresh air into your home can alleviate odors. For tough and stubborn smells like in your garbage can, all-natural baking soda can work wonders. To bring sweeter scents into your home, use soy candles instead of petroleum-based ones.
5) Chemical Cleaners: Most of us don’t know we’re polluting while cleaning because the makers of popular household cleaners aren’t required to list all their ingredients on the label. These hidden ingredients can cause everything from asthma to reproductive problems.
Alternative? Natural cleaners. You can use all natural vinegar and baking soda to clean and disinfect just about every surface in your home.
Making smarter choices will help to create healthier homes and healthier children. It’s one of the most important ways to Do Your Part for your family and our planet.

How to Get the Best Mortgage Interest Rate

How to Get the Best Mortgage Interest Rate

When you’re buying a home on a tight budget, qualifying for the lowest mortgage rate becomes extremely important. The larger your loan, the greater the impact a difference in interest rates will have on your monthly payments.

For example, if you had a loan of $100,000, the monthly payments would rise by just $30 with an interest rate change from 4.5 percent to 5 percent. If your loan balance were $500,000, the difference in your payment under similar circumstances would be $151.

A lower mortgage rate also impacts the total amount of interest you will pay over the life of your loan. A $100,000 30-year fixed-rate loan at 5 percent requires $93,256 in interest payments; whereas an interest rate of 4.5 percent requires $82,407 in interest payments — a savings of $10,849 over the full length of the loan. Similarly, on a $500,000 loan you could save $54,245 in interest with the lower 4.5 percent rate.

Steps to the Lowest Mortgage Rates

Lenders have different standards and loan programs, so it’s important to shop around on the same day (since rates change frequently) for the same loan terms to find out who is offering the lowest rates. In the meantime, you can also consider these other options to qualify for the lowest interest rate:

§  Pay points: A discount point, equal to 1 percent of the loan amount, can be used to buy down your interest rate. Generally, paying one point at closing will buy down your rate by about 0.25 percent, but think carefully whether this is the best use of your cash.

§  Shorten your loan term: Shorter loan terms generally have lower interest rates, although the difference between the rates varies. For example, on Jan. 10, 2014, the average mortgage rate for a 30-year fixed rate loan was 4.64 percent compared to 3.74 percent for a 15-year loan. However, given the shorter term, your payments will be higher.

§  Consider an ARM: Adjustable rate mortgages (ARMs) have a lower interest rate for the first few years (you can find 1-, 5-, 7- and 10-year ARMs) and then adjust, usually on a yearly basis. You’ll need to qualify for the loan based on the highest possible mortgage rate (ARMs are capped so they can’t go higher than the cap) and be prepared for the worst-case scenario, but in the meantime you can benefit from a lower interest rate.

§  Improve your credit score: Lenders tack on slightly higher interest rates for borrowers with a credit score of less than 740. The rates are a bit higher for every 20-point difference in your credit score, so making changes such as paying off debt and paying all your bills on time before you apply for a loan can help.

§  Increase your down payment: Interest rates are also based on your loan-to-value and will be lower if you make a down payment of at least 20 percent. If you can manage to make a down payment of 30 percent or 40 percent your interest rate will be even lower.

§  Wait to lock-in your interest rate: Home buyers often choose to lock in their mortgage rate 60 to 90 days before closing to avoid the danger of rising rates. However, lenders charge a slightly higher interest rate for lock-in periods. Ask your lender for advice about when to lock in, but you may want to consider a shorter 30-day lock once your settlement date is determined.

While qualifying for the lowest possible interest rate is important, be sure you understand your loan terms and your budget before you sign the papers for a new loan.

What Does Your Door Say about You?

What Does Your Door Say about You?

Debbie Zimmer of the Paint Quality Institute.

Zimmer says in a news release that the colors we choose for our doors often communicate our emotions and personalities. A front door is the focal point of a home, she says, much like a necktie is the focal point of a suit.

Here’s what a color psychologist might say about the most common front door colors:

Blue: Studies often show blue is the most popular color. A blue front door indicates the homeowner sees his or her home as a place of refuge.

Green: This color connotes health, safety, tranquility and harmony.

Black: A black front door projects strength, sophistication, power and authority.

Red: This powerful color says a home is vibrant and exciting.

Brown: A brown front door conveys warmth, stability and reliability, but some darker shades of brown signal a desire for privacy, even isolation.

5 Ways Home Sellers Can Prepare for the Spring Market

5 Ways Home Sellers Can Prepare for the Spring Market

With spring being the busiest time for real estate, homeowners planning to put their homes on the market shouldn’t wait for flowers to bloom before getting ready to sell. Having a few months to prepare can make for a much smoother selling experience.

If you’re a prospective home seller, here are five things you can do now to get ready for a spring sale:

Start Packing

It may sound crazy to start packing months in advance of your move, but since you’ll eventually need to do this anyway, you might as well get organized now. We’re not suggesting you pack up your kitchen and eat off paper plates, but you can sort through your storage closets, attic, basement or garage to determine what you want to keep, what to give away and what to sell. Boxing up items will make your space look larger and neater when it’s time to show your home. You can also get an idea of whether you need to rent a storage facility while your home is on the market.

Clear Away the Clutter

If you visit model homes or open houses of homes that have been staged, you’ll never see a stack of unread magazines, children’s artwork loosely hanging on the refrigerator, or a cluster of unpaid bills on a table. While everyone has clutter, buyers want to see a fantasy version of your house, in which they can envision living. Once your home is on the market you’ll need to keep it as neat as possible. One way to make that easier is to reduce the amount of clutter you have on your shelves and surfaces. Put away items that are regularly on your kitchen sink and pack away the family photos that gather dust.

Improve Your Home

While you don’t necessarily want to do a major, expensive renovation project before you sell, you can make minor repairs and improvements that will make your home look fresher to buyers. Try things such as replacing the caulk and grout in your bathroom, updating old or rusted ceiling fans and light fixtures, and changing switch plates, doorknobs and other hardware for a clean and neat appearance. Consider painting your front door and trim even if your rooms don’t need new paint.

Interview REALTORS®

Your choice of a listing agent will make a big difference in how quickly your home sells and how much of a profit you’ll realize. Get recommendations from friends and interview several listing agents to see which ones have the right experience with similar homes in your price range and area. A REALTOR® with a great marketing plan and deep local knowledge is extremely important. Don’t just go with the one who tells you they can sell for the highest price; choose someone who can present you with a detailed market analysis.

Research Your Market

If you plan to buy another home, an important decision to make is whether to sell your home first or make an offer on a new home before putting yours on the market. A knowledgeable REALTOR® can help you evaluate how fast homes are selling in your market and help you estimate how long it will take you to find a home. This decision also depends on your financing, so you may want to consult with a lender to see how you can finance the transition from one home to another if you choose not to sell your home first.

If you spend the winter months preparing for spring, you’ll find yourself ready to move fast when buyers come out of hibernation.

5 Resolutions for First-Time Home Buyers

5 Resolutions for First-Time Home Buyers

If you’ve promised yourself you’ll become a homeowner for the first time in 2014, we’ve got five, easy-to-accomplish resolutions to help get you there.

1. Boost Your Credit Score

Your credit score will play a key role in your mortgage approval and rates. At the beginning of the year, order your credit reports from AnnualCreditReport.com, a free service authorized by federal law. Go over each report, dispute any errors, and pay off old debts.

In the meantime, avoid big-ticket items such as cars or furniture and don’t apply for new credit. Jon Sterling, a regional sales manager for real estate offices in Northern California, says, “An inquiry itself causes a credit score to temporarily drop, and acquiring more debt by buying something, or the capacity to acquire more debt by opening a new credit account, can have dramatic effects on [your] mortgage situation.”

2. Save Up to Put Down

According to Sterling, you’ll typically need a 20 percent to 30 percent down payment to qualify for the best mortgage rates. At the beginning of the year, try cutting optional expenses to save more. For example, cutting out an $85 cable bill will save you $1,020 in a year. Remember, every little bit helps you avoid higher interest rates or private mortgage insurance.

3. Find the Best Real Estate Agent

Finding a great real estate agent takes time but will pay off in the end. Sterling recommends you find a buyer’s agent who “can give you a few recent testimonials from happy buyer clients. Be sure to check those references to be sure they are legitimate.” To get started, ask friends and family for referrals or search realtor.com®’s Find a REALTOR® database.

4. Get Pre-Approved

Knowing what you can afford, what you qualify for, and what type of loan you want can help you find the best deal when you’re ready to apply for a mortgage. To get started, research the differences between conventional and unconventional loans and use a mortgage term comparison calculator to get an idea of the cost. When you’re ready to shop for mortgages, use realtor.com®’s Get a Mortgage Quote tool to see current rates and get quotes from lenders in your area.

5. Find Your Dream Home

Sterling says potential home buyers should be “reading and researching as much as they can” as soon as they can. Don’t wait until you’re ready to shop to start looking at homes. Start early by researching neighborhoods in your target city and viewing homes online to get an idea of pricing. Once you’re ready to shop, you’ll have a much better idea of what you want and what you can afford.

Think you might be ready to buy?  Visit the newest addition to our sites, Doorsteps, to explore the home buying process at your own pace. On your own terms.

Get a REALTOR® to Ensure Home Buying Success

Get a REALTOR® to Ensure Home Buying Success

Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price.

But a basic rule in real estate is that all properties are unique. No two properties —even two identical models on the same street — are precisely and exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. Also, no two transactions are alike.

In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local REALTORS® who serve your area.

How Do You Choose a REALTOR®?

In every community you’re likely to find a number of realty brokerages. Because there is heated competition, local REALTORS® must fight hard to succeed in your community.

The best place to find a local REALTOR® is from realtor.com®’s extensive listing of community professionals and properties. Other sources include open houses, local advertising, websites, referrals from other REALTORS®, recommendations from neighbors, and suggestions from lenders, attorneys, financial planners and CPAs. The experiences and recommendations of past clients can be invaluable.

In many cases buyers will interview several REALTORS® before selecting one professional to work with. These interviews represent a good opportunity to consider such issues as training, experience, representation and professional certifications.

What to Expect From a REALTOR®

Once you select a REALTOR® you will want to establish a proper business relationship. You likely know that some REALTORS® represent sellers while others represent buyers. Each REALTOR® will explain the options available, describe how he or she typically works with individuals and provide you with complete agency disclosures (the ins and outs of your relationship with the agent) as required in your state.

Once hired for the job, the REALTOR® will provide you with information detailing current market conditions, financing options and negotiating issues that might apply to a given situation.

Remember: Because market conditions can change and the strategies that apply in one negotiation may be inappropriate in another, this information should not be set in stone. During your time in the marketplace REALTORS® will keep you updated and alert you to each step in the transaction process.

Preparing to Sell Your House

Preparing to Sell Your House

Millions of existing homes are sold each year and, while each transaction is different, every owner wants the same thing — the best possible deal with the least amount of hassle and aggravation.

Home selling has become more complex than it used to be. New seller disclosure statements, longer and more mysterious form agreements, and a range of environmental concerns have all emerged in the past decade.

More importantly, the home selling process has changed. Buyer brokerage — the process in which REALTORS® represent home buyers — is now common nationwide, and good buyer-brokers want the best for their clients.

The result is that, while hundreds of thousands of existing homes may be sold each week, the process is not as easy for sellers as it was five or 10 years ago. Surviving in today’s real estate world requires experience and training in such fields as real estate marketing, financing, negotiating and closing — the very expertise available from local REALTORS®.

Are You Ready? 

The home-selling process typically starts several months before a property is made available for sale. It’s necessary to look at a home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.

Ask yourself: If you were buying this home, what would you want to see? The goal is to show a home that looks good, maximizes space and attracts as many buyers as possible.

While part of the “getting ready” phase relates to repairs, painting and other home improvements, it is also a good time to ask why you really want to sell. Selling a home is an important matter and you should have a good reason to sell — perhaps a job change to a new community or the need for more space. Your reason for selling can impact the negotiating process, so it’s important to discuss your needs and wants in private with the REALTOR® who lists your home.

When Should You Sell?

The marketplace tends to be more active in the summer because parents want to enroll children in classes at the beginning of the school year (usually in August). Summer is also typically when most homes are likely to be available.

Generally speaking, markets tend to have some balance between buyers and sellers year-round. For example, a given community may have fewer buyers in late December, but it’s also likely to have fewer homes available for purchase. As a result, home prices tend to rise or fall due to general patterns of supply and demand, rather than the time of year.

Owners are encouraged to sell when the property is ready for sale, there is a need or desire to sell, and the services of a local REALTOR® have been retained.

How Do You Improve Your Home’s Value?

The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. This means you want to put on the market a home that fits with the neighborhood but is not over-improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and would be more difficult to sell.

Improvements should be made so that the property shows well, reflects community preferences and does not involve capital investments, the cost of which cannot be recovered from the sale.

Cosmetic improvements — paint, wallpaper, landscaping, etc. — help a home show better and often are good investments. Mechanical repairs that ensure all systems and appliances are in good working condition are required to get a top price.

Ideally, you want to be sure your property is competitive with other homes available in the community. REALTORS®, who see numerous homes, can provide suggestions that are consistent with your marketplace.

What Comes After You’ve Bought a Home

What Comes After You’ve Bought a Home

You’ve done it. You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you’re a first-time buyer or a repeat buyer, you’ll want to take several more steps.

Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.

Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing, and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. REALTORS® can provide contact numbers and related information.

About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.

Moving In

It is generally understood that sellers will leave homes “broom clean” when moving out. This expression does not mean “vacuumed” or “spotless.” Broom clean makes sense because it means the house is ready to be painted and cleaned.

Your Home, Your Money

For most owners a home is the largest single asset they hold, so it makes sense to protect that asset.

Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it.

You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.

Lastly, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that home ownership should be a wonderful experience. Enjoy!

How to Navigate the Closing Process

How to Navigate the Closing Process

The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is increasingly computerized and automated. In many cases, buyers and sellers don’t need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.

In practice, closings bring together a variety of parties who are part of the transaction. For example, while the history of property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.

What to Expect

Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.

Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.

What You Need to Do

One of the best parts of settlement is that buyers and sellers need to do very little.

Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not changed materially since the sale agreement was signed.

At the closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records, and state governments collect their transfer taxes.

Set the Sales Price of Your Home

Set the Sales Price of Your Home

Every reasonable owner wants the best possible price and terms for his or her home. Several factors, including market conditions and interest rates, will determine how much you can get for your home. The idea is to get the maximum price and the best terms during the window of time when your home is being marketed.

In other words, home selling is part science, part marketing, part negotiation and part art. Unlike math where 2 + 2 always equals 4, in real estate there is no certain conclusion. All transactions are different and, because of this, you should do as much as possible to prepare your home for sale and engage the REALTOR® you feel is best able to sell your home.

What Is Your Home Worth?

All homes have a price — sometimes more than one. There’s the price owners would like to get, the value buyers would like to offer, and a point of agreement which can result in a sale.

In considering home values, several factors are important:

§  The value of your home relates to local sale prices: The same home, located elsewhere, would likely have a different value.

§  Sale prices are a product of supply and demand: If you live in a community with an expanding job base, a growing population and a limited housing supply, it’s likely that prices will rise. However, it’s important to be realistic. If the local community is losing jobs and people are moving out, then you’ll likely have a buyer’s market.

§  Owner needs can impact sale values: If owner Smith “must” sell quickly, he will have less leverage in the marketplace. Buyers may think that Smith is willing to trade a quick closing for a lower price — and they may be right. If Smith has no incentive to sell quickly, he may have more marketplace strength.

§  Sale prices are not based on what owners “need”: When an owner says, “I must sell for $300,000 because I need $100,000 in cash to buy my next home,” buyers will quickly ask if $300,000 is a reasonable price for the property. If similar homes in the same community are selling for $250,000, the seller will not be successful.

§  Sale prices are NOT the whole deal: Which would you rather have: A sale price of $200,000, or a sale price of $205,000 with an agreement that you will make a “seller contribution” of $5,000 to offset the buyer’s closing costs, pay a $2,000 allowance for roof repairs, fund two mortgage points, re-paint the entire house and leave the washer and dryer?

How Much Is Too Much?

Because all transactions are unique there is flexibility in the marketplace. The amount of flexibility depends on local conditions.

For example, suppose you’re selling a townhouse. Suppose also that there have been five recent sales of the model you own and that sale values have ranged between $200,000 and $210,000. You now have an idea of how your home might be priced. In a strong market you might be able to ask for $210,000 or a little more. If the market has slowed, $210,000 may be a reasonable asking price, but perhaps more than the final sale price.

Here’s another scenario. Imagine that you live in a community of Victorian-style homes, most of which were built in the 1920s. All the homes are different in terms of size, condition, modernization, style and features. In such a neighborhood, an average sale price is just a statistic without much practical meaning. On a single block one home may sell for $400,000 while another is priced at more than $1 million. The average price may be outrageously high for one home and staggeringly low for another.

Who Can Help?

Experienced REALTORS® are active in the local marketplace and can provide assistance with pricing, marketing, negotiation and closing.

Because experienced REALTORS® have handled many transactions, they’re familiar with the terms and conditions that went into individual sales, not just published sale prices which may not reflect various premiums, discounts and adjustments.