All posts for the month February, 2015

Great Real Estate Advice Home Seller Feb 2015

Home Buyers Tip: Here’s A Quick Way To Figure Out – How Much House Can You Afford?

The stock answer given to this question is – if you rent and have cash for a down payment, you can purchase a home. But what if you don’t rent? Then, here’s the simplified version of what a mortgage broker would do with you.

Step One: Annual salary ÷ 12

What is your gross monthly income from all sources? If your annual salary is $75,000, divide this by 12 and you’ll see that your monthly income is $6,250.

Step Two: Monthly salary x percent you want to spend

Brokers and financial planners will recommend that you spend anywhere between 25% and 36% of your monthly income on household expenses. We’re going to use 36%.

$6,250 x .36 = $2,250

Step Three: Calculate your debt

Add up your current monthly debt. This includes things like a car loan, insurance, school loans, credit cards, and any other personal debt you may have. All of this added together gives you your total debt. Just a guess, but let’s say that these add up to $750 a month.

Step Four: Amount you want to spend – total debt

Now, take that total debt and subtract it from the amount that you were willing to spend per month to get your maximum monthly payment: $2,250 – $750 = $1,500

Step Five: Monthly payment x12

Multiply that house payment by 12 months, and you have $18,000 to spend each year.

Step Six: Annual payment ÷ interest rate

Divide this annual amount by the current interest rate (I’m using 10%, because it’s a nice, round number, and a good average). So, $18,000 ÷ .10 leaves you with $180,000 available for a mortgage!

Step 7: Mortgage + down payment

Now, take the amount you’ve calculated that you can afford to pay for a mortgage, add the amount of cash you have on hand to make a down payment, and you get your purchase price!

So, using the current example: The mortgage was $180,000 plus you have $20,000 on hand for a down payment, then you can afford to purchase a home for $200,000.

We’re often asked by our clients, “How much under the listing price should we offer?” This is an excellent question. The answer is difficult. There are four basic ways that sellers price their homes.

1. Ridiculously Overpriced!

These sellers have listened to a real estate consultant over-inflate the value of their home in an effort to obtain the listing. There’s a natural tendency on the part of sellers to list with the real estate consultant who gives them the highest promise. Some real estate agents give the seller a high “value” in an effort to obtain the listing.

These homes can be 10 to 20% overpriced. These sellers may need a “dose of reality” for a few months before they begin to realize that their home is way overpriced as compared to others in the area.

The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price.

2. A Little Overpriced…

Perhaps 75% of all homes for sale are priced in this range.
These sellers fall into two categories:

  • Those who feel their home is worth every penny of their asking price.
  • Those who want to leave a little “negotiating” room. These homes can be four to 10% overpriced.

3. Priced At Fair Market Value…

These sellers have carefully and realistically studied other homes for sale. They’ve priced their homes very competitively. These homes usually sell within four weeks at or very near the listed price.

In an active market, timing is everything.

In the good old days, you might have the luxury of viewing a home several times – even dragging your relatives to see it – before you actually made an offer.

“He/she who hesitates is lost” aptly explains buyers who dally when making a buying decision today.

4. Priced Below Fair Market Value…

These homes are priced below value. Perhaps the seller wants a fast sale.

Perhaps the real estate consultant recommended too low a price.

These homes usually sell within seven to 10 days, at or above the listed price.

There usually are competing offers in this situation, and you may need to make your first offer your best offer.


How To Avoid The Most Expensive Mistakes Smart People Make When They Sell A Home…

Failing to “show-case” their home.

First impressions are the most important. Experience shows that for every $100 in repairs that your home needs, a buyer will deduct $300 to $500 from their offer. Thoroughly clean and prepare your home before you put it on the market if you want top dollar.

Spend a Little Get a Lot

• If you have more than two cars in your driveway, park the extra vehicles at a neighbor’s house. This will give your driveway and yard a spacious look.

• Oil and rust stains can be removed from concrete with commercial driveway cleaners that are available from automotive and home improvement stores.

• The basement needn’t be spotless, but change light bulbs and clear cobwebs before showing the house.

• Change air conditioning and furnace filters so the units will run efficiently.

• If your washer and dryer are in the basement, create a cozy laundry area by adding an area rug and shelves to store detergent bottles.

• Check for termites by using a pocketknife to jab the support beams near the house foundation. If the knife penetrates the wood easily, then there could be a termite problem.

Professor Von Helsing approaches the house with trepidation – the lone light is from the moon and even that scarcely illuminates the entry way. He wonders what horrors are hidden in the shadows…

A potential buyer for Count Dracula’s castle might also question what is tucked in the dark corners and hallways of the eerie abode.

Bram Stoker, the author of Dracula, and old Hollywood horror-movie directors understood the impact proper lighting has on a situation. A multitude of horrible, dirty, dangerous, unsightly, disgusting surprises can be lurking about, waiting for the most opportune time to make their presence known.

But while Von Helsing overcame his fears and entered the castle despite them, potential homebuyers may not make it past the unlit foyer, no matter how attractive it is. If buyers can’t SEE it, they can’t love it. Even worse, they can fear the unseen (and quite possibly insignificant) qualities, and become uneasy in a home that may be just perfect for them.

Lighting can be a relatively inexpensive but effective way to highlight the positive qualities of your home or downplay areas that are less attractive.

The most desirable and inexpensive lighting is natural sunlight. The easiest way to capitalize on this natural resource is to show your home during the daytime when the sun is shining brightly, throwing open blinds or shades, decluttering windowsills, and washing panes to allow light inside. This is also a good time to move Aunt Gerties’s antique walnut wardrobe away from the window. To do its job, light needs to enter a room unhindered.

Unless your window overlooks a neighbor’s collection of rusting cars or a grimy, graffiti-ridden wall of the building next door, it’s good to keep curtains open when showing your home. It makes the room look bigger and more inviting. If the view is less than attractive, hang sheer curtains over the window that will allow some light in while subtly distracting the buyer’s attention from the unsightly scene.

If the house is dark with few or very narrow windows, take heart. A trip to your local home improvement store can lighten things up quickly. Even naturally lit houses can benefit from the addition of appropriate electric lighting.

Begin by slowly walking through your house, taking special care to flip all switches and look at each light fixture and lamp. Are there burnt-out bulbs that need to be replaced? Keep a list of all the size bulbs you need to purchase.

Do shades or domes have dead insects or dust in them? Clean them and see how much brighter the room looks. Are there scratches, dents, dings or tarnish on fixtures? If they can’t be buffed or cleaned, consider replacing them.

If fixtures need to be replaced, consider your target buyer and the style of your house when choosing the replacements. For example, if the architecture and furnishings of your home are traditional, modern-style fixtures of polished gunmetal would look inappropriate. Or if you’re targeting younger buyers, the original circa 1970 pea green mod-style hanging lamp may need to go.

Lighting can minimize a room’s idiosyncrasies, creating optical illusions that make a room seem wider, a ceiling higher or hallway longer. Long, narrow hallways, common in today’s condominiums, can be transformed from wasted space to an art gallery with the addition of track lighting to illuminate artistic treasures. Is there a room that feels like the ceiling and floor are gradually closing in on you? By avoiding hanging fixtures and using those that throw light up a wall, such as floor can lights, one can make ceilings feel higher.

But if your ceiling has cracks or other blemishes, light that flows down to the floor moves the eye in that direction, distracting a potential buyer’s attention away from a negative feature. On the other hand, bowing walls of older houses require lighting that moves straight from floor to ceiling without hitting the wall. Here, the lamps or fixtures must be placed away from the wall and face the ceiling.

Often one can take fixtures already used in the house and move them to more appropriate areas. Life’s little horrors, real or imaginary, tend to disappear when rooms are lit properly.

Have a particularly small room? A mirrored wall will look double the size that it did when it was only painted. If the mirrored wall is across from a window, the natural light will be reflected and the room will seem brighter.

It’s important to remember that it isn’t enough to just have the proper light fixtures. You need to use them. Even during the day, lights should be on in every room of the house, including hallways, closets, bathrooms, on the stove, in the oven and under hanging cabinets. At night, be prepared for an evening buyer drive-by with lamps illuminated in rooms with windows that face the street. After all, folks need to know that Dracula isn’t lurking in the shadows.