Friday, June 16, 2006

Price Your Home RightTo Help Speed a Sale

By Marshall Loeb From Marketwatch

With home sales slumping and inventories on the rise, experts say getting your home sold depends a lot on pricing it correctly. One tool sellers can fall back on when the market is shifting is a home appraisal.

You can have an appraisal done before you contact a broker or if you're just curious what your home would be worth. They cost, on average, from $250 to $400 for a single-family home, slightly more for multiple-family dwellings.

An appraiser will physically inspect your house for shoddy workmanship or needed repairs, measure its dimensions and takes notes on the floor plan, utilities and other factors that affect pricing.

He or she should also look at three or four "comps" -- comparable homes in your neighborhood that have sold within the past six months -- and analyze how homes currently on the market are faring, says William J. Doka, owner and president of Erickson Appraisal Company in Fair Lawn, NJ.

That's a more comprehensive assessment of market conditions than the free comparative market analysis, or CMA, that a broker will give you, says Doka.

He cautions that brokers want to earn your listing and can be tempted to paint an overly rosy picture of how your home will sell while appraisers, although sometimes subject to similar pressure from mortgage brokers, strive to be objective.

The results of the appraisal will be presented to you in a report that can run from five pages, for a simple summary that suits most lenders and homeowners, to 50 pages or more for a "narrative" that banks might demand before financing the purchase of a multimillion-dollar home.

Homes are typically listed for sale at a price several percent above the appraised value.
Predictably, most of Doka's business comes from lenders, who typically require an outside appraisal before making a loan. But homeowners are also hiring him before contacting a broker. He charges from $350 to $400 to appraise a single-family home.

Some things to remember when looking for an appraiser:

Make sure the appraiser is licensed by your state.

Ask how long the business has been around, what professional education the appraiser has had and what organizations -- like the Appraisal Institute or the American Society of Appraisers -- the appraiser belongs to.
Copyright © 2005 Dow Jones & Company, Inc.

Wednesday, March 22, 2006

5 Simple Kitchen Remodels

Along with getting a great return on your investment, making the space work for your needs is important when considering a kitchen remodel. The most beautiful kitchen will only create stress for a homeowner if it isn't designed properly. Consider these tips for a kitcehn remodel that will simplify your daily routines.

Kitchens
Probably the busiest room in the house, a kitchen can serve a multitude of functions these days: cooking, eating, entertaining, and family gathering place.
1. Remodel by the work triangle. Designers have been using the kitchen work triangle to create efficient kitchens for many decades. The work triangle refers to the arrangement of the three basic work areas: the refrigerator, sink, and stove. You don't want these to be too far apart or you will spend a good deal of time running back and forth. Click this link to read more about work triangles.
2. Consolidate kitchen contents with a pantry. Walk-in pantries have become very popular as they allow a homeowner to quickly take in the kitchen's contents without having to search through the cupboards. If you're tight on space a pull-out pantry can be installed into areas as small as a few inches wide. A kitchen pantry is a great way to keep the kitchen traffic localized to one area, so that you can cook without interruption.
3. Don't waste space. Install cabinets that go all the way up to the ceiling add baskets and shelving inside to maximize storage space. Add a hanging rack for pots and pans to free up some cabinet space.
4. Let appliances do some of the dirty work. A dishwasher with a third rack can cut down on the number of times you have to load that dishwasher. Self-cleaning ovens are everywhere today. If you are in the market for energy efficient appliances, consider a dishwasher or even a refrigerator with the Energy Star rating. Click this link to read more about Energy Star Appliances.
5. Create areas for your kids. A couple of stools at the kitchen counter create an easy, informal place for kids to eat. Also, consider keeping your kids' snacks and beverages on lower shelves where they can easily access them.

Most everyone knows that kitchens have the best return on investment for remodeling projects. However, many homeowners get caught up thinking about granite counters, solid wood cabinets, and hardwood flooring trends and forget to consider how a kitchen lives, its flow, and whether or not it is energy efficient. Don't overlook these simple solutions to when choosing your kitchen remodel.
© Copyright 1999-2006, ServiceMagic, Inc. All Rights Reserved.

Monday, March 20, 2006

Sellers who skip brokers may be losing their edge
Lew Sichelman, United Feature SyndicatePublished March 5, 2006
This is "The Case of the Missing 10 Percent." It's a tale of lost millions, and it stars a cast of thousands--the thousands of owners who sell their houses without professional help.It seems that in their desire to save the 5 to 7 percent fee that agents charge for their services, FSBOs--as in for sale by owners--get 16 percent less than owners of comparable houses who put the transaction into the hands of an experienced agent, according to a survey by the National Association of Realtors.
Colby Sambrotto of ForSaleByOwner.com, an online marketplace where do-it-yourselfers list their properties and pick up valuable tips on going it alone, disputes that figure.
"It just doesn't jibe with our experience," he said."We haven't put together a big study like [NAR's]," Sambrotto conceded. "But we ask all our sellers if they were successful, and 65 percent say they were. And we ask if they sold at or near their selling price, and 85 percent say they do."
But the 1.2 million-member NAR says it has the research to back up its claim. In what it calls the "largest and most authoritative" survey about how people buy and sell houses, a poll of 7,813 recent buyers and sellers through county deed records found that the median price achieved by sellers with agents was $230,000 versus $198,200 for sellers without agents.That's a difference of nearly $32,000, or 16 percent, with no significant differences between the types of homes sold.
NAR isn't alone when it says the desire to save the commission can backfire on sellers. Research by two University of Texas instructors found sellers realize little net gain when they turn to limited-service agents to perform some--but not all--the tasks needed to bring a contract to closing.The study found limited-service listings sold for 1.7 percent less than full-service listings and took 17.1 percent longer to sell.
Additional research may be warranted, said James Ford, a lecturer in the College of Business at the University of Texas at San Antonio, and Ron Rutherford, a professor of finance. But for now, they say, it seems that limited-service brokerage offers "no dollar advantage."Of course, not everyone does worse in the attempt to go it alone. At the top of the market, where even fixer-uppers are selling within hours, it's tough for sellers to make a mistake.
But forget for a moment that NAR's findings might be seen as self-serving. For argument's sake, let's say the Realtors are right, that in the effort to save 6 percent--the reason cited most frequently by what NAR calls "unrepresented sellers" for selling their homes themselves--sellers lose 16 percent.The mystery here is this: If you figure that would-be buyers automatically knock 6 percent off their offers to FSBOs because they know there's at least that much fat in their asking price, where goes the remaining 10 percent?One glaring clue appears to be the inability of FSBOs to market their houses as widely or as professionally as, well, the professionals.
Nearly two-thirds of the unrepresented sellers in the Realtors' study used yard sales to alert would-be buyers that their homes were on the market. And almost half used word-of-mouth. Some also advertised in their newspapers or for-sale-by-owner magazines. A third held open houses, and a small number used direct mail.These are all good tools. But fewer than one in five listed his or her home on the Internet, either with its own Web site or on one such as ForSaleByOwner.com. Yet, the NAR study found that three of four buyers--77 percent--went house hunting on the Web.
So go-it-alone house peddlers are missing a big part of the market.Virtually everyone who uses the Internet to house hunt is in the game, the survey found. They're not tire kickers; they're actively looking for properties for sale. And they want photos, detailed property information, virtual tours, interactive maps and neighborhood information before they make that first phone call or hop in the car.Internet users in the survey visited more houses than nonusers--a median of 11 versus 6, with 1 in 10 touring at least 25 properties before making a decision. And once they jumped behind the wheel, three of four went to see something that caught their attention while online.
Interestingly, the sites used most frequently by home searchers are controlled by brokers. Realtor.com, NAR's official site, was visited most often, followed by the sites operated by local multiple-listing services, real-estate companies and real-estate agents. Of course, to list a property on these sites, a seller must sign up with a broker, a full-service office at full commission or a discount firm that charges a smaller fee.
FSBOs in the NAR survey also said they had more difficulty in completing the necessary paperwork, preparing their homes for the market and setting the price than they did in attracting buyers.It's hard to see how handling the paperwork affects the selling price, but staging the house so prospects see it in its best light and determining the correct asking price can have a profound effect.
Face it, many folks don't know how to make their homes show well. They fail to remove the clutter, for example, or put away all those personal items that distract visitors. Mostly, though, they cannot view their places as the commodities they become once they are on the market. To them, the house is wonderful as it is, so they don't look at it through a buyer's eyes.
If there is a fatal mistake, though, it's probably that FSBOs don't price their properties correctly. Sambrotto contends they tend to price their houses too high. But too high or too low, do-it-yourselfers simply don't have the resources to determine a fair asking price.While there are a number of Internet sites--Sambrotto's is one--with valuation tools to help owners determine what their homes are worth, most agents have the best tool of all--the multiple-listing service.
Agents aren't always right. Indeed, they can misread the market too. But they have a sense of the market that nonprofessionals can't match.
----------
Write to Lew Sichelman c/o Chicago Tribune, Real Estate, 435 N. Michigan Ave., 4th floor, Chicago, IL 60611.
Or e-mail him at realestate@tribune.com. E-mail this story
Copyright © 2006, Chicago Tribune

Monday, January 16, 2006

Housing Market to 'Normalize' in 2006

(January 10, 2006) --
The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, says current trends in the housing sector are healthy.
"We don’t need to break a record every year for the housing market to be good—in fact, cooling sales are necessary for the long-term health of this vital sector,” Lereah says. “A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong.”
After setting a fifth consecutive annual record, projected to be 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006—that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units—the highest since setting a record 1972—with a 6.6 percent slowing to 1.94 million this year.
“A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year,” Lereah says. The 30-year fixed-rate mortgage is likely to increase gradually to 6.7 percent during the second half of the year.
“This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace.”
NAR President Thomas M. Stevens from Vienna, Va., says price appreciation should be at more normal levels across most of the country. “Buyers are no longer competing for a tight supply,” says Stevens, senior vice president of NRT Inc. “That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of home ownership for sellers.”
The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.
Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.
Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year.
The unemployment rate is expected to drop to 4.8 percent by the end of the year.—NAR

Tuesday, January 3, 2006

IBM going condo, too?

Owner mulls residential redo as two major office tenants head for the exits
January 02, 2006
By Alby Gallun
-----
The owner of the landmark IBM Building is considering joining the growing ranks of downtown office buildings that are converting in whole or in part to residential condominiums.

After losing its two largest tenants, and with the office market in a deep slump, landlord Prime Group Realty Trust would likely find it easier to sell condos than lease commercial space in the 52-story tower, one of famed architect Ludwig Mies van der Rohe's most celebrated buildings. The high-rise is 32% vacant after the departure of IBM Corp. Law firm Jenner & Block LLP, which leases 22% of the building, moves out in 2010.

Prime Group would start out by redeveloping vacant space on the lower floors into condos, with the option of converting the rest of the tower later on, say people familiar with the plans. Jeffrey Patterson, CEO of the Chicago real estate investment trust, did not return calls.

APPEALING OPTION
Amid a booming downtown condo market, condo conversions have become an appealing option to office landlords with big chunks of vacant space. After the largest office tenant at 900 N. Michigan Ave., WPP Group PLC, relocated to another building, the landlord, an affiliate of JMB Realty Corp., decided to convert the vacant space into 48 luxury condos (Crain's, March 21). A conversion is also in the works at 55 E. Monroe St., which is losing its second-largest tenant, law firm Seyfarth Shaw LLP.

Yet the IBM Building, on the Chicago River at 330 N. Wabash Ave., would be the most prominent downtown office building to go condo. It's lost some of its cachet as the West Loop, with its proximity to the train stations, has become a more attractive location for office tenants.
"I think it's a challenging location" for office space, says Todd Lippman, an executive vice-president in the Chicago office of broker CB Richard Ellis Inc.
POTENTIAL SELLING POINT
Prime Group plans to spend more than $100 million to renovate the building and remove asbestos, costs that will be difficult to recoup by leasing office space.
Condo buyers would live next door to Donald Trump's new skyscraper, which will block most of the IBM Building's east views but will bring more restaurants and retail and add a health club.

The IBM Building's architecture could be a selling point. "For the people that love Mies, it might have an attraction," says residential broker Tricia Fox.
copyright 2006 by Crain Communications Inc.
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Monday, December 19, 2005

Historically Strong Home Sales Expected in 2006

(December 12, 2005) -- The housing market for 2005 is headed for a fifth consecutive annual record, and sales activity in 2006 is expected to be the second best year in history, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, said that market conditions are still favorable for housing.
“The slowdown amounts to a tapping of the brakes on a hot market,” said Lereah. “Home sales are coming down from the mountain peak, but they will level-out at a high plateau – a plateau that is higher than previous peaks in the housing cycle. This transition to a more normal and balanced market is a good thing.”
The 30-year fixed-rate mortgage should trend up modestly and reach 6.6 percent during the second half of 2006.Existing-home sales, expected to rise 4.7 percent to 7.10 million this year, are likely to decline 3.7 percent in 2006 to 6.84 million. New-home sales, projected to increase 7.0 percent to 1.29 million this year, are forecast to drop 4.8 percent to 1.23 million in 2006 – also the second best on record. Total housing starts for 2005 should grow 5.8 percent to 2.06 million units, the highest since 1972, and then decline 4.8 percent to 1.92 million next year.
NAR President Thomas M. Stevens from Vienna, Va., said that housing has always been the soundest investment for most families.
“As the old saying goes, homeownership beats the heck out of a drawer full of rent receipts,” said Stevens, senior vice president of NRT Inc.
According to the Federal Reserve Survey of Consumer Finances, the median net wealth of a homeowner household is 36 times higher than a renter household. Stevens said that the national median home price has never declined since good recordkeeping began in 1968.
“Although there can always be a temporary decline in a given area if jobs are weak and there is an oversupply of homes on the market, people who stay in their homes for a normal period of homeownership generally see healthy returns over time. There are no guarantees, but there are very good odds.”
The national median existing-home price for all housing types, which is experiencing a surge estimated at 12.7 percent to $208,800 for 2005, is expected to rise another 6.1 percent in 2006 to $221,400. The median new-home price is likely to rise 5.5 percent to $233,100 in 2005, and then grow by 7.3 percent next year to $250,100 as higher construction costs impact the market.The U.S. gross domestic product should grow 3.7 percent for 2005 and 4.1 percent next year. The unemployment rate is expected to decline to 4.9 percent by second quarter of 2006, and then stabilize.The Consumer Price Index is projected to rise 3.4 percent for 2005, and 2.9 percent next year. Inflation-adjusted disposable personal income is forecast to increase 1.4 percent in 2005 and 4.5 percent in 2006.NAR

Monday, December 5, 2005

In the Buyer's Corner...

Five Secrets to a Successful Purchase
By Bob Bruss

If your resolutions for 2006 include buying a house or condominium—whether it will be your first home or a move-up residence—today is a great time to plan for your purchase.

Home mortgage interest rates remain remarkably low and affordable. During this slowest time of the year for home sales in most communities, between Thanksgiving and New Year's Day, this is a great time to start your quest for the near-perfect place to live. Here are five secrets to make your purchase easy and profitable:

1. Before looking at homes, get a written mortgage pre-approval by an actual lender. Contrary to popular myth, the first step to buying a home is not to start inspecting residences that interest you. Instead, your first step to a successful home purchase should be to get pre-approved in writing by an actual mortgage lender. Then you will know the maximum mortgage you can obtain.

But don't be misled. Some mortgage brokers advertise "mortgage pre-qualification." That means absolutely nothing.

Worthless pre-qualification means only "based on your information, which we have not verified, it appears you can obtain a home mortgage."

Instead, smart home buyers get a written mortgage pre-approval letter or certificate from an actual mortgage lender, such as a bank or mortgage banker. Mortgage brokers can obtain these pre-approvals after taking your loan application and checking the details, such as verifying your employment and credit report.

With a lender's written mortgage pre-approval letter or certificate, you will be in a strong position to shop for a home and make a purchase offer, confident your mortgage lender has already approved your loan, contingent on a satisfactory appraisal of the home you decide to buy.

2. Take your time buying a home. A special advantage of buying a home during this slow time of the year for home sales, which extends even until Super Bowl Sunday in many towns, is there are usually few other home-buyer competitors.

Buying your home is a major decision so take your time. Don't be rushed.

A good place to start, as do 71 percent of today's home buyers according to a recent survey by the National Association of Realtors, is on the Internet. The most frequently visited Web site for home buyers is http://g.msn.com/2HA/1?http://www.realtor.com. Savvy real estate agents also have their own Web sites that provide access to local MLS (Multiple Listing Service) listings

Home buyers who are in a hurry often make costly mistakes. The prime example is an out-of-town buyer whose job transfer requires a quick home purchase. These buyers frequently make hasty bad decisions.

Examples of expensive home purchase errors include buying a home in a poor-quality school district, failure to check the local crime rates, locating in a neighborhood with heavy traffic noise or other drawback such as an adjacent railroad, flood area location, inadequate nearby shopping, and long commute time to employment areas.

Equally important, home purchasers who think they have located the "perfect home" should always make purchase offers contingent on their approval of a professional home inspection report. Buyers should always accompany their inspectors to discuss any defects that the seller didn't reveal in his/her written defect disclose report.

3. Always work with a buyer's agent. Every home buyer needs his/her own buyer's agent to look out for the buyer's best interests. But finding a top-quality buyer's agent isn't easy.

Ask friends and business associates for their recommendations of buyer's agents. But beware of any buyer's agent who asks you to sign a buyer's agency contract over 30 days.

A better alternative is to sign a 30-day buyer's agency contract with an understanding you will extend it if the agent hasn't found you a home to buy within 30 days but is doing a good job. The result is you then won't be tied up with a lazy agent.

4. Inquire why the home seller is selling. Home buyers who don't want to overpay can't ask too many questions. A key question to ask your buyer's agent is "Why is the seller selling?"

Your buyer's agent might not know the answer, but he or she can easily find out by asking the listing agent. The answer is very important to you.

For example, if you learn the seller is retiring to another area, if the home is free and clear with no mortgage, that house or condo might be a perfect candidate for easy bargain-interest rate seller financing to provide retirement income for the seller.

Or, if you learn there is a pending foreclosure, you must be able to get the sale closed fast. But you might be able to get a bargain price to give the defaulting seller some equity cash from the sale

A related question to ask your buyer's agent is "How much did the seller pay for this home and when was it purchased?" If you learn the home was purchased many years ago at a price far less than today's market value, then you know the seller has lots of room to negotiate on the sales price and the terms. But a home purchased within the last year or two probably won't have as much negotiation room.

5. Ask your buyer's agent to prepare a comparative market analysis (CMA) before you make your purchase offer. No matter how anxious you might be to buy a specific home, before making a purchase offer insist your buyer's agent prepare a written CMA to help you arrive at a realistic purchase offer.
The CMA form shows recent sales prices of comparable nearby homes, the asking prices of similar neighborhood homes, and the asking prices of recently expired listings, which were comparable but didn't sell. Based on this information, you can then add or subtract value for the pros and cons of the properties to arrive at a reasonable market value purchase offer price.

You can be sure your buyer's agent will use the CMA to justify your purchase offer to the seller and the listing agent. Of course, you might not want to offer the full market value justified by the CMA, but that's up to you. Negotiation is half the fun of buying a home.

Even if you can't reach agreement on a sales price and terms, always keep the door open to future negotiations. Several times I've had my home purchase offers rejected, only to be later accepted several weeks later after the sellers realized my latest offer was pretty good after all.

Summary: This "slow time" of the year for home sales can be a great time to buy a home if you have a plan and know what you are doing. First, get pre-approval in writing by an actual mortgage lender. Next, be aware time is on your side during this "slow season" when there is little buyer competition in most communities.

Before making a purchase offer, always ask why the seller is selling and what the seller's purchase price was. This valuable information can greatly aid your negotiations

The help of a buyer's agent usually doesn't add to your home purchase cost but the agent's services can be invaluable, especially when it comes to preparing the buyer's CMA and negotiating the sale price and terms.
© 2005 Microsoft