Excellent photographs are a must in order to properly market a home; without photos many listings simply get passed up. In addition to photos, a good quality virtual tour will lead a buyer from one room of the home to another, allowing the buyer to visualize themselves living in the home. Print advertising will reach buyers who read the newspaper, and direct mail may reach neighbors surrounding the property who may know of an interested buyer for the home. An open house is a magnet for buyers who are searching in a particular area. Brochures are also an excellent source to attract drive-by buyers who are interested in finding out more information about the home or even setting up a private viewing. Stay tuned for more.
Sellers
Congess Extends and Expands Homebuyer Credit
President Obama is scheduled to sign an economic package passed by Congress this week that will help millions of Americans who have lost jobs and have been unable to rejoin the workforce. It would also extend for seven months an $8,000 tax credit for first-time homebuyers that was enacted as part of the $787 billion stimulus package passed in February 2009 and is set to expire at the end of November 2009. The program would be expanded with a $6,500 credit for homebuyers who have lived in their current residences for five years.
The IRS reports that 1.4 million people applied for the homebuyer’s credit through August 2009. The legislation would extend the program through June 2010, as long as the buyer signs a contract by the end of April 2010. It also offers a $6,500 tax credit to those who have lived in their current residence at least five years.
The measure doubles the income ceiling for eligible individuals to $125,000. Homes must cost less than $800,000 to qualify.
Marketing a home (Part 1)…
Marketing a house does not involve one act, but various measures. It does not only occur online and it certainly involves more than just placing a sign in the front yard and hoping for a sale. One of the first steps in marketing a house is to make sure the house is in presentable condition, which means that the home will be clean and decluttered. Stay tuned for additional marketing tips.
HomeTelos LEO Program Achieves Market Success as Foreclosure Alternative
US-TX, Dallas, October 21, 2009 – HomeTelos Loan Exit Option (LEO) program has demonstrated market success as an effective approach in avoiding foreclosure for borrowers, investors, and mortgage servicers. The LEO pre-foreclosure home sale program is faster and has significantly higher closing success rates than traditional short-selling programs. The HomeTelos LEO system aligns the interests of borrowers, servicers and other interested parties through its unique workflow management system, which qualifies properties for pre-foreclosure sale. When qualified, LEO then facilitates property sales through its dynamic online marketplace that brings motivated sellers & buyers together. Mortgage servicers can better help borrowers avoid foreclosure through HomeTelos’ integrated and streamlined LEO system and processes. Costly, frustrating, and ultimately unsuccessful sales efforts are avoided without heavy staff demands being imposed on servicing operations.
Since LEO’s launch last year, LEO properties upon listing have averaged 37 days on market, 4 offers per property and sales prices that average 96 percent of list price. A key to this success is real-time communication between real estate brokers, servicers and investors, allowing LEO to average only 3 days from buyer’s offer submission to servicer’s acceptance or rejection. According to a Florida borrower, “we were getting nowhere, losing our job then our home. We appreciated the quick action in getting our short sale resolved in this market”. LEO provides loan servicers with assurance that the property is widely marketed, offers represent real market value and that closing issues are resolved in advance. Borrowers avoid foreclosure proceedings, critically damaged credit ratings and the threat of lender recourse for loan payment shortfalls.
According to HomeTelos President Stephen Polley, “LEO’s success is driven by its breakthrough combination of innovative technology and re-engineered workflow processes for achieving the combined critical objectives of servicers, borrowers and other interested parties. LEO provides a way for families under financial stress to have a mortgage option that allows them to relocate with dignity.”
The Loan Exit Option (LEO) system process is patent pending.
About HomeTelos, L.P.: HomeTelos is headquartered in Dallas, Texas and specializes in the development and support of web-based solutions which support the management and marketing of real estate assets, including pre-foreclosures and foreclosures. For more information, visit www.hometelos.com or call (888) 676-9200.
Broad Improvement in Home Prices
According to the Case-Shiller Home price index, published 9-29-2009, there has been Broad Improvement in Home Prices. Data through July 2009 shows that, although still negative, the annual rate of decline of the 10-City and 20-City Composites improved compared to last month’s reading. This marks approximately six months of improved readings in these statistics, beginning in early 2009. F igures continue to support an indication of stabilization in national real estate values. For more information visit the S&P/Case-Shiller Home Price Indices
HomeTelos LEO: On the Cutting Edge of Something Great!
Comment from a Platinum performing agent in Los Angeles, CA: “Nothing is forever in this business and your ability to adapt to the changing marketplace will ensure your survival. I think the move to focus on LEO is a brilliant move. I think your company is on the cutting edge of something great. I don’t see REOs flooding the market. I see a measured pace for REOs especially as the number of workouts and short sales continue to increase. I think the LEO program will be a great success in California. I recognize that it’s a privilege to work with your company.
For Sale By Owner … Are there downsides to this approach?
A “For Sale by Owner” is a homeowner, who decides to sell their property without a real estate professional. There are some downfalls to this approach for a homeowner, which may include limited advertising and lack of knowledge in the real estate field.
A homeowner can advertise in newspapers, online, and host an open house. A real estate professional can offer the same and give your property exposure to their real estate network, in addition to other services. Realtors have access to the Multiple Listing Service also known as MLS. This system allows other realtors throughout the area to pull up properties for sale, in an area their buyer may be interested in looking. This opens up maximum exposure for the homeowner.
Lack of knowledge in the real estate field can cause a home to be over priced in a competitive market. In turn, an overpriced home can sit on the market for months. A real estate professional has expertise in the local real estate market. They are able to provide efficient market analysis to price the home according to the market. This can eliminate costs and unwanted time for the homeowner.
Limited advertising and lack of knowledge in the real estate field are only a few downsides to selling a home without a real estate professional. Hiring a real estate professional can maximize property exposure, reduce unwanted costs, and eliminate unnecessary time on the market.
HomeTelos LEO Program Announcement
HomeTelos LEO launched its pilot program in 4Q 2008. The pilot results have been extremely encouraging. Participating brokers have sold most of the properties assigned at current market prices, while averaging only 29 days on market! Most exciting have been the positive responses we’ve received from homeowners, brokers and title companies who have experienced the successful results of a completed short sale. Here are a few of their comments…
- “The homeowner was cooperative. The property was well maintained, the pricing was in line with my BPO and, the sale occurred quickly…I think this program is great”!!!
- “Overall experience was very good. Communication from the HomeTelos team was great”!
- “The ease in which we were able to get answers from the lender via HomeTelos exceeded my expectations”!
Expansion of the HomeTelos LEO Program is imminent, but for good reason lender resources have been focused on keeping people in their homes over the past few months, delaying the referral of many potential leads. In the meantime HomeTelos plans to add an additional loan servicer and continue expansion of the program in the months ahead.
Working together, we will help families, lenders and our markets achieve better outcomes by avoiding foreclosures. Visit www.hometelos.com for additional information on the HomeTelos LEO Program and pre-approved short sales.
How To Determine The Market Value of a Home, Part 2
In Part I of this article we said the market value of a home, like anything in the market, is determined by what a buyer is willing to pay. Fortunately, in the real estate world there is a standard and proven method for determining “approximately” what that amount might be. This method is called a “Comparative Market Analysis”, also known as a CMA. Understanding the CMA is essential for sellers as they decide what price to list their home and for buyers, as they decide what price to offer.
So,what is a comparative market analysis? Let’s begin with the first word, “comparative”. As you have probably noticed, most neighborhoods or subdivisions are made of a group of homes that are similar in age, construction, style and size. You probably also noticed that each neighborhood is different and unique from another neighborhood and some are more desirable than others. The first step in determining market value is finding and comparing homes that are “similar” to your home if you are a seller, or similar to the home you are considering purchasing, if you are a buyer. From this point forward we will refer to your property as the subject property.
For example, if your subject property is a single story brick home with 1800 square feet, carpet in the living areas and bedrooms and tile floors in the kitchen, Formica counter tops in the kitchen, light fixtures and plumbing fixtures from the original construction in 1995 and the original standard builder fence that is now 14 years old, then you will need to find 3 or 4 homes that have recently sold in that same neighborhood that have those same amenities. You will not want to compare it to a home that has been updated with granite counter tops, all new fixtures, wood floors and a new board-on-board fence. If you do, you will find that the updated home sold for significantly more than the homes that are similar to your subject described above. This is a common mistake many sellers make. They see an updated home in their neighborhood sell for $200,000 and think they can sell their home for the same price when their home is not really “comparable”. In reality, if they looked at homes that have recently sold that are similar to their home with no updates or improvements; they would discover those homes “sold” in the $175,000-$180,000 range instead of the $200,000 range. So, it is very important to compare apples to apples when determining the market value of a property.
Now that you know how to properly compare similar properties, you are ready to look at the actual “market data”, the next word in comparative market analysis. You will need a real estate agent to assist you with this part, as well as, for preparing a Comparative Market Analysis, because they have access to the market data in the area of your subject property. Most communities have a multiple listing service (mls). This is the database system that contains all the properties currently listed for sale with a broker in an area. Many online sites, which post for sale properties, sometimes pull their data from the local mls. Once a property is sold and closed, the listing agent changes the status to sold and enters the sold price in the mls for that particular property. Only real estate agents have access to the mls, therefore, only they have access to the sold data. When a real estate agent prepares a CMA for you, it will usually be divided into four categories:
1. Similar properties that are currently listed for sale. Actives.
2. Similar properties that have recently sold. Solds.
3. Similar properties that have sales pending. Pending or Option Contract
4. Similar properties that have failed to sell. Expired/Withdrawn/Cancelled.
All four categories are important, but the most important category of all is the “Sold” properties. Comparing similar homes that have “sold” will give you an “average price per square foot” of what homes like your subject are selling for. The price per sq. ft. is determined by dividing the sales price by the square footage. For example, if a home was 2500 square feet and it sold for $200,000, then the price per square foot would be $200,000/2500 = $80 per sq.ft. If another similar home sold for $195,000 and was 2400 sq ft, the price per sq ft would be $81. You then take the price per square foot of 3 or 4 similar homes that sold and average them, to get an “average price per square foot.” Once you know the “average price sq/ft”, then multiply that number by the square footage of your subject. This is the approximate market value. One final note, you should only compare properties that are within 300 to 400 square feet of your subject, plus or minus.
Finally, the third word, “analysis.” A real estate agent analyzes the CMA and all the variables to determine what they think is a good estimate of value for the subject property. In their analysis, they consider many things like the number of days on the market, how many properties are currently listed, how many listings have expired and most of all, they make adjustments to the 3 or 4 sold properties chosen to make them like the subject. The analysis part requires the skill of an agent because they know how to make those standard adjustments for amenities, and in addition, they know the local real estate market. This is another good reason to always use a real estate agent when buying or selling a home.
This basic method of valuation is also used by appraisers as they determine the appraised value of a home. If a home does not appraise for the loan amount, then a lender will not lend you the money to purchase a home for more than its “market value”. One final important fact about a comparative market analysis is, it is an opinion of value; it is not an exact science. If you ask three different real estate agents to do a CMA on a subject property, you will get three different opinions. If they are good agents however, the opinions will usually be close in value.
I hope this explanation of market value has been helpful. The CMA gives you an idea of what buyers have been paying in the market, but as I said in Part I of this post, market value is always determined by what a buyer is willing to pay and what a seller is willing to sell for. If you can understand this key element in the valuation process, you will be a much more educated and savvy seller or buyer.
How To Determine The Market Value of a Home, Part 1
We are all aware of the recent decline in home values. In fact, our current economic condition is largely a result of this issue, so determining the correct “market value” of a home is essential to both buyers and sellers. No buyer wants to pay more for a home than it is worth and no seller wants to sell their home for less than it is worth. In addition, lenders also need to determine the market value of a home before they provide the funds to purchase or refinance it. As a former real estate agent, I have seen first-hand how market value is determined and exactly how it works. It can be a wonderful thing for some and a devastating thing for another. If I had to share the truth about how to determine the current market value of a home with a family member, my best friend or anyone that trusts me, I would tell them what I am about to tell you.
First and foremost, the market value of a home – like anything in the market – is determined by what a willing buyer is willing to pay and what a willing seller is willing to sell. If you list your home for $200,000 and all the buyers in the market are only willing to pay $150,000 for it, then you will not be able to sell it for $200,000.
I was in the grocery story one day and the lady in front of me paid $16 for an organic watermelon. I was stunned because I would never pay $16 for a watermelon; unless of course I was starving and the $16 watermelon was the only food item on the shelf, then I would gladly pay that price, or more. The same scenario occurs in the real estate market. Demand determines the price. During the peak real estate market home prices escalated because there were more buyers in the market than homes. Because demand was high, prices were high. Today, demand is at an all-time low, so prices are low. Many have lost their jobs, the economy is uncertain and fewer people are in a position to purchase a home. If you are a seller, this means that the market value of your home is not determined by what you paid, what you owe, what you want or what you need. The value is determined by what a consumer is willing to pay “today”.
If the market value of your home has declined since you purchased it there is a good chance that you owe more on it than you can sell it for, i.e., you are “upside down” on your mortgage. If you need to sell it, then you will either have to come to the closing table with cash to make up for the shortfall, work out a resolution with your lender, or face foreclosure. If you are unable to pay for the shortfall then you could qualify for a “short sale” with your lender. HomeTelos works with various lenders in a new innovative, pre-approved program called the Loan Exit Option program (LEO) in which your lender may approve the sale of your home to a buyer for less than you owe and forgive the shortfall. Read more about this program in my blog post titled HomeTelos LEO – Real Benefits for Homeowners, Agents and Lenders.
In Part 2 of How to Determine the Market Value of a Home, I will share with you how you can determine the actual “value” or “price” you can expect to sell or purchase a home for. This method is known as a comparative market analysis and it uses real market data to determine an approximate “price” or value of a home. If you are a seller, understanding this market data analysis will help you not only know what price to list your home for, but ultimately, how to sell your home at the highest market price in the shortest amount of time. If you are a buyer this same method will help you purchase the best house possible at the best possible price. Until then, check out the additional helpful information on our HomeTelos blog.