Monthly Archives: December 2008

Don’t Hold Your Breath for 4.5% Rates

And here’s why.  There is a new refinance fever hitting the consuming public. Why? Because the record low delivery rates have let to incredibly low home loan rates.  Have you heard about the rumored 4.5% fixed rates that might become available from the gub’mint under a new stimulus program to get the housing market to move again?

If you’re waiting for rates to fall to that level before you refinance, you may be very sorry.

There are several problems in waiting for lower rates. For starters, when home loan rates are at or near record lows ALREADY, it’s unreasonable and possibly irrational to wait until they fall even further.

Secondly, if that program ever DOES come into existence, it will NOT be available for refinance loans. If you’re planning on buying a home, you might get lucky with a reduced rate, subsidized by taxpayers, for a purchase loan.  Then again, a member of a Republican administration floated the program. Change, remember, is coming to Washington in just over 3 weeks.

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Is Your Property Tax Bill Too High?

Cash

Income tax, sales tax, estate tax, excise tax, alternative minimum tax…and just when you thought you’d paid them all…along comes your property tax bill as a homeowner. But did you know that the National Taxpayers Union estimates that as many as 60% of homes are assessed for too high of a value, resulting in an incorrectly larger property tax bill? Chances are good you might be in that group of people paying too much, so taking the time to review your property tax bill could save you a nice chunk of change.

The good news is that it’s easy.

First, contact your local tax assessor’s office and ask for someone in the reassessment area. Find out when appeals are heard, and how the process for submitting a property tax appeal works. Additionally, ask for a copy of your property card. Review the card and confirm that the basic information about your property is correct. For example, is the square footage and number of rooms for your home accurate? If the number is incorrect, the county may change the assessment without a formal appeal. If everything on the property card is correct but the assessed value still seems too high, your next step is to gather the following documentation to support an appeal. And don’t be surprised if the assessed value is lower than what you think the market value for your home is–many counties use a formula which uses a percentage of market value to determine assessed value. Ask what the formula is, because an assessment which is less than market value still might be too high.

If you have a current appraisal that supports the value being lower using recent market-value information, many counties will accept a copy of the appraisal with the appeal. If the appraisal is outdated, you can order a new one–just call me for a referral to a great appraiser. You can also visit the local assessor’s office or search online, and look through the public records for other homes that have similar features to yours, but have lower assessments. Additionally, contact me to get in touch with a great Realtor who knows your area. They will be able to give you current market information for your neighborhood, and help you see how your market value and assessed value stacks up against your neighbors’.

Submitting an appeal is generally a fairly simple process, but make sure to take the time to fill out all forms in advance and be prepared with your documentation if there is an in-person hearing that needs to take place.

More good news – according to the National Taxpayers Union, about 33% of property tax appeals succeed. Taking the time to review the accuracy of a tax bill could easily save you hundreds of dollars per year, adding up to thousands of dollars during the time you own your home.

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5 Signs Your Home is Overpriced

05_bert As a follow on to yesterday’s post on overpriced listings, I came across this very well written Forbes article, which, if you’re selling your home, you should definitely soak it up (and yes, I did “borrow” their picture for yesterday’s post as well.)

Here are the five tell-tale signs:

  1. Your home is priced well above neighboring properties.  The first thing brokers do before they recommend a price to a seller, is they look at the sales prices of the last three sales of comparable-sized homes in your neighborhood.  You can conduct your own research to determine a reasonable price before you hear estimates from brokers.  Do a quick search online to see what neighborhood homes are selling for, and there are some tools that can help determine a roundabout value of your home based on your zip code and other factors.
  2. After a couple months, you still haven’t received an offer. Don’t panic just yet. This isn’t true for all homes, (it’s not uncommon for high-end homes, for example to stay on the market for years) but there should be a flurry of showings and interest in the first 4 to 6 weeks the home is on the market if it’s priced properly.  Although one assumes that overeager buyers are indicative that the price is low, realtors say competitive bids are more likely indicative of a reasonably priced home.
  3. You spoke to several realtors before you hired the one who recommended the highest price for your home.  Realtors seldom want to take a property that is overpriced, simply for the fact that the chances of selling it are slim, and that means their chances of making a commission are greatly reduced. Common sense is that you should speak with several realtors before choosing one to represent you, but if you consistently hear a ballpark price that seems low to you, the price may be right. Realtors are (or should be) intimately familiar with most real estate activities in their market, and they should have the best idea of how a home should be priced.
  4. There aren’t any scheduled showings.  Immediately after the home hits the market, there should be at least a few appointments for showings.  If there aren’t, it might indicated that local brokers think the home is overpriced and therefore aren’t showing it to their clients. Realtors suggest that after a month, if there is very limited interest in the home, it’s not too late to reduce the price, but it’s important to act quick in order to sustain some interest.
  5. The home is priced for expensive, unique amenities that may not hold broad appeal. Your family may have enjoyed endless hours of fun in your indoor badminton court, but not everyone loves badminton as much as your family does.  The more customized the home’s amenities, the less likely the buyeris to see their value in the sales price.

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Open Letter to the Overpriced Listing

Overpriced homes

I like the format of the “open letter” — props to Dave over at New Media Chatter, I’m copping your “style”

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Dear Seller of Overpriced Home for Sale:

It would be a perfect world if you get the exact price (or more) you’re asking for your home. This however, is not a perfect world.

Look, we are NOT in the 2006 market. Or the 2005 market. Or the 2004 market. This is 2008/2009, and things are wildly different than when your neighbor sold their house. Have you been reading the news or not? Sorry, but you need to get over it and move on.

Today’s market (as in all markets) – and especially the pricing strategy – is simply about SUPPLY and DEMAND.

Let’s say your house is listed for $1.5M, and it’s been on the market for 90 days at that price.  Guess what? The only person who thinks it’s worth $1.5M is you. Know why? Here’s an abstract way to look at it:

 

 

So what will you do?

If you don’t want to take less than your listing price, you may be in for a long, long wait. 

If I was your agent, I’d first ask you: “do you want me to tell you what you WANT to hear, or what you NEED to hear?”

If it’s the latter, then I’d say you’re not motivated enough right now, and the best thing you can do is take your home off the market — listings that do not sell usually need price reductions to get them to a marketable range.  Take it off the market for a while, lest it grow stale (which it probably already is at that price), and reassess in a few months. 

If you were motivated enough (read: you absotively NEED to sell), then I’d tell you to price your home correctly and competitively so that you won’t be “chasing the market”

The best way to get your home sold, is  to understand what your “demand” looks like, and PRICE  it so that the demand (the buyers) flock to it.

Supply and demand. Understand it and embrace it, or be stuck with a home that no one wants to see.

  • Say there are 5 homes in your immediate area that are all listed for $1.5M (= the SUPPLY)

  • Now say there are 10 buyers in the market right now who can actually afford a $1.5M home if they can find the “right” house (= the DEMAND)
  • But, if not one of those buyers paid a second glance to your home at that price, then NOBODY thinks they should pay $1.5M for it . Guess what? The DEMAND now equals ZERO.
  • It’s a lonely dance floor when no one wants to dance with you.

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