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    Sunday
    Feb122012

    Don't let tenants derail your home appraisal

    If you're looking to close a refinancing deal in time to take advantage of a low rate, you're probably doing everything you can to take care of the paperwork quickly.

    But if you're the owner of a multi-family home, you may have neglected to pay attention to another factor that can easily slow the completion of a needed appraisal: your tenants. 

    When appraisers complete an appraisal on a multi-family home, they must have full access. If there are rental units inside, an appraiser must be able to enter them at the time of the appraisal.

    This means the home owner must make sure that the tenants will be available to give the appraiser access or that the homeowner must have a key and permission to enter. If the tenants are at work or will not open the door, the appraisal cannot complete the appraisal. Even if the apartments within a multi-family home are seemingly identical, the appraiser must still go inside of each one. He or she can't just fudge it, based on seeing a single unit.

    The upshot: If you own a multi-family home, do some advance planning to make arrangements for tenants to provide access to the apartment at the time of the appraisal. Waiting until the appraiser has arrived at your house to start phoning the tenants is inconsiderate toward the appraiser--what if no one is home?--and it can push back the completion date of your appraisal. If you have problem tenants who are not cooperative about other matters, make sure to build in some extra time for reaching them and communicating about what the appraiser needs to do.

    Your appraiser probably has appointments booked for tomorrow and the next day, so he or she may not be able to come back on your schedule. If you have to wait a few days for a return visit, that may affect whether you are able to lock in a rate on time. 

    Plan ahead and you'll have an edge. 

     

     

    Saturday
    Jan072012

    What to expect during a real estate appraisal

    If you've never sold a home before, you may wonder exactly what is going to happen when a real estate appraiser comes to your house and if there is anything you should be doing to prepare. 

    Here's a crash course: During a home appraisal, an appraiser will determine the fair market value of your house. This is based on research on the selling prices of homes in your neighborhood and on a visual inspection of your house and property. Depending on the type of financing, an appraiser may test the systems in your house, such as the plumbing.

    When I get to a house to do an appraisal, I inspect every room in the house and draw a floor plan. If there is a door in any room, I'll open it to find out what is behind it. When there is an attic or basement crawl space, I'll look inside. I will take pictures of every room in your house.

    Appraisers must consider many factors during an appraisal. We'll look at the condition of each room, for instance. Are the walls and floors in good shape or badly damaged? Are there signs of problems, like pooled water on a basement floor near the washer or stains on the ceilings indicating there may have been a roof leak? If so, I'll ask the homeowner what caused them. 

    I'll also look at fixtures in your house. Do you have new, high-quality appliances? Do you have new windows? Did you add new fixtures to the bathrooms recently? All of these things can add to the appraised value.

    Appraisers also inspect the outside of the house. They will measure the entire house from the outside, as well as your entire property. They will take pictures of every side of the house.

    Certain exterior factors can affect the value of your home. For instance, a new roof or siding can add to the value. Having a corner lot or a property with a view that many people enjoy -- like the Manhattan skyline -- will also add to its value. On the other hand, a view overlooking something very unsightly may work against you. 

    Is there anything you can do to prepare for an appraiser's visit? I recommend that if there are any problems in the house that will be easily visible that you fix them. For instance, if your roof is leaking, have the leak fixed and re-paint the ceiling. If a pipe is leaking and causing water damage to your floors, call a plumber to repair it and then fix the floor tiles that were warped. Telling the appraiser that you plan to fix them later will not help the value. He or she has to base the appraisal on the condition of the house at the time of the appraisal.

    Besides repairing anything that is obviously broken or damaged, it's a very smart idea to make sure your home is spotless. It will help to create a positive impression on your appraiser, who is evaluating the overall condition of the house.

    Typically, when I do a residential real estate appraisal, it is because a bank has hired me to determine the fair market value. The bank needs this information to make a decision about how much to lend to the home buyer. Banks must follow particular loan-to-value ratios when issuing mortgages.

    It should take your appraiser anywhere from a day to several days to complete an appraisal. Once it is done, your bank will provide you with a copy of the appraisal. It will tell you the fair market value of your house.

    If you've done your homework before pricing your home, the fair market value should be very similar to the selling price.

     

     

     

    Wednesday
    Dec212011

    Help! I can't afford to stage my house

    You've already read that staging your house can help you sell it. But what if you don't have the money to hire a pro--or redecorate? 

    In my experience, there's still plenty you can do. The number one weapon in your sales arsenal: elbow grease. When a potential buyer comes to view your home, it should be immaculate. If you're marketing your property at the same time as a nearly identical one in town, and your home is significantly cleaner, it will make a much better impression on a buyer--one that can be worth thousands when it comes time to make an offer. That may sound obvious, but so many people ignore this rule of thumb that it's worth repeating.

    It's hard to maintain a spotless home, especially if you have young children and lack cleaning help, but it will generally pay off. If you keep your home within two hours of being spotless at all times, you'll be better able to respond to unexpected showings. Your broker may be able to persuade spur of the moment shoppers to come back in a couple of hours, after you've had a chance to tidy up, but may not be able to get them to come back the next day. Remember, you only need one buyer to make a sale, so don't let the ick factor--whether it's sticky floors, a grimy bathtub, or pet odor--derail your deal.

    You've already heard that decluttering is important. Even if you've done so already, make another sweep of your home with a neutral observer, like your broker, to make sure you've done the best you can on this front. It's easy to stop noticing piles of papers, toys, etc. that you've lived with for a while. Even a small amount of clutter-- or an outsized piece of furniture--can make a room look dramatically smaller to a visitor.

    If the current state of the housing market is making you feel powerless, put that energy to good use: Clean your house or declutter. It'll pay off in the end.

    Saturday
    Dec172011

    Home improvements to make (and skip)

    If you're preparing to sell your home, you may wonder which improvements you absolutely need to make to find a buyer in today's market at the best possible price.

    In my experience as a real estate appraiser, a brand new kitchen or bathroom will add to the overall value of your home, as will new, high-quality windows.

    However, it is important to consider whether you will recoup your investment before moving ahead. You may be better off pricing your home lower to reflect the existing condition of your home, especially if you would like to move soon.

    Also weigh the expectations of buyers in your community and think about the properties to which they will be comparing your home.

    If most similar homes around town have high-end kitchens, a home with a utilitarian or dated one may suffer a significant dip in value. However, if you live in a community of modest means, potential buyers may not be expecting new top of the line appliances and granite counter tops, and it therefore may not hurt your home value much if your kitchen isn't a showstopper. In fact, it may not be a good idea to add such expensive improvements, because you will then have to price yourself out of your market to get back your investment. A good broker can guide you on this.

    Broken or damaged systems in your home--such as the plumbing, electrical system or HVAC system--will negatively affect the value in virtually any community. The same holds true for roof leaks. You will generally need to fix such problems or to make a concession in your selling price that reflects the market reaction. A problem like a major roof leak may make it extremely difficult to sell your home at all, and it may require very significant concessions. 

    There are some improvements that are generally not worth it. For instance, some home sellers paint the rooms of their home in designer colors. Doing this may not win points with buyers, because they may not have the same taste. And an appraiser will not appraise your home at a higher value because you invested in pricier sage green paint instead of off-white. Save the money for other improvements that will really make a difference.

    Remember, you're leaving, so your goal should be to spend as little as you can to make your home as appealing and valuable as possible. 

     

     

     

     

     

     

    Sunday
    Dec112011

    Price your home to sell

    Even if you know that home prices have dropped in your market, finding out what your home is worth right now can feel like a kick in the gut. 

    As I learned in selling my own house, the quicker you adopt realistic pricing, the faster your will sell your house. Just when we thought we couldn't take the pain of lowering our price any more, prices dropped further, leaving our home a little over priced for the market. It was only when we swallowed hard and priced it at what our broker said it was worth--and not 5 or 10% higher--that we sold it immediately. (Being a real estate professional doesn't mean you're immune to optimism!)

    What is realistic pricing? A good real estate broker should be able to help you do a study of recent sale prices of comparable properties in your area to guide you. A seasoned broker will also have a sense of what the comparable properties in the neighborhood are. As a layperson, it's easy to talk yourself into thinking that your 30-year-old condo is equivalent to the brand new one that went up across the street, so it is important to get a referral through word of mouth to a broker who will tell it like it is. You might not like what the broker has to say, but if you truly need to sell your home, it is important to listen and act on the broker's advice.

    If you're selling your home without a broker, sites such as Zillow can give you an idea of the going rate for similar homes in your area. Be brutally realistic with yourself about which homes are similar, so you don't set the price so high that your home languishes on the market. 

    "Wait a minute," you may be saying. "I put in granite countertops! The master bathroom is brand new! I spent $2,000 on landscaping and $8,000 on a new furnace last year." Even if you've done amazing things to improve your home, it is unlikely that you will be able to sell it for much more than the most recent sales in its category. If property values in your town have dropped 30% since the recession, then there is little chance that your home was the only one immune to the price decline. 

    Okay, that's the bad part. The good news is that if you price your home attractively out of the starting gate, you'll increase the likelihood of a quick sale. And, if values are still collapsing in your area, you'll improve your chances of selling your property before it is worth less--and free yourself from "house arrest."