Pricing your home is as much an art as a science - By Todd Harvey

When sitting down with your Realtor’s® to analyze comparable homes and recent sales, It’s tempting to pick the highest price and say, “Let’s list it here.”  
 

As a home seller, the science is choosing the right price at which your home will sell by analyzing your local real estate market conditions. You want the highest price and the buyer wants the lowest price and the sales price will end up somewhere in between. To best determine market value, you have three critical tools: CMAs, appraisals, and using an experienced Realtor’s® knowledge of the market.

A comparative market analysis (CMA) is comparison of similar homes for sale and recently sold homes in your neighborhood. CMAs are composed of data compiled for comparison by your Realtor’s® multiple listing service (MLS.)  Realtors® use CMAs to illustrate the range of homes in the marketplace and the features that make them unique, including age, location, number of bedrooms, baths, room sizes, updates, condition, etc. As a seller, you should be able to see where your home fits – in the top or lower price range of similar homes. Buyers also get CMAs from their practitioners to help them understand the selection in the market, and to prepare them to make an offer on a listing. CMAs are typically used by buyers and sellers before an offer is made.

An appraisal is a market analysis performed by a professional appraiser using a variety of sources, including MLS data and conforming loan formulas. Appraisers most often work for lenders to determine market values, so that lenders can weigh the risk of making a loan to a home buyer. Appraisals come after an offer is made when the buyer applies for a loan.  Even though the buyer pays for the appraisal, the lender uses it to determine whether or not to make the loan at the contract price.  Buyers have one advantage over sellers when it comes to appraisals – their bank has the last word. If the appraisal doesn’t meet the contract price, the bank refuses to make the loan, unless the seller agrees to a new contract price. One can hire an appraiser to help determine at what price a bank will loan a buyer money to buy his or her home.

 It’s your Realtor’s® expertise in the local market that can connect the numbers with other market conditions. Realtors® will help read the market, and help choose the right price, based on current trends analysis and news.  Experience with current customers tells them how buyers are behaving today. Are they paying top dollar or low balling offers?  Their network of contacts provides valuable intel into where other sellers have run into problems. He helps avoid the same issues. For example, how stringent is the current lending environment. Your Realtor® knows his clients motivation, what he needs to get out of the home financially, and under what terms. While it’s her job to help you meet your goals, it’s also the Realtor’s® job to help a client face the realities of the current marketplace. Their job is to help price a home high enough that it sells quickly, without sitting on the market longer than the homeowner can afford. By the same token, his job is to make sure that a home isn’t listed so low that profits are left on the table.   And that’s where the art of the deal comes in – putting all the moving parts of the market together. 

Ultimately, you are the one who will choose your listing price, based on your understanding of all the data.  You can’t list and sell your home for any more than a buyer is willing to pay.  And that makes pricing it right both an art and a science. 

Todd Harvey is an experienced Realtor, Broker and Sales Director at Better Homes & Gardens Real Estate the Masiello Group. The office is comprised of over twenty five professional agents servicing all of your real estate needs and is conveniently located on Route 115 in North Windham.

Don't hesitate to buy a home today! - By Lisa DiBiase

Mortgage rates continue to drop and have reached a 16-month low. If you have been waiting to purchase or refinance, today is a good day to explore your options for a new loan. Rates can change quickly and without notice!

If the home you are thinking about buying is likely to quickly sell, and if you have a way to later cancel the contract, you should immediately make a purchase offer. Don't sleep on it or try to get every single question answered beforehand or you may very well lose the home. Somebody else could beat you to the draw and steal it out from under your nose while you're busy weighing the pros and cons.

When a home seller accepts a purchase offer, the seller is hoping the buyer will complete the transaction at the price agreed upon and believes there is nothing wrong with the condition of the home. The home buyer, on the other hand, is hoping the transaction will close because the home is in perfect condition. However, we know that we are not in a perfect world! No home is perfect and many conditions can change once a contract is signed and accepted.

Pros to making the first offer:

The obvious reason to make a purchase offer right after finding the home you love would be preventing someone else from buying it. When the seller accepts an offer from you, the seller cannot accept any other offer other than a back-up offer to yours.

If your offer is first and the only offer being presented, you will have better leverage negotiating on price and terms. You can make a lower offer. 

Even if other buyers are interested, they will generally pass on looking or making an offer once the seller has already accepted a contract. This helps for renegotiations, if any, after the home inspection.

Cons to making an offer too quick:

If you're undecided between two homes and go under contract with one property, the other property may not be available if you change your mind and cancel the first one.

Return of an earnest money deposit is not automatic. Both parties are required to sign cancellation instructions. 

Buyers can incur upfront fees that are non-refundable, like home inspection, water tests, radon tests, appraisals etc.

As I have said since the beginning, please call a local Realtor for all your real estate needs no matter how big or small. We are trained professionals here to make your life easier. It's best to surround yourself with the right team of professionals that can continuously give you the right advice for all your circumstances.

HARP. Is it for you? - By Rick Yost

If you currently have little to no equity in your home, HARP may be for you. HARP (the Home Affordable Refinance Program) originated in 2009 and has seen changes to allow more home owners to qualify since its inception. The program was put in place for home owners that couldn't refinance their homes at a lower interest rate due to a lack of equity in the homes. In layman’s terms, home owners owed more on their house than the house was worth and banks would not refinance the homes at the historically low interest rates that were available.
 

When HARP first became available, four to five million homes were eligible for the HARP program according to the Federal Housing Finance Agency. Since 2009, HARP has been used to refinance over 3.1 million homes according to HUD data. The FHFA estimate that over 800,000 borrowers are still eligible. If you currently have limited or no equity in you home and your interest rate is five percent or more, you should look into HARP.

To qualify for HARP, you must meet all of the following criteria:

Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae

Your property must be a primary residence, single family second home, or 1-4 unit rental

Your mortgage was sold to Fannie Mae or Freddie Mac before June 1, 2009

Your mortgage must be current with the last six months of payments on time

You cannot have had more than one late payment in the last year.

You cannot have more than 20 percent equity in your home

You can do a little research to find out if you are eligible or not. First check freddiemac.com/lookup/ and knowyouroptions.com/lookup to find out if your mortgage is guaranteed by Fannie Mae or Freddie Mac. Then get out your closing paperwork and look for the date your mortgage started. Next, go to a credit report site and get a free copy of your credit report. Check for late payments over the last six and twelve months. Ask a realtor for an opinion of value on your home and compare it to your mortgage balance.

You will not qualify for HARP if you find that your mortgage isn't listed on one of the lookup web sites, if you have bad credit, if you have too many late payments, if you have more than 20 percent equity in your home, or if you have used HARP before. If you meet the criteria for HARP and have been previously denied a HARP loan, I urge you to shop around and try again. Changing criteria and different lender standards might just change your result. Hal Inman at the Mortgage Network is a great source to use. He is as knowledgable as anyone I have met in the industry.

You can borrow up to 105 percent of the value of your home with an adjustable rate HARP mortgage, and no maximum percent to value of your home with a fixed rate HARP mortgage.

If you have little or no equity in your home and good credit, HARP may be for you. A lower mortgage payment just might be in your future.

Rick is a Realtor, real estate author, and long time Windham resident. You can reach Rick with all of your real estate questions and needs at columnist@TheWindhamEagle.com.

What's smarter - paying off debts or investing? From Edward Jones - Pete Neelon

It probably doesn’t happen as much as you’d like, but from time to time, you have some extra disposable income. When this happens, how should you use the funds? Assuming you have adequate emergency savings — typically, three to six months’ worth of living expenses — should you pay off debts, or fund your IRA or another investment account?

There’s no one “correct” answer — and the priority of these options may change, depending on your financial goals. However, your first step may be to consider what type of debt you’re thinking of paying down with your extra money. For example, if you have a consumer loan that charges a high rate of interest — and you can’t deduct the interest payments from your taxes — you might conclude that it’s a good idea to get rid of this loan as quickly as possible. 

Still, if the loan is relatively small, and the payments aren’t really impinging on your monthly cash flow that much, you might want to consider putting any extra money you have into an investment that has the potential to offer longer-term benefits. For instance, you might decide to fully fund your IRA for the year before tackling minor debts. (In 2014, you can contribute up to $5,500 to a traditional or Roth IRA, or $6,500 if you’re 50 or older.) 

When it comes to making extra mortgage payments, however, the picture is more complicated. In the first place, mortgage interest is typically tax deductible, which makes your loan less “expensive.” Even beyond the issue of deductibility, you may instinctively feel that it’s best to whittle away your mortgage and build as much equity as possible in your home. But is that always a smart move?

Increasing your home equity is a goal of many homeowners — after all, the more equity you have in your home, the more cash you’ll get when you sell it. Yet, if your home’s value rises — which, admittedly, doesn’t always happen — you will still, in effect, be building equity without having to divert funds that could be placed elsewhere, such as in an investment. In this situation, it’s important to weigh your options. Do you want to lower your mortgage debts and possibly save on cumulative interest expenses? 

Or would you be better served to invest that money for potential growth or interest payments? 

Here’s an additional consideration: If you tied up most of your money in home equity, you may well lose some flexibility and liquidity. If you were to fall ill or lose your job, could you get money out of your home if your emergency savings fund fell short? Possibly, in the form of a home equity line of credit or a second mortgage, but if you were not bringing in any income, a bank might not even approve such a loan — no matter how much equity you have in your house. You may more easily be able to sell stocks, bonds or other investment vehicles to gain access to needed cash. 

Getting some extra money once in a while is a nice problem to have. Still, you won’t want to waste the opportunity — so, when choosing to pay down debts or put the money into investments, think carefully.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.