If you are feeling "house rich and cash poor" lately, you are not alone. As the current housing and economic crisis continues to worsen and expand, many homeowners previously unaffected are beginning to feel its effects.  Household income is dropping as more and more jobs are affected, savings are being tapped into and investments portfolios are losing value in the volatile stock market. What was once a comfortable mortgage payment is now becoming a struggle. A potential solution for many of these homeowners may be a residential sale-leaseback where they cash out the equity in their home, typically by selling to a family member or investor, then turn around and lease the home back for a fixed period of time.

Sale-leasebacks are fairly common and have been around for decades. Although primarily utilized in commercial real estate and businesses as an alternative to conventional financing, sale-leasebacks have been getting a second look in the residential markets. A recent article in the Wall Street Journal reports that real estate agents are seeing an increase in sale-leasebacks, in which homeowners sell their home and then rent it back from the new owner. The homeowner frees up cash to help weather the current economic crises, while continuing to live in their home by making lease payments.  The family member or investor looking for investment income has the benefit of a long term lease executed the same day the property is purchased.

The mechanics are fairly straight-forward. The home is sold in the same manner as a typical sale of any other residential real estate. At closing, concurrent with the sale of the home, a mutually agreeable (previously negotiated) Residential Lease is entered into by both parties. The Residential lease terms and conditions are often incorporated into the Purchase Agreement as a pre-condition to closing. Care should be taken, particularly when involving family members, to make sure the transaction will be viewed as being "arms length" where the sale price and lease terms are based on fair market comparisons.

Unlike commercial and business use, where the sale-leaseback deal structure is fairly standard and often utilizes boilerplate agreements, residential sale-leasebacks are often unique to each individual situation and will need to be structured accordingly. For example, if a home's value (particularly in this current housing crises and sometimes irrational housing valuations) has fallen below the balance owned on the related mortgage, the homeowner may not have any "equity" to cash out. After paying off the mortgage with the proceeds from the sale of the home, the previous homeowner may find the monthly "lease payments" as much of a struggle as the previous mortgage payments were. Furthermore, they will likely have lost certain tax benefits formerly available as a "homeowner".

Each sale-leaseback deal structure will be influenced by the projected cash flow and credit strength of the individual homeowner. In some cases, where proceeds from the sale of the home exceed mortgage payoff amounts, the deal might be structured with a higher selling price or lower lease payments in return for a guaranteed minimum "return on investment" (ROI) when taking into account future price appreciation. Caution is advised however, as to the underlying strength of such "guarantees" and in certain situations, funds may be set aside at closing in a separate escrow account as security for future anticipated price appreciation.

The bottom line is that a residential sale-leaseback may be worthwhile to consider for a cash strapped homeowner possibly in danger of defaulting on their loan. The attractiveness to the investor is being able to acquire property at a good price, not having to renovate the property in order to lease it, and not risk having the property sit empty for a period of time while waiting for someone to lease it. It may also be a good investment portfolio diversification during the current volatile stock market.

If you are a homeowner or potential investor that would like to discuss this in further detail, please call or email me. I have an extensive background in mergers and acquisitions and also as a CPA and CFO and would be happy to discuss your situation and assist you in structuring a possible residential sale-leaseback that meets both your needs as well as those of a potential investor.

Larry Hansen

Realty Executives

Ph: (760) 668-2486

Email: Larry@HansenDesertRealty.com

Website: www.DesertAreaGolfHomes.com

 

"Things To Do When Selling a Home, Part 3". (See also "Things To Do When Selling a Home, Part 1 and 2 " previously posted.)

The following post is part 3 in a series of 3 blogs to help guide you step by step through the process of preparing your home for sale to achieve the highest possible sale price in the least amount of time. The last part 3 will focus on the extior and a final room-by-room analysis.

The Exterior

Check your home for any needed maintenance, just as a buyer would. Repaint or touch up as necessary. You can't make a better investment when you are selling your house! Don't let the outside turn buyers off before the inside turns them on.

27.  Color has the power to attract. A tub of geraniums, a pot of petunias, or a basket of impatiens on the front steps is a welcoming touch. 

28.  If you are selling during the winter months, consider using a wreath of dried flowers on the front door, or an attractive milk can on the porch.

29.  If you have a porch or deck, set the stage with pots of flowers and attractively arranged furniture.

30.  Check to see that all doors and windows are in good working order. Give special attention to your home's exterior doors and front entry. Clean and paint doors if necessary. Remember, first impressions are likely to color the remainder of the house tour.

31.  Replace any broken or cracked window panes. 

32.  Screens should be free of any tears or holes. 

33.  Inspect all locks to ensure that they are functioning properly.

34.  Check for loose or missing shingles. Clean out gutters and down spouts. Touch up peeling areas on gutters.

35.  Invest in a new doormat that says "Welcome."

The Yard

36.  Make sure the yard is neatly mowed, raked, and edged.

37.  Prune and shape shrubbery and trees to compliment your house.

38.  Consider adding seasonal flowers along the walks or in the planting areas. Place the plants into a well-placed wheelbarrow or an old-fashioned washtub. Such standbys as nasturtiums, petunias, impatiens, and verbena are easy to maintain if you remember to water them regularly. Try a row of sweet smelling alyssum to line a short sidewalk or some perky dwarf marigolds to form a cheerful oasis of color in your yard.

39.  Add an inch or two of bark mulch around your shrubs and trees.

40.  Set up your old badminton or volleyball net-suggest a scene of family fun!

41.  It is important to devote at least one area of your yard to outdoor living. Buyers will recognize a scene set with picnic table and chairs and they will respond positively to it. Cover your picnic table with a fringed, red-and-white checked cloth, set out some plastic plates and glasses, and bring out the barbecuing equipment. Buyers will almost smell the hot dogs cooking!

The Driveway

42.  The driveway is no place for children's toys. Not only are such things dangerous, the clutter is unsightly. 

43.  The surface of your driveway should be beyond reproach; after all, it's one of the first things a buyer will see when he drives up. Sweep and wash the driveway and walks to remove debris, dirt, and stains. Repair and patch any cracks, edge the sides and pull up any weeds.

Room-by-Room Analysis

The Front Entry

Whether a graciously proportioned center-hall or a small space just large enough for a coat rack and tiny table, this part of your home deserves your particular attention.

44.  Study your entry hall and ask yourself what kind of impression it makes of your home. Dried flowers or a small plant can make a striking focal point on a hall table any time of the year. 

45.  Virtually any entry hall will benefit from a well-placed mirror to enlarge the area.

46.  Your entry hall's flooring will be observed carefully by the prospective buyer. Make sure the surface is spotless and add a small rug to protect the area during showings.

47.  The entry hall closet is the first one inspected. Make it appear roomy. Add a few extra hangers. Hang a bag of cedar chips or a pomander ball to give a pleasant, fresh scent.  Remove all off-season clothing.

Living Areas

Think of these areas as if they were furniture showrooms. Your job is to make each room generate a positive response. Add touches that make a room look truly inviting. 

48.  Sweep and clean the fireplace. Place a few logs on the grate to create an attractive appearance. You are welcome to have a fire going for showings during the winter months It creates a great atmosphere.

49.  Place something colorful on the mantel, but don't make it look like a country craft store.

50.  Improve the traffic flow by removing excess furniture. Have easy traffic flow patterns. Be sure that all doors open fully and easily.

51.  Draw attention to exposed beams or a cathedral ceiling with special lighting. Be sure to remove any cobwebs and dust.

52.  Remove oversized television sets if they dominate the room. If necessary, substitute with a smaller one until you move.

The Dining Room

Avoid going overboard. To be effective, any stage setting that you create should reflect the character of your entire home appropriately.

53.  Set the scene by setting the table with an attractive arrangement. Add fresh or silk flowers as a centerpiece. 

54.  Visually enlarge a small dining area. If your dining table has extra leaves, take one or two out. Consider placing your dining table against a wall. Remove any extra "company" chairs.  Consider putting oversized pieces in storage until your house is sold. 

The Kitchen

Pay particular attention to your kitchen-this room continues to be the "heart of the home." A pleasant, working kitchen is near the top of most buyer's list of priorities and is a room that buyers always scrutinize closely.

55.  Avoid clutter! Clean counters of small appliances and store whenever possible to maximize the appearance of work space. 

56.  Check the counter top around your sink, and remove any detergent or cleanser, etc., that may be cluttering the area.

57.  Sinks, cabinets, appliances, and counter tops should be clean and fresh.

58.  All appliances should be absolutely clean, bright, sparkling, and shiny!!

59.  Clean off the top of the refrigerator! If you must use that space for storage, use baskets and bowls to camouflage the items kept there.

60.  Set the scene with an open cookbook, a basket filled with fruit, a basket of silk flowers, or a ceramic mixing bowl and wire whisk.

61.  Create the aromas associated with happy homes! Bake some cookies from pre-mixed, refrigerated cookie dough, start baking a loaf of refrigerated bread dough, or pop a frozen apple pie in the oven. A delightful kitchen aroma can be created with commercial potpourri preparations or you can mix up a batch from scratch on top of your stove:

Cinnamon Potpourri

1 T grated nutmeg

5 cinnamon sticks

1 tablespoon whole allspice

1/2 tablespoon whole cloves

Add all ingredients to 2 1/2 cups of water in a saucepan. 

Bring to a boil, then lower to simmer.

62.  In the heat of summer, place a bowl of lemons or limes on the counter to provide a fresh and pleasant aroma.

63.  Clean and organize all storage space. If your cabinets, drawers, and closets are crowded and overflowing, buyers assume that your storage space is inadequate. Give away items you don't use, storing seldom-used items elsewhere, and reorganize the shelves. Neat, organized shelves and drawers look larger and more adequate for prospective buyers' needs.

64.  Large, cheerful kitchen windows are an advantage and should be highlighted as a special feature of your home. Take a critical look at the window treatment-is it clean, sharp and up-to-date? Do the curtains need washing or the blinds need cleaning. Would the window area look better without any window treatment?

65.  If you have a counter top eating area, set two attractive place settings with coordinating napkins and placemats, and place cushions on the stools.

66.  Set the table for an informal meal with bright place mats and a generous bowl of fruit as a centerpiece.

Laundry Room

A separate laundry room is a true asset and is one of the most frequent requests that buyers make during a home search. Don't hide this treasure behind closed doors. Spruce up the room and open the door proudly for inspection.

67.  Add a fresh coat of paint or put up cheerful wallpaper.

68.  Organize all closets and storage areas.

69.  Remove all dirty laundry. Keep current with your laundry or store all dirty laundry in a closed container.

70.  Clean and polish the washer and dryer.

71.  Consider adding an attractive, coordinated throw rug.

Stairways

Stairways should provide an attractive transition from one level of your home to another.

72.  Make sure the stairs are safe! Stair lighting should be more than adequate, stairs must be clutter free, stair railings tight and secure, and runners or carpeting tacked securely.  Remove any items from the surface of the stairs and store elsewhere. Check the condition of the walls, and paint or re-wallpaper if necessary.

73.  If the stairs are a focal point of the main living areas, carefully choose accents to improve the visual appeal. If you have a wide, gracious staircase, emphasize this feature by hanging a few pictures along the wall. Draw attention to a handsome lighting fixture by polishing the brass and dusting each small light bulb or crystal prism. Any stair landing should also have an attractive focal point, be it a fern on a plant stand, a dramatic poster, a chiming clock, or a special chair on a large stair landing. If the staircase is narrow, fool the eye by minimizing clutter.

Bedrooms

Imagine for a moment that you're in the "bed-and-breakfast" business. How would you change your home's bedrooms to appeal to a paying lodger? Naturally you'd make up the beds with your prettiest sheets and comforters. Maybe you'd add a vase of flowers on the dressing table or a cozy armchair in the corner. Every bedroom in your home should invite prospective buyers to settle right in.

74.  Large master bedrooms are particularly popular among today's home buyers. Make your bedroom larger. Paint the room a light color, remove one of the bureaus if the room is crowded and minimize clutter to maximize spaciousness. Aim for a restful, subdued "look".

75.  A private bathroom off the master bedroom is a real sales plus. Decorate to coordinate with the color scheme of your bedroom, creating the "suite" effect.

76.  Virtually all buyers are looking for a house with plenty of closet space. Try to make what you have appear generous and well planned. Remove and store all out of season clothing.  Remove any items from the floor area-this will make a closet seem more spacious. Arrange all shelves to maximize the use of space.

77.  Make sure all articles in the closet are fresh and clean smelling. When prospective buyers open your closet door, they should be greeted with a whiff of fresh smelling air.

78.  Make sure all closet lights have adequate wattage and are operating. Add battery operated lights to those closets that lack them. Lighted closets look bigger, are more attractive, and allow buyers to inspect the interiors easily.

79.  Take the time to explain the importance of marketing to your children. Encourage them to participate in preparing your home for showing; particularly the principle of appealing to the widest possible market segment. Ask your children's cooperation in making their beds and picking up their rooms prior to showings. Consider promising a special reward if they willingly participate in your house-selling goals.

80.  Have children pack up any items that are not currently in use and dispose of unused possessions. 

81.  Remove any crowded, unusual, or personal wall hangings (such as posters) and store them until your home is sold.

Bathrooms

Wise sellers take special pains with preparing their bathroom(s) for scrutiny by strangers. The bathroom is a room after all, and a very personal one. Prospects will inspect yours carefully, so be sure it is immaculate. Cleanliness is the key! Make sure that all surfaces are spotless.

82.  Replace worn or dirty shower curtains, clean and repair caulking, and remove non-skid bath surface decals that are in poor condition. 

83.  Clear off counter tops and store all personal care products out of sight.

84.  Repair any faucets that leak or do not function properly. Clean off mineral deposits with vinegar or commercial products. 

85.  Clean and organize all cabinets and drawers. Don't forget the medicine cabinet: dispose of old prescriptions and polish the shelves. The same goes for the storage cabinet under the sink. 

86.  Remember to appeal to a wide range of buyers. Play down dominant colors with contrasting neutral colored towels and accessories. If your bathroom is mostly white or neutral, add a few cheerful accents of color: use towels in the popular new shades. Don't hesitate to buy a few new towels and a rug; you'll be taking them with you to your new home.

87.  Scrub and wax an old floor. Cover the largest area you can with a freshly washed scatter rug.

88.  Decorate and personalize. Create a pleasing, individual look. Consider bringing out your best towels and perfumed guest soaps. Add a plant for color and freshness.

89.  A gentle hint of fragrance in the air is fine, but keep it subtle.

Basement

90.  Clean and organize the basement. Be sure that the stairs are cleared and well lit and that the handrail is secure. Remove and dispose of any items that you will not be taking with you. Pack other items in boxes and arrange them neatly in the center of the room so that basement walls can be inspected. 

91.  Make sure your major systems, such as the furnace and electrical service are operating properly. If appropriate, vacuum out the furnace and install a clean filter.

92.  A dark, damp-smelling basement will have trouble selling. Clean up mildew stains, throw out any upholstered furniture that retains that musty smell, and check the basement walls for high water marks. Many basements are a turnoff simply because they're too dark. Increase the wattage of your existing light bulbs, and if needed, install a few more lights. Be sure, however, to disclose any problems with your basement drainage system. Most states require that adverse defects of material significance be noted as exceptions to the seller's warranties.

93.  As a final touch, take a damp cloth and wipe off any dust and grime from the surface of your water heater and furnace. Apply a coat of wax when you are finished.

Garage

94.  Sweep and wash the floor to remove dirt and stains. Organize tools, garden equipment, bicycles, etc. A clean, organized garage appears larger. 

95.  If the area is dark, add more light. If it is small and accommodates only one car, remove your car before buyers visit. An empty garage always looks larger. If it is a two-car garage with very little extra room, remove one of your cars so that buyers can make their inspection in comfort.

96.  If the basement is appropriate to use as a recreation area, set up your ping pong table (with balls and paddles as props), hang some bright posters, put down an area rug, and you've transformed the place into a teen retreat. Your setting does not need to be complete and shouldn't cost a large amount. It's meant to suggest further possibilities to buyers.

97.  Clear off and organize the workbench in your basement and draw attention to it as a sales feature. Make sure the lighting is excellent and stage the area as a comfortable place in which to work. Add a throw rug as cushioning against the cement flooring.

Attic

Whether a high-ceiling room or a crawl space under the eaves for storage, your attic area will be examined and should not detract from the well-kept appearance of your house. 

98.  If your attic is reached by a steep flight of stairs, be sure the stairs are clear of objects and well lit. If your attic space is reached by a folding set of stairs that you pull from the ceiling, be sure the mechanism is well oiled and there is adequate lighting.

99.  Spruce up your attic space, hide the mousetraps, and install bright lights. If your attic does have windows, be sure to clean off the grime and let in as much light as possible. Clean as needed.

100.  Get rid of anything that you don't plan to move to your new home. Place remaining stored material neatly in boxes and trunks, and then position away from the walls.

101.  If the attic is windowed and can be expanded under the current municipal building codes, be sure to inform your prospective buyers of this potential. Be sure to verify this information first.

Some Final Tips

Showings

•·The more people who see your home, the more likely you are to sell it quickly. Yes, it's an inconvenience to show your home at dinner time, but if the people end up buying, it's worth the effort.

•·Prepare for inevitable, unexpected showings with a family game plan. Work out an effective plan in writing with your family so that everyone knows what to do if you sound the alarm.

•·There shouldn't be any major housecleaning at this point. The kinds of tasks you ought to be concerned with now are simple ones; making the beds, stuffing last night's dirty pans in the dishwasher, picking up loose newspapers, etc. Even young children can participate by cleaning their rooms.

•·If the season is appropriate, open the windows in each room and let in some fresh air. Stale air isn't appealing, particularly in a home with smokers or pets.

•·Keep your thermostat at a comfortable temperature.

•·Turn on all of the lights for every showing before prospective buyers arrive. This also gives you an opportunity to select the lighting effects you want for each room.  Be sure not to overlook areas like your attic and basement where light switches are often difficult to locate.  No area of your home should be dark.

•·Turn off the television and turn on light, background music.

•·Arrange for pets and children to be at a neighbor's. Perhaps it's unfair to lump children with pets, but young children can distract buyers from their purpose. Keep pets away from buyers.

•·Don't try to "sell" the house with words! By this time you have prepared the house for sale so let it sell itself.  Buyers' buy on emotion-theirs, not yours. Keep your emotions under control.

•·Never misrepresent! 

•·Today's consumer protection laws are very specific.

•·Prepare property information

•·Prepare a book of complete information about the property. Include data about the neighborhood, distance to shopping, drive time from the airport, names and ages of the neighborhood children, places of local interest, etc. 

•·Assemble utility expense records, such as total yearly heating costs or monthly budgets, for the buyers' inspection.

•·If you are including any appliances in the sale price of your home, you should keep warranties and instruction booklets in this same file.

•·Have information about the major systems of the house available.

Miscellaneous

Consider hiring a surveyor to mark the boundaries of your property. This will not only show consideration, it will be an effective sales tool. Caution! If you are not exactly sure of the boundary lines, do not attempt to represent their location to the buyer!

Items not included in the sale

Remove (and replace if applicable) any items that will not be included in the sale of the property. Keep in mind that if anything there is anything you really want keep, if it is stored away and not shown, chances are it won't become an issue and negotiating item. You can always bring it back out after the home is shown.

"Things To Do When Selling a Home, Part 2". (See also  "Things To Do When Selling a Home, Part 1" previously posted.)

The following tips will guide you step by step through the process of preparing your home for sale to achieve the highest possible sale price in the least amount of time. Your concentration will be in six areas: repairing, cleaning, neutralizing, space management, atmosphere, and staging.  None of these activities are fun to do, but all are an extremely important part of marketing your home

Repairs

1.  The rule of thumb is, if something needs repair, fix it! There are probably many things in your home that you have simply become used to over time, things that you have been "promising yourself" you will attend to.  Well, now is the time.  The buyer will mentally add up the cost of repairing all those minor flaws and end up with an amount that is generally much higher than what it would cost you to do the repairs. 

You might be saying to yourself, "These repairs aren't any big deal." The buyer, however, is thinking, "If the owners didn't take care of these little items, then what about the roof or the furnace?"

Small needed repairs and perceived owner neglect will either lower the purchase price or lengthen the time required to sell.

2.  Check all walls for peeling paint and loose wallpaper. 

3.  Large repairs. In today's climate of open disclosure and vigilant professional home inspections, the rule is: treat a buyer as you would treat yourself. Repair any problems with major systems or offer an allowance for the buyer to make repairs after closing. Always disclose anything that you know about the property.  Having been a consumer yourself, you know that buyers will more readily make a purchase decision with someone whom they can trust.

Cleaning

4.  Every area of the home must sparkle and shine! Each hour spent will be well worth it. Would you rather buy a clean car or a dirty one? Would you hurry to buy a pair of shoes with mud on them?

5.  Clean all of the windows, including attics and basements.

6.  Clean all wall-to-wall carpeting and area rugs. Clean and polish linoleum, tile, and wooden floors. Consider refinishing wood floors if necessary.

7.  Clean and polish all woodwork if necessary. Pay particular attention to the kitchen and bath cabinets.

8.  Clean and polish all the light fixtures.

Neutralizing

9.  Be cautious about selecting colors when painting or replacing carpeting. Your objective is to make your home appeal to the largest possible buying segment. Ask yourself, "How many of the available buyers would be able to move into my house with their own furniture and not have to replace the carpeting?" Position your home on the market to be as livable to as many people as possible and to allow the buyer to mentally picture the home as theirs.

10.  Forget your personal taste-the market is always demand driven! The average buyer will have a hard time looking beyond blue carpeting and bold wallpapers. Consider replacing unusual or bold colors with neutral tones. Two coats of off-white paint may be the best investment you have ever make.

Space Management

This involves creating the illusion of more space. 

11.  Arrange furniture to give the rooms as spacious a feeling as possible. Consider removing furniture from rooms that are crowded. If necessary, store large furniture. 

12.  Pack up collectibles-both to protect them and to give the room a more spacious feel.  Leave just enough accessories to give the home a personal touch. Dispose of unneeded items. 

13.  Remove all clutter and make it a habit to pick up clothing, shoes, and personal possessions each day for possible showings.

14.  Empty closets of off-season clothing and pack for the move. Organize the closets to demonstrate the most efficient use of space. Leave as few items on the floor or shelves as possible.

15.  Use light to create a sense of space. All drapes should be open. Turn on all of the lights throughout the home.

Atmosphere

When placing yourself in the potential buyer's shoes, you will want to consider the overall atmosphere of your home. Keep in mind your sense of smell as you go through this checklist.  Present the atmosphere of your home as a shelter, a place that is safe, warm, and in good condition.

16.  A clean-smelling house creates a positive image in the buyer's mind. Be aware of any odors from cooking, cigarettes, pets, etc., that may have adverse effects on potential buyers. Remember that some people are much more sensitive to odors than others. Smokers rarely notice the odor of tobacco that fills their homes, and pet owners may be oblivious to objectionable doggy odor. 

17.  You can use products like carpet deodorizers, air fresheners, and room deodorizers; but the best strategy is to remove the source of the smell rather than to cover it up.

18.  Unfortunately, often the only way to remove the smell of pet urine from flooring is to rip up the carpeting, padding, and underlayment, and to replace them. If this is preventing the sale of your home, don't hesitate to make this investment.

19.  If smoking and cooking odors have permeated your home, have your carpets and furniture cleaned, and air out or dry-clean your drapes.

20.  Mildew odors are another no-no. Don't allow wet towels to accumulate in hampers, or dirty laundry to pile up in closets.

21.  Once offensive odors are removed, consider adding delightful ones. Recent studies have shown that humans have strong, positive responses to certain smells. Cinnamon, fresh flowers, breads baking in the oven are all excellent ways to enhance your property for sale.

Staging

This part of preparing your home for sale is the most fun and involves the use of color, lighting, and accessories to emphasize the best features of your home. 

22.  Study magazine ads or furniture showrooms to see how small details can make rooms more attractive and appealing. The effect of a vase of flowers, an open book on the coffee table,  a basket of birch logs by the fireplace, etc., can make the difference in a room. Be careful not to create distractive clutter.

23.  The use of a brightly colored pillow in a wing chair or a throw blanket on a couch can add dimension to a sterile room.

24.  Soften potentially offending views, but always let light into your rooms. Replace heavy curtains with sheer white panels. Never apologize for things you cannot change. The buyer will either decide to accept or reject the property regardless of the words you say. Just present the home in the best way possible with complete honesty.

25.  Go through your photo albums and select pictures of your house and yard during all four seasons. If hung at eye level in a well-lighted area, the pictures will speak for themselves and give you yet another selling edge.

26.  Take advantage of natural light as much as possible by cleaning windows, opening shades and drapes, etc. Add lamps and lighting where necessary. Be sure that all fixtures are clean and have functioning bulbs. Increase the wattage of the bulbs in the basement area.

Of all the things homeowners control when selling their home, the condition of the property is one of the most important.

A crucial part of marketing any product is the presentation of the product. Corporations and retail businesses understand this concept, and they pay millions of dollars each year to advertising and marketing consultants for the best advice possible.  

The same is true of real property. In order to compete effectively with other sellers, homeowners must present their homes to the marketplace in an attractive, desirable condition. When you bought your home, you probably comparison shopped. Well, buyers are still doing that today.  According to the National Association of REALTORS, the average purchaser looks at 18 properties prior to purchasing a home. Regardless of how many properties are on the market, available buyers will always seek the best priced property that is in the best condition.

Think like a buyer!

You are not just selling a house, you are selling shelter, security, a lifestyle, and dreams. People always want the best for themselves and your home should represent the buyer's answer to this goal. Put yourself in the buyer's shoes!  Remember, they arrive at your front door wanting to find the right home. Don't make them search somewhere else for it. If you have done your homework, every room in your home will create a desire for the buyer to stay.

Start making a list!

Walk outside and take a look at the property through the critical eyes of a buyer. Is there anything that needs repairing, looks worn, or is outdated? Start writing these items down on your list.  Walk through the interior, and do the same thing. Ask for the assistance of everyone in your family. After all, a shorter sales time will benefit everybody in the family!

Why did you purchase this property?

You know this home better than anyone else. Think back to when you first walked in this house.  What attracted you to this property? These features should be among the first that you enhance.  Ask your spouse and your children to add their own special positive reactions. Your teenager may remember how she fell in love with your home years ago because of the "climbing" tree in the backyard. Listen carefully to your children's perceptions. Tour every room, the attic, the basement, the garage, and the yard. Note at least one positive feature in each. Include the items that attracted you and those desirable features you have added.

Do everything before you put your home on the market!

In a normal market (which hopefully we will return to in the not to distant future)  the longer a house is on the market, the more likely prospective purchasers are to suspect that something is wrong with the house. Remember back to all the times you have looked at properties during a home search. Chances are that whenever you came across a property that had been on the market for a while, the first thought that went through your mind was, "I wonder what is wrong?  Why isn't this property sold?". Assuming it was not grossly overpriced, it could well be the condition of the home that is turning prospective buyers away as soon as they enter the home. Don't let that happen to you! Complete all of your repairs, improvements, and enhancements prior to your first showing.

Larry Hansen

e-PRO, REALTOR

www.DesertAreaGolfHomes.com

There are 5 factors that affect the sale of your home:

1.  Location

2.  Exposure

3.  Condition

4.  Terms

5.  Pricing

You control 4 of these.  Although location is the one factor you cannot control, the effects of a negative location can be compensated by price. 

Exposure refers to how you choose to present your property to the market, and in particular, the "internet market" which is where most buyers begin their search these days.  

Condition refers to how you get the property ready for sale. How clean is the house? Is everything in good repair? Has the home been maintained properly?

Terms indicates some of the conditions under which you are willing to sell, such as paying part of the buyer's mortgage costs, or including all the kitchen appliances, or the date on which you are willing to give occupancy.

Pricing is a process, not an event.  Many consumers figure out the price they want, and then tell their selling agent what they need to get for the property.  That's backwards.  Set price first, and then put your house on the market.  The law of supply and demand will always work its magic. 

Determining a fair market price is done by considering a number of factors:

One of the most common methods used is called a CMA, or Certified Market Analysis which is basically a report of activity that is based on the law of supply and demand.  The CMA typically takes into account 4 factors:

1. Recent sales

2. Current listings

3. Pending sales

4. Houses that did not sell during the listing period.  

Recent sales represent the prices buyers have actually been willing to pay.  If possible, those sales should be less than 6 months old.  If the market has changed, the use of old data will distort the results.

Current listings represent the prices of homes you will be competing with.  These are the homes that buyers will look at and compare to yours.  I have a question for you: When you bought your home, how did you determine what to pay for it?  If you are like most buyers, you looked at several properties.  And during that process, you became knowledgeable about the supply of homes for sale and the range of values in the area.  Buyers are still comparison shopping today.  The average prospect looks at 18 homes before making a decision. (The law of supply and demand will always work its magic.) 

Pending sales are an important indication of current activity.  Although the selling price of these homes must be held in confidence until the settlement of the transaction, these pending transactions represent listing prices that have attracted offers in today's market.   

Houses that did not sell (expired listings) usually represent homes priced higher than supply and demand would dictate. (The law of supply and demand will always work its magic.) 

A house takes on a reputation surprisingly fast, so you do not wear out your welcome on the market.  You might be thinking to yourself, "Well they could always make an offer."  However, the best prospects may not even see the home, due to other similar homes available at lower prices. (The law of supply and demand will always work its magic).  As a final note on the subject of pricing, if you get an offer right away, it probably doesn't mean you were under priced. More likely, it means you priced competitively.

The good news is, if you are selling a home in a down market, chances are you are buying in a down market, and will achieve a saving on the new purchase. 

Larry Hansen

Have we finally reached the bottom of the housing market? I wish I knew. I can say however, that here in La Quinta CA, buyers are coming out and picking off the cream of the crop. La Quinta may not be typical of the Southern California housing market in general, being largely second homes, retirement homes and vacation homes inside gated golfing communities, however recent activity sure does point to a housing market bottom or near bottom. 

Buyers right now, seem to be mostly interested in the "cream of the crop". They are not necessarily looking for the "best deal" but rather the most "desirable and attractive" home in terms of being totally designer, turn-key furnished right down to the silverware, having the most desirable views (usually being south or west views of the nearby Santa Rosa Mountains), and being in a desireable gated community. While many of the homes selling right now are priced at $1 million - $2 million and up, there has been a lot of recent activity in the $800,000 to $1.1 million dollar range. 

The challenge right now for real estate agents is to weed through the huge inventory of homes for sale, and find the real "gems". This requires a fair amount of upfront work in determining the buyer's price range, criteria and general likes and dislikes and then a lot of in-depth MLS research, prior to meeting with the buyers. However, this upfront work proves to be very productive when the actual property viewing process begins. Buyers are realizing now is the time to start picking of the cream of the crop, however the challenge is to find the cream of the crop for them.

Larry Hansen

 

As REALTORS, we are inundated with industry news and articles on "how to convince a potential home buyer that "now is the time to buy". It has been my experience that home buyers, at least in the La Quinta, CA area, are very much in tune with local market conditions. Many have friends that own homes in the various surrounding golf and gated communities in this area, or they are accessing the Internet to view available listings. In most cases, the last thing they need or want from me, as a Realtor is to give them a sales pitch on why now is the time to buy. They already fully understand the rather unique market conditions that exist right now in terms of low interest rates, low prices and a huge inventory of available homes to select from. What they most often want from me, as a Realtor is to help them narrow down the search (from the huge selection of available homes) to find a home that appeals to them, that is in a gated or golf community that they like, has the right floor-plan and view that appeals to them and is priced to sell in the current market. Fortunately, that is the part of my job as a Realtor that I enjoy the most. It is very gratifying to help a buyer find that perfect home that is also well priced to offer some very good upside potential.

So how is the local market? Well, my most recent listing is currently in escrow after being on the market for only 29 days. It will be awhile before the currently inventory shrinks, but right now, there are sellers that are pricing their homes to sell, and there are buyers taking advantage of the pricing and huge inventory before all the "best" homes are gone. We don't need to "convince buyers to buy" with a well-rehearsed sales pitch, we just need to help them narrow the search down with so many great homes to choose from and help them find the right home. In that respect, it is a great time to be a Realtor!

If you are a homeowner involved in a short sale and your lender has agreed to "forgive" any unpaid balance due on your mortgage, you will be pleased to note that you will not be taxed on the amount of "debt forgiveness" thanks to the new Mortgage Forgiveness Debt Relief Act of 2007 that was signed into law on 12/20/07.  This act amends the Internal Revenue Code to exclude from gross income amounts attributable to a discharge of indebtedness incurred to acquire a principal residence. The act limits to $2 million the excludable amount of such indebtedness, reduces the basis of a principal residence by the amount of discharged indebtedness excluded from gross income and sets forth rules for determining the allowable amount of the exclusion for taxpayers with nonqualifying indebtedness and taxpayers who are insolvent. The act also extends through 2010 the tax deduction for mortgage insurance premiums. For more information or for a copy of the Mortgage Forgiveness Debt Relief Act of 2007, click HERE.

Larry Hansen, Realtor, e-PRO

Realty Executives

Ph: (760) 668-2486

Texting: (760) 668-2486

Email: Larry@HansenDesertRealty.com

Website: http://www.desertareagolfhomes.com/

Welcome to 2008, the year of the turnaround in the housing market. Here's your local situation report:

Local Job Market - is healthy and growing. Unlike past housing downturns, which were accompanied with severe job cuts, the local economy continues to add jobs. Since the peak of the housing market two years ago, 98,000 new jobs (net) have been added. Last year, there were 51,300 new jobs added, an increase of 13.8% vs. 5.0% national average. 

Inflation - is contained. The Consumer Price Index (CPI) is currently around 2.1%. Compare this to a rate of 3.5% in 2000, dropping to around 1% in 2002, and increasing to nearly 4% in late 2006.

Mortgage Rates - near historic lows. Although not (yet) producing buyers due to continuing uncertainly and lack of confidence, this will change as uncertainly lessens, confidence returns and pent up demand is released. The recent subprime mess will "cycle through" and actually be good for the housing market long term as bad mortgage lending practices are eliminated.

Housing Inventory - an area of weakness is the short-term oversupply of existing homes, making this truly a "buyers market". During the market "boom", as speculators entered the market hoping to turn a quick profit, there was a period where "demand exceeded supply", which contributed to "artificially" inflated prices. We are now seeing this turn around as price moderation combined with mortgage and carrying costs is pressuring speculators to "sell into" a declining market. If we "learn" anything at all from this, hopefully it will be that buying a house purely as a short-term investment is risky. On the other hand, buying a home for all the right reasons is still a smart, long term, wealth-building strategy.  Bottom line...if you are a "buyer" in this market, there may never be a better time than right now. Like all "buyers markets", this too will cycle through.  If you have been thinking about "trading up", this is a great time to do that as well.  There is a great selection of homes to choose from and the risk of being exposed to a sudden market downturn (during that time period between buying and selling) is no longer a significant risk.  

Larry Hansen, e-PRO Realtor

Whether you are buying or selling a home, you will more than likely be faced with the age old dilemma of price vs. time. Sellers are typically faced with the need to sell within a certain period of time, or having the luxury of being able to hold out for the best possible price. Buyers are typically faced with the need to buy within a certain period of time or having the luxury of being able to hold out for the lowest possible price (assuming they have not fallen in love with a particular house and don't want to let it slip away). It generally boils down to price vs. time and which is the greatest concern for both parties.

This is just one reason among many, why the "average selling price" of comparable homes may or may not be an accurate indication of fair market value of a home for sale. Other reasons include general market conditions, interest rates, tight credit or money supply and whether home prices are increasing or decreasing at the time. For these reasons, both buyers and sellers need to be somewhat flexible in what they are willing to purchase a home for, or what they are willing to sell a home for.

It would be ideal if we had a "home price guide" that we could go by, however this just isn't the case, particularly in this current market where many buyers are holding out for the market "bottom" and sellers are holding out for a market "turn around". If you are a buyer and find a house you like, and plan to live it in for a few years, make a reasonable offer and buy it. If you are a seller and get a reasonable offer and don't want to sit on the house forever, take the offer. If a counter offer is made for a few dollars more or less, the "offer" is no longer valid and that opportunity for both parties may slip away.   

If a Realtor is assuring you that he or she can get "top dollar" selling your home, be skeptical. The Realtor is not the one selling (or buying) the home, and is not forced to choose between price vs. time (or letting an "opportunity" come and go). Their job is not to advise on what price a seller should hold out for, or what price a buyer should hold out for. Their job is to assist the buyer or seller in making the best decision they can, based on a combination of available market data and the buyer and seller's needs regarding "price vs. time". There is no "Comparative Market Assessment (CMA)" that will accurately determine the right fair market value. The ultimate fair market value is simply that price at which the seller and buyer eventually agree on, given the circumstances involved.