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Tips for Selling Your Home

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With a little preparation and the guidance of a professional real estate agent at Referred Real Estate, you can help make the sale of your home go much more smoothly. Key factors include setting the proper price, effective marketing, and making your home sparkle inside and out.

-Inspect your home and make any necessary repairs or renovations
-Find an agent to represent you
-Tidy the exterior and give your home curb appeal
-Thoroughly clean the interior and get rid of unneeded items

Before putting your house on the market, you have the option to have a seller’s inspection. The inspection can help identify previously unknown problems, as well as give you time to make any necessary repairs or renovations. Likewise, many states require sellers to disclose known problems with their house.
Consider hiring a professional home inspector, as they can often identify problems that are easily overlooked by a novice. Important things to look for include leaks, evidence of wood rot and wood-destroying pests, structural integrity and a thorough assessment of major systems such as the plumbing, electrical, heating and cooling systems.

The right agent can help you set an appropriate price, advertise and show the house to buyers, handle negotiations, draw up offers and coordinate the closing. In short, we can help you sell your home in less time, with less aggravation, and for more money. To find the right agent, you can start by asking family or friends for a recommendation, using an agent that someone you know and trust has had a great experience with is a very good idea. Next, contact the agent and set up a meeting for a listing presentation. This is gives you an opportunity to hear the agent’s plans for selling your property, as well as learn other important factors such as:

-Information about the current market and comparable sales
-Plans for marketing the house, including advertising and open houses
-How long the agent has worked in the community, former clients, etc.
-How much money you’ll net based on different selling prices.

Give Your Home “Curb Appeal”
Even if your home is in good shape, there are probably a few things you can do to make it really sparkle. This is what’s known as “curb appeal,” and experts agree that making a good first impression is a crucial factor in attracting buyers. Improving your home’s curb appeal can be as easy as tidying up the yard, washing windows, touching up exterior paint or even adding a new bed of flowers.

Cleanliness and Clutter
Houses look a lot smaller if they’re crammed full of belongings-and you can’t just hide it in the garage either. Buyers like to imagine storage spaces full of their belongings, not yours. Get rid of clutter, and give the house a top-to-bottom cleaning. In particular, make sure the kitchens and bathrooms are immaculate. Buyers will notice right away if these rooms aren’t spotless.
If you want to go the extra mile, you might even consider “staging” your house for showings. This can be as simple as adding houseplants and some decorative lamps, all the way to hiring an interior designer to bring in elaborate rugs, antique furniture and expensive artworks.

Getting Your House Ready Inside and Out

Exterior
Mow the yard, trim hedges and edge sidewalks and driveways
Wash the windows, and repair screens and shutters
Clean oil spots from the driveway
Pressure wash the outside, or touch up paint if necessary
Keep the entryway attractive

Interior
Remove clutter and dust all surfaces
Touch-up paint scuffs
Thoroughly clean the kitchen and bathrooms
Mop floors, shampoo carpets and clean fireplaces
Organize closets so they appear spacious as possible
Clear out the garage by holding a sale or donating items to charity
Make sure light switches and the doorbell work
Store excessive photographs, trophies or other knick-knacks
Consider adding plants or other items to “stage” your home

Real Estate Investing: The Power of Leverage

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One question we get a lot is “how do I begin investing in real estate? Whether someone is considering a second home, a property to improve and sell, or a property to rent and hold, investors starting out need to understand the power of leverage.

Leverage is the term used when one may not have the cash on hand to buy something outright, so they borrow someone else’s money (usually a bank’s) to finance their investment. Certainly the loan is paid back with interest, but the asset purchased appreciates at the full amount of the investment regardless of what was borrowed.

Let us give you an example. Let’s say a new real estate investor wants to purchase a second home in our area at $200,000. He has 20% to put down, or $40,000. He borrows $160,000 from the bank at 4.5% interest for a 30 year fixed rate loan and he plans to rent out the home for $1,200 per month.

His principle and interest payment is $810 per month. Of course, this does not include property taxes or insurance, which can be estimated at another $233 per month. Additionally, it is smart to estimate repairs at least 1% of the  home value – in this case $2,000 per year.

At first glance, it doesn’t appear that the math works in this property owner’s favor as he is looking at a net loss in this case of $10 per month! And that is assuming that the property does not remain vacant, need major repairs, and he handles the rental himself instead of involving a property management company.

Here is where the value of appreciation and cost of living come into play.  Unless our investor refinances, his payments for the next 30 years will be $810 per month. However, during that time a number of other forces are at work. Rents rise each year. At an approximate 5% increase per year in rent, that $1,200 in income today will equate to $1,540 in five years. We can assume that property taxes and insurance might rise at that same rate, leaving our investor in a slightly better position monthly than his $9 net loss of five years previous.

Estimated Monthly Revenue and Expenses

Let’s take a closer look at the 10 year figures listed above. At a modest 5% appreciation, the property purchased today would be worth $329,402 in 10 years. If our investor decided to sell and walk away from the $453 in net profits per month, he could be looking at gross proceeds of $201,259 (as his loan at this point has been reduced to $128,143). This doesn’t take into account closing costs, but isn’t it amazing how $40,000 can turn into over $200,000 in a relatively short amount of time?

Additionally, savvy investors need to realize there is another perk of owning multiple properties  -interest deduction on taxes. The mortgage interest paid on your home loans is tax deductible depending on how your investments are set up. In the example above, $7,147 is paid in interest on the first year alone which could result in big tax savings!

If you are interested in learning more about how to leverage your next home purchase or real estate investments, please contact us: Jennifer at (509) 947-5670 or Jessica at (509) 947-2230.

Rising Interest Rates and Homeowners – What You Need To Know

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00014474According to Bankrate.com, 30 year mortgage interest rates were at 4.74% week before last from 4.57% the week before) and are up 1.5% since the lows hit in December of 2012. This is also higher than one year ago when mortgage rates were 3.91%.

While this may not seem like a significant increase, it can have an impact on buying power. For example, on a $200,000 loan, the change in interest rates from 3.91% to today’s 4.74% is $98 more per month or $35,280 over the life of the loan.

Interest rates are expected to continue to rise which has caused some buyers who were previously on the fence to get into the buyer pool now to the delight of sellers. If you have been considering selling your current home and moving to something larger, in a better location, or something with higher-quality finishes, this would classify you as a “move-up buyer” and rising interest rates may affect you more than other types of seller/buyers. Here’s why:

First-time homebuyers don’t have a home to sell. Their buying power certainly ties into interest rates, but the financial impact is less when the loan amount is lower. For example, on that $200,000 loan example above, the difference was $98 more per month. However, on a loan of $140,000, that difference is lessened to $68 per month.

Downsizing buyers may be saving per month after downsizing as they may be using the equity in the more-expensive home they are selling to put a larger down payment on the home they are downsizing to. For example, let’s say a retired couple is selling their home they have lived in for 15 years. They will be selling it for $300,000 and have $100,000 in equity in it. They plan on buying a home for $209,000 and they are putting their $100,000 as a down payment, leaving them with a loan amount of only $109,000. The difference between 3.91% and 4.74% for this loan amount is $53 per month.

However, the downsizing buyer still needs to sell their home. As interest rates rise, the number of buyers who can buy their home at that price will shrink. Therefore, downsizing buyers do still need to watch rates.

The move-up buyer needs to keep a close eye on interest rates as they are considering their move. For example, let’s say the move-up buyer has a home they are going to sell for $200,000 and they want to buy a home that is listed for $300,000. In this case they have about $50,000 in equity in the first home. This means they will take out a loan of about $250,000 for their move-up property.

If interest rates go up as in the 3.91% to 4.74% example, this can affect the move-up buyer two-fold. First, the buyer pool for their home they are trying to sell will shrink, making it more difficult for them to sell (although it can be argued that the same thing will happen with the home they wish to purchase) Second, the amount they would need to pay each month for their mortgage will increase (by $122 per month!)

The bottom line? If you are thinking about buying or selling, interest rates will definitely have an impact on the home you can purchase and how many buyers are available to purchase your home if you are trying to sell. Move-up buyers should consider the number of buyers who are in the market right now, wanting to buy, as this could be a great time to sell and find a great deal at a good interest rate. But time is of the essence. Please call us to learn your options and what moving now versus moving later could look like. Please call Jessica at (509) 947-2230 or Jennifer at (509) 947-5670.

All mortgage examples are for a 30 year fixed rate mortgage and payment amounts include principal and interest only. Downpayments, homeowners insurance, property taxes, private mortgage insurance, closing costs, etc have not been factored into these examples.

Making the right move –choose a real estate life transition specialist

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Many homeowners have come to us over the years indicating they are tired of cleaning all the rooms in their house, there are rooms not being utilized, their home just no longer fits their needs, and they are ready to begin a new chapter in their lives.

While some agents may group people who need to make some lifestyle changes as “downsizers”, we believe it is much more than that. It is about finding you the right property which fits seamlessly into your lifestyle, not just a smaller property.

We know there can be a lot of emotions that go along with moving. Excitement of this new period in your life…melancholy over moving out of a cherished home with lots of memories…perhaps even anxiety over making sure all the finances work out so you can do everything your heart is set on in this next chapter.

That is why we have a different approach when it comes to helping you define what the future holds. During our first meeting with a homeowner who is ready for a new lifestyle, we ask a lot of questions to make sure we don’t just understand the housing needs. We want to understand the big picture! Often we have helped people find properties that were not on their radar, but were a great match due to the recreational opportunities that were close by or the easy maintenance which would allow them to be snowbirds every year. Sometimes it takes outside-the-box thinking in order to find that “just right” home.

And when it comes to making choices about what needs to stay and what needs to go in the current home in preparation for the move, we have some good resources for helping with that as well.  We are from a family of builders and designers, and understand implicitly how spaces work, helping you plan as far in advance as you need. I have my SRES (Seniors Real Estate Specialist) designation which I received after additional training which helps me to counsel clients through the financial and lifestyle transitions involved in beginning a new chapter in their lives. I spent the time and money required to earn this designation because helping people transition and begin something new is exciting to me, and I wanted to have more resources at my disposal to help my clients.

And what’s more? Sometimes a buyer will find a home they love, but it just isn’t quite perfect. That is where we excel! Due to our builder connections, we can easily outline a plan that may make the “almost-right” property perfect!

So if your eaglets have fledged and you are thinking about how you want the next chapter in your life to be written, give us a call! You can reach Jessica at (509) 947-2230 or Jennifer at (509) 947-5670. We would love to hear what the future will bring for you!

 “Downsizing was a must for us. We needed to sell our home for something smaller. Jessica was very helpful in the pricing of our home. It sold in three months. She was also helpful in the purchase of our lovely townhome. She worked hard to get the sale and purchase coordinated. We recommend Referred Real Estate to others.”

-Jerry and Shirley Cole

Benton and Franklin County Median Home Price Update

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Nationally, there is a lot of talk recently about the real estate “recovery”. Some areas are seeing double-digit median home price appreciation rates this year over last year. While that is great news for the country as a whole, in those areas that did not see drastic reductions in median home prices, such as ours, what is the status of median home prices?

The graph below charts median home prices in Benton and Franklin County per quarter since quarter 1 2002 provided by the Washington State University College of Business Washington Center for Real Estate Research.

Benton Franklin County Median Home Prices by quarter

As you can see, the Median Home Prices per quarter have risen in the last 10 years from $137,400 in quarter 1, 2002 to $181,400 in quarter 2, 2012. That represents a 32.02% increase in ten years, an 11.22% increase in five years, and a 4.01% increase in the past year.

Between 1995 and 2011, house prices in Benton and Franklin Counties have appreciated at an average of 4.695% per year. How does this compare with the state as a whole? Interestingly, this appreciation has outpaced Washington State appreciation. If you look at the graph below, you will see that the two lines appreciate at a fairly even rate until the mid ‘00s when the statewide appreciation increased dramatically and then came back down. Overall the statewide appreciation rate was 4.001% per year from 1995 through 2011.

Benton Franklin County Median Home Prices vs Washington State

What does this mean for buyers and sellers? Our area remains a strong real estate market, and in order to have an understanding of how what you are hearing in the national and statewide news media affects your real estate investment, you have to look at what is happening locally.

If you have any questions regarding appreciation in your particular area, please call us. You can reach Jennifer at (509) 947-5670 or Jessica at (509) 947-2230 to learn more about what the real estate market is doing in your neck of the woods.

 

 

The Tri-Cities Inventory Update

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The most recent quarterly figures on median home prices and inventory from the National Association of REALTORS® are in.  The National Association of REALTORS® Chief Economist, Lawrence Yun, stated, “Housing inventories have been gradually trending down from a record set in the summer of 2007.” With the gap between the number of homes available and the number of homes sold shrinking, home prices in several areas are beginning to increase. In fact, NAR is predicting a 9% increase in homes sold in the next 12 months and a 15% increase in home prices over the next three year period (cumulative).

Indeed, the housing market as a whole is recovering nicely. But if we have learned anything from recent years, it is that a national trend does not necessarily translate into a local real estate market trend.

How has the inventory shifted in our market since last year? Below are the total number of active listings in our market, comparing September 2011 to 2012 numbers:


  2011 Sept active 2012 Sept activeChange
Total active listings 1306 1430 +9.49%

While inventory in other areas of the country have been declining, inventory in the Tri-Cities has been stable and has increased a bit year over year. However, the additional inventory does not necessarily mean a price slide. In fact, median resale prices have continued to increase 1.9% over the last year, although the number of homes sold has decreased by 1%.

It is also important to remember that when looking at a real estate market, one must also look at demand in specific price points. I have outlined the current inventory (as of 11/12/12) and corresponding price points so you can see how our inventory is spread across these prices. As you can see, the bulk of our market (78%) is under $300,000.

Current Inventory (active property listings)

$0-$150,000………………………. 399

$151,000-$200,000………………. 440

$201,000-$300,000………………. 569

$301,000-$400,000………………. 237

$401,000-$500,000………………. 76

$501,000-700,000………………… 66

$701,000-$900,000………………. 13

$901,000+…………………………… 4

If you have questions on what these figures mean to you, please don’t hesitate to give us a call. You can reach Jennifer Cowgill at (509) 947-5670 or Jessica Johnson at (509) 947-2230.

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