Top 5 Things Home Sellers Need to Know About Price

May 21, 2017

Every potential buyer will have their own unique situation and a top price they’ll pay for your home. It’s a mistake to assume you’ll stumble into the perfect prospect who will fall in love with the home and pay over market.
Dean Graziosi

Top 5 Things Home Sellers Need to Know About Price

May 19, 2017

Every potential buyer will have their own unique situation and a top price they’ll pay for your home. It’s a mistake to assume you’ll stumble into the perfect prospect who will fall in love with the home and pay over market.
Dean Graziosi

Top 5 Things Home Sellers Need to Know About Price

May 17, 2017

Every potential buyer will have their own unique situation and a top price they’ll pay for your home. It’s a mistake to assume you’ll stumble into the perfect prospect who will fall in love with the home and pay over market.
Dean Graziosi

Buying a Home? Know Hard Costs Going In

April 9, 2017

Surveys of potential home buyers, particularly first time buyers, are telling us that many could use a little more knowledge about two of the largest costs of ownership. Everyone needs a mortgage and insurance is necessary as well.
Dean Graziosi

Buying a Home? Know Hard Costs Going In

December 16, 2016

Surveys of potential home buyers, particularly first time buyers, are telling us that many could use a little more knowledge about two of the largest costs of ownership. Everyone needs a mortgage and insurance is necessary as well.
Dean Graziosi

Buying a Home? Know Hard Costs Going In

June 5, 2015
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Surveys of potential home buyers, particularly first time buyers, are telling us that many could use a little more knowledge about two of the largest costs of ownership. Everyone needs a mortgage and insurance is necessary as well. Your lender will require that insurance premiums be escrowed in advance to be certain that the money is there when they are due. Mortgage interest with a long term fixed rate is at least predictable and stable, but too many new buyers aren’t aware of how their credit rating influences their mortgage rate.

The Mortgage and Credit Scores

Transunion, the credit rating agency, recently announced the results of a survey of potential buyers. The survey of those planning on or considering buying a home in the next 12 to 18 months, found that while nearly 74% believe it’s important to check the accuracy of their credit report, only 45% or fewer correctly understand that their credit score measures:

• The amount of debt that they hold.
• The risk of them not paying back the loan.
• Their financial resources available to pay the mortgage payments.

Many believe that their payment history and on-time payments would be the only or the major factor in whether they get a mortgage or not. Also, too many fail to understand that the risk measurements influence the mortgage interest rate they’ll be offered. Small increases in the rate result in mortgage payment increases that can result in being denied a loan on a home they believe is affordable for them. In fact, only around half could identify the aspects of the home buying process affected by credit scores: interest rate (52%), the amount they can borrow (53%) and their mortgage lending terms (50%).

When it comes to improving credit scores before applying for a mortgage, around a third of consumers surveyed thought that simply increasing their income would have a significant effect on their scores. And, 28% thought that closing old accounts would help a lot. Both of those things do have some influence on scores, but not nearly as much as many consumers believe.

Only around half of survey respondents understood that their credit score directly influenced the amount they can borrow, the interest rate they would be offered, and the terms of the mortgage. Only around a fifth of consumers correctly identified three months as the correct time before applying for a mortgage to check their credit score. Almost a third of respondents believed that one month before was sufficient time.

Insurance Premiums and Deductibles

The majority of consumers understand that raising the deductible on a homeowner insurance policy will reduce their monthly premium. However, far fewer of them understand that deductibles offered vary by state and even in how they’re offered (flat dollar or percentage). Insurance is a must-have, and lenders will require advance payments into escrow to fund premium payments in the future. They will not allow a policy to lapse in order to protect their investment.

Why do deductibles vary by state? The first and most obvious reason is that the terms of insurance are controlled at the state level. They typically average somewhere between $ 250 and $ 5,000 per claim. One study found that raising the deductible from $ 500 to $ 2,000 could reduce policy premiums by as much as 16%. So, many home buyers understandably want to run their deductible up to reduce their monthly outlay.

However, that monthly savings varies a lot by state, with the 16% number being a national average estimate. In some states like Texas, it can result in a savings of only as much as 6%. In North Carolina that increase from $ 500 to $ 2,000 could drop premiums as much as 41%. When lenders are approving mortgages, the cost of insurance factors into the amount they’ll loan on a home based on income and expenses of the borrower.

If you’re about to gear up to buy a home, start planning early for credit evaluation and insurance cost estimates. You want to get prepared and have a firm understanding of what your lender is checking to determine what they will approve for your loan.
Dean Graziosi

Weekly Video Blog #95 – Betcha Didn’t Know Dean Was a Magician!

January 23, 2015
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Weekly Video Blog #95 - Betcha Didn't Know Dean Was a Magician!

Visit http://www.internetlifestyle.com/blog/fun/lessons-and-adventures-from-necker-island-with-sir-richard-branson/ Welcome to Dean’s Weekly Video Blog as we…

http://www.youtube.com/watch?v=AkuFdaa1zp0

Top 5 Things Home Sellers Need to Know About Price

January 15, 2015
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The vast majority of homes sold in the U.S. are sold through local real estate MLS (Multiple Listing Service) systems. The member real estate brokers and agents list their properties and cooperate with other members in the sales through commission sharing. The typical seller will shop for a real estate company and agent, maybe interviewing several.

Every seller has their own priorities for that choice, but the most important common concern should be listing the home at the right price. Here are what I consider the top five things to understand about pricing your home to sell and not sit on the market.

#5 Value is Relative but there’s a Limit

You’re going to have your own ideas about what your home should sell for, but emotion only clouds the picture. It doesn’t matter how much you love your home, or how much money and sweat you’ve invested in it. There isn’t an absolute hard number though, as there are nuances in every market. Every potential buyer will have their own unique situation and a top price they’ll pay for your home. It’s a mistake to assume you’ll stumble into the perfect prospect who will fall in love with the home and pay over market.

There are fast, slow and balanced markets. Sellers can be more aggressive if buyers are competing in a low inventory situation. Your home may also have certain features that are in demand, such as a large open gourmet kitchen. But, if every home in the neighborhood does as well, then you lose the competitive advantage. The point is to work with the listing agent to thoroughly evaluate your home based on more than just what others have sold for recently.

#4 DOM Can Burn You

That’s Days-On-Market. Testing the market with a price higher than a careful valuation tells you it’s worth is risky. Sure, if it’s a healthy market you may get that just-right buyer the first week or so. But, if you don’t, buyers are checking out the number of days your home has been for sale and maybe adjusting their offers downward. Don’t assume that DOM doesn’t matter.

#3 Leave Room for Negotiations

Sure, we all know that it’s unlikely that we’ll get a full price offer right out of the gate. We expect some back-and-forth, and the listing price should have some room built into it for this bargaining process. But, too many sellers forget that there is another bargaining process after inspections. The perfect home doesn’t exist, and home inspections turn up condition issues and repair recommendations.

Minor stuff usually doesn’t result in a new round of negotiating, but buyers can be very demanding, especially if they paid near asking price. If you’ve been aggressive and held the line for a full price or near full price contract, expect some pushback if there are condition problems.

#2 Know How Your Agent Chose the Comparables

Real estate agents do a CMA, Comparative (Competitive) Market Analysis. They choose a number of homes similar to yours that have sold recently and use their selling prices to value your home in the current market. They adjust those sold prices to compensate for differences in the properties, such as number of bedrooms, etc.

Three very important things they consider in choosing those comparables (comps) are similarity to your home, when they sold and location. They should be using very recent sales, try to stay in the same neighborhood, and use homes as close to the same in features and size as yours. Ask your agent the reasons for choosing the comps they did, and how many possible choices there were. It may not be intentional, but in competing for a listing, an agent wants to give you a good list price estimate to get the listing. They can lean toward the comps with the highest sold prices, even if there were more qualified recent sales.

#1 Do it all Again

If your home doesn’t go under contract very quickly, how long is that original list price the right one for the market? It depends on the market, but in all of them homes are being added and sold almost daily. Supply and demand is the driver of prices, and supply can rise or fall quickly. Have a clear understanding with your agent that you want a report of market activity every couple of weeks. If home inventories change a lot, you’ll want to do another CMA.

Another thing that can make a big difference very quickly involves the type of homes and features. Inventory levels can stay pretty steady, but if three bedroom homes flood the market suddenly, yours may need a price adjustment.

Now you’re well-informed about price influences and the process. Keep these in mind for a better relationship with your agent and a smoother sale process.
Dean Graziosi

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