To buy or sell in 2012, what with end of the world coming and all? Minus any ancient Mayan wisdom on real estate theories, let's just hope the real cataclysmic event in the real estate market has already passed, even if the rubble from the bubble remains.
A persistent surplus of households with loans higher than their value will continue to restrain prices and create some major problems for sellers in 2012, a year that's shaping up to be another buyer's market. In fact, recent studies indicate that more than 20% of all residential properties with a mortgage are still underwater, hinting that even more foreclosures are on their way.
Thankfully, even the most conservative forecasts are predicting growth in home sales in 2012. More than 33% of home resales were made to first-time buyers in 2011 – which is another good sign!
While the buyers are having their fun, we can’t forget about the sellers! So here are 12 tips for 2012, aimed mostly at the folks that need the most help -- home sellers.
#1 Price it right from the very beginning! The
traditional strategy of home sellers crossing their arms and holding
out for a better offer will be brushed off by most homebuyers. Consider
that of the homes that took four months or more to sell in the past
year, almost half of their owners accepted less than 90 percent of the
asking price, according to the National Association of Realtors. For a
gauge, have your real estate agent (Lucy and Tony Ray, of course)
produce the latest set of comps including short sales and foreclosures
as well as a recent summary of sales prices compared to original list
prices. But be wary that such information doesn't reflect the homes that
failed to sell.
#2 Put your best footage forward Prep, paint,
stage, scrub, improve, repeat. Easy improvements can make a big
difference, like caulking, plastering, planting flowers, adding potted
plants, making the windows spotless, pressure washing the oil-stained
driveway, edging the walks, trimming the bushes and trees, and mending
the fences. None of these is excessively labor or cost-intensive, but
when combined, they scream "buy me!"
#3 Be flexible We're not saying
bend over backward to accommodate home buyers. Bend forward and
sideways, too. Be ready to negotiate and offer extras such as closing
costs, paid property taxes, remodeling work (or cash for the repairs),
appliances, paid condo association/homeowner association dues, a few
months of mortgage payments or even seller financing.
Home sellers who
have been on the sidelines and who advised their agents to ignore
lowball offers don't have that luxury now. Tell your agent (*ahem* Lucy
and Tony Ray) to listen intently to prospective homebuyers' reservations
about the home and try to make changes accordingly and immediately.
#4 Get over your techno-fears Hire
a listing agent steeped in mobile platforms (like us!). Sellers and
buyers are routinely using Facebook and other social media to sell and
search, not to mention dozens of other online selling sites. Some owners
are even making YouTube videos to showcase their homes, making it
easier and faster to link to potential buyers to sellers. There's also a
ton of smartphone apps popping up to review real estate listings and
#5 Don't fall prey Con artists are targeting
distressed homeowners with "deals" that can sound totally legitimate.
Some offer loan modifications for an upfront fee, and others offer
fee-based "help" in navigating government housing assistance programs,
sometimes even claiming that they are attorneys.
There are also
con-artist "investors" that try to force desperate owners to sign away
their homes with quitclaim deeds in return for a typically empty promise
to remain there indefinitely. Others are telling former owners they can
get their foreclosed homes back for a lump sum.
Be forewarned: Never
sign blank documents or documents with blank lines. If you're unsure
of an offer, have an attorney or other trusted adviser look it over.
Keep in mind that a law barring firms -- except attorneys -- from
charging upfront fees for mortgage relief or mortgage modification took
effect in 2011. It's called the Mortgage Assistance Relief Services
#6 Finance 101 You need to understand that it's harder to
qualify for loans these days. Credit records are under greater scrutiny,
and lenders are often demanding a 20 percent down payment and some
pricing flexibility from the sellers, especially if the lender's
appraisal doesn't reach the asking price.
You should consider cash
offers, even if they're not the highest offers. Reject too-low offers
from homebuyers gently and with encouragement, telling them they're
oh-so-close. You don't want to give away the farm, but you don't want to
give it back to the bank either. These days, meeting halfway usually
means meeting buyers on their side.
#7 Be your own spokesperson Agents
once advised home sellers to retreat from view during showings, afraid
they might disclose something unsavory or otherwise mess up the deal.
That's changed. If you can control your ego and emotions and come off as
an honest, flexible seller, you can serve as your best spokesperson. Be
ready to answer prospective buyers' questions about the neighborhood
and the school district. But be careful about making verbal promises!
#8 Flight to quality Worried
about durability? Buyers who place a heavier focus on brick or
concrete-and-steel housing may find they're longer lasting, safer and
Are you concerned about retaining value? Buy near a
prestigious hospital, university, large government employer or newly
revived central business district. These entities typically aren't going
away, and the demand for good housing around them won't either.
#9 Expand your buying universe There's
still an overabundance of well-priced inventory out on the market,
which means you don’t have to immediately narrow your search to the
first house you like. That's especially the case with short sale homes,
which can be a stuggle to close in a timely manner. There are some
for-sale gems that need only a little polishing.
Shop around. Don't
dismiss foreclosures and other bank properties, pre-foreclosures,
auction homes, for-sale-by-owner or lease-to-own homes. Pick at least
three favorites and work from there.
#10 'Site unseen' equals shortsightedness Are
you confused by the home valuation you did on your home on the website
of a large, seemingly reputable real estate organization? Puzzled how
that valuation can be 25 percent or more above or below a firsthand
appraisal you've had done? Well, value estimates on these sites can vary
widely, sometimes by hundreds of thousands of dollars. Even the
companies themselves admit it. There are way too many variables in the
valuation game to give too much weight to blind, algorithm-based
estimates that are calculated by the computer. Nothing beats a
firsthand, personal, professional appraisal.
#11 Expand your buyer's due diligence Besides
the financial details, contracts, disclosures and protections you
typically tend to as you prep to buy a home, add these to the list: • Hire a title company to check the house for liens and tax arrearages. • Hire you own inspector. Don't use the seller's! • Have the inspector check for unpermitted work such as illegal room additions and garage conversions. • Evaluate the overall energy efficiency of the home with an energy audit. •
Make sure property lines are accurate. If there's any question, hire a
land surveyor to research the original deed and stake out the property
lines and your neighbors' property lines to avoid future conflicts.
#12 Make a quality-of-life due-diligence checklist • Go to the National Sex Offender Public Website at Nsopw.gov to search for neighborhood predators. •
Spend some time around the neighborhood and chat with the neighbors.
Figure out if there are noisy neighbors, signs of gang activity,
nocturnal barking dogs, frequent loud parties and/or suspicious
nighttime visits. Are there lots of rental homes? Is the block a
cut-through point during rush hour? Does the school bus go past the
block? Is the homeowners association restrictive? • Determine what
types of buildings can be constructed on vacant lots close to the
neighborhood. This helps avoid unpleasant future surprises like a
mini-mall behind your backyard. Is there constant noise from a nearby
highway or busy street? Are there odors from nearby industrial plants?