Archive for Austin Texas Home Sellers

Low Inventories Indicate a Trend

Low inventory is a relative term depending on how you’re comparing it.  Would the comparison be to total number of homes on the market last year, homes in a certain price range or homes in a certain area?  In some situations, it’s a combination of all of those things.

In any given market, inventories will fluctuate based on area and price range.  The National Association of REALTORS® considers a balanced market to be six months’ supply of homes.  If it takes longer than six months to sell, it is thought to be a buyer’s market and less than six months, a seller’s market.  Most buyers and sellers probably feel inventory equilibrium is more like three month’s supply of homes.

Inventory has a direct impact on price.  During the housing bubble, demand decreased, supply ballooned to four million houses and prices dropped dramatically.  Increased inventories due to foreclosures, bank’ revised lending practices and builder’s lack of new housing starts each contributed to the dramatically lower prices.

As the market has recovered, economic conditions have improved, banks have loosened their requirements, interest rates have remained low, foreclosures have slowed and gradually, the inventory has been reduced to approximately two million houses.  When demand is constant but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller than normal number of homes.

Based on the low mortgage rates that have been inching up each week in 2013 and an improving consumer confidence level, most markets are experiencing some increase in demand.  With inventory decreasing, buyers in the marketplace can see that prices are increasing.

Just as signs of spring can be seen to be just around the corner, it should be recognized what direction prices will be moving.  Hindsight is 20/20 but we can’t purchase or sell in the past.  We need to make decisions today on what we think will happen in the future.

If you’re curious to know what inventory conditions are for your specific market, send me an email with the price range and area and I’ll send you a report.  Vivian@VivianDaywood.com

Sell Sooner and for More Money? – More Likely If It Shows Better!

If it shows better, it will probably sell faster and maybe for more money. Once your home is on the market, it’s time to look at it like a commodity and through the eyes of potential buyers. In all likelihood, you’ll need to take care of these items eventually, so do them now to help it sell sooner.

  1. Make repairs – it doesn’t matter if it’s been that way since you bought it. You need to fix it so that the buyer doesn’t think that the rest of the house is about to fall apart.
  2. Not too personal – you may have bought your home to express yourself but if the buyer can’t see themselves in the home for all of your things, it’s going to take longer to sell than you want.
  3. Drive-up appeal – the old saying “you never get a second chance at a first impression” applies to your home too. They may never even get out of the car to come inside.
  4. The nose knows – it may not smell like home but it shouldn’t smell like a place they would never consider living.
  5. Neutral colors, decor, etc. – these are not decorating tips you’ll see in magazines but the truth is that bold colors and designs are difficult for most people to see beyond. They’ll imagine their things better in neutral surroundings.
  6. Less looks like more – removing some of the non-essential things from your home will eliminate clutter and make the home feel larger. The same suggestion applies to cabinets and closets.
A confused mind will not make a decision. Identify and eliminate items that could derail a potential sale. The preparation you make in the beginning will help the presentation to your buyers.

Unexpected Home Repairs – Avoiding Them!

It’s common for sellers to consider offering and buyers might find it an incentive, but a growing number of homeowners are purchasing the home warranties themselves to limit the unexpected expenses of repairs and replacements.

A home protection plan is a renewable service contract that covers the repair or replacement of many of the components in a home. Some homeowners especially like the convenience that it organizes a qualified service provider as well as the cost of the items.

There are a variety of companies that offer home warranties and the coverage may differ but the majority of things will include heating, air conditioning most built-in and some free-standing appliances, as well as other specific items. Additional specific coverage may be available for other things like pool and spa equipment.

Some investors are even placing this coverage on their rental properties to limit the amount of maintenance repairs during the year. It is a viable alternative to managing the financial risk and the stress dealing with unexpected expenses.

If you’re interested in home warranties, I’ll be happy to send you more information.

Water Damage – Covered or Not?

A number of things can cause water damage to a home and it’s important to know whether they’re covered by your insurance policy. Some water damage may be covered and other may not be. Generally, you need an incident to invoke coverage rather than something gradual due to lack of maintenance.

However, some incidents are specifically exempt from homeowner policies such as floods. A flood can be described as rising water due to overflow of inland or tidal waters or unusual and rapid accumulation or runoff of surface water from any source.

Homes in designated high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance.

Even if you don’t live in a dedicated flood zone, you could be affected by flood damage. Review your policy about water damage and call your insurance agent to get a better understanding. Ask if you need to purchase additional coverage or separate flood insurance along with other questions.

Flood insurance can be purchased for the building and the contents. The average flood insurance policy costs about $600 per year. For more information, see the National Flood Insurance Program.

Which Value Do You Use?

What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.

Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by the comparable market analysis done by real estate professionals.

Insured value is determined for the proper insurance coverage. Replacement cost could actually exceed the cost of new construction when additional expenses are incurred for demolition and the added complexities of matching existing construction.

Homeowners are generally more familiar with their home’s market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agents periodically. Under-insuring could invoke a co-insurance clause that may limit the settlement and increase your out of pocket expenses.

In search of an honest man

Similar to Diogenes’ search for an honest man, homeowners want someone to do quality repairs at a fair price.  The task appears reasonably easy but if you’ve ever tried to locate someone to fix something, you know just how difficult it is.

Finding a list of companies from a phone book doesn’t mean they’ll be reasonable and reliable, it just means they have a phone and are willing to pay for an ad.  Searching on the Internet may direct you to a website that appears to be a local company but really is a marketing company who will sell the lead to a repairman or company who will pay a referral fee.

There are consumer organizations like Angie’s list who rate repairmen and contractors but they usually require an annual membership fee to be able to access the information.  There are also services like Renovation Experts or Service Magic that are registries for contractors but they may not be the most competitively priced.  

Your best recommendations are going to come from friends, family and neighbors you trust who have actually used the repairmen before and would use them again.  The problem here is that you might have to make multiple calls before you can find a friend who can recommend the type contractor you need.

Repairs are a normal part of selling homes and we certainly come in contact with lots of contractors.  This experience leads us to understand who is reputable and reasonable as well as who to avoid.  As part of our commitment to helping you be a better homeowner from the time you buy your home until you sell it, we’re more than happy to make a recommendation of good repairmen or other professionals you might need.  Give us a call…we want to help.

Keep Track of Your Home Improvements

Keep Track of Improvements

People are staying longer in their homes according to the National Association of Realtors and the U.S. Census. Over time, even a modest appreciation could result in a significant gain and homeowners should have a strategy to minimize possible taxes.

 

Maintenance on a principal residence is not deductible but improvements can add to the basis which can reduce the gain in the sale. Improvements are easily identified if they add to the value of a home, prolong its useful life or adapt it to new uses.

Receipts and other proof, such as pictures, should be kept during ownership and for several years after the sale of the home. They can include the closing statements from the purchase and sale of the home and all receipts for improvements, additions or other items that affect the home’s adjusted basis or cost.

For a principal residence, basis includes the price paid, plus certain acquisition costs and capital improvements made. When the property is sold for more than the basis, there is a gain. Currently, homeowners that meet the requirements can exclude up to $250,000 of gain if single or up to $500,000 if married filing jointly.

A simple strategy is to put documents that affect the basis of the home in one envelope. Any receipt for money spent on the home that isn’t the house payment or utilities, goes into the envelope. Your tax advisor will be able to sort through them to determine the capital improvements.

For more information on determining basis or capital improvements, see IRS publication 523, Selling Your Home.

Sale of Home by the Surviving Spouse

Sale by Surviving Spouse

The loss of a spouse is not something we like to contemplate, but if we are home owners, such a sad event can complicate our home ownership.  The IRS has given special consideration regarding the sale of a jointly-owned principal residence after the death of a spouse. If the surviving spouse does not remarry prior to the sale of the home, they may qualify to exclude up to $500,000 of gain instead of the $250,000 exclusion for single people.

  •  The sale needs to take place after 2008 and no more than two years after the date of death of the spouse
  • Surviving spouse must not have remarried
  • Both spouses must have used the home as their principal residences for two of the last five years prior to the death
  • Both spouses must have owned the home for two of the last five years prior to the death
  • Neither spouse may have excluded gain from the sale of another principal residence during the last two years prior to the death

If you have been widowed in the last two years and have gain in your principal residence, it would be worth investigating the possibilities. Contact your tax professional for advice about your specific situation. Contact me to find out what your home is worth in today’s market. See IRS Publication 523 – surviving spouse.

Selling Real Estate, A Little Elbow Grease Goes a Long Way

Preparing a home for saleA little elbow grease goes a long way when selling real estate, especially if you are trying to cut back on expenses. Many people stage their homes to sell, a sometimes costly venture in a time when profits from home sales are at low levels. Though a very economical alternative for sellers is to consult with a professional home stager or designer and create a do-it-yourself action list from their suggestions.  There are many things that a home owner can do himself to save money and reel in a buyer. 

Research shows that today’s home buyer is more interested in buying a home that is in move-in condition, as opposed to a home that needs some major work and updating to be acceptable.  Buyers are considering the time, money, and hassle factors when viewing homes needing renovations.  This fact makes a home’s appearance a key factor in attracting buyers. Aside from the standard cleaning, organizing, and de-cluttering there are many steps that can be taken to improve a home’s appearance. From refinishing hardwood floors and adding a fresh coat of paint, to replacing carpet and light fixtures, small inexpensive changes can be completed to make your home stand apart from your neighbor’s home.  Homeowners can become immune to small maintenace issues that eventually become larger issues.  A buyer viewing the home and encountering these maintenance items may chalk it up to neglect and begin wondering what other repairs lurk.

The important thing to remember when selling your home is that you will never have a second chance to make a first impression. A good first impression is instrumental in grabbing a potential home buyer’s attention. A clean, well-presented home stands a much better chance of selling than a cluttered messy home.

Click here for some great do-it-yourself tips for preparing your home for sale from Realtor Magazine.

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