Is The Time Right to Sell my Home?

Deciding if the time is right to sell your home can be overwhelming. Between the news, Zestimates, casual conversations and neighborhood chatter, there is a lot of information to process. Sadly, a fair amount of that information could be wrong.

If you are seriously considering selling your home, talk to a Realtor. Don’t just talk to any Realtor; believe it or not we are not all the same. Experience levels differ, approaches differ, levels of professionalism differ, etc. etc.

sell house calendarFirst and foremost, talk to a Realtor that sells in your area. Talk to a Realtor that has a proven track record. Talk to a Realtor you feel comfortable with – someone who you can connect with. Selling a home takes time from listing to closing. You want to work with someone you feel comfortable with and someone who is going to be honest with you.

Honesty is the best policy. Having an agent that is going to be honest with you in determining the value of your property and best list price is crucial. This will save you time and money in the long run.

When I meet with a potential seller, we discuss the value of the house, the costs to sell, the time anticipated to sell, and more importantly, the reasons for selling. Often times, the house is no longer a fit: too big, too small; too much upkeep; too far away from family, etc.

handshakeOnce we’ve talked it all out, and I have explained the sale process, showing expectations and answered questions, if the numbers work and we are a fit, we move forward. If the numbers don’t work quite yet, and we are a fit, I will keep an eye on the market and keep the future sellers informed. No pressure. No obligation.

In life, timing plays a crucial role. Timing is important in sales as well, and when the time is right, it will happen.

There have been a number of times where sellers have been pleasantly surprised when I show them what their house is worth. There have been times when the opposite is true. The point is, if you don’t ask, you don’t know and if you are considering moving, asking the right real estate agent for guidance and facts can be most beneficial. A seller may find they are in a perfect position to move forward or a seller may find otherwise.

Either way, if you are curious about your home’s value and are ready to move out of a house that no longer fits your lifestyle, call an experienced, professional Realtor that will provide you the information necessary to make an educated decision. Selling a home is no small under taking. Having the proper tools, support, information and knowledge to aid in the process will help to ensure a smooth transaction, eliminate surprises and reduce stress levels along the way.

Costs involved in Selling a Home

When you are ready to sell and talking with a REALTOR about listing the house, s/he should include the estimated cost involved in selling at the listing appointment. What I typically do is provide a breakdown at 3 or 4 different price points from projected sale price to worst case scenario. To date, my sellers have never been confronted with a worst case scenario net, but I believe it’s important to include that information up front since we should all work towards the best while being prepared for the worst.

Knowing these costs up front helps in preventing any surprises down the line. Real estate transactions are delicate matters. Scenarios can change from day to day based on inspection results, appraisal results, buyer financing, lender productivity and more. Eliminating surprises should be a priority for an experienced agent. Surprises in day to day life can be exciting and fun. Surprises in real estate transactions typically are not.

Educating a seller on the costs to sell up front is one of the steps I take to eliminate surprise. Imagine going through the process of selling and reviewing the settlement statement (HUD) 30-45 days after entering into a contract and learning you are walking away with less than you anticipated. That’s not a fun surprise by any means. That is why it is important to know these numbers at the time of listing.

Since I believe knowledge is power and in educating sellers and buyers, I am going to share these costs with you.

Cost to sell a home in Central Florida are as follows:

Real Estate Commission this is what you and your agent agree upon. The commission is typically shared evenly between the listing brokerage and the selling/buyer’s brokerage.

Documentary stamps on the deed. This seller cost is based on the sales price. It is calculated at 70 cents per one hundred dollars. Example: Sale price of $250,000 = $1750 in doc stamps on the deed. (250000 x .007)

Taxes are pro-rated. (If your taxes and insurance are escrowed into your mortgage, those escrows will be returned to you by your lender once the mortgage is paid (satisfied) – typically 45-60 days after closing.) In Florida, taxes are paid in arrears. Tax bills for the current year come due in November of that same year. At closing the taxes are pro-rated to reflect this; a seller will give the buyer a credit towards taxes for the number of days the seller had ownership in the house. Example – 2015 taxes total $1800. Property sells on May 1, 2015. Tax bill comes due on November 2015. Seller gives buyer a credit of $600 for January-April 2015. Buyer pays the entire tax bill when it comes due.

Seller Title insurance and fees are also a cost in the transaction. In this region, the seller pays for and conveys clear title to the buyer. The cost of insurance is based on the sale price of the property. If a seller is selling a home that was owned for 3 years or less, a re-issuance credit may be available. The chart below shows title insurance fees without any credit being given.

Courtesy Metes & Bounds Title Co.
Courtesy Metes & Bounds Title Co.

Title fees vary from company to company and include costs for title search, lien search, recording fees, government fees and the settlement fee. Again, these fees vary from company to company. As a rule of thumb, I quote $725 for title fees.

Another item that is pro-rated are Home Owner Association (HOA) dues. In order for the dues to be properly pro-rated, the title company must order an estoppel letter from the HOA. The estoppel letter shows what the seller has paid for HOA dues to date, any outstanding balance or fines, etc. HOA’s charge for this estoppel. These charges vary and generally run between $50-$500. I have seen them to be $150 on average.

And those are the standard costs of selling a home.

Simplified it is as follows:

$250,000 Sale Price

Commission                                                                                           $X

Taxes $1800/yr (pro-rated: estimated closing 5/1/15)     $600

Doc stamps on deed (.70 per $100)                                              $1750

Title Fees ($725) & Insurance ($1325)                                        $2050

Cost to sell                                                                                                $4400 plus X***

***HOA estoppel fees (cost for payoff from HOA to title co.) generally run between $50-$500. I have seen them to be $150 on average. This cost has not been included in the cost to sell calculated above as the exact amount of the estoppel fee for your HOA is not known.

Calculating the cost to sell is not especially tricky. As I mentioned previously, any agent you interview should have these numbers available and should be providing these figures to you at the initial meeting. If s/he is not, then you are not getting the full picture. Hopefully, I have made these costs clear and easy to calculate. If you have any questions regarding the cost to sell, feel free to get in touch with me. I’d be glad to assist in any way I can.

Florida Real Estate Sales – Contract to Close. I think we’ve got it right.

Real estate sales are different from state to state. Procedures are different, how and when we go under contract is different and who closes the sale differs. I am licensed to sell real estate in Florida. I have never sold anywhere else. Based on stories I have heard, observations I have made and experiences REALTORS from other states have shared with me, I believe Florida has gotten it right when it comes to contract to close procedures.

I have contacts with REALTORS across the country. For the sake of brevity, I am going to discuss Massachusetts and New York in comparison to Florida. It is my understanding that these 2 sales handle real estate transactions similarly.

In Florida, title companies are typically used to close/complete the sale. The title company is a neutral party in the sale. They perform lien searches to ensure there are no liens against the property that a buyer may be held responsible for, make sure the chain of title is clean (no one has claim to the property), order payoffs, prepare and record the deed, etc. They basically close out the sale. In Massachusetts and NY, attorneys handle closings. Attorneys also handle contracts.

In Florida, REALTORS handle contracts. In most instances, contracts that have been contractdrafted and approved by The Florida Bar. The steps of a sale in Florida are pretty straight forward. Buyer finds a house they like, they make a written offer on a contract and buyer and seller agree to terms. The terms are spelled out on the contract. Terms include sale price, closing date, escrow deposit and how it is handled in case of buyer or seller default, inspection periods, financing contingencies (including financing type and loan commitment deadlines), repair limits, etc. It is all spelled out and agreed to in writing by all parties prior to moving forward with inspections, appraisals and loan approval. Once the contract is executed by the buyer and sellers, inspections, appraisal, and all steps that lead to closing are completed.

In Massachusetts and New York, buyers and sellers come to a written agreement on price, inspections are performed, then an attorney drafts the contract to purchase. As an agent that works in residential sales in handshakeFlorida and has only worked in Florida, I find this mind blowing.

Here’s why: I have heard stories of buyers and sellers coming to agreed upon purchase price and finding other terms in the contract that both parties haven’t agreed upon. One example of this includes a change in buyer financing (i.e. going from 5% down on conventional financing to 0% down on a USDA loan). For a seller, this could be alarming. The seller agreed to a purchase price based on one set of terms and is presented a different set of terms at the time of entering into contract. Terms that could appear less appealing or “safe” than what was anticipated. Another example I have heard is buyer and seller agreeing to a contract price and when the contract is presented, buyer sees a clause stating they would lose their entire escrow deposit if financing was not in place within 20 days of contract. (most lenders need 30-45). I’m sure most times these items can get ironed out. Sometimes they don’t though. Sometimes weeks can be lost “renegotiating” terms that, in Florida, would have been ironed out up front – before a buyer invests time and energy on the house and more importantly spends hundreds of dollars on inspections.

I am grateful to be able to sell real estate in Florida. It seems to me it is more cut and dry, straightforward, and certain when a buyer and seller have a binding contract with all the terms to the agreement spelled out prior to any actions being taken. I can only think it cuts stress levels, too. If I were selling real estate in MA or NY I may think differently.  As a Florida Realtor, I would be extremely hesitant to allow a buyer to spend monies on inspections prior to being in a fully executed contract. I understand an agreement has been made by the parties in NY and MA, but without having all the terms to the contract laid out and agreed to beforehand seems like a risky endeavor to both parties in the transaction.

I’d be interested to hear from other REALTORS about contract to close procedures in your state, and what I’ve gotten right and what I may have gotten wrong about sales in MA and NY based on the information and examples provided to me by other in the field.

Ready to Sell. Now what?

Ready to sell your home but not ready to put it on the market yet? Then this post is for you.

Committing to the decision to sell can take time. Once you’ve made that commitment, the next step is preparing the house for sale. You know, doing the deep clean, making repairs, freshening paint or neutralizing a vibrant color, de-cluttering, and maybe tweaking a few things here and there.

Not sure where to start? De-cluttering is a fine place to begin. I’ve heard the DIY shows tell you to remove all personal photos, etc. I’m not 100% sold on that theory. Yes, you do not want a buyer looking at your stuff and family photos for a number of reasons. I once showed a house loaded with personal items and my buyer felt bad about buying the house because she saw they had so many good memories and didn’t want to take that away from them. This may seem a little farfetched to you, but it’s a true story, and I’m sure if one person felt that way, another did, too.

We want potential buyers to feel comfortable in the house and leave with a good feeling.

On the other hand, you still live in the house. So when you are clearing shelves, start with non-essential items. (You are planning to move. Packing non-essential items is a good place to start. Heck, you might decide you don’t miss some of those knick knacks once they’re out of sight.) However, you are still living in the house. Leaving out a few cherished family photos will not hinder a sale. Having a wall plastered with years of memories may.

Repairs and paint freshening would be next or in tandem with the de-clutter. A fresh coat of paint can really help a room; especially if it’s covering a color others might find loud or too vibrant. If the paint in a home/room is currently neutral and clean, don’t repaint. If the walls have become dirty with streaks or fingerprints or past touch ups do not give the wall an even color appearance, a professional repaint should be done. I say professional because we ideally like clean/straight borders.

In Florida, a subtle shade of beach sand or beige is preferred for interiors. Trim (base boards and crown moulding) should be white.

Repairs. Repairs can get out of hand. They don’t need to. Keep it simple. Some of the most common repairs I see needed in resales are: the need to wood rot around doorways, air conditioning units needing service (fresh filters and coil cleaning), light fixtures not working or not secure, and dripping faucets. Repairs generally do not include upgrading formica counters to granite, or replacing carpet with tile or wood. In most cases, these are not jobs that will bring a 100% return on investment. So although your house may sell for a few thousand less than the same house with granite next door, I don’t generally believe spending $10,000 to get $7,000 in return is worth the time, hassle and cost. I have also seen those new floors or counter tops removed by new buyers and replaced with something more to their liking. In most cases repairs should be kept simple and not include major upgrades.

Once these steps are complete, it’s time for the deep clean. Getting behind appliances, in corners, crack and crevices, cleaning windows and don’t forget the light switch covers. Pressure washing driveways, walk ways, fascia and patios/decks should be part of the deep cleaning process, too.

Now that your house is ready for market, it’s time to find the right Realtor® to work with you in the sale. S/he may recommend additional improvements – likely just little tweaks since you’ve already done all your prep work. Getting this leg work done up front can save you time in the long run and will certainly help you in getting the most money the market will allow for your home.

Home Buyer and Credit Survey

Experian recently released their Experian Home Buying and Credit: Survey Report, 2015.
Results are based on answers provided by buyers that purchased a house in the past year or plan to purchase in the next year.

I’m sure everyone who reads/looks at this report will get something different out of it. Here’s what I found most interesting.

The survey found that “more than two in five future buyers are worried that they will not qualify for the best home loan rate and have delayed purchasing to improve their credit.” The survey goes on to say that 55% are working to improve their credit to qualify for a better home loan rate.”

Here’s the thing, interest rates are really low – still. They have been for several years now. A 4% or 4.5% mortgage is nothing to squawk about. Interest rates fluctuate and waiting a few months to bump up a credit could cause more harm than good should rates continue to rise (and they will). That great interest rate you are working towards getting today may not be there tomorrow or next month or the month after.

If you find a loan program that can put you in a monthly payment that fits your budget, would that work?

Another factoid I found interesting is that only half of recent buyers reported “checking their credit as soon as they considered purchasing a home.”

Buying a house is scary. It is a big step; one of the biggest steps adults take in life. Delving into credit can be scary as well – especially when you aren’t sure what will be on that report. Here’s what Experian found though….43% of recent buyers had a better credit score than expected, and 30% were surprised by their credit. So odds are pretty good your credit is not as bad as you think. You know what they say, we are our own toughest critic….

Checking credit and getting qualified for a mortgage are the first steps in taking the leap to home ownership yet according to this survey 67% of future home buyers are not pre-approved. Here’s the deal, finding a house on or Zillow is not the first step to home ownership. Getting qualified for a mortgage with a lender is your first step. Here’s one thing that could happen: Say you put the cart before the house and find an agent that will take you house hunting without a qualification letter from a lender (this is not likely but it happens from time to time). You could see a house, fall in love with it, want to write and offer, call a lender and find you do not qualify for a house in that price range . Deflating to say the least.

So if you’re considering buying your first home. Do your homework. Pull your credit, and call a mortgage lender before you start scrolling through home sites. Don’t know how to read your report or don’t understand something on it? That’s ok. A good lender can help you understand what’s on your report and help guide you in the right direction if improvements need to be made.

If for some reason your credit score is not where it needs to be to qualify, at least you know and can begin working on correcting the item or items that are holding your score down and you back from purchasing your first home. Building a credit score does take time but not as long as you may think once the repairs are made.
Knowing is half the battle. Taking steps to correct past mistakes leads to victory. But again, Experian found that 43% of recent buyers had a better credit score than expected, and 30% were surprised by their credit. So please, don’t let what you don’t know hold you back from taking a step forward – in home buying or life.

Real Estate News and Reality

The Central Florida market has been on fire. Lenders, appraisers and Realtors® are busy, busy, busy. Year over year statistics are impressive.

Right now, the Orlando area market appears to be pretty stable. Month- over- month prices are increasing gradually and at a healthy pace, inventory of homes for sale has increased considerably in the past 2 years, and buyer traffic is steady. On the whole, we in the Orlando area are in a stable market.

On a national level, I hear and see news about prices skyrocketing and concerns of another bubble. I had those concerns a while back myself. Our market righted itself though, and I suspect other markets throughout the U.S. will follow; this has been the trend since the market crash and recovery – hardest hit states are where the trends start and the rest of the U.S. follows in time.

It’s hard to ignore the news, especially in the age of connectivity we are in. If you’re in the market to buy or sell a home, the best thing you can do is ignore the news.  Instead, examine local data. Better yet, save yourself from data overload. Find a Realtor® that is in tune with the data, knows how to interpret it, and has the know how to sort the facts from the fluff. This is a world of T.M.I (too much information). There are a number of factors to consider when working to determine where the market is going and where values are, and real estate is truly local – in some cases hyper local. Values can and will vary from town to town and even from neighborhood to neighborhood. Finding an agent that will be honest with you about your market and where you stand in it is crucial, and is likely to save you time, money and stress in the long run.

Oh Experian…. It’s about more than your FICO

Have great credityou seen the Experian commercials about how a person’s great credit score virtually guarantees a low interest rate and/or line of credit? A good credit score is important. That is true. The higher the score, the greater the odds of getting a lower interest rate on loans or revolving credit lines.

What irks me about these commercials is a great credit score is not a guarantee of anything as Experian suggests; especially when it comes to qualifying for a mortgage. Credit is only one of the determining factors in obtaining a mortgage. Other factors include income and job longevity, the amount of debt a person carries, outstanding liens/judgments that may be looming out there, savings, a previous bankruptcy or foreclosure.

A person could have great credit but no money saved to afford the costs associated with securing a mortgage or meet a possible requirement for reserves (additional savings cushion in the event of emergency). A person with great credit could have started a new job in a different field of work than previously held or may be collecting unemployment benefits. Lenders typically like to see at least 2 years employment with the same company or within the same field of work.

Someone with great credit may be carrying a little more debt than they should per lender requirements or have a recent bankruptcy that hasn’t been discharged long enough to be able to qualify for a mortgage. Re-building credit after a bankruptcy or foreclosure does not take as long as someone may think…..However, lenders require certain time pass after a bankruptcy is discharged or a foreclosure date has passed before approving a new mortgage. These time frames can vary based on the loan product being offered or even from lender to lender. Havimortgage approvedng an 800 credit score will not negate these waiting periods.

So yes, great credit is a good thing to have. For Experian to say “getting a mortgage shouldn’t be a problem” based on a credit score alone is spreading misinformation (which there is more than enough out there already on a plethora of subjects.) As I briefly pointed out, there is a lot more for mortgage lenders to consider, and verify, than a FICO score. Why Experian has decided to imply otherwise is beyond me….