Pricing your home realistically will most certainly get potential buyers through the door, but how do you get them to fall in love with the home? A recent article at U.S. News & World Report offers some of the following tips for sellers in enhancing their home’s appeal.

1. Add curb appeal: “Make sure the house is cleared of winter clutter, that windows are washed, that the front door is painted or clean,” says Brad Knapp, regional vice president for the National Association of REALTORS® for Ohio and Michigan. “You have to give the house good curb appeal.”
2. Declutter: Remove clutter from the home so that buyers can actually see what all the home has to offer. Any excess belongings of the sellers should be stored in the garage or in a storage unit.
3. Be careful not to offend: “Hunters and fisherman often have game hanging on the walls,” Knapp notes. “Some people are offended, so get that off the walls and into the garage.”
4. Consider staging: “It might behoove [sellers] to hire a professional stager to help them,” says Robert Simon, a professor at Cleveland State University. “You have to get it right so it looks lived in, but definitely not cluttered.”
5. Complete routine maintenance: Make sure your sellers complete any routine maintenance projects before the home is listed. Also, sellers need to realize that “people don’t care if you spent $15,000 fixing the roof. It’s worth nothing,” Simon says. “The market expects the roof to be in tip-top shape. You have to go above and beyond.”

Source: “Steps You can Take to Boost Your Home’s Value,” U.S. News & World Report (March 5, 2012)

Reprinted from Realty Times.com

by Carla Hill

The latest Pending Home Sales Index from the National Association of Realtors showed promising results this month, with pending sales in upward movement.

This is the highest point seen since April of 2010, when buyers took advantage of the first time home-buyer tax credit.

Lawrence Yun, NAR chief economist, said this is a hopeful indicator going into the spring home-buying season. “Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year. With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”

Regionally, the South led the way increasing 7.7 percent in January. The Northeast also saw a 7.6 percent rise for the month. The Midwest and West both fell, however, falling 3.8 and 4.4 percent respectively.

“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun said. “If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater.” In the new homes market, sales declined in January to a seasonally adjusted pace of 321,000, but were up 3.5 percent over last year at this time.

NAHB Chief Economist David Crowe reports, “This is indicative of the incremental, steady progress that the market is making toward recovery in conjunction with modest economic and job growth. Increasingly, potential buyers are feeling better about their financial situation and their ability to buy a home, but the challenges posed by tight credit conditions and appraisal issues continue to slow that process.”

Despite the decline for the month this is the fastest pace seen again since April 2010. Finally, the Mortgage Bankers Association reports that mortgage applications declined this last week by 0.3 percent. Michael Fratantoni, Vice President of Research and Economics reports that “more than 20 percent of refinance applications were for HARP loans.

He continued that “the HARP share of total refinance applications has increased over the past month. Purchase application volume increased over the week, but remains within the narrow and anemic range of activity we have seen since the expiration of the homebuyer tax credit in May 2010.”

Published: March 5, 2012

The housing supply is expected to normalize in two to four years, Barclays Capital projects, assuming that household formation rates increase to 1.1 million and construction remains slightly above 2011 levels.

Household formation–which is a reflection of population growth and housing affordability–has drastically dropped since 2007, reaching about 300,000 to 500,000 per year. Historically, the rate is about 1.25 million.

Home prices will likely see a 1 percent appreciation this year (that’s after falling 3 to 4 percent through March), Barclays Capital estimates. It is also projecting a 1 percent price appreciation in 2013, followed by 2 percent to 3 percent appreciation levels.

But to reach those goals, the housing supply needs to continue to shrink first.

“We think this will be achievable only if household formation exceeds net construction for a sustained period,” Barclays says.

Source: “Barclays: Housing Supply Could Normalize in 2014,” HousingWire (March 2, 2012)

There has been an email going around about this tax that is somewhat misleading. It implies that there is a 3.8% tax on all home purchases, this is not the case.

The health care legislation enacted in 2013 includes a new tax that is designed to affect upper income taxpayers. The 3.8% tax is imposed ONLY on those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000 on a joint return). The tax applies to investment income, defined as interest, dividends, capital gains and net rents. These items are all included in an individual’s AGI. A formula will determine what portion, if any, of these types of investment income would be subject to the tax.

The tax is NOT a transfer tax on real estate sales and similar transactions. Not long after the tax was enacted, erroneous and misleading documents went viral on the Internet and created a great deal of misunderstanding and made the tax into something far more draconian than the actual provisions.

The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a gain above those thresholds is included in AGI and could be subject to the tax.

The recovery of the housing market and economy has been slow and arduous. Legislators and leading economists alike know that housing is the key to helping jobs and Americans get back on their feet.

Federal Reserve Chairman Ben Bernanke recently spoke at the 2012 National Association of Homebuilders International Builders’ Show and made some strong statements about the housing market and what has and has not happened in recent years.

“The economic recovery began more than two years ago, but it doesn’t feel like much of a recovery for many Americans–certainly for those of you who depend on the housing sector for your living, as well as for the millions of others who have seen their home values plummet or lost their homes through foreclosure,” he said.

Historically during recoveries we’ve seen that “resurgent” housing is what fuels employment and rising incomes.

Today’s recovery efforts however are coming up again a number of actors that constrain demand. Bernanke added, “Household formation has been down, particularly among young adults.

High unemployment and uncertain job prospects may have reduced the willingness of some households to commit to homeownership. Availability of mortgage credit is an important constraint.”

The housing market is on the move, however, albeit slowly. In the latest existing-home sales survey by the National Association of Realtors (NAR), sales showed promising movement for the month of January. This is the third gain in the past four months. Existing-home sales rose 4.3 percent for the month.

Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favorable market conditions. “The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents.”

The Western region of the U.S. experienced the largest jump in sales, rising 8.8 percent for the month. This brought it’s annual pace within 3.1 percent of the spike seen in January of last year.

The second largest rise was seen in the South, which rose 3.5 percent. The Northeast and Midwest experienced gains as well, rising 3.4 and 1.0 percent respectively.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun said. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

Additionally, nationwide production of new single-family homes and apartments also rose 1.5 percent in January. According to the U.S. Commerce Department this was the second-best pace seen since October 2008.

“Today’s solid housing starts report indicates that builders are putting more of their crews back to work, and adds to the growing field of evidence that the overall housing market is gradually but consistently moving in the right direction,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB)

To continue to see strides in the housing market, though, Bernanke stands by his advice that we need to continue to develop and implement policies to aid the housing sector. “No single solution will be sufficient. But sustained efforts to address the many interlocking factors holding back the housing market will pay dividends in the long run.”

Over the last few years, some homeowners have opted to stay put for the time being and that’s caused them to consider remodeling instead of moving. But most homeowners know that one day they might need or want to sell their home so which remodels help to add value and entice buyers?

There are a few areas that are better than others to improve. It’s pretty easy to understand why these home remodels are enticing buyers when you consider the way the housing market has been for the past several years.

Here are a few of the renovations that are adding value to homes and creating appeal from home buyers.

Aging in Place

With the tough economic times, more short sales and foreclosures, extended families are combining homes and reducing their cost of living by residing together in one larger house. The National Association of Home Builders found that 62 percent of builders in a survey were working on home projects that were helping families “age in place”. Included in these types of remodels are placing a bedroom on the entry-level of a home, wider doorways that would accommodate a wheelchair, and overall modifications for the elderly including reducing steps outside and inside.

At one time, these designs might have been unattractive but with many Americans wanting to “age in place” and extended families living together, remodels like these are becoming common, necessary, and valued.

Savvy Kitchen

The great rooms that bring the kitchen and the eating areas together are still popular. More space is preferred so families can have room to sit and spend time together over a meal even if that means having less space to actually prepare the food. Cabinets and shelving are being customized to suit the homeowners’ needs and many are favoring pantries or utility rooms. Kitchens are taking on the look of a chef’s cooking space with open shelving and islands to help homeowners be able to quickly prepare meals and still mingle with guests and family.

Totally Wired

Fast-placed, busy buyers who often work from home will find smart homes that are wired and built to handle all the high-technology needs a huge plus when it comes time to market and sell their homes. Another plus is having space-saving workstations in the home. Remodeled homes that feature floor-to-ceiling bookcases and wiring for home offices are increasingly becoming the norm in many homes.

Outdoor Living

This continues to be a popular trend to bring the outside in. Making the most of living spaces, even those in the garage and outside, is a huge benefit. Homeowners are capitalizing on all possible livable space by creating outdoor living rooms complete with wiring for entertainment, cooking, and relaxing. Outdoor furniture is also being featured inside as well as outside the home, blending the line between the two.

According to the Census Bureau, 2011 home starts were bigger and featured more amenities than in the previous year. It seems houses are growing again. The average new-home’s square footage is was 2,522 in 2011, up from 2,381 square feet.

Not all remodels add value to the home. The balance of achieving what you like in a home and which improvements can potentially increase the sale of your home, can allow you to make smart home improvement choices.

Washington, DC, June 29, 2011

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.

Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and Seattle.”

Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”

“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.

The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago. In the Midwest the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010. Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago. In the West the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.

Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.

It is regrettable that the recently-created Consumer Financial Protection Bureau (CFPB) doesn’t have an easily-pronounceable acronym like HUD or RESPA. That is too bad because the CFPB is a government entity that people in the real estate industry are going to be referring to – and dealing with – over and over again in the coming years. Would that its name rolled easily off the tongue.

CFPB will affect real estate financing in matters ranging from disclosures to underwriting to appraisal practices. And that’s just the real estate part. CFPB will also have its hand in the business of credit card companies, credit reporting agencies, automobile financing, payday lenders, and many others.

Many know that CFPB was in a kind of limbo during its beginnings, because there was a political stalemate over the appointment of its director. Recently, though, President Obama was successful in installing Richard Cordray in that position, and the agency has been a beehive of activity since then.

On February 13 the Bureau released a model form for mortgage payment statements. The form can be found on the CFPB web site at www.consumerfinance.gov. It is not a final version. Input from both consumers and industry representatives is solicited. It is anticipated that a final form, and rule, will be proposed this summer.

Creating a standardized, mandatory statement form was not just the idea of an eager-beaver employee at CFPB. Rather, it was mandated by the Dodd-Frank Act (Section 1420). That law specifies several items that must be in the statement, and it also provides that other information may be prescribed by CFPB in its regulations.

It may come as a surprise to some that there currently is no standardized requirement of mortgage payment statements. To be sure, many are similar, but there are no industry-wide standards.

Particularly noticeable about the proposed form is that, in the case of an adjustable rate loan, the monthly statement shows when the interest rate will be reset – even if the date is not imminent.

Also, the proposed form shows if there will be a prepayment, how much it will be, and when the penalty will no longer be imposed. (More than a few real estate agents can tell of deals gone awry because the seller was “sure” that they had no prepayment penalty.)

Also, in what is probably a departure from the existing norm, the statement shows the maturity date of the loan.

An important component of the proposed form is that it includes information for those in need of mortgage counseling or assistance. Phone numbers are provided. That was one of the requirements of the Dodd-Frank act, and is clearly a sign of the times.

Readers are encouraged to visit the CFPB web site and to look at the form, and to make any suggestions they might have. And, for those who are really interested in these sorts of things, take a look at the proposals for new loan disclosures to be made just before the time of closing. These are not for the faint of heart.

Published: February 21, 2012

Daily Real Estate News | Thursday, February 16, 2012

“Mom and pop investors” are trying to capitalize on a depressed real estate market in the hopes of one day being able to cash in. An article in USA Today highlights this new breed of small-scale investors who like to buy and hold properties, opposed to the high-dollar large investment firms that once dominated the real estate market who preferred to buy and flip their property investments.

For “mom and pop investors,” the strategy is to buy homes at rock-bottom prices, rent the properties out to cover all of the costs of home ownership for several years, and then one day sell the homes when prices recover.

“An unprecedented number of investors are looking into this,” John Burns, CEO OF John Burns Real Estate Consulting, told USA Today.

Investors purchased more than 26 percent of single-family and condos in 167 U.S. markets in the first nine months of last year, according to data supplied by Burns to USA Today.

For investors in the rental market, an 8 percent annual return is fairly normal, according to Burns. “That means that someone who buys a $100,000 property — and pays cash for it — makes $8,000 a year after expenses, including maintenance and taxes,” the USA Today article notes.

Of course, the threats of tenant and maintenance issues always has the potential to derail that potential profit, so investors need to be careful before jumping in, some experts warn.

Source: “Mom and Pop Investors Propping Up Home-Buying Market,” USA Today (Feb. 14, 2012)