How to Speed up the Sale of your Home

By Marni Jameson
Special to The Times

June 22, 2008

BACK WHEN the real estate market was hot, sellers barely had to make their beds and do the dishes for their houses to attract buyers. Any extra effort often elicited multiple offers for over the asking price.

In today’s cool market, however, those same extras can mean the difference between getting one offer or none at all, says Lisa LaPorta, cohost of HGTV’s “Designed to Sell.”

Sellers frustrated with the stagnant market should consider turning their anxiety into action. As inventory grows, a few inexpensive moves can make your house stand apart.

Here are 12 cheap tricks real estate experts recommend sellers consider to speed sales:

1. Get the right mindset. Once you list your home, detach yourself. Treat the house as a commodity, which means making changes that will broaden its appeal but that may erase some of your personal style. “I tell sellers in our first meeting that I may say things that offend them, but if I do it’s because I feel it’s for the benefit of the sale,” says Dan Verbin, general manager of Re/Max Marquee Partners, which oversees 14 offices in the South Bay and throughout Greater Los Angeles.

2. Start at the curb. Look at what people see when they pull up, says Sandy Fish, broker owner of Re/Max Ranch and Beach in San Diego, where she’s been selling real estate for 20 years. Trim hedges, prune trees, mow the lawn and plant oodles of colorful flowers. If the mailbox is tired and the address numbers are falling off, replace them. Walk around the house. Get all debris — old patio furniture, rusty barbecues — off the property. Everything outside should look perfect.

3. Paint — it’s money in a can. Outside, if a good power wash isn’t enough, a coat of paint is one of the best facelifts you can give a house for a relatively low price. If you don’t want to paint the whole house, do the trim. Inside, paint walls a soft neutral such as warm beige, sage or gold. Paint not only says new start, but it also masks odors.

4. Focus on the entry. Put some energy into the front door, because it makes a strong first impression. A few years ago, LaPorta fixed up a Pasadena home for her show. The home had a traditional old-fashioned front door, which looked like all the other doors on the street. She bought a stock door from a lumber supplier, painted it glossy burgundy, put a pediment over it, thick molding around it and flanked it with two large potted topiaries. The whole upgrade cost $2,000. The result? After the listing agent saw the improvements, she raised the original asking price by $40,000 to $739,000. The owners received multiple offers and sold in the high $700,000s, LaPorta said, “because we made an ordinary entry look stately and elegant.”

5. Catch up on maintenance. Get around to the repairs you should have been doing all along. “Fix the little stuff,” Re/Max Marquee Partner’s Verbin says. “Repair the cracked tile in the bathroom and torn screens. Replace broken light-switch covers and burned-out lightbulbs. Tape up or pin wires from audio systems and computers.”

These easy fixes show potential buyers that you pay attention to detail, which signals that you must care about the big stuff too.

6. Look for alternatives to expensive or messy upgrades. “Don’t take on a big remodel when you’re thinking of selling,” says Reva Kussmaul, a remodel coach and owner of Eye for Detail, in Pasadena. “Keep improvements small and manageable. A major project creates more mess and can take up time you could be on the market.”

However, do investigate small ways to get big results. If your tile is 1950s pink or 1970s brown, look into companies that can spray tile to make it a new color, she says. Miracle Method, for example, gives a clean, fresh look without the demo, dust or fat price tag.

If dated cabinets still work well, consider painting or staining rather than replacing them. Today’s house hunter prefers either dark wood cabinets in shades of espresso or ebony, or painted cabinets. Mid-toned browns and grainy golds are out. A dark stain over light, coarse-grained wood will quiet busy grain and make wood a color more people prefer, as will painting. Put on some new knobs, and for a couple thousand dollars, your kitchen will look as though it had a $20,000 makeover.

7. Consider new appliances. In LaPorta’s experience, sellers typically get every dollar back that they spend on new appliances. “When people see new kitchen appliances, they often see a new kitchen,” LaPorta says. “That rates high on people’s radar, especially men’s.”

8. Add some house bling. Make anything metal in your home look new and shiny. “People see shiny new metal and say ‘Oooh,’ and it’s not that expensive,” LaPorta says. You can pick up a new dining room light fixture for $200 and one for the porch for $40; people will notice. Change the front-door handle, faucets and curtain rods if they’re worn and dull. These should all look fresh.

If you have an ’80s shiny polished brass fixture, try painting it with an updated metallic that looks like oil-rubbed bronze, brushed nickel or iron. If you have metal grills on your stove, spray them their original color, using paint meant to withstand high heat.

9. Start packing. “The average home would show much better if it had 50% less stuff,” real estate broker Fish says. Since you’re already going to move, give yourself a head start by packing away all the clothes, books and dishes you won’t need for the next few months. Thinning out bookcases and closets lets buyers actually see and appreciate the space and gives the illusion that the house offers more-than-adequate storage.

Take out extra furniture, especially if it’s blocking the flow of foot traffic. “It’s better to have just a corner of a room decorated nicely with a little vignette than an overcrowded space, or a room where the furniture is of mixed styles or not to scale,” LaPorta says. If you can get all the stuff off-site in a moving pod or in storage, do so. If not, stack neat, labeled boxes in the garage.

10. Remove the “you” factor. Sorry but home buyers don’t care about your trophies, your hobbies, your taste in art or your photos. Pack all that away. Depersonalizing a home lets buyers imagine themselves in the house. “You want people looking at your house, not your wedding photos,” Fish says. “Those are just a distraction.”

Once personal art is off the walls, patch and paint over holes. While you’re at it, clear countertops. In kitchens, leave out just one appliance and, on your desk, just a phone and a lamp. Think nice hotel.

11. Clean house. “Clean is a relative term,” says LaPorta, “but we often don’t notice our own dirt. Look hard, starting with the switch plate by the front door. Wipe it down along with all light switches, doors and baseboards. If you’re not the best housekeeper, hire a service. . . . Every surface should sparkle.”

12. Banish smells. When people first walk in, they should either smell nothing or a nice scent, like cinnamon or citrus. Set out potpourri, fresh-cut flowers or subtle air fresheners. Have carpets — if not replaced — professionally cleaned and deodorized.

Some carpet-cleaning companies will also clean hardwood, tile or stone floors and grout and buff countertops. “For a 3,000-square-foot house, expect to pay under $1,000,” says Fish, adding that it’s money well spent.

Besides making suggestions as to what buyers can or should do to get a “sold” sign out front, real estate experts also suggested a few things not to do:

* Don’t avoid an upgrade with the idea that you’ll give the new owner a carpet or paint credit.

Most buyers are tapped out and don’t want to spend a lot the minute they move in. Plus, that’s one more hassle for them. They want clean surfaces when they move in. And many people lack the imagination needed to picture how much better the place will look with new carpet. Your job is to make buyers say, “I could move in tomorrow.”

* Don’t ignore the competition. Fish helps clients get realistic about their homes by showing them what else is on the market in the same price range.

“When they see what they’re up against, including new homes, that often motivates them to get real about their price and what they should fix up,” Fish says.

* Finally, don’t get so carried away making improvements that you forget the original goal: Be a bargain.

“The best way to sell your house quickly in a down market,” real estate agent Verbin says, “is to be the best deal out there.”

Marni Jameson is a syndicated home columnist, and author of “The House Always Wins.” She may be contacted through her website, marnijameson.com.

Short Sales, Not that Fun

Short sales: A tough road

By Diane Wedner
Los Angeles Times Staff Writer

June 15, 2008

RESIDENTIAL short sales sound like a picnic: Owners need to sell their homes for less than they owe, lenders forgive the difference and buyers grab a good deal.

If only. This is one picnic that requires a long wait for dessert. The only “short” thing about short sales, buyers and sellers say, is one’s patience.

“The waiting is torture,” said Mark Shandrow, a Keller Williams Realty agent in Long Beach who specializes in such transactions. “The banks are overwhelmed with short-sale requests, and some make sellers wait five months for an answer.” That answer, in many cases, he added, is “no.”

Yet despite the obstacles to successful short sales — lenders holding the first and second mortgages don’t agree on the terms, buyers often ditch the deal midstream or banks nix the agreement just before escrow closes — they’re on the rise. Countrywide Financial Corp. of Calabasas, the largest U.S. home lender, reports a nearly 60% increase in those transactions nationwide in April, the latest month for which statistics are available, from the same period a year earlier.

In the Santa Clarita and San Fernando valleys, the number of short sales increased from at least 31 sales from May 2006 to May 2007 to at least 1,956 sales from May 2007 to May of this year, according to the Southland Regional Assn. of Realtors.

The reason for the rise, experts say, is that as more financially strapped homeowners fall behind on their mortgage payments — and see their homes’ values plummet to less than what they owe — they’re turning to short sales as an alternative to foreclosure. Banks, once loath to take on short sales because, among other reasons, they were understaffed for the application onslaught, are tackling them now mainly because they’re more cost-effective than foreclosures.

“Banks aren’t happy about short sales,” said Sherri Frost, a senior loan officer with Sherman Oaks-based Metrocities Mortgage, “but they have few options.”

Unlike a foreclosure, in which the lender takes ownership of a property after a borrower misses several payments, a short sale is a transaction in which the owners, not the bank, sell the home; they receive no proceeds from the sale. In a foreclosure, the defaulting owner may receive sales proceeds once the lender has been paid, if the amount exceeds that of the outstanding loan.

If a short-sale borrower owes $500,000 on a home, the bank may accept a payoff amount of $450,000, the amount a buyer has offered to pay. The sellers need not be in default — meaning they stopped making mortgage payments — in order for a lender to consider a short sale, but they must be able to show a real hardship to receive the debt forgiveness, which may have tax consequences.

Then there’s the wait

It sounds straightforward, but the short-sale road is a long one. Once sellers have an offer, they must assemble a package to present to the bank, including a “hardship letter” explaining why they had to put the house up for sale — loss of employment, a spousal death, a divorce, a disability or a mortgage resetting, for example — and asking the bank to accept a short sale, according to a Countrywide spokeswoman.

The sellers also must provide income verification, their most recent bank and income-tax statements, the listing history of the house and other documentation. Then comes the wait. And frequent follow-up calls to the bank to make sure the file isn’t buried.

“Banks won’t grant face-to-face interviews because of the volume of short sales and foreclosures,” said Mary Ebersole, a Re/Max Realty Specialists agent in Long Beach. Even if the seller gets approval, she added, “there’s only room for cautious optimism.”

That’s because impatient buyers sometimes head elsewhere while the bank’s loss-mitigation officer, or negotiator, sifts through the pile of short-sale packages. Or buyers put offers on five or six other properties to see which comes through first.

Sometimes, while awaiting a bank’s decision, interest rates go up and buyers no longer qualify for a previously approved loan because their lock-in rates expired. Worse yet, a seller may get an initial approval from the bank, but in the eleventh hour the bank adds a contingency that skewers the deal, or pulls the plug without explanation, agents say.

Second and third mortgages and even home equity loans can further complicate matters. Last fall, Pam Kennedy, a Coldwell Banker Ambassador agent in Whittier, was disheartened when her short-sale client’s lender demanded, after a long wait and with a buyer already on board, that the seller sign a promissory note for $15,000, which would be interest-free and amortized over 10 years. The seller had taken out a second mortgage awhile back to buy a recreational vehicle for $25,000 and pay off some debt. The lender wanted to recoup some of the loss it was absorbing.

The seller was going through a divorce, starting a new job and was afraid she couldn’t make the payments. Also, despite months of effort, she couldn’t sell the RV — an asset, in the bank’s opinion. The deal fell through and the bank foreclosed on the property. The experience left a bitter taste in Kennedy’s mouth.

“I avoid short sales and advise buyers to avoid them,” Kennedy said. “They are miserable.”

Sticking it out

True, most participants say, but some eventually have happy endings.

Mari and Joe Abrams found the house of their dreams in Porter Ranch in December. They got quick loan approval to buy the four-bedroom, three-bathroom home, and feeling optimistic about the new purchase, they put their Encino home on the market.

The couple offered $650,000 for the new house, which had been listed earlier in the $699,000 to $749,000 range. They paid a $10,000 good-faith deposit, agreed to pay all of the escrow fees (which usually are split between seller and buyer) and agreed to buy the property as is.

They expected the bank to quickly counter-offer. For one thing, the seller’s second-mortgage holder already had agreed to the sale, a major hurdle in short-sale transactions. But without the first bank’s approval, the deal stalled. (Both the first and second mortgage holders must settle to complete a short sale.)

The couple’s own house sold three months into the process, so they moved, with their toddler, Daniel, and 50-pound dog into Mari’s mother’s condo.

By April, Mari, 32, started peppering the first lender with daily phone calls, seeking a response to their offer. As the deal dragged, the Abramses extended the escrow. It closed, finally, on May 2. The family plans to move in later this month.

“Our hearts sank a hundred times,” Mari said. “It was a roller coaster.”

“If we didn’t like the house so much, we wouldn’t have hung on that long,” Joe, 37, added. In the end, however, they’re glad they stuck it out. It is, Mari says, just what they wanted. Even if they didn’t get the “deal of the century,” Joe said.

Bargain bins

Lenders will not accept short-sale offers that are far below market value. To the contrary, many banks “net about 90% of the current market value” on many of these sales, agent Shandrow said. Also, the homes usually are sold as is, which sometimes can mean a missing kitchen sink, ripped-out bathroom fixtures and stained carpets.

Marty Rodriguez, a Century 21 agent in Glendora, says she won’t take a short-sale offer to the bank unless it’s reasonable. “The negotiator doesn’t want to look at 12 offers,” Rodriguez said. “He wants the best, highest and the most qualified ones.”

Buyers looking for bargains should wait until short-sale and foreclosure prices are down about 35% from the peak market in their search area, said James Joseph, owner of Century 21 Ambassador in Brea and Whittier.

“Short sales and foreclosures are the nails in the floor of the market,” Joseph said. “That’s where the bargains are.”

diane.wedner@latimes.com

Home Will Sell if the Price is Right

To sell home, make sure the pricing is right

By Lew Sichelman
United Feature Syndicate

June 15, 2008

WASHINGTON — You can spruce up the outside of your house to the point where it stops passersby in their tracks. You can “stage” the inside so it looks roomy and brand-spanking new. You can give away a car or vacation to your eventual buyer. You can even offer a cash bonus to the selling agent.

But in today’s market, if your place isn’t priced correctly, it probably isn’t going to sell. More than likely, it will languish on the list of unsold inventory until the market adjusts back up to your asking price. And that could be months — or even years in some places.

A far better plan is to adjust your price to local market conditions, and let the market come to you.

“I have learned that a great strategy for sellers who are serious about getting their homes sold is to price the property ahead of the market,” said Michael Selvaggio, president of the Council of Residential Specialists and a broker in Townsend, Del.

In a seller’s market, Selvaggio said, there’s nothing wrong with setting your price a little higher than the last one because prices are steadily rising. But in a flat or declining market, your price should be a little lower than the last comparable sale.

And not just a few percentage points lower, either.

“When was the last time you rushed out to the mall to take advantage of a 2% sale?” asked the 32-year real estate veteran. “You need to have a real sale, so how about 5% to 10% off, for starters?”

Price adjustments

Owners instinctively know, perhaps with a little prodding from their agents, that they’ll have to adjust their price if their homes are not in great condition. Ditto for houses that are not in the greatest locations. But many sellers today are reluctant to trim their asking numbers in a “challenging” market, clinging unflinchingly to the notion that their homes are worth what they paid for them — and then some.

Sellers who have the best results realize the logic and marketing advantage behind placing a realistic price on their homes, Selvaggio said. “Make no mistake about it — price sells.”

If some sellers haven’t yet gotten this message, some real estate agents haven’t either. There are plenty of agents who continue to accept overpriced listings on the theory that if you throw enough mud against the wall, some should stick.

But according to Robert Jenson of the Jenson Group, a luxury Las Vegas real estate agency, an overpriced house will wither on the listing vine, putting it at a strategic disadvantage to other, newer listings.

Ultimately, Jenson said, the owner of an overpriced property is often forced to accept less than what he might have sold it for had he been more realistic in the first place.

Market controls

Howard Brinton, a sales trainer from Boulder, Colo., said too many agents let the market control them, instead of the other way around. An agent, he says, needs to be a counselor and educator as well as a salesperson.

“Pricing, specifically correct pricing, is the only answer for today’s changing market and the most important thing a Realtor can do for his client,” Brinton said.

To price your home properly and achieve a prompt sale, you need to anticipate the market and get in front of it. “You never want to get caught chasing the market down,” the realty educator said. “You want to get ahead of it.”

To price their homes properly, sellers need to know how fast properties in their specific market segment are being sold. You also need to know how much competition you have for today’s skittish buyers, most of whom are worried about jumping into the ocean while the tide is still going out.

And you need to know market statistics such as absorption rates (the number of homes sold in any given time frame), inventory (the number of unsold houses) and days on the market (how quickly or slowly houses are selling).

Of course, it is difficult, if not impossible, for sellers to perform this kind of research on their own. And if your agent can’t do it for you, find one who can.

Above all, heed Brinton’s final bit of advice: Selling houses is like standing in line at the grocery store. Eventually, you are going to get to the cashier. But if someone breaks in line with a more competitively priced property, you are going to have to wait longer.

Lew Sichelman can be reached at lsichelman@aol.com.

ARM Yourself With Info Before Mortgage Rate Resets

 Borrowers who opted for an adjustable-rate mortgage, or ARM, in return for a lower starting rate often fear that when the mortgage resets, they’ll either have to refinance — possibly at a higher rate — or face a big kick in their pocketbooks.

But even if an adjustment is the last thing you want to see, it shouldn’t catch you off guard. Your lender will remind you in plenty of time to weigh your options, which may be more numerous than you think.

By law, lenders are required to give you at least 25 days — 25 business days — notice of what changes, if any, will take place. And some lenders give you even more time than that.

Exactly how much notice your lender is required to provide should be spelled out in your loan documents. The typical notice is mailed 45 business days before an adjustment, but some loans call for notices to be sent 120 days in advance of changes. Even if you receive “only” a 25-day warning, five weeks is plenty of time in this day of computerized lending to search for something better.

The adjustment notice should contain the date your payment will change, the old and new index rate, the lender’s margin or markup, the old loan rate and the new one, and the old and new principal and interest payment.

Check behind your lender to make sure that the proper index, correct index amount and appropriate index period were used in calculating your adjustment. Also be certain that the lender has the right starting rate and that the margin amount hasn’t changed. All this information can be found in your mortgage.

While you’re at it, do the math yourself to be certain the numbers add up.

Generally, if this is your first adjustment, you can expect your rate and payment to rise. Subsequent changes will follow the market. But the initial one usually — but not always — calls for an increase.

Why? If you’ll recall, your original rate was a discounted one. Now, your lender gets to make up that difference.

Even if rates have declined since you first took out the loan, the drop would have to be greater than the initial discount to prevent your rate and payment from going up.

Refinancing may not be a viable option for people who have seen the value of their homes plummet. Unless you have a big chunk of change in the bank to make up the difference between what you borrowed and what your place is worth now, you are “underwater.” And to persuade your lender to give you another loan, the lender is probably going to have to take a “haircut,” meaning the bank must agree to take the loss rather than you.

Many lenders these days are doing just that for people who want to remain in their homes and can afford to keep them. Anything is better than a foreclosure, for both the borrower and the lender.

But if your original mortgage rate wasn’t too terribly discounted — such as one of those “teaser” rates — it might be wiser to stick with the loan you have.

For one thing, in almost all cases, adjustments are limited to protect borrowers from payment shock as the result of a big jump in mortgage rates.

Nowadays, most adjustables limit the amount your rate can increase at any one time to no more than 2 percentage points. Moreover, increases are normally capped at no more than 6% over the life of the loan. So, if your original rate was 6%, the highest it could go at the first adjustment is 8%. And it could never go any higher than 12%.

Although many people believe the mortgage rate rides the cap — that is, if the cap is 2 percentage points, then the interest rate automatically rises 2 percentage points — that’s not the case.

Another thing ARM borrowers either tend to forget or never understood in the first place is that their rates also can go down.

No one knows what market rates will do in the future, but if they do fall, the rate on your loan could go back down too. Maybe by no more than 2 points a year, but down nonetheless.

By Lew Sichelman
United Feature Syndicate

June 8, 2008

Lew Sichelman can be reached at lsichelman@aol.com.

Proposition 60 & 90

 

Guidelines for the transfer of the Property Tax Base

from one principal place of residence to another

principal place of residence in-county only.

One of the property owners must be at least 55 years old

on the day of transfer of the principal place of residence.

The subsequent principal place of residence must be

transferred (i.e. close of escrow on purchased home) within

two years of the transfer date of the first principal place of

residence.

A five percent inflation allowance is allowed if the

subsequent purchase is less than one year of sale date of the

original place of residence.

A ten percent inflation allowance is allowed if subsequent

purchase is at least one year and one day but less than two

years of the original property.

ALL PROP 60 TRANSACTIONS MUST

BE COMPLETED WITHIN TWO YEARS!

Proposition 90 will allow the inter-county transfer of the

property tax base if the county supervisors have approved

it. Counties subject to change without prior notice. For

further verification, please contact your county’s

assessor’s office.

 

Guidelines for proposition 60 & 90 apply if the

homeowner wishes to purchase a new principal place of

residence prior to the sales completion of his original

principal of residence.

There is no inflation allowance if a new principal place of

residence is purchased first!

EXAMPLE:

A home is purchased under Proposition 60 & 90 for the

amount of $200,000 before the sale is completed on the

original home. (DEED RECORDED).

The homeowner must be certain the original home where

the property taxes are being transferred from will sell for

at least the purchased price of his new home, $200,000 in

this example.

If the original residence does not sell for at least this

$200,000, the homeowner would not be able to transfer his

lower property tax base to the new home.

It is always a safer situation to have the homeowner sell his

principal residence first, as he then knows what his options

will be.

COUNTY UPDATE: PROPOSITION 60 & 90

Proposition 60, under certain requirements, allows a

homeowner 55 years of age or older at the time of the sale

of his principal residence, to transfer his tax base rate

within the same County. Proposition 90, under certain

County requirements, allows a home owner 55 years of age

or older at the time of the sale of his principal residence, to

transfer his tax base rate from one County to another.