Tips

How to price a house to sell

When an owner prepares to sell their home, the biggest question to answer is what price should they ask?  All too often they come to their conclusion based on how much they “need” to walk away with the profit margin they want OR they arrive at their answer after looking at data that doesn’t really give them the full picture.  Neither approach does anything to helping them sell their house fast— or for the most money.

Here’s a much better approach:

#1   Look at what similar houses in similar neighborhoods have sold for during the past six months.  And look too at what nearby houses have sold for in the price range you think your house might fall into.  This info will tell you what has recently happened.  And unless something has changed in the market, this info will give you a very good idea of what your house will could sell for.

#2  Look also at the same type of houses as above, that were offered for sale during the past six months and were removed from the market because they didn’t sell.  You may find that these were priced too high, or that the owners started with a pricetag way to high and scared everyone away.  Or you may find that they were priced too high for their condition or location.

#3  Review carefully each house currently for sale that will be a competitor.  Obviously you want to be priced lower than those competitors that are larger, more updated, etc. than your own.  And, you’ll likely want to be priced higher than those your house is “better” than (so that you don’t leave any dollars on the table!).

If you’d like help digging out this data and making heads or tales of it- just let me know.

 

Farm Credit… not just for farmers!

Yes, Farm Credit makes agricultural loans and loans to farmers.  But, they do so much more, and some of their programs may be of assistance in helping non-farmers to achieve their real estate and financial goals.

Here’s a few things they do:

*  Lot loans with as little as 15% cash down.

*  Jumbo home loans over $1M.

*  Manufactured home loans with 25% cash down.

*  30 year mortgages on Log Homes with 15% cash down.

*  Construction & Construction-Perm loans.

*  Will finance owner builds.

*  Large acreage purchases with credit given to out buildings.

If you think something like that may be of value to you- call me.  I know a guy!

Why does it matter where my money comes from?

That’s a question I get asked by wide eyed, bewildered clients when their loan officer tells them they have to prove where their down payment money is coming from.  They ask, “Why does it matter?  Why should they care?”  Well, let me see if I can shed some light on the situation…

First of all, the minimum amount of cash down payment required varies with your loan type.  VA and RD loans do not require any down payment from the buyer.  FHA requires a minimum of 3.5% of the purchase price (ie. $3500 on a 100k property), and Conventional loans require 5%.  There are a couple exceptions to those rules, but they don’t factor in very often.  And keep in mind that closing costs typically run around $4-5000; and someone has to pay those- either the buyer or seller.  They are a negotiable item.

On VA, RD and FHA loans, the buyer can use their own money or they can receive a gift from a relative, employer or (in some cases) a close family friend.  To use the gift money, the person giving the gift must sign a form called a “Gift Letter” where they affirm that the money is their’s and being given as a gift (ie. no repayment is intended).  They also must supply a bank or investment account statement evidencing that the money is their’s.  For any other funds the buyer is using to pay down payment or closing costs, they’ll have to prove where the money came from (unless it was in the bank or an investment account for the past 60 days).

On Conventional loans, anything above the minimum 5% required cash down payment may be gift funds.  And like on the other loan types, the source of the funds will have to be verified unless it was in the bank or an investment account for the past 60 days.  (Read that last sentence again- carefully.  It can be a deal breaker.)

On Contract deals, the source of funds does not usually have to be proven.

So, why does it matter?  Basically, there are two reasons why the lender wants to know where the money is coming from.  First, it a general rule of lending is that borrowers who have some “skin in the game” have lower default rates than those who do not.  Makes sense.  I mean, if you’ve put some siignificant amount of your own cash into the deal, you’re less likely to give up and walk away from your investment.  Secondly, the lender wants to know if you’ve borrowed money to come up with the down payment or closing costs.  This makes sense as well.  If you’ve borrowed money, then the amount that will need to be repaid each month should be taken into consideration when evaluating your debt-to-income ratio to see if you qualify for the loan.K

There are a lot of things in the mortgage business that don’t make sense.  These requirements, however, do help the whole system to function better— and in the end, that is good for home owners.

If you have questions about your own situation, please call.  I’ll be happy to help you find your way through the mortgage maize!