Huntsville Alabama Houses Blog

Selling a home is an art, not a science. But, there are some very common mistakes most sellers make which make their home less attractive to buyers. Here they are:

We all have a tendency to think our home is the nicest in the neighborhood, and therefore worth more. However, a good market analysis tends to keep things in perspective. But, a market analysis alone is not sufficient to properly price a home. The condition, size, amenities, etc as compared to other homes that have sold in the area are equally important. Another thing to consider is the price of your home versus the price of other homes currently on the market. ie, what are you competing with?

Many sellers prefer to wait on a contract and then make only the repairs the buyer requests. While this may seem a good strategy, it's a double edged sword. Often, $1000 worth of needed repairs can bring you much closer to your asking price much quicker. $1000 worth of repairs today can potentially bring you $2000 or more tomorrow on the sale of your home.

The kitchen and the master bathroom are the most important rooms in any home and are the most critical areas to clean. As a seller, it is important to make sure not only the floors and sinks are spotless, but also the hand towels, mirror, shower, shower curtain, and of course the toilet. Put away all personal hygiene items including toothbrushes and toothpaste. In the kitchen all appliances should be spotless and there should be no dishes in sight. Steam clean all carpet throughout the house. Dust all rooms of the house thoroughly and burn scented candles to mask any odors good or bad. Note: Using spray aerosols before a prospect shows up usually makes them think you are hiding strange odors. Candles are MUCH less intrusive to the nose and send a more positive message.

Another agent put it to me the best: Sellers, remove your treasures both inside and out. Clutter detracts attention from the home and directs it to the clutter. I'm not just talking about paperwork, extra furniture, extra cars, or other various treasures. I'm also talking about pictures of your family on the walls and refrigerator. Many sellers are reluctant to take those pictures down, but if you don't, your prospective buyers will spend more time looking at your photos than they will the home. An hour later, they won't be able to remember any redeeming feature about your home other than your photos.

You may love purple, but most buyers don't. The balloons painted on bright yellow in your child's bedroom may be cute to you, but it does little to help make your home seem appealing. Maybe you are the artsy type and you've painted the living room with artwork or abstract designs. Everyone has their own personal tastes, but they typically won't appeal to most people. Before you put your home on the market, paint with neutral colors such as off whites and very light beiges. I recommend staying away from pure white as it tends to take away from the warmth other colors can provide.

Very few things are more awkward than this situation. If you remain home during a showing, the buyers and their agent cannot adequately talk about the pros and cons of the home. Also, the buyer will feel rushed into leaving and most likely won't have a favorable view of your home.

In my opinion, this is one of the most annoying things a seller can do. I've shown homes where the cat ran out and we had to chase it down. I've shown others where the overly friendly dog jumped on my buyers on a muddy day. Even worse, I've been slobbered on. If you have pets, either take them with you when you vacate the house before a showing, or keep them leashed or tethered somewhere away from the vicinity of the house. Furthermore, if the pets are indoor pets, hide the food and water dish, and of course, the litter box.

First impressions are usually the best impressions. When the buyers pull up, they are already looking at the house before they even pull into the driveway. More than once in my career I have had a buyer tell me to keep on driving before I ever pulled in the driveway. $500 worth of shrubs, trees, flowers, and general landscaping can often mean the difference between full price offers and low offers. I learned this lesson years ago when I was selling a home. I had a beautiful home and got plenty of offers...all of them more than 10% below my asking price. I paid $500 for landscaping and got a full price offer 3 days later. The couple that bought it stated, "We knew it was our home before we ever went inside."

Obviously, you want a call from an agent before they show your home. Make sure the number you provide to them has someone available to answer. If you both work, and you provide your home phone number for the answering machine to catch, chances are your home will not show. If you provide a cell phone number, make sure the ringer is on and you are able to answer it. If you miss a call and the agent leaves a message on your voice mail....CALL BACK ASAP! Most agents try to give you at least a one hour's notice, and they aren't going to show your home unless they have your permission.

Buyers have plenty of homes to choose from and they aren't yet in love with yours. Requiring 24 hours notice before showing is a near guaranteed bet your home will not be seen by serious buyers. Worse yet, telling an agent they can't show the home until so and so date practically eliminates any chances that buyer will look at your home. Your home must simply be ready for a showing at all times. Just like you, buyers and agents value their time and don't want to waste it.

Which one is the right agent? The one that sells the most homes or the one with the most experience? Actually, the answer is neither. The right agent is the one you feel most comfortable with and can provide you with services you like. All agents have differing personalities and differing ways to market your home. The right agent for you may be the numbers guy or it could be the one offering the lowest commission. The right agent may be the one you feel you can trust the most or the one who has the best marketing plan that matches your goals and ideas. Remember, you are entering a relationship and the agent that sells the most homes or has the most experience may not match your personality or have the same goals you do.

Foreclosures - Truth and Fiction

A common question I get is "Is it true you can get foreclosures for pennies on the dollar?". The answer isn't as simple as a "yes" or "no".

First, you must understand how foreclosed properties are priced. Most people I speak with have the impression banks discount these properties in an effort to rid themselves of inventory. While banks do not like holding inventory, they aren't in the business of losing money either.

Nearly all foreclosed properties are priced based on market value minus cost for repairs, not based on what was owed when it foreclosed. For example, let's say a foreclosed home would sell for about $100,000 on the open market under normal circumstances. Let's also say it needs $20,000 worth of repairs to sell for $100,000. Let's also assume the previous owner only owed $50,000 on the home when it foreclosed. Now, many people I speak with assume the bank would try to sell it for $50,000 to $55,000. Wrong answer. The bank will price it at $80,000.

If you purchase the home, you are getting it cheaper, but you still need $20,000 worth of repairs to bring it up to market value. Most all foreclosed properties are sold "as-is" meaning the bank will not pay for any repairs the home may need, whether minor or major. And, nearly all of them need repairs. I'm astounded at the number of foreclosures where the disgruntled homeowner punched holes in all the walls, stole all the appliances, and in one situation took a water hose to the inside of the home.

This condition can create another condition. If you are purchasing the foreclosed home with a mortgage, your lender may refuse to loan the money, particularly if the home needs major repairs before it is in "livable" condition. Most lenders are also unwilling to lend money above the contract price, which means you will have to get money for the repairs from some other source, such as your bank account, relative, or worse...putting it on a credit card.

Finally, one other thing you must be aware of is the "right of redemption". This varies state by state, but in Alabama the "right of redemption" lasts for one year. What this means is within a period of one year after foreclosure, the homeowner who lost the home has the right to take that property back. Granted, that homeowner would have to be able to pay for the home somehow in order to do so. Plus, the homeowner would also have to reimburse you for repairs only. If you make modifications or updates, they would not have to pay you for those. So, if the 20 year old 30 gallon hot water heater didn't work and you replaced it with an 80 gallon hot water heater, he/she would only owe you for a 30 gallon heater. Any other updates, such as modern lighting or modern kitchen counters would also be at your loss.

The fortunate thing is less than 1% of all those foreclosed homes are actually redeemed. Typically, if someone forecloses they aren't able to get financing for at least two or three years due to the huge negative impact a foreclosure has on credit. But, if he/she wins the lottery, inherits some money, or gets it from a relative, you could be forced to move out of your home.

Buying a foreclosure can save you money in the short term, particularly if you can do the repairs yourself. Do your homework, estimate costs, and learn from professionals. Then, you'll be in a much better position to purchase a foreclosure without losing money or lots of time.

Haunted Homes in Huntsville?

From time to time, I check my web page statistics to see what key words are directing people to my page. This morning, I found an interesting search phrase driving traffic to my web page; "haunted homes for sale in Huntsville". At first, I was amused. Then I noticed several other similar search phrases such as "haunted homes Huntsville" and "haunted houses in Huntsville".

"Hmmm...", I thought, "Maybe I need to blog this".

So, for all those of you who are interested in hauntings in Huntsville, here's what I found:

-Huntsville is reported to be the most haunted city in Alabama.

-Many of the hauntings in Huntsville are centered around an old cemetery, less than 1 mile from my office on California Street. Here's the map: http://www.google.com/maps?f=q&hl=en&geocode=&q=maple+hill+cemetary,+huntsville,+al&ie=UTF8&ll=34.731949,-86.569798&spn=0.008288,0.019526&t=h&z=16.

- Dead children's playground: Located right next to Maple Hill Cemetery, this playground is rumored to be haunted by ghosts of children who swing in the swing sets between 11 pm and 3 am.

- Carter Mansion: Rumor has it, Sally Carter, a 16 year old who died violently, turns over her headstone from time to time and flings furniture about the place.

- Maple Hill Cemetery: An elderly woman who loved her rocking chair passed away. They placed her in the family crypt with the rocking chair and it is rumored she can be heard rocking from time to time.

- Space Camp: An unfortunate accident claimed a worker's life, burying him alive while one of the sleeping quarters was under construction. It is rumored at night he can be heard calling for help.

- Huntsville High School: It is rumored footsteps and laughter of teenagers can be heard in the empty halls at night.

While this isn't a complete list, there are many more reports of hauntings in Huntsville. The city of Huntsville maintains a webpage with a few details of these supposed hauntings. You can find it here: http://www.hsvcity.com/kids/ghosts.php

I can't claim to have ever seen a "ghost", but I will say I have seen homes in "scary" condition. If you are in the market for a "haunted home", I have no problem helping you find one reported to be so. Just drop me a line or email me.

Happy Haunting... errrrr... Hunting, that is!

Todd

Top Ten Buyer Mistakes

1. Using an out of town lender

The most common reasons deals either fall through or get delayed are usually related to lender problems. Internet lenders or out of town lenders simply complicate those problems. Internet clearing houses which represent multiple lenders have a tendency to tack their own fees to your closing costs while guaranteeing you the lowest rate. Furthermore, many of these cut rate lenders have loan programs with pre-payment penalties, high fees, and pre-paid "discount points" which can quickly add up. Many of them aren't in a hurry either. They don't have a reputation to uphold and they are handling massive amounts of loans every day, often causing deals to slip through the cracks. Do yourself a favor and choose a local lender who has a reputation to uphold.

2. Failing to hire a licensed home inspector

A typical home inspection can cost you $350, and that money is usually due the day of the inspection. in an effort to save money, many buyers opt to do their own inspection or hire a family member who is somewhat savvy. Since Alabama is a "buyer beware" state, I can't stress the importance of hiring someone who is licensed to do the inspection. It could save you thousands of dollars in hidden repairs.

3. Demanding too much of the seller

When making an offer, use reason. Most sellers are willing to come down on price, pay some of the closing costs, do some repairs, or even provide a home warranty. When a buyer makes a low offer and requests all of the above, a seller will usually balk and not even consider the offer. If you ask the seller for a massive amount of closing costs or other things, make sure you make a fairly high offer. You'll have a much better chance of buying the home if you do.

4. Asking for too much in the request for repairs

An inspector's job is to find what's wrong with a house up to and including loose door knobs and stuck windows. The contract specifies a seller MUST deliver electrical, appliances, plumbing, and heating/cooling in normal and operating condition. It does not specify they must fix everything on the inspection report. When you sit down with your agent to choose what you want repaired, be reasonable. Obviously, ask for things that the contract specifies the seller must do, but don't ask for everything under the sun. A good rule of thumb is the higher your offer, the more the seller will be willing to repair.

5. Obtaining additional credit between the time of approval and closing

After you've been approved for a loan, most lenders will continually check your credit up to and including the day of closing. If you've financed a new car or obtained a new credit card during that time, you take the risk of the lender denying you a home loan. Furthermore, stop using your credit cards until after closing. Don't finance that new furniture until after closing. Don't do ANYTHING that will negatively impact your credit.

6. Being too picky when choosing a home

Finding a home should take no more than 30 days. If you've looked at more than 10 homes and none of them interest you, then you are probably too picky for your price range. We all have our wants, but when a buyer demands 6 bedrooms and 4 baths in a $75,000 home that is ready to move in, said buyer is being unrealistic. The more you want, the more you will have to pay. If those amenities are important to you, then my advice is to wait until your income rises to the level of the type home you want before you even look. If you don't, you'll just be setting yourself up for a lot of disappointment.

7. Having no money for closing

When a seller pays your closing costs, he will want to cap the amount. If closing costs are estimated to be $3000 and the seller agrees to pay up to that amount, this does not mean those costs won't exceed that cap. As a buyer, any closing costs over the amount the seller is willing to pay is your responsibility and you should anticipate that. Also, pre-paid taxes and homeowner's insurance are the buyer's responsibility as well. Open a savings account and put back enough money to pay those costs and any overages well before closing.

8. Trying to buy a home "my own way"

Many buyers drive around looking at "For Sale By Owner" yard signs, refusing to use an agent, typically because they think they can do it better or find a better deal without an agent. While that is commendable, one thing you must understand is sellers rarely discount their home just because it is for sale by owner. Most "For Sale By Owner" sellers are trying to maximize their returns. If they were to lower their price by 6% since they don't have to pay commission, then their bottom line is no different than if they had hired an agent. What would be the point? Also, when you buy direct without representation, you don't have access to the experience and wisdom an agent can provide.

9. Obtaining an adjustable rate mortgage (ARM)

I threw this one in here due to the problems lenders are now having. Adjustable Rate Mortgages have lower initial interest rates than fixed rates, but rates fluctuate daily. The biggest risk is the rates going up over time and your monthly payment doubling or even tripling! This is what happened over the last 6 months. Many buyers got these adjustable rate mortgages and are now losing their homes due to inability to pay. Statistics report over 90% of the current loans in default are ARMs. Do yourself a favor and demand a fixed rate.

10. Choosing the wrong agent

Which one is the right agent? The biggest name in town or the one with the most experience? Actually, the answer is neither. The right agent is the one you feel most comfortable with and represents your interests, not his/her own. All agents have differing personalities and differing ways to help you find your home. The right agent for you is usually the one who identifies your wants and needs up front and finds you a home based on those things. The wrong agent is usually the one who is pushing you into seeing homes out of your price range or homes that don't meet your needs. Those are usually the agents trying to push you into buying one of their own listings so they can get double commission. Remember, you are entering a relationship and the agent that is well known or has the most experience may not match your personality or be taking your best interests at heart.

What does a Real Estate agent do?

When someone asked me this question recently, I have to admit I was pleasantly surprised. Why? There is a common misconception, even among students in real estate school, that all there is to it is showing houses, filling out contracts and collecting a fat commission check.

Oh, that it would be so easy!

My answer to this person was, "being a Real Estate agent is no different from being a business owner."

Having failed at many businesses and succeeded in even fewer, I at least had a small advantage over other beginning agents. The drop out rates are phenomenal...80% of new agents are gone within the first two years. This isn't much different from the rest of the business world. Most experts cite "lack of business experience" as the culprit.

With that being said, running a successful real estate business is dependent upon the same factors as any other business. First, as an agent, you are self-employed, even though you have to work as somewhat of an apprentice to a broker. To a certain extent, he/she is still your boss and has certain systems in place you must follow, but for a price.

That 3% commission you earn is split with the broker. 65% to you and 35% to your broker is not uncommon. Some brokerage firms charge a "lease" for your office that must be paid monthly whether you are bringing in deals or not. Other brokerage firms require you pay them a certain amount if you don't meet a quota.

An agent also has to consider marketing, which is CRITICAL to operating any business. Any business owner must have an effective marketing strategy and spend money on that marketing to keep the business growing. Marketing expenses can get away from you quickly!

Finances are a major portion of it too. As a business owner, you must control expenses and do your own accounting. Sure, you can hire a CPA, but you must still keep accurate records. Other important things to consider are cash on hand for those seasonal down turns and how much to hold back from the net commission check for taxes. Being self-employed, no one takes it out of your pay check automatically.

You know those little lockboxes that hold the keys? Well, those don't come free. Annual insurance, attorney fees, association fees, listing service fees, and other fees all add up very quickly, particularly in the first year of business.

And the mountains of paperwork? I digress...

Don't get me wrong...I thoroughly enjoy my career in Real Estate. It's fun and exciting to me. My point is this: just like any other business, if you are going into it for the money, you are going into it for the wrong reason.

I went into the computer field in the early days of the desktop computer (for the money), and stayed in it for 17 long, miserable years. As a result, not only did I wake up every morning with a feeling of dread, I never reached the full financial potential it offered. Why? Because I did not enjoy it, and therefore didn't work as hard for it. You cannot separate the two.

If you are considering a Real Estate career, I advise you to get some business operation training first. It will give you a huge advantage over other new agents and give you some insight on being self employed.

It's as simple as this. No matter what you do, do it because you enjoy it. You'll work much harder at it and pat yourself on the back when the money finally comes. Then it will feel like a hobby, not a job.

Todd

Searching for Homes in Huntsville Just Got Easier!

Want to see North Alabama listings in a convenient, easy to use web page? Rise Five Star Realty has set up a new web page that makes searching listings much easier. Any feedback you could give me would be much appreciated. Try it out and let me know. Here's the link:

http://huntsville.alabama.mls.searchrealestatehomesforsale.com/

Thanks,

Todd