Category Archives: Seller Information

Sellers: Don’t Be Surprised by Repairs

Buyer Information, Seller Information, Uncategorized

Repairs or replacements that the homebuyer requires to be completed before closing on the sale of your home can blindside you if you’re not prepared. While any unforeseen expenses are an unwelcome surprise, you’ll still have to fix the problems or risk letting your buyer out of the contract and having to disclose the problems to future homebuyers.

Homebuyers have the right to have the home they’re buying professionally inspected. The purpose of the inspection is to inform the buyer as to the condition, age and likely lifespan of major systems and appliances in the home. As a contingency in the contract, the buyer has the choice to proceed with the contract or ask the seller for repairs or replacements. This is fair because many issues with a home can’t be seen with the naked eye. An inspection gives a rough idea of future expenditures; if there are more problems than the buyer is willing to allow, the transaction will be in jeopardy. The buyer can’t help but wonder what other problems may come to light about the home.

Obviously, the less the buyer finds wrong, the smoother the transaction will be. Before you put your home on the market, hire a licensed home inspector to alert you to unknown problems and repair or replace them so the buyer has no misgivings. You’ll also be able to ask a higher price for your home when it’s in excellent condition.

Surprising Features Homebuyers Want in 2022

About the house..., Seller Information

Picture1Virtual interior designer/home stager Stuccco.com has compiled a wish list from numerous online sources that experts say homebuyers want in 2022. Many popular features aren’t what home sellers may think. Before you upgrade your home to sell, consider these top five homebuyer preferences:

  • Laundry rooms
  • Exterior lighting
  • Ceiling fans
  • Patios or decks
  • Walk-in pantries

Laundry rooms. Homebuyers don’t want to go down to the basement to do laundry, so make room somewhere on the first floor. Including a built-in table for sorting is a good idea. Realistically, many Lansing area homes have a basement laundry.  Paint the surrounding wall a light color and make certain the area is well-lit.

Well-lit outdoor living spaces. Homebuyers want exterior lighting (87%), patio (82%) and a front porch (81%), a rear porch (75%) or a deck (75%). Landscape lighting adds a luxurious glow to outdoor spaces as well as an extra element of security.

Ceiling fans. With the sudden rise in energy prices, it’s not surprising that homebuyers want lighting fixtures to do double duty as an air conditioning aid, especially when cooling or heating a larger home.

Walk-in pantries. Homebuyers want to be able to stockpile food and paper goods. They want to open the door to the pantry and see at a glance what’s on hand.  Not everyone has a large enough kitchen to support a pantry.  Consider reorganizing a nearby closet that currently houses miscellaneous items.

Homebuyers also prefer two-sided kitchen sinks over farmhouse sinks (81%.) They want a full bath in the living area (80%) and kitchens open to the dining room for less formal dining (85%.)

Homebuyer preferences are changing home design. The National Association of Home Builders reports that new home buyers want bigger homes which now average 2,524 square feet.

 

About Earnest Money Deposits

Buyer Information, Seller Information

When a buyer and seller agree on a purchase price and terms, the buyer7856255.large shows the seller a sign of good faith in the form of earnest money. This money, typically 1% to 3% of the sales price or whatever is customary for the local market, is deposited with an escrow agent or title company, a neutral third-party that serves to finalize the transaction for both sides.

Earnest money is designed to protect the seller. It shows the buyer is serious, but if the buyer doesn’t follow through with the contract, the seller could lose valuable marketing time when the transaction doesn’t close. They’ll have to start all over again to market the home. There are also opportunity costs – the seller could have possibly sold the home to a different buyer and perhaps for better terms. For that reason, the seller can keep the earnest money.

This also protects the buyer. The buyer can get out of a sales contract and get their money back if contingencies outlined in the purchase agreement aren’t met. Typical contingencies are that the buyer’s lender agrees to make the loan, the appraisal meets or exceeds the sales price of the home, the home passes inspection or that the buyer sells their current home before closing on the seller’s home.

Earnest money paid upfront in the transaction means the buyer has to come up with less money at closing or the deposit can be used as part or all of the down-payment.

20 things that may not add to your property value

Seller Information

6014862.large (1)

  1. DIY Home Improvements – while they may save you money, if not done professionally, it will be obvious to a prospective buyer, which might cost you in property value more than you invested in improvements.
  2. Garage Conversion – When it comes to home buying, buyers care about their garage space and size.  Cutting into that with a garage conversion that might not match the rest of the house might be something to consider before taking the plunge.
  3. Solar Panels – If you decide to lease solar panels instead of buying, keep in mind, that future home buyers might not want to take on that responsibility.
  4. Quirky Wallpaper – it may look cute, and you might think it adds character but with quirky wallpaper, the odds of others not holding them as fondly as you do are very high. Consider investing in temporary wallpaper instead and removing it before selling if you have your heart set on it.
  5. Custom Luxury Upgrades– They may be just perfect for you, but that’s just the thing, they probably won’t be for others, and the more custom you go, the likelihood the cost will go up for replacing the upgrades. Make sure you think through these decisions.
  6. Wine Cellars– With so maybe individuals who don’t drink, or hate wine, or are simply committed beer drinkers, wine cellars take up a lot of square footage. They are expensive and difficult to renovate into a different space.
  7. Remodeled basements and attics –If you are looking to add on a bedroom, using this space, there is a lot to factor in. There are ceiling height, closet, and emergency exit requirements that can end up racking up quite a cost so if you are thinking of doing this make sure you do your research and the math beforehand.
  8. An oversized home addition –If you expand the home too far, it will start to look unplanned and not give the added appeal you may be thinking it will have.
  9. New windows – If these are old windows we’re talking about, then they may add to your property value, but you need to check your local market to see if houses with new windows are going off the market faster than ones that haven’t made the upgrade, especially with windows being such a large investment.
  10. Swimming pools – Swimming pools often scare aware new family buyers who have little ones around to worry about, while they may seem fun, keep in mind your target buyer before installing.
  11. Lavish lighting fixtures– These can go wrong in so many ways, they can go out of style fast, dates themselves and your home, and aggressively tell other people your style and how much it’s not theirs.
  12. Too much wallpaper – Once again, it’s hard to envision a space of your own, in a room with a distinct look because of the wallpaper. Solid color walls give homebuyers more room for imagination.
  13. Textures on the wall and ceiling– Textured walls can go in and out of style, people who want this in their home will make the investment to do it themselves but for others who don’t want them, they may be discouraged by the mess of having them removed.
  14. Overbuilding for the neighborhood – A house that doesn’t match the neighborhood, can stand out and make people feel it’s out of place.
  15. Inconsistent high-end upgrades – This creates more work for the buyers to make the home more cohesive and it can sometimes give the impression that your home upgrades weren’t thought out.
  16. Invisible improvements– If it’s not something you need to be done and not something homebuyers would see or ask about, it likely will be a good deed unrecognized, save your wallet the stress.
  17. Quirky tiling – It is pretty hard to work with tiling if it is already setting the tone of the room all on its own. Try picking tiling that can mess well with many different design tastes, homebuyers often are interested in ripping up and replacing tile right after purchase.
  18. Too much carpeting– Carpet can age fast, wear down and get messy. It may make sense in some rooms like the bedroom but with the market changing, committing to most of the rooms with carpet is a big no-no, especially in the bathroom! 
  19. Bright or bold paint colors – If new buyers cannot imagine themselves in your home because you have left so many traces of your design style that they might not agree with, they are going to be less likely to see it as their dream home.
  20. Large Gardens – Gardens are amazing, but depending on the property price range, large gardens can be expensive and time-consuming to maintain, and not easy to get rid of if the new owners don’t share your green thumb.

This is not to suggest that you shouldn’t make your home as unique as you want it, but if you are considering selling in the not so far future, or are already on your way to listing, staying away from these items or self-correcting might pay off. 

 

First Time Home Seller’s Top Questions Answered…

Seller Information

Each new home seller has a list of questions that they may wish to ask their Realtor before the process of putting their home on the market begins. We answer the top questions most h4c96rb8diome sellers ask.

  • When is the best time to sell my home?

Every real estate market is different, therefore, the best time to sell a home will be different from real estate community to real estate community.  In the Lansing area market, the spring months are the best time to be selling a home.  The spring months begin in mid-March. Earlier if winter ends sooner.  Since every home seller’s situation is different, you should discuss the timing of your home sale with your Realtor.  Selling a home in the fall and winter months may be necessary and could be better than waiting until spring. There are fewer listings meaning less competition.  Also, only serious buyers will be shopping during the frigid winter months.  Keep in mind that Michigan State University and our major local business are constantly bringing new employees into the Lansing real estate market.

  • How is the real estate market right now?

One of the most important indicators on market conditions is average days on the market. New listings posted in the spring and summer have been selling within a few days. It may a little longer in the winter months, however, low interest rates (current around 3%) are an incentive for buyers to purchase a home.

  • What steps should I take to prepare my home for sale?

Not properly preparing a home for sale can put a home owner at a huge disadvantage. Making sure clutter is at a minimum, freshly painting rooms, installing new carpeting, or ensuring odors are non-existent are just a few things that could be done before listing your home for sale.

  • What should I disclose to potential buyers?

Michigan real estate law requires that sellers disclose imperfections that affect the structure and living environment. Basically, anything that you are aware of in your home. If you’re aware of defects with the roof, appliances, structure, or home in general, you’re required to be honest and upfront.  If you’re aware of defects, whenever possible, fixing them before going on the market is best.  This can avoid potential issues once your home is under contract, after inspections, and even years after you have sold your home.

Are we headed for real estate crash?

Buyer Information, Finance and Taxes, Seller Information

Every fall, when the housing market begins the annual slowdown, buyers and sellers begin to ask if we are destined for another crash like the country experienced in 2007.

The housing market crash 15 years ago was responsible for a worldwide recession. Millions of families lost their homes and housing values plummeted more than 30%. It took nearly a decade for the Lansing market to fully recover from that disaster.  While it’s true that the real estate market is experiencing surging prices and a housing shortage much like market environment prior to 2007, the conditions are different than those 15 years ago.

Uncontrolled Mortgage Financing.
Following a period of high interest rates approaching 18%, mortgage money became available for a new low of 7%. The market quickly became flooded with new buyers hoping to  qualify for a mortgage loan. However, there was no agency regulating the business of mortgage financing. It was easy for just about anyone  to set themselves up as a mortgage broker and make a fortune offering loans to unsuspecting buyers who didn’t know they were not financially capable of sustaining monthly mortgage payments.

“If they have a pulse, we’ll give them a loan.”
This was the joke in the mortgage business. It was possible for a buyer to secure mortgage financing for much as $750,000 on “stated income” without proof of employment.  Millions purchased their home with no out-of-pocket expense. Adjustable-rate loans, with closing costs and down payment built into the monthly payment, made it easy for anyone to obtain a mortgage and become a homeowner.

These buyers often had a first and second mortgage and no equity in the home. Initially, the monthly payment was lower than renting, so it seemed like a good idea. However, the adjustable-rate eventually raised the monthly payment to more than many could afford.

Mortgage defaults rapidly increased nationwide with the investors who held those loans unable to sustain the financial loss. Ultimately, some of this country’s largest banks and mortgage companies went out of business.

Mortgage Practices have Changed.
These near fraudulent practices forced the United States Congress and federal regulators to change how mortgage lending is regulated. The Consumer Financial Protection Bureau was created to enforce standardized mortgage practice so that the process of obtaining a mortgage is more transparent. Lenders who do not follow prescribed practices will loose their license and suffer huge penalties.

Many economists are confident that there will eventually be a change in the market. Population movement, interest rates, and consumer confidence all contribute to a shift from “seller’s market” to “buyer’s market”…but not a crash.

 

Normal Real Estate Slowdown Entering September

Buyer Information, Current Lansing Area Sales Statistics, Seller Information

The current inventory of homes (770) is more than double the 353 homes available to buyers in April. This increase occurs at this time every year and does not indicate a change in the current seller’s market.

Historically low interest rates, currently at 2.87%, continue to offset the increased cost of purchasing a home with properly priced homes continuing to sell quickly, and with multiple offers.

Why the increased inventory?
Each spring the inventory includes a large number of properties that for a variety of reasons didn’t sell the previous year.  A home in poor condition or lacking a second bath may be passed over by buyers willing to wait until something better comes along. Obviously, an unappealing home is not going to easily sell as a growing number of more attractive homes become available.

Then there’s the reduced number of buyers.  As of August 30, 1,022 homes have accepted offers or are pending a closing.  Also, 5,255 homes have closed since the beginning of the year. This adds up to 6,277 buyers who are no longer searching for a home. Add to that figure the families involved with back-to-school activities who may need to postpone home shopping until next spring.

This is good news for September buyers still in the hunt.  Increased inventory plus reduced competition may provide an opportunity to acquire their home of choice.

 

Is Lansing area Housing Becoming Overvalued?

Market Update, Seller Information

Home values in the Lansing area have risen by more than 12% over the past year.
This means, a home that sold for $250,000 a year ago would likely sell for $280,500 today.

This rapid rise in prices has many buyers and homeowners wondering if the housing market is becoming overvalued.

Is there a housing crash on the horizon?
This is not the first time the real estate market was considered to be overvalued. Home values escalated in 2002 through 2006, just before the nationwide housing market collapse.

Things are different in today’s market. During the last housing bubble, there was a huge surge in new home construction and extremely lax mortgage-lending standards.

In the current market, there an ongoing shortage of homes for sale across the mid-Michigan area. Instead of having too many houses on the market, we currently have a situation where the number of available properties falls well below the demand. This is the number-one reason why prices have risen so sharply over the past year or two.

Even though buyers continue to pay above asking price, that does not necessarily mean a crash is on the way. The ongoing problem with supply and demand will continue to force home values upward in the foreseeable future.

If real estate home values continue to climb, there could eventually be a decline in home sales due to many buyers being priced out of the market.  In addition, buyers may reconsider purchasing a home. Buyers worry that they will overpay for a home, only to see prices drop over the next few years. This can lead to a homeowner being “upside down” or underwater in the mortgage loan.

No one can predict future real estate or economic trends with complete accuracy.  So, home buyers simply have to think long term, when buying a home. Houses tend to gain value over the long term. That is what makes real estate one of the best investments over time.

 

Are Sellers Required to Make Repairs

Buyer Information, Seller Information

Typically, buyers include a home inspection contingency in their purchase offer that allows them to ask the sellers for repairs and opt out of the contract if the seller refuses. The seller can respond in several ways.Picture1

  • They can readily agree to fix the problem, no matter how expensive.
  • They can agree to fix any problem that’s a safety or potential legal issues, such as mold or radon remediation, but decline minor repairs such as filling in and painting over picture hanger holes in the wall.
  • They can refuse to fix anything, but risk losing the buyer. For safety or code issues, they’ll have to declare the problem on subsequent seller’s disclosures, which could impact the home’s value to future buyers.
  • They can offer to lower the price of the home to cover the cost of the repair for the buyer or offer a closing credit to the buyer to pay for the repair without lowering the price of the home. That way the buyer can complete the repair to their liking.
  • They can ask the buyer to meet them halfway, such as paying more for the home if the seller repairs something major, or replaces the roof.
  • They can ask the buyer to waive additional repair requests if the seller will fix the worst or most expensive problem.

Sellers should know that FHA, VA and other government-guaranteed loans have stricter requirements for home safety and that some repairs are mandatory for the buyer’s loan to close.

Should You Put Your Home on the Market in Winter?

Market Update, Seller Information

If you are a home seller, you may be wondering whether to put your home on the market  during the winter months or wait for spring 2021.  There are arguments for both sides, but the National Association of REALTORS® predicts that this “will be one of the best winter sales years ever.”

6900083.largeThere is currently a perfect storm of low mortgage interest rates, low housing inventory, and a pandemic that’s causing many homebuyers to work from home and virtually school their children. They’re rethinking how and where they want to live. Since most homebuyers purchase homes to secure more living space, that’s true now more than ever.

Buyers are looking for advantages because low inventories and rising prices favor sellers.  Many will look at homes in the winter because the interest rates on the 30-year fixed-rate are below three percent for those with good credit. There’s less competition from other buyers, which means they may actually win in a bidding war.

The inventory of homes is historically low and housing demand is likely to increase now that a COVID-19 vaccine is on the horizon.  Homebuyers should prepare for what could possibly be the most competitive spring homebuying season in years.