The Best Year Ever, for Sellers

Some experts predict mortgage rates will be as high as 5.5% by summer. Remember that high is a relative term and 5.5% is still a pretty attractive rate over the long haul. It is pretty unthinkable for most banks, but some in Washington think the time has come to start talking about cutting the principal on mortgage loans in an effort to stave off another huge wave of foreclosures.

Federal Deposit Insurance Corp. Chair Sheila Blair says she is considering incentives for lenders to cut principal on $45 billion in mortgages her agency has acquired from seized banks, according to Bloomberg BusinessWeek magazine.

Analysts with Amherst Securities Group say negative equity is the most important predictor of default and warned that interest rate reductions and extending loan terms aren’t going to work for many of the borrowers who are currently at risk of default. There are no details yet available, as this program is still in the very early stages of discussion. Mark Zandi, the chief economist for Moody’s Economy.com, suggested that banks receive a federal match of $1 for every $2 in principal reductions they offer to home owners. He added that, while principal reductions are rare, some banks have been forced to use them recently and are seeing positive results from writing off part of the loan.

There was clear evidence that first-timers were a big part of the fact that sales were on the upswing in November. According to one survey, first-time buyers purchased 51% of the homes in November. Likewise, they also accounted for 50% of total sales in October. The number of first-time buyers might also explain the surge in sales of condos. While single family home sales jumped an impressive 42% from a year ago, condo sales did even better — condo and co-op sales were up in November by 60% over last November.

It wasn’t only the tax credit that encouraged people to go out and buy pieces of property. Interest rates were also incredibly attractive, making monthly mortgage payments palatable. The national average for a 30-year fixed rate mortgage fell to 4.88% in November from 4.95 in October and was far better than a year ago when the rate hit 6.09 in November of 2008. That rate was the second-lowest on record after bottoming out at 4.81% in last April.

One notable change in November was that there were sales gains in all price classes from a year ago across the nation. For most of 2009, sales were gaining ground only in the lower price ranges. Because sales are still most concentrated among first time homebuyers, who typically shop in the lower price ranges, there has not been upward price pressure. In fact, the median price in November was $172 thousand dollars, which is 4.3% below where it had been in November of 2008. The large number of distressed properties that have changed hands continue to exert downward pressure on prices.

Going into 2010, it appears the national scene is poised to have another good year. Mortgage rates remain low, and the federal tax incentives remain in place for first time buyers and have been extended to repeat buyers. Prices in many places are still below where they were a year ago.

With all these factors in place, real estate watchers are bracing for another surge in the springtime and, hopefully, move us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires, which will help restore balance to the housing market across the nation.

For one thing, there is a major tax incentive for buyers to jump on properties sooner rather than later this year. Under the federal tax credit that was extended for first time homebuyers and expanded to include repeat buyers, the homes need to be under contract by April 30th for the buyer to receive that tax break from the government… And, that sale has to be completed by June 30th. Considering that most people shop for about 10 weeks before signing a contract, this year sellers should expect to have a lot of foot traffic at their open houses even in January or February.

The other financial incentive for buyers to get rolling on their house hunt now is the fact that interest rates remain low. Some buyers are going to want to jump on the interest rates now rather than risk seeing them increase later in the year. Essentially, the same combination of financial factors that set sales soaring in the fall are still in place this winter, so don’t expect the buyers to disappear. And they are going to need houses to look through.

That said, sellers shouldn’t just sit back and wait for the throngs of buyers to come knocking on the door with their pre-approval letter in hand. You still have to do your part. Houses just don’t look as nice in winter as they do in summer so you should come up with ways to make your home more inviting. Try to show it as much as possible during daylight hours when buyers can see it in natural light. But be sure to give your windows a good scrubbing beforehand. Strong southern sunlight has a tendency to make dirty windows look really gritty, which might lead some people to think the house hasn’t been well-maintained.

It is still likely that you are going to have showings in the evenings after the sun has gone down. It’s important that on these dark nights to make an effort to make sure your home is as cheery as can be. If your place is dark and uninviting, it is going to be a tougher sell. It may even be tough just to get people through the door. Make sure you shovel away snow on walkways and clean up your porch lights to let the light flood your entry to the best of their ability. You may even consider adding a string of lights near to the entrance or some easy-to-install solar lights along the walkway to your house to make sure it is as welcoming as it can be.

Inside the house, check that all the bulbs in your lamps are at their maximum wattage and put some key lamps on timers. We all know how prospective buyers like to drive by homes that interest them at unusual times. Your house will always be a little more appealing if it appears well lit from the street.

Even if it is your personal practice to keep your thermostat down to save on heating costs, make exception for showings. Give it a good blast of heat before buyers come looking. They are going to want to look and linger in a warm and cozy home a lot more than they would one that has a little feel of that outdoor chill inside.

So there you go, for buyers and sellers alike, it’s a new year’s wish come true. A usually chilly season in real estate that ends up favoring you both.

• I will properly stage my home
  It may seem like common sense, but you’d be surprised how many people skip this, so make sure you aren’t one of them. When attempting to sell your home to prospective buyers, do not forget to make your home look as pleasant and fresh as possible. One of the most important and free things you can do is eliminate clutter and remove personal photographs from around the house. Remember, you want to show off your beautiful home but at the same time make someone else feel completely at home in it… First impressions are critical, so ensure the junk is packed in boxes, and all boxes are put in storage rather than the garage or closets — prospective buyers are definitely going to be looking in those areas too.
• I will not wait for an offer before making needed repairs
  You are probably asking yourself, why would you want to lay out money on a house you’re not going to be living in anymore? But, would you buy a car with bent rims, stained rugs and cigarette burns in the seats, even if the seller was offering a “repair credit”? Selling a home is just like selling anything else, and if you don’t want to fool around with writing those credits in to the contract, then sort them out in advance.
• I will not overprice my home
  Obviously, you want to get the most money for your property, but one of the most common mistakes that causes a seller to get less than they hope for, is listing too high. Listings will be seen by the greatest proportion of potential buyers pretty soon after they appear on the market. If your property is overlooked because of being overpriced early on, you may have to end up making a price reductions later, which can reflect poorly on your listing.
• I will not limit showings
  Now it’s time to ask yourself. Am I serious about selling my home? If the answer is yes then definitely need to ensure your home is ready to be shown at the drop of a hat, even if you’re not around. Pack up your valuables and get one of those outdoor lockbox that your REALTOR® can access at their discretion. Many showings can be fairly spur of the moment, and you don’t want to miss out on any qualified prospect.
• I will be aware of all contract terms
  Real estate contracts are legally binding documents, and they can often be complex and confusing. If you’re not fully aware of the terms in your contract it will certainly be detrimental to you and could cost you thousands for repairs and inspections. Make sure you know exactly what you are responsible for before signing any contract. Have questions? That’s what your REALTOR® is there for.

That’s a few real estate resolutions that are really worth sticking to this year!