What to Do if an Appraisal Comes in Low

Low appraisals can be meddlesome, but there are plenty of solutions to this common problem. Here’s what you can do.

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A very common question I hear from my clients is, “Does a home have to appraise at the contract price or the financed loan amount?” The short answer is the contract price, but here’s why: When financing a home purchase, a lender must ensure that they don’t finance more than a home is worth. The lender will typically require the buyer to contribute a small amount to the transaction, commonly referred to as a down payment, to help safeguard against risk. The financed price, or maximum amount the lender can loan you, is usually expressed in loan-to-value ratio. For example, an 80% loan-to-value ratio product will require a 20% down payment. A 90% loan-to-value ratio will require a 10% down payment. A common problem occurs when an appraisal value is less than a contract price. For example, if a buyer agrees to pay $260,000 for a home and the appraisal comes back at $250,000, the loan will only cover 95% of the appraised value of $250,000, or $237,500. To complete the purchase, the buyer would need a down payment of $22,500 instead of the originally planned $13,000.

You could just ask the seller to reduce their sale price.

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Basically, a low appraisal number has the ultimate result of requiring a higher down payment from the buyer. Of course, the buyer may not be willing or able to come up with that difference. In that case, they do have the option of walking away from the contract due to the appraisal contingency. There are also different ways to overcome a low appraisal. You could ask the seller to reduce the sale price to reflect the appraised value, or you could negotiate somewhere in the middle. If you have questions about this topic or anything else related to real estate, I’d love to be your resource. Just reach out via phone or email today.

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What to Do When You Receive a Lowball Offer

If someone writes you a lowball offer for your home, how should you handle it? Today I’ll give you my advice.

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I know that getting a lowball offer for your home feels painful, frustrating, discouraging, and even offensive. I also know all the terrible—yet justifiable—things that you’d like me to pass onto the buyer who wrote you such a low and insulting offer. It’s very common for both sellers and their listing agents to get so wrapped up in their righteous indignation after receiving a lowball offer that they refuse all communication from the offender. However, the only winner here is ego-gratification, which has a monetary value of precisely zero. Today, I’ll give you a few suggestions for how to respond to lowball offers other than letting your anger get the best of you. I primarily encourage you to always be gracious and to respond with a counteroffer. The fact that someone liked your home enough to take the time to write an official offer on it is already a promising start. There might be various reasons why some buyers choose to send a low offer. Some simply want to test your willingness to negotiate—some sellers have been known to accept discounted offers for strictly personal reasons. Other buyers might send a low offer because they feel that your home is overpriced; if you’ve recently upgraded your home, the buyer might send a lower offer because they think the asking price was meant to compensate for the costs of those projects.

There might be various reasons why some buyers choose to send a low offer.

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It’s not their job to know the value of your home. Most buyers don’t sit and study the market like we agents do when we appraise a for-sale home. It’s our job as agents and sellers to educate buyers on home values. After all, negotiation is how selling a home works, and to tell you the truth, negotiating an offer is the most fun we have in our workday as Realtors. If you are looking for a strong negotiator on your side as you sell your home, or if you have any real estate questions, feel free to reach out to me. Let’s talk.

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Should You Sell Your Home to an iBuyer?

Is it a good idea to sell to an iBuyer? Here’s what you need to know.

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Essentially, iBuyers are companies that purchase homes directly from the owner. Their value proposition is pretty cool: They say they will pay you a fair market value for the house, you will get to skip the uncertainty and hassle of the traditional home-selling process (such as staging your home, allowing showings, worrying about inspection results and buyers’ financing contingencies, etc), and you get to pick your closing date! How awesome is that, right?
But there is only one catch. The catch is that it will cost you! The company that is purchasing your home is in business for one reason only—to make profit. As a homeowner, you will always net much less money if you choose to sell your home to an iBuyer instead of listing it for sale with an agent. The question is: how much less? There are several big players on the market now—Opendoor, OfferPad, Perch, and now Zillow Instant Offers. None of these companies are really transparent with their fees and value estimation formula. However, since I have had the privilege to help a number of sellers who, at one time, were considering to accept one of these instant offers but decided to list and sell with me, I have some insight to share with you.  

You will always net much less money if you choose to sell your home to an iBuyer instead of listing it for sale with an agent.

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Based on my personal data, my calculations show that you will net an average of 11% less if you sell your home to an iBuyer. Let’s put it in dollar amounts to help you understand. If your home is worth $350,000, you will net somewhere around $38,500 less if you decide to sell it to an iBuyer instead of listing it with me. I personally think that it is a pretty high convenience fee, but you be the judge. My advice is this: If you are seriously considering to accept an offer from an Ibuyer, please give me an opportunity to offer an alternative. I can be pretty resourceful when it comes to accommodating your wants and preferences, and it’s my promise to you that I will always net you more money when all is said and done. All you have to do is reach out to me. I’d be glad to help you!

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What to Know When Selling Your Solar-Equipped Texas Home

Do solar panels help or hinder home sales in Texas? Let’s discuss.

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The state of Texas is a leading force when it comes to implementing alternative, renewable energy sources—especially wind energy, which we use more of than any other state in the union. And yet, we remain slow to embrace rooftop solar deployment. 

Despite our abundance of sunshine, solar power accounts for less than 1% of all electricity generated by states’ utilities. Texas underutilizes residential solar energy, but we still lead the way in this category for three key reasons:   

1. All but two states require power companies to buy surplus power from you—Texas is one of the two. 

2. By comparison, electricity in Texas is just plain cheap. 

3. Given the amount of hail we receive each year, Texans are concerned with the overall durability and maintenance of rooftop solar panels.    

Despite its advantages, residential solar energy is still relatively new to Texas, which can present challenges when selling your solar-equipped home. Here are a few tips and points to be aware of before you do: 

First, never assume that solar panels automatically add to your home’s resale value. Solar panels are an attractive feature for certain buyers, but because it’s a niche market, having them doesn’t inherently add value. Because solar panels can’t be included in the mortgage, a buyer who’s willing to pay more for your home just because you have them would have to come up with the difference in cash at closing. 

As time goes by, solar power will increasingly gain traction in neighborhoods across Texas.

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If you’re leasing your solar panels, this can further complicate things: You’ll have to break your lease with the solar panel company and will be required to pay off your remaining balance. And while you’ll have the option to take your panels with you to your next home, the costs associated with removing them and repairing your current home’s roof can add up quickly.

The easiest and best option is to see if you can transfer the existing lease over to the new buyer. Some buyers don’t like the idea of taking on such a commitment, though, so don’t be surprised if yours says no. 

In my view, renewable, clean energy is our future, and I’m sure as time goes by, solar power will increasingly gain traction in neighborhoods across Texas. If you have any questions about selling or purchasing a home with solar panels or about real estate in general, don’t hesitate to call me at 972-984-0511 or send me an email at Anastasia@Ebby.com. I hope to hear from you soon!

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Will a Swimming Pool Add Value to Your Home?

If you think that installing a pool in your backyard will do wonders for your home’s resale value, think again.

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Summer is well underway, and it’s during these sunny, sultry days that our desire to take a dip in the refreshing waters of our very own private swimming pool is heightened. 

Installing a swimming pool in your backyard might be money well spent in light of the entertainment value it offers for you and your family, but will it increase your home’s value? Homeowners regularly ask this question, and the answer is yes. In Texas, adding a pool will indeed raise your home’s value by 7% to 10%.   

However, the bigger question is whether you will see a return on that investment when it comes time to sell your home. Unfortunately, no. When all is said and done, you won’t actually recoup the costs associated with the pool’s construction.  

The bottom line is a pool will be a good lifestyle investment, but will not add money to your pocket once you sell.

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Suppose that your home is worth $350,000 as is, and then you decide to build a pool. This will increase your sale price by about $35,000, but your total expenses from this undertaking will add up to about $60,000. Aside from these initial expenses, you’ll also have to think about general maintenance, utility, and insurance premium costs.

The bottom line is that while a pool will be a good lifestyle investment that you and your family can enjoy for years to come, you’ll be sorely disappointed if you expect such an addition to put more money in your pocket once you sell. 

If you have any further questions about making home improvements or about what will and won’t elevate your home’s resale value, please don’t hesitate to give me a call at 972-984-0511 or email me at Anastasia@Ebby.com. I hope to hear from you soon!

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The 4 Keys to Pricing Your Home Correctly

There are certain variables you need to take into consideration when pricing your home. Today, I’ll discuss four in particular.

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What’s the key to pricing your home correctly?

Establishing a price for your home is part art, part science. Contrary to what Zillow would have you believe, there is no simple formula for pricing homes in our market. A home’s value involves many variables, some of which can be factored into a computerized analysis, but most will require an in-depth knowledge of current inventory—both past sales and current listings—and the precise skill of being able to interpret current market trends, absorption rates, seasonal fluctuations, and other economic variables that can influence the value of your home. 

To top it off, there’s also a human factor to consider, which is very elusive and unpredictable at times, but it’s a very important part of the puzzle. 

A home’s value depends on many variables.

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There are four main points to consider when pricing your home:

1. Study past sales. This is the starting point to determine the base price of your home. Don’t confuse active listings with sold listings. Active listings haven’t sold yet. It is very important to know your competition, but don’t assume that just because your neighbor listed their home for $3 million that makes your home that much more expensive. 
2. Pay close attention to market trends in your area, sub-area, and price range. For example, we have a really strong seller’s market for homes under $300,000 in the north Dallas area. Many homes in that price range sell quickly and at their asking price. That trend, however, doesn’t apply to homes priced at $400,000 or higher unless they have pools or sit on greenbelt lots. Homes with pools and those that sit on greenbelt lots are in a completely different sub-category and they have their own unique set of trends.
3. Price your home strategically. It amazes me how many agents advise their clients to price a home with a 99 at the end believing that a home priced at $299,999 looks better than a home priced at $300,000. A home priced at $299,000 look and sound better than one priced at 300,000, but it can also hurt you. Most homebuyers start their home search online. Imagine, then, a homebuyer sitting at their computer who types in “homes in McKinney between $300,000 and $350,00.” Guess what? Your $299,000 bargain-priced home won’t even show up on their search. If you want to get really psychological about pricing, use a seven instead—not only does it project the message of a very precise value calculation, but many people also consider it a lucky number, which brings me to my next point:
4. Don’t forget about the human factor. This point is the most complex and my favorite to address. Since I majored in psychology in college, I’ll save this point as a topic by itself for a future video. 

If you have any questions about pricing your home correctly or you’re thinking about putting your home on the market, don’t hesitate to give me a call. I’d be happy to help you.

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The Best Time to Get Your Home Listed and Sold

If you’re thinking of waiting until May to sell your home, you may want to reconsider. Here’s why.

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You may have heard before that May is the best time to sell a home. While it’s true that the highest number of real estate transactions take place during this month, it doesn’t mean it’s the best time to put your home on the market.

If you want to net the most money for your home, the best time to list it and get it sold is now.

Just like any other commodity market, real estate follows the law of supply and demand. When there’s high demand, prices rise, but when there’s a high supply without much demand, prices fall.

There’s something invigorating about the spring season that makes people want to take action. The world seems fresh and new, the sun is shining and the flowers are blooming, and homebuyers are ready to make some decisions. This is exactly what you want as a seller—buyers looking to make a purchase.

Real estate follows the law of supply and demand.

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The demand is there, but what about the supply? The inventory of homes is rather low during the springtime because sellers are waiting for lawns to grow, for school to be out for summer, or for May to arrive. This high demand and low supply means sellers will be able to sell their homes for more money.

If you’re thinking of selling this year, I’d love to share with you my selling strategy, designed specifically to net you top dollar for your home. If you’d like to talk about your real estate plans, have any questions, or need further information, feel free to reach out to me. I look forward to hearing from you soon.

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What Closing Costs Are Sellers Responsible for?

Even after you’ve sold your home and made a profit, there are some out-of-pocket closing costs that you’ll be responsible for. Here are the big ones to know.

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Closing costs are the expenses that are over and above the price of the property that buyers and sellers pay to complete a real estate transaction. Each side has their own costs that they’re responsible for, so let’s take a look at them, starting with the sellers.

Real estate commission is the seller’s largest closing expense. Sellers in Texas are responsible for paying both Realtors, with 3% going to their listing agent and 3% going to the buyer’s agent. 

Another common expense for sellers is the owner’s title insurance. It’s essentially an insurance policy that ensures the deed to the property is clean and clear with no outstanding liens or title effects. The cost depends on the state but is based on the price of the home. On a $300,000 home, for example, the title insurance policy will cost around $2,000. 

Then we have the escrow fee. This is a fee that the title company charges to hold money in escrow. The average charge for this is around $400. 

If your home is located in a community with a Homeowners Association, you'll likely have to pay HOA transfer fees an for a subdivision information package. The cost here varies greatly depending on the community. The average is around $350, but it can be as much as 1% of the sale price. Then, you’ll pay a few hundred dollars for miscellaneous expenses such as a closing attorney and a property survey.

The cost of HOA transfer fees varies greatly by community.

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That’s about it when it comes to seller closing costs. Another thing to note is that buyers typically expect sellers to contribute a few hundred dollars toward their home warranty, but it’s not required. Buyers can also ask sellers in Texas to contribute money towards their closing costs, but that really depends on the type of market we’re in.

Next time, we’ll take a closer look at buyers’ closing costs. If you have any questions for me in the meantime, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

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The Differences Between Appraised, Assessed, and Fair Market Value

What's the difference between the appraised value and the fair market value of a home? One is determined by a lender and the other is determined by the market.

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When it comes to the value of a home, what's the difference between the appraised value and the fair market value?

Fair market value is basically defined as the most probable price a buyer is willing to pay and a seller is willing to accept for their home under the current market conditions. Appraised value is the value of a property in the opinion of a single appraiser. 

In most cases, appraisals are ordered by a lending institution when a house is purchased. It allows them to justify the amount of the loan that the borrower is seeking. We'll talk later about what happens if the appraisal comes in below the sales price. 

Both concepts differ from a property's assessed value. The assessed value of a property is primarily for determining property taxes.

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Appraised value and fair market value both differ from assessed value.

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Texas is a non-disclosure state, meaning that sold properties aren't publicly recorded. Our local county appraisal district assesses property values annually using mass appraisal methods instead of evaluating each home independently. These mass appraisals evaluate a particular market area and take the average area appreciation and depreciation and apply it to every property in the group. 

A Texas county appraisal district may not increase the assessed value of a homestead by more than 10% in a given tax year. This is another important topic I'll cover in an upcoming video. I'll also touch on why many assessed values vary so dramatically from their appraised or fair market values. 

These are complicated topics, so if you have any questions or you'd like me to clarify any of these points, feel free to give me a call or send me an email. I'd be happy to help!

3 Ways to Prepare for the Spring Market

Today I want to go over three things you can do you ensure your home is prepared for the spring market.

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Spring is right around the corner, which means the real estate market is about to heat up. Many sellers list their homes in the spring, and more buyers come out to see what’s available. The weather is warming up, the landscaping is turning a lush green, and the prospect of being in a new home before summer starts all make the spring market incredibly attractive. 

For those reasons, you need to make sure your home is properly prepared to sell, and today I have a few tips to help you get ready. 

First, look at your home as if you were a buyer. Today’s buyers are incredibly picky. There is a lot of competition between new construction and existing homes, and buyers want everything to look, smell, and feel perfect. So, make sure your home is clean, de-cluttered, and easy to navigate through. Failing to stage your home properly could result in a loss of buyer interest. 

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Failing to stage your home correctly would result in a loss of buyer interest.

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Next, do the necessary repairs. Buyers are known for overestimating the costs of repairs. In fact, I recently asked a group of buyers at one of my showings what they thought it would take to get the carpet replaced and every single one thought it would cost two times more than it was actually going to. Carpet is just an example; buyers are going to overshoot the costs of all the repairs or upgrades, so I recommend doing the repairs yourself or getting direct quotes from service professionals to show the buyers. 

One of the most important things you can do is price your home correctly the first time. I believe pricing a home correctly is both an art and a science, and many factors need to be taken into consideration such as current market trends, the supply and demand ratio, seasonal changes to the market, and many more. 

If you are thinking about selling a home, please don’t hesitate to give me a call or send me an email. I am confident I can get you ready for the market and help you have a successful sale.

How to Cater to Millennial Home Buyers

As a home seller, here are three tips for catering to millennial home buyers.

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Millennials are finally entering the housing market and taking it by storm. In fact, almost half of all home buyers in 2016 were millennials. If you’re selling your home, here is what you can do to appeal to this all-important segment of buyers and maximize your bottom line:

1. Make your home move-in ready. Previous generations viewed homeownership as a way to build equity, and many bought homes that needed a lot of work. It was common and respectful to invest your own time and sweat into improving your home. Millennials, on the other hand, have a completely different approach when it comes to this. They want their home to be move-in ready with very few upgrades and repairs needed. 

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Millennials want homes that are move-in ready.

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2. If you live in a larger and more expensive home, don’t worry. You’d be wrong to assume that millennials aren’t your target pool of buyers. When they buy homes, they’re leapfrogging the more traditional, starter-type homes for the more expensive ones. It’s not unusual at all for them to have a budget of $400,000 or $500,000 for their first home. 

3. Make sure your home has the features they want. I work with a lot of millennial home buyers, and their want lists are all pretty similar. They all find the following features to be desirable and attractive:

• Hardwood floors—the more of them, the better.
• Huge kitchens, preferably with large center islands.
• Neutral color schemes.

As always, if you have any questions about this or any other real estate topic, don’t hesitate to contact me anytime. Talk to you soon!