Does HAFA Pay You To Short Sale Your Home?

One of the most common ways to avoid foreclosure when facing a financial hardship is to short sale your property. A short sale, by definition, is selling your home for less than what is owed, and as of April 5, 2010, you can even get a little cash from the government to do so.

The HAFA (Home Affordable Foreclosure Alternatives) program introduced by President Obama, allows homeowners up to $3,000 to avoid foreclosure after closing on their short sale. Here are some facts that you need to know about HAFA:

Home Affordable Foreclosure Alternatives Facts

The first step to qualifying for HAFA is to apply for HAMP, (Home Affordable Modification Program).  You see, in order to get the $3,000, you must try a loan modification first. Here are the rules of eligibility for the HAMP program:

  • Must Be A Personal Residence
  • Mortgage Amount Must Be Less Than $729,750
  • Must Suffer A Financial Hardship
  • Mortgage Must Have Been Initiated Before January 1, 2009
  • PITI And HOA Must Be More Than 31% Of Borrowers Gross Monthly Income

The second step is to get denied by HAMP.  If any of those five rules do not apply to you, you are not eligible for HAMP. Not qualifying is a good thing if you wish to short sale your home through the HAFA program.

If you do meet these eligibility rules it’s up to your bank to decide if they will allow you to modify your loan, and everyone knows how difficult that can be. Less than 30% of homeowners who apply for a loan mod are approved, so there’s a pretty good possibility you will be denied.

Once you’re rejected from the HAMP program, you can do a HAFA short sale or pursue a deed in-lieu-of foreclosure. In order to qualify for the HAFA short sale program, there are a few more eligibility rules.  First off, HAFA will pre-approve the short sale price and you only get four months to sell with a real estate agent.

Just like the HAMP program, the home has to be your principal residence. The mortgage must be less than $729,750. You must be 60 days behind on the mortgage. The mortgage has to be originated before January 1, 2009, and sellers with government loans do not qualify.

After jumping through all these hoops, the benefits of the HAFA program are worth it. If you sell your home within the four month time period, you will receive the $3,000 check for relocation expenses from the government. But that’s not all.

Your lender can not pursue a deficiency judgment. You wont have to make a seller contribution and the bank cannot foreclose during those four months. As you can see, short sales are a complicated process and require the expertise of a qualified short sale agent. If you’re in the San Diego area, please contact us for help with your short sale process.

Are You a Seasoned Condo Seller?

Preparing your home for sale is often a tedious process. From cleaning and updating to de-cluttering and preparing for open houses and showings, preparing your home for sale can test one’s patience, for sure.  However, there are a number of things that you can do now, before you list your Boston home for sale, which will save you a considerable amount of time and frustration during the home selling process:

  • Have a pre-sale home inspection – It may be a bit difficult to fork out a few hundred dollars for a home inspection given that the homebuyer will certainly have a home inspection of their own, but the idea is to make your life a bit easier. A pre-sale home inspection can bring problems to light so that you can deal with them before you list your home for sale. In other words, it’s a lot easier to repair a roof without a buyer breathing down your throat. In short, a pre-sale home inspection can make the buyer’s home inspection go off without a hitch –and without a worry on your part.
  • Pay for a termite inspection – It is best to handle this “pesty” situation beforehand so that you’re not unpleasantly surprised when a homebuyer’s pest inspection reveals problems. Plus, a pest inspection report is a great selling feature for your home, as it eliminates one less worry for homebuyers.
  • Fill out your home disclosure form truthfully and completely – Be as forthcoming as possible on your home disclosure form so that you don’t find yourself in a situation where the buyers are accusing you of knowingly hiding pre-existing problems.
  • Repair what you can, and get repair estimates for repairs that you don’t want to address – Doing so can give your buyers a general idea of how much it will cost to address the issue. You may also want to offer a credit in the amount of the repair to the buyer.
  • Organize all the warranties and operator’s manuals for your home appliances, including the furnace, the air conditioner and the kitchen appliances.

5 Simple Boston Home Staging Tips

When it comes to getting your home sold, you need to do everything possible to set it apart from other homes that are on the market. Furthermore, you need to present your home in the best light possible, which means adding a few extra touches that will make your home more appealing to potential buyers. This process of creating a more appealing home is known as staging and here are 5 simple things you can do to help your home sell.

Home Staging Tip #1: Create Curb Appeal

The first time a potential buyer drives by or up to your home, you want it to leave a good impression. Therefore, you should take steps to make the exterior of your home stand out and look great. To do this, you might need to make a few minor repairs, such as applying a fresh coat of paint if the current paint has become faded or chipped or repainting the shutters, door and trim to create a neutral color scheme. You should also remove any clutter from your driveway and yard while also making certain the lawn is neatly mowed and edged. Adding fresh mulch to your flower beds and placing some potted plants outside of your front door will also make your home seem more inviting.

Home Staging Tip #2: Make the Entryway Welcoming

Your entryway, which is the area the potential buyer will first see when opening the door to your house, will also play a strong part in creating a first impression. Therefore, care should be taken to make certain it is both attractive and inviting. To accomplish this goal, you should keep the entryway free of clutter while also making certain it is well-lit. This way, your home will appear larger while also feeling warm and inviting.

Home Staging Tip #3: Depersonalize the Space

Personal knick-knacks and portraits scattered throughout the house make it difficult for potential buyers to visualize anyone other than you living in the home. Remember, you want the buyer to be able to picture him or herself living in the home, so you should remove those personal touches before your Realtor takes the buyer for a tour of the home. In addition to removing personal belongings, you should also paint walls with a neutral color so the buyer can more easily envision the colors that he or she might like.

Home Staging Tip #4: Update and Upgrade

Spending a little money in order to upgrade or update parts of your home, particularly your kitchen and bathrooms, is always a good idea. If your cabinets are outdated, simply purchasing modern knobs and handles can go a long way toward making your home more attractive to potential buyers. Similarly, upgrading to a water-efficient faucet will appeal to today’s eco-friendly buyers.

Upgraded Boston Kitchen

Home Staging Tip #5: Create a Comfortable Space

As part of the staging process, you want to make every room in the house appears as comfortable as possible. You can accomplish this by limiting the amount of furniture placed in rooms such as the living room and bedrooms while also arranging the furniture in a way that is easy to walk around and is conducive to conversation.

Psychological Obstacles of Selling

Buying and selling real estate is a very emotional and psychological experience. Perhaps you’ve been on one of the two sides at some point in your life. You know when you’ve had to either decide on a minimum number to sell your home or maximum number to buy a home? Yes, that fun game of going back and forth for weeks negotiating just to end up at a stalemate feeling frustrated, deflated and back at square one.

It rarely comes as a surprise when I meet with a Boston seller and upon our first consultation they make an irrational statement about what their home is worth. Their chest sort of puffs out and they become animated explaining just why their home is worth what they say it’s worth. None of it is based on market data. It’s all about what they think it’s worth. The dialogue is actually good to hear as it allows me to gauge the person and their level of emotional connection and commitment to the transaction. I’ve had sellers insist on pricing their homes up to 40% above fair market price regardless of having seen data that advises them against doing so. When this happens, I graciously walk away because in the end the experience is like swimming rip tide the wrong way. You just end up getting swallowed up and die. These folks are not ready to move on with their lives, but perhaps are looking to make the lives of others miserable. No thanks.

Okay, so by nature I’m somewhat of an idealist, but my experience has made me a realist. First and foremost, my role is to educate and consult clients to the best of my ability so that they may make a decision, an educated decision. The information I provide may not always be welcome news, but, it is information based on fact and in essence therefore a snapshot of reality. Unfortunately, not everyone is ready to deal with their reality. My goal is to come up with the best outcome for my clients and at times that means breaking even or plugging up the projectile bleeding before foreclosure. So what can a seller do to avoid psychological obstacles of selling real estate that will lead them to stalemate?

  1. Be Committed: Assess your life and decide if you are really ready to sell your property. If not, do not waste your time nor anyone else’s.
  2. Separate Your Psychological Self from Your Physical Home: Sure, you’ve owned your home for so many years or cared for your investment property for a long time, and have natural emotional attachments to it, but try to disassociate yourself from the home. Perhaps envision yourself in an upgrade or another neighborhood, as a next step in your life.
  3. Stay Present: Focus on your finances today, not the money you spent yesterday. You may not be able to recoup your loses, but consider that delaying a decision to sell today may put you in worse financial circumstances tomorrow.
  4. Be Real About What to Recoup: After going through your inventory of various projects, such as painting the walls, building that special California style closet, or opening up a room for that open layout feel, consider what you may be able to pass on to a buyer and what you may not. For example, if your condo association recently had a special assessment to repair the roof, you may not be able to pass the cost on since it is upgrading the building, not your individual unit. You can’t expect to get back dollar for dollar on some investments like painting and sweat equity, but upgrading the windows, front door, kitchen, bathroom or deck is a different story. Have a trained and reputable Realtor® assist with evaluating your “inventory”.

As you begin the process of selling your home, work with a Realtor® who will guide you through psychological obstacles – some obvious and some not so much. Their role should be to help you so that you don’t find yourself at a stalemate. Selling and buying is really about moving on with your life. Accepting reality sooner rather than later may save you some money in your pocket, but more importantly, it will save time on your heart. And in the end isn’t that what it’s all about?

Moving? Don't Forget These

You’ve successfully sold your Boston condo and now the only thing left to do is simply make the move to your home. If only it were that easy.

There are a multitude of important things to remember when moving, and some are more obvious than others. We all know to schedule a mover, accumulate a bunch of boxes and get plenty of packing materials to get things underway. However, there are a handful of things that are often forgotten in the flurry of activity that surrounds a move. Here are a few things that are at the top of my list:

  • Cash and Credit Cards – If you must make a long trip to your new property, you will need cash and credit cards to get you there. I suggest stopping by the ATM several days before your closing / move takes place. Make sure you have enough cash to take care of incidentals, such as tipping the movers or paying tolls if you’re driving, enough that you don’t run out and have to use an ATM out of your network and get hit with ATM fees. As well, ensure you have a functioning credit card or two to pay for larger lodging and travel-related expenses.
  • Personal Care Items – Although you may be inclined to pack everything up for convenience’s sake, it is important to keep a certain number of personal items with you. Keep a small bag and load it up with important medications, any other prescriptions or over-the-counter medications that you and your family may need during your transition time between houses. I advise you think about what you might need ahead of your move by creating a list at least one week before the move happens, and think about it in the context of what you will need between now and when all your goods in moving boxes will show up – keep in mind that if you are being moved any significant distance by a shipping company, you won’t have access to your boxes, and there may be delays associated with the arrival of your goods, so give yourself some buffer time on the back end.
  • Your Kids’ Favorite Items – Comfort items for your children are an important part of any move, as they provide stability and comfort kids may need to make the transition to a new home a bit easier. It is therefore extremely important to keep these cuddle items, such as blankets and stuffed animals, with you at all times during your move to soothe and comfort your child. After all, you don’t want to wait weeks for your goods to arrive in your new home, or spend your first night in your new home searching through countless boxes for your child’s favorite doll!
  • Items of Special Importance or Value – If you have special items that are either of great value or great sentiment, consider keeping them safe during your move and/or transporting them yourself (always keeping them in your possession). You may want to hire a specialty moving company to take care of priceless antiques and pianos, verifying that there is proper insurance in place to cover any losses. Additionally, you may want to ask a close family member or friend to take care of your personal items, such as jewelry and china, until you have settled into your new home. Also in this group may be important papers, such as tax documents, receipts, or credit card statements that you would like to keep close to your person throughout the move, decreasing or eliminating the chance that your personal information, such as a social security number or credit card number, be compromised.

These items may or may not already be on your list of to-do’s associated with your move, but they represent a small handful of things that I oftentimes see go forgotten until it’s too late to change. Happy moving!

Power of Curb Appeal: What not to Forget

When considering curb appeal, don’t forget about first impressions!

If you think your buyers’ first impression of your home is realized upon walking in the front door, think again. The moment potential buyers pull up to the front of your home they begin assessing your home. And, if your home’s curb appeal is less than appealing, they may have already made up their minds about your home before they even walk through the front door.

Remember: an attractive front yard not only attracts buyers to your home, but it also conveys pride in home ownership. With that said, you can begin improving your home’s curb appeal today:

  • Check the steps, front porch, and driveway (as appropriate) of your home for any cracks or uneven surfaces. Repair any defects and seal your driveway to make it look its best.
  • The plant and flower beds should be free of weeds and all bushes and plants should be trimmed, neat and attractive. Mulch all of the beds with a natural pine needle mulch to pull it all together.
  • The front door should be free of fading or peeling paint, and it should have updated hardware. Don’t let your home’s first impression be squashed by an ugly front door with rusted hardware.
  • Your outdoor accessories should be tasteful and limited. Yard sculptures, lawn art and various other types of outdoor decorations should be limited. Instead, opt for an attractive door mat made of natural materials and a nice, seasonal wreath on the front door.
  • Make sure your outdoor landscape lighting is attractive and efficient, as it is important to remember that potential buyers will likely drive past your home during the nighttime hours, as well.
  • If you have low-lying trees and shrubbery that are blocking the front of your home, consider having them pruned. If buyers can’t see the front of your home then they are less likely to be immediately enamored by your home as they drive past.

Tips for Sellers: More Staging Advice

As a home seller, you want to showcase your home in the best possible way.  Some subtle staging advice may assist you in getting under agreement, and to closing, faster.

Since it is now Spring, the weather and sunshine may cooperate by allowing you to open windows to let in the fragrance of fresh air. Do not use a perfumed spray or air freshener as some prospective buyers may have allergies that might be triggered by these smells – resulting in an attack of sneezing or coughing instead of an offer to buy your home.

The fragrance of freshly baked bread or cookies is something most people find pleasing. Be sure not to cook cauliflower or broccoli when your real estate agent is expected with potential buyers! I once visited a home for sale where the owner was boiling pieces of chicken in water. The smell was so awful that I hardly looked at the house and could not wait to get outside…..

Many Realtors have taken courses in Home Staging and are experienced in helping sellers emphasize the strengths in their property and minimize the weaknesses.

Let Your Agent Make the Sale

If at all possible, be somewhere else when your Realtor shows your home. Buyers are sometimes reluctant to look as carefully and thoroughly when the owners are home as when they are away.

If you must be at home, smile and be pleasant – but be unobtrusive. Unless the buyer specifically speaks to you, let your Realtor respond to questions. Case in point is a situation where a buyer visits a home in a very nice community with their agent. The owner was home and in the bathroom. When he came out, he sat in a chair reading the newspaper and with his body language, conveyed a message that he was in a bad mood. The buyer spent a few minutes looking around but left as fast as possible – don’t impede the sale of your home by not leveraging some common sense and courtesy.

Tips for Freshening Up Your Home's Exterior

Have the winter blahs got you down? Does the exterior of your Boston home look less than stellar? If so, then join the many other sellers out there who are looking to spruce up their homes and get them sold as the spring months approach.

Luckily, there are a great number of things you can do to spruce up a tired-looking exterior and garner some attention from home buyers!

  1. Freshen up your flower and plant beds by giving them a fresh layer of mulch. Many people are quite surprised to find that this simple chore can make their landscape look so much better. Mulching your beds is also one of the most inexpensive improvements you can make to your landscape, so take advantage of this cost-saving improvement.
  2. Trim back any dead branches or leaves. Nothing can make a landscape more worn and tired than dead branches and leaves. So grab your pruners and head outside to take care of cutting back any dead areas and revel in your renewed landscape.
  3. Decorate your front door with a seasonal wreath. A colorful wreath is the easiest way to set the mood and to welcome buyers into your home. It also creates a warm, inviting feeling, thereby exciting buyers to view your home.
  4. Arrange a few colorful containers of perennials on your front porch. Choose containers of various sizes and place them together in groupings to provide a strong, visual impact. Nothing says spring more than colorful flowers!
  5. Take care of your outdoor living spaces by sweeping up, cleaning the furniture and adding colorful throw pillows and areas rugs. Add lush greenery to the corners and add small accessories, such as candles, to finish it off and make it look like a comfortable, welcoming space.
  6. Give your exterior trim a fresh coat of paint or consider repointing your building (the latter would most likely involve a condo association vote). Consider painting your front door or shutters. Simply by adding a fresh coat of paint you can turn a tired-looking condo or home into a fresh, updated one.

Selling Your Home on Your Own?

According to the Massachusetts Association of Realtors®, nearly ninety percent of homeowners use a Realtor to sell their home year after year. Furthermore, similar to the national trend, Massachusetts homeowners who hired a real estate agent to sell their home in 2006 garnered a median selling price that was 23.4 percent higher than homes sold by property owners on their own. This article provides additional detail to explain why hiring a professional marketing agent is a smart choice.

The desire to keep all of the proceeds from the sale of one’s home is quite enticing at first glance. After all, there will be a state sales tax, attorney fees, a potential capital gains tax and other miscellaneous closing costs. So, the very idea of “cutting out the middle man” initially sounds like a smart move. Why not save that 4% to 6% or so in Realtor fees when you can do just as good a job selling your home as a professional can? The problem is that you can’t.

It seems once a homeowner puts a “For Sale by Owner” sign in front of their home and places an advertisement in a local newspaper; their home becomes a magnet for unqualified buyers and bargain hunters. After all, these folks already know that you are not paying for professional representation, so they skim that percentage amount right off the asking price before commencing price negotiations.

And what happens if you have priced your home incorrectly in the first place? Many unrepresented sellers over-price their home (thereby helping other homes sell) while others unknowingly under-price it. Many Internet sites give general estimates of a home’s value – but fall short when it comes to knowing local market trends and understanding the uniqueness of each property. When compared to other parts of the country, condos and single family homes in greater-Boston are not “cookie cutter” look-alikes. No amount of Internet research can take the place of an in-person, professional assessment of your home’s positive attributes as well as its challenging flaws – and provide staging/merchandising advice to minimize or eliminate those flaws (please refer to my recent article entitled: Staging Your Home to Sell).

Correct pricing and merchandising are just two aspects of selling your home at a competitive price within your desired timeframe. What about the costs of advertising and marketing (and do you know the difference between the two)? Most buyers (80 to 85 percent) initially turn to the Internet for their home search before contacting a Buyer Agent. It’s simply not enough to hire an agent to put your home in MLS while you do all the rest. Selling a home today requires local, regional and national exposure. Marketing agents have access to a vast array of websites, many of which are inaccessible to the general public. Moreover, a good marketing agent has developed strong relationships with other Realtors to facilitate “getting the word out”.

What about hosting broker and public open houses, and requests for private showings during weekdays? Do you really have the time and patience for these time-consuming activities? Be aware that many buyers don’t feel comfortable “thinking out loud” in the presence of a homeowner, or providing honest feedback directly to a homeowner for fear of hurting their feelings. A professional Realtor, on the other hand, solicits unvarnished feedback from each Buyer Agent. Over time, repeated observations and comments can help you and your Realtor to re-stage a room, fix a flaw, adjust the listing price and/or revise the sales strategy. As an unrepresented seller, you do not have access to this continuous feedback loop to help you modify your selling strategy (if you have one).

Now, fast-forward: once you have a potential buyer, how can you be assured that they are well qualified financially to purchase your home? You will also have to attend the home inspection(s), lender appraisals, track buyer adherence to contingency dates and are responsible for overall project management of both sets of attorneys, the buyer’s lender, and a host of other players to ensure a smooth, on-time closing.

After reading this article, is there any remaining doubt in your mind that paying a Realtor 5% or 6% of the sales price of your home for all these services is money well spent, especially when your home has a good chance of selling for approximately 23% more than it would if you try to go it alone? If so, please feel free to contact me for additional information.

Hiring a Marketing Agent to Sell Your Home

In my two most recent articles (see Staging Your Home to Sell and The Danger in Over-Pricing Your Home), I shared my thoughts with you on the importance of correctly pricing your home to sell, and ensuring that it is attractively staged, or “merchandised”. Both of these steps are critical to the timely sale of your home at the highest market price possible – under any real estate market conditions. Yet the most critical ingredient for success is the agent you select to sell your home in the first place.

What selection criteria should you use? The problem is that most of us know at least one person – likely a friend or relative – who is in the real estate business. Even more of us know several real estate professionals. I’ve often heard folks struggle to decide who among their friends, relatives and acquaintances should get their listing – and their main concern is that they don’t hurt anybody’s feelings. Please stop and think: is this how you would select a doctor, an attorney, an accountant or another professional? Hopefully your answer is a resounding “no”! Therefore, doesn’t it make sense to similarly apply a set of stringent selection criteria to determine the most qualified professional to sell, that which for many folks is your largest financial asset, your home?

Here are a few truisms for your consideration: real estate professionals are not all the same! They are not interchangeable. Each does not have the same education, skills and experience, or marketing and negotiating ability. In fact, there are some fundamental prerequisites you should look for to help you begin eliminating candidates for your consideration:

  • Your agent should have a Realtor® designation after his/her name – at a minimum. To become a Realtor, an agent must take an ethics course every three years – and pass an exam. Does this mean that a licensed real estate agent who is not a Realtor is unethical? No – but it’s noteworthy that some agents go the extra mile to be held accountable to a higher set of professional standards than the Commonwealth of Massachusetts requires to maintain a license to practice real estate. Advanced training (you know, the other funny letters after the name) is even better. Additional training is proof that the agent values continuing professional education and ongoing self-improvement.
  • Your Realtor should be in full-time practice. He or she should not be someone who dabbles on the side to supplement their income from their primary full-time job. Why? Because they won’t necessarily be available to show your home privately in a timely manner while at their full-time job, or develop a strong network with other full-time Realtors who will help sell your home by bringing their qualified buyers to see it. Skill and competence develop over time with a good deal of sales experience – not a mere fraction thereof. If “practice makes perfect,” lots of sales experience makes for an even better agent! Part-time practice on the other hand: well, I think you catch my drift.
  • You want a good listing agent, right? Wrong! You want an outstanding marketing agent!This isn’t a matter of mere semantics. Marketing agents develop thoughtful, customized, marketing proposals. Listing agents are more apt to give “listing presentations” that are usually more about them, the number of properties they’ve listed and the virtues of their firm’s “brand name” as opposed to their own strategies to get your house sold as quickly as possible while netting you top dollar. (Caveat: “Top dollar” should be interpreted in the context of current market conditions).
  • A listing agent is primarily interested in one thing: getting listings. The more the merrier! While this in and of itself is not a bad thing, have you ever asked one of these folks how they plan to market your home? Do they know the difference between marketing and advertising? Who will show it privately, and within what time period following a request from a buyer agent? We’ve all seen agents who advertise a multitude of listings at the same time. If your listing agent is overwhelmed, you suffer the loss of potential buyers!
  • When I’m not showing my own listings, I’m invariably working with buyer clients. I’ve not always had good luck in getting my calls promptly returned by agents with – in my opinion – too many listings to be able to effectively market each one of them. If and when I do get a return phone call, I’m invariably told – especially in some notable suburbs – to “get the key from the lock-box”. Or, worse yet – “come to our office to pick up the key!” Folks, I’m here to tell you that your agent, or a very well trained team member, should be present at each and every private showing.
  • Note that I stated a very well trained team member. An agent who is “covering” for your primary agent should be as familiar with every minute detail of your home as your primary agent. A buyer agent and his/her client will otherwise walk into and out of your home with no more information than they’ve already gleaned from the MLS or LINK description. A good buyer agent has many detailed questions to ask. So if your agent isn’t there in person to answer the questions while simultaneously emphasizing the positive attributes of your home, he or she is simply not doing a good job. Of course, this then begs the question: exactly what is being done to earn their professional fee? A “for sale” yard sign and a key in a lockbox are not sufficient, especially in a buyer’s market.
  • Demand to see what your agent has written in MLS and LINK, and demand to have them augment the information if there are fewer than 10 photos, a weak lackluster description of your home that does not set it apart from others, and/or the lack of a visual tour or dedicated website. Additionally, ask your agent about the strength of their online presence. On how many national and international websites will your home be marketed? A sharply increasing number of buyers now look exclusively at online for homes as compared to hard copy newspaper advertisements.

One final truism: You get what you pay for. Hire a discount firm and you will receive discount services. Pay your agent less than the norm for your community (I’m not promoting any kind of price-fixing), and unethical buyer agents will show other properties similar to yours – rather than yours – especially if the supply of available homes exceeds the demand. If you successfully convince your agent to lower his/her professional fee, congratulations! You have just hired a weak negotiator! Any professional who is readily willing to cut their own income will invariable encourage you to settle for a lower offer, rather than strongly negotiate a higher sales price on your behalf – count on it. Finally, since all agents have fixed costs, what line item do you think suffers most when you ask them to reduce their professional fee? If you guessed correctly that the marketing budget for your home will suffer, I’ve made my point. If not, I gently invite you to read this final paragraph once again.