Seller Tip - How Not To Alienate Potential Buyers Over $1

Pretty much all listing sites such as Realtor.com and Homesdatabase.com provide buyers the option to search in 25K, 50K or $100K blocks. Buyers can search "up to $400K" or "up to $425K". The same is the norm for agents who search for properties "less than $400K" or "less than $425K". By being priced directly at or even $1 over a price bracket, you will lose exposure to another pool of potential buyers.

For example, if you are listed at $426,000, you’re losing exposure to all buyers and buyers’ agents searching for properties up to $425,000. Perhaps you have to have that last $1000, but you’ll never realize any money unless you sell your home in the first place. It would make more sense to price your home at something like $424, 900, gain exposure to a greater number of buyers and then do a great job negotiating the price and terms of the offer once you actually have one on the table.

With over 80 percent of today’s buyers searching for homes online, it’s crucial to understand how they go about doing so in order to gain exposure to the greatest number of potential buyers. This is just one of the many ways to do so.

Home Improvements and Your Return On Investment

So you’ve made some improvements and upgrades in/on your property within the last year. Now, you’re going to sell your property and are curious as to what you’ll get back in value from the improvements you’ve made.  Or maybe you’re thinking about selling your home in the future and are curious as to which improvements will bring you the greatest return on investment (ROI).

Well, according to the Cost vs. Value Report, here are the top 10 home improvement projects based on average ROI:

Project	Job Cost	Resale Value	Average ROI
Vinyl Siding Replacement	$9,134	$7,963	87.2%
Window Replacement (Wood)	$11,040	$9,416	85.3%
Minor Kitchen Remodel	$17,928	$15,278	85.2%
Bathroom Remodel	$12,918	$10,970	84.9%
Window Replacement (Vinyl)	$13,120	$11,109	84.7%
Two-Story Addition	$105,297	$87,654	83.2%
Major Kitchen Remodel	$54,241	$43,603	80.4%
Attic Bedroom Remodel	$44,073	$35,228	79.9%
Basement Remodel	$56,724	$44,685	78.8%
Deck Addition	$14,728	$11,307	76.8%

Please note that these are national averages and may not reflect Loudoun County or Northern Virgina specifically.

For example, granite is not listed in this list, but is definitely in the top 10 for homes in Loudoun County. As is landscaping - a few hundred dollars worth of landscaping can be worth $500 to over $1000 in value, a significant ROI. on the flip side, two-story additions are not very common place in this area so there is no way to truly track the ROI on that home improvement.

Whatever the improvement is, make sure that you check around to see whether it’s a good ROI. Times and tastes change meaning that the most sought after improvement or feature today may be old news by next year.

How The Mortgage/Credit Crunch Affects You As A Home Seller or Buyer

If you’ve looked at any news pages online or picked up any newspaper recently, you know all about the subprime mortgage fiasco and how it’s caused investors to flee, money to dry up, the banks to inject money into Wall Street and the government to step in. But how does it really affect you as a home seller or home buyer here in Loudoun County, Virginia? To find out, let’s look at two real life scenarios that I ran across in the past 2 weeks:

1) I am representing sellers who have their town home up for sale. It was originally listed a few weeks ago at $449,900 and during that time, buyers that went through it said that it was just outside of their budget. This was based on the asking price and the interest rates (at that time), which came out to a certain monthly mortgage payment. The buyers asked that we let them know if/when the price was adjusted because they were very interested in the property, but just couldn’t afford that much.

Fast forward two weeks…

Based on market conditions and recent comps, we adjusted the price to $432,000 this past week. I immediately called the buyer’s agent to let her and her clients know of the new price and to see if her clients were still interested in the property. The buyer’s agent told me that due to the interest rates going up a quarter point the week prior, that her clients went from affording $430,000 to only affording up to $410,000.

The buyers lost $20,000 in purchase power and a chance to purchase the home they really liked while the sellers lost a potential buyer and sale and possibly, market value. All in just one week.

2) I am representing buyers who are looking to purchase their first home. We originally started our search almost a year ago, but something came up that made them put off purchasing a home until this month. Prior to searching last year, they spoke with a reputable lender and were approved for up to $360,000 based on their financials and the interest rates at that time. They spoke with the lender again two weeks ago and were told that the rates had gone up, but due to their financial situation improving since last year, they were approved up to $350,000. They weren’t thrilled, but they weren’t as upset as they would be shortly.

Fast forward two weeks…

Due to the interest rates going up almost a quarter point on conforming loans last week, they are now only approved to $340,000. They lost $10,000 in purchase power in one week.

But wait, it gets worst.

Due to the price points of town homes in Ashburn, the difference between a town home that is $350,000 and one that is $340,000 is huge.

• One car garage versus no garage
• Move in condition versus $5,000 to $10,000 in work and/or sweat equity
• New appliances versus original appliances
• 1700 square feet versus 1900 square feet
• Backs to common area versus backs to another town home
• More desireable location versus less desireable location (based on buyer feedback)

The list goes on. And yes. All for $10,000.

The buyers had their eye on a particular property and decided that they wanted to place an offer on it. After speaking with the lender and finding out that they could no longer afford to buy it, they were heartbroken. Every property they’ve seen since then (at the lower price point) is compared to the one they liked and now, they all "don’t work".

Though they will eventually get past it, it’s not fun to go through it for anyone. It hurts the buyers and the sellers whose homes the buyers saw and now "don’t work" because they’re stuck on the one they now can’t afford.

Well, it could be worse. According to some, there are consumers out there that may have been approved for a loan in the past, but may no longer be approved even if their financial situation stayed the same. Are you one of them?

Related Articles

Who Can’t Get A Mortgage Now - CNN Money

Mortgage Mania - Part 10, The Credit Crunch - 3 Oceans Real Estate

You Think The Subprime Mortgage Fall Out Won’t Affect You? Think Again - Loudoun Stats

Washington Mutual, National City and Now IndyMac - real/diaBlog

Thursday Poll-Are You Happy With Current Real Estate Listing Sites?

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Sellers Beware-New Virginia Disclaimer and Disclosure Statements Open The Door To Liability

Virginia released a new Disclosure/Disclaimer Statement July 1, 2007 affecting all home sellers in Loudoun County as well as the rest of Virginia. The new Virginia Disclaimer addresses the issue of zoning much more than previously. For example, let’s say you finished your basement, but did not get permits and/or a final inspection from the county. You may be liable for future issues that arise because of it even after the sale of the home. Furthermore, Virginia is eliminating the Disclaimer Statement and mandating a Disclosure Statement effective January 1, 2008, which will impact sellers even more.

To better explain how it will effect you as a seller or buyer, we contacted Michael McFarlane, attorney and owner of Highland Title and Escrow here in Northern Virginia. This is what he had to say regarding the issue:

"Recent changes in Virginia laws governing the sale of residential real estate will affect both buyers and sellers in the coming months. Virginia law has required the sellers of a one to four residential dwelling unit to provide a Disclosure Statement OR Disclaimer Statement.

The Disclosure Statement provides specific information regarding the condition of a dwelling to prospective purchasers.

The Disclaimer Statement advises prospective purchasers that the seller is not providing any information, and that the purchaser should proceed with caution and carefully inspect the property. In past years, almost all sellers provided a Disclaimer Statement and NOT a Disclosure Statement. The consensus among real estate agents (and sellers) was that the Disclosure Statement could subject their clients to undue liability.

The Virginia Real Estate Board (VREB) amended both statements for use after July 1, 2007. The changes to both the Disclosure Statement and the Disclaimer Statement reflect a requirement that purchasers be cautioned about possible zoning violations.

The biggest change, however, will occur on January 1, 2008 when the ability to use a Disclaimer Statement will be eliminated.

In 2008, all sellers must use a Disclosure Statement. This will dramatically change real estate transactions.

For instance, sellers will be required to disclose if there have been "any leaks or evidence of moisture" in the basement. With a Disclaimer Statement, a seller is not obligated to provide any information and is only governed by the laws of misrepresentation and fraud. If there is no affirmative representation regarding a dry basement or no action to conceal the leaks from the purchaser, the seller would not be liable to the purchaser if it is later discovered that substantial flooding occurs after every heavy rainfall.

If a seller states that there are no leaks or evidence of moisture on the Disclosure Statement, the seller could be held liable to the purchaser after settlement if this statement is discovered to be false.

With this new disclosure requirement, purchasers have the benefit of a full disclosure regarding the condition of the property they plan to buy. Sellers, however, may open themselves to liability for an innocent mistake on the Disclosure Statement and must be very careful."

As a seller, you are going to face much more liability in the road ahead and a simple mistake or "accidentally overlooking something" may cost you in the future. Not very good news for sellers.

But let’s see who may be happy about the new Disclaimer/Disclosure…

• Buyers - may be more comfortable pruchasing a property because they may feel as though sellers are not able to "hide" anything for fear of a law suit. Buyers will also have more recourse than they currently do.
• Home Inspectors - will be able to pitch "Pre-Listing Inspections" to sellers in order to find out what is or what could potentially be deficient with the property for Disclosure purposes and to help avoid future liability.
• Lawyers - will love the new business.

Nevertheless, this "fuzzy feeling" of security that buyers will get may not be an all too realistic and buyers should still get a Home Inspection and take other measures to ensure that they cover themselves and their investment. And Home Inspectors may want to cover themselves and limit their liability should the sellers try to pin it back on them and their "Pre-Listing Inspection".

Whatever it may be, the new Virginia Disclaimer and future Disclosure Statement will have a big effect on the way real estate transactions are seen and conducted by all parties involved.

This article is not in any way a form of legal advice. Please contact a real estate lawyer or the VREB directly for clarification and guidance on this issue.