Real Estate - Real Solutions

Last week, The CBS Evening News with Katie Couric had a special report called Real Estate Real Solutions. I thought the segments were good because they gave buyers and sellers insight to the market, steps sellers can take to improve their chances for an offer, and even tips for people who want to try to go it alone without an agent. Keep in mind this was the national market in general with some spotlights on local markets in other states; all markets are local so be careful making assumptions in your town and even your neighborhood!

A note to those sellers who want to go it "alone." If you want to try this just to save money paying a commission, then let me tell you about 2 services you can still get from a REALTOR for a reduced commission.

ENTRY ONLY LISTING. This is a listing in which a REALTOR will provide the seller with very minimal services such as advertising the home on the MLS and providing forms to the seller. All negotiations, showings, open houses, and any additional advertising (and the costs associated with them) are the sole responsibility of the seller.

LIMITED SERVICE LISTING. This is a listing for which a REALTOR will perform at least one of the following (but not all):

1. Present offers to purchase diretly to the seller


2. Advise the seller on the merits of an offer


3. Advise the seller in developing, communicating, or presenting counteroffers


4. Participate on the seller's behalf in negotations leading to the sale of the listing property

Both of these options can help you "go it alone" without leaving you in the dark. I encourage anyone considering this to speak to an agent first to hear first hand exactly what he or she can and will do for you to sell your home.

I also encourage anyone looking to buy or sell a home to check out Real Estate - Real Solutions on The CBS Evening News website.

1st Half Sales Results

I thought I would share some sales statistics for RI for the 1st half of 2007. I'm often asked what the average price of a home is in a given area of RI, how long a property has been on the market, etc. And I've been keeping everyone apprised of the "doom and gloom" reported in the media--another pressure on home sales in my opinion.

Well here are some numbers for you to consider.

In the 1st half of 2007, 5,133 homes and condos were sold with an average selling price of just over $335,000. We have to be careful when considering the average selling price of an entire state, especially in a place as small as RI where multimillion dollar homes are never more than a 20-30 minute drive from the most depressed areas of the state.

Consider this. In Providence, the average list price (the "asking price" when the house first goes on the market) was $215,814 in the 1st half of '07 and the average selling price was $207,322. On the EAST SIDE of Providence, however, the average list price was $601,944 with an average selling price of $548,933.

A licensed REALTOR can look at the condition of your home, your individual neighborhood, and the larger municipal area in which you live to help correctly price your home for TODAY'S market. A friend of mine recently asked me about a website, increasing in popularity, that enables you to see active and sold listings on the market with great map capabilities, etc. I visited this site (I am not going to put its name here.) a few days ago and found that the "recent" sales data on many of the houses I checked were from 2005--the TOP of the market 2 years ago.

Pricing your home correctly is probably one of the most important factors in determining how long your home will take to sell. Other things to consider: Make your house stand out among the competition. Repair any defects; de-clutter your home; keep your house clean for any last minute appointments that pop up (not just at open house time); keep your yard tidy.

The following table shows # of Days on Market (DOM) of the 5,133 homes that were sold in the 1st half of the year. Nearly 1/2 sold within 2 months and the majority sold in less than 120 days.

0 - 30 Days....................1,401
31 - 60 Days................... 936 (2,377)
61 - 90 Days................... 702 (3,039)
91 - 120 Days.................. 565 (3,604)
121+ Days......................1,529 (5,133)

If you're thinking about selling your home, then give me a call or send me an e-mail. I'll be happy to look at homes that have sold in your neighborhood in the last 2, 4, or 6 months to get a more accurate picture of the real estate market where you live.

Mortgages Today Take More Time, Money

Due to the recent fallout in subprime mortgages, lenders are now taking a closer look at applications for home financing. The changes in the approval process may ultimately cost many people, particularly subprime borrowers (those with FICO scores under 620), more time and money. In fact, in today's market, it may be unlikely for a borrower with a credit score lower than 620 to obtain a no-money-down loan; most lenders are requiring a minimum of 3% to 5% down and a solid verifiable income history. In fact, lenders have increased the minimum score for loans requiring no down payment from 570 to 620. The irony is that this same group of people could have easily qualified for this type of loan just a few months ago. Analysts and experts believe recent changes to the application process means 10% to 15% of borrowers who qualified under the old rules no longer qualify for 100% financing under the new rules.

Those who are self employed or who are paid in cash will have greater difficulty obtaining financing--particularly if they are in the subprime category. Many lenders are scrutinizing income history and may require FICO scores as high as 700 for 100% financing if there is no verifiable history of income. Additionally, home appraisals are being more carefully researched. In some cases, second appraisals are required for approval adding to the time it takes to get a loan regardless of credit worthiness and income. Many subprime lenders and those with loose lending policies have gone out of business in the crisis which means an increase in business at the remaining lenders adding to the length of time to approve an application.

So what can you do? One of the best things you can do if you're looking to buy a home is know your FICO score. You can obtain your FICO score from online sources (just Google FICO scores--I'm not advertising any of them here) or your mortgage professional. Talk to your mortgage professional about your score and how you can improve it. S/he may be able to refer you to a credit counseling agency that can tell you things like what types of accounts to open/close; which accounts to payoff first; etc that may result in your score going up. Also there may be programs in your area for first time buyers or for invidivuals looking to move into more depressed areas of a city or town. Second, keep good records. When you sit with a mortgage professional, have at least 2 recent tax returns and your last 3 or 4 paycheck stubs to show income history and work stability. Finally, consider putting something down. Banks are more willing to loan money to borrowers who put some of their own savings on the line.