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Why “For Sale by Owner” Signs Cost A Bundle

When the time comes to list your Napa home for sale, it can be tempting to stick one of those “for sale by owner” signs in your lawn and just try to sell it yourself. Daydream visions of trips to Europe, new Lamborghinis and stacks of gold ingots (all bought with the commission fees saved) can crowd out more realistic thoughts.

Images of craven real estate agents, twirling their mustachios as they plot to under-price your home, may compete with more practical notions… such as the actual hassle of learning to deal in a specialized marketplace without specialized tools and resources.

Still, it is tempting. After all, at the local Napa Home Depot “For Sale by Owner” signs cost just $8.99 at any hardware store! And how hard could it be to find out what forms you’re supposed to use to accept a good faith deposit? Or where to put the deposit so it’s in escrow (or whatever they call it)…???

The fact is, about 70% of homeowners who try to sell their homes themselves eventually hire an agent. Some of the others give up altogether — having now established a record of owning a house they didn’t sell.

So it’s probably more practical to forget the Lamborghini, right? Well, maybe not entirely. According to the National Association of Realtors, represented sellers get higher prices for their homes than do owners of comparable homes who eventually complete a sale. Often, the difference in price is more than enough to cover the broker’s fees.

Marketing your home is only part of my job. Things really swing into gear once a prospective buyer makes an offer. That offer includes more than an offering price: it also establishes how the buyer wants to structure the deal and sets forth a timeline. It’s really difficult for a homeowner to evaluate the offer and the possible consequences of each term in the contract. As a result, it is also very difficult for the seller to negotiate the offer to his best advantage. I will make sure you understand the offer and its implications — and keep you from making a costly mistake.

A lot happens between your acceptance of the offer and closing day. The buyer usually orders numerous inspections and, depending on the results, may request repairs. These requests often lead to further negotiations. If the buyer isn’t satisfied, your deal can fall apart. And a deal can collapse over financing and title delays. It’s a stressful, emotional time for the buyer and seller both.

From the moment you sign your listing agreement, I am legally and ethically bound to work in your best interest and to ensure that your sale is as profitable as possible. If you’re considering selling your home, before you decide to just stick one of those Napa Home Depot “For Sale By Owner” signs in your lawn, contact me for a complimentary consultation to see how I can help you succeed!

-Karen Magliocco

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Napa Foreclosure Sales Flood Market

Foreclosures and other distressed properties account for more than a third of all home sales, and data released today suggests that figure may soon grow even bigger.

Lenders in January took back nearly 91,100 distressed properties, which includes foreclosures and short sales, up 29% from the previous month, according to data released this morning by LPS Applied Analytics, which tracks mortgage performance.  In the next few months, experts say those homes will make their way back to the market to join the already high percentage of distressed homes being snatched up by buyers.

That addition of distressed properties will likely lead to further drops in home prices, says Tom Popik, research director at Campbell Surveys, a real estate research firm. Foreclosures and short sales accounted for roughly 35% of total existing home sales in January — up 16% from June, according to the National Association of Realtors. Over that period, the median home price fell 8.5% to $154,700. “Prices are going to continue to go down for a long time,” says Popik

To be sure, distressed properties tend to make up a greater share of overall sales in the winter when investors are the predominant buyers, says Walter Molony, a spokesman for the National Association of Realtors. Families typically purchase a home in the spring and summer before the new school year begins. And because families tend to avoid buying foreclosures, distressed properties make up a smaller market share of home sales during that time, he says.

Still, as banks reclaim more foreclosed properties and put them back on the market, experts say homeowners are likely to feel the impact of a nearby foreclosure on their own property’s value. On average, home property values drop about 1% when they’re within one-eighth of a mile from a residence that’s received a foreclosure filing, according to the Woodstock Institute, which researches foreclosures, and the Georgia Institute of Technology. When the home is sold – whether in an auction or taken back by the lender – homes within a quarter mile lose up to around 4% of their value, which they’ll need between two and five years to recoup, according to a separate study in the Journal of Real Estate Finance and Economics.

For homeowners, more foreclosure sales in their neighborhood can lead to losing home equity at a time when millions already owe more on their home than it’s worth. Less equity will make it harder to borrow against homes for renovations, repairs, or other purposes, says Spencer Cowan, vice president at the Woodstock Institute.

Real estate pros say those who want to sell will likely end up getting less for their property than they expected. That’s because they’ll be competing with foreclosed homes that sell at a roughly 29% discount on average, according to RealtyTrac.com. Of course, these homes may stand out to buyers who prefer to buy a move-in ready home or at least one that doesn’t require extensive repairs like most foreclosures do.

What’s bad news for sellers, of course, is good news for buyers. In particular, experts say the spike in foreclosures means buyers have more leverage to negotiate a price on a non-distressed sale if it’s in a market where a significant number of homes are in foreclosure. They may also be able to purchase a foreclosed home at a relatively low price (though they’ll likely have to pump money into it for repairs).

During the last quarter of 2011, foreclosure sales in Las Vegas accounted for 59% of all home sales – among the highest in the country — according to RealtyTrac.com. Those homes sold for an average discount of 19%. In Sacramento, foreclosures made up 50% of all sales and sold at a 25% discount. But while they may get a deal, buyers shouldn’t count on turning a profit quickly especially if foreclosures continue to rise in the area dragging property prices further down.