Opportunities Abound to Profit in 2008

 

Tumbling home values.  Soaring energy prices.  A topsy-turvy stock market and a gazillion other financial worries, not the least of which is whether we'll spend the coming year mired in recession.

 

Considering all the black clouds hanging over the economy, you probably think there's no way you can really expect to prosper in 2008.  It will be all you can do just to hang in there, right?  WRONG!

 

We firmly believe there will be plenty of opportunities to make money this year - yes, even in real estate - as well as ways to insulate your finances from the most serious economic challenges ahead.

 

The real estate slump isn't going away soon, so whether you're buying, selling or staying put, deal with it.

 

For sellers:

Forget what the ugly house next door sold for last year or even what comparable homes are listed for today.  Instead, use the going price of houses that have recently sold as a guide - then price your home even lower so it looks like a great deal.

Best case: Your aggressive pricing attracts more than one bid, pitting buyers against one another and ultimately lifting the final sale price.

 

For buyers:

If ever there was a time to drive a hard bargain, this is it.  Don't be distracted by small stuff like whether the current owners will leave behind their appliances and window treatments.

 

Focus instead on what's really important: getting the lowest price.  Do a little homework and find out what comparable houses have sold for lately.  Then start the bidding at 10% to 15% below that recent sale price.

 

Note: This strategy works best if there are several homes on the market in your area around the same price.

 

There are many other tips throughout this weblog for buyers and sellers.  We encourage you to spend a few minutes and look through them.  It could be worth a minor fortune if you pick up a tip here or there that could add dollars to your home buying or home selling strategy.

 

 

 

Some Home Improvements Are Worth Skipping

 

Homeowners aren't recouping as many improvement costs as they could in recent years, according to a recent study by Remodeling magazine.  In fact, real-estate agents advise clients not to overdo it, regardless of what the local market conditions are like.

 

To keep costs down and spend remodeling dollars wisely, consider the following tips:

 

1. Ask for advice.

Before making any remodeling plans, clear your home of clutter and rent a storage unit, if necessary, to hold extra stuff while the home is on the market.  Then, get some advice from a local real-estate agent on how the home stacks up against the competition.

 

Cleaning the carpets, painting the walls and removing wallpaper are common fixes. It is wise to budget for these tasks before putting money aside for more expensive projects.

 

2. Dig deeper.

It also could pay to look below the surface by getting a home inspection before even listing the property for sale.  That way, problems that could hold up a sale are addressed in advance.

 

Some estimate that for every dollar of perceived defect, buyers want a $2 to $3 discount.  If that's true, it might pay to spend $2,500 to replace an old furnace before a buyer demands $5000 off for them to have to replace it.

 

Also, replacing something as necessary as a furnace helps create a favorable perception of how well a seller took care of the home.  If there is a problem with an essential element of the house, a buyer might think, "If that was neglected, what else was?"

 

3. Look outside.

Pay attention to exterior details like the condition of siding and windows.

 

According to Remodeling magazine's 2007 Cost Vs. Value Report, a wooden-window replacement recovers on average 81.2% of its cost at resale, and siding replacement recovers on average 83.2% of its cost.  The payoff for those projects is much better than for an upgrade that a buyer might not need.  A home-office remodeling, for example, recovers only 57% of its cost on average.  The estimates are national averages for midrange homes, not upscale ones.

 

4. Spend time in the bathroom.

Freshening up the bathroom doesn't have to be expensive, but it could be important.

 

It's most important for the bathroom to be clean, but sellers should also consider replacing the fixtures, tub, sink and toilet — if they need it.  Replace cracked tiles and curled linoleum.

 

The replacements don't have to be expensive.  A toilet can cost less than $250, and it is recommended that you consider taller, handicap replacement toilets to appeal to an aging population.

 

5. Keep it small in the kitchen.

The other room that often sells a house is the kitchen, but it might be best to keep renovations modest.  Remodeling magazine's report found that homeowners could recover 83% of the cost of a minor kitchen remodel at resale, compared with 78.1% of a major kitchen remodel.

 

Use caution when thinking about replacing refrigerators, stoves or dishwashers.  Buyers considering remodeling the kitchen will likely have their own preferences.

 

Along those same lines, sellers should replace a countertop if it is crumbling but not if its only fault is that it is outdated.  Even then, seriously consider material costs: There is no need to update to granite unless the competition has granite countertops as well.

 

 

 

Pricing Your Home

 

Even though we're smack dab in the middle of Winter, Spring time is just around the corner.  And Spring is the time of year when the weather begins to change…and many homeowners begin to think about changing houses.  If you're going to be selling a home this coming Spring, here's some advice on pricing your home from money reporter Stacy Johnson.  (1:36)

 

 

If you have a question or comment about the video, please leave your comment below.

Selling a Home - Hiring a Realtor

 

Selling a home in most places is a lot harder today than it was a few years ago… which means getting the best possible help.

 

Money Talk Editor Stacy Johnson takes a look at some things you need to ask.

 

 

Have a comment or question that Stacy didn't cover?  Post it here and we'll gladly answer it for you.

 

 

 

How to Determine a Home's Value

 

Property values are falling in many markets, balancing out some inflated markets and making home values a little more realistic.  This has some sellers worried.  While they might not make as much money on a sale now as they would have a year or two ago, it doesn't mean the market is bottoming out.  Many areas are still experiencing a strong real estate market.

 

So what does a seller have to do to get the most for their home?  How does one determine their home's worth?  Frequently, a homeowner's emotional attachment to a home, not to mention their wishful thinking, makes them a poor judge of what their home is worth.  That's why online appraisers have grown in popularity recently.

 

An online appraisal company uses mortgage loan origination systems to help them determine the value of a home.  They access census data, tax assessments and previous sales information, as well as analyzing physical features such as the number of bedrooms, room sizes, lot size, year the home was built, and similar data to determine your home's accurate worth.  Furthermore, they access national real estate related websites to help them determine market values in specific areas.  So if your home is small, but in a trendy area, that will all be taken into account.

 

One of the best things about an online appraisal system is it's convenient for you, no matter if you are buying or selling.  All the data the system collects is passed along to you, so you can keep it for your records and see for yourself exactly how the value was assessed.

 

For sellers, this system allows you to fully understand what your home is worth, so no one can undervalue it.  You won't be tempted by low-ball offers if you know your home's true value.  Plus, electronic appraisal is far cheaper than hiring a local, traditional appraiser.

 

For buyers, it helps you know a deal when you see one, and not be caught up in someone's inflated idea of their home's value.  It helps you keep your offers realistic.  Plus, you get a long list of background information about the home, things you'd otherwise have to go to multiple sources to find out about.

 

Online electronic appraisals… just one more reason why they say, you can get just about anything on the Internet.