10 tips for home buyers and sellers in 2014

Homeowners enjoyed double-digit price growth in the first half of 2013, greatly exceeding experts’ predictions of a year ago and even settling into pre-recession values in many markets. Though there was some softening in the second half, sellers remain in their element and are turning the screws on anxious buyers who fear further price spikes and escalating interest rates. New-construction home sales are up, previously underwater properties are in positive equity again and investors are turning their attention to “secondary markets” to find value. Economists expect house prices to rise another 4 percent to 5 percent in 2014, meaning remaining bargains will get even more sparse.

With that in mind, here are 10 tips befitting the up-market of 2014.

Sellers: Jump-start the process.

You may be an avowed procrastinator, but if you want to sell a house this year, start planning now. The process, say sellers, always takes longer than expected. So get your home inspected now; there may be unseen major repairs to address. Declutter, clean closets and shelves, store extraneous possessions and furnishings and other stuff that might keep sellers from picturing themselves in your space. Attend an open house or two to get an idea of how to stage yours. And move along: Owners still waiting for the market to peak should beware that this real estate cycle may be shorter-lived than last.

Buyers: Be credit-ready.

There’s a lot of competition out there for homes, so tarry not. Get your credit report and start repairing any blips. If your scores are below 620 or so, a conventional loan will be a challenge. But if they’re under 740, you still might not get the best rates. Many buyers get a prequalification letter from the lender, but you can one-up them with a preapproval, which comes after a more thorough evaluation of your finances. A preapproval letter shows the seller that you’re good to go and can close quickly.

Sellers: Vet your real estate agent, then follow the agent’s advice.

Sellers lose time and money by hiring poorly. Interview several potential agents. You’ll want a full-timer who is Web savvy and uses mobile technology, because at least 4 in 5 buyers view their homes first online. Your agent should be a proven performer in your submarket and be willing to walk you through the financial aspects of your deal. The more the agent knows about schools, commutes and other local details, the better. Once vetted, accept your agent’s advice on pricing, marketing and negotiation.

Buyers: Adjust your negotiating expectations.

Lowball offers are off the table in this environment and could eliminate you from consideration. Respond to counteroffers quickly to keep other buyers from entering the picture; you don’t want to encourage a bidding war. If one breaks out, be prepared to get fewer concessions and pay more money. And have a few other homes in mind so you can be willing to walk away if the price soars.

Sellers: It’s your market (finally) so make the most of it.

At long last, it’s a seller’s market! While you’re interviewing agents, be wary of those offering too-good-to-be-true price opinions because they may be trying to “buy” your listing. And don’t jump at that first (seemingly) generous offer, especially if sellers are getting multiple offers. If you’re getting your price and then some, give something back to the buyer in good faith, such as an early move-in date or some personal property you’re not attached to. Never let the buyers’ agents know what you’re willing to do, though. Make them ask.

Buyers: Find life after foreclosure.

Have a foreclosure in recent years? Join the crowd. Though you might think you have to wait seven years to get another conventional mortgage, Fannie Mae, Freddie Mac and the FHA say they actually require just a three-year waiting period if the foreclosure was caused by extenuating circumstances. There are plenty of nonconforming lenders — often called “shadow bankers” — out there if you can endure a big down payment (around 20 percent) and above-market interest rates. Or consider a lease-purchase or lease-option where you pay the homeowner a monthly premium above your rent for the right to buy at a set price later.

Sellers: Hesitate to renovate.

We hear that newly renovated homes are easier sells, and that’s true. So is it time to remodel that outmoded kitchen? Not if you plan to sell soon. According to remodeling surveys, the average renovation project returns only about two-thirds on investment. For example, a major bathroom remodel costing $15,000 yields about $10,000 in resale value. The same goes for a major kitchen remodel. In most cases, it would be cheaper to issue credits to buyers or drop your price a few grand. Lighter jobs like new doors are more practical and return about 85 percent. But feel free to spend a bit on paint (basic colors), curb appeal and fence replacement to enhance exteriors.

Buyers: Ask and you won’t receive (an unpleasant surprise).

You’d be dismayed at the things sellers aren’t obliged to disclose in most states, including on-premises felonies, suicide, murder or a neighboring sex offender. Don’t be afraid to thoroughly question the selling party in writing before signing the contract. Some questions: Is there a cell tower, water tower, natural gas well, oil well or other non-residential construction scheduled to be built in this neighborhood (then define “neighborhood”)? Is there commercial zoning on nearby vacant land? Is the yard prone to flooding? Are train whistles or other regular loud noises audible there? Did known criminal activity occur in the house? Have there been reported hauntings? Are there loud neighbors, dogs or other noise pollution? Are there registered sex offenders or other known criminals living nearby? If the selling party refuses to answer any of these questions, that’s a bright red flag.

Sellers: Tailor your local game.

Folks who base their selling decisions on trends on cable news are often left wondering, “Why can’t I sell at this price?” The truth is, all markets are different and all real estate is local, and prices can vary greatly even in adjacent subdivisions. Home prices are dictated largely by demand, land availability, foreclosures and employment. Most local real estate offices will provide market stats and at least a few recent comp sales in hopes of earning your business. Additional trend data can be found online or in local newspapers and business journals. A polite call or email to a local real estate appraiser might net more info or links to local statistics.

Sellers and buyers: Heed changing trends.

Pay attention to trends and react accordingly. Thinking of laying carpet? Agent surveys in the past few years show homes with hardwood floors or faux wood laminate floors are far faster sells. You still want to be in suburbia? Millennials don’t. Numerous cities — such as Austin, Texas; Portland, Oregon; and Minneapolis — have watched this more environmentally conscious generation flock to “mixed-use” urban districts served by trendy cafes, nightclubs, bike paths, civic events and mass transit. For now, they’re not buying condos, which haven’t recovered like the single-family market. They’re renting — but watching the condo market ever so carefully.

We are officially in the thick of the housing season – and in the real estate world, this is housing’s peak season. If you’re one of the millions of Americans hoping to sell in the summer, capitalizing on red-hot market activity, there’s a lot to know.

Here are the seven most important things to know if you’re looking to take advantage of real estate’s most sizzling season:

Busiest Month of the Year

Nationally, the volume of home sales in June is typically 29% above the annual average, according to Trulia. In July and August, inventory keeps climbing as some sellers miss the sales peak. Homebuyers begin their search in March and April, but they really get down to business after Memorial Day. The peak in June and July sales reflects the fact that many people want to move in summer when school’s out and the weather’s good. In fact, more buyers are ready to close deals in the summer than any other time of the year. So get your house ready and on the market now, and take advance of the surge in activity.

Mortgage Qualifications Loosening

Fannie Mae (FNMA) and Freddie Mac have just announced that they’re loosening some bank lending rules. Accordingly, in April, Wells Fargo & Co., the biggest U.S. home lender, cut its minimum credit score for borrowers of Fannie Mae and Freddie Mac-backed loans from 660 to 620, following similar moves from smaller banks. Thus, there may be a bit more qualifying flexibility for hopeful homebuyers come end of the summer.

Interest rates on 30-year fixed-rate mortgages rose from a record low of 3.31 percent in November 2012 to 4.58 percent in late August. But optimistically, rates fell last week to 4.21 percent. And falling rates are just another incentive for those summer homebuyers.

Push The Inside Out

Now that the weather is heating up and you’re spending more time outdoors, use it to your selling advantage. Living space is not defined by the interior walls of your home; it actually extends all the way to the sidewalk in front to the property line in back. And whether you have a modest balcony or a big backyard, you’ll want to push the inside out. Make your outdoor space inviting with a cozy seating area or dining table, complete with attractive place settings. Stage you barbeque area with a nice set of tools and mitts next to the grill. Or if you have a pool, include rolled white towels and a terry cloth bathrobe draped by a Jacuzzi. Be creative. I have seen a backyard staged with a croquet set as if there were a game in progress. These little touches makes people think “I should live here!”

Keep It Green and Flowery

The hot days of summer present their own challenges and opportunities for curb appeal. You want to make sure the lawns are well watered and green. Grass and shrubs dry out quickly, and nothing is more uninviting than a charred front yard. And as you struggle with your lawn, don’t overlook the fact that warm weather affords the opportunity to create an especially inviting front yard, with beds of colorful flowers – a must for spring and summer home sales. Not sure where to start? Keep it simple: choose one color and stick with it. And when all else fails, go with white. It’s sure to look good, and it really pops against other greenery creating a sophisticated look.

Keep It Cool

For every showing or open house, make sure that the air conditioning is working and turned on prior to any guests arriving. You want your home feel like a cool oasis in the heat of summer. In fact, it’s smart to set your thermostat a few extra degrees lower than usual to compensate for all the doors opening during prospective buyers’ comings and goings.

Summer Treats For Your Buyers
Buyers are hot and sticky after hours of getting in and out of scorching cars while battling open house crowds. You’ll want them to have a nice refreshing moment in your home, so break out the pitchers of ice water with lemons or stock the fridge full of cold drinks. It’ll go a long way in keeping interested visitors happy about spending time in your place. Remember, the longer potential buyers hang in your home, the more they become emotionally attached and want to make it their home!