How to Identify an Overpriced Home

Posted by Ed Hughes

Whether you are selling your home or looking for a new home, knowing how to avoid an overpriced home is important. In many cases, homeowners value their homes higher than what they’re worth because of sentimentality and emotional attachments  However, overpricing a home is one of the biggest mistakes sellers can make, and buying an overpriced home is an even bigger mistake.  Here are 5 ways to identify an overpriced home. The home is priced much higher than neighboring properties. One of the first things real estate agents do before recommending a price to the seller is look at the sales prices of the last three sales of comparable sized homes in the neighborhood. Do a search to find out what neighboring homes are selling for, and make sure the home is priced accordingly. Look at the number of days the home has been on the market. If the home has a high number of days on the market, it may be an indication that the home is overpriced. Competitive bids indicate a reasonably priced home. The home is priced for customized, unique amenities. Tennis courts, badminton courts, wet bars, expensive pools, bowling alleys, and other amenities may have a lot of the appeal to the seller, but they don’t necessarily have a broad appeal. The price should reflect that point and not include many customized, personal amenities. The location does not add value to the home. It’s a real estate cliché that “location is everything.” However, location can affect the price of a home. If the house is located on a very busy street, is located in a generally low-income area, or the nearby schools don’t have high ratings, the price should reflect such. The home price is based on home improvements. There are a few improvements that can increase a home’s value. An updated kitchen, a newly installed bathroom, a deck, or other add-ons may warrant additional cost. However, minor home improvements and repairs do not. Make sure you are aware of any improvements, remodels, add-ons, etc. Verify that if the price of the home includes improvements, the improvements add actual value to the property.

First impressions are made at the front door

Home's entrance is seldom high on remodeling priorities 
     

By Arrol Gellner
          

Have you ever been to a house where you had to skirt the gas meter or sidle around garbage cans to get to the front door? Or one where there was such a bewildering array of doors, you weren't sure which one to knock at?
The front entrance is seldom high on people's remodeling priorities. Yet, just like that old saw about first impressions, it's your home's entrance that people notice first. It's practically impossible to rectify a bad impression made at the front door.
Tract-home builders have known this for years; even in the cheapest house, they'll never cut corners on the front door. They know that a strong impression of quality here subtly colors a visitor's perception of the whole house.
For much of architectural history, front entrances have been a focal point of a home's design. In colonial New England, for example, the front door was often flanked by sidelights and topped by a pediment, setting it apart from an otherwise austere facade.
The entrance should also be clearly apparent from the street. That doesn't mean it has to be glaringly exposed to view -- just that its location should be easily deduced by an unfamiliar passerby. Architects call this principle "demarcation."
There are lots of subtle ways to demarcate a front entrance. The most common is to surround the door with an architectural form such as a pediment or other type of trim. Another traditional strategy places the door in a recess, on a projection, or under a roofed porch. You can find a well-known example of the latter on the back of a $20 bill.
Here are some thoughts for planning your own grand entrance:

• Don't place an unsheltered entrance door flush with the front wall of the house; it'll create an unwelcoming "side door" or trailer-door effect.

• Don't bring the path to the front door past utilities such as gas or electric meters, or past unsightly storage areas for trash or the like. Keep these kinds of features out of the visitor's line of sight.

• Don't force visitors to walk on a driveway to get to your front door. Provide a separate walking path, or at least set aside a portion of the driveway paving using a different color or texture so it's clearly meant just for those on foot.

• If you plan to provide a covered entrance porch, make it at least 6 feet wide -- enough for a person to stretch out both arms without touching either wall. Anything less will feel cramped and uncomfortable. Also, make the porch at least 4 feet deep (6 feet is better), or it'll feel cramped when more than one person is waiting outside the front door. A cheaper alternative to building a projecting porch is simply to recess the front door. Again, make the recess at least 6 feet wide, and not less than 2 feet deep.

• Lastly, if your house has several doors facing the street, make sure your front approach aims your visitors toward the main entrance. Your front door may seem obvious to you, but, hey, you live there.

Read Arrol Gellner's blog at arrolgellner.blogspot.com, or follow him on Twitter: @ArrolGellner.

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6 tips on buying, renting a home for extra income

ALEX VEIG, Associated Press Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

By ALEX VEIGA, AP Business Writer

 

File photo, a house is for rent and for sale in Portland, Ore. Experts

say owning rental housing can pay off even as market recovers.

FILE - In this Sept. 13, 2011, file photo, a house is for rent an...

 

(Page 1 of 2)

 

Low mortgage rates have made buying a home more affordable and turned rentals into an attractive option for investors. Throughout the downturn in the housing market, average investors, sometimes pooling their money, have bought foreclosures at a sharp discount and turned them into rentals. Many homeowners also have purchased a second home and rented out their first property.

Although the housing market is showing signs of recovery, demand for rental housing is expected to remain strong. The national unemployment rate remains high at 7.9 percent, banks are still working through a backlog of foreclosures and tight lending requirements prevent many renters from becoming homeowners. And the Fed has said it will keep its short-term interest rate, the federal funds rate, at a record low until U.S. unemployment falls below 6.5 percent, something many economists don't expect to happen until late 2015 at the earliest. "In this market, at this point, it's a sweet spot," says Chris Princis, a senior executive at financial advisory firm Brook-Hollow Financial and owner of two rental properties in Chicago. "You're getting the market where it's just starting to rebound, but still at the bottom, with what's looking to be a great recovery."

 

Here are six tips on becoming a landlord or investor in rental property:

 

1. UNDERSTAND WHAT IT MEANS TO BE A LANDLORD

Residential real estate generally provides three possible ways to get a return on your investment: when it's sold, assuming it has grown in value, by collecting rent and through tax savings, such as the mortgage interest deduction. So, if you elect to buy a property for the long-term investment potential, the goal should be to ensure that the rental income covers the cost of your mortgage and monthly maintenance costs. If you buy a foreclosed home, you'll have to factor in the cost of repairs to ready the home for rent. And if you have a mortgage on the property, you'll need to be prepared to cover the costs for however long it takes to find a tenant. "Real estate is a great investment if people are paying their rent," says Princis. "If they're not paying their rent, it's a horrible investment."

 

2. BUY IN AN AREA WITH A HISTORY OF STRONG RENTAL DEMAND

Neighborhoods near universities are a good option. For homes in residential areas, proximity to schools can be a good draw for families. Condominiums and similar properties in communities with a homeowners' association can be a great option because the association arranges for upkeep on the property. But check the fine print on your mortgage and homeowners' association rules to make sure turning your property into a rental isn't forbidden. If you're going to buy a foreclosure, be prepared to compete with other investors, many of them paying in cash. And because many require upgrades and repairs, expect that it will take longer until you'll be generating rental income.

Websites like Zillow.com and Trulia.com list foreclosures, as well as rentals in a given area.

Foreclosure tracker RealtyTrac Inc. recently ranked U.S. metro areas, with a population of 500,000 or more, according to the supply of available foreclosures for sale and their discount versus other homes, among other criteria. Among the top 20 cities deemed the best places to buy: Miami, Chicago, Philadelphia, El Paso, Texas; and Poughkeepsie, N.Y.

Claire Thomas, a retiree in Phoenix who owns 10 rental condos in Las Vegas, says that landlords looking to keep their properties as income-generating rentals for many years should look into areas that are not too expensive.

"I would rather have a middle-of-the-road rental that stays rented than a higher-end (property)," she says.

 

3. CONSIDER A USING A MANAGEMENT FIRM

Determine whether you want to select the tenant and handle property issues or hire a company to do it. If you take on the responsibility, you are obliged to fix any problems (leaky faucets, broken furnace, etc.) or find professionals to do it.

 

"Are you prepared to do all of this this on your weekends or evenings or get calls while you're at work because a pipe burst and it's flooding?" asks Jim Warren, chief marketing officer for property management company FirstService Residential Realty. "What's that threshold worth to you?"

Property management firms can charge a percentage of the rent, sometimes 10 percent or more.

Hiring out the hands-on landlord job also makes sense if your rental property is not in the same city where you live.
 

4. DO THE MATH

Although prevailing rental prices will go a long way toward determining what you can charge, getting the best return on your investment starts with making sure you're going to get enough rent to, ideally, cover expenses and costs.  Princis' formula is charging 15 percent above monthly mortgage and maintenance costs. So if those costs add up to $1,000, he'll look to charge $1,150.

Of course, flexibility might be called for if you're unable to get a tenant in for months and months.

Experts recommend starting with popular rental listings in newspapers or on Web sites such as Craigslist.com, Trulia and Zillow, to see what comparable apartments or rooms are going for. Another option is rent analysis website Rentometer.com.

The good news: Rents for single-family homes rose 2.3 percent last year from 2011, according to Trulia.

5. SCREEN TENANTS THOROUGHLY

Once your rental starts drawing inquiries, it pays off to screen prospective tenants by asking for previous landlord references and running a credit and a criminal records check.
Experts also recommend asking for a deposit equal to one month's rent, plus extra if the tenant has pets. That will help cover any damage to the property and protect you if a tenant moves without paying rent.  Also, have a walkthrough of the unit with the tenant and ask that they sign off on the condition of the property before they move in. That will help avoid conflicts over the security deposit if there are damages once they're ready to move out.

6. GET FAMILIAR WITH LANDLORD LAWS

As a neophyte landlord, it's important to know your exact responsibilities under the law.
Two good resources for rental rules are the U.S. Department of Housing and Urban Development's Web site (www.hud.gov ), and The Landlord Protection Agency (www.thelpa.com ), which includes state-specific rental guidelines and standardized forms for rental agreements.
An attorney or the Landlord Protection Agency also can help you craft a well-written lease, which is crucial to protect your property. It will help you evict a tenant or hold them accountable for damage if necessary.

Another Sign Of Housing Strength - Taking Equity Out Again:

During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone. But the Home Equity Line of Credit (HELOC) is back and millions of homeowners are tapping into their equity to put it back to work. Nationally there has been a 31 percent increase in HELOC's year-over-year. With home prices up 8 percent year-over-year in December, according to the latest reading from CoreLogic, homeowners are regaining home equity at a fast clip—1.4 million borrowers rose above water on their mortgages through the end of September. That number likely increased as price appreciation accelerated toward the end of the year. Unlike the equity grab during the housing boom, this is real equity that borrowers are tapping into.  During the housing boom, banks were relaxed in their valuation processes, often times only requiring a statistical valuation or at the most a drive-by-appraisal.  But not this time. After getting burned by their second lien positions, banks are making sure that the equity is really there and are using very strict underwriting guidelines.  The fact that under these new strict guidelines and appraisal scrutiny more and more HELOCs are being approved is another sign that the housing market has some real strength.

Overall Home Prices are Increasing, But......

Most Housing Markets with Biggest Price Gains Aren’t Healthy

Should we all envy Phoenix, where prices have risen 24.8% year-over-year? Probably not. Huge price gains in Phoenix and elsewhere are not necessarily a healthy sign. As part of our 2013 housing outlook, we ranked the 100 largest metros on the health of their housing markets, based on three market fundamentals: strong job growth, low vacancy rate, and low foreclosure inventory. On this list of healthiest markets, Houston ranked #1.

Weaknesses on these fundamentals are red flags for a local housing market – even when prices are galloping ahead. Few of the markets with the biggest price gains are “healthy” in terms of these fundamentals: eight of the 10 top price gainers were in the bottom half of the “healthy markets” ranking. For example, Detroit – despite a 14.2% price increase – was dead last, ranked 100 out of 100. None of the 10 markets with the largest price gains was also among the top 10 healthiest markets for 2013, though San Francisco came close, with the 11th largest price increase and the 2nd healthiest market.

Are you ready for.......

Natick Open Houses Feb 3rd

Single Family Listings
	MLS #	Status	Address	Town	Description	DOM	List Price
	71459384	ACT	3 Gibbs St	Natick, MA	7 room, 4 bed, 1f 0h bath Capex18	72	$300,000
	71440638	ACT	10 Vermont Avenue	Natick, MA	5 room, 2 bed, 2f 0h bath Colonialx14	129	$314,900
	71418758	ACT	76 South Main Street	Natick, MA	6 room, 2 bed, 1f 1h bath Antiquex23	125	$329,900
	71478062	NEW	30 Brookdale Road	Natick, MA	7 room, 3 bed, 1f 1h bath Ranchx17	2	$359,900
	71476178	ACT	163 Oak Street	Natick, MA	7 room, 3 bed, 2f 1h bath Capex15	8	$449,000
	71477702	NEW	18 Marshall Rd	Natick, MA : East Natick	9 room, 4 bed, 2f 0h bath Capex24	3	$469,000
	71471375	ACT	21 Longfellow Rd	Natick, MA : East Natick	7 room, 4 bed, 2f 0h bath Colonialx28	23	$529,900
	71478563	NEW	10 DWIGHT AVENUE	Natick, MA	10 room, 4 bed, 2f 1h bath Colonialx16	1	$599,000
	71468606	ACT	20 Wellesley Avenue	Natick, MA	6 room, 3 bed, 2f 1h bath Colonialx23	30	$624,900
	71478002	NEW	129 Union St	Natick, MA	8 room, 3 bed, 3f 0h bath Colonialx30	3	$679,000
	71469267	ACT	4 Lantern Ln	Natick, MA : South Natick	10 room, 4 bed, 3f 1h bath Garrisonx28	21	$824,800
	71439809	ACT	14 SANCTUARY BLVD U:Lot 8C	Natick, MA : South Natick	9 room, 4 bed, 3f 1h bath Colonial	131	$949,990
	71472624	ACT	2 Davis Brook Drive	Natick, MA	12 room, 5 bed, 3f 2h bath Colonialx24	18	$1,225,000
	71474032	ACT	15 Davis Brook Drive	Natick, MA : South Natick	10 room, 4 bed, 3f 1h bath Colonialx30	61	$1,249,000
Single Family Listings: 14    Avg. Liv.Area SqFt: 2,473.86    Avg. List$: $636,021    Avg. List$/SqFt: $253    Avg. DOM: 44.79

Condominium Listings   MLS # Status  Address Town Description DOM List Price 71477587 ACT 52 Village Brook Ln U:20 Natick, MA : West Natick  4 room, 1 bed, 1f 0h bath Mid-Risex16  4 $145,000   71467056 ACT 10 Nouvelle Way U:922T Natick, MA  4 room, 2 bed, 2f 0h bath Hi-Risex10  164 $400,000   71475546 ACT 10 Nouvelle Way U:907S Natick, MA  4 room, 2 bed, 2f 0h bath Hi-Risex26  10 $449,000   71461615 ACT 14 Hopewell Farm Rd U:14 Natick, MA  7 room, 3 bed, 2f 1h bath Townhousex21  63 $559,000     Condominium Listings: 4    Avg. Liv.Area SqFt: 1,347.50    Avg. List$: $388,250    Avg. List$/SqFt: $277    Avg. DOM: 60.25