Q & A with Dottie Herman

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Q1 - My husband and I recently purchased a home. We took an ARM at 4.875%; however, now that the rates for a 30 year fixed are as low as our ARM should we refinance and take the 30 year? How do we go about that?

A - I suggest you contact your lender and see if they will refinance your existing ARM mortgage with a fixed rate.  You must take into consideration that there are costs to refinance. 

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Q2 - We just started looking for our first home and I have to admit, its a bit overwhelming. What's a simple way to tell if a property is overpriced besides our gut instincts?

A - Besides working with an experienced real estate agent who knows the local market, most sales are now public knowledge and are listed on-line through various websites. You should be looking to see if there has been high turnover in your interested area (if there was a high turnover in a particular area, you want to make sure that this was due to a desirable area becoming more affordable). Also, are the sale prices of the sold properties that are physically comparable to the property you are interested in  (for example, if you are interested in a 2 bedroom 2 bath ranch, you should check to see what the sale prices in the last six months were for similar property).   Another indication that a property is overpriced is how long has it been on the market.  Usually, if a house is on the market for a long period of time, it can be caused by the seller not being realistic about the current market conditions and overpricing the property.

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Q3 - My wife and I are going to put our home on the market. We have been seeing a lot of for sale by owner signs in our area lately. What is the benefit of listing with a realtor?

A - In today's market it is more important than ever to list your home with a real estate agent, who will price, market, and sell your home.  There is certainly an art to pricing a home.  A real estate professional can evaluate detailed market comparables combined with an in person inspection of your home, to determine the right asking price.  The agent will have marketing tools at his or her disposal that are critical for success.  These tools include an internet presence, roster of past clients, and marketing professionalism.  Finally, an agent is a professional at selling.  This means the agent will know how to handle objections of buyers and can emphasize the key selling points.  All together, the difference between selling on your own and using an agent is vast.  The decision is in reality no decision at all - if you want to sell your home for the most amount of money possible - get yourself a real estate agent.

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Q4 - Do terms matter when making an offer on a property? What can I offer as far as financing to make my offer more attractive?

A - In today's market with all the press of defaulting and subprime mortgages, sellers and their attorneys are more apprehensive to accept offers with minimum down payment. Although the FHA loans of the world are very good and secure with their minimum down payment of 3.5%, sellers don't always feel this way. I preach to agents all the time, that if they don't educate their sellers on embracing FHA, they will lose out on over 35% of the buying power out there today. However if the property you are looking to purchase falls into the aforementioned situation, and you really want to purchase this property, you should strongly consider increasing your down payment, even if you have to receive funds from family members to assist you (gift funds). However I always caution buyers to not let the passion of acquiring this dream, overstep your ability to purchase something you can't afford.

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Q5 - I am listing my house for sale early next year but I am not in a hurry.  I have spoken to a number of real estate agents to get their take on pricing strategy.  While I am a reasonable person, I don't want to leave money on the table.  I am leaning towards listing high and seeing if I get lucky and find a buyer that will pay the higher price.

A - It's been my experience that your strategy, especially in a weak housing market, will end up getting you a lower price than you would if the house was priced very close to its true value.  Remember, with more homes for sale than a few years ago, you have more competition.  Buyers and real estate agents may view you as an unrealistic seller and avoid your home.  I always say that if you price your house at market value and it will sell.

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If you have a real estate question for Dottie, please send it to; Dottie@RealEstateChannel.com.
 
NOTE: Due to high volume of questions, not everyone can be answered, but she'll do her best.

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