Q & A with Dottie Herman

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Q1 - I am trying to sell my house- I am trying to decide if I should just list the home at the lowest number I am willing to take OR if I should start a bit higher, and then adjust the price in a few weeks if no one bites. Is there a strategy to pricing?

A - This is an excellent question.  Yes, there most certainly is a strategy to pricing your home.  It sounds like you have elected not to work with an experienced real estate agent in your community.  If this is the case, I would urge you to re-consider.  The 3 key pillars of selling your home: pricing it, marketing it, and negotiating terms of the sale, can be best addressed by a professional real estate agent. I have spoken with many sellers over the years that opted to sell on their own, only later to lament their decision. When it comes to pricing your home, the most effective pricing strategy begins with market data.  An experienced agent can construct a historical analysis of what comparable homes have recently sold for, and can examine what comparable homes are currently asking on the market. After viewing the data and touring your home, then, and only then, can you get a better sense of how to price it.

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Q2 - I recently purchased a home and we have been living there for about 16 months - recently we have had some issues with leaks and some other damage, etc. We basically need to tear out our bathroom and start over because no one knows where the leak is coming from. According to the contractor, this is 15-20K and we do not have the money. Can we take a loan and build it into our mortgage? Can we just take a separate loan? How can we make this work without laying out that kind of cash?

A - You have a couple of options for this type of work.  There are many versions of home improvement loans available to you in the form of Home Equity Line of Credit. These allow you to borrow, and then repay the money. For example, you could borrow the $20k and pay it back, then use that same line of credit again for another project.  As long as you have funds available to draw on, you can do this over and over again without having to go through the process of setting up a new line of credit each time. It's kind of like a credit card that is backed by the equity in your house. These loans often have a variable interest rate but there are also fixed-rate, fixed- payment home improvement loans. For the amount you are considering, you may even be able to get a personal loan, although loans secured by your home will carry a lower interest rate.

As far as adding it to your mortgage that might make sense if your current mortgage interest rate is much higher than the current interest rate.  If this is the case, you can refinance your entire loan and add in this new amount in the process. Call your local banks to see what is available.

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Q3 - I have two homes: one in New York and one in Connecticut. I want to refinance both houses because New York is my primary residence and my current rate is well over 6% and my second home in Connecticut is close to 7%. How are the rates for second homes? Would it make sense to refinance with all of the costs involved?

A - Rates for primary and second homes are often the same. What will probably be different on the second home is that the underwriting criteria maybe stricter and the maximum loan a bank will lend against the value may be less than on your primary residence.

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Q4 - I was selling my house and we had an accepted offer and pre-approved buyers. We were about 3 weeks from closing and the lender wanted to resubmit them for their loan since their lock expired on their rate and they no longer qualified. Why would that happen? We are very discouraged as now we are back to square one with no buyer.

A - If your borrowers are no longer qualified based on the new rate, there are a few things that may help.  First they can try different mortgage programs which carry a lower qualifying rate.  Another option is for you, as the seller, to renegotiate the terms of your sale to include a "Sellers Concession".  This is when you, as the seller, agree to pay something on behalf of the buyer.  In this case you could pay some additional "points" (pre-paid interest) to reduce your buyer's interest rate and help them qualify.  Inquire if this might help and then work out the best way. You may be able to raise your sales price to cover the cost of this.  Good luck.

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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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