Home sellers probably won’t be too happy, but housing experts in an article at CNNMoney say that underpricing a home by 10 percent may help it sell faster. And while sellers may lose out on thousands from the sale, they likely will avoid months of carrying costs from the home lingering on the market to offset that loss.

The high inventory of foreclosures on the market is making it difficult for sellers to compete against these ultra-low prices. Therefore, “listing your home for less than comparable ones in your neighborhood is the best way of unloading it as quickly as possible,” according to the article.

You could even attract a bidding war, says Steve Murray, editor of the Real Trends newsletter.

Furthermore, it may take the property a lot less time to sell. For example, a home underpriced by 10 percent in Somerdale, N.J., may sell in a few days rather than in the average four months, says Denise Riordan, a Sotheby’s International real estate professional.

Source: “Sell Your House Faster in a Tough Market,” CNNMoney (June 27, 2011

Bankrate.com recently featured a range of tips for first-time sellers to help them stay competitive in today’s real estate market. Here are some things you may want to discuss with your sellers:

Pricing a home competitively from the beginning is important. “Your largest number of showings will occur in the first two to three weeks,” says Mark Ramsey, broker with the Ramsey Group/Keller Williams Realty in Charlotte, N.C. “The (multiple listing service) systems and the Internet tend to drive the majority of showings.” That’s why real estate experts stress that it’s important sellers get a competitive, realistic price from the start.

Consider sweetening the deal. Sellers may be able to lure more buyers by offering some extra incentives, whether that’s leaving that top-of-the-line gas clothes dryer or other items that would be difficult to move, like the two wall-mounted, flat-screen TVs. The perks may add a little extra to attract buyers and become extra selling points too.

Make sure the home is show-ready and in move-in condition. In smaller homes, for example, clutter can mean the difference between cozy and cramped, experts say. Be sure the sellers keep homes clean and clear of clutter, particularly kitchen and bathroom countertops that tend to accumulate personal items that can hamper showing the home’s features.

However, make sure sellers don’t go to the other extreme and clear away too much.

“Don’t neutralize it so that it’s sterile,” says Pat Vredevoogd Combs, vice president of Coldwell Banker AJS Schmidt in Grand Rapids, Mich., adding that small mementos and photos help make a house feel like a home.

Real estate experts also stress the importance of sellers’ getting a home in move-in condition–such as fixing all repairs and replacements–before it is even listed.

“From a presentation standpoint, you want them to feel it’s turnkey — ready to go,” says Mark Ramsey, broker with the Ramsey Group/Keller Williams Realty in Charlotte, N.C. “Because your competition is doing that. In this market, it’s not just a price war but a beauty contest at the same time.”

Source: “7 Tips for the First-time Home Seller,” Bankrate.com (June 2011)

Delinquent home owners are finding a wild-card in saving their home from foreclosure. In court, more home owners are successfully arguing that their mortgage companies can’t prove they own the loan and don’t have the right to foreclose on them.

The Wall Street Journal reports: “In some cases, borrowers are showing courts that banks failed to properly assign ownership of mortgages after they were pooled into mortgage-backed securities. In other cases, borrowers say that lenders backdated or fabricated documents to fix those errors.”

In a few cases, home owners have even had their foreclosures reversed as courts blame lenders’ sloppy paperwork.

Some argue that borrowers are using “arcane legal rules” to get free houses when not paying their bills. Banking industry lawyer Laurence E. Platt at K&L Gates in Washington says “the real assault on the legal system” are efforts by judges and local officials to not give lenders their rightful ownership and make foreclosures nearly impossible.

However, attorney Thomas Ice in Royal Palm Beach, Fla., argues that borrowers shouldn’t have to tolerate incomplete or falsified evidence by lenders.

Source: “Banks Hit Hurdle to Foreclosures,” The Wall Street Journal (June 1, 2011)

Buyers who have a foreclosure or bankruptcy in their credit past wouldn’t be a likely candidate to secure financing from a bank anytime soon for a home purchase. As a result, some sellers are stepping in to offer seller financing to get a home sold.

Seller financing, once popular in the 1980s when mortgage rates spiked to 18 percent, is making a comeback in areas flooded by foreclosures and where tight lending standards are keeping some buyers on the sidelines, reports Bloomberg News.

“The market is locked up because there’s no financing,” says Gordon Albrecht, executive vice president of FCI Lender Services Inc. “This is moving houses.”

Last year, 52,991 U.S. homes were purchased with various forms of seller financing–a 56 percent jump from 2008, according to the REALTORS® Property Resource LLC. In 2010, such deals made up 1.5 percent of all transactions.

One popular form of seller financing is known as a land contract, which is when a buyer takes possession of the home but the seller holds the title until the debt is completely paid off. The loan’s terms–such as down payments and interest rates–are negotiable. These arrangements usually consist of a balloon payment in five to 10 years, which is when buyers will have to repay the seller or lose the home, along with any money they already put into it.

Source: “Home Sellers Become Lenders to Poor-Credit Buyers,” Bloomberg (May 11, 2011)

Buyers may someday ask you: “Is this home powered by Android?”

The ability to control a home via smartphone may not be too distant in the future, experts say. Google is setting the way for home owners to use its Android software to control everyday household items, everything from turning on and off the lights, the dishwasher, a lamp, and more.

Google’s Android@Home software would be built into appliances and light bulbs so it can wirelessly communicate with Android devices. For example, LightingScience this year released LED light bulbs that can connect with Android devices to turn off the lights without having to get up to flip the switch. Google also introduced the Open Accessory toolkit, which will help developers create other everyday household items that are compatible with Android devices.

“Everything should be Android-ified,” says Andy Rubin, head of Android. “We should just take it to new levels. It’s no longer something that people will go to the store to buy and then bring to their home or bring to their office. It’s something that will actually bridge those things.”

Source: “Turn Your Android Phone Into a Remote Control for Your Home,” The New York Times (May 10, 2011)

Celebrities often have slightly different priorities when shopping for a home than the average home buyer. Here are a few top items often found on their priority list when home-shopping, according to the Zillow Blog.

1. Privacy. Most often a top priority, celebrities usually want a gated, secured home. “It’s a huge issue,” says Jade Mills, a Coldwell Banker real estate pro who has worked with actress Jennifer Aniston. “They want to be able to come home and get away from the paparazzi and want privacy when they go into their yard. They usually have foliage [and] hedges so that people can’t look in.” Ultra-privacy goes for condos too. For example, Aniston recently bought a penthouse condo in New York City, as well as the floor directly beneath it, to ensure more privacy.

2. Giant closets. Celebs can’t hold all of that glam without lots of oversized closets. “A lot of the female celebrities and even the male, love giant closets—over-the-top closets—because they have a tremendous amount of clothes,” says Gary Gold of Hilton & Hyland in Beverly Hills. Some celebrities may even convert extra rooms into expansive, customized closets.

3. Home theaters. They also want a comfortable place to view themselves on screen. Home theaters are often high on their priority list, says Mauricio Umansky of Hilton & Hyland in Los Angeles. “They’re in that business and they expect it,” Umansky says.

4. Hobby rooms. Celebrities also tend to like flexible spaces–rooms that are blank slates that they can transform into whatever they desire, whether that’s a hair salon, home office, or even a guest house. “Each [celebrity] has their own thing and needs a hobby room, a studio, a dark room, or a computer room,” Umansky says.

But, of course, celebrities–just like any other buyer–may have a few odd requests from time to time too. Gold says he once had to try to find a place for a celebrity that could accommodate his 9-month-old, 160-pound mountain lion.

Source: “What Do Celebrities Want in a Home?” Zillow Blog (May 2, 2011)

Check your emotions

A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer

Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits.

A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you.

Consider the terms

Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps

Ask your REALTOR® whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer’s comps

Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps.

Get the agents together

If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer.

Don’t signal desperation

Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s listing describes you as a “motivated” seller, you’re signaling you’re open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you’re motivated, the next purchase offer you get might be more to your liking.

Article By HouseLogic

1. You’re drawing few lookers

You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If your real estate agent reports there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, that may be a sign buyers think it’s overpriced and are waiting for the price to fall before viewing it.

2. You’re drawing lots of lookers but have no offers

If you’ve had 30 sets of potential buyers come through your home and not a single one has made an offer, something is off. What are other agents telling your agent about your home? An overly high price may be discouraging buyers from making an offer.

3. Your home’s been on the market longer than similar homes

Ask your real estate agent about the average number of days it takes to sell a home in your market. If the answer is 30 and you’re pushing 45, your price may be affecting buyer interest. When a home sits on the market, buyers can begin to wonder if there’s something wrong with it, which can delay a sale even further. At least consider lowering your asking price.

4. You have a deadline

If you’ve got to sell soon because of a job transfer or you’ve already purchased another home, it may be necessary to generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It’s not how much money you need that determines the sale price of your home, it’s how much money a buyer is willing to spend.

5. You can’t make upgrades

Maybe you’re plum out of cash and don’t have the funds to put fresh paint on the walls, clean the carpets, and add curb appeal. But the feedback your agent is reporting from buyers is that your home isn’t as well-appointed as similarly priced homes. When your home has been on the market longer than comparable homes in better condition, it’s time to accept that buyers expect to pay less for a home that doesn’t show as well as others.

6. The competition has changed

If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what’s still on the market? What new listings have been added since you listed your home for sale? If comparable home sales or new listings show your price is too steep, consider a price reduction.

Writing a home purchase contract is crucial. Otherwise, it can easily derail a deal.

Here are some common contract mistakes:

1. Buyers don’t secure financing by deadline. Many contracts are contingent upon the buyer securing financing by a particular date. However, in today’s tight lending environment, you’ll want to ensure you allow extra time for buyers to get mortgage approval. Otherwise, sellers may terminate the contract altogether and even keep the earnest money deposit if a buyer doesn’t meet the deadline in getting financing.

Be realistic about your closing date and don’t try to close too quickly, Patti Lawton, a broker with Welcome Home Realty in Brunswick, Maine, told Bankrate.com. “There are a lot of things that need to be done properly, and you must give lenders, title companies, and others time,” Lawton says.

2. Not being clear on what stays with the house.
Clearly state in the contract what stays with the home. You don’t want buyers to walk into their new home after closing to unexpectedly find the chandeliers missing.

3. Missing signatures.
“Sometimes the home is owned by both spouses, other owners or an entity such as corporation,” says lawyer Jeff Marks, a partner with Ryan and Marks Attorneys LLP in Jacksonville, Fla. “Make sure all of the parties sign the contract. If a party to the transaction fails to sign, they’re not bound to perform the contract.”

Source: “Write Home-Purchase Contract Clearly,” Bankrate.com (April 2011)

Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.

Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.

And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.

On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.

A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.

How a Credit Score Is Affected

FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:

? 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.

? Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
? Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.

Source: “Fallout From a Poor Credit Score,” The New York Times (April 24, 2011)