Tips for selling a home in today’s market
Selling a home in today’s market can be tough. Here are a few suggestions that might help:

Get your own home inspection. Potential buyers who are serious will hire a home inspector to discover any flaws in the property. Consider hiring your own inspector first. You might discover things you can do to enhance the value of the home, such as installing more energy-efficient windows. You’ll also be prepared for any “surprise” problems that the buyer can use to back out of the deal or negotiate a lower price. Typically, the cost of fixing minor problems ahead of time yourself is a lot less than what a buyer will demand if the problems are discovered during an inspection.

Make major repairs. If there is a major problem with your home, consider having it fixed before the sale, even if you have to increase the price as a result.

In a typical seller’s market, a lot of people are looking for “fixer-uppers” that they can afford or that they can “flip” after making improvements. In today’s much tougher market, though, where people are worried about job security and where fewer people are buying real estate as an investment, fixer-uppers are a harder sell.

Sellers who make major repairs typically come out ahead. Consider a home that’s worth $250,000 but needs a $20,000 roof repair. If the seller offers the home “as is,” a buyer probably won’t offer $230,000 for it, because the buyer could simply pay $250,000 for a comparable home with a good roof and avoid the hassle. Most likely, a buyer would offer $200,000 or $210,000. So by investing $20,000 in a new roof, the seller could recoup $40,000 or $50,000.

Conserve energy. Many people who are thinking of purchasing a home will ask for copies of recent utility bills, so they can see what their monthly costs will be. For this reason, it’s a wise idea to turn down your heat or air conditioning, and turn off lights and appliances when not in use.

Go to open houses in your area and look at comparable homes. Seeing the “competition” will give you a much better sense of minor improvements you can make in your home to make it more attractive and saleable. Then drive by your own home and try to see it as if for the first time. What do you notice? Trimming the bushes, touching up the paint here and there, or cleaning the gutters can make a better first impression and a surprising difference in whether people decide to attend an open house.

Question your property taxes. Property taxes are calculated as a percentage of the assessed value of your property. In many communities, the current assessments are based on appraisals that were conducted at the height of the real estate boom. If the value of your property has declined since then, your assessment – and thus your taxes – might be too high. You might be able to get a lower tax rate by appealing your assessment, which could help you sell the property (and of course could help you even if you don’t sell the property).

Challenging an assessment might involve getting an independent appraisal. An appraiser will value your property by comparing it to the price recently paid for comparable properties in your area. If you want a low valuation, it wouldn’t hurt to point out to the appraiser the offering price on any foreclosure sales in the area, since foreclosed properties typically sell at a significant discount.

In many communities, the current tax assessments are based on appraisals that were conducted at the height of the real estate boom, and may be too high.

If your property has been on the market for a while at an offering price below the assessed value and it hasn’t sold, that could also be evidence that your assessment is too high.

If you do get an independent appraisal, it could have other benefits. For instance, if a buyer offers to purchase your home and he or she needs a mortgage, the lender will typically hire its own appraiser to value your property. If the appraiser values the property at less than what the buyer is offering, then the lender might refuse to approve a mortgage unless the buyer comes up with a larger down payment. In today’s economy, with banks being much more stringent about mortgages, a number of sales fall apart for this reason. Having an independent appraisal that backs up your figure could help the buyer. It could also help you set a “safe” selling price.

Sweeping changes to the way home mortgages are structured and approved have been passed by Congress and signed into law by President Obama. The changes are included in the recent financial regulatory reform law. Although the main goal of the law is to change the way Wall Street banks are regulated, a large section of it is aimed at mortgage reform.
Here’s a brief summary of the most important changes:

* One of the key goals is to reduce the number of “risky” mortgages that led to the recent housing bubble, such as mortgages that don’t require full documentation of the borrower’s income, mortgages that have “balloon” payments (large one-time payments at some point in the future), and “option ARM” mortgages that keep initial costs low by allowing borrowers to defer payments of principal and interest.
During the recent housing run-up, many banks made these loans without much regard for the potential consequences to borrowers, because they could bundle them and then sell them to investors. Under the new law, lenders are discouraged from making such risky loans because if they do bundle them and sell them, they must keep a substantial stake themselves – thus giving them an incentive to make sure the loans they make are likely to be repaid.
* The law requires lenders to make a good faith effort to ensure that borrowers have the ability to repay a loan. In many cases, borrowers who are given a loan they can’t afford will have the ability to sue the lender and to use this fact as a defense against foreclosure proceedings.
* The law also regulates the way that mortgage brokers and loan officers are paid. In the past, these employees were sometimes given extra compensation if they “steered” borrowers into riskier loans, such as option ARMs or subprime loans. Under the new law, they cannot be paid extra based on getting a borrower to agree to a particular type of loan. The law also bans “yield spread premiums,” in which a lender compensates a broker for persuading a borrower to accept a higher interest rate.
* Prepayment penalties – fees that a lender charges if a borrower pays off a mortgage early – will be limited under the law. They will be prohibited for adjustable-rate mortgages and riskier types of mortgages, and phased out over time for standard fixed-rate mortgages.
* Mortgage agreements can no longer require that the parties go to arbitration rather than to court if there’s a dispute. (However, once a dispute arises, the parties can agree to submit it to arbitration if they want.)
* Lenders who offer hybrid adjustable-rate mortgages must notify the borrower six months before the loan resets or adjusts to a variable rate, providing an estimate of the new rate and the new monthly payment and suggesting options for avoiding the change, such as refinancing.
* Generally, loan servicers must credit payments to the borrower’s account as of the date of receipt. They cannot “sit on” a payment for several days and then use the delay to impose a fee or report negative information to a credit bureau.
* “Negative amortization” loans (in which the payments are so low that the total amount the borrower owes actually increases over time) are prohibited unless the lender makes certain disclosures. A first-time homebuyer can’t obtain such a loan unless he or she first visits a government-approved loan counselor.
* A number of provisions concern appraisals, including mandating fair compensation of appraisers (in order to ensure quality work) and regulating lenders who invest in appraisal companies so they can get a cut of the fee. The law does not allow borrowers who switch lenders to force the new lender to accept their prior appraisal rather than paying for a new one, but it does allow regulators to adopt such a rule, and it may well be adopted over the next year or so.