As much as you may believe, a St. Joseph statue doesn’t really guarantee a home sale.

Say you’ve had your home for sale for months and not a single home buyer has decided to make an offer to you. You’ve spent a lot of money on home advertising, made a number of price reductions and nobody calls you.
Maybe your agent now has an expired listing. It’s possible that you’ve even buried a St. Joseph’s statue in your yard, and that didn’t bring any offers, either. What can you do when it’s plain that your home isn’t selling?

1) Postpone Home Selling
Could it be that now is not the time to sell? If it’s a buyer’s market, perhaps you should take your home off the market and wait for inventory to drop. When there are fewer homes for a buyer to choose from, your home may be snapped up.

•Selling during the holidays is especially tough because buyers expect bargains. You may lose money if you try to negotiate during holiday stresses.

•Selling in the winter is more difficult than during warmer months because there are typically fewer buyers.

•If you can afford to wait, selling in spring might bring an offer because spring months bring more buyers into the marketplace.

2) Take Out a New Mortgage
If your need to sell is based on financial needs, it might make sense to take out a home equity loan, providing you can afford to pay a higher monthly payment. If your existing loan is an adjustable rate mortgage, and a higher interest rate has raised your payment to the extent that you can no longer afford to pay it, you might be able to renegotiate a loan modification plan with your lender or convert that ARM into a fixed-rate mortgage at a lower interest rate.

Before you decide to borrow more money, through a refinance of your existing loan or by taking out a second mortgage, first meet with a trusted adviser to discuss your financial situation. Don’t talk with any real estate professional who has a vested interest in your affairs. Speak with a tax accountant or your real estate lawyer.

3) Rent Your Home
Some home sellers have no choice. For a variety of reasons, from job promotions to family-related matters, a home seller might be forced to relocate to a new area and leave an existing home behind.

Even if you can’t receive enough rent to cover your mortgage payments, paying a small amount of negative cash flow every month might be easier on the pocketbook than forking over thousands of dollars for a vacant house.

Here are a few tips about renting:

•Be aware that many homeowner insurance policies do not cover a vacant house for more than 30 days; however, you may want to talk with your insurance agent about changing the policy to insure only the structure without contents.

•Hire a reputable real estate management company to screen tenants and hire tradespeople if repairs become necessary. You don’t want midnight calls from tenants if a toilet leaks.

•Ask neighbors to keep an eye on your home and to notify you if they suspect problems. Give them your e-mail address or cell phone number to call in the event of an emergency.

4) Consider a Short Sale
If you’ve purchased your home within the past few years, it’s possible that you owe more than your home is worth. A real estate agent who specializes in short sales might be able to negotiate with your lender to accept less than your mortgage balance. Before you consider doing a short sale, here are a few things you should know:

•Discuss the ramifications with a real estate lawyer to make sure you understand the consequences. Moreover, not every seller qualifies for a short sale, and not every lender will accept a short sale.

•Realize that short sales affect credit, and redeeming a pre-foreclosure on your record could prevent you from buying another home for a while.

•You may owe the IRS taxes on a short sale. You may receive a 1099 from the lender for the amount of forgiven debt.

5) Offer Your Home on a Lease Option
You might talk to your real estate agent about doing a lease option purchase versus an outright sale. Lease options are appealing to borrowers who, for a variety of reasons, might not be in a position to purchase a home through conventional financing. Maybe they can’t decide whether to buy or rent. Make sure your lawyer reviews all documents before you agree to a lease option.

•Lease options give a tenant the opportunity to later purchase your home at a predetermined price. For a tenant who is on the fence about buying a home, it lets them live there while deciding whether to buy.

•Typically, lease options payments are higher than a regular rent payment, which might eliminate negative cash flow for you.

•A tenant who has a stake in the home might take better care of the home, and sometimes lease option agreements make the tenant responsible for all repairs.

6) Ask Your Employer About Relocation
If your employer is transferring you out of town, you might ask about a guaranteed purchase program. Many employers hire relocation companies that offer buy outs for employees. You might not even know that your employer has a relocation program if you don’t ask.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

This is one of the most shocking real-estate stories we have read lately: Contrary to popular belief, the smell of fresh-baked cookies does NOT help to sell your home.

A simpler scent, such as lemon, basil or pine, would be preferable, researchers from Washington State University report. A complex scent, such as cookies, could be a distraction from the home itself.

“They are not there to process the smells,” Eric Spangenberg, who has done years of research on the effect of smells on sales, told The Wall Street Journal. “They are there to process whether this is a place they want to live.”

In their most recent study, he and his colleagues studied the effect of scent on 402 shoppers in a home decor store in Switzerland. They found that the shoppers bought 31.8% more when the stores used a simple orange scent than when the scent was a blend of orange, basil and green tea.

What’s the best day to list your home for sale?”Complex scents, even if they’re pleasant, can be a distraction because some people subconsciously dedicate time and energy to figuring out what the aroma is,” The WSJ explains, meaning that the would-be buyers are analyzing the cookie smell with the part of the brain that would normally be evaluating the merchandise, i.e., your house for sale.

Beware of the ‘fantastic’: real-estate listing words that lureThe cookie-baking maxim has become so pervasive that it may be hard to get sellers to quit baking – though a few renegade agents have always questioned the advice. “Cleanliness is the best scent,” Oregon broker Annette Sievert wrote at Active Rain.

Spring selling season finds little to sellWriting at Home Goes Strong, Leah Ingram said was skeptical but when her home was on the market she baked cookies because her real-estate agent insisted it would bring about a faster sale. She wrote:

What that meant was that I baked a lot of cookies before open houses and showings. And what I learned was this: While her choice of house smells turned out to be a personal favorite, buyers didn’t like it. In fact, they didn’t even want the cookies — that plate was always untouched after every showing or open house. And the folks that did eventually buy our house made no mention of the cookies.
What do you think: Does the smell of cookies give you a warm feeling about a place?

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Fixed-rate mortgages have been the mainstay of the home loan industry for decades. Over the years, loan-to-value ratios have fluctuated and interest rates have moved up and down, but the security a fixed-rate mortgage offers has never lost its appeal.
The word “mortgage” comes from the French. Mort means dead and gage means pledge. It’s been argued that if the mortgagor (borrower) did not pay the debt, the property was dead to the owner because the mortgagee (lender) would reclaim the land used as security. If the debt was paid, then the pledge was dead. But those funny, silly French. Who really knows what it originally meant back in the 1500s?

What is a Fixed-Rate Mortgage?
Fixed-rate mortgages allow for repayment of a debt in equal monthly mortgage payments over a specified period of time, from 10 to 50 years. A 30-year amortization period is most common.

•Payments are credited first to interest, then to principal.

•During the early years of the loan, much of the monthly payment goes toward interest.

•Toward the end of the loan period, much of the monthly payment goes toward principal.

•Yikes, please realize, though, a $200,000 amortized loan at 6% for 30 years means you will pay $231,676 in interest over the life of the loan.

Fixed-Rate Mortgage Benefits
Borrowers gravitate toward fixed-rate mortgages in-lieu-of adjustable-rate mortgages because they like the security of knowing exactly how much they will pay per month for principal and interest.

•The interest rate is fixed, so if overall interest rates increase, it does not affect the fixed-rate borrower.

•Likewise, if overall interest rates decrease, the borrower’s payment still remains the same unless the borrower chooses to refinance the mortgage into a lower rate.

•A borrower can choose to make a larger monthly payment and direct the additional portion of the payment to be paid toward principal, thereby decreasing the principal balance of the loan faster. Paying half your monthly mortgage every two weeks pays off your mortgage in about 22 years. One extra payment per year reduces the amortization period to about 26 years. But additional principal payments are not required.

Should You Pay Points?
You can buy down your mortgage for the first few years by paying a lump sum to the lender. But unless the seller or somebody else is paying this fee for you, it doesn’t make much sense to buy down your own mortgage. You can sock away the money in your own savings account and use that money every month, on which you earn interest, to help pay your own mortgage payment.

Points will decrease your interest rate. Each point is equal to 1% of your loan. To recover the cost of those points, figure out the monthly savings with the lower interest rate versus the rate without points. Then divide that number into your points to arrive at the number of months it will take you to break even. Everything after that is gravy.

For example, say you are paying 2 points on a $200,000 loan to get an interest rate of 5% with a payment of $1,074. Or you could get that $200,000 loan at an interest rate of 6% without points and pay $1,200 per month. The difference between the two payments is $126.

Two points will cost $4,000. To recoup that investment, $4,000 divided by 126 equals almost 32 months. By your 33rd month, after almost three years of payments, you will begin to profit from paying those points.

Collection for Taxes and Insurance
If you are considering a loan that is higher than 80% of the purchase price of your new home, you will likely be asked to pay monthly property taxes and homeowners insurance to your lender. Your lender, in turn, will pay the tax assessor and your insurance company. In this case, your monthly PITI will change from year to year as annual taxes and insurance go up or down.

•Lenders will also collect a reserve, from 2 to 8 months of taxes and insurance, in advance from you.

•This impound account reserve (sometimes referred to as an escrow account) will increase your closing costs.

•The reserve amount collected depends on the time of year and when your annual tax bill is due.
Even if you are putting down 20% or more of the purchase price, often lenders will charge “1/4 point to rate,” meaning you will pay .25% more in interest NOT to set up an impound account. Personally, I prefer to be responsible for paying my own taxes and insurance.

Prepayment Penalties
As a hedge against interest rates falling, lenders who make fixed-rate mortgages will sometimes demand a loan feature known as a prepayment penalty. This means if you pay off the loan within a certain number of years, typically one to five years, you will also pay the lender an additional six months of interest, or more.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

There’s a great saying in the real estate business. To succeed in life, you want to be:
•The First Child
•The Second Spouse
•The Third Realtor
And like with most sayings, there is some truth in that statement, as agents who pick up listings after sellers have made major mistakes will attest.

But We Want More Money

When the average seller sits down to interview real estate agents, it’s easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities for the homeowner. Perhaps it means the seller can afford to buy a more expensive home, help pay for her child’s college education or take that greatly overdue vacation. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.

Establishing Value

The truth is it doesn’t really matter how much money you think your home is worth. Nor does it matter what your agent thinks or ten other agents just like her. The person whose opinion matters is the buyer who makes an offer. Pricing homes is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements and taking stock of present inventory, all in an attempt to come up with a range of value, an educated opinion. This method is the same way an appraiser evaluates a home. And no two appraisals are ever exactly the same; however, they are generally close to each other. In other words, there is no hard and fast price tag to slap on your home. It’s only an educated guess and the market will dictate the price.

Is it Too Low?

Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, priced under the competition, the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value.

How It Starts To Go Wrong

The seller of the Spanish home pictured on this page didn’t even interview her real estate agents. She plucked the first one off the Internet because, “He looked like such a nice guy.” He priced her home at $1.3 million. This agent never heard the local agents chuckling behind his back because he worked in a different city. After 90 days, the listing expired.

Continues To Go Wrong

The next agent, also from another town, listed the home at $1.1 million. Months passed. Eventually the price dropped to just under $900,000. Still no takers. A few lookie-loos, but no serious buyers.

More Than a Year Later

By the time the last agent was hired to list this home, the seller had grown weary and exhausted. It was now 12 months later. Together, the seller and her agent priced the home at $695,000. It immediately sold for all cash. The sad part is the comparable sales in the neighborhood fully justified a price of $835,000, but the home had been on the market for too long at the wrong price, and now the market had softened.

Agents Specialize in Expired Listings

There is an agent in my office whose basic real estate practice is comprised of calling sellers of expired listings and relisting them at market value. He sits in a small room with a phone, desk and chair, dialing number after number. Last year he sold more than 34 homes valued at more than $13,600,000, and he has 18 active listings right now. He makes a pretty good living repackaging overpriced homes.

Protect Yourself

The question is how much money have those expired listings cost the sellers? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the value that a buyer ultimately chooses to pay because it’s not a fresh listing anymore. It’s now stale, dated, a market-worn home that was overpriced for too long. Don’t let it happen to you. Don’t be that seller of an expired listing.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

Buried within the fiscal cliff deal are 2 treasured homeowner tax perks restored by Congress.
By MSN Money partner 1 hour ago
This post comes from Marilyn Lewis of MSN Money.

Homeowners received two little-noticed gifts from the fiscal cliff deal signed by President Obama on Jan. 1. That congressional agreement, called the American Taxpayer Relief Act of 2012, restores a pair of treasured tax breaks previously lost to homeowners.

One is the federal tax deduction for mortgage insurance premiums. The other is a tax credit that lets homeowners take up to $500 off their federal income tax for making certain improvements that increase the energy efficiency of their homes.

Bloomberg makes the point that restoring these tax perks was a triumph for the extremely powerful housing and mortgage insurance lobbies. These two breaks, together with decisions to preserve tax exemptions for home sale profits and mortgage debt forgiven in foreclosures and short sales, could total $600 billion over the next five years.

Deduct MI premiums again

If you pay mortgage insurance, you know that deducting it is the next best thing after being able to cancel it (when the loan balance drops below 78% of the home’s value and you’ve made at least 60 payments). Congress snatched away the deduction at the end of 2011 but gave it back with the stroke of a pen in the Jan. 1, 2013, deal.

You can use the deduction on your 2012 and 2013 federal taxes. It applies to private mortgage insurance premiums as well as Federal Housing Authority and Veterans Affairs premiums.

Restoring the deduction for those two years will cost taxpayers $1.3 billion, says The Associated Press.

Bloomberg says about 3.6 million taxpayers used the deduction in 2009 (the latest data available). “They deducted almost $5.5 billion in premiums, for a total tax benefit of more than $700 million, according to the National Association of Homebuilders in Washington.”

To enjoy this restored benefit, you’ll have to itemize deductions on your federal income tax, said MSN Money tax expert Jeff Schnepper, reached by email. “That means, assuming you don’t take the standard deduction, your maximum benefit is 25% of whatever you pay in mortgage insurance premiums.”

The deduction is for taxpayers earning less than $110,000 a year, says Mortgage Insurance Companies of America, a trade group.

FHA rules about to change

Government’s and lenders’ rules require mortgage insurance for homes bought with a down payment of less than than 20%. MICA, the trade group, says that roughly 29% of home loans have mortgage insurance. Of thgat, 9% is private mortgage insurance, 13% is FHA mortgage insurance and 7% VA coverage.

Heads-up: Buying an FHA-insured home is about to become more costly, by the way. Not only are FHA premiums rising to replenish the insufficient FHA insurance pool but FHA is putting an end to homeowners’ ability to cancel their insurance once they have a 78% stake in the home.

No date has been set for the change, HUD spokesman Lemar Wooley said by email. He expects an announcement by March 31 or sooner. Once the change goes into effect, you’ll pay mortgage insurance on an FHA loan for as long as you own the loan. The change does not affect FHA loans made before then, though.

Credit for green improvements

And now for that tax credit on energy-frugal improvements. A credit — unlike a tax deduction, which lowers your taxable income — is simply money taken off the amount you owe the IRS.

Residential energy tax credits have been available for several years for improvements and appliances that improve a home’s energy efficiency. (The program has a tortured history. See it here at the Alliance to Save Energy.)

The tax credit is typically 10% — up to a total of $500 — for purchasing and installing certain products. But a few eligible products have specific credits, $300 for an electric heat pump water heater, for example.

What’s eligible

The credit can be used when you purchase a qualified new water heater, furnace, boiler, heat pump, central air conditioner, insulation, windows or roofing for your home. Circulating fans are eligible when they’re used in a qualifying furnace. Biomass stoves that use qualified fuel also are eligible.

As you may have noticed, “eligible” is the important word here. The Alliance to Save Energy explains how to find out which appliances are eligible. The Database for State Incentives for Renewables & Efficiency also offers a rundown of the credit.

You claim the credit for the tax year in which the appliance was installed (not purchased). You can use the tax credit only if you haven’t claimed it before (in any year). File IRS Form 5695 along with your income tax to claim the credit. Here’s how the IRS describes the credit.

Extending the credit for 2012 and 2013 will cost taxpayers $2.4 billion, according to the AP.

The longer a seller’s home is on the market, the less attractive the home becomes to buyers. The best home selling tricks are to price it right, prepare it for sale, hire the best listing agent and attract that excited home buyer who will offe top dollar in record time.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

Getting Ready to Sell
Home Pricing
Working With Real Estate Agents
Marketing and Showing
Home Selling Mistakes
Negotiation Strategies
Financing
Home Inspections and Disclosures
Getting Ready to Sell
Knowing how to professionally spruce up your home is part of the battle. The other half is figuring out if you have too much furniture, the wrong type or a bad arrangement, and whether it’s worth making repairs or staging your home to transform that house an irresistible and desirable showcase for potential buyers.

•Reasons for Selling
•Seller’s Remorse
•Repairs Before Resale
•Selling When Divorcing
•Preparing Your Home For Sale
•Home Staging
•Interview with Staging Pro Barb Schwarz
•Preparing for an Open House
•Selling With Pets at Home
•Getting Rid of Fleas
•Selling During Holidays
•Selling in Winter
•Selling in Spring
•Protecting Privacy
•Selling Before Buying
•Measuring Square Footage

Home Pricing
How much is your home worth? Pricing a home is part art and part science. It’s a combination marrying analytical statistics to emotional appeal and market movement. You do not want to overprice your home or try to “test the market.” Like Goldilocks and the Three Bears, you want to price it just right.

•Seller’s Worst Pricing Mistake
•Pricing Houses to Sell
•Comparative Market Analysis
•Overpriced Listings
•Price Reductions
•Expired Listings
Working With Real Estate Agents
A good real estate agent can make or break your deal. You want to hire the best real estate agent you can find, which means hiring an agent who will put your interests first, above his or her own. All agents are different. They charge varying rates, specialize in certain areas, utilize a variety of marketing techniques and possess particular skill sets, all of which sets them apart.

•Reasons to Hire an Agent
•Finding a Real Estate Agent
•Interviewing Real Estate Agents
•Choosing a Listing Agent
•Novice Real Estate Agents
•Real Estate Agents vs. Realtors
•Full-Service Real Estate Agents
•Discount Real Estate Brokers
•How Real Estate Commissions Work
•Negotiating Real Estate Commissions
•Hiring Agents When Selling and Buying
•Real Estate Agent Myths
•Guide for Working With Real Estate Agents
•Real Estate Agent Duties
•White Knight Real Estate Agents
•Firing Real Estate Agents
•Real Estate Designations
•Listing Agreements
•Length of Listing Agreements
•Closing Gifts
Marketing and Showing
Effective marketing is more than sticking a sign in the yard. Successful sellers utilize dozens of marketing techniques to draw the largest pool of buyers. When buyers show up on your doorstep, here are tips on how to create a magical experience and encourage the buyer to make a purchase offer.

•How Lockboxes Work
•Appointments or Lockboxes
•Selling By Owner
•Increasing Traffic
•Marketing Tips
•Showing Tips
•Open Houses
•Buyer Feedback
•Posting Internet Listings
•Virtual Tours
•Networking
Home Selling Mistakes
The first inclination that something is wrong happens when weeks go by without calls from buyers or their agents. Or when buyers don’t spend more than 30 seconds inside the home before scurrying out the door. If your neighbor’s homes are selling and yours is sitting on the market, here is how to correct the problem or, better yet, to avoid making selling mistakes at the beginning.

•#1 Home Selling Mistake
•Top Home Selling Mistakes
•Why Isn’t My Home Selling?
•Marketing Bloopers
•Selling Without Equity
•Bad Pending Home Sales
•Do-It-Yourself Mistakes
Negotiation Strategies
Sellers and buyers are often polar opposites. Buyers want to pay as little as possible and sellers want full-price offers. Somewhere in between those two extremes, sellers and buyers find middle ground or the deal doesn’t happen. Here is advice on how to give sellers a clear edge in negotiations.

•Negotiating as a FSBO
•Real Estate Counter Offers
•Full-Price Counter Offers
•Lowball Offers from Buyers
•Multiple Offers
•Selling on Land Contracts
•Seller’s Markets
•Buyer’s Markets
•Removing Contingency to Sell
•Buying Before Selling
•Contingent Contracts
•Timing the Market
•Hot, Cold, Neutral Markets
•Commissions
•Crediting Buyer Closing Costs
Financing
In tough markets, buyers ask sellers to help finance properties. Owner financing attracts more buyers, and sellers have a variety of financing instruments to choose from. Sometimes sellers obtain home equity loans to or bridge loans to buy a new home before their existing home sells. Here are articles that cover financing options for a seller.

•Bridge Loans
•Home Equity Loans
•Reverse Mortgages
•Buying Down Mortgages
•Figuring Mortgage Loan Interest
•Owner Financing
•Installment Sale Land Contracts
•Selling on Land Contracts
•Low Appraisals
•Lease Options and Lease Purchases
•Selling Carry-back Mortgages
•Mortgage Loan Types
Home Inspections and Disclosures
Almost every home buyer will get a home inspection before committing to buy your home. You can help the process move more smoothly by preparing for the home inspector and making minor repairs beforehand. No home is perfect, not even new homes; however, buyers may offer less for a home if major defects are discovered.

•Preparing for Home Inspection
•Getting Through the Home Inspection
•Home Inspection Checklist
•Request for Repairs
•Seller Disclosures
•Roof Certifications
•Wet Basements
•Mold and Mildew
•Tent Fumigation
•Home Warranties
•Title Insurance Policies
•Buyer’s Final Walk-Through

Fixed-rate mortgages have been the mainstay of the home loan industry for decades. Over the years, loan-to-value ratios have fluctuated and interest rates have moved up and down, but the security a fixed-rate mortgage offers has never lost its appeal.
The word “mortgage” comes from the French. Mort means dead and gage means pledge. It’s been argued that if the mortgagor (borrower) did not pay the debt, the property was dead to the owner because the mortgagee (lender) would reclaim the land used as security. If the debt was paid, then the pledge was dead. But those funny, silly French. Who really knows what it originally meant back in the 1500s?

What is a Fixed-Rate Mortgage?
Fixed-rate mortgages allow for repayment of a debt in equal monthly mortgage payments over a specified period of time, from 10 to 50 years. A 30-year amortization period is most common.

•Payments are credited first to interest, then to principal.

•During the early years of the loan, much of the monthly payment goes toward interest.

•Toward the end of the loan period, much of the monthly payment goes toward principal.

•Yikes, please realize, though, a $200,000 amortized loan at 6% for 30 years means you will pay $231,676 in interest over the life of the loan.

Fixed-Rate Mortgage Benefits
Borrowers gravitate toward fixed-rate mortgages in-lieu-of adjustable-rate mortgages because they like the security of knowing exactly how much they will pay per month for principal and interest.

•The interest rate is fixed, so if overall interest rates increase, it does not affect the fixed-rate borrower.

•Likewise, if overall interest rates decrease, the borrower’s payment still remains the same unless the borrower chooses to refinance the mortgage into a lower rate.

•A borrower can choose to make a larger monthly payment and direct the additional portion of the payment to be paid toward principal, thereby decreasing the principal balance of the loan faster. Paying half your monthly mortgage every two weeks pays off your mortgage in about 22 years. One extra payment per year reduces the amortization period to about 26 years. But additional principal payments are not required.

Should You Pay Points?
You can buy down your mortgage for the first few years by paying a lump sum to the lender. But unless the seller or somebody else is paying this fee for you, it doesn’t make much sense to buy down your own mortgage. You can sock away the money in your own savings account and use that money every month, on which you earn interest, to help pay your own mortgage payment.

Points will decrease your interest rate. Each point is equal to 1% of your loan. To recover the cost of those points, figure out the monthly savings with the lower interest rate versus the rate without points. Then divide that number into your points to arrive at the number of months it will take you to break even. Everything after that is gravy.

For example, say you are paying 2 points on a $200,000 loan to get an interest rate of 5% with a payment of $1,074. Or you could get that $200,000 loan at an interest rate of 6% without points and pay $1,200 per month. The difference between the two payments is $126.

Two points will cost $4,000. To recoup that investment, $4,000 divided by 126 equals almost 32 months. By your 33rd month, after almost three years of payments, you will begin to profit from paying those points.

Collection for Taxes and Insurance
If you are considering a loan that is higher than 80% of the purchase price of your new home, you will likely be asked to pay monthly property taxes and homeowners insurance to your lender. Your lender, in turn, will pay the tax assessor and your insurance company. In this case, your monthly PITI will change from year to year as annual taxes and insurance go up or down.

•Lenders will also collect a reserve, from 2 to 8 months of taxes and insurance, in advance from you.

•This impound account reserve (sometimes referred to as an escrow account) will increase your closing costs.

•The reserve amount collected depends on the time of year and when your annual tax bill is due.
Even if you are putting down 20% or more of the purchase price, often lenders will charge “1/4 point to rate,” meaning you will pay .25% more in interest NOT to set up an impound account. Personally, I prefer to be responsible for paying my own taxes and insurance.

Prepayment Penalties
As a hedge against interest rates falling, lenders who make fixed-rate mortgages will sometimes demand a loan feature known as a prepayment penalty. This means if you pay off the loan within a certain number of years, typically one to five years, you will also pay the lender an additional six months of interest, or more.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

If a bill becomes a lien and is attached to the home, it typically must be paid at closing. Otherwise, it would affect the new buyer, and the buyer might not be willing to close under those circumstances. Moreover, a title insurance policy would except that lien from coverage, providing the title company was even willing to issue coverage.

It is important to note that in a non-GSE HAFA short sale, the federal guidelines do allow payment of a utility bill from the seller’s relocation incentive, subject to a certain dollar maximum. However, the guidelines do not authorize payment of a lien. That’s where you can get caught between a rock and a hard place. If the utility bill is recorded against the property and becomes a lien, that’s a huge problem for some sellers of a short sale. Especially a short sale seller without enough money to pay the utility bill.

Why Utilities Need to Stay On During Home Selling
Sometimes, sellers don’t think about the utilities or the buyer when they are getting ready to move. They of course will make sure to begin service at their new home, but are sometimes so distracted and overwhelmed with the moving process they don’t realize that turning off the utilities at their existing home could carry consequences.

Here are some reasons to keep the utilities connected in a vacant home:

•Showing the home. If the home is still on the market for sale, utilities are very important. Heat and AC maintain the interior comfort for home buyers. If it’s too hot or too cold inside the house, a buyer might not even make it to the third bedroom. A buyer might spin on her heels and walk out.

•Maintaining integrity of the home. Twice in the last several years, water pipes have exploded during December freezes in Sacramento and flooded vacant homes. The pipes burst because the heat was turned off — standing water inside the pipes froze, expanded and broke the pipes. Homes need to breathe, hardwood floors can be damaged in extreme heat or cold temperatures.

•Providing security. Some homeowners install a timer on a light fixture or lamp to automatically turn on and off at certain hours at night. A little light can make a home appear occupied. It’s also a good idea to leave a porch light on at night. It discourages break-in attempts.

•Buyer’s appraiser. If the buyer is obtaining financing, that lender will hire an appraiser. The appraiser will perform certain tests that can only be performed if the utilities are working. If the utilities are not connected, many appraisers will not complete the appraisal until the utilities are turned back on. If the buyer’s appraiser cannot finish the appraisal, the buyer will not get the loan and cannot close.

•Buyer’s home inspection. Most buyers want to do their due diligence, which includes a home inspection. A home inspector cannot check receptacles nor test water pressure nor ensure a gas stove is working properly without utilities.

•Buyer’s final walk through. Many purchase contracts provide for a final walk through. This means the buyer verifies the home is in the same condition as it was when the buyer first viewed it. If the utilities have been turned off, the buyer cannot obtain this verification.
Buyers and buyer’s agents can help to reduce utility costs for the seller between the time the purchase contract is ratified and prior to closing by:

•Turning off lights when leaving
•Monitoring the thermostat
•Closing drapes and / or blinds
•Ensuring all water valves are tight and secure.
A buyer should treat a seller’s home the way a buyer would take care of her or his own home . . . because soon enough it will be. Care and consideration make for good relations between the parties. It’s a good idea to keep all parties in a transaction civil and speaking to each other, especially if they might need something from each other down the road. Little angers a seller more than to receive an outrageous utility bill after closing.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

•Tenants might sabotage the sale.
Not every investor and tenant get along. Sometimes, a tenant resents the investor simply because the investor owns the home and the tenant is a renter. But there are other reasons why a tenant might sabotage the sale of rental:

1.Notwithstanding a lease, when the home sells, the tenant might be forced to move out.
2.A tenant might carry a grudge because maybe a repair wasn’t promptly fixed in the past.
3.There may have been a dispute involving a late rental payment.
Whatever the reason, the person speaking with potential buyers is often the tenant. A tenant who harbors ill feelings toward the investor may lead a buyer to believe that buying the rental is a bad idea based on the way the tenant presents the home. Such a tenant will not hesitate to purposely point out defects or, worse, make up problems that do not exist.

•Buyer’s agents often pass on “By Appointment Only.”
If a buyer’s agent has a plethora of inventory to show a prospective home buyer, that agent might be very selective when choosing homes to show. Say 10 homes are easy to show and one home requires a 24-hour notice, the agent might not show the “By Appointment Only” home. Tenants sometimes feel that they do not need to return an agent’s phone call, so even if the agent does call for an appointment, the tenant might not call back.

•Tenants might not allow a lockbox.
Without a lockbox, a buyer’s agent is restricted from access. This means the tenant must be home to let the agent and buyer inside. If the tenant works during the day, it means the home can only be shown on the weekends or in the evening, which limits the number of buyers who can see the home. Moreover, sometimes a tenant will make an appointment and conveniently forget about the appointment, leaving the agent to stand on the doorstep and repeatedly ring a doorbell that nobody answers.

•Condition of rental home untidy.
I’m not insinuating that all tenants keep messy homes, but they have little incentive to keep the home in perfect showing condition 24 hours a day. They might not think twice about leaving beds unmade, clothing on the floor or dishes in the sink. If the rental home is not spotless, the condition may turnoff a potential buyer.

•Tenants may refuse to leave during the showing.
Buyers feel extremely uncomfortable when a seller or tenant is present during a showing. They feel as though they cannot freely speak nor address any concerns about the home in the presence of an outsider. This means they generally rush through the home and may miss or overlook qualities in the home that if noticed would otherwise make them want to buy it.

The bottom line is buyers need to envision themselves living in the home, and that’s almost impossible to convey if the tenants are still in possession.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

A “For Sale” sign is posted at a home on August 28, 2012 in Los Angeles, Calif. The rise in home prices for the sixth month in a row, according to a widely-watched survey, is bringing much-needed help to the sluggish recovery.
By John W. Schoen, NBC News
The ongoing rise in home prices, up for the sixth month in a row in July according to a widely followed index, is bringing some badly-needed support for an ailing U.S. economy.

U.S. single-family home prices rose in July, though the improvement was not as strong as expected, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.4 percent in July on a seasonally adjusted basis, shy of economists’ forecasts for 0.9 percent, according to a Reuters poll.

On a non-adjusted basis, prices fared better, rising 1.6 percent.

Compared to a year ago, prices in the 20 cities were up 1.2 percent, beating expectations for 1 percent. It was the second month in a row year-over-year prices have risen.

Tuesday’s home price data confirmed “recent good news” about the sector, David Blitzer, chairman of the index committee at Standard & Poor’s, said in a statement.

“All in all, we are more optimistic about housing. Upbeat trends continue,” said Blitzer.

Home price rebound.
Most economists think home prices have stopped falling and are slowly headed back up. But the recovery to pre-bust levels will take years..Some six years after the housing market collapsed, the forces of supply and demand that sent prices plummeting now appear to have laid a firm foundation for a sustainable recovery, according to many economists.

“The rise in home prices across the nation reinforces the view that housing is now leading rather than restraining the economy,” said Joel Naroff, chief economist at Naroff Economic Advisors

The U.S. housing market’s long slumber has been a major drag on the wider economy’s recovery from the 2007 recession. Now, as that market force shifts from a headwind to a tailwind, economists expect the housing revival to help boost economic growth in several ways.

“Strengthening in home prices is a plus for growth through various channels, including increased consumer spending because of wealth and confidence effects, increased incentive to buy before prices go up some more, and increased incentive to lend because of less chance of mortgages turning delinquent,” according to Jim O’Sullivan, chief U.S. Economist at High Frequency Economics.

Rising home prices have helped put consumers in a better mood. Consumer confidence jumped to its highest level in seven months in September as Americans were also more optimistic about the job market and income prospects, a private sector report showed on Tuesday.

Homebuilders are also feeling more upbeat.

Both home resales and groundbreaking on new houses rose in August, helping to lift business sentiment among homebuilders to a more than six-year high.

Housing starts rose 2.3 percent last month, the fastest in more than two years, and are up by more than 20 percent in the past year. But the gain follows a collapse that saw new home sales crash from a nearly 1.4 million annual rate in mid-2005 to fewer than 300,000 last year.

Foreclosure backlog
The recovery in home prices comes as the supply of “distressed” properties has begun to ease. Those include houses seized by banks in foreclosure and so-called “short sales,” in which a bank approves a sale for less than the outstanding mortgage balance. But with default rates still high by historical standards and a large backlog of pending foreclosures, those properties will continue to weigh on the market.

Capital Economics housing economist Paul Diggle figures the supply of homes for sale has fallen some 23 percent over the past year, while the pace of sales has picked up by 11 percent. That’s brought the number of homes on the market back down closer to historical levels.

Advertise | AdChoices“Supply may not fall much further, but with demand continuing to improve, the market will remain tight enough to sustain price gains,” he said.

Nationwide, Diggle expects price to close out 2012 with a gain of about five percent, after giving up some ground later this year as they typically have during the slower selling months in winter.

Demand for houses could also get a lift from the Federal Reserve’s recent move to force mortgage rates, already at historic lows, even lower. The Fed is hoping that cheaper credit will prompt potential home buyers to take the plunge.

The central bank’s announcement earlier this month that it would spend $40 billion a month to buy mortgage-backed bonds has already forced the yields on those securities sharply lower.

But for many borrowers, low mortgage rates aren’t the problem. Bankers have been demanding higher credit scores before approving loans, and with unemployment stuck above 8 percent, many would-be home buyers can’t get a mortgage.

Lower rates could also help spur the economy by helping existing homeowners with mortgages refinance to a lower monthly payment. But millions of them – roughly one in four – can’t get a new mortgage because they owe more on their old loan than their house is worth.

“It remains to be seen just how much of this fall (in mortgage rates) will be passed through to borrowers,” said Diggle. “And in any case, with rates already at record lows and credit still very tight, any fall probably won’t make a dramatic difference to the recovery.”

Rising home prices will slowly lift underwater houses back onto dry land. But the process will take years.

Nationwide, homeowners with mortgages owed some $689 billion more in the second quarter than their homes were worth, according to CoreLogic. But the recent uptick in home prices is providing some small relief; that number dropped by just $2 billion from the first quarter to the second quarter. Of all homeowners with mortgages, some 10.8 million – more than one in five – were still underwater in the second quarter, according to CoreLogic.

Reuters contributed to this report.