Ten Dos and Don’ts to Help Sell Your Home for Top Dollar

A lot of sellers don’t put enough emphasis on fixing up their homes when they put them on the market. Even sellers with recently renovated homes need to do this work. There is stiff competition and every detail is important to help you sell fast and for top dollar.
So if you want to sell your house, take ten minutes to read this list. Then start packing!
1 DO de-clutter and de-personalize the space! It’s simple advice but this is the most difficult step for sellers. Say good-bye to the home and then erase the memories from the space by putting away personal items. The more prospective buyers can visualize their own belongings in the space, the better.
2 DO create a welcoming entrance that feels great to walk into. Make this space clean, well lit, and up-to-date. First impressions are critical.
3 DO invest in low cost, sweat equity. Repaint the walls a neutral light color, update light fixtures, faucets, doorknobs, and backsplashes. If you don’t have time, hiring someone to get these things completed is money well spent. If you don’t have the talent, hire an interior designer or home stager to consult for a couple of hours. Small cosmetic improvements add up.
4 DON’T do any major renovations on your home if you don’t have the time, money, or energy. Jobs like re-doing the flooring, kitchen, or bathrooms are large and stressful, particularly if you are living in your house during the work. Think rejuvenation not renovation.
5 DO invest in fixing up your outdoor patio or sitting area if you are selling during the warm months. Potential buyers love the added value of an outdoor eating or sitting space. Repaint the deck and create a comfortable space with outdoor furniture. An umbrella and barbecue will be great selling points.
6 DON’T invest in a swimming pool, hot tub, or fishpond. You won’t make your money back. You may even alienate many prospects who are put off by the maintenance involved and the potential hazard for small kids.
7 DO give your kitchen or bathroom a surface makeover. These two rooms are the most important in any home. There is no need to change your entire set up. New faucets, knobs, backsplash, moulding, sink, and paint are all easy and inexpensive updates. Remember to keep it neutral.
8 DON’T forget about the landscaping and outdoor appeal. This is the very first thing buyers will see. If they are turned off, you’ll have to work even harder on the inside. So why not give it some care? Paint your front door, give it a new handle, fix cracks in the walkway, paint the mailbox or get a new one. Fix or get new house numbers. Make it charming by trimming all your trees, bushes, grass, and by adding flowers.
9 DO Be eco-conscious when moving. Donate home fixtures that are in working order to Habitat for Humanity’s ReStore and bring your debris to the eco-center. Consider re-facing or repainting kitchen and bath cabinetry rather than replacing them. The more you can reuse and repurpose, the better. The goal here is to spend as little as possible for the biggest impact.
10 DON’T leave any animal marks around the house. Scratched doors, a kitty litter box, messy eating bowls, hairy blankets, and chewed up toys need to go. Not everyone is an animal lover and they might dismiss the home altogether if they are allergic.

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Refinancing Pitfalls With a Fix and Flip – Keeping the Property When Your Flip Becomes A Flop

I was young and inexperienced, but I was convinced I was unstoppable. I had a lot of energy and motivation. The house was in Arvada, a northwestern suburb of Denver,and I purchased it for a killer price. It was part of a package deal with another house I planned to keep as a rental. This one did not have great rental numbers, but looked fantastic as a flip, so I bought both houses. I started the rehab on both properties, with the focus on the planned rental; that would be a much easier and a quicker rehab. That house went smoothly. I rehabbed it, rented it, and refinanced it. Because I used a hard money loan, I had no money into it and was producing positive cash flow within six weeks. The Arvada house was a different story. That one ended up in my rental portfolio too, but it was far from planned.

It was after I was done with the first project that I started noticing the shady work in Arvada. There was un-permitted work all over the place. There was a small addition that was falling away from the house, material used to build that did not belong, leaks that were covered up, and faulty wiring. The budget was blown before I even started, and I did not have the reserves to cover the extreme amount in overages. I did not know what to do, so I went cheap. I did a lipstick job, threw the house on the market and crossed my fingers.

I dropped the price, and then dropped it again. It got to the point that I could not pay off my loan and pay a Realtor, so I decided to keep it. In order to do that, I had to pay back my hard money lender, meaning I had to refinance the loan.

This painful experience taught me many important lessons; don’t go cheap on finishes, what to look for in a budget, and the pitfalls of the refinance. Lending has changed since then, so I reached out to Joe Massey at Castle and Cooke mortgage, our preferred lender in Colorado, to get some help on what issues investors are running into today when they try to refinance their flip. Here is the list of pitfalls we discussed:

Value: It is nearly impossible to get an appraisal higher than the last list price. In my case, I kept dropping the price, to the point it was listed below what it could have appraised for. When I went for the refinance, the appraisal came in at the last list price, and I was forced to bring cash to closing to get the deal done. Refinance appraisals are based solely on the comparable sales (comps) in the area, as there is no other market indication for the appraiser to reference. Also, the low-quality rehab is hard for an appraiser to put a value on, so it is common for low quality rehabs to have no impact on appraised value. Low quality rehabs do, however, have a big impact on actual value. Once there is MLS exposure, meaning everybody who is looking for a house can see it, the appraiser has actual market information to use to come up with a more accurate value. Think about it, how can the appraiser justify a value higher than what it is listed at in the MLS? You better just count on the value coming in at, or even below, the lowest list price.

Another obstacle with the MLS exposure is with timing. This is not a big deal for most, but is worth a mention. The property must be out of the MLS for at least one day before you can apply for the loan. Again, not a big deal, but this will create a day or two delay in the process.

Credit: Credit requirements are a little stricter with rental property loans compared to owner occupied loans. Almost all loans are approved or denied by a computer system, so the scores can vary. For example, if you have less thanperfect credit but a larger down payment, the computer could approve the loan. In the rare case the loan is manually underwritten, the credit on rentals needs to be 620 or higher until you hit your 5th rental, and at that point you will need to have a 720 credit score.

Entities: Conventional lenders will not loan to an LLC or corporation; you will need to own the home in your personal name to qualify. Many lenders will not loan you money if at ANY point you owned the property in an entity. Most fix and flippers do business in an entity, so you can see how this can cause you a problem with a refinance. All hope is not lost though! Because Joe is a direct to Fannie Mae lender, he is able to finance you while your property is in your entity, but will require that you move it into your personal name. If you hear a lender tell you they cannot help you because you owned your flip in your LLC or corporation, know that there are lenders like Joe out there that can do it.

DTI: You might hear that you cannot finance a rental because your debt to income ratio will be off, meaning you don’t make enough money to support all your debts. The hiccup here is often the rent amount on the new property, and if you can use that to offset the new mortgage payment. Some lenders will want to see the property on your tax returns to give you credit for the income, which is always a loss in the first year you buy a new property and rehab it; therefore making it tougher to qualify. If you get this feedback, call another lender. The guideline here is that you can use 75% of the gross rent amount as income if you have a lease and can show at least one month of rent collected and the security deposit.

Another issue with DTI is self-employed borrowers. I have written full articles on this subject, because many people who are self-employed take as many deductions as possible. When you take a deduction, you lower your taxable income, so you save on taxes. The problem is that when you lower your income, you hurt your DTI, making it harder to qualify for loans. It is not the fact that you are self-employed that is preventing you from getting a loan, it is the income you report. The guideline here is that you can get a loan when you work for yourself if your income supports the debt. Income is documented with two years of tax returns, unless you have been in business for at least five years and have a 740 or higher credit score, in which case you will only need one year of tax returns.

Reserves: As you start to go over budget or have issueswith your fix and flip, it is very common to burn through your reserves to save the deal. This is understandable but could create a problem. You are required to have reserves for conventional loan qualifying, so it is very important that you have this set aside before you apply for your refinance. The guideline is a little confusing and is based on the number of properties you own. The reserve requirement is:

6 Months of mortgage payments on the subject property (PITI) plus…

2% of unpaid loan balances on your other rental property loans for 1-4 financed properties
4% of unpaid loan balances on your other rental property loans for 5-6 financed properties
6% of unpaid loan balances on your other rental property loans for 7-10 financed properties

You do not count your primary home mortgage balance in these calculations.

You are able to use some retirement money to meet this requirement, but you will also need money in the bank. Check with your lender if you plan to use retirement money to meet this requirement, and they can walk you through what funds need to be where when you apply. If you start running low on reserves, do what you can to get the house acceptable for an appraisal and then get the loan done. Once the loan is in place, go back and complete anything that you need to complete that will consume your reserves.

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What Are The Keys To CARE For Your Home?

Whether, you hope to stay, and live, in your present residence, long into the future, or, are considering, selling it, and relocating, doesn’t it make sense, to pay attention, to the best way, to maintain the house, property, and grounds, and, thus, take quality CARE for your home? If you plan to stay, it’s always nicer, and in the longer – run, far less expensive, when you pay attention to maintaining it properly! If you want to sell it, wouldn’t it make more sense, to ensure, potential buyers, were impressed, favorably, by how well it’s been maintained, etc? With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, using the mnemonic approach, what this means and represents, and why it matters.

1. Character; core; creative: When someone sees your home, what impresses them, about the character it represents? What are strengths, and benefits of the core, and how, might these, be articulated and communicated to others? Smart homeowners think about ways, to enhance a property, and are creative, in their pursuits, of making it, as attractive, as possible!

2. Attitude; attention; area: When you live somewhere, you enjoy, your personal attitude, generally, becomes more positive, and beneficial! One should pay keen attention to the finest possibilities, and consistently, seek to enhance, one’s overall property, and its condition! Think carefully about the specific area, of the property, and enhance the strengths, while minimizing and addressing areas of weakness! How might you make curb appeal, work best, for you?

3. Region; real estate: How much, makes sense, to invest in your property? The wisest approach, is the have a professionally designed, Competitive Market Analysis (CMA), created, and proceed, accordingly. Real estate, and the market – place, is the business of bringing buyers, and sellers, together, seeking a meaningful, meeting – of – the – minds!

4. Emphasis; energy considerations; excellence: How does your house, compare, in terms of energy considerations, with others, competing, in the area? Compare costs involved, clean energy, and, whether, these might enhance the appeal, of the specific home! When one aligns this, and other relevant areas of emphasis, with demonstrating it, clearly, often, has a significant impact/ difference, in terms of enjoying living somewhere! It makes sense to make the wisest, possible decisions, and focus on genuine excellence, instead of good – enough!

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