SellAustinTexas

Let’s face it, some homeowners have gotten in way over their head on their property and just need to get rid of it. There’s just not a lot of buyers out there and they can’t sell it for what they paid for it. That leaves them with two options: Short Sale or Foreclosure. Most people who are underwater on their loans opt for Foreclosure – defaulting on the loan and giving the property back to the bank. Often people have not fully explored all their options with their lender and are unaware of the Short Sale option. In simple terms, a Short Sale is asking the lender to take less than what is owed on the loan. This allows a homeowner to lower the selling price of their home to a price point that will get it sold and prevents them from defaulting on the loan. Here are some major differences between a short sale and foreclosure.

1) Credit Score – Defaulting on a loan and going into Foreclosure will result in a 200-400 point hit on your credit score. That’s big and it will affect not only your ability to get another home loan but any credit card limits, car loans and any other purchases made from credit. A Short Sale typically will reduce your credit score from 50-130 points – a much more manageable hit.

2) Future Home Purchase – A Foreclosure on your record will prevent you from obtaining a loan anywhere from 5 to 7 years. However, if you are not behind on payments and opt for a Short Sale, you are eligible to purchase another home under Fannie Mae in 2 years. The wait for an FHA loan is 3 years.

3) Deficiency Judgement – Another more immediate cost associated with Foreclosures and Short Sales is the deficiency judgement. This is the lender asking for you to pay them the difference between the sales price of the home and the value of the loan. The government and the lender see this as income and could have tax implications along with the fact that the lender still wants money from you. Typically, with Short Sales these days, the lender is willing to forgive that difference. With a Foreclosure, the lender is less forgiving and usually goes ahead and issues a deficiency judgement for that difference.

Although neither is a good alternative to hanging in there and making the payments, pursuing a Short Sale has much less of a financial impact than a Foreclosure.  Here’s a link to some resources for preventing Foreclosure.

Staged kitchen in Travis Country home

This recent sale goes to prove two essential elements in real estate.  If a home stands out among the crowd through pricing and presentation, it will sell.  Not only will it sell, it will sell FAST.  This home in Travis Country sold because we priced it right – at market value – and the sellers did everything right as far as staging and preparing the home to get on the market.  Things like paint touch ups, fresh mulch in the flower beds and “de-cluttering” the home went a long way to make this home stand out from the other homes in the area.

Manicured Yard

Pricing was the second essential element to make this one stand out from the crowd.  We priced this fairly for the market – not too high and not too low – and got very close to the asking price.  Overpriced listings don’t sell.  A home can be flawless and move-in ready but if it’s priced too high, it will sit on the market.

I’m not using this post to brag about our abilities (but I do think we do more than 90% of the realtors out there) but instead using it as an example of what happens when the fundamentals of pricing and presentation are properly executed.

In September, we posted “Upgrades that Pay Off” – tips for home remodeling for those interested in investing in their property. In a money conscious market, sellers are interested in sure-fire ways to invest in their home to improve appeal to get the house sold, and value for when it is.

It was the question posed to the Austin-American Statesman yesterday: “How do we know if the time and money we put into upgrading the house for sale will be worth the investment and lead to an eventual sale?”

Look at the market. Think both big and small – find the big trends, but also look at the homes in your neighborhood (what is selling, and how long it’s taking). Visit your competition – tour homes as if you were a buyer to get ideas for when it’s your turn.

Perform a home pre-inspection. Surprises at home inspection kill many deals. Even if you elect not to fix a problem, you should ask for bids from three contractors or vendors to present to potential buyers, a standard practice to give buyers an idea of the cost to repair.

Target your potential buyer. Who would be most likely to shop for your home? If you live in an artsy, historic, or charming and quaint neighborhood, be sure to keep those elements and not overwhelm them. On the other hand, if homes around you are big and new, you might add lavish, luxury elements. Find an agent with expertise in your type of home, and who will discuss your ideas and options with you.

The City of Austin Energy Audit is now in effect.

Read About the Audit

If you have a home within Austin city limits and are trying to or thinking about selling your home, you need to find out how the Energy Conservation Audit can affect you.

Who is affected (you must meet all 3 criteria)?

Homes that are 10+ years old

Homes within Austin city limits

Homes that receive electricity through Austin Energy

Are there any exceptions?

You may be exempt if your home was a participant in the Austin Energy Residential Energy Efficiency program within the last 10 years.  Check with the City of Austin at 512-974-7827.

What are your choices?

The City of Austin has declared the Energy Conservation Audit mandatory UNLESS you complete specific voluntary upgrades through the Austin Energy Residential Energy Efficiency program. A homeowner can choose from a list of approved companies who can consult with them to determine what upgrades would be necessary to complete. The primary upgrades are additional attic insulation, solar screens, and sealing the duct work in the home.

How much does the energy audit cost and what do they do?

The energy Audit typically costs $200-300 for a home with one HVAC unit and prices go up from there depending on the size of the home and number of HVAC units. The energy audit evaluates the home’s windows, attic insulation, HVAC system, and duct work. The report is about 9 pages and points out areas that are inefficient and gives suggestions on how to make the home more efficient. It will be mandatory to supply a buyer with this report if you are selling your home.

What is the benefit to participating in the Austin Energy Residential Energy Efficiency program?

Austin Energy and Texas Gas Service offer incentives to participants to offset costs of these upgrades. Homeowners can also receive a tax credit for these upgrades if it is their primary residence. When you sell your home, you will not have to complete the mandatory energy audit which will save you the cost of the audit and report. The remaining costs vary but in some cases they can be very near the same cost of completing the mandatory energy audit. In addition to all of the immediate cost benefits, you can reap the benefits of living in a home with lower bills and a more comfortable and efficient home.

When will this apply to me?

The ordinance will take affect any home that sells after June 1, 2009.

Why did the City of Austin create this ordinance?

The City of Austin created this ordinance in order to bring our older more inefficient homes up to par with newer construction homes. This will benefit all Austin Energy users as it will lower the impact that we have on our power plants. If we can reduce the dependency on our power plants then we can stop or slow the need to build more which also helps keep our energy bills more affordable.

How do I learn more?

Contact your team of Real Estate agents, the Dave Murray Team, with your questions!