Q. I am planning to sell my house soon. What is the harm in pricing high initially? I can always come down in price but can't go up. Don't buyers make offers based on what they think it is worth anyway? I don't want to miss a buyer that falls in love with my home and will pay a premium price for it.
A. I am not a fan of knowingly over-pricing a home. A listing that might look great to a buyer at the right price might not even be appealing at an above-market price. I am also not a fan of under-pricing your home. You might not get the multiple bids you had planned on. I believe in putting it at market value and let the market tell you if it can go higher. The danger of initially pricing the home too high is the fact that it is most marketable when it is new on the market. Capitalize on this enthusiasm by presenting a good product at the right price.
In our area we are in a potentially quickly changing market. It presently is pretty stable but slower than last year. Just a jobs report or an interest rate adjustment can disqualify buyers from the market. But regardless of the market, overpriced listings don't sell in any market. If the price is too high the market can literally pass you by.
There is more emotion involved in a home purchase than in most other business negotiations. Home buyers usually need to feel passionate about a property before they'll make an offer. Today's buyer is concerned about overpaying in a potentially softening market.
Q. I want to sell my house but I must admit that the mere thought of negotiation makes me nervous. You might negotiate the price, the length of the listing and various marketing considerations. I am afraid I am at a disadvantage with my limited skills. Have you heard this before?
A. These feelings are not unusual but, like it or not, buying or selling a home involves negotiation. Your first negotiations are with your Real Estate agent. You might negotiate the price at which you will offer it, the length of the listing or certain marketing considerations. Some Realtors are more adept than others in bringing buyer and sellers together. Check them out carefully. Check their references if you haven’t worked with them before.
Negotiation is not a bad thing. It's one of the ways we interact with others in order to realize our goals which, in this case, is selling a home. Try not to think of negotiation as combat. Although you want to sell at the highest price you can get and the buyer wants to buy at the lowest price possible, you both have the same goal: The completion of a home sale.
Send your question & look for your answer in a future column. E-mail: Lynne@LynneFrench.com
Lynne French is the Broker/Owner of Windermere Lynne French & Associates and a Clayton resident. For any real estate needs or questions contact her at (925) 672-8787 or stop in at 6200 Center Street in Clayton.
Lynne French – Real Answers
Q. We are in the middle of a short sale. A tax forgiveness measure was supposed to expire on December 31, 2012. Did it expire? If so, I heard I will be taxed on the forgiven amount as ordinary income. If this is the case should I let the bank foreclose instead? Would I be taxed on the forgiven amount in a foreclosure?
A. The measure you are referring to is called the "Mortgage Forgiveness Debt Relief Act of 2007." This measure could pertain to short sales, foreclosures, deeds in lieu of a foreclosure or modifications. Your tax professional would determine how this would affect you in each situation. Technically it did expire for 24 hours but then was extended for 1 year. I have no idea if it will be extended again. So you seem to be safe for now, but please confer with your tax professional.
Industry experts expected the bill to be extended. It had bipartisan support in the house and the senate. Congress didn't seem to feel it was a high priority within the "fiscal cliff" negotiations so the extension actually was allowed to expire briefly, causing much anxiety for people like you. The National Association of Realtors and others lobbied hard to keep it in the forefront. Forty-one state attorneys general appealed to the House and Senate for the extension.
Not to extend it at this point made no sense. It would have hurt the very people that the short sale or loan modification was supposed to help. How could people who can't afford their mortgage be able to afford this huge tax bill?
Some home owners who are paying their mortgages on time have suggested this tax forgiveness is unfair to them. Perhaps it is, but anything that will help keep the housing market improving is good for the economy.
Q. Our swimming pool is about 30 years old. It could use a facelift. We don't use it much anymore and are considering filling it in and maybe planting a lawn there versus replastering. How would these alternatives affect our property value? We might sell our home in 5 to 10 years.
A. A sparkling, inviting pool can add value to your property. If it is not spectacular an appraiser won't add much value for it. Many buyers definitely want a house with a pool. Most of those want one that is in near perfect shape. They might be willing to do some repairs but any repairs needed on the pool will lower the amount they would be willing to pay for your home. There is the other buyer who absolutely does not want a pool. Perhaps they had one in the past and don't want to deal with the expense and the upkeep. And there is the other buyer who is ambivalent whether there is a pool or not. They would not buy a house with a pool that needs a lot of work though.
How large is your lot? If the pool takes up most of the yard, it won't be appealing to most buyers. People usually want the yard to be a recreation center.
What I would suggest you do is compare the cost of filling in the pool and landscaping the area with the cost of replastering and repairing or replacing anything else that is needed. Also factor in the maintenance cost of each. If you are still going to live in your house for 5 to 10 years, which type of yard would you enjoy having? Your quality of life is very important.
I have noticed one truth in Real Estate. If there are things about your home that you value and enjoy, it is not hard to find a buyer who will also value and enjoy your improvements.
Q. What is something new that makes an area desirable?
A. The California Association of Realtors put out “One Cool Thing” which is the Walkability Index. It is a new measure of the desirability of an area. This is the proximity of amenities such as restaurants and shops, and community hubs such as schools, parks and libraries. Walk scores range from 0 to 100, and any rating above 70 is considered “very walkable.” You can check a walk score in a specific city or neighborhood at www.walkscore.com. I am proud to say that Clayton has been named “Most Walkable City” in the past. And it has been named in Money Magazine’s Top 100 “Best Places to Live” three times since 2007. Each time they cited the extensive walking trails.