What are the differences between a condominium, a town-house, and a co-op?
Q:What is the current real estate market like in Reedley and the surrounding towns?
A: As of May, 2008, there are several factors influencing the current real estate market in Reedley and the other small towns in the Central Valley. First, there is a general perception that real estate is no longer a good investment. Second, there are more homes on the market that are in the various stages of foreclosure. Finally, the real estate market is plagued by uncertainty about the economy as a whole.
Let’s discuss each of these issues briefly.
The media is touting the drop in real estate prices, and as a result many buyers are convinced that if they buy a home it will be worth less tomorrow than it is today. While this may be true, if you plan to live in your new home for several years or longer, the effect of the short-term market will likely be negligible. If your goal is not to turn a home for quick profit, but instead to make a good long-term investment, buying now while prices are low makes very good sense. If the value of your new home is in the shelter and security it provides for your family, along with the potential for profit in the future, then the immediate state of the market is of less concern. Now is the time to buy for those who are planning for the long-term.
The market is currently flooded with pre-foreclosure short sales or bank owned “as is” sales. This is contributing to a downward price trend, which is unfortunately difficult to address. Buyers are tending to use price as the determining factor, but this may be a mistake. For example, three homes sold over a two-month time period mid-Oct.-mid-Dec. 2007. All three were brand new, all three were the same model, and all three were within ½ block of each other, yet they had a $70,000 price range between the highest and the lowest price. The difference was in the upgrades chosen by the buyers. A home built with features like granite countertops, a whirlpool tub in the master bath, a pool in the back yard, and beautiful landscaping is worth more than a basic model, even if the maintenance has been the same for both homes. Some homes may have been rentals, or might have been neglected due to lack of money leading to foreclosure, and some might even have been abused out of spite, and those may be worth less than a home in which the current owners have and are maintaining it meticulously. This illustrates the fact that two equivalent homes can be worth very different amounts based on factors that don’t appear on paper. This is why buying in a market flooded with foreclosures is tricky - if you shop for a home by price alone, you may pass up the real value in the neighborhood.
Perhaps the most important factor affecting the real estate market in Reedley and elsewhere is the condition of our economy. The economic news has many people worried and as long as potential buyers are uncertain as to what the economic future holds, they may be hesitant to take the plunge.
The Bottom Line:
The Bottom Line for Sellers:
This market makes correct pricing of your home critical. Buyers have a lot of options right now, and many are letting price become the determining factor. It is important that, while your home is on the market, you keep the price at a competitive level.
The Bottom Line for Buyers:
It is a great time to buy if you are looking for a good longer-term investment at favorable interest rates. But as you are considering homes, it is important not to let price be the only driving factor in your decision. Make sure to take into account the elements that don’t show up on paper but could have a financial effect in the future, such as upgrades and deferred maintenance.
Q:Why should sellers pay 6% commission?
A: A growing inventory of homes on the market and sagging prices have made it clear that the real estate market in Fresno County is leaning towards buyers. Often sellers are being pressured to lower the listing price on their homes, or to give big concessions in order to induce a sale. This has concerned homeowners trying to cut more corners in order to close the transaction with as much money in their pocket as possible. Getting the maximum net dollars is, of course, the most important part of the sales transaction for the seller, so this impulse to cut costs is understandable. However, when it comes to choosing a realtor to represent you, cutting corners can end up costing you more than it saves.
Often the first place sellers look to increase their bottom line is in real estate representation fees. Some opt for bargain agencies that will charge only 4-5% commission instead of the historical standard of 6%. While this may seem beneficial on the surface, it may actually do more harm than good. On a $300,000 home, a 1% discount on your agent’s commission would translate to $3,000 of savings. While this sounds great, the bargain pales when you take into account what it could potentially cost. Real estate marketing costs have gone up, not down. Buyers are being inundated with advertising from all levels of the marketplace, and it is more expensive that ever to assure that they know your property is for sale. In addition, the agent likely has fewer sales to absorb this cost, so the per unit cost is proportionally higher. Any agent that is willing to take less money in commissions must therefore find other ways to fill that gap. There are two ways to do this: one is to cut advertising, an option that is obviously not good for the seller; the other is to close transactions as quickly as possible, with a minimum of time-consuming and deal threatening negotiation between buyer and seller. This strategy worked better in the recent seller’s market, when the offers exceeded the list price. However, in the current buyer’s market, buyers are coming into the transaction with more power, and thus with more costly (and often unreasonable) demands. This can result in offers that are thousands of dollars lower with requested repairs that are thousands higher. A discount agent might feel the pressure to agree for the sake of expediency. In the face of losing tens of thousands of dollars to unreasonable repair demands, the $3,000 discount doesn’t sound so great!
A real estate agent that has the resources provided by a full commission, like myself, will not skimp on the critical marketing of your property, and likewise won’t be pressured into a quick sale of your property at your expense. Rather, I negotiate with your buyers so that you get the best price for your home possible, and just as important, I make sure that after the agreement is reached, you are prepared to deal with the buyers when and if you are peppered with unreasonable repair demands. The power in real estate transactions has been in the hands of the sellers for the last few years while demand was high and prices were increasing. Now that this situation seems to be reversing, it is more imperative than ever that you choose a listing agent with an extensive marketing plan for your home, strong skills in negotiation, and a willingness to turn down offers that don’t reflect your home’s true value. Your home is worth the wait – and having an agent that will fight for you is worth the 1%!
Q: If your home sells in the first few days after you list it, have you received top dollar for your home?
A: There's no way to know! The only way you can be sure that you get top dollar for your home is to effectively place your home on the open market and expose it to as many potential buyers as possible. Then you should allow a reasonable amount of time for them to view your property and write their offers. Only then can you be sure that you have received the top price that your home will command. If your real estate agent sells your home before it comes onto the open market, especially to their own buyer, there is no way you can be sure there wasn't another buyer out there who would have paid more for your home. Other buyers never had the chance to see your home and make you an offer! Do not allow your house to be sold before it comes completely onto the open market and is on the market long enough to let the marketplace work for you. Selling a house is not a horse race. The winner isn't always the fastest, the winner is the one with the most money at the finish line.
Q: Staging Your Home For Sale - Is It Worth The Investment?
For the past three months the average selling price of a staged home was 19% above the listing price while the unstaged home was only 15%. The 4% difference more than paid the staging cost.
Here are the ten secrets fo selling from Marelen Wharmby, a successful home stager:
- Freshen up the home by painting walls a light, neutral color, such as antique white. Lighter colors appeal to a wider range of buyers and make each room look larger.
- Take a close look at the floor coverings in each room. If you have hardwood floors under the carpet, you will always make money by removing it, even if the floor is not in perfect condition.
- Allow as much light as possible to enter the room. Open up or remove all draperies, blinds, shades or other window coverings.
- Removing the clutter of everyday life - all utilitarian items, stacks of paperworks, toiletries, kitchen utensils, electronic equipment and television sets.
- Remove furniture from each room that does not go with the decor, such as items that stand out too much and items that are worn or of an unappealing color.
- Place the remaining room furnishings in a way that makes best use of the character of the space. A room should be balanced so that people do not focus on one particular piece of furniture.
- Now that you've removed the clutter from your home, adding some nice but inexpensive accessories will greatly elevate the perceived value of the home.
- Clean, clean, clean. Every crevasse within the home should be spotless and gleaming. Even your normal weekly cleaning can not come close to the quality of clean you need.
- You can't over spend on fresh plants and orchids, elaborate floral arrangements and landscape plants. All these provide a strong addition to the ambience you want to create.
- Go on vacation! The houses that sell for much higher prices are homes that do not have the slightly disheveled look which comes with showering in the morning and cooking dinner in the evening. Being gone also will lower your level of stress and make the house easier to sell. Think of it this way: Your vacation will actually make you money.
Q: What are the differences between a condominium, a townhouse and a co-op?
A: A townhouse is a style of construction, whereas condominium and co-op are types of ownership. A townhouse is basically a building or unit that shares a common wall with the building or unit next door. The walls are usually straight and entry is usually from the ground floor. Townhouses usually have two or more stories. A townhouse can be a style of condominium.
A condo is where you own the actual structure of the building jointly with the other members of the association, along with common areas such as swimming pools, tennis courts or other common areas. Individually, you own the airspace and interior of the structure, but not the building itself. You and the other members of the association own the structure together.
A co-op is where you own shares of a corporation or organization that owns the larger structure, and ownership of those shares gives you the right to occupy a specific unit or apartment. 
