Real Estate Investing

While the real estate market in all parts of America isn’t necessarily as grim as many would have us believe, it is certainly a buyer’s market. However, there are many homeowners looking to sell their property who refuse to acknowledge this. If you do not price your property fairly (in accordance with the housing market, the area’s crime and poverty level, and the property values of surrounding homes), you can be in for grave disappointment.

You will get fewer looks. You will find that responses to your advertising will be fewer and farther between. This means your property could stay on the market longer, and property that has stalled on the market is a definite deterrent to buyers.

You will attract the wrong buyers. For a sale to proceed, the buyer’s wishes and the home’s features must agree. An overpriced home will entice buyers shopping in a certain price bracket, but with far higher expectations than your property can meet.

It’s not good starting ground for negotiations. Prospective buyers will be less enthused to negotiate because, by talking the buyer down on the price, they are not necessarily getting a deal. They are probably just getting a home at full market value. They expect a deal, especially with the current buyer’s market.

It could mess up your closing If your house is priced above the appraiser’s estimate, it could prevent the buyers from successfully getting the mortgage loan they need.

The comparison factor An overpriced home makes a great comparison for less expensive homes with more features. There’s plenty of great deals out there, so do your research before determining your price. It’s better for you, not your buyers, to be first to identify the great deals offered by the competition.

Looking for a new home? Gone are the days of driving around neighborhoods, scouting out For Sale signs. Newspapers are even irrelevant to the home search nowadays. And you can forget trucking it over to your local open house. Online MLS listings, online classified ads, online high-powered search maps and even online virtual tours have made it so that the first human contact may not come until the closing.

It’s shocking, but true - it’s a digital age. Some say it’s convenient, but others say it’s sad. At any rate, most people (particularly under age 35) could name at least three great web sites to aid the real estate search. However, in a recent column for USA Today, tech wiz and radio show host Kim Komando compiled a pretty comprehensive list:

-Realtor.com is the official site of the National Association of Realtors.

-RealtyTrac.com categorizes listings according to pre-foreclosure, bank-owned, government-owned, FSBO, auction, resale and new. It’s very comprehensive and user-friendly, but costs about $50 monthly after the seven-day free trial.

-Foreclosures.com has foreclosure listings with market value and the percentage of equity in the home. Again, a seven-day free trial followed by a $50 monthly fee.

-BargainNetwork.com advertises thousands of foreclosures and FSBOs nationwide, but will not allow you to browse the site without signing up for a free trial membership, to be followed by a $40 monthly fee. The catch on these seven-day trials is that you must enter your credit card information, which will be charged if you do not call the company and cancel. In some situations, there may even be a $40 or $50 hold placed on your card during the trial period, so be forewarned.

-HomeSales.gov lists federal government-owned properties to be sold at auction, many of which are HUD homes.

-Trulia.com allows searches to be saved and referenced later, and e-mail notices can be sent out whenever there are new listings matching your search criteria.

Kim Komando lists other resources, like the home value calculator and neighborhood property value “heat maps” on Zillow.com. Of course, we wouldn’t want to forget about sites like FSBO.com and ByOwner.com, and Komando also recommends searching official government web sites for foreclosure listings. And of course, there’s always our good friend Craig. Warning: searching for real estate online, regardless of whether you are serious about buying, is a very time-consuming and addicting process. Proceed carefully!

So arson is not really your thing and you don’t feel like reading over hundreds of essay entries. How else are you going to unload that house? One option is joining the thousands of people looking into house swaps. We’ve discussed temporary house swaps for vacation purposes, but a growing number of people are choosing to make those swaps permanent.

The Wall Street Journal recently published an article outlining just how popular this has become. We’re talking 16,000 listings as a combined total between house swap sites like GoSwap.org, OnlineHouseTrading.com, DaytonaHomeTrader.com and DomuSwap.com. Popular free online classified ads site Craigslist saw a 56-percent increase in “home swap” ads during 2007 with 7,392 such ads listed, according to WSJ.

These house swaps are working over short or long distances, usually with realtors or some type of transaction manager involved. It is recommended that a clause be included in the terms and agreements of each contract that final sale is pending on the same-day closing of both houses. This prevents either homeowner from getting snowed and coming up short-handed.

GoSwap.org has a fairly comprehensive Frequently Asked Questions section that briefly outlines some of the tax implications of swapping houses. If ineligible for a tax-deferred 1031 exchange, the homeowners may want to reasonably adjust the home’s asking price - say, by relying on the lowest of several home appraisers’ reports - and thus reducing their capital gains tax obligation. Obviously, the “asking price” of the home can be tweaked (within reason) because it is of little consequence in a housing swap.

The benefits of swapping houses are many. In addition to tax benefits, it can allow homeowners to skirt around broker’s fees - typically 4% to 7%. Still, roughly 13% of the listings on DomuSwap.com were listed and handled by brokers. Housing swaps also make it more possible for people to move up to bigger living quarters, provided they can find someone with a bigger house who is wanting to downsize. Under current market conditions, it may not be terribly difficult to find someone who meets that criteria but has been unable to find a buyer. House swapping is an innovative new trend that seems to provide a win-win scenario for all involved.