The needs that real estate professionals must address with their homebuyers, and the advantages they need to stress, must therefore adapt themselves to today’s realities. Think Benjamin Franklin. Think a-penny-saved-is-a-penny-earned. Think about making money “the old-fashioned way”. But don’t forget that, even in the most difficult economies, many wise American investors have made their fortunes.

Let’s look at a few outmoded maxims about home-buying, find today’s widely-accepted truths, and articulate the maxims that not only work today, but also help to sell houses.

1) “You’ll be thankful if you stretch beyond your budget to purchase a house.”

It really wasn’t long ago that buyers could assume their new home’s quickly growing value would pay them back (and then some) for going way out on a limb and buying a home whose purchase price and cost of financing were beyond what they could live with comfortably.

Now that we have survived what seems to be the worst of a terrible recession, it is apparent that the cost of a home, like the cost of any commodity, can go down as well as up (though real estate prices, over our nation’s history, rarely decline for very long). As a result, homebuyers, notably including first-timers, should be well aware that they can’t count on their home’s value to race higher, without ever pausing. Homes will, however, continue to provide their owners with long-term shelter for their wealth and with greatly increased borrowing power.

2) “Use the largest mortgage you possibly can to purchase your home because mortgage interest is deductible.”

There are two problems with this tattered maxim. First, you have to pay the monthly mortgage payment in order to deduct the mortgage interest. That deduction is indeed very helpful, but it’s rather like paying an extra dollar in order to get thirty cents back.

Second, though we can make no predictions of an outcome, legislators in the federal government continue to question the value of the mortgage interest deduction in its current form. If death and taxes are the only certainties in life, the actual tax laws and regulations remain very uncertain and potentially changeable. So we probably shouldn’t assume that today’s deductions will remain the same tomorrow. Today’s homebuyers, therefore, have set their sights on financing they can afford. And they are mindful of the vast number of benefits of owning rather than renting their home, including retaining the ability to remodel and decorate their home in precisely the ways that they desire.

3) “If you can’t afford your dream home, buy the next most expensive home.”

Perhaps the assumption was, again, that we should buy the most expensive home we could, pushing our purchasing power to the maximum. But there is another strategy. Savvy buyers today are buying a home that, while not their dream home, is truly affordable for them. This means they can modify and improve the home over time and, in a matter of years, create what proves to be their ideal home. It takes time, money, and often, a lot of work, but that process helps to establish exactly what they want to do to the home. They have, after all, lived in it, discovering its minor faults as well as its advantages. And the end result could be a home that fits their needs far more closely than their original dream home would have, if they’d been able to afford it.

The successful real estate professional today is selling long-term value. The home should serve its owners through the many changes they may face in the coming years, including the addition of children to the household and the requirements of retirees who wish to live in comfort and security.

It is almost as if today’s homebuyers were purchasing a completely different asset than were the buyers of half a decade ago. This is confusing and even potentially disruptive, but economists agree that it is a good thing. The purchase of a home is now grounded in economic reality and few buyers seem more aware of this than are first-time buyers, who expect their real estate advisors truly to understand their changing needs and assumptions.  If you would like help in purchasing your next real estate investment and want someone who cares about you, I ask that you allow me the opportunity to earn your trust and business.

The appraisal process often baffles consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn’t always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.

In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.

For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren’t uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.

As a Real Estate professional, I make a point to help Sellers and Purchasers understand the market value based on comparables in our market place so Sellers can put the right listing price on their property and so Purchasers can see the true value of the home they are trying to purchase. This promotes a good relationship with my Sellers and my Purchasers because with the values already understood there typically aren’t any suprises.

If you have any questions or concerns about appraisals and market value please respond here with contact information.  

A fourth-quarter survey of more than 900 real estate practitioners and brokers by HomeGain shows that 48 percent expect residential prices to hold steady.

Twenty-four percent anticipate price increases during the next six months — up from 36 percent and 11 percent, respectively, in the first quarter. While most agents attribute a boost in sales activity to the home buyer tax credit, the survey indicates that they are unsure about the program’s costs and whether sales activity will hold up after its expiration in 2010.

First-time buyers accounted for more than 50 percent of transactions during the last three months for 21 percent of the survey’s respondents. Meanwhile, 76 percent of sellers believe their agent’s listing price is too low and 62 percent of buyers consider homes overpriced — versus 74 percent and 64 percent, respectively, in the third quarter.