* Agency: The relationship that a real estate agent has with a client.
* CMA: Comparable Market Analysis, a home evaluation based on properties that have sold in the neighborhood similar to the property being priced.
* Disclosure: An oral and/or written communication about agency, property condition, or other key factors.
* Earnest Money: A good-faith deposit provided as consideration when a buyer offers to the seller of a property a contract to purchase the property.
* MLS: Multiple Listing Service, information on properties that is shared among brokers belonging to a specific multiple listing organization.
* Purchase and Sale Agreement: A contract from the buyer to the seller offering to purchase the property for a certain price.

When you’re ready to sell your home, I’ll be happy to explain all the terms and transaction details and walk you through the entire process. Please don’t hesitate to email or call me if I can help you or answer any questions.

Good news in housing. Existing home sales rose 2.4 percent in May. Compared to the same month one year ago, existing home sales were down by 3.6 percent.

The national median existing home price in May was $173,000, which is a decline of 16.8 percent from one year ago. Lower prices are good news for potential buyer. Housing affordability is at the highest since 1970. A middle-income family now has more than sufficient income to buy a middle-priced home at current mortgage rates and stay well within family budget. From one year ago, inventory is lower by 15.3 percent.

The first-time buyers will be the key to help drive up sales. First-time home buyers accounted for 29 percent of all buyers based on a survey of REALTORS about their recent clients. It is a decline from the 40 to 50 percent range in recent prior months. With all the homebuyer tax credits in place on national and state levels, this is troubling.

On the bad side, eleventh hour fallout is occurring on contracts because appraisals are coming in with unrealistically low values. I have a buyer and a seller that made a deal at a mutually acceptable price, but the appraisal killed the deal. We challenged the appraiser as to the correctness of some of the data he used on one of his comparable property. We supplied our data, and his response was that the property we supplied data on didn’t qualify as a comparable. Alarming thing, he chose it as his first comparable, we only questioned the home square footage. I don’t even think he read his own report since he rejected his first comparable property.

More properties are being appraised by non-local specialists, being based on non-comparables. Appraisers are comparing normal homes against distressed homes that typically are in disrepair and many have significant damage. Lowball appraisals are opening up additional negotiations which is delaying the closing or leading to the cancellation of the contract. Lower appraisals also force the buyers to come up with extra cash to make up the difference between price and appraisal, which some buyers are unwilling to do, and again lead to a fallout. This issue is suddenly escalating.

The major advantage of buying a fixer upper is that you can often obtain such a property below market value, giving you plenty of opportunity to sell it at a profit later. Often, the owners of fixer uppers are financially unable to make the necessary repairs to such homes, and would rather sell the properties than worry about upgrades and repairs. This gives you the leverage to negotiate a lower price.

The first major downside to this investing strategy is that you will have to front the costs of the repairs yourself. You can make an estimate of repair costs when evaluating a fixer upper home for purchase, but you’ll need to build in extra costs for undisclosed damage and surprise repairs. Properly accounting for repair costs is critical to your success as a real estate investor – being too optimistic about repair costs can cause you to end up spending more on renovations than you can make with the resale of the home.

Another risk of buying a fixer upper is that the home may be located in a declining area. While some fixer upper homes are located in desirable neighborhoods, many more are in areas where neighboring properties are also in disrepair. If this is the case, it will be difficult to sell your investment home, no matter how much time and money you have spent renovating the property.

Finally, you should be prepared for the risk that it may take quite some time to find a suitable buyer for the home, no matter what kind of neighborhood the property is located in. You will need to sell the home for substantially more than your purchase price, and buyers may be hesitant to pay much more for a home than it was worth six months or a year ago.