Are you ready to sell your Big Bear home? Then it is time for you to know how to price your home correctly! A Big Bear Realtor will be able to help you when choosing the correct price for your house. When a homeowner is selling their house that they have a connection with or bought when the market was in a different state, it can lead to a homeowner incorrectly pricing their home.

As you try to come to a fair price, try to remember that the memories you’ve made with your family don’t impact the value of the home to anyone but you and your family. The precious moments you had in your house are special but do your best to take your emotions out of the equation at this point. If you do, not only will it help you come to a good price for you and the buyer but will also make the overall process a lot easier!

The number also depends on how quickly you want to sell the property. Do you mind it being on the market for a little while or do you want to sell it right away? Figure out this answer before moving forward!

1. Do you want to sell your Big Bear home quickly?
If you are short on time, a great idea would be to check the other homes on the market in Big Bear Lake, California. Only compare your house to others that are close to yours; don’t take the price of a lakefront home and place that value on your two-bedroom home in a residential area. If the homes in Big Bear like yours are selling for $400,000, price your home competitively. Put yourself in the mindset of the home buyer; they’re looking for the best value.

Being less expensive than other houses will draw more buyers to consider owning your home. Remember that not every home is like the other.

You can price the home to your liking if time is on your side. Yet, do not take that to mean that you can place a higher price tag onto the property with hopes that you will find a home buyer in Big Bear willing to pay that price. There is a chance that your home will be on the market for awhile. Being on the market for too long can negatively affect selling your home.

After your house has been on the market for over 30 days, it gives Big Bear home buyers the impression that something may be wrong with the house. This gives them the chance to go a lot lower with their offer than you may have liked. Buyers may believe that you are becoming overly eager to sell your home.

2. Don’t go by how much you purchased the Big Bear home.
The market changes all the time. If you focus on how much you bought the house for ten years ago, you will be off the mark. Either it is no longer worth that amount, or it could be worth even more. Don’t get stuck on the price you paid! That thought process can hinder your efforts for selling your home.

Study the real estate market and see what Big Bear homes have been selling near your property. Every house is different, but this will help you get a good overview of how the market is doing.

When you feel a little lost, ask your Big Bear Realtor! Their job is knowing and understanding the market. They will be able to give you a realistic number without you having to do the work. They are here to help make the overall process as easy as possible for their clients.

3. Be willing to negotiate!
When you are trying to sell your house, be open to the idea of negotiation. Take into consideration how long your house has been on the market, how many offers you have received, and the state of your home. You could have a fair asking price but the home buyer offers a lower price, what will you do?Don’t worry, this is a great spot to be in! You have an offer and now the negotiations can begin.

A local Realtor can provide negotiation skills to help you, and the buyer come to a mutually-beneficial agreement.

4. Choose your renovations carefully to help to sell your home.
Every renovation you have made can add value to your home. You do have to take into consideration the quality of your house. Many homeowners add onto or upgrade a part of their home to raise the value. To do this, it is important that the seller knows what will benefit the home and what will not! According to Zillow, “Eighty-three percent of sellers make home renovations before listing. The most common improvements are painting (45 percent).” The reason why painting is a popular renovation is that it increases the curb appeal of a home without being a huge expense.

Let’s say that your deck needs repairing, the appeal of the deck will decrease. In this scenario, you could benefit from sanding and staining the deck. Make any necessary repairs needed to have your house stand out from the rest! Every house is a case by case situation. To help you maximize the return on your investment for your renovation, have a Realtor by your side!

5. Supply and demand.
Is it a sellers’ market or a buyer’s market? Whenever there are many homes for sale, it’s a buyer’s market because they have more to choose from and sellers are in competition with each other. However, the market is a sellers’ market when there are fewer homes up for sale. Home buyers are more so in competition with each other because the supply is low, leaving them with fewer options than they would have in a buyer’s market.

The supply and demand in Big Bear vary throughout the year. During the winter, it could slow down or you could be in the ideal time where buyers are trying to be in their new home before the winter holidays. You could be in the spring listing season when competition is high but so is the buying activity typically across the board. The best way to find out the cycle the market is currently in is to talk to your Realtor because it is their job to know the market for you.

When it comes to pricing your home correctly, many factors go into the overall process! Don’t let yourself become overwhelmed. Take each step as it comes rather than focusing on every part of the process at once.

Your local Big Bear Realtor will be able to help you through the selling process. Zillow reported, “Eighty-eight percent of sellers use an agent to sell their home and the majority (69 percent) of sellers who use an agent elect to bring them on board at the beginning of the process.”

The price of a Big Bear home for sale relies on the location, view, quality, real estate market, and timing.

The easiest step in the real estate process is to fall in love with a Big Bear home! A confusing part can be the real estate terms you will begin hearing. Appraisal, due diligence, earnest money deposit, and so forth might throw you for a loop. Don’t worry, this article will go into detail about the meaning behind important real estate terms.

By the time you start speaking to your Big Bear Realtor, you will be able to know everything he or she is saying without having to ask the meaning of a term. Understanding these upcoming terms will help you to feel more at ease while purchasing or selling your home. Of course, if you have hired a knowledgeable real estate agent in Big Bear, they are there to make the entire process as smooth as possible and will help explain anything you would like to know.

It is critical for your buying and selling needs to choose the right real estate agent who is friendly, helpful, and understanding when it comes to the Big Bear market. If you are wondering how to choose the perfect Realtor for you, there are a couple of suggestions I would like to make! Head over to our blog post that will go into more detail about choosing your Big Bear Realtor.

• Appraisal
An appraisal is the value of a home that was conducted by a professional appraiser. When a Big Bear home buyer or seller is about to start a real estate transaction with a loan involved, an appraisal on the property is a critical part of the process. It helps the buyer and seller understand the home’s worth and what is a fair amount to price the home at.

If a buyer is using a loan for the house, a lender will require a home appraisal to show them that they are not loaning out more money than what the home’s worth is.

By having the house appraised, it protects the lender from losing out on a lot of money, in case the borrower is unable to pay their mortgage and the house ends up going into foreclosure. According to the Appraisal Institute, a real estate appraiser needs to be licensed or certified in all 50 states and familiar with the town. Appraisers are impartial; it is illegal for them to give an amount based on a biased inspection.

If the appraisal is lower than the expected value, the transaction may be delayed, canceled, or the price may be renegotiated. While a formal written appraisal is necessary when there is a loan involved, a good Big Bear real estate agent can help you look at comps and understand the true value of the home you are buying or selling. If it is a cash deal, an appraisal is often unnecessary.

• Certificate of Title

A certificate of title is official documentation that names the owner or owners of a property. Typically, it is issued by the state, but it does not guarantee that the name on the certificate is the official owner but rather an opinion of title status. Included information is the owner’s name, address, and features of the property.

That may sound a lot like a deed to you, but there is a difference! In the certificate, there is information that is listed that is not in a deed.

• Closing Cost
At the end of a real estate transaction, some fees are to be paid by either the seller or buyer called the closing cost. When the title of a property is being transferred over, this is the time when the closing costs need to be paid. Every real estate situation is different, but a handful of possible closing costs could include an appraisal, application fee, property tax, Home Owner Association transfer fees, and homeowner’s insurance.

• Contingencies
A contingency is a clause or condition within a real estate contract that could break the contract if not met. It is an escape clause that can allow the buyer or seller to get out of the transaction without any loss. It is important that both parties understand the contingencies because the entire real estate transaction can be dependent on them.

For example, a buyer could ask for an appraisal contingency. It protects the buyer in case the appraisal says the house is worth less than the agreed upon amount. If the buyer is going through a mortgage lender, who will only finance the amount the house is appraised for then they can back out of the contract rather than having to come up with the remaining amount out of pocket.

• Due Diligence
The buyer has the right to have the property inspected to ensure that to answer any questions or concerns that they have before fully committing to their buying decision. During the diligence period, buyers can stop the transaction, if there are too many issues with the home. Some examples of what a buyer should go over are the insurance policy, HOA documents, title insurance, and having a thorough inspection of the property.

• Debt to Income Ratio
Mortgage lenders use your debt to income ratio to measure how much of a monthly payment the borrower is able to afford by calculating the recurring monthly debt by the buyer’s gross monthly income. All the monthly bills the buyer is paying towards their current debts will be subtracted from the income they make before taxes are taken out.

According to Investopedia, “For example, John pays $1,000 each month for his mortgage, $500 for his car loan and $500 for the rest of his debt each month, so his total recurring monthly debt equals $2,000 ($1,000 + $500 + $500). If John’s gross monthly income is $6,000, his DTI would be $2,000 ÷ $6,000 = 0.33, or 33.”

• Earnest Money Deposit
When the buyer is serious about buying a home, they can put down an earnest money deposit to show the seller that. The earnest money deposit is money that is put into escrow by the buyer and held as the buyer’s money until they sign off on all their contingencies. Once they have signed off on their contingencies, the earnest money deposit becomes the sellers, if the buyer fails to purchase the home for any reason. If the buyer completes the purchase, the funds are generally put towards the down payment. Depending on the situation, the buyer could receive or lose their money if the real estate transaction falls through.

• Escrow
In California, we use escrow companies, but in some states, they don’t. Escrow is an impartial third party that is hired to handle the transition of property, exchange of currency, and any documents that relate to those topics. Being “in escrow” happens after the seller and buyer have come to an agreement on the real estate contract. The listing agent then opens the escrow account, after all the documents have been signed by both parties.The instructions for escrow also needs to be signed by the seller and buyer.

During this process, the escrow officer checks that the home does not have any liens on the property by ordering a title report from a title company. If there are any liens on the house, it could cause the closing process to be stalled. At this point, the real estate transaction is still not set in stone.

The next step in this process is called closing of escrow, the escrow officer to audits all the files to double check that all the information is correct and the instructions have been followed accurately. Finally, it is time to close the escrow. The buyer and seller receive all their final paperwork to confirm the transaction. The buyer receives the keys while the seller collects the check.

Escrow is a very critical moment for every party involved. Your Realtor will be able to help you with any questions you may have about this process.

• FICO Score
A FICO score is used by a lender to assess the credit risk and determine where to approve the borrower for a loan. The Fair Isaac Corporation creates a person’s FICO score, which is a type of credit score. When creating a FICO score, five parts determine a score: payment history, the level of debt, types of credit the borrower uses, new credit accounts opened, and the length of credit history. A higher FICO score will get a borrower better rates and terms because they are less risky to the loan company. Typically, someone who has a good payment history in the past will have good payments habits in the future.

• Fiduciary Duties
Real estate agents or brokers have legal obligations that they have to perform while acting on behalf of their clients called fiduciary duties. They must protect their clients’ information and privacy. Any information the real estate agent or broker receives is confidential and must not be disclosed to anyone. Fiduciary cannot profit from the relationship than any other way that is disclosed with the beneficiary.

• HOA
HOA is an abbreviation of Homeowner’s Association. A homeowner’s association is an organization that enforces rules for homes within their jurisdiction. If a home buyer purchases a home that is in an HOA, they automatically are a member of the HOA. Not every property in Big Bear Lake is within a jurisdiction under a homeowner’s association.

There are monthly costs to be a member that are supposed to go towards keeping up areas within the HOA. Depending on the HOA, there can be strict restrictions on what is allowed when it comes to what you can do with your home. For example, there might be a certain color that you will not be allowed to paint your house. In Big Bear, there are some HOAs that do not allow vacation rentals. For instance, Eagle Point Estates, Eagles Knoll, and Papoose Bay Estates are three examples of HOAs that don’t allow vacation rentals in Big Bear.

• Loan to Value Ratio
When lenders are trying to figure out how much lending risk there is when loaning to a borrower, they use a loan to value ratio. A loan to value ratio is a risk assessment ratio that lenders examine before approving a borrower for a mortgage. Typically, if a borrower has a high LTV ratio, then they are considered a high risk. A lender is able to charge the borrower more for the loan if they are considered a high risk.

According to Investopedia, “The LTV ratio is calculated as the amount of the mortgage lien divided by the appraised value of the property, expressed as a percentage. For example, a borrower taking on a $92,500 mortgage to purchase a home appraised at $100,000 would have an LTV ratio of 92.50% (92,500/100,000).

The loan-to-value ratio is a critical component of mortgage underwriting, whether it be for the purpose of purchasing a residential property, refinancing a current mortgage into a new loan, or borrowing against accumulated equity within a property.”
Sometimes if there is less than 20% equity, a lender will require a borrower to get private mortgage insurance which pays out if the lender is forced to foreclose.

Mortgage
In a real estate transaction, hearing the term mortgage is very common! A mortgage is when a borrower is securing a loan, they can use their property or real estate as collateral. The lender agrees to loan the borrower money up front, letting them make payments over a set amount of time until it is paid back in full.

There is a risk for lenders that the borrower will not be able to pay in full, but they do have the right to take the property in foreclosure, forcing the owner to move out of the house. The bank would then sell the home to be able to pay off all the debt still owed on the property.

Now that you have a basic knowledge of real estate terms, it is time for you to go out and find your dream house! A Big Bear Realtor would be able to assist you with any other questions you may have on these terms and the search for your Big Bear home.