National Association of Realtors Reporting Significant Increase in Sales in First Quarter
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We have all been waiting while watching the real estate market – especially during the rollercoaster ride that has resulted in some very low lows. But now, as we are in the midst of 2012’s second quarter the signs all point to an improving market. The National Association of Realtors is reporting home sales on the rise, home prices stable but lower than they have been in years and significant distressed properties on the market. All create a ripe environment for a great deal on a home creating an opportunity that many buyers are jumping to take advantage of before it gets too late.
Huge Jump In Home Sales in 2012
The NAR recently reported that home sales have reached the same level as they were during the first quarter of 2007. In the face of a changing real estate environment this is further indication of a strengthening market that highlights heightened consumer confidence with buyer power to match. The main reason for this spike in sales has been the phenomenal deals available to buyers right now. Combining the record-setting low interest rates with equally as unrivaled home prices, buyers are able to afford more home today than they have been able to purchase for years.
Great Deals Continue to Motivate Buyers
Almost a third of the sales reported in the first quarter of 2012 were of distressed sales. The reason buyers are attracted to bank owned or short sale properties is because they end up getting a fantastic deal on the home since banks want to quickly unload the property. Despite the misconception that these properties are rundown, they are actually often in good condition. Buyers are savvier than ever before and realize that this opportunity will likely turn around soon enough with interest rates and home prices beginning to rise in some markets. In some areas interest rates have dropped to as low as 3.6% for qualified buyers with good credit standing.
Home Prices Starting to Come Up In Some Markets
As predicted by analysts, some markets that were hard hit by the recession such as Phoenix are beginning to see higher increases in home values. Before this trend spreads to most other markets, buyers are getting off the fence and buying up the properties they might have otherwise waited a bit longer to purchase. Currently, as reported by the NAR, the national median list price has dropped to $158,100 – indicating a very opportune time to buy.
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If you have been considering purchasing a home – we invite you to contact us so that we can show you how today’s fast-improving market works in your favor. Through our extensive resources and tools, we will be able to guide you through and to the successful purchase of your dream home!
Three Essential Strategies When Selling Your Home
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Once you have made the decision to sell your home, the next step is to put it on the market and get the word out! Hopefully, the home will sell in record time. But if you are like many homeowners these days, the number of sellers still outweighs how many interested buyers are out there. So how can you stand apart? How can you be sure that your home is the one attracting the most attention in the neighborhood? And aside from that positive feedback from the buying community, what can you do to get the most out of your listing and be successful? Here are three absolutely vital aspects of selling a home – that if followed are sure to help you successfully achieve your selling goals:
Do Your Homework and Be Prepared
The single most important thing you can do before even taking the first step in selling your home is to hire the perfect agent. This is not a matter of just finding the next person you know that deals with real estate professionally. Hiring an agent is a process that should be done carefully and with much thought. Does he or she take an active marketing stance? Are they accessible? Do they have a strong, solid and proven track record? What do recent clients say about dealing with this agent and/or broker?
Understand what your competition is selling. By knowing and understanding the other options buyers looking in the same area have, you will gain a competitive edge and be able to adjust your home based on the others’ offerings. One example is the comparison between an older home versus new construction. Though the amenities and number of bedrooms, bathrooms and square footage may be the same – buyers might easily prefer new construction. Your preparedness will help you overcome challenges such as this example perhaps by compensating with incentives or making updates to your home.
Strengthen the Perceived Value of Your Home
Now, more than ever, buyers are savvy and they know what to expect. That is why when they see several properties in one area they are able to easily distinguish a good deal from a not-so-good one. By working to enhance the perceived value of your home you can stand to gain significant leverage over other sellers in the area. One of the best examples of this is a new home that offers a 13-month warranty to go along with the sale. Nothing provides more reassurance to buyers than to have the sellers stand by their product. And if the home does have any issues, buyers know that the warranty will cover those issues. The typical cost of a home warranty is not more than $350-$400 but it can cost less depending on the coverage chosen and company. Imagine the edge you will have when buyers see most major components of the home as well as little things covered by a warranty plan.
One of the most damaging things you can do to the potential sale of your property is to price it inaccurately. Though homeowners are free to price their home as they wish, once area comparable sales, appraisals and inspections, as well as buyers’ perceived value are taken into consideration, prices can change dramatically. It is important to know your competition, assess your property as compared to that competition and then price the home accordingly. Overpricing can clearly lead to lack of buyer interest while underpricing can backfire in more than one way; the seller would obviously get less money and also buyers could potentially be turned off thinking that something is wrong with the property.
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For a customized assessment of your home’s selling position and for an analysis of how much you can potentially sell your home for – contact us today!
Beware of the Companies That Will “Pay Cash For Your House”
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Imagine being in the midst of a terrible financial situation, behind on your mortgage, unable to pay your bills and considering selling your home before you really want to. Now imagine a shark sneaking up behind you and then snatching away your lifelong dream, putting you in a position you will likely never recover from.
Well, there are sharks out there that are trying to capitalize on the financial troubles of many families and homeowners in the nation. These are the ones that spend lots of advertising dollars on blaring billboards, audaciously claiming that they “ Will Buy Your Home For Cash” and “Close In 7-10 Days”.
Think about it. It sounds too good to be true, doesn’t it? It is. The single biggest risk of dealing with these companies, aside from the fact that you are exposing very personal details of your financial life to them, is that they will likely steal your equity.
Getting Pennies on the Dollar For Your Home
Consider this recent example: A woman I met a short time ago was behind on her mortgage payment and feared that her home would face foreclosure. Rather than approach a Realtor, she responded to one of these ads and almost found herself trapped. With years of experience dealing with these types of “investors”, we were able to go in and show her how big of a mistake that would have been. It turns out she had a significant amount of equity in her home. Had she proceeded to engage with this company that wanted to “help” her, she would easily have lost all if not most of the equity that she had built up over the years.
The most enticing thing to people in such situations is that they see an easy and quick out with the companies’ claim to close in seven to ten days. But if you take a closer look at some of the websites of these companies you will notice that they are a bit off. Here is an example of one site that comes up in the first few Google picks. You will notice right away that there are typos on the site – something that hardly signifies a quality, long-standing company.
A Better Way to Get Out of a Tough Situation
Rather than deal with these less than scrupulous companies and risk losing the hard earned equity on your home, visit your Realtor. He or she will walk you through your options and explore viable alternatives to giving up and getting out then losing out in the process. In the woman’s case above we suggested that she sell her home, pocket the equity of her home and move on. Rather than allow this alarming trend to continue, homeowners should educate themselves on the programs designed to really help them get out of the financial difficulty they are facing. Recent changes made by the government to PMI fees for homeowners that refinance allows property owners a chance to seize the opportunity of today’s lower interest rates while avoiding foreclosure.
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Remember, if something sounds too good to be true – especially when it comes to your home – it probably is. To find out where you stand and how you may be able to sell your home quickly but effectively, contact us today. We will help you determine exactly what you can get for your home, how long it might take to sell it and what you can expect if you choose otherwise.
What Would Warren Do?
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The news spread like wildfire. No, it’s not another politician’s sex scandal or the latest (definitely not greatest) gas prices. It is the monumental statement made by Warren Buffett that he would buy up “a couple hundred thousand” single-family homes. The catch is that he would do that if it were something he could practically manage. He may not be able to practically manage it but individuals certainly can.
Think about that. For months, if not more than that, countless Realtors have been urging their clients and potential clients that now is the perfect time to buy. Now that it comes from one of the biggest investors of our time, it brings new light to the subject for many investors and has generated widespread industry buzz from the moment the billionaire uttered those words.
In an interview where he discussed several topics, soon into the discussion with Becky Quick of CNBC’s Squawk Box, he said that in addition to equities, single-family homes are probably the most attractive investment there is out there right now. With the low rates that seem to be heading further down still, he suggests buying at these low interest rates and then for homeowners to refinance if and when the rates dips even more.
He cited that the only reason he has not purchased as many homes as he would have liked is because of the practicality of managing the transactions and properties. Apartment units might have been more manageable and in his words, he said he would “load up on them” had that been the case. But for the everyday investor it makes perfect sense to seize this opportunity and Warren Buffett highlights this repeatedly in his most recent discussion on CNBC.
Mr. Buffett shared his perspective on the idea of buying homes at distressed prices, fixing them up and renting them out as an ideal way to get a solid return on investment. Referring to the changing trends and attitudes within the housing market, he also said this is the perfect way to “short the dollar” because with a 30-year fixed rate mortgage it can go two ways; either the interest rate is too high down the line after which you can go and refinance or if it’s too low the other guy’s stuck with it for 30 years. Could this be the return of the house-flipping craze that we saw boom in the mid 2000s?
Mr. Buffett’s statement brings new light to something that so many agents and mortgage consultants have been saying all along. Buy now. At a time when stocks are just now rebounding after four years of inching their way back up, he says that consumers should acquire 30-year fixed rate mortgages and then refinance when rates go down further.
If homeowners can hold on to their property for a long time after purchasing it at the lowest rates the industry has to offer they are sitting on the best investment possible of our time. Of course equities are still very strong but they have come up quite a bit and Warren Buffett says owning a home is a “leveraged way of owning a very cheap asset”, making it quite possibly the most attractive investment that you can make.
HUD-Owned Homes Are One of Real Estate’s Best Kept Secrets
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For a few years now the real estate market has been heavily leaning on the buyers’ side with a lot more inventory than there have been buyers and unfortunately because of the economy we are going to see more of the same in 2012. But if you’re a buyer, this could not be a better time for you, especially with interest rates still as low as they have ever been!
HUD-Owned Properties Are Not Always Money Pits
The single biggest hang up that most homebuyers have about looking at HUD-owned homes is that they perceive the properties to be money pits waiting to happen. The truth is that there are a lot of properties in perfect or at least near-perfect condition. At best these properties require some rehabilitation but nothing that will cost too much or involve lengthy time-consuming projects. In fact, aside from a few cosmetic issues like paint, flooring or fixtures, HUD-homes most often have solid structure and very desirable amenities, floor plans and features.
Homeowners Can Manage Fix-Ups With the FHA 203k Home Reno Loan
There will be times that you will come across serious fixer-upper homes in this category however you will likely get the property at a steep discount and with the help of a 203k loan you can build in renovation costs into your mortgage. The best advantage of this is that you can customize the home to your needs, doing anything from installing a high-end kitchen and bathrooms to finishing your basement or even landscaping. One of the best features of this loan is that it also facilitates owners to live elsewhere for up to 6 months while rehabilitation takes place, keeping up mortgage payments in the interim. Add to that the fact that you will get the same low interest rate on your 203k loan and buying a HUD home makes even more sense!
When you consider the financial benefits of buying in today’s market and buying through HUD with the historically low interest rates available out there, it makes good sense to browse HUD homes. Most buyers receive deep discounts on their property – discounts that add up to thousands of dollars and many times even tens of thousands of dollars. When you factor in the low interest rates and as a result buyers being able to afford much more house for the same monthly payment amount, dealing with a few cosmetic concerns is well worth it.
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To begin your search for HUD homes, browse the official HUD search engine of all properties listed nationally, by state. Keep in mind that in order to bid on any of these homes you must go through a registered HUD broker as all real estate agents are not qualified to handle these transactions. Getting a great deal, sometimes as much as 40% below market value, is worth a little extra effort – so why not start your search today?
Is Now a Good Time to Buy?
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I get asked all the time whether or not now is a good time to buy. Honestly, now is a great time to buy. Never have I seen sellers more willing to negotiate than I do right now.
First of all, we have fantastic mortgage rates. These rates are at all time low. The average national interest rate is at 4.6% for a 30 year fixed rate loan while the 15 year rate is around 3.78%. Could we have imagined these kinds of interest rates just a few short years ago?
As an example, if you took out $300,000 loan for 30 years at a fixed rate of 4.6%, your payment would be around $1,537 per month. If you decide to wait another year hoping prices will go even lower and the rate rises to 5.7%, you would need home prices to fall another 12% to come in at same mortgage payment. That's more than double the price decline most are expecting to happen.
I truly do not believe that interest rates will be going much lower. In fact, most experts predict that they will be going back up to just under 6%.
I also don't foresee prices falling another 12%. If anything, prices are stabilizing. In many areas, prices are actually starting to inch upward again.
Mortgages for expensive homes will fall to $625K for a conforming loan very soon. Right now, lenders can do over $700K on a regular conforming loan without having to worry about getting into a non-conforming situation.
For buyers, there is also a lot less competition right now. It's the perception of many buyers that prices will fall lower, but most experts think there may be an additional 5% decrease at most in some markets.
In Connecticut, some areas are already seeing upward pricing trends. In other words, don't sit around waiting for the prices to adjust downward as well as the interest rates. They are so super good right now that it doesn't make sense to keep waiting it out in an already fantastic market.
For renters, new studies are showing that renting really isn't such a great deal right now. Demand for rentals over the last few years has increased because of the rise of foreclosures and less renters looking to buy. However, the supply has not kept up which means that rental prices have gone up. Why rent when you can buy a home and pay less each month?
Experts also believe that qualifying for a mortgage is likely to get harder instead of easier. As the mortgage market starts moving into the private market and away from Fannie Mae and Freddie Mac, many believe that tougher lending standards will be created.
As always, if you have real estate questions or want to get pre-approved for a mortgage, call or email me. I am also always happy to sit down with you and go through the whole buying process with you at any time.
Shop Around Until Interest Rates Drop when Buying a Home
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When you're in the market for a home, I'm here to help you find the best mortgage terms around. But I also want you to be a fully-informed consumer!
As you already know, buying a home may be the largest purchase of your life so you should go into it with eyes wide open! In this article, I'd like to provide you some proven and common-sense guidelines that can save you time, money and hassle during the mortgage-hunting process.
Guideline 1: Look Beneath the Surface of the Interest Rate!
If you're like most prospective home buyers, you call lenders or use the Internet to shop for the best interest rates. That's a good first step, no doubt about it! But, the mistake many buyers make is that they stop there and don't consider the fees that may be added on to the loan later by the cheapest lender.
Guideline 2: Chose the Type of Lender That Works Best for You!
There are several different sources of lenders - banks, credit unions, mortgage brokers, etc. They all have their advantages and disadvantages in terms of the rates and services they can offer you. For example, credit unions often provide the best value and service, but, of course, you have to belong to one in order to receive their services.
Regular banks and "big lenders" (Bank of America, Citigroup, etc.) also provide competitive rates and services. Of course, they only offer products their companies provide. You can also use a mortgage broker. This person is a "wholesaler" who uses several lenders to give service to their customers. The advantage of a broker is that he or she offers a greater selection of rates and products. However, they also tend to be more expensive than regular banks and big lenders.
Brokers make money in two ways. One is origination fees ("yield spread" or "rebate"). Essentially, the origination fee is a commission paid by the bank to the brokers to encourage them to use their firm. The second way is by selling a higher interest rate to you. This means there's room for you to negotiate that interest rate down!
When a broker quotes you an interest rate, ask him or her to tell you what the origination fee, rebate or yield spread on that rate is. For a broker, a reasonable amount would be a total of 1% of the loan amount from yield spread, origination or combination of the two. Most brokers usually want to make at least 2%.
Tip: Don't pay an origination fee unless the broker informs you that he or she isn't getting anything on the back end of the deal.
The bottom line: you can (and should) shop among all these lenders to find the lowest rate. It can save you thousands of dollars over the life of the mortgage.
Guideline 3: Review the Good Faith Estimate with an Eagle Eye!
Most lenders provide complete and straight-forward information on these forms; however, there's no reason for you to accept the GFE at face value. Comb through the information and if you don't understand a particular item or fee, ask for an explanation. If you still don't understand them, you may want a lawyer to review them for you so you have complete understanding.
Remember: A GFE is only an estimate. Changes may occur through no fault of the lender. A reputable lender will let you know if fees are going up substantially. In general, however, if those fees go up by more than approximately 16%, then a red flag should go up in your mind.
Guideline 4: Negotiate, Negotiate, Negotiate!
When confronted with the expertise and "prestige" of banks, we all have a tendency to think they know best, and we should, therefore, agree to their terms. Never think this way! Banks are like any business; you can and should negotiate with them!
Want more information on banks and other lenders? Contact me today!
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