Unparalleled Trust Necessary Before Listing Your House

You and your family have decided to sell your house. It is now time to choose a real estate professional to help with the process. One of the major attributes this agent must possess is trustworthiness. To what degree do you need to trust them? You must have enough trust in them that you feel comfortable they will accomplish all four things below:

1. Sell possibly the largest asset your family owns

In many cases, a home is the largest asset a family has. Studies have shown that the equity many families have in their home is the largest percentage of that family’s overall wealth.

2. Set the correct market value on that asset

Pricing is crucial even in the best of markets. You want to get the best price for your home without putting your house at a value that buyers will have little interest in.

3. Set the time schedule for the liquidation of that asset

Your family probably has a certain timetable for the sale of your house and the move into your next home. Coordinating the home selling process to meet certain schedules can be tricky.

4. Set a fair fee for the services required to liquidate that asset

You will need to pay a commission to an agent for selling the home and coordinating all elements of the selling transaction, including possible future negotiations (ex. with a home inspector or appraiser). That’s a lot of trust. Make sure you pick a true professional to help with the sale of your home.

Source: Keeping Current Matters / The KCM Crew 052616

In a Seller’s Market: Is it Time to Downsize?

 

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their house in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market. In a recent blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it in order to put down payments on a smaller home in their current location, as well as a vacation/retirement home where they plan to live when they retire. This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’slatest Equity Report revealed that 72.6% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, meet with a real estate professional in your area who can help guide you through the process.

Source: Keeping Current Matters / The KCM Crew 051716

A ‘Buyer’ in the Hand is Worth Two in the Bush

 

In today’s highly competitive seller’s market where there are more buyers than there are listings for them to purchase, some sellers may feel like the ball is in their court. And they would be right when it comes to choosing which offer to accept, the closing date, or even which improvements the seller is willing to make to the home prior to selling. One thing to remember though is that there is always a line that shouldn’t be crossed. Interest rates could change, financing might not go through, the appraisal might not come back at the price that you have agreed to. These are all opportunities to work with your buyer to make sure that the sale still happens. You may think that because buyer demand is high right now, that you could choose to make your buyer jump through hoops. But what happens if they reach their limit and need to walk away? You’re starting over… weeks, maybe months later… and other buyers may wonder what’s wrong with the house that the deal fell through.

The Golden Rule

We were all taught from a young age to “treat others as you would like to be treated”.This shouldn’t change once you have a buyer who seems as though they would do anything to buy your home.

Source: Keeping Current Matters | The KCM Crew 05112016

Americans Rank Real Estate #1 Long Term Investment

The Gallup organization recently released a survey in which Americans were asked to rank what they considered to be the “best long term investment.” Real estate ranked number one, with 35% of those surveyed saying it was a better long term investment than stocks & mutual funds, gold, savings accounts or bonds. Here is the breakdown:

   

The survey revealed that real estate was the number one choice among each of the following groups:

• Men
• Women
• People between the ages of 18-29
• People between the ages of 30-49
• People between the ages of 50-64
• People 65 and older
• People with annual earnings of less than $30,000
• People with annual earnings between $30,000 and $74,999
• People with annual earnings of over $75,000
• People with a college degree
• People without a college degree

Even stock investors ranked real estate number one. According to the report:

“With housing prices showing a steadier path upward in recent months, even stock investors are about as likely…to choose real estate (37%) as stocks (32%) as the best long-term investment.”

Source: Keeping Current Matters / The KCM Crew 04042016

Buying A Brand New House? Keep these 7 Tips in Mind

Many homebuyers prefer to buy a newly built home over a pre-existing home. This is because newly built homes are typically built using more eco-friendly materials and energy-efficient systems, and are equipped with more up-to-date features. It’s perfectly reasonable to want a newly built home for these reasons; just be sure to use these seven tips to avoid making costly mistakes:

1. Avoid developments that haven’t been completed Many newly built homes are being sold in developments that aren’t finished yet. Buying a newly built home in a half-finished development is a gamble. What happens if the rest of the development is never completed? Then you’ll be stuck in an unfinished community with a house that may be unsellable. You may be able to obtain a better deal by buying a newly built house in a half-finished development, but be aware that you are taking a risk.

2. Don’t assume that your house will look like the model

If you are thinking about buying a newly built home, then you’ll typically be shown a model instead of the actual house you would be buying. Be aware that the model is decorated in a way to make it look more appealing. Model homes are also presented in a way to make them seem bigger than they are, often by removing the doors to make the house feel more spacious as well as using smaller-sized furniture to make the rooms look bigger.

3. Don’t go overboard with the upgrades You’ll be able to choose different upgrades for your home. One of the benefits of purchasing a newly built house is that it’s often customizable. For example, you may be able to upgrade the kitchen with higher-end appliances. It can be easy to lose sight of your budget when considering the upgrades that are available, so be careful.

4. Get a completion clause in your contract If the contract doesn’t have a completion clause, then you could end up waiting months or even years for the house to be finished — and you would still be contractually obligated to buy the house once it is completed. Have a completion clause inserted into your contract stating when the house will be finished, so that you can make sure it coincides with your schedule and your needs. In addition to having a completion clause, have a refund-of-deposit clause or a cancellation clause added so that you can walk away without losing a cent if the house isn’t completed on time.

5. Check out the neighborhood carefully If you are buying a newly built home, you may be able to choose the lot and location of the house before construction begins. Consider important factors like the views that your house will have. Will the house be built right next to another house, reducing the privacy and eliminating some of your view?

6. Speak with other homeowners If there are other newly built homes in the neighborhood that are already occupied, go speak to the owners. Ask them if they are happy with their home and their neighborhood. Ask about any drawbacks they may have experienced and whether they have any advice for you. They have nothing to gain by not being honest, which means you can get valuable information about the homes and the neighborhood by speaking to current owners.

7. Get a home inspection When it comes to existing homes, waiving a home inspection is practically unheard of. Nobody wants to risk buying a house that could potentially be in need of costly repairs. However, with newly built homes, many buyers make the mistake of thinking a home inspection isn’t necessary. If it’s new, then how could there be anything wrong with it? This line of thinking is a huge mistake and not worth the couple hundred dollars you would save from waiving a home inspection. In fact, you might even want to hire someone to inspect the house as it’s being built. This will allow you to identify poor construction as well as other potential problems that you might have to deal with when the house is completed. There are a lot of benefits to buying a newly built house instead of a pre-existing house. However, there are a number of pitfalls that you’ll want to avoid if you decide that a new house is what you want. Use these tips to make sure you don’t end up making a costly mistake.

Source: Ballen Network 04282016

One More Time… You Do Not Need 20% Down To Buy NOW

 

A survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less. Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO Scores

The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower. The average conventional loan closed in March had a credit score of 753, while FHA mortgages closed with a 685 score. The average across all loans closed in March was 722. The chart below shows the distribution of FICO Scores for loans approved in March.

 Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, sit down with a professional who can help you understand your true options.

Source: Keeping Current Matters / The KCM Crew / 04262016

If You Are Thinking of Selling, Now Is The Time

If you thought about selling your house this year, now may be the time to do it. The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned the concept of supply and demand: the best time to sell something is when supply of that item is low and demand for that item is high. That defines today’s real estate market. Jonathan Smoke, the Chief Economist of realtor.com, in a recent article revealed that:

“Would-be buyers face a dilemma: There will be more homes on the market over each week of the next three to four months, but there will also be even more prospective buyers. We are entering the busiest season of home buying with the lowest amount of inventory in three years. To be competitive, buyers should get pre-approved for a mortgage and be ready to act quickly if they find a home that meets their needs.”

Smoke goes on to say:

“Listings are growing as they normally do this time of the year, but because demand has been growing faster than supply, homes are selling faster. So the monthly trend is the normal seasonal pattern, but the year-over-year decline is reflective of demand being stronger than supply for more than a year, which is resulting in fewer homes available and faster-moving inventory.”

In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction including the inspection, appraisal and financing contingencies.

Bottom Line

As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas.

Source: Keeping Current Matters / The KCM Crew 04182016