Why you Should buy Your Home Now and not wait until Spring!

Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying:

Supply is Shrinking:

With inventory declining finding a home of your dreams may become more difficult going forward. There are buyers surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy!

Price Increases are on the Horizon:

Prices are projected to appreciate by over 25% from now to 2018. First home buyers will probably pay more both in price and interest rate if they wait until the spring. Even if you are a move-up buyer, it will wind-up costing you more in net dollars as the home you will buy will appreciate at approximately the same rate as the house you are in now.

Owning a Home helps Create Family Wealth:

Whether you are rent or you own the home you are living in, you are paying a mortgage. Either you are paying your mortgage or your landlord’s. The Fed, in a recent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.

Interest Rates are Projected to Rise:

The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will be over 5% by the end of 2014. That is an increase of almost one full point over current rates.

Buy Low, Sell High:

We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’ compared to where it will be next year. It’s time to buy.

 

Should You List Your Home During the Holidays?

With the holidays approaching, sellers often wonder if they should keep their properties on the market or take them off. Or if they haven’t listed their homes yet, should they wait until after the first of the year? Maybe hold off until spring?

Conventional wisdom used to be that you shouldn’t even try to sell your home during the busy holiday season. Potential home buyers were too preoccupied with attending parties, cooking meals, buying presents or planning vacations.  With all that going on, there just wasn’t time to ride around with a real estate agent, looking at properties.

But with the Internet, smartphones, tablets and our always-on lifestyle, that conventional wisdom isn’t relevant any more. The reality is, the home buying season is now year-round.
Here’s why you should consider listing your home during the holidays, or even in January!

Today’s buyers never stop looking online

Today, serious buyers are always looking — and the holidays are no exception. They may check out the latest listings in a Zillow Mobile app before bed or while waiting for the kids’ school holiday show to start.
Our hectic lifestyles also play a role. Many serious buyers today work hard. They don’t shift into holiday mode until the last minute. Even during the holiday break, they’re still squeezing in work. There’s no such thing for them as “going off the grid.” So why not continue to monitor real estate listings, too?

The inventory — and the competition — is usually lighter

Despite our always-on lifestyles, many sellers still believe buyers can’t be bothered to look for a home between, say, Thanksgiving and Valentine’s Day. At the same time, sellers who’ve had their homes on the market often take them off during the holidays.

The net effect is that the inventory for good homes often tightens this time of year. So there’s less competition for sellers, at a time when motivated buyers are out there looking — and no doubt wishing there were more properties to see.

If you’ve been considering selling, are motivated, are flexible on timing and have a home that truly sparkles, consider listing right after Thanksgiving. There’s still a window of several weeks to get buyers into your home before the end of the year. And those buyers flipping through listings at their kids’ basketball game will be excited to see something new and awesome hit the market — especially if there’s a lack of good inventory in their area. These buyers will be motivated to see your home, regardless of what the calendar says.

Home not selling? Now’s the time to lower the price or change your strategy

If your property has been on the market for months, most buyers and their agents will see it as stale or overpriced and disregard it no matter how great it is or how light the competition is.

In that case, it’s time to take action, and the year-end holidays can be a great opportunity to shift course. Dramatically reducing the price or overcoming some major obstacle that’s been preventing the sale might be what’s needed to sell your home. If you received lower offers early on but weren’t ready to accept them, or you keep hearing there are issues with how your property shows, this is a good time to show the market you’re listening and are serious about selling. The motivated buyers, desperate for good inventory, will notice you and take a look.

You might even get a sale closed before the end of the year. Before you make any big changes, talk it over with your real estate agent, as always.
  
Don’t want to be bothered during the holidays? List in January

Admittedly, the thought of keeping the house clean, holding open houses and vacating to accommodate last-minute showings during the holidays is a deal killer for some would-be sellers.

If so, consider listing your property after New Year’s Day. Traditionally, not much inventory comes onto the market in January. It’s cold in most places, the leaves are off the trees and landscaping is dead. Many sellers wait until the spring instead, a more conventional time to sell.

January inventory is still very tight. And yet, each January, buyers call up agents, wanting to get into the market. Often, new buyers — with their fresh New Year's Resolutions to stop wasting money on rent and buy a home — are ready to jump into the market as soon as possible. Some buyers are motivated to search for a home in January because of year-end tax planning.

Whatever the buyers’ motivation, for sellers it means one thing: Demand for homes can increase at a time when inventory is traditionally low. And that means if you’re ready to sell, you’ll have an even more “captive” audience during the holidays, all the way through January.

You can make that New Year's Resolution as well as a seller and get your home on the market!!
  

First Time Home Buyers #3

First Time Home Buyers

Making an Offer

You’ve found a home that meets your wants, needs and budget. It’s time to make an offer.

The offer is a legally binding commitment stating that you will buy the property for an agreed-upon price provided certain terms and conditions are met. An accepted Offer to Purchase Real Estate must be in writing and signed by both parties.

 

Considerations for the Offer

When you prepare your offer, consider the following points:

• What is the age and condition of the home?
• Are any repairs needed? What will they cost? Are the sellers willing to share any of the expense?
• How long has the property been on the market?
• How active is the market (i.e., buyer’s or seller’s market)?
• Are the sellers anxious to sell?
• Is the property in a particularly desirable location or school system?
• Does the home meet many, most or all of the items on your wish list?

 

Preparing the Offer

The offer should clearly outline all terms and conditions of the sale, including:

• Your name and the name and that of the seller
• The property's address
• Any special provisions regarding fixtures, appliances, etc.
• The purchase price being offered (including the deposit put down to bind the offer and the deposit to be paid upon the execution of the Purchase and Sale Agreement)
• Any additional riders and deadline dates
• Any contingencies to which the offer is subject (e.g., pest inspection, securing financing)

Timing and deadlines are very important in real estate transactions. Allow yourself enough time in your offer to get an inspection, negotiate the Purchase and Sale Agreement, apply for and obtain mortgage financing, and set a closing date. Real estate deals often fail based on the inability to meet deadlines.
The seller may accept, reject or counter your offer. If there is a counter-offer, you may in turn accept, reject or counter that. Remember that regardless of the progress of your negotiations, the house remains on the market during negotiations.

Does a First Time Home Buyer Need an Attorney?

It is recommended that you retain an attorney when purchasing your first home. An attorney will protect your interests and will

• Help you prepare the offer
• Help negotiate the sale price and conditions of the sale
• Draft and/or revise the Purchase and Sale Agreement to protect you and your money
• Assist you with the mortgage process
• Prepare you for the final walk-through of the property
• Attend the closing and represent your interests

The Purchase and Sale Agreement

Once your offer has been accepted, a Purchase and Sales agreement is drawn up by the broker. It is likely the second contract between buyer and seller, and spells out the agreement in specific detail. This is a legally binding contract that should be reviewed by your attorney before you sign it.


Adding Provisions and Contingencies:

You can provide protections for you and your money by including provisions and contingencies in your offer. The Purchase and Sale Agreement should include a mortgage contingency clause, stating that your ability to buy the house is contingent upon your obtaining financing by an agreed-upon date. Such a clause ensures that you do not lose your deposit on the house if your loan is not approved.
Other contingencies should include acceptable home, pest, radon and lead paint inspections. The loan closing date and occupancy date should also be indicated in the agreement.

Though not required by law, a satisfactory home inspection is a major part of buying a home. The inspection examines the condition of the property and identifies necessary repairs and potential problems before you buy the home. The inspection generally costs a few hundred dollars, and is paid for by the buyer.

• More Tips for First Time Home Buyers to come!

First Time Home Buyers #2

Finding an Affordable Property!

 

As a First Time Home Buyer, once you've determined your price range, it's time to start looking at houses. But where should you look, what can you expect to find? While no property will have everything you want, the home you purchase should meet as many of your expectations as possible.

You've probably made a mental list of expectations for a new home. Get that list on paper. Consider the home's interior, amenities and size, as well as location and lifestyle, commuting distance and community, schools services. Whatever you jot down, the list should be a reflection of you.

After you make it, take the time to review and update your list throughout the entire home buying process. The more items on your list that your new home has, the happier you'll be when you're living in it.

What are my options?

Before you can find the right house, you need to decide what type of home you want. There are a number of housing types to choose from, including:

• Single-Family
• Condominium
• Multifamily
• Fixer-Upper

Consider discussing your options with a real estate professional.  Get the pros and cons of each option and consider what you are willing to live with.

Location, Location, Location

Here are some things to consider when choosing a location:

• How far are you willing to commute to work?
• How accessible is the home to highways or public transportation?
• How close are shopping, churches, day care facilities and recreation areas?
• What is the quality of the public schools?

Again, prioritize the attributes that are most important to you. Would you trade a larger yard for highway access, public transportation for shopping and restaurants, a shorter commute for better public schools? With your list in hand, you'll be better equipped to find towns that suit your desired lifestyle.

Finding the Right Home

Conducting the search yourself is certainly manageable, but a fair bit of organization is required. First identify towns that fit your needs, and then seek out homes in those towns. Arrange appointments to view homes for sale, or find open houses you can attend.

There are a number of resources that will help you find the right house for you:

• Getting on the internet and looking up each towns website will tell a bit more about what the town is like
• Driving around and looking at what the town has to offer such as waterfront, shopping, highway access
• Talk to your Real Estate Professional, they will be very knowledgeable about the local area and when given a list of your criteria can make suggestions as to which town would likely suit you best

Open House Advice

Attending open houses is serious business. Don't underestimate the exhaustion factor. It's not just a matter of being physically tired: after a while, the houses start to look the same. Therefore, keep in mind the following:

• Bring a notepad and map so you can mark each home's location and note its special features
• Pick up a listing sheet whenever one is available. After a day of open houses, you may find that a home has more appeal than you initially thought
• Pace yourself. Visit too many homes without a break and you'll start missing details
• If you are going to look at a lot of houses, take big breaks. See three homes in the morning, then stop and have lunch then see three more.
• Make a rough sketch of the floor plans of the homes you are considering
• Remember, there are no foolish questions. Ask away!

You want to know everything you can about each property. Often, one question about pipes, heating or cooling systems, taxes, or recent repairs will lead to other questions. You may find areas of concern about a specific property that looked trouble-free. It's far better to know about a home's problems before you buy than it is to discover them once you own the property.


Next week we will discuss how a First Time Home Buyer should go about making an offer on a house!

First Time Home Buyers

What do First Time Home Buyers need to know?

 

What can I afford?

First things first: it's time to review your financial picture, consider the expenses involved in owning property, and determine your budget. Can you afford to buy a home? Let's find out.

Am I Ready?

All first time home buyers should take a hard look at their personal finances.
Get a better grasp of your financial situation by using this  income worksheet.

The Costs of Home ownership:

As a renter, you do not have to pay for a variety of regular and as-needed expenses that are the responsibility of the landlord. When you buy a home, you take on these costs as well. Some fees are part of your monthly mortgage payment while others are not. Among the costs shouldered by homeowners but not by renters:

• Property taxes and special assessments
• Home/hazard insurance
• Property maintenance
• Association and membership fees (for condominiums, townhomes and some developments)

 

Credit and Credit Histories:

Your credit history—how you’ve borrowed and repaid money in the past—plays a big role in your ability to purchase a home. It’s one factor used to determine your credit score, generally called a FICO score. FICO scores range from 300 to 850, and lenders believe that borrowers with higher scores are more likely to repay their loan.

First Time Home Buyers should obtain a copy of their credit report by contacting the Consumer Credit Counseling Service at 617.426.6644 .

Down payments

The down payment, the initial payment made when buying a home, will impact your ability to get a mortgage as well as the loan’s interest rate and terms. Lenders view buyers who contribute their own funds to the purchase of a home as a better overall credit risk.

If you're making a down payment of less than 20% of a home’s price, you’ll also get mortgage insurance, which banks require in exchange for the larger loan. MassHousing mortgage insurance includes MI Plus, a unique borrower protection that covers principal and interest payments if you lose your job.


It's always a good idea to speak to a professional before starting your home buying process.
You can contact me anytime with any questions at billyd@kw.com

This is just the beginning of the process, more First Time Home Buyer advice to come!

FSBO's Must Be Ready to Negotiate

In a recovering market, some sellers might be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional. The real estate agent is a trained and experienced negotiator. In most cases, the seller is not. The seller must realize the ability to negotiate will determine whether they get the best deal for themselves and their family.

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to sell on their own:

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies which work for the buyer and will almost always find some problems with the house.
• The termite company if there are challenges
• The buyer’s lender if the structure of the mortgage requires the sellers’ participation
• The appraiser if there is a question of value
• The title company if there are challenges with certificates of occupancy (CO) or other permits
• The town or municipality if you need to get the Cos permits mentioned above
• The buyer’s buyer in case there are challenges on the house your buyer is selling.
• Your bank in the case of a short sale

In Short, It's never a good idea to go it alone.  Hire a professional if you want to get the best possible deal on your home!

What are buyers willing to do for the House they want?

The Housing Market is picking up, however the inventory is still low!
If you have been thinking of selling your house this is the perfect time. 
You may just have the upper hand in the negotiation process!

Here is a look at what some buyers are willing to do when they find their perfect home

• 25% of buyers are willing to pay 1-5% OVER asking price
• 9% of buyers are willing to pay 6-10% OVER asking price
• 4% of buyers are willing to pay 10+% OVER asking price

Other things buyers are willing to do:

• 25% will pay the sellers closing costs
• 17% write a personal letter to the seller
• 8% are willing to remove all contingencies
• 12% are willing to ask family & friends to borrow money so they can have 20% down payment
• 5% are willing to ask family & friends to borrow money so they can offer a full cash payment

New FHA Program Seeks to Give Borrowers Back their Buying Power

It’s no surprise that over the last several years a lot of people have experienced financial problems due to the economic downturn. Now that consumer confidence and employment opportunities have returned (respectively), traditional buyers are looking for ways to get back in the home buying game. 

 Now there is “The Back to Work Extenuating Circumstances Program,” and is designed to allow people who experienced a “Negative Credit Event” like a short sale, foreclosure or bankruptcy during the housing crisis to purchase a home.  Typically these people would have experienced an extended delay of anywhere between two and seven years before they could purchase a home. Through this program, they have an opportunity to get back in within as little as 12 months. The program is going to remain in effect for any applications that have a case number through September of 2016.

In order to be eligible for this program, applicants are going to need to prove four things.

• First, they need to prove that they’re income declined by 20 percent or more for a six month period and that those circumstances were the result of a negative credit event.
• Second, they’ll need to be able to provide documentation if the negative credit event qualifies under the “Job lost beyond applicant’s control” category. This might include publicly available information on a reduction in workforce or that a company closed. Applicants can also look to see if they had unemployment compensation.
• Next, they have to prove that, over the course of the last twelve months, they haven’t had any credit hiccups like a late installment or any new collections or judgments.
• They also have to have a clean credit record for the last 12 months. So, they’ll need to show that they’ve had a positive rental history or that if they’re living with their parents they haven’t had any other credit issues.
• The last criteria is that applicants will have to go through Housing Counseling with an approved counselor no later than six months from the application date and no sooner than 30 days from the application date.
  
  
  Another bonus is that this is an FHA program. So not only does somebody have the ability to get back in after a 12 month delay, they have the ability to do so with a 3.5 percent down payment if they still qualify for that loan type.
  
  
  

  “You may not have thought that you could purchase a home today. But I’m here to tell you that many of you can. Call me for information on the new ‘Back to Work Program’ from HUD so we can try to put you in a position to buy.”

5 Reasons to Hire a Real Estate Professional

The real estate market is a place where most people will make their largest investment ever. It is a place where fortunes can be, and often are, made.  It is not a place, however, for you to
“wing it”.

 

While the myriad TV shows about real estate make the process look so simple – it’s not really that simple… they make it seem like all you need to do is slap a for sale by owner sign in the yard, have one open house with fresh flowers and fresh baked cookies and bam! SOLD! in one day.  On average in Massachusetts it takes roughly 100 days to sell your home (That is just an estimate, some may take less and some longer).

You need a professional, full time, well educated, ethical and trustworthy REALTOR to represent you whether buying or selling real estate.

* There are about 180 typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided by  full service real estate brokerages in return for their sales commission. (Based on a report prepared by the Orlando Regional REALTORS Association).  So this means that if you choose to go it on your own, you are going to have to do all these things yourself… or they don’t get done… which probably means your transaction doesn’t end in a successful purchase/sale.

* While there will always be that one guy (or gal) who thinks he (she) is the all-time greatest negotiator, the vast majority of folks do not like confrontational interactions.  A negotiation for the purchase/sale of an asset as large as a piece of real estate can be a very confrontational interaction. The role of the REALTOR is to act as a buffer between the two parties who are in the midst of a very emotional and high-level financial transaction, both wanting to get the best they can get often at the detriment of the other party. A real estate professional is experienced in all aspects of the negotiation and is bound legally to do only what is in the best interest of his/her client. 

*  Perhaps the single most important aspect of the transaction is the value of the piece of property.
If you are a seller you want to know how much you can expect to get for the sales price and how much of that you will walk away with in your pocket. You want to advertise the property for sale at the right price so you sell for as much as possible but you don’t want to price it so high that no buyers make you an offer (and YES if you price it too high MOST buyers will not want to offend you by making a low offer…thus you don’t get any offers).
If you are the buyer, you want to know how much to offer. Now multiple offer situations are happening more frequently and if a buyer offers too low, they can either be rejected completely by the seller or they can cause the negotiation to take too long thus allowing time for a competing bid to come in… allowing the seller to be in the driver’s seat.

*  Any good professional, whether a real estate professional, doctor, lawyer, CPA, etc., will have the heart of a teacher. Real estate brokerage is a service business. The professional REALTOR is there to educate you about the conditions impacting today’s real estate market.  It is as easy as picking up the newspaper or searching the Internet for real estate news to see conflicting headline after conflicting headline. “Prices are up 20%”, “Among worst markets in nation”, “Best year since the crash”…well which is it? All real estate is local and your real estate professional will know the local market conditions and will lead you through the process, like any good teacher would, making sure you understand all that is going on around you.

A real estate professional is a crucial member of your team when buying or selling real estate.

You could be buying your first home or your tenth home, an investment property or a vacation home, commercial or residential…whichever it is you are best served in the care of a full time, well educated, ethical, trustworthy real estate professional.

Why it's a Great Idea to Buy or Sell before the end of 2013!!

The Fed's just announced last week that they will not be winding down their bond buying program right now.  What does that mean for you?

The Fed’s purchase of these bonds over the last few years has driven mortgage rates to historic lows. The assumption that there would be a reduction in bond purchases has caused 30 year mortgage rates to spike upward over the last few months.

       

"The Fed could have caused rates to shoot up this week if it had announced the tapering of its bond-purchasing program.   For now, borrowers have dodged another spike in rates. The Fed's announcement might even cause rates to drop in coming days, says Paul Edelstein, director of financial economics at IHS Global Insight.
‘Mortgage rates should fall back -- not massively, but to some extent,’ he says.
That doesn't mean homebuyers and homeowners should wait for lower rates, mortgage professionals say.
Eventually, once the Fed lets the mortgage market and the economy start walking on their own, rates will probably head back to the 5 percent or 6 percent range, says Scott Schang, manager for Broadview Mortgage Katella in Orange, Calif." (Bankrate.com)

Federal Reserve policy makers decided this week that the economy isn't in the right place for them to start winding down their bond-buying program.  By the time they meet in December, it might be.

Don't wait until the Fed's make the announcement that they will wind down their bond-buying program, by then it will be too late!!


Another Great Reason to Sell now, especially if you are upside down in your mortgage!

On January 1, 2013, Congress passed an extension of the Mortgage Debt Relief Act.
This was set to expire on December 31, 2012, however their extension could be very helpful to you.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.  It's a good opportunity to walk away from a home you can no longer afford.  There are many reasons for this.  If you want to know if you qualify just contact your local realtor for more information.

So Many Great Reasons to Buy a Home!

Here are just a few of the reasons why American Family's are still buying homes!

There are many opinions voiced by real estate gurus as to why the dream of home ownership is so important to most Americans. However, study after study reveals the same five reasons families decide to buy a home. They…

 

1. Want a good place to raise children
2. Want a place where their family feels safe
3. Want more living space
4. Want control of that living space
5. Realize that owning makes better financial sense than does renting

 

If you are considering purchasing a home, look at the five reasons mentioned above. If any of them apply to you and your family, perhaps it is time for you to take the plunge. With both prices and interest rates rising, waiting will only increase your monthly cost.

How has the cost of buying a house changed in the last few years?

The cost of a home is determined mainly by two components: price and mortgage rate.
How has the price of a home purchase changed over the last twelve months?  How might it change over the next twelve months?

LAST YEAR

The median priced home in the country was selling for $187,800. The 30-year fixed mortgage rate was at 3.5%. Here is what it would cost to buy a home last year:

TODAY

The median priced home in the country is selling for $213,500. The 30-year fixed mortgage rate is at 4.5%. Here is what it would cost a purchaser to buy a home today:



The monthly cost increased by: $190.78!

 

Next Year's Projections: 

Projecting into the future in real estate can be rather tricky. Future pricing was based on a survey taken by 100 housing experts (Home Price Expectation Survey) who called for an approximate appreciation rate of 5% over the next twelve months. The interest rate is based on the projections from the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae.
Here is what these experts project will be the approximate cost of a home a year from now:



The monthly cost will increase by about: $97.32!

Bottom Line

From a financial perspective, why wait if you are thinking about buying?

How Housing is helping to Rebuild the Economy

Housing drives the economy in three ways:

Demand for Housing Will Drive Employment

Increased demand for housing will help stimulate new single-family and multifamily construction and boost home sales. We expect starts to hover just below one million over the second half of the year. This also helps other industries such as appliances, services, and furnishings.


Rising Prices = Increased Family Wealth = Increased Spending  

With housing being the biggest asset of most American households, rising house prices directly affect the balance sheet of homeowners. Home equity is the largest component of net wealth for many families. As wealth rises, households generally increase their consumption spending. They may even tap into their equity through a home-equity loan, using the proceeds for either consumption or investment spending. Some evidence that home equity lending has picked up was found in Freddie Mac’s Refinance Report for the second quarter, which saw $9.5 billion in home-equity cashed-out as part of a refinance, up from a year ago.   

Small Business Development is Funded through Home Equity 

Rising house prices will help the economic recovery by spurring small business formation, as a business owner’s home often serves as collateral for a start-up. 


As you can see from the graph, Massachusetts comes in fourth in the country for strong economic growth directly related to home sales. 
 



*Housing’s contribution to the economy, while muted in recent years, remains strong. What’s more, housing’s role in the economy will only expand as modest price growth and stronger sales volume boost agent incomes, new construction puts more workers back to work with expanding incomes, and stronger sales and rising prices result in robust follow-on spending.

Real Estate’s New Reality

The real estate industry has been going through a major transition for a number of years, yet many agents haven’t adjusted to these changes.   Not long ago, real estate agents were in the business of providing information.  The only value we thought we had was giving information, such as what’s for sale, what’s on the market, what’s the price of similar homes etc.   Back then, to protect our value, we locked away this information in MLS, and if you were in the business long enough, you may even remember the blue book of MLS!  This is how real estate has been done for over a hundred years!

            This is not how real estate is done now.  The information you used to be hired for, the information people turned to you for, is all over the Internet.  Anyone can access it.  Anyone can use it. 

            How does this change redefine the role of the real estate agent?  There is a large gap between information and the use of the information to get the best outcome.  Let’s take for instance a CMA, which essentially tells a consumer what houses used to sell for and are currently selling for now.  Can’t you just look up that information yourself online? However what good is that information without the ability to analyze what that information really means? 

The agents who don’t evolve into what the consumer now demands will not survive!

            Clients no longer need us for information regarding which homes are for sale.  They really want us to

·      Analyze the available information

·      Connect the dots and let them know if now is a good time to buy or the right time to sell

·      Take the time to explain their options – simply and effectively. 

           

People are yearning for expert advice. 

            An expert doesn’t mean you are going to give perfect advice, but you will give excellent advice.   You can’t give buyers or sellers perfect advice because you can’t know the future.  You can give excellent advice based on the information and situation at hand, guide them through the process and help them make the necessary changes along the way.

Give Excellent Advice

            In order to give excellent advice you need to make sure your knowledge inspire confidence and certainty and that your knowledge takes away the clients concerns.

Ask yourself these two questions, do I know what is truly happening in the market and do I know why it’s happening? You not only have to analyze the information well enough to understand it yourself, you also have to understand it so well that you can simply and effectively communicate it to buyers and sellers.  You shouldn’t be trying to convince someone to do something (that’s what salespeople do); instead, you should be helping them discover what their options are, explaining the pros and cons of each of those options, and then letting them make the decision that is best for them and their families. 

Technology Today

            Go Mobile.  The best times to educate the consumers are during the informal times such as a children’s athletic event, the supermarket or any other chance meeting.  The information that consumers want; how’s the market, should I wait to sell my house or is now the right time to buy?  Having that information on hand, such as on your smartphone or tablet and pull out graphs and charts and other visual information that helps explain what you want that person to understand.   The key to doing a better job at these pre-appointment appointments is becoming mobile with your real estate information and tools. 

For most families, buying or selling a home is the most important personal decision and possibly the largest financial decision they’ll ever make.  They are looking for a true professional to help them through this process.  Make sure they get one when you walk into their lives.

5 Demands to Make on Your Real Estate Agent

Are you thinking of selling your home? 
Are you dreading having to deal with strangers walking through the house? 
Are you concerned about getting the paperwork correct? 

Hiring a professional real estate agent can take away most of the challenges of selling. A great agent is always worth more than the commission they charge just like a great doctor or great accountant. You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish the average agent from the great one.

1. Tell us the truth about the price

Too many agents just take the listing at any price and then try to the ‘work the seller’ for a price correction later. Demand that the agent prove to you that they have a belief in the price they are suggesting. Make them show you their plan to sell the house at that price – TWICE! Every house in today’s market must be sold two times – first to a buyer and then to the bank.

The second sale may be more difficult than the first. The residential appraisal process has gotten tougher. It has become more difficult to get the banks to agree on the contract price. A red flag should be raised if your agent is not discussing this with you at the time of the listing.

2. Understand the timetable with which my family is dealing

You will be moving your family to a new home. Whether the move revolves around the start of a new school year or the start of a new job, you will be trying to put the move to a plan. This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. I am not suggesting that your agent can pick the exact date for your move. You just want the agent to exert any influence they can.

3. Remove as many of the challenges as possible

It is imperative that your agent know how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.

 Remember: If you have an agent who was weak negotiating with you on the parts of the listing contract that were most important to them (commission, length, etc.), don’t expect them to turn into Superman when they are negotiating for you with your buyer.

4. Help with the relocation

If you haven’t yet picked your new home, make sure the agent is capable and willing to help you. The coordination of the move is crucial. You don’t want to be without a roof over your head the night of the closing. Likewise, you don’t want to end up paying two housing expenses (whether it is rent or mortgage). You should, in most cases, be able to close on your current home and immediately move into your new residence.

5. Get the house SOLD!

There is a reason you are putting yourself and your family through the process of moving. You are moving on with your life in some way. The reason is important or you wouldn’t be dealing with the headaches and challenges that come along with selling. Do not allow your agent to forget these motivations. Constantly remind them that selling the house is why you hired them. Make sure that they don’t worry about your feelings more than they worry about your family. If they discover something needs to be done to attain your goal (i.e. price correction, repair, removing clutter), insist they have the courage to inform you.

Good agents know how to deliver good news. Great agents know how to deliver tough news. In today’s market, YOU NEED A GREAT AGENT!

Selling a House? Don’t Overprice It!!!

Don't get carried away
seeing Dollar Signs!!

There is no doubt that the housing market is coming back nicely. What, if anything, could slow down the current momentum? We believe it may be sellers’ over exuberance when it comes to pricing. There is little doubt that house prices have appreciated over the last twelve months in most regions of the country. However, with both the inventory of homes for sale and interest rates increasing, we have to be careful to not over judge what the market can bare.



Trulia just reported that asking prices have jumped dramatically and the increase is accelerating:

• Year-Over-Year prices jumped 10.7%
• Quarter-Over-Quarter prices jumped 4.1% (16.4% annualized)
• Month-Over-Month prices jumped 1.5% (18% annualized)

No expert is expecting home prices to shoot up 18% in the next twelve months. If anything, price appreciation may slow as rates and inventories increase. Investors will begin to slow their purchases and the first-time buyers expected to take their place will be working within a pre-set budget in many cases.

Buyers’ Purchasing Power

Let’s look at an example: A young couple is looking for a home and have predetermined that their budget will only allow them to spend $1,000 a month on a mortgage. At today’s mortgage rate of 4.5%, they could afford a $200,000 mortgage ($1,013 principal & interest). However, if rates jump to 5%, they would have to lower their mortgage amount to $190,000 in order to keep their monthly payment where they need it ($1,020). At 5.5%, the mortgage would need to be no more than $180,000 ($1,022).

The Impact on Prices

This decrease in buyers’ purchasing power will have an impact on home values going forward. We do not believe it will cause a decrease in prices. However, we do believe it will likely cause current rates of appreciation to slow.

If you are thinking about selling your home, don’t get carried away with current headlines about home price increases that have taken place over the last twelve months.  
Instead, call a local real estate professional. They will be best prepared to explain where prices are headed over the next six months.

Buying is Still Cheaper than Renting!

My last blog was about how the interest rate is rising and how it could be costing the potential home buyer more money to wait to purchase a property.  This week I will be discussing how even though interest rates are creeping up it is still cheaper to buy a home than to continue renting and paying someone else's mortgage!

Mortgage rates are still near long-term lows, and because prices fell so much after the housing bubble burst and remain low relative to rents even after recent price increases, buying is still much cheaper than renting. That means that the recent jump in rates doesn’t change the rent-versus-buy math much.

Rates are likely to keep rising, but how far must rates rise before buying a home starts to look expensive relative to renting?

We updated our Rent vs. Buy analysis with the latest asking prices and rents from March, April, and May 2013. We calculated the cost of buying and renting for identical sets of properties, including maintenance, insurance, taxes, closing costs, down payment, sales proceeds, and, of course, the monthly mortgage payment on a 30-year fixed-rate loan with 20% down and monthly rent. We assume people will stay in their homes for 7 years, deduct their mortgage interest and property tax payments at the 25% tax bracket, and get modest home price appreciation.

Buying remains cheaper than renting so long as mortgage rates are below 10.5%. At 3.9%, the current 30-year fixed rate according to Freddie Mac, buying is 41% cheaper than renting nationally. With a 5% mortgage rate, buying is still 34% cheaper than renting nationally. Mortgage rates would have to rise a huge amount – to 10.5% – to tip the math in favor of renting, which isn’t impossible. Rates were that high throughout the 1980s, but have been consistently below 10.5% since May 1990.

Each local market, of course, has its own mortgage rate “tipping point” when renting becomes cheaper than buying a home. At 3.9%, buying is cheaper than renting in all of the 100 largest metros, which means the tipping point is above 3.9% everywhere. 

10 Metros with the Lowest Mortgage-Rate Tipping Point
#	U.S. Metro	Mortgage rate below which buying is cheaper than renting
1	San Jose, CA	5.2%
2	San Francisco, CA	5.4%
3	Honolulu, HI	5.8%
4	New York, NY-NJ	6.8%
5	Orange County, CA	6.8%
6	Los Angeles, CA	7.5%
7	San Diego, CA	7.5%
8	Ventura County, CA	8.0%
9	Sacramento, CA	8.0%
10	Oakland, CA	8.2%

 But for 78 of the 100 largest metros, the tipping point is 10% or higher. In fact the tipping point is above 20% in Cleveland, Memphis, Detroit, and several other metros in the Midwest and South.

10 Metros with the Highest Mortgage-Rate Tipping Point
#	U.S. Metro	Mortgage rate below which buying is cheaper than renting
1	Detroit, MI	35.8%
2	Memphis, TN-MS-AR	21.0%
3	Gary, IN	20.8%
4	Warren-Troy-Farmington Hills, MI	20.2%
5	Toledo, OH	20.1%
6	Cleveland, OH	20.0%
7	Dayton, OH	19.2%
8	Grand Rapids, MI	18.4%
9	Akron, OH	17.4%
10	Kansas City, MO-KS	16.9%

As you can see from the charts above, the immediate New England area is not within these calculations.  The cost to buy a new home in the Boston/South Shore area continues to remain less expensive than renting !

Of course, the tipping point also depends on how long you plan to stay in your next home (we assume 7 years) and whether you itemize your deductions (we assume you do). For instance, if you don’t itemize, or if the mortgage interest and property tax deductions were eliminated entirely, buying would still be 29% cheaper than renting at a mortgage rate of 3.9%, and the tipping point when renting becomes cheaper than buying would be 7.5%.

So, if you have the resources to buy, what's making you hesitate?  

Is Now the Time to Buy a House?

The real estate community is often criticized for always seeming to have a Pollyanna attitude about the housing market. Many believe that the industry’s current call ‘to buy now’ is nothing more than a scare tactic with the sole purpose of creating more commissions for the industry. Let’s take a look at whether or not that advice was good advice over the last year.

According to the most recent S&P Home Price Index home values have risen over 10% in the last year. If we look at Freddie Mac’s Weekly Primary Mortgage Market Survey®, the 30 year mortgage rate has increased from 3.67% to 3.91% during that same period.

Take a Look at the Following Table Comparison:

*We can see that the advice to buy a year ago made complete financial sense.

Regarding interest rates, the 30 year mortgage rate has soared by over a half point already this year and many believe that the increases will continue. Even those trying to be the voice of reason on this issue are projecting higher rates, going up to as high as 5%.

Bottom Line

The next time a real estate professional says that now is the time to buy they may not be giving you a ‘sales pitch’. They may be giving you nothing but excellent advice.