"D.O.M." Your Way to better Value When Buying a Home!

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Generally speaking, the longer a home is on the market, the more willing a seller is to negotiate. And that means you might be able to get a good deal!

However, notice that I said “generally speaking.” I put in that disclaimer because there are several reasons a home might be on the market for a long time.

One is that it might simply be overpriced. If that’s the case, then you’re in an excellent position to negotiate since the sellers may be anxious to sell the home.

A second reason may be someone has already put an offer on the property, but their financing, credit rating, etc. hasn’t met the requirements of the deal. In short, there was something wrong with the buyers, and nothing wrong with the home. Again, there may be an opportunity for you in this situation.

A third reason is that someone made a simple mistake in the Multiple Listing Service (MLS)! Perhaps the home got listed in the wrong ZIP code or the wrong neighborhood, or the price was simply wrong and listed too high. Now, normally, MLS is very accurate, but, as always, it’s dependent on humans entering information into the system, so mistakes happen!

Fourth, the house may have stayed on the market for so long because the owners simply refuse to negotiate! A real estate agent can help you identify these individuals for you so you don’t waste time and energy on a sale that will never happen.

Finally, a home may stay on the market for a long time because there is something wrong with it either structurally or cosmetically or both!

Depending on the situation, this can also be an opportunity for you as a buyer! You can use it as a bargaining tool; that is, either the home seller fixes the defects or lowers the price to account for the cost of repairing those defects.

However, you should always, always get a home inspection done on such houses! (Or on any house you’re considering, for that matter!). It prevents you from buying a “money pit,” in which you have to throw a small fortune in order to get defects repaired.

Here’s the short and long of it: DOM can sometimes get you a great value in a home; however, you need the expertise and guidance of an experienced real estate agent to pinpoint such values! I can provide you with that expertise. Contact me today!

Is It the Right Time to Sell or Stay Put and Wait For Change?

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These days so many homeowners are wondering if it’s the right time to move on and move up into a better home. So many questions ensue. How long will it take for the market to be back to normal again? Will today’s interest rates go on indefinitely? How can I tell before they begin to climb again? If I wait long enough will my home’s value come back up to what it was just a few years ago? The answers are not so simple but one thing is for certain. Property values take time to climb up and rebound after bouts of the situation that we are facing at present. Here are some pointers that will provide further insight as to why selling sooner may make more sense.

When Incomes Go Up – So Do Property Values

Many industry experts believe the only way for home prices to go back up is for buyers to have higher incomes. Based on this assumption, a good number of homeowners’ expectations that their property will miraculously gain 20% to 30% of value on the market within the next year or so are sufficiently unrealistic. Keep in mind that the average annual income increase nowadays is anywhere from three to five percent, which translates to a waiting period of until at least 2017 before you will regain housing values from a few years ago.

How Long Will It Take For the Job Market To Improve?

As we find ourselves in yet another double dip recession and the nation is struggling to deal with the economy, the unemployment rates in many states continues to plummet or stay where it’s at; a dismally low level. No one can say how long it will take for the job market to improve but analysts predict that though process will be slow it will happen.

Interest Rates Are At “Go Get ‘Em” Levels

Being able to finance a home was much easier just a few short years ago but having said that the fact of the matter is that now, interest rates make up for the otherwise detailed and careful application and approval process. While in the midst of a 30-year low, interest rates at about 4-4.5% clearly indicate this is a very good time to buy a home. Of course, for owners of existing homes this can mean a loss on the property they sell but by moving into a home that will most likely increase in value in a few years’ time it offsets the loss.

Keep Living But Live Happier

Why not wait for the market to improve before selling your existing property and moving into another? The return on investment can be significant when you factor in the changed interest rates regardless of improved property values. Consider this: Sell an existing home for $200,000 today and buy up into a new home worth $320,000 at the current low interest rates, versus wait for 5-7 years to sell the home, which by then might be worth $220,000. The interest rates by then to purchase the same new house worth $350,000 will be at least a couple percent higher. The end result is about $12-$15,000 in savings by selling and buying sooner – and that many more years of happiness.
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A few other things to consider are whether or not you are willing or able to maintain your existing home or would you prefer moving into a condominium or relocating to a warmer climate? Would this be a perfect time to sell your property and invest in a dual home that can also be rented out for some additional income? Also, how can you be sure your property value will not dip even further as you wait the market out? Wouldn’t you want the freedom to at least be able to get into a newer home, at a great price because of the current housing prices?

The best way to really know what steps to take is to contact your Realtor for an in-depth consultation and to learn whether now is the perfect time for YOU to sell.

Understanding the Difference Between Online Resources and a Realtor When Pricing Your Home

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The Internet can be a great resource for a host of things centered on buying or selling your home but in some cases, the most you can expect to gain is a basic understanding of things. For something as serious and important as pricing your home to either value it or sell it, relying on the Internet can only go so far. Here we’ve outlined some key differences between the figures you will yield from online sources versus those that have been compiled by your local Realtor.

ACCURACY IS VITAL

In today’s market especially, accurately pricing your home to sell is essential. With it being a buyers’ market, you will have to gain a solid understanding of all factors that contribute toward your property’s value. There can be negative repercussions of pricing a home either too low or too high. One such scenario is if there was a seasoned buyer who had taken the time to research in advance of searching for homes. That buyer’s knowing what to expect in the local market seeing your overpriced home could result in a turn-off and you could lose the sale. By the same token, you stand to get the shorter end of the stick in case of not knowing what you could have charged. Spending a little more time and/or expense can make a huge difference in the end outcome.

ONLINE TOOLS AND CALCULATORS

There are more than several websites where anyone can log on, put in their zip code and be given an instant “analysis” of their real estate value. The figures that appear as results from searches made through online resources stem from a conglomeration of several weeks and sometimes months of data collected from a particular region.

Websites such as www.zillow.com, www.realtytrac.com orwww.trulia.com offer a great way to get a generic idea of the value that homes in your region are going for or have gone for recently. As an added resource to other services also offered on these sites, the goal is not to assist homeowners in assigning a selling price on their property based on the data, rather to offer a snapshot on sales and pricing data for the area. In fact, for many people it is the perfect tool to add an extra edge when determining the fair market value of your home, along with other factors.

PROFESSIONAL COMPARABLE MARKET ANALYSIS

While online real estate tools are a great way to get a preliminary idea, they are only going to yield a figure that will show you where to start. To get an accurate assessment, you will need to avail the professional services of a Realtor. The only way to get an accurate “reading” of what the market rates are for homes in your vicinity and your neighborhood in particular, is to have a comparative market analysis conducted by a Realtor who understands your neighborhood. There is a good chance that they have dealt with properties in the area on a first-hand basis, regularly interact with the agencies and organizations that deal with very homes in your neighborhood and are familiar with the people in various facets that you will end up needing to interact with yourself, as the seller of your home.

Realtors conduct a detailed Comparable Market Analysis (sometimes also called Competitive Market Analysis) through a series of data compilation of area homes and properties, considering factors such as amount of land, the square footage and number of bedrooms or typical amenities in the neighborhood. But homeowners can also opt to delve into accurate detail about their property’s value by relying on an independent appraiser. Also, through the use of CMA data the County Tax Assessor determines the value of your property taxes.
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When you are pricing your home to sell, it is vital that you use all available resources. At first, it makes sense to “shop around” and get to know the generalities before you head for the specifics. And as with most transactions dealing with your real estate world, it is always best to rely on your Realtor for quality, effective and accurate information that is relevant to you and YOUR market.

Real Estate Trends On Both Sides of the Fence; Here’s What’s Happening

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We are definitely seeing a plethora of lengthy reports about the real estate market these days, whether on a national level or honed in on a particular local area. But the fact remains that the market is in an unstable state and keeping track of indexes, watching over home sales and how they fluctuate from month to month or year over year, is giving us a glimpse into what to expect. It is these very measures that allow us to foresee the greater trends that exist so we can act accordingly. Here, according to which side of the transaction you are on, are some happenings in the industry and what they mean to you as a homebuyer or home seller.

Buyers Don’t Beware

Buyers Trend #1

Foreclosures have slowed down. For the most part, whatever foreclosures that had flooded the market have either slid into transition stage, where the banks are reviewing documents and going through the sometimes lengthy review process that comes before accepting applications to purchase a foreclosed home – or there are fewer properties available. There was indeed a flood of distress sales in the market that occurred in the recent past but banks have now shifted away from foreclosures and they are favoring short sales instead. Short sales are a far better option for many reasons, but the two main benefits remain 1. Homeowners are either able to retain some of their credit while buying back their home at less than its current value and 2. Banks are spared the added expense and risk that goes along with foreclosures.

Buyers Trend #2

Prices remain historically low. One thing that has not changed for the duration of our current recession, even as we have headed into a double-dip economic downturn, is that as a result home prices continue to be at their lowest level in years. In the S&P Case-Shiller Home Price Index, it is indicated that housing prices these days rival a 30-year low and they seem to be hanging there in place as the market remains unsettled. Even though prices are as low as they are, the fact remains that these transactions that are taking place are happening with regular homeowners and simple sales deals, rather than banks for foreclosure sales.

Buyers Trend #3

Rates are still at an all-time low. Interest rates, depending on the day, are still as low as a little under 5% for the average 30-year fixed rate mortgage loan. For potential homeowners and those who want to move up or seize the opportunity to move into a luxury residence, this could not be a more perfect time to invest in that property. For those people willing to remain in the mix for the long haul, the current market trends will predominantly not affect them in terms of return on investment. The market will indeed bounce back, whether 6, 7 or even more years later. And when it does, you will end up having much more house (in terms of value), while still paying that very low interest rate.

It’s a Small (Selling) World After All

Sellers Trend #1

There are lots of buyers looking to buy. When you are selling your property, the more the potential buyers the merrier. With the number of buyers who are looking for a great deal your chances of selling are a lot better these days and if you have a home that has unique or upgraded amenities you can further avail the opportunities that will come with having that edge over other sellers.

Sellers Trend #2

Inventory is down. With the number of pending sales in limbo on a day-to-day basis, inventory figures are relatively low. This is great news for people looking to sell their properties, because that translates to more buyers for the taking and the ones that do come looking at your property are far more impressionable.
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To sum things up, right now is a great time to be a buyer – especially with all the incentives out there ranging from super low interest rates to housing prices that are closer to those from 7 or 8 years ago. If you can afford it now, buy now.

As a seller, the main advantage you have these days is that there is less inventory for those buyers out there looking for a deal now – which means you have the edge and better chances of selling that property.

The trends keep fluctuating a bit here and there but the major things remain: low rates, low housing prices, low inventory. And now is the time to seize the opportunities that lie within these trends.

Should I Wait Till Prices Rise Or Does Selling My House Now Make Sense?

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Many people are of the impression that waiting for six months to a year will result in a more stable market and a higher property value. This may not be entirely true, depending on how much equity you are expecting on your property. Looking at past real estate trends, the average number of years homeowners must wait may be longer than you think. Here are a few things to think about when deciding the right time to sell your home.

Do You Have a Choice?

Often people don’t have a choice in the matter. So, the first thing you should do is to assess whether you are able to withstand either staying in your home or selling it right away. If you are facing a new job that would require relocation and maintaining two households is not practical, then it may be a good idea to sell your home now, regardless of the current value. On the other hand, if the reason you would like to sell is in your hands, such as retirement, then you may want to wait a few years till the value matures and the return on your investment is stronger than it is today.

History Helps Us Gauge The Future

To understand where we are headed, it’s important to understand the history. With respect to the real estate industry, the lending market has seen significant changes over the past ten years and this intense shift in trends has affected the housing market of today. 

Specifically, a closer look at the market between 2001 and 2006 reveals that buyers were getting into homes with little to no money down, regardless of bad credit with some buyers actually falsely reporting the amount of money they earned per month. Still, these buyers were qualified for loans by most lenders and the end result was an influx of homeowners who couldn’t afford their homes. 

In hindsight, that housing phenomenon, which is a thing of the past now, was a trend that redefined the housing market, as we know it today.

By early 2007 the national “mortgage meltdown” occurred. Lending institutions realized the loan programs and application parameters were way too lax, causing far more damage than they had anticipated. As a result of the loans that were being approved without much consideration of buyers’ qualifications, homes were over valued and sellers had no equity plus couldn’t afford payments. Further they were losing their properties and even today many people are suffering the mortgage meltdown because of those lending trends.

Looking At The Here And Now

Lending institutions today process “full documentation” loans, something that is far different from the overly lenient loans of the previous decade. The level of detail and depth that goes into researching applicants’ qualifications now, is much higher than before. Lenders now perform detailed background checks, making sure that your salary is what you say it is, checking tax returns and references and also carefully reviewing your credit history. Very importantly, buyers that are getting into homes through loans obtained from lending institutions are people who can actually afford the home. This never mattered before. 

Keeping this very important fact in mind, it makes sense then that the only way for prices to go back up is for buyers to have a higher income. Based on this, many homeowners’ expectations that their property will miraculously gain 20% to 30% of value on the market within the next year or so are unrealistic. Unless they suddenly experience a significant jump in income, the chance that their properties will gain that much value is next to impossible. The average annual income increase these days is around three to five percent. 

Once our market is completely at the bottom in terms of prices, we can expect home prices to rise to somewhere in the 3-5% range, which is about the same as the average salary increase.

What Does This Mean Exactly?

The best way to illustrate how this plays out in terms of property value versus time needed to increase the value, is through this example: 

With a property valued currently at about $450k, the homeowners are looking to retrieve at least $600k on it when they sell, the value of the home when they purchased it during the housing market boom. Their misconception is that the home’s value will return to its original purchase price value, within a year or so. 

Given that property value increases coincide with the job market and wages earned, based on a 5% appreciation per year – on the $450k property it would take about six years for it to reach the hopeful $600k value again. So, to get to that price, the homeowners would have to hold on to the property until 2017 before they sell. Not a mere six months to a year.
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Prior to making any decisions about whether to sell now or later – it makes sound financial sense to begin looking at your options today. Consult with your real estate agent to ascertain where you stand in the market today, how your home’s value compares to your expectations of when you sell it and when would be the best time for you to sell.