Category: Real Estate

Stop First-Time Buyers From Making Mistakes | Realtor Magazine

First-time home buyers are facing some stiff competition this summer, and while they may feel compelled to make a hasty real estate decision, doing so could lead to financial remorse or home buyer regret, according to Curbed.com. In their article, real estate professionals share some of the most common mistakes by first-time home buyers, including:

Choosing the most expensive home. Just because you can qualify for a loan to buy that high, doesn’t mean you necessarily should. Some buyers max out how much they spend but then have nothing left over for savings. They get over their head quickly then when they move into home ownership.

Not shopping around enough. This applies to seeing enough homes and shopping for the right mortgage. “We are in a crazy market, and many buyers feel rushed,” says Mark Ferguson, a real estate professional and creator of Invest Four More. Buyers likely need to be able to act quickly in some areas but they don’t need to feel pressured to buy the first house they see. They should take time to learn the markets and its values so they can feel more confident about their purchase. They also should take into account all the costs of home ownership, including mortgage, insurance, taxes, maintenance, utilities, and unexpected incidentals, Ferguson says.

Being indecisive. On the same note, home buyers can’t be paralyzed to act in the market either if they want a home. Many first-time home buyers “suffer from the fear of missing out,” says Kwame Joseph, a real estate professional with Coldwell Banker Residential. “They may find a home that they love, and though their gut tells them it’s the right house for them, they believe that there’s something better.” Joseph says he’s had markets make an offer and then still want to view other properties. But backing out at that point could become costly.

Working with the seller’s agent. Some buyers get the help of the seller’s agents, but they are there to represent the seller, not the buyer. Often, they don’t realize that the buyer’s agent will be compensated through a commission split from the seller’s side so there’s “no out of pocket expense” to first-time home buyers seeking an agent for themselves.

Help Your Buyers Win a Bidding War | Realtor Magazine

Bidding wars are heating up across the country as buyer demand continues to offset the number of homes for sale. Buyer competition is even affecting towns that rarely see bidding wars, due to the lack of lower-priced inventory.

Bidding for Success

For buyers with school-aged children, there’s an added urgency in wanting to find a place before the fall.

“Buyers were waiting and waiting for inventory to open up, and they’re looking at the school calendar and thinking they need to get settled before the school year starts,” Betsy Ceccio of Keller Williams in Montclair, N.Y., told The New York Times. “The clock is ticking.”

So in particularly hot markets, how can your buyers come out ahead in a bidding war? The New York Times recently offered some of the following tips from housing experts:

• Get preapproved for a mortgage. A preapproval letter from a lender – note, not prequalified – can show that a buyer is a strong candidate in obtaining financing.
• Have a strong start. What can you most afford? Bid accordingly. That said, “don’t go to a point where you think it’s going to be too much to handle,” says Caroline Baccellieri of McClellan Sotheby’s International Realty in Pelham, N.Y. Also, if buyers offer more than the asking price, make them aware that their mortgage lender may still appraise the home at a lower value. This could then leave them having to pay the difference.
• Waive the mortgage contingency, but … Sellers tend to prefer offers that are not contingent on the buyers’ ability to obtain financing. So in hot markets, an offer contingent on the mortgage could be viewed as a detriment. Yet, without this contingency, buyers can run a risk of losing their deposit if their financing  ends up falling through. They’ll want to weigh this one carefully and consult a lawyer.
• Don’t just bank on the letter. A heartfelt letter attached to your offer has gotten some buzz lately as a winning strategy. While a nice touch, “don’t expect them to distract the seller from the bottom line.”
• Cash. And one of the best ways to win a bidding war: Offer cash. Sellers like all-cash offers because it provides more certainty the deal will go through and without delay. If an all-cash offer isn’t practical, have your buyer find other ways to provide the seller certainty that the settlement will go through.

More Home Buyers Have Renovation in Mind | Realtor Magazine

As buyers face more hurdles finding their dream home because of limited inventories, some are settling for a property they can eventually mold into what they want. Over a quarter of renovation projects are being driven by recent home purchases, according to the 5th annual Houzz & Home survey of more than 120,000 respondents. Home owners say they are opting to renovate instead of buying a “perfect” home largely because they think remodeling is a more affordable option or could provide a better return on investment, the survey found.

Recent home buyers invest more in renovation than other home owners — $66,600 versus $59,800. They also tend to take on larger projects and are nearly three times as likely to renovate all of their interior spaces than other home owners, according to the survey.

Kitchen remodels are the most popular renovation projects, followed by master and non-master bathrooms. Other top priorities include the addition of home automation and curb-appeal projects, such as upgrading exterior paint, roofing, exterior doors, and decks.

“2015 was another strong year for the home-renovation market, with home owners continuing to increase investment in their homes,” says Nino Sitchinava, principal economist at Houzz. “While the majority of renovations are spurred by home owners’ desire to upgrade a home they have lived in for some time, recent home purchases are also an important driver of home-renovation activity. Recent home buyers tend to do more, spend more, and are more likely to hire professionals to help with their renovation projects than other home owners. As the churn in the housing market picks up in the near future, the home-renovation market should see meaningful growth.”

Home owners who are preparing to sell reported spending slightly over half the amount that recent home buyers do on renovations ($36,300 versus $66,600), which shows they are “prioritizing immediate return on investment and rapid sale,” the Houzz survey notes.

Newlyweds: 5 Tips for Finding your First Home

Buying your first home can be an exciting, but sometimes intimidating – experience. However, there are few tips you can use to make it easier to find the perfect first home.

 

Determine your must haves

Talk with your new spouse about what each feels they need in a new home. Don’t forget things you may want like an easy-to-maintain yard, space for your California king sized bed, or a home that is good for entertaining. Don’t confuse what you must have with what you’d like to have. Prioritize. Be specific but realistic. Don’t expect to get everything on your list.

Get Pre-qualified

Finding the right home can be everything from time-wasting to heart-breaking if you skip prequalification. Do not try to shop for a new home without this. Prequalification is a legitimate assessment from a bank, mortgage company or other lender. This is not a guesstimate from you.

Find the right agent or the right agent team

Give your agent or team member a list of your home requirements. Then they can make your search much easier. Once you find an agent/team that is right for you, stay with them. Listen to your agent! Some real estate agents may not have the experience to understand and meet your real estate needs. But realtors like ReMax Alliance – the Diane Stow Team have that experience.

Be prepared to, and willing to, act on an offer

When you find that first house you think you love, act on it. In real estate, there is no time like the present. There is nothing worse than seeing the home you envisioned as your dream home go to another buyer. Be patient. When the contract starts going back and forth, just be patient. Your agent is trained and ready to handle all the aspects of it for you. However, it sometimes takes time to negotiate.

Be realistic

The owner of the home you are buying is selling a home they loved. Be realistic about what could happen. Your agent will be your guide. An agent is there to help you manage every step, from your first meeting to the moment the ink dries on your contract and sometimes beyond.

Your realtor is not only an astute business person. They can be a friend – not just in your first home purchase –but also all of your home sales and purchases in the future!

5 Good Reasons to Tap Your Home Equity – NerdWallet

Lenders want you to borrow against your home equity again. The question is, should you?

Rising home values and a sluggish mortgage market mean banks are once more marketing home equity lines of credit. Last year, lenders handed out $156 billion in HELOCs, a 24% rise from a year earlier and a 138% rise from 2010.

HELOCs are typically a cheap source of credit, with current rates averaging less than 5%. (Here’s how to pick the right HELOC lender.) But borrowing against your home equity can be risky. Rates are typically variable, and payments can balloon after the initial interest-only period ends. A recent uptick in second mortgage delinquencies is being driven by an 87% jump in missed payments from loans made in 2005 that just ended their 10-year interest-only period, according to Black Knight Financial Services, which tracks mortgages.

Less equity also means less cushion if your home value drops, leaving you more vulnerable to foreclosure if you lose your job or otherwise can’t pay the loan.

There are times when taking the risk can make sense, but only with certain caveats. You normally don’t want to borrow more than 80% of your home’s current value, a ratio that includes your first mortgage. You’ll typically get better rates and terms, plus you’ll be left with a cushion for emergencies.

What you spend the money on matters as well. Here are five uses for home equity that can make sense:

1. Home improvements

But only if they actually add value and you pay cash for up to half the cost.

Few home improvements will increase the value of your home enough to cover their cost. Many projects return between 50 and 80 cents on the dollar, assuming you sell within a year of completing the project.

Borrowing only half the cost of a remodel and paying cash for the rest can help you curb the urge to overspend. It also lessens the odds of paying interest for years on borrowed money that didn’t enhance the value of your home.

Speaking of years, a HELOC is probably your best option if you can pay it off within a few years. If repayment would take you five years or more, consider other options including locking in a fixed rate with a home equity loan instead.

2. Debt consolidation

But only if you’re extremely responsible and can pay off the balance fast.

There are many, many problems with using home equity to pay off credit card and other high-rate debt. One of the biggest is that you’re turning consumer debt that could be discharged in bankruptcy into secured debt that can’t.

Another is that you may just be papering over a spending problem that will leave you deeper in debt. If you don’t fix the budgeting problems that led to the credit card bills in the first place, you’ll soon find yourself with a HELOC balance and more credit card bills.

If you’ve mended your ways and can pay the HELOC off quickly — say, in three years or less — it may be worth the gamble. If it would take you five years or more, though, you may have too much debt for a do-it-yourself solution. Consider other alternatives, including talking to a credit counselor or discussing your situation with a bankruptcy attorney.

3. Emergency expenses

But only if it’s a real emergency and you’ve exhausted your nonretirement savings.

Financial planners typically recommend an emergency fund equal to three months’ worth of expenses or more. Unfortunately, it can take a typical family two years to save up that much, and a lot can go wrong in the meantime. A HELOC can supplement an inadequate emergency fund and be a comforting Plan B while you build or rebuild your cash stash.

4. College costs

But only if you’re the parent and can pay off the balance before you retire, while still being able to save for retirement.

Students have access to federal student loans, which come with low fixed rates, numerous repayment options and the possibility of forgiveness. Parent PLUS loans, by contrast, come with higher rates, an origination fee over 4%, fewer repayment options and no hope of forgiveness.

HELOCs can be a reasonable alternative, especially if the parent can pay off the loan relatively quickly. Again, if it would take five years or more, fixing the rate with a home equity loan could make more sense.

If borrowing would keep you from retirement, though, consider other alternatives — like a cheaper school.

5. To protect your portfolio in retirement

But only if you open a reverse mortgage line of credit early in retirement for just this purpose.

Good financial planners have long hated reverse mortgages, which allow people 62 and over to tap their home equity without having to make payments on the debt. Advisors traditionally have seen these loans as a last resort for retirees who exhaust all their other assets.

Today’s reverse mortgages are cheaper and safer than in the past, however, thanks to improvements in the Federal Housing Administration’s Home Equity Conversion Mortgage program. Also, recent research indicates that reverse mortgage lines of credit offer an important safety valve in retirement. When the stock market plummets, retirees can tap credit lines instead of their portfolios, which allows their investments time to recover when the market rises. This “standby reverse mortgage strategy,” as some researchers call it, significantly improves the odds of a portfolio lasting through retirement.

Is Now A Good Time To Buy A Home? – Forbes

I teach a class once a month about how to buy an apartment in NYC and in nearly every session, I get a question on whether it’s a good time to buy a home.

So…is it?

You’re Asking The Wrong Question

The truth is, neither your real estate agent nor anyone else can tell you whether now is the best time to buy a house so you can make a hefty profit in short order. If they could and were so confident in their predictions, they certainly wouldn’t be giving you advice. Instead, they’d be acting on their own knowledge to become incredibly wealthy.

Kathy Braddock, a managing director at real estate brokerage William Raveis New York City, says, “The reality is, no one has a crystal ball. We only know what the right time was to buy or sell by looking at history, hindsight being 20/20.”

What Are The Right Questions?

When people ask me this question, I don’t think they’re asking whether now is a good time to buy so they can sell in a year and make a huge profit.

I think what they’re really asking is, does it make sense for me, in my current situation, to buy a home. That’s a tougher question to answer broadly because everyone’s specific situation is different and can vary based on a variety of factors, but let’s try to break it down.

Police Hunt for Texas Man Posing as Agent | Realtor Magazine

A man posing as a real estate agent is being accused of stealing $20,000 from a potential home buyer who thought she was making a down payment on house, the San Antonio Police Department report.  

Police allege Chris Hinojosa, 29, has been acting as a broker without a license in the city. They have issued multiple arrest warrants for Hinojosa, who remains at large.

A woman told police in January that she responded to a for-sale by owner real estate sign earlier this year. She alleges she met with Hinojosa, agreed to purchase the home, and gave him two separate payments of $20,000 for closing. She said she later discovered the man did not own the property and also was not a real estate agent.

“At no time did the victim sign a real estate title or any document recognized by the Texas Real Estate Commission,” police documents state.

“He fleeced this person,” San Antonio Police Department Sgt. Jesse Salame told ABC affiliate KVUE. “It’s probably best not to respond to a sign on the side of the road. Look up licensed REALTORS®.”

The property’s actual owner has also sued Hinojosa.

7 Reasons Why You Still Can’t Sell Your House

You made the investment and bought a house, but now it’s time to sell it. Whether you’re looking for a different atmosphere, moving for work, or accounting for any number of factors, selling your home can be one of the most complex deals you make. You might be facing steep competition from other homes for sale, or you might find yourself in a fickle real estate market. Whatever the case, you might find that it’s taking much longer than you expected to sell your home.

Though the market can fluctuate depending on location and the real estate industry at large, things are beginning to look up for people hoping to sell their home at a profit. Home sales were up 6% in the spring of 2016 compared to the year before, according to the National Association of Realtors, and home prices have increased for 50 straight months. For all intents and purposes, the industry is recovering from the housing crash that shook the nation leading up to the Great Recession.

 

However, each sale is unique, and it might be a challenge to sell your home. If you listed your house for sale months ago and haven’t gotten a single offer, you might be getting discouraged at this point. More importantly, you might want to purchase another property but need to sell your current house in order to do so. So, what are some factors that could be keeping you from closing a deal? Here are a few to consider.

1. The price is too high

You’re likely hoping to make a profit on the home you bought years ago. For one thing, you lovingly put years of time and effort into making it your own — and perhaps even made some improvements along the way. Unfortunately, the market doesn’t care if you need $50,000 over the correct asking price to break even on your mortgage or the repairs you made. If you’ve overpriced your home looking to recoup those losses, you might be waiting a long time before you get an offer.

“Without question, the No. 1 reason a home doesn’t sell is price,” Bill Golden, an independent, Atlanta-based Realtor who sells for ReMax, told U.S. News & World Report. “Sellers have an emotional attachment to their homes and tend not to [be] objective about the true value.”

Though there is such a thing as a “seller’s market,” when real estate prices favor the seller and supply is less than demand, the buyer still has one matter-of-fact point of control. If a home isn’t worth it to them, they’re not going to put down the money. “If there are no problems with the property or its location, it is the price,” Tracey Martin, a realtor, bluntly stated on Realtor.com. “Properties sell when they are priced correctly. The value of your home is determined by what a buyer is willing to pay for it. If it is too high, you won’t get any offers.”

2. You don’t use a realtor, or don’t have the right one

Of course, Realtor.com is going to advocate for using a professional realtor to list your home and handle the finer points of price negotiation. Its input might be biased, but there’s truth behind it. “If you’ve tried your hardest to make your home presentable, and feel that you have marketed it to the best of your ability, the problem may not be you. It may be your real estate agent,” Local Agent Finder advises.

If you’re looking for a new realtor, or are just starting your search, it might be a good idea to take into account some of the common mistakes people make when looking for a real estate agent.

3. Your home is in disrepair

Chances are, your property doesn’t look quite as destitute as the one pictured above. But if you have overgrown landscaping, broken light fixtures, or a hole in your drywall, you might encounter several hesitant buyers. Fixer-upper shows are fun to watch on TV for entertainment, but chances are that won’t appeal to most people.

“Today’s buyers are busy,” Alix Prince, a vice president and broker at Julia B. Fee Sotheby’s International Realty told U.S. News. “They are looking for properties where they can ‘unpack’ without doing a lot in renovations or decorating. Properties that are in need of TLC are at a disadvantage since two-income families would prefer to spend their weekend relaxing rather than redecorating.”

A fresh coat of paint will likely go a long way, though you might have to put some extra elbow grease into larger, obvious issues. Take a hard, objective look a what would make you second-guess your own home, and make your to-do list accordingly.

4. The house appears cluttered

Your collection of rare glassware and excess of furniture is precious to you, but to potential buyers it likely appears like clutter at best, and junk at worst. You might still be living in your home, but it’s wise to think about starting the packing process, Zillow real estate expert Brendon DeSimone told real estate site Bob Vila.

“Take all the stuff you won’t use for six months and put it in a storage locker — that’s the smartest $20 to $30 you can spend during this process,” DeSimone says.

You can also use this as an opportunity to remove decorations or items from your home that might not speak to everyone’s tastes. You might enjoy your collection of abstract art, but new buyers could have trouble envisioning themselves in your home when it still feels distinctly yours, U.S. News reports. “This is perhaps the most common problem of all,” Joshua Mogal, founder of eco+historical homes, told the publication. “Buyers rarely have the same tastes as sellers.”

5. Your home isn’t marketed well

Are you leaving the advertisements completely up to your realtor? If they create flyers and literature that’s professionally done, that might be fine. But if you think you could (or should) be doing more, you might want to reconsider the photos you’re using and the ways in which you’re marketing your home. Local Agent Finder suggests adding a video tour to your online listing, and making sure your photos look professional.

As part of that, it’s a smart idea to pay close attention to the staging of your property. The photos should showcase your home’s best angles, free from clutter and other attributes that might detract from the overall appearance. If you’re unsure about capturing this on your own, it might not be a bad idea to enlist a professional.

6. It’s a mess

Let’s face it: If you haven’t washed the windows in a while and your children haven’t seen you use a vacuum in weeks, it’s time to channel your inner housekeeper and break out the Hoover — and the duster, too. “It’s important to treat your house as a product. It will not sell itself, so you need to spend a little bit of time and effort to make it more appealing,” Local Agent Finder reminds potential sellers. The publication suggests attending other open houses in your neighborhood, to make sure you’re on the right track with the condition of your home.

If you can’t seem to find time to wash the baseboards and scrub your bathroom until it sparkles, it might be worth it to call the pros. In fact, Gary Rogers, regional vice president of theNational Association of Realtors, told Bob Vila he recommends it.

7. You’re actually not ready to sell

When it comes to selling your home, you might be the biggest obstacle you have. It’s easy to develop a sentimental attachment to your home, and you might not realize it until you’re having difficulty signing over the deed to new owners. When it comes down to it, that sentiment can be the worst form of self-sabotage possible, DeSimone told Bob Vila. “You could set the price too high, ignore recommendations from your agent, or miss spots in cleaning the house,” he explained.

If you think this is you, it might be time to re-evaluate your reasons for selling. If they’re still solid, it’s time to break the familiar ties and focus on finding your new favorite home.

 

5 Mistakes to avoid when buying a house | bakken.com

Owning a home is part of the American dream for citizens across the nation. If you live in North Dakota or Minnesota, there are basic rules of thumb to follow to achieve home-buying success. There are also mistakes you should avoid, including these five common missteps:

1. Not Knowing the Difference between Being Prequalified and Preapproved

Before you get your heart set on a neighborhood or house, know how much of a mortgage you can afford. To do this, you first need to obtain a pre-qualification. This is not a definite yes or no to your loan request, but it is a number to set you on your path to home ownership. To grant a pre-qualification, your lender will look over your income and debts to come up with a price range you can afford. When you’re seriously ready to start making offers on homes, you need to move to the next step, which is to obtain a preapproval. To preapprove you for a mortgage, your lender will need to verify all the information you provided on the prequalification, including your credit score.

2. Not Looking Far Enough Into the Future

When you buy a house, it’s important that you look into your future. If you are newly married, a two-bedroom home may seem like plenty of space for you and your spouse, but take a look at a few years down the road. Are you planning to have children? If so, it would be wise to purchase a place with room to grow. On the flip side, if your kids are teens who will be moving out in the next couple years, don’t buy a house with way more space than you will need when you are an empty nester.

3. Buying Through an Emotional Lens

Although a home may be where the heart is, house buying is a business endeavor. It’s important to keep a logical perspective when crunching numbers, thinking about your commute, estimating how much it will cost to heat your place in the frigid North Dakota or Minnesota winters, and deciding whether the neighborhood is a place where you want to live long term. Some buyers fall in love with a front porch, a backyard, or master suite and forget about everything else. While you want to adore your abode, don’t let your emotions taint your reasoning.

4. Forgetting to Think About Hidden Expenses

There are more expenses involved in home ownership than just paying your mortgage payment. Be sure you factor in all the other costs you’ll have to shell out each month. For example, you will need to pay utilities such as gas, electricity, water and sewer. If you plan to watch cable television and have Internet service, you’ll also have to add that to your total monthly bills. Homeowners are the ones who have to take care of all maintenance and repairs, too, such as tuning up or repairing the HVAC system, patching or replacing a leaky roof and unclogging plumbing snarls. You’ll also need to take a look at how your loan is structured. If you have an adjustable rate mortgage, it’s important to plan for interest rate fluctuations. Plus, some mortgages are “principal only,” which means you’ll have to plan ahead to pay property taxes and homeowners insurance. A good mortgage lender will advise you throughout this process and help to make sure you don’t get in over your head.

5. Not Carefully Selecting Realtor and Lender

Not all realtors and mortgage lenders are alike. The professionals you choose to work with will make a difference in how successful your home-buying process will be. It’s smart to get referrals from family members and friends, and then to interview both your potential realtor and lender. You want to make sure you feel comfortable with their communication styles and follow-through, because you will be spending time together on the all-important home-buying journey. Having savvy professionals who understand your wants and needs will go a long way. Be sure to ask your lender about the different types of mortgage loans his or her company offers, so you understand the options and can choose the right one for your situation.

Mortgage Rates Plunge to 3-Year Lows | Realtor Magazine

For the second consecutive week mortgage rates moved lower, and are currently the lowest since May 2013.

“The 10-year Treasury yield continued its free fall this week as global risks and expectations for the Fed’s June meeting drove investors to the safety of government bonds,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate responded by falling 6 basis points for the second straight week to 3.54 percent — yet another low for 2016. Wednesday’s Fed decision to once again stand pat on rates, as well as growing anticipation of the U.K.’s upcoming European Union referendum will make it difficult for Treasury yields and — more importantly — mortgage rates to substantially rise in the upcoming weeks.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 16:

• 30-year fixed-rate mortgages: averaged 3.54 percent, with an average 0.5 point, falling from last week’s 3.60 percent average. Last year at this time, 30-year rates averaged 4 percent.
• 15-year fixed-rate mortgages: averaged 2.81 percent, with an average 0.5 point, dropping from last week’s 2.87 percent average. A year ago, 15-year rates averaged 3.23 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.74 percent, with an average 0.5 point, down from last week’s 2.82 percent average. A year ago, 5-year ARMs averaged 3 percent.