All about Real Estate

Thinking about selling or buying but you're not sure where to start? Here you have all the facts and hacks!

Dec. 2, 2017

Homeowners: Your House Must Be Sold TWICE

Homeowners: Your House Must Be Sold TWICE | Simplifying The Market

 

In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 5%+ over the next twelve months. One major challenge in such a market is the bank appraisal.

If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth, and an appraiser’s evaluation of that same home.

Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges anyone looking to buy or sell in today’s market to remember the impact of this challenge:

“Based on the HPPI, it appears homeowners in the markets where prices are rising faster than the national average – like Denver, Seattle and San Francisco – are continuing to underestimate just how quickly home values are rising, so the average appraisal is higher than homeowner estimate.

On the inverse of that, homeowners in areas where the values aren’t rising as fast may think they are rising faster than they are, leading to the appraisal lagging the estimate.”

The chart below illustrates the changes in home price estimates over the last 12 months.

Homeowners: Your House Must Be Sold TWICE | Simplifying The Market

 

Bottom Line

Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this and any other obstacles that may arise.

 

Nov. 28, 2017

Low Interest Rates Have a High Impact on Your Purchasing Power

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.92%, which is still near record lows in comparison to recent history!

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.

Low Interest Rates Have a High Impact on Your Purchasing Power | Simplifying The Market

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money.

Nov. 21, 2017

Access is an Important Factor in Getting Your House SOLD!

Access is an Important Factor in Getting Your House SOLD! | Simplifying The Market

So, you’ve decided to sell your house. You’ve hired a real estate professional to help you with the entire process, and they have asked you what level of access you want to provide to potential buyers.

There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access that you can provide to your agent so that he or she can show your home.

Here are five levels of access that you can give to buyers, along with a brief description:

  1. Lockbox on the Door – this allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.
  2. Providing a Key to the Home – although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.
  3. Open Access with a Phone Call – the seller allows showings with just a phone call’s notice.
  4. By Appointment Only (example: 48-Hour Notice) – Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.
  5. Limited Access (example: the home is only available on Mondays or Tuesdays at 2pm or for only a couple of hours a day) – This is the most difficult way to be able to show your house to potential buyers.

In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.

Nov. 10, 2017

Millennials Flock Towards Low Down Payment Programs

Millennials Flock Towards Low Down Payment Programs | Simplifying The Market

A report released by Down Payment Resource shows that 61% of first-time homebuyers purchased their homes with a down payment of 6% or less.

The trend continued among all buyers with a mortgage, as 73% made a down payment of less than 20%.

An article by Chase points to a new wave of millennial homebuyers:

“We teamed up with Google to help us better understand what customers are searching for and how the home buying landscape is evolving. We found that millennials and first-time homebuyers are making a big splash in the market, and affordability remains top of mind.”

Among millennials who purchased homes, David Norris, Loan Depot’s Head of Retail Lending, said:

“It’s clear from the survey results that Millennials have a lot of anxiety built up about the home buying process.

There is good news, however, as there’s more flexibility than most Millennials think regarding how to qualify for a loan and what’s needed for a down payment.”

 

Bottom Line

If you are one of the many millennials who is debating a home purchase this year, let’s get together to help you understand your options and set you on the path to preapproval.

Nov. 4, 2017

Hiring an Agent to Sell Your House May Cost You NOTHING!

Hiring an Agent to Sell Your House May Cost You NOTHING! | Simplifying The Market

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide:

  • Greater exposure to more buyers
  • The skills of a professional negotiator
  • A layer of protection from possible legal liabilities
  • Professional guidance in navigating any pitfalls that may arise
  • A level of safety while showing the home

There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny?

A study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money on their own than if they used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
  2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
  3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

Oct. 31, 2017

Buying Remains Cheaper Than Renting in 39 States!

In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

A study by GoBankingRates looked at the cost of renting vs. owning a home at the state level and concluded that in 39 states, it is actually ‘a little’ or ‘a lot’ cheaper to own (represented by the two shades of blue in the map below).

Buying Remains Cheaper Than Renting in 39 States! | Simplifying The Market

One of the main reasons owning a home has remained significantly cheaper than renting is the fact that interest rates have remained at or near historic lows. Freddie Mac reports that the current interest rate on a 30-year fixed rate mortgage is 3.91%.

Nationally, rates would have to reach 9.1%, a 128% increase over today’s average of 4.0%, for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters who would like to evaluate your ability to buy this year, let’s get together and find you your dream home.

Oct. 25, 2017

Builder Offering to Pay Off Student Loans for Buyers

Builder Offering to Pay Off Student Loans for Buyers | Simplifying The Market

Millennials are on track to become the most educated generation in history. This means they are also the generation with the most student debt. Depending on the type of degree earned, as well as the prestige of the institution attended, there are some millennials who graduate college with what equates to a mortgage payment.

For those first-time buyers, and even some move-up buyers, who took advantage of the First-Time Homebuyer Tax Credit in 2008, there is an interesting program being introduced by Lennar Home Builders and Eagle Home Mortgage.

“Borrowers with Eagle Home Mortgage’s Student Loan Debt Mortgage Program can direct up to 3% of the purchase price (up to $13,000) to pay their student loans when they buy a new home from Lennar, one of the nation’s largest homebuilders. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan.”

The program allows borrowers, whose credit and income requirements qualify, to put down as low as 3% and have a maximum loan amount of $424,100. At the time of closing, Lennar contributes up to 3% to pay down student loans incurred while attending universities, colleges, community colleges, trade schools and other certificate-granting programs.

Jimmy Timmons, President of Eagle Home Mortgage, gave more context about the reasons behind the creation of the program,

“Americans are more burdened than ever by student loans, with $1.3 trillion in outstanding student loans spread out among 42 million borrowers.  

Particularly with millennial buyers, people who want to buy a home of their own are not feeling as though they can move forward. Our program is designed to relieve some of that burden and remove that barrier to owning a home.”

 

According to the Wall Street Journal, “housing observers said other builders are likely to look to mimic the program, which could help lure more of the critical first-time-buyer segment into home purchases.”

 

Bottom Line

If you are one of the many millennials who may have delayed purchasing your first home, or feel stuck in a house that no longer fits your needs, there are programs and options available to help you achieve your dream!

Oct. 19, 2017

No… You Do Not Need 20% Down to Buy NOW!

 

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

 

Bottom Line

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

Oct. 14, 2017

A Tale of Two Markets: A 6-Month Update

A Tale of Two Markets: A 6-Month Update | Simplifying The Market

Six months ago, we reported that the mismatch between the type of inventory of homes for sale and the demand of buyers in the US was causing the formation of two markets. 

In the starter and trade-up home categories, there were significantly more buyers than there were homes for sale, causing a seller’s market. In the premium, or luxury, home categories, the opposite was true as there was a surplus of these homes compared to the buyers that were out searching for their dream homes, which created a buyer’s market.

According to the National Association of Realtors latest Existing Home Sales Report, the inventory of existing homes for sale in today’s market is at a 4.2-month supply. Inventory is now 6.5% lower than this time last year, marking the 27th consecutive month of year-over-year decreases.

Looking at the latest report from Trulia, we can see that not much has changed, and in fact, recent natural disasters across the country have made inventory conditions even more dire.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

A Tale of Two Markets: A 6-Month Update | Simplifying The Market

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, which is leading to a highly competitive seller’s market in these categories.

Premium homebuyers, on the other hand, have the best chance of less competition and more inventory of listings in their price range with a 14.7-point surplus, which is creating more of a buyer’s market.

 

Bottom Line

Real estate is local. If you are thinking about buying OR selling this fall, let’s get together to discuss the exact market conditions in your area.

Oct. 12, 2017

Which Homes Have Increased in Value the Most?

Which Homes Have Increased in Value the Most? | Simplifying The Market

Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 5.6%. CoreLogic, in their most recent Home Price Index Report, revealed that national home prices have increased by 6.7% year-over-year.

CoreLogic broke appreciation down ever further into four price ranges which gives a more detailed view than simply looking at the year-over-year increases of the national median home price.

The chart below shows the four tiers and each one’s growth from July 2016 to July 2017 (the latest data available).

Which Homes Have Increased in Value the Most? | Simplifying The Market

It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor in determining how much it has appreciated over the course of the last year. Lower priced homes have appreciated at greater rates than homes at the upper ends of the spectrum, due to demand from first-time home buyers and baby boomers looking to downsize.

 

Bottom Line

If you are planning on listing your home for sale in today’s market, let’s get together to go over exactly what’s going on in your area and your price range.