Three Questions You Must Ask If You Are Going To Buy A Home

If you are thinking about purchasing a home right now, you are surely getting a lot of advice. Though your friends and family have your best interests at heart, they may not be fully aware of your needs and what is currently happening in real estate. Let’s look at whether or not now is actually a good time for you to buy a home. There are three questions you should ask before purchasing in today’s market: 

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:

• A good place to raise children and for them to get a good education
• A place where you and your family feel safe
• More space for you and your family
• Control of the space

What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

When looking at future housing values, Home Price Expectation Survey provides a fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number. Here is what the experts projected in the latest survey:

• Home values will appreciate by 4% in 2015.
• The cumulative appreciation will be 19.5% by 2018.
• Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 11.2% by 2018.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates. The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months.

Bottom Line

Only you and your family can know for certain the right time to purchase a home. Answering these questions will help you make that decision. 

New Construction Homes-Competition?

For the last several years, home sellers had to compete with huge inventories of distressed properties (foreclosures and short sales). The great news is that the supply of these properties is falling like a rock in the vast majority of housing markets. Many homeowners are now thinking of selling as the impact of this substantially discounted competition has disappeared.

However, every seller of an existing residential property must realize that there is a new form of competition about to hit the market: newly constructed homes.

As the economy improves, builders will again be bringing their housing developments to the market. Trulia recently reported that the purchaser, given a choice, actually prefers new construction. Here are two charts showing the results of the Trulia survey:

Bottom Line

If you are thinking of selling, perhaps you should do it now to avoid the additional competition that will come to the market later this year.

School or Pool?

Millenials and Living With Parents

Every day we are pleasantly surprised with the research coming forward regarding the Millennial generation. Whether it was the over-exaggeration of the student debt challenge, the misbelief that they are not yet ready to buy or the under estimation of their actual home purchases, evidence is beginning to debunk the myths many have held about this generation and home ownership. Now, one more strongly held belief is being questioned.

Do Millennials Live in their Parents Basements?

It seems not as many as once was reported. Our friends at Calculated Risk (CR) alerted us to a post by Derek Thompson in theAtlantic: The Misguided Freakout About Basement-Dwelling Millennials. The article explains that according to the Census Reports:

“It is important to note that the Current Population Survey counts students living in dormitories as living in their parents' home.”

What?!? If you live in a college dorm, the census counts you as living with your parents. Thompson has some fun with this when he explains:

“When you were adjusting to your freshman roommate, you were ‘living with your parents’. When you snagged that sweet triple with your best friends in grad housing, you were ‘living with your parents’. That one time you launched butt-rattling bottle rockets at the stroke of midnight off your fraternity roof? I hope you didn't make too much noise. After all, you were ‘living with your parents’."

The data is “Criminally Misleading”

According to Thompson, the counting of those living in college dorms as living with their parents is “criminally misleading”. He explains that part of the increase in these numbers is actually attributed to the fact that more people are attending college:

“[T]he share of 25- to 29-year-olds with a bachelor degree has grown by almost 50 percent since the early 1980s. More than 84 percent of today's 27-year-olds spend at least some time in college and now 40 percent have a bachelor's or associate's degree. More young people going to school means more young people living in dorms, which means more young people ‘living with their parents’, according to the weird Census.”

Thompson then goes on to reveal that:

"[T]he share of 18-to-24-year-olds living at home who aren't in college has declined since 1986. But the share of college students living "at home" (i.e.: in dorms, often) has increased.
So the Millennials-living-in-our-parents meme is almost entirely a result of higher college attendance.”

The Other Side of the Argument

However, Trulia’s chief economist Jed Kolko, doesn’t totally agree. In a post in response to the Thompson article, Kolko explains:

“The Current Population Survey’s (CPS) Annual Social and Economic Supplement (ASEC) counts college students who are living in dorms as living with their parents, and college enrollment has indeed gone up. But it does not follow that basement-dwelling millennials are a myth. The ASEC and other Census data show that after adjusting for college enrollment and for dormitory living, millennials were more likely to live with parents in 2012 and 2013 than at any other time for which a consistent data series is available.”

Bottom Line

There are more Millennials living with their parents than ever before. However, the numbers being quoted by some seem to be exaggerated.  Millenials can buy homes, if you are interested in making a home purchase call me directly and let's see how we can make this dream a reality, 661-702-4767.

A Great Reason To Sell Now

The price of any item (including residential real estate) is determined by ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.  

According to the National Association of Realtors (NAR), the supply of homes for sale is still below the normal 6 month level of inventory. That means less competition.

However, a recent study revealed that 71% of current homeowners are considering selling their home this year. Putting your home on the market now instead of waiting for this increased competition to come to the market might make a lot of sense.

Buyers currently in the market are motivated purchasers. They want to buy now. With limited inventory available in most markets, a seller will be in a great position to negotiate their best possible price.

Thinking Of Buying A Vacation Home?

The sales of vacation homes skyrocketed last year. A recent study also revealed that 25% of those surveyed said they’d likely buy a second home, such as a vacation or beach house, to use during retirement. For many Baby Boomers, the idea of finally purchasing that vacation home (that they may eventually use in retirement) makes more and more sense as the economy improves and the housing market recovers.

If your family is thinking about purchasing that second home, now may be the perfect time. Prices are still great. If you decide to lease the property until you’re ready to occupy it full time, the rental market in most areas is very strong. And you can still get a great mortgage interest rate.

But current mortgage rates won’t last forever…

According to FreddieMac, the interest rate for a 30 year fixed rate mortgage at the beginning of April was 4.4%. However, FreddieMacpredicts that mortgage rates will steadily climb over the next six quarters.

Let’s assume you want to purchase a home for $500,000 with a 20% down payment ($100,000). That would leave you with a $400,000 mortgage. What happens if you wait to buy this dream house?

Prices are projected to increase over the next year and a half. However, for this example, let’s assume prices remain the same. Your mortgage payment will still increase as mortgage rates climb to more historically low levels.

Interest Rates Compared to Home Prices

Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices are still below those of a few years ago and interest rates are below 4% with 20% down and a 740 FICO score.

Don't get priced out of your 'Dream Home'... pay attention to interest rates, they have a direct impact on your purchasing power.  See the diagram below.  When interest rates are higher, you can have about the same house payment as a home that is $40,000 more with a point less in interest rates.

Remember as interest rates go lower, home prices usually will increase and as rates rise home values will normally diminish. 

Don't hesitate to contact me directly if you have any questions, 661-702-4767.

Most buyers are overwhelmed!

There was an interesting survey I read about that home buyers revealed how prepared they actually are for the mortgage process. The survey reported that 94% of prospective buyers believe they are making a good investment decision if they buy a home. The survey also explained that 66% of buyers reach out to real estate agents to help determine whether buying a certain home would be a good investment. However, there is less certainty regarding the mortgage process.

Most buyers overwhelmed

The majority of potential buyers are actually overwhelmed with the plethora of information available about the home financing process.  Here are some interesting highlights from the report:

• Nearly 66% feel overwhelmed with the amount of information available
• 76% of those under the age of 30 feel overwhelmed
• 76% of first time buyers feel the same way
• 54% of those buyers who have previously owned also were overwhelmed
• 59% of buyers turn to mortgage bankers to help evaluate mortgage terms and comparing offers
• 49% of buyers turn to real estate agents to help evaluate mortgage terms and comparing offers

There is help available…use it!

Cameron Findlay, chief economist at Discover Home Loans, gives great advice:

“The industry is becoming more transparent in an effort to help homebuyers become informed about changes that may affect their process. The sheer amount of information can lead to confusion and stress. Those looking to purchase should work closely with their lender and realtor to make sure they are comfortable with mortgage terms and understand the impact a loan will have on their finances.”

Bottom Line

When you are ready to purchase a home, don't go it alone!  As your real estate agent, I am here to advise you on finding you the best lender out there.  Use me for all the advice you can get!

Five Demands To Make On Your Real Estate Agent

As a real estate agent, here are 5 demands you should make on the real estate agent you choose to represent you in the sale of your home

Are you thinking of selling your house? 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.

Here are the top 5 demands to make of your Real Estate Agent when selling your house:

1. Tell 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.

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The second sale may be more difficult than the first. The residential appraisal process has gotten tougher. A recent survey showed that there was a challenge with the appraisal on 24% of all residential real estate transactions. 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 your 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. You agent cannot pick the exact date of your move, but they should exert any influence they can, to make it work.

3. Remove as many of the challenges as possible

It is imperative that your agent knows 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 and their family  (commission, length, etc.), don’t expect them to turn into Super hero when they are negotiating for you and your family 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! If you are interested in selling call me today so we can discuss you being represented by a great agent-ME!

Whats On Your October Home Maintenance To Do List?

The weekend is here and with the air turning crisp, leaves falling and farmer’s markets overflowing with squash, gourds, apples and potatoes, October is a time to celebrate the harvest — and button up the home and garden for the winter ahead. From raking leaves to sharpening knives, see which of these 13 to-dos make your list this month.

 

1. Rake leaves. Clearing away leaves from lawns is hard work, so be sure to choose a rake that feels good to you. Plastic rakes don’t last as long, but they are lightweight — which helps if you get fatigued easily (or have a lot of leaves to contend with). Instead of bagging all of the leaves you collect, try chopping some with your mower and using them as mulch in flower beds, or add them to a compost pile.

2. Clean gutters and downspouts. Schedule rain-gutter cleaning for after most of the leaves have fallen. Inspect gutters and downspouts for cracks and loose parts, and make repairs as needed.

3. Put up storm windows and doors. If you use storm windows or doors and haven’t put them up yet, now is the time.

4. Decorate outdoor spaces. Fall flowers, pumpkins and gourds are versatile enough to work throughout the season. If you enjoy decorating for Halloween, get out that frightful decor.

5. Shut off exterior faucets and store hoses for winter. Disconnect, drain and roll hoses before storing them indoors for the winter. Shut off the water supply to exterior faucets to prevent frozen pipes.

David Sharff Architect, P.C.

6. Sharpen knives. The holidays are around the corner — be sure your knives are ready to take on all of that cooking by having them professionally sharpened now.

7. Launder and iron holiday linens. Get ahead of the holiday crunch and prep your linens — roll up the freshly laundered and ironed linens on old wrapping paper tubes to prevent wrinkles.

Bardes Interiors

8. Decorate with layers of warmth. Get toasty indoors with cozy throws, thicker curtains and soft rugs. If you haven’t done so yet, swap out your bedding for thicker blankets and fluffy duvets.

9. Check safety devices. Test all smoke and carbon monoxide detectors in the house, and replace batteries as needed. Check the expiration date on the kitchen fire extinguisher and replace it if needed.

10. Swap seasonal clothes. Depending on where you live, September can be a fickle month — but now that October has arrived, it’s time to settle into more predictable fall weather. Gather up stray sandals and lightweight clothing that you don’t plan to wear again until spring, and pack it away. Also look over your fall and winter clothes, and note anything you will need to replace this year.

11. Start an art wall for all of those school projects. Corral those stacks of paper coming home from school with a dedicated space for display. A large bulletin board or magnet board makes hanging art and papers easy. Or you could try art wire with bulldog clips, or simply tape art to the wall with colorful masking tape.

12. Start planning or making holiday gifts. I know it seems like the holidays are still a long way off, but that’s exactly why it’s smart to start thinking about gifts now. Especially if you have hopes of making anything by hand! At the very least, start a gift list that you can add to as you think up ideas.

Whitten Architects

13. Savor your favorite fall traditions. Is there a local harvest festival you’d love to attend, a favorite pumpkin patch or apple orchard to visit? Mark some dates on your calendar so you don’t miss out.

Tell Me: What’s on your to-do list for October?

What Does A Real Estate Agent Do For You?

IF YOU HAVE STARTED YOU HOME SEARCH AND ARE FEELING A LITTLE OVERWHELMED HERE IS THE BEST WAY TO FIND AN AGENT FOR YOU.

HOW DO I FIND THE BEST AGENT FOR ME?

To find the best agent you should think of the selection process as an interview to find someone that is the right fit. You are interviewing potential agents to determine which one will get you into a new home, in the shortest amount of time possible, and for the least amount of money. With that in mind, you should attempt to find an agent through a referral (more than 50% of buyers find an agent through referral or from previous home buying experience), or by contacting your State’s Association of Realtors.

Your evaluation should focus on the following criteria:

EXPERIENCE

Does your agent have recent and in-depth experience helping buyers locate homes that fit your criteria, and in your preferred location?

• Location: What areas do you work in the most?
• Price-Range: What was the price range of homes for which you acted as buyer agent last year? Average / median home price?
• First-Time Buyers: What percentage of your work is with first-time home buyers?
• Experience Closing: How many buyers have you represented? How many transactions did you complete in the last year?
• Buyers vs. Sellers: What percentage of your business is with home buyers (as opposed to sellers)?
• Types of Home: What type of homes do you specialize in? Single-family / condo / townhouse?

PERSONALITY

Trust is important in real estate transactions; does your agent have a personality that you’re comfortable with and do they seem trustworthy?

• Timing/Organization: How many clients do you work with? Can you work around my schedule?
• Communication Style: What is your preferred method of communication? (phone / email / text / in-person)? How often do you stay in touch?

KEY INTERVIEW CONSIDERATIONS

• Does the agent intimidate you? Do you feel they would pressure you into making a decision before you are ready?
• Would the agent work around your time schedule? Do they seem like they have time for you?
• Do you have confidence in their experience and abilities?
• Are they a member of the National Association of Realtors?

WHAT TO WATCH OUT FOR WITH AN AGENT

• An agent who is reluctant to show houses being sold directly by the owner – commission is usually only paid to agent for transactions in which a seller’s agent is representing the owner (you may need to discuss directly compensating your agent for this type of transaction).
• An agent who may be financially motivated to pressure you into completing a transaction – could pressure you or suggest that you pay a higher price so that you are more likely to secure the home, especially in the event of a bidding war.
• The potential exists for a “dual agency” situation, where an agent represents both the buyer and seller (and stands to collect the full commission). In these cases, the agent is purely interested in making sure the transaction closes, instead of protecting the buyer’s best interests, to receive a double commission.
• Service providers recommended by an agent may be less motivated to discover potential problems with the house in order to maintain business with the agent.

HOW DO YOU FIND THE BEST REAL ESTATE AGENT?

IF YOU HAVE STARTED YOU HOME SEARCH AND ARE FEELING A LITTLE OVERWHELMED HERE IS THE BEST WAY TO FIND AN AGENT FOR YOU.

HOW DO I FIND THE BEST AGENT FOR ME?

To find the best agent you should think of the selection process as an interview to find someone that is the right fit. You are interviewing potential agents to determine which one will get you into a new home, in the shortest amount of time possible, and for the least amount of money. With that in mind, you should attempt to find an agent through a referral (more than 50% of buyers find an agent through referral or from previous home buying experience), or by contacting your State’s Association of Realtors.

Your evaluation should focus on the following criteria:

EXPERIENCE

Does your agent have recent and in-depth experience helping buyers locate homes that fit your criteria, and in your preferred location?

• Location: What areas do you work in the most?
• Price-Range: What was the price range of homes for which you acted as buyer agent last year? Average / median home price?
• First-Time Buyers: What percentage of your work is with first-time home buyers?
• Experience Closing: How many buyers have you represented? How many transactions did you complete in the last year?
• Buyers vs. Sellers: What percentage of your business is with home buyers (as opposed to sellers)?
• Types of Home: What type of homes do you specialize in? Single-family / condo / townhouse?

PERSONALITY

Trust is important in real estate transactions; does your agent have a personality that you’re comfortable with and do they seem trustworthy?

• Timing/Organization: How many clients do you work with? Can you work around my schedule?
• Communication Style: What is your preferred method of communication? (phone / email / text / in-person)? How often do you stay in touch?

KEY INTERVIEW CONSIDERATIONS

• Does the agent intimidate you? Do you feel they would pressure you into making a decision before you are ready?
• Would the agent work around your time schedule? Do they seem like they have time for you?
• Do you have confidence in their experience and abilities?
• Are they a member of the National Association of Realtors?

WHAT TO WATCH OUT FOR WITH AN AGENT

• An agent who is reluctant to show houses being sold directly by the owner – commission is usually only paid to agent for transactions in which a seller’s agent is representing the owner (you may need to discuss directly compensating your agent for this type of transaction).
• An agent who may be financially motivated to pressure you into completing a transaction – could pressure you or suggest that you pay a higher price so that you are more likely to secure the home, especially in the event of a bidding war.
• The potential exists for a “dual agency” situation, where an agent represents both the buyer and seller (and stands to collect the full commission). In these cases, the agent is incentivized purely to make sure that a transaction closes, instead of protecting the buyer’s best interests.
• Service providers recommended by an agent may be less motivated to discover potential problems with the house in order to maintain business with the agent.

Why Do I Need A Buyers Agent?

Many people today figure that with real estate listings published online, the buyer’s agent’s role is irrelevant. By searching and researching independently, buyers going directly to the listing agent assume they can negotiate a better deal by cutting out the middleman—the buyer’s agent.

The role of the buyer’s agent was never solely about accessing listings, of course. A good buyer’s agent has always had their feet on the street and keeps a finger on the market’s pulse. They know the comps and the other agents, so they can add an incredible amount of value simply through sharing their experience and knowledge.

Buyers, left to their own devices, “don’t know what they don’t know.” A good buyer’s agent can step in, track the buyer’s process and help uncover some of the unknowns about a particularly house, an agent or the market in general. A good agent has years of market and transaction experience.

Additionally, the seller is going to pay the commission whether or not there’s a buyer’s agent. For the buyer, then, there’s rarely any savings by going without an agent. Instead, the listing agent simply makes double the commission. There’s no savings to the seller or the buyer when the buyer doesn't have an agent.

Also, by having a listing agreement with the seller, the listing agent is looking out first and foremost for the seller’s interests, not the buyer’s. By working with an agent (at no cost), the buyer gets an adviser/advocate working to represent their best interests.