What is the Cost of Waiting Until Next Year to Buy a Home?
Over the course of the last 12 months, home prices have appreciated by 7.0%. Over the same amount of time, interest rates have remained historically low which has allowed many buyers to enter the market.
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As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.
The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 4.7% over the next 12 months.
What Does This Mean as a Buyer?
If home prices appreciate by 4.7% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:
If buying a home is in your plan for 2018, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.
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What Is a Real Estate Agent’s Commission?
Ever wonder what exactly a Real Estate Agent does? Are they worth the commission? Ever wonder if you’re paying too much for commission? Even consider going it your own via FSBO?
You may have a great Agent and they don’t communicate with you all they’re doing. Or, you may also have a rock star agent and who’s doing so much it hasn’t even occurred to you all the fine details going into your home sale.
Here are a few facts that might help you sleep at night and have some peace about residential real estate commissions:
1. Real estate agents are sole proprietors
That means that even if they are a part of an agency, they are small business owners and cover all their own costs and carry all the risk. Do you own or have you ever owned your own small business? Then you know you wear ALL the hats and all the responsibility falls to you. Not to mention, your rather high tax rate!
They invest in you and your home. If they take on a listing, that means they’ve calculated the cost of marketing, photos, and time – lots and lots of time. High quality marketing – online and offline – and maybe even virtual tours. All that cost money. There’s considerable overhead if you are active in the field.
They have no salary and no real predictability in income. One deal may have to last them many months or maybe even longer.
2. The sale of your home may be covering for the loss of another
Deals fall through ALL. THE. TIME. Your particular sale may go pretty smoothly – great! I guarantee you it has ended up covering for a major loss on another deal. It’s the nature of business.
3. The real work begins once a contract is accepted
It may feel like all an agent does is show up sometimes for an open house here and there and put a sign in the yard. Or every time they come over, they’re telling you things you need to spend money on. But the real work is done behind the scenes and is intensified once an offer is accepted. Getting to the closing table is more and more challenging.
Pat Vredevoogd-Combs, a former president of the National Association of REALTORS, testified before the House Financial Services Committee on Housing to stark federal complaints about residential real estate industry pricing.
She submitted a list of 184 things that Listing Agents do in every real estate transaction as a part of her testimony to the committee. She stated, “By all accounts the general public is not aware of all the services that agents provide to sellers and buyers during the course of the transaction, probably because most of the important services are performed behind the scenes.”
Here is the list of (just) 184 things residential real estate agents do:
1. Make appointment with seller for listing presentation.
2. Send a written or e-mail confirmation of appointment and call to confirm.
3. Review appointment questions.
4. Research all comparable currently listed properties.
5. Research sales activity for past 18 months from MLS and public databases.
6. Research “average days on market” for properties similar in type, price and location.
7. Download and review property tax roll information.
8. Prepare “comparable market analysis” (CMA) to establish market value.
9. Obtain copy of subdivision plat/complex layout.
10. Research property’s ownership and deed type.
11. Research property’s public record information for lot size and dimensions.
12. Verify legal description.
13. Research property’s land use coding and deed restrictions.
14. Research property’s current use and zoning.
15. Verify legal names of owner(s) in county’s public property records.
16. Prepare listing presentation package with above materials.
17. Perform exterior “curb appeal assessment” of subject property.
18. Compile and assemble formal file on property.
19. Confirm current public schools and explain their impact on market value.
20. Review listing appointment checklist to ensure completion of all tasks.
Listing Appointment Presentation
21. Give seller an overview of current market conditions and projections.
22. Review agent and company credentials and accomplishments.
23. Present company’s profile and position or “niche” in the marketplace.
24. Present CMA results, including comparables, solds, current listings and expireds.
25. Offer professional pricing strategy based and interpretation of current market conditions.
26. Discuss goals to market effectively.
27. Explain market power and benefits of multiple listing service.
28. Explain market power of Web marketing, IDX and MLS.
29. Explain the work the broker and agent do “behind the scenes” and agent’s availability on weekends.
30. Explain agent’s role in screening qualified buyers to protect against curiosity seekers.
31. Present and discuss strategic master marketing plan.
32. Explain different agency relationships and determine seller’s preference.
33. Review all clauses in listing contract and obtain seller’s signature.
After Listing Agreement is Signed
34. Review current title information.
35. Measure overall and heated square footage.
36. Measure interior room sizes.
37. Confirm lot size via owner’s copy of certified survey, if available.
38. Note any and all unrecorded property lines, agreements, easements.
39. Obtain house plans, if applicable and available.
40. Review house plans, make copy.
41. Order plat map for retention in property’s listing file.
42. Prepare showing instructions for buyers’ agents and agree on showing time with seller.
43. Obtain current mortgage loan(s) information: companies and account numbers
44. Verify current loan information with lender(s).
45. Check assumability of loan(s) and any special requirements.
46. Discuss possible buyer financing alternatives and options with seller.
47. Review current appraisal if available.
48. Identify Home Owner Association manager is applicable.
49. Verify Home Owner Association fees with manager–mandatory or optional and current annual fee.
50. Order copy of Home Owner Association bylaws, if applicable.
51. Research electricity availability and supplier’s name and phone number.
52. Calculate average utility usage from last 12 months of bills.
53. Research and verify city sewer/septic tank system.
54. Calculate average water system fees or rates from last 12 months of bills.
55. Or confirm well status, depth and output from Well Report.
56. Research/verify natural gas availability, supplier’s name and phone number.
57. Verify security system, term of service and whether owned or leased.
58. Verify if seller has transferable Termite Bond.
59. Ascertain need for lead-based paint disclosure.
60. Prepare detailed list of property amenities and assess market impact.
61. Prepare detailed list of property’s “Inclusions & Conveyances with Sale.”
62. Complete list of completed repairs and maintenance items.
63. Send “Vacancy Checklist” to seller if property is vacant.
64. Explain benefits of Home Owner Warranty to seller.
65. Assist sellers with completion and submission of Home Owner Warranty application.
66. When received, place Home Owner Warranty in property file for conveyance at time of sale.
67. Have extra key made for lockbox.
68. Verify if property has rental units involved. And if so:
69. Make copies of all leases for retention in listing file.
70. Verify all rents and deposits.
71. Inform tenants of listing and discuss how showings will be handled.
72. Arrange for yard sign installation.
73. Assist seller with completion of Seller’s Disclosure form.
74. Complete “new listing checklist.”
75. Review results of Curb Appeal Assessment with seller and suggest improvements for salability.
76. Review results of Interior Decor Assessment and suggest changes to shorten time on market.
77. Load listing time into transaction management software.
Entering Property in MLS Database
78. Prepare MLS Profile Sheet–agent is responsible for “quality control” and accuracy of listing data.
79. Enter property data from Profile Sheet into MLS listing database.
80. Proofread MLS database listing for accuracy, including property placement in mapping function.
81. Add property to company’s Active Listings.
82. Provide seller with signed copies of Listing Agreement and MLS Profile Data Form within 48 hours.
83. Take more photos for upload into MLS and use in flyers. Discuss efficacy of panoramic photography.
Marketing the Listing
84. Create print and Internet ads with seller’s input.
85. Coordinate showings with owners, tenants and other agents. Return all calls–weekends included.
86. Install electronic lockbox. Program with agreed-upon showing time windows.
87. Prepare mailing and contact list.
88. Generate mail-merge letters to contact list.
89. Order “Just Listed” labels and reports.
90. Prepare flyers and feedback forms.
91. Review comparable MLS listings regularly to ensure property remains competitive in price, terms, conditions and availability.
92. Prepare property marketing brochure for seller’s review.
93. Arrange for printing or copying of supply of marketing brochures or flyers.
94. Place marketing brochures in all company agent mailboxes.
95. Upload listing to company and agent Internet sites.
RELATED: Your Custom Home Marketing Plan
96. Mail “Just Listed” notice to all neighborhood residents.
97. Advise Network Referral Program of listing.
98. Provide marketing data to buyers from international relocation networks.
99. Provide marketing data to buyers coming from referral network.
100. Provide “Special Feature” cards for marketing, if applicable/
101. Submit ads to company’s participating Internet real estate sites.
102. Convey price changes promptly to all Internet groups.
103. Reprint/supply brochures promptly as needed.
104. Review and update loan information in MLS as required.
105. Send feedback e-mails/faxes to buyers’ agents after showings.
106. Review weekly Market Study.
107. Discuss feedback from showing agents with seller to determine if changes will accelerate the sale.
108. Place regular weekly update calls to seller to discuss marketing and pricing.
109. Promptly enter price changes in MLS listings database.
The Offer and the Contract
110. Receive and review all Offer to Purchase contracts submitted by buyers or buyers’ agents. 111. Evaluate offer(s) and prepare “net sheet” on each for owner to compare.
112. Counsel seller on offers. Explain merits and weakness of each component of each offer. 113. Contact buyers’ agents to review buyer’s qualifications and discuss offer.
114. Fax/deliver Seller’s Disclosure to buyer’s agent or buyer upon request and prior to offer if possible.
115. Confirm buyer is pre-qualified by calling loan officer.
116. Obtain pre-qualification letter on buyer from loan officer.
117. Negotiate all offers on seller’s behalf, setting time limit for loan approval and closing date.
118. Prepare and convey any counteroffers, acceptance or amendments to buyer’s agent.
119. Fax copies of contract and all addendums to closing attorney or title company.
120. When Offer-to-Purchase contract is accepted and signed by seller, deliver to buyer’s agent.
121. Record and promptly deposit buyer’s money into escrow account.
122. Disseminate “Under-Contract Showing Restrictions” as seller requests.
123. Deliver copies of fully signed Offer to Purchase contract to sellers.
124. Fax/deliver copies of Offer to Purchase contract to selling agent.
125. Fax copies of Offer to Purchase contract to lender.
126. Provide copies of signed Offer to Purchase contract for office file.
127. Advise seller in handling additional offers to purchase submitted between contract and closing.
128. Change MLS status to “Sale Pending.”
129. Update transaction management program to show “Sale Pending.”
130. Review buyer’s credit report results–Advise seller of worst and best case scenarios.
131. Provide credit report information to seller if property is to be seller financed.
132. Assist buyer with obtaining financing and follow up as necessary.
133. Coordinate with lender on discount points being locked in with dates.
134. Deliver unrecorded property information to buyer.
135. Order septic inspection, if applicable.
136. Receive and review septic system report and access any impact on sale.
137. Deliver copy of septic system inspection report to lender and buyer.
138. Deliver well flow test report copies to lender, buyer and listing file.
139. Verify termite inspection ordered.
140. Verify mold inspection ordered, if required.
Tracking the Loan Process
141. Confirm return of verifications of deposit and buyer’s employment.
142. Follow loan processing through to the underwriter.
143. Add lender and other vendors to transaction management program so agents, buyer and seller can track progress of sale.
144. Contact lender weekly to ensure processing is on track.
145. Relay final approval of buyer’s loan application to seller.
146. Coordinate buyer’s professional home inspection with seller.
147. Review home inspector’s report.
148. Enter completion into transaction management tracking software program.
149. Explain seller’s responsibilities of loan limits and interpret any clauses in the contract.
150. Ensure seller’s compliance with home inspection clause requirements.
151. Assist seller with identifying and negotiating with trustworthy contractors for required repairs.
152. Negotiate payment and oversee completion of all required repairs on seller’s behalf, if needed.
153. Schedule appraisal.
154. Provide comparable sales used in market pricing to appraiser.
155. Follow up on appraisal.
156. Enter completion into transaction management program.
157. Assist seller in questioning appraisal report if it seems too low.
Closing Preparations and Duties
158. Make sure contract is signed by all parties.
159. Coordinate closing process with buyer’s agent and lender.
160. Update closing forms and files.
161. Ensure all parties have all forms and information needed to close the sale.
162. Select location for closing.
163. Confirm closing date and time and notify all parties.
164. Solve any title problems (boundary disputes, easements, etc.) or in obtaining death certificates.
165. Work with buyer’s agent in scheduling and conducting buyer’s final walkthrough prior to closing.
166. Research all tax, HOA, utility and other applicable prorations.
167. Request final closing figures from closing agent (attorney or title company).
168. Receive and carefully review closing figures to ensure accuracy.
169. Forward verified closing figures to buyer’s agent.
170. Request copy of closing documents from closing agent.
171. Confirm the buyer and buyer’s agent received title insurance commitment.
172. Provide “Home Owners Warranty” for availability at closing.
173. Review all closing documents carefully for errors.
174. Forward closing documents to absentee seller as requested.
175. Review documents with closing agent (attorney).
176. Provide earnest money deposit from escrow account to closing agent.
177. Coordinate closing with seller’s next purchase, resolving timing issues.
178. Have a “no surprises” closing so that seller receives a net proceeds check at closing.
179. Refer sellers to one of the best agents at their destination, if applicable.
180. Change MLS status to Sold. Enter sale date, price, selling broker and agent’s ID numbers, etc.
181. Close out listing in transaction management program.
Follow Up After Closing
182. Answer questions about filing claims with Home Owner Warranty company, if requested.
183. Attempt to clarify and resolve any repair conflicts if buyer is dissatisfied.
184. Respond to any follow-up calls and provide any additional information required from office files.
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Zillow’s 6 Housing Market Predictions for 2017
Well, as many had been wishing for, 2016 is officially behind us. And as the year came to a close, predictions for the 2017 housing market came pouring in.
It’s hard to say what the new year will bring with the newly-elected President-elect Donald Trump. Zillow points out in its predictions how some of his policies could affect housing next year.
Here are Zillow’s six predictions for 2017:
1. Cities will focus on denser development of smaller homes close to public transit and urban centers.
2. More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.
3. Rental affordability will improve as incomes rise and growth in rents slows.
4. Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages (this could be worsened by tougher immigration policies under President-elect Trump).
5. The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing – putting them further from adequate public transit options.
6. Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.
Other predictions for next year include this one from Redfin, predicting the fastest real estate market ever, this one from Kroll Bond Rating Agency, this one from Realtor.com and this one from Bank of America.
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How Do You Find a Real Estate Agent?
There are NO standards for Real Estate Agents. GOOGLE every Agent considered and verify everything they say
Hiring a Real Estate Agent is a job interview – someone is going to be responsible for one of the largest transactions in your life. Incredibly, studies consistently show that the majority of buyers and sellers fail to treat Agent selection seriously.
In a field with few to no established performance standards, ridiculous self-aggrandizement and bogus production reporting, how are the qualified and high producing Agents found? In about 15 minutes with Google search and seven direct questions.
Before anything, GOOGLE every New Jersey Real Estate Agent that you are considering. Real Estate has exploded with the internet; any productive Agent understands and embraces this. Examine reviews, their website, articles, social media…they will be your representative. After that, a few simple and very direct questions will narrow the pool. It’s possible Uncle Jack or Aunt Cathy won’t make the cut.
1. Are you a full-time Agent?
This question must be asked because so many Agents are not, Real Estate is a second, third or fourth job. It is impossible to effectively work part time; the speed of transactions, increased legal requirements and fluid market mandate full attention. Society has been conditioned to expect answers quickly, at all times. Agents that can’t or won’t pay attention cost clients money and opportunity.
2. How long have you been actively selling Real Estate and for whom?
Two years of full time work or about 20 personal transactions is a recommended minimum. The skills required for contracts, data collection, negotiation etc., cannot be taught in a class room. Many “discount” firms exist often housing Agents that want to hang their license at a place that doesn’t charge full fees. Research into the firm is as important as that for the Agent.
3. What are your personal production levels over the last three years?
If an Agent can’t live off their earnings, they are not producers. A full-time Agent should have at least 10-12 transactions per year personally completed, not as part of a team, an office or some other entity. Some Agents tie into office or team production – focus on their production only and be certain to verify this.
4. Verify the figure you are provided and request a copy of their report.
Personal stats must be for the Agent only – not a team or office. Request a copy of their personal production; this can be pulled off the MLS or from their Brokerage firm.
5. Is your managing Broker on site at your office and responsible for it?
Many discount firms have “Broker pools” – not specific managing Brokers that guide Agents. When things go bad and that Agent is clueless, will the Broker step up?
6. Please provide five references over the last year that I can call.
This will verify experience with past clients and by keeping the date within a year; it will demonstrate experience in the current market. Call the references and ask questions.
Also understand the difference between Real Estate Agent references and testimonials vs. reviews. References and testimonials you receive from your prospective next Agent will always present that Agent in the most positive light. Unsolicited reviews, however, are more honest. Websites like Zillow and Trulia are great resources for Jersey Shore Real Estate Agent reviews.
7. Please provide a copy of your resume.
Every Agent likely has an alphabet of nonsensical designations; most are obtained by writing a check. Many Real Estate designations were invented during the crash as a way of generating income for various associations – don’t fall for the nonsense.
These are reasonable, direct questions; others can be added as needed. This type of pre-screening should be completed ahead of any listing appointments or before meaningful meetings begin. Obviously, there are a plethora of additional, more specific questions depending on the circumstances, but a few minutes spent ahead of time will save time and money down the road.
Selection of a Real Estate Agent is arguably the single most important decision a buyer or seller makes. Until consumers demand high standards, the problem of inept and incompetent Real Estate Agents will remain.
How did you successfully interview your last Agent? Or, did you fall just short of all due diligence an end up in a nightmare scenario? Sound of on the Patrick Parker Realty Facebook Page, on our Twitter or LinkedIn feeds, and don’t forget to subscribe to our monthly email newsletter for articles like this one delivered straight to your inbox.
#Brexit: The Immediate Impact on U.S. Mortgage and Housing Finance
After much speculation on the U.K.’s decision — British voters decided to leave the European Union — now many speculate about how this will affect the U.S. economy.
Here is a summary of the opinions that impact the housing and mortgage finance industry:
First, Standard & Poor’s reports it may downgrade UK sovereign ratings: now at “competitive disadvantage compared with other global financial centers.”
Stateside, financial institutions sought to downplay fears in the early hours Friday.
“We affirm our assessment that the U.K. economy and financial sector remain resilient and are confident that the UK authorities are well-positioned to address the consequences of the referendum outcome,” the G-7 finance ministers and central bank governors stated.
“We recognize that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability,” their statement continued.
So how do experts think the market will react to this decision?
“The market action in Treasuries and Gilts continues to evolve in line with the playbook from the 2011 U.S. sovereign downgrade,” said Mike Schumacher, head of rate strategy Wells Fargo.
“There is one key distinction: this time Gilts are leading the way,” Schumacher said. “Should Gilts lead Treasuries? We think not. We still expect capital to flow out of the U.K., with the U.S. being a very likely destination.”
“In the June 17 edition of the Rates Explorer, we called for two-year and 10-year Treasury yields to reach 0.5% and 1.3%, respectively, in the week or two after a leave victory,” Schumacher continued. “We stand by these projections. In the Asia trading session, the two-year reached 0.5%, while the 10-year bottomed at 1.4%.”
Then he adds this important point:
“We still expect capital to flow out of the U.K., with the U.S. being a very likely destination. In the June 17 edition of the Rates Explorer, we called for 2yr and 10yr Treasury yields to reach 0.5% and 1.3%, respectively, in the week or two after a “Leave” victory.”
In fact, the Brexit vote may not cause as dramatic of an effect as some people think, and will even take years before going into effect, said Andrew Kenningham Capital Economics senior global economist. The economy may even see benefits such as loosening monetary conditions.
“Goldman Sachs has a long history of adapting to change, and we will work with the relevant authorities as the terms of the exit become clear,” said CEO Lloyd Blankfein in an internal memo following the Brexit vote, according to an article by Stephen Alpher for Seeking Alpha.
On the other hand, some experts point out the downfalls that could come from the vote.
“Isolationist move will cause many wealthy foreigners to consider selling their properties in UK, especially in London as it becomes less attractive place to set up offices to conduct global business,” said Lawrence Yun, the National Association of Realtors chief economist. “Therefore, demand for U.S. real estate could rise if global investors view America as open to global business.”
“But overall, global economy and job creations could modestly slow down with more frictions in place to do commerce,” Yun said. “The British economy will be disrupted and hence we should expect fewer Brits able to buy in the U.S”
Previously, after the recent shockingly low jobs report, some experts pointed to the Brexit vote as a deciding factor on the Fed raising rates.
“The sudden stop in employment growth rules out any chance of a rate hike from the Fed at next week’s FOMC meeting, particularly now that the UK vote on whether to leave the European Union appears to be going down to the wire,” said Capital Economics Chief Economist Paul Ashworth.
“The people of the United Kingdom have spoken and we respect their decision,” said Jacob Lew, U.S. Secretary of the Treasury. “We will work closely with both London and Brussels and our international partners to ensure continued economic stability, security, and prosperity in Europe and beyond.”
“We continue to monitor developments in financial markets,” Lew said. “I have been in regular contact in recent weeks with my counterparts and financial market participants in the UK, EU and globally and we are continuing to consult closely. The UK and other policymakers have the tools necessary to support financial stability, which is key to economic growth.”
Sources: The New York Times, The Wall Street Journal, Housing Wire
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4 Common (but Terrible) Reasons for Overpricing Your Home
We know, we know—you love your house. The kitchen is the perfect size, your weekly summer barbecues give your neighbors patio envy, and your ’70s-style conversation pit is totally coming back into vogue—as you knew it would.
You’ve seen the comps for your neighborhood, but you just know your home is worth more, so you’re going to list it at a higher price.
HAVEN’T SEEN YOUR COMPS? Request A Free Comparable Market Analysis
This is one of a few reasons why sellers overprice their home, and none are smart. If you price your home too high, it’ll take longer to sell, raising doubts in buyers’ minds about whether there’s something wrong with it, and you’ll probably have to drop the price eventually anyway.
So don’t fall for any of these five common justifications sellers use to inflate the price of their beloved property:
1. You have the Midas touch in decor (you think)
The reason that interiors are often painted white or neutral colors before a sale is that that allows potential buyers to envision what colors would make it their home. Your colorful touches might not be for everyone, and can actually devalue your house.
RELATED: To Sell Your Home Think Like A Buyer
Recently an Agent listed a home for a client whose bathrooms were all sorts of strange colors—olive-green toilets, a purple bathtub, and a pink sink. Agents need to be honest with you at all costs – pun intended. But when it was recommended to the seller a price that factored in the cost of necessary updates, things got a little heated.
The owner was upset and argued that the colorful fixtures added value, because people are tired of the all-white, stale hospital look.
So we tried the seller’s way first, listing it for his desired price. It didn’t sell, and buyers gave feedback that the home was overpriced. After weeks on the market, the seller finally agreed to lower the price. It sold within 2 weeks.
2. You’re nitpicking comps
Comps (or comparable market analysis) are valuable reference points that allow you to compare your home to similar nearby homes in order to price it right. But some sellers place too much value on ultimately negligible differences between their home and the comps.
Recently an Agent received the following feedback from a seller; “My home has a 60-gallon hot water heater; every other home has 40. My deck is 60 feet larger. My den has real barn wood paneling.”
While small features like this might be worth pointing out to potential buyers, they are not going to make or break a deal – and trying to price your home based on the size of your deck is a setup for disappointment. Plus, you might not see the flaws in your home – your deck might be big, but it might also need work.
We don’t want to be a downer; by nature, we see life through rose-colored glasses. Sadly, it can cost you when it comes to selling your home.
3. You’re too focused on your ROI
A house is an investment, and everyone wants a return on their investment. Couple that with emotional attachment, and you’re primed to mark up your home’s value.
We often find Sellers think that their house is worth what they want or need to sell it for, but the harsh reality is that a home is worth whatever a buyer is ready, willing, and able to pay for it.
FREE DOWNLOAD: Your Ultimate Home Sellers Guide
Even in a seller’s market, there’s no guarantee that you’ll make money on your house. And just because you need $500,000 to buy that house in Shark River Hills doesn’t mean you can sell your house for the same amount.
4. You’re imagining you’ll haggle
Perhaps the most common reason people overprice their home is because they’re looking to negotiate.
On paper, it sounds like something you’d see on “Pawn Stars.” You offer up a vintage silver tea set at an inflated price. Rick Harrison offers you 25% of that, but he eventually goes up to 30%.
OK, maybe “Pawn Stars” is a bad example, but you get the idea: You price your house 10% higher, fully expecting a buyer to try to lowball you, netting you the price you wanted all along while the buyer walks away thinking he got a bargain.
It doesn’t work like that in real estate.
It’s much better to price it right and create such interest and demand where buyers are chasing you, versus you chasing the market backward [and] searching for the demand.
RELATED: The Importance of Proper Pricing
So don’t be afraid to price your home fairly, or price it based on your Agent’s advice. This is what will attract buyers and boost the price to where it should be.
Ultimately, everything sells when it’s priced right.
FREE DOWNLOAD: Your Ultimate Home Sellers Guide
Did you recently sell your home? What experience did you have when it came to proper pricing? Are you currently selling? What are your proper pricing observations?
Back in the Real Estate Market: Navigating the New Tech-Centered World
What if someone awakened from a long slumber — and decided to sell their home and buy a new one? That’s sort of what many empty nesters and other long-term homeowners face today. Many have paid little or no attention to the dramatically altered real estate market.
It’s not just that prices have changed: The entire buying and selling process has been transformed.
It’s a brave new tech-centered world
Perhaps the biggest change over the past 20 years is that technology has revolutionized the market. Now, consumers can effortlessly access all sorts of information that used to be mostly proprietary; it was hidden until revealed by industry insiders. Today, information is everywhere and the Internet is the first stop for most potential home buyers.
Buyer’s are capable of knowing everything about the homes they’re interested before they buy. Information is out there and Buyer’s can come in armed with all sorts of information about prices, taxes, the community and more.
Take one of the thorniest questions that both buyers and sellers used to face; How much should they offer/ask for homes? Uncovering home value used to involve intricate, bespoke examinations of recent sales within a community. Today, buyers and sellers can get a rough estimate with a few keystrokes.
In addition, Broker websites – like Patrick Parker Realty – add to the wealth of information online about the properties. They also provide advice and explanations on all different aspects of buying and selling; examples:
FREE DOWNLOAD: The Ultimate Buyers Guide
FREE DOWNLOAD: The Ultimate Sellers Guide
Buyers can… get a good sense of the market before you begin to shop. Then, take all that knowledge and work with an agent who has an intimate understanding of the local market.
Sellers can… use real estate sites to come to a better idea of how much their homes are worth, what they’re likely to be worth in the future, and what they need to do to maximize their sale price.
Real estate websites have become increasingly content rich, the Patrick Parker Realty Blog being just one example.
Just a few recent developments; videos shot from drones for aerial looks at how homes fit into the landscape and community; 3-D walk-throughs that enable users to take virtual home tours where they can poke around corners and see what’s behind the sofas; and apps that provide real-time access to activity anywhere within a community.
Buyers can… access price or tax history and inspection information, find out what the local schools are like, neighborhood crime rates, and the home’s proximity to parks, shops, restaurants, and cultural amenities.
Sellers can… access their listing pages and update home facts. They can go online to find out the best time to sell their property in their area. After its listed they can learn how many buyers have looked at their property and how that compares to other, similar homes.
All-told, consumers are much more empowered, much more in charge of the buying and selling experience. They have information at their fingertips that can make them much more prepared and discerning sellers and buyers.
Are you back in the market? What are your favorite online destinations to research and find information?
All Signs A Go For A Strong Selling Season
The number of homes that in April went under contract to be sold climbed to the highest level in over a decade, a sign the housing market is gaining traction and supported by steady job creation and historically low interest rates.
Pending sales of previously owned homes, reflecting contract signings, rose 5.1% last month from March said the National Association of Realtors, handily exceeding the 0.7% rise expected by economists surveyed by The Wall Street Journal.
FREE DOWNLOAD: How to Put Your Home on The Market and Attract Buyers Today
In addition, Pending sales in April rose 4.6% compared with a year earlier, marking the 20th consecutive month of year-over-year gains. Pending sales provide a more up-to-date assessment of the housing market than other measures because they are based on contract signings, the earliest stage of the sales process.
Home Sales Climb to Highest Level in a Decade!
The sales index climbed to 116.3, the highest level since February 2006. An index of 100 is equal to the average level of contract activity during 2001, which the NAR considers a “normal,” or balanced, market for the current U.S. population.
The U.S. housing-market activity continues to improve, and all indications thus far point to a strong spring selling season.
Steady demand for housing has tightened supply and pushed up, but simultaneous low mortgage rates are not deterring buyers.
FREE DOWNLOAD: Your Ultimate Home Selling Guide
Thinking of selling this season? Ask us why now is the perfect time!
6 Reasons Financial Experts Say You Should Be Investing In A Home
Each day you’re swarmed with financial advice. Particularly Millennials… start saving early, start investing, use employer’s 401(k) match and for heaven’s sake, dump those high-interest credit cards!
Ultimately, financial advisors concur, purchasing a home is a great investments. Why? Because it is inflation-protected and a physical asset that doesn’t disappear like stocks can and do.
1. You’ll spend smarter
Rent payments go straight into the pocket of the landlord – and at the beginning of the next month, you’ve got nothing to show for it.
But mortgage payments are an investment in the future. As the remaining balance on a mortgage is reduced, home equity increases, padding your own retirement account – and not your landlord’s. Better to spend your money on your own home than on unnecessary, short-term expenses that won’t provide value later, he says.
RELATED: How to Pay Off Your Mortgage Wisely
2. Consider the resale value
Properties in solid markets such as ours are a good investments because we attract buyers who want to live here for a long time. Buying in areas where the market is trending up can increase net worth.
3. Enjoy the tax breaks
Mortgage interest is deductible from your income tax, lowering your tax burden to Uncle Sam. And homeowners usually don’t have to pay a capital gains tax when they sell if the property value increases by less than $250,000 and if the home has been occupied as a primary residence for more than two years. That’s a benefit that trumps even a very good IRA or other tax-deferred retirement plan.
RELATED: Homeowernship: A Shelter from Taxes
4. Homeownership has emotional benefits
Homeowners are more likely to be invested in the local community and develop interpersonal relationships that create a reliable support system than those who rent.
There is also a sense of pride that homeownership invokes. Through the investment of a home purchase, millennials particularly, can play a key role in restoring faith in the American dream and preserving it for decades to come.
5. Low interest rates
Borrowing to buy a place to live is seen by banks as a much safer investment than credit cards, and interest rates are still at rock bottom. These days, mortgage debt is not a BAD financial decision.
6. Supplement your retirement income
As you contemplate buying a home, think about the future. You’ll benefit from having a home as a storehouse for retirement funds, and for most of today’s home buyers your homes will likely be paid off by retirement. You then have home equity to tap into to fund retirement benefits.
This will help you supplement 401(k) and IRA accounts, which will become increasingly more important as the U.S. struggles to fund Social Security.
There are plenty of benefits to owning a home, but Chris Copley, a regional sales manager for TD Bank in New Jersey, notes the important consideration that you’ll be staying in one location for a while.
For prospective homeowners – particularly Millennials – Copley’s best advice is to do research. Talk to loan officers, ask questions and walk through the home-buying process from a financial perspective. “Sit down and do the math. My advice always comes back to doing the homework.”
Crunching numbers is exactly what our client David, 30 – a Millennial – and his wife did before they purchased their first home in August. In an effort to make a smart decision, the couple weighed how long they expected to stay in the home, rent potential and their finances.
“We were nervous,” he says. “But we realized we’d be here long enough that it made financial sense now and for our future.”
And don’t forget to subscribe to the monthly Patrick Parker Realty email newsletter for articles like these delivered straight to your inbox!
Best Practices for Paying Off Your Mortgage
It’s simple to pay off a mortgage earlier. But should you? It’s a complicated question.
Let’s discuss why…
For many people, their mortgage carries an interest rate that’s lower than they could average in retirement or investment accounts. And that means the “extra” money you could throw at a mortgage might actually earn you a lot more elsewhere.
With a low mortgage interest rate, homeowners are “so much better off putting that money in a Roth IRA,” says Jill Gianola, CFP professional, author of “The Young Couple’s Guide to Growing Rich Together.”
Other financial pros agree. And if you have extra money and an employer that offers matching retirement contributions, that option might give you a higher return for your money than paying off a low-rate mortgage, says Eric Tyson, author of “Personal Finance for Dummies.”
Then there’s the college aid factor. If you’re applying for need-based aid for your kids, that home equity could count against you with some colleges, he says, because some institutions view equity as money in the bank.
If, after those caveats, you want to pay off your mortgage early, here are 4 ways to make it happen:
1. Pay an extra 1/12th every month
Divide your monthly principal and interest by 12 and add that amount to your monthly payment. End result: 13 payments a year.
IMPORTANT NOTE: Before you make anything beyond the regular payment, phone your mortgage servicer and find out exactly what you need to do so that your extra payments will be correctly applied to your loan.
Let them know you want to pay “more aggressively,” and ask the best ways to do that.
Some servicers may require a note with the extra money or directions on the notation line of the check.
And to confirm, if you’re putting extra money toward your loan, always check the next statement to make sure it’s been properly applied.
2. Refinance with a shorter-term mortgage
Want to make sure your mortgage is paid in 15 years? Refinance to a 15-year mortgage.
15-year mortgages often carry interest rates a quarter of a percentage point to three-quarters of a percentage point lower than their 30-year counterparts.
But this option is not quick or free. You must qualify for a new mortgage – which means paperwork, a credit check, and, likely, a home appraisal. Plus closing costs.
So do your research about refinance costs before jumping in… even with a lower interest rate, that quicker payoff means higher monthly payments. And this method is a lot less flexible. If you decide that you don’t have the extra money one month to put toward the mortgage, you’re locked in anyway.
Ultimately, unless the new interest rate is lower than the old rate, there’s no point in refinancing. Without a lower rate, you’ll get all the same benefits (and none of the extra costs) by just increasing your payment a sufficient amount.
3. Make an extra mortgage payment every year
12 months, 13 payments. There are a couple of ways to pull off this tactic. You can save up throughout the year and make an extra payment. Or, for those who get paid biweekly, harness part or all of those “extra” or “third” checks.
Get a bonus? A tax refund? An unexpected windfall? However it ends up in your hands, you can funnel some or all of your newfound money toward your mortgage.
The upside: You’re paying extra only when you’re flush. And those additional payments toward the principal will cut the total interest on your loan.
The downside: It’s irregular, so it’s hard to predict the mortgage payoff date. If you throw too much at the mortgage, you won’t have money for other needs.
So yes, whether you should pay off your mortgage early it’s a complicated question. But it does not mean without the proper research you can’t come to an answer.
Have you used any of the above methods to start paying your mortgage off early? What is working for you?
And don’t forget to subscribe to the monthly Patrick Parker Realty email newsletter for articles like these delivered straight to your inbox!
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