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Another Indication

March 12, 2012 By Leave a Comment

The Housing Affordability Index was developed over thirty years ago to help consumers determine when it is a good time to buy a home. It’s considered advantageous to the buyer when the index is over 100 because a median income family can qualify for a median price home.

Recent figures released by the National Association of REALTORS’ economic department show that the 2011 index of 184.5 is the highest annual average since it has been calculated. The most recent month released, December 2011, was 194.9. The index is also broken down into four regions of the country.

The two major components that contribute to the index are home prices and mortgage interest rates which are lower than they’ve been in the last five years which account for the dramatic rise in the index since 2006.

The Housing Affordability Index is another indication that this is a good time to buy a home for people who have good credit, a down payment and want a home. It may be the best time we’ll see in our lifetimes.

Filed Under: Financing

Are You One of THOSE Sellers?

March 8, 2012 By Leave a Comment

Are you one of those sellers?

If you have been in the industry as long as I have (20+ years), you will know what I am talking about.  If you are one of those sellers, you will know what I’m talking about.

What do I mean by those sellers?

Comparable Data

Those sellers are the ones who:

  • Want to price their home above the market value (to leave room for negotiation), but they want to price their home wayyyyyy outside of the right range to even get prospects to come to look
  • Never want to talk about a price adjustment
  • Blame the Realtor for not having people come through (But they are priced 100k higher than market value remember)
  • Change Realtors five times because the waaaay overpriced home isn’t selling
  • Want an open house every weekend although all the data shows that they are ineffective

This post is meant to bring a smile to all who have experienced this type of challenge.  When I was driving to a client’s house the other day, I saw that same house, still listed, but this time with the 4th Realtor.  I decided to look to see what the pricing history has been, and low and behold, the price has not been adjusted even once since it was introduced to the market over a year ago.  Now, shame on the Realtor’s who agreed to list a home with an unrealistic seller (and presumably unmotivated seller).  Listing and carrying an overpriced house on the market costs money, reputation and worse of all, is not going to meet the goal of the seller – to SELL the home.

In conclusion, to avoid being one of those sellers, research the sales data and price the home according to what has recently sold.  If the price that you want to get for the home is outside of the comparable data, you probably can’t get that price (barring some significant enhancements to your home or lot that the comparables don’t have).

Thanks for reading! Be Well.

Filed Under: For Sellers, Uncategorized Tagged With: , , , , ,

FHA Fees Going Up April 1st

March 5, 2012 By Leave a Comment

FHA has raised the annual Mortgage Insurance Premium to 1.25% beginning April 1st.  MIP is required on all FHA loans and used to fund losses by lenders for borrowers who default on their mortgages.  As of June 1st, FHA loans in excess of the standard maximum of $625,500, in high-cost areas, will have a premium of 1.5% of the loan amount.

In addition to the increase in the annual MIP, FHA also announced it plans to raise the fee on the up-front MIP from 1.00% to 1.75%.  No date was reported for its implementation.

The bottom line will result in a borrower’s payments going up.  However, it might not be restricted to the MIP.  Freddie Mac’sPrimary Mortgage Market Survey showed that both 30 year and 15 year mortgages have gone up too.

One way to avoid the increase is to have a completed sales contract and have your lender order the FHA commitment prior to April 1, 2012.  If you plan on buying a home this spring, there is a reason to do it earlier rather than later.

Filed Under: Financing Tagged With: , , , , ,

Negotiating is an Art. Is your Realtor an Artist or Just a Presenter?

March 5, 2012 By Leave a Comment

If negotiation is an art, is your Realtor an Artist?

I’ve said this is several blog posts and it’s worth repeating.  There is much more to a real estate sale than just sales price.  If price becomes the sole focus, many viable real estate transactions could be disregarded when a little massaging could have done the trick.

What are the other considerations when reviewing real estate offers?

  • Sales price (obviously)
  • Closing costs paid for by the seller (If the net number (Sales price minus any concessions ie. closing help) yields the seller an acceptable amount, don’t get stuck on the fact that someone is asking for closing help….. it doesn’t matter.
  • Repairs requested – If the sales price is full price but the buyer nit picks the house to death to the tune of $15,000 to remedy, would an offer $5,000 less with no repairs requested be better? Of course.

Find the Win Win to Win

  • Closing date – If you accept a full price offer but have to pay two additional months of mortgage payments to accommodate the buyer’s requested date, would you have been better off accepting an offer less than full price, but a 30 day closing?
  • Buyer or seller flexibility – Is your counterpart making all the rules and firm with all their requests or are they willing to compromise on some terms that are important to you?
  • Contingencies – A non contingent offer is much stronger than a contingent contract.  Keep in mind, contingency does not necessarily mean that the buyer has a home to sell.   Another common contingency is a home inspection contingency, for example.  All contingencies buy the buyer time to change their mind and offers an “out”.
  • Buyer and seller motivation – A buyer or seller who is motivated is much much bought in to the sale than someone who could take it or leave it.  You want your counterpart to be committed to the end result – going to closing.
  • Showing activity and offers – if you’ve had one showing in 6 months and they want to buy….. consider their offer.  You do not know when the next showing will be.  On the other hand, if you have multiple showings per week, you may be more judicious.
  • Buyer qualification – Does the buyer have strong qualifications or are they squeaking by? Did the offer include a letter from the lender? Are they pre-approved or only pre-qualified? Has the lender seen the buyers loan documents or are they giving a conditional approval IF the buyers documents match what they told the lender verbally?
  • Loan type – Each loan type has its own rules and regulations.  For example, on an FHA and VA loan, the appraiser will be looking for safety defects in the home which could cost the seller additional money to remedy.
  • Market conditions – buyers market or sellers market.  Obviously, the person buying in a buyers market is in a stronger negotiating position than the seller in a buyers market and vice versa.  Playing hardball when you are in a weaker position could be fatal.

Consider the big picture when an offer comes in.  Choose a Realtor with proven and successful negotiating skills.

If you found this post to be helpful, please share it!

Live well!!

 

Filed Under: Financing, For Buyers, For Sale by Owner, For Sellers Tagged With: , , , , , , , , ,

Why Would Anyone Sell Their Home NOW?????

March 2, 2012 By Leave a Comment

 

 

 

 

 

Why would anyone sell their home now?????

They revisit their WHY.

People aren’t selling homes today just because it’s fun.  It’s not fun.  It’s hard and it’s frustrating.   Or at least it  can be.

So why are so many people doing it? Because they have a WHY.  They have a reason to move that is greater than the frustrating parts of selling a home in a buyers market.  They have an unmet need they want to fulfill.

What are some of the reasons people are selling homes? It’s personal.  I mean, it’s personal to the seller.

I sell homes in Anne Arundel county and the surrounding areas.  Here are some of the reasons my sellers are moving – they need a larger home to accommodate their aging parents, they need a smaller home as their kids have moved out, they want to decrease their mortgage payment so they have money to travel, they hate the area they are currently living and don’t feel comfortable with the kids playing outside, they can’t afford their mortgage payment because of a recent hardship, they love another home they saw, they love a community they recently saw, they want to be in a community that has more kids, they want to move from a community that has so many kids, and the list goes on and on.

The point of this blog is to remind the sellers to consider WHY they want to move.  They could make more money if they sell in a sellers market.  The trouble is, when will it become a seller’s market again and are they willing to wait for that time to meet their big WHY? So often people think only financially when they are thinking about selling a home.  But when they aren’t meeting their big WHY in the home or community they are currently living in, the emotional and logical rationale for moving sets in and they call their trusted realtor to list their home for sale.

It is important to remember, memories in a home last far longer than the discomfort of leaving some money on the table.  It is important to sit with your loved ones to determine what your big WHY is and is it large enough to pick up the phone to list your home for sale?

Live well and consider your memories!

Filed Under: Annapolis Real Estate, Anne Arundel County, For Sellers Tagged With: , , , , ,
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