"Timing the market" in real estate doesn't work the way it does with stocks. Homes are bought and sold more out of necessity than to make an easy buck. However, some indicators give a clue when it's a good time to buy. Like now!
Despite the fact that rates are low and prices may still drop, now is the time to move if you have good credit and funds for downpayment. It would be a mistake to "wait and see" if rates or prices fall any more. Why?
Rates are low now because of federal bailouts, but continued low rates can fuel inflation. Fear of inflation causes "the Fed" to raise those rates. Waiting for a lower price on a home while interest rates rise could make the home more expensive.
Example: purchasing a home now for $177,000 at 5% could make the total cost around $370,000 by the end of the loan term. But what if you wait for prices to fall more, and next year you get that home for $160,000. You saved $17,000 - right? Wrong!
If rates rise 2% during that time, you could pay over $400,000 over the life of the loan - $30,000 more than if you bought now! If the math is still fuzzy to you, talk to an agent and crunch the numbers. You'll be glad you did.
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
6/4/10
5/20/10
Launching A New Product
In today's real estate climate, you want to be sure to take all the necessary steps to squeeze every possible penny out of the sale of your home. Small oversights or missteps can be costly when it comes to your bottom line. However, there are some common mistakes that are easily avoidable if you listen to the experience and advice of your real estate representative.
One error that can cost you is to put your home on the market before it is truly ready for presentation. Image is everything, so get all the cleaning, painting, patching, and lawn care done well in advance of your first showing.
Another costly stumbling block involves your initial listing price. Remember that you control the asking price, but not the selling price - that is finally determined by the buyers and what the market will bear. Try to detach yourself emotionally from what you want to net, and price your home aggressively against your competition, right from the beginning.
Emotional attachment can keep you from perceiving and presenting your home as what it now is, a commodity. Present it, market it and price it as you would any new product on the market. Your agent will make sure it gets exposure to the right demographic, and will help you avoid costly errors along the way to a successful closing.
One error that can cost you is to put your home on the market before it is truly ready for presentation. Image is everything, so get all the cleaning, painting, patching, and lawn care done well in advance of your first showing.
Another costly stumbling block involves your initial listing price. Remember that you control the asking price, but not the selling price - that is finally determined by the buyers and what the market will bear. Try to detach yourself emotionally from what you want to net, and price your home aggressively against your competition, right from the beginning.
Emotional attachment can keep you from perceiving and presenting your home as what it now is, a commodity. Present it, market it and price it as you would any new product on the market. Your agent will make sure it gets exposure to the right demographic, and will help you avoid costly errors along the way to a successful closing.
Rent That Builds Equity
Applying for a home loan today sure isn't what it used to be. Buyers who would have qualified just a year or two ago are now facing rejection, but all hope is not yet lost. If you find a home you love offered by motivated sellers, your real estate representative may be able to negotiate a lease-to-own option.
Usually, a portion of the monthly rent paid goes into escrow, where it accumulates for the eventual downpayment. It's a fairly painless way to save up money so you can get the home you want now, even if you can't put enough down to qualify for financing. Within an agreed amount of time, usually three to five years, you will have then saved enough to secure a loan and complete your purchase.
Simply paying rent is like throwing your money away, but a rent-to-own option actually helps you build equity while you’re making your monthly payments (like a mortgage!). Many sellers find this arrangement attractive too, because it generates regular income for them in a still recovering housing market.
You might be wondering why a real estate agent would even bother to offer a lease-to-own option instead of an outright purchase, but in these cases, the agent is often paid a rental commission, and then a sales commission once the transaction has completely closed with a purchase.
Usually, a portion of the monthly rent paid goes into escrow, where it accumulates for the eventual downpayment. It's a fairly painless way to save up money so you can get the home you want now, even if you can't put enough down to qualify for financing. Within an agreed amount of time, usually three to five years, you will have then saved enough to secure a loan and complete your purchase.
Simply paying rent is like throwing your money away, but a rent-to-own option actually helps you build equity while you’re making your monthly payments (like a mortgage!). Many sellers find this arrangement attractive too, because it generates regular income for them in a still recovering housing market.
You might be wondering why a real estate agent would even bother to offer a lease-to-own option instead of an outright purchase, but in these cases, the agent is often paid a rental commission, and then a sales commission once the transaction has completely closed with a purchase.
4/9/10
Making It At The Top
You may be hearing that things are improving in the residential real estate market, and while that is true, not every area is experiencing the euphoria yet. Even where sales are making gains, it often still depends on the ranges of listing prices - bargain foreclosures, mid-range homes, or high-end properties.
My last two columns addressed the approaches that buyers and sellers should take when the transaction involves homes in the first two categories, but luxury listings are a different story. Between the economy and the credit crunch, this top 10% of listings is suffering, largely because lenders aren't committing to financing such large loans.
As high-end prices will probably still drop, buyers who do qualify for financing have more power in negotiating these sales. However, seek loan pre-approval before you make any offers. Jumbo loans require larger downpayments at slightly higher rates, and qualification takes time.
As the seller of a luxury home, you may have to bite the bullet and undercut your competition, if you're truly committed to making a sale. Use your agent's Competitive Market Analysis to make your pricing decision, and if you can, offer to finance the deal yourself.
The painful truth in this high-end market is that recovery will take longer, so you shouldn't hesitate to set a lower price and offer other concessions to make your sale happen.
My last two columns addressed the approaches that buyers and sellers should take when the transaction involves homes in the first two categories, but luxury listings are a different story. Between the economy and the credit crunch, this top 10% of listings is suffering, largely because lenders aren't committing to financing such large loans.
As high-end prices will probably still drop, buyers who do qualify for financing have more power in negotiating these sales. However, seek loan pre-approval before you make any offers. Jumbo loans require larger downpayments at slightly higher rates, and qualification takes time.
As the seller of a luxury home, you may have to bite the bullet and undercut your competition, if you're truly committed to making a sale. Use your agent's Competitive Market Analysis to make your pricing decision, and if you can, offer to finance the deal yourself.
The painful truth in this high-end market is that recovery will take longer, so you shouldn't hesitate to set a lower price and offer other concessions to make your sale happen.
12/17/09
Begin Packing Yesterday
Getting ready for a big move? You can't begin preparing too soon, because the average move takes over 200 hours! Count on your real estate representative to provide advice and guidance during this seemingly monumental task.
Your first decision is whether to hire a moving company, or rent a moving van and ask friends and family for help. If you're using the pros, solicit quotes from several local companies who can visit your home and offer an accurate quote.
Next, begin sorting piles of items you'll want to sell in yard sales, donate to charities, or haul to the landfill. This is a great opportunity to give back to the community, and make a few bucks on the pieces you'll sell. Anything you eliminate now will lower moving costs later.
DO create an inventory of your belongings, in case you need to file an insurance claim for lost or damaged goods. Allow the professionals to do your packing, because if you don't, those items that you wrap and pack won't be covered by the mover's insurance policy.
Finally, invest in additional insurance with the movers and storage facility, if needed. It only costs about $10 for every $1,000 in high value items, so it's worth it for your peace of mind. Ask your agent for more details to make your move as stress-free as possible.
Your first decision is whether to hire a moving company, or rent a moving van and ask friends and family for help. If you're using the pros, solicit quotes from several local companies who can visit your home and offer an accurate quote.
Next, begin sorting piles of items you'll want to sell in yard sales, donate to charities, or haul to the landfill. This is a great opportunity to give back to the community, and make a few bucks on the pieces you'll sell. Anything you eliminate now will lower moving costs later.
DO create an inventory of your belongings, in case you need to file an insurance claim for lost or damaged goods. Allow the professionals to do your packing, because if you don't, those items that you wrap and pack won't be covered by the mover's insurance policy.
Finally, invest in additional insurance with the movers and storage facility, if needed. It only costs about $10 for every $1,000 in high value items, so it's worth it for your peace of mind. Ask your agent for more details to make your move as stress-free as possible.
7/16/09
The Lingo of the Loan
Your real estate agent may not write your home loan, but that's who will probably be there when you begin discussing mortgage options. Knowing some of the nuts and bolts before you start your home search can help you find the right loan.
Factors affecting your terms are the amount, the length of the loan, and the loan-to-value ratio (how much of the home's value you are financing). Larger loans carry more risk to the lender, so the interest rate may be higher.
Similarly, a smaller down payment represents more risk, possibly warranting a higher interest rate. Get the best rate by putting down as close to 20% as possible.
The difference between a 15- and 30-year loan is also critical. Payments for a shorter term will be larger, but you'll build equity much faster, and enjoy a slightly lower interest rate.
Also understand the workings of an adjustable rate mortgage (ARM). You need to be fully prepared for what may happen to your payments after the first adjustment. However, something like a 5/1 ARM (a fixed rate for five years and an adjustment each year thereafter), could be a good idea if you're buying your first home and don't plan to stay longer than five years.
Discuss your hopes and objectives with an agent, who can help guide you down the road to homeownership.
Factors affecting your terms are the amount, the length of the loan, and the loan-to-value ratio (how much of the home's value you are financing). Larger loans carry more risk to the lender, so the interest rate may be higher.
Similarly, a smaller down payment represents more risk, possibly warranting a higher interest rate. Get the best rate by putting down as close to 20% as possible.
The difference between a 15- and 30-year loan is also critical. Payments for a shorter term will be larger, but you'll build equity much faster, and enjoy a slightly lower interest rate.
Also understand the workings of an adjustable rate mortgage (ARM). You need to be fully prepared for what may happen to your payments after the first adjustment. However, something like a 5/1 ARM (a fixed rate for five years and an adjustment each year thereafter), could be a good idea if you're buying your first home and don't plan to stay longer than five years.
Discuss your hopes and objectives with an agent, who can help guide you down the road to homeownership.
6/25/09
An Offer They Can't Refuse
In real estate investment, one person's misfortune is another's opportunity. Indeed, with so many foreclosed properties on the market, buyers are poised to take advantage of a literally once-in-a-lifetime chance at investment or ownership.
Every opportunity presents some challenges, however, and you'll need more than luck to effectively buy a distressed property. These transactions are more complex than traditional sales, and you are strongly advised to seek the advice and representation of a real estate professional well versed in this new marketplace.
While a bank-owned home may look like a great deal, don't assume that any offer will be accepted. Most banks list their foreclosed properties through real estate brokerages, and while they want to sell as quickly as possible, the listing agents have a fiduciary responsibility to get a good price for the owner.
An insultingly low offer can table the transaction permanently, so proceed with common sense and a trusted representative. Keep in mind when negotiating your offer that you should have an additional 10% of the price tag set aside for repairs. A foreclosed property, particularly an older one, will almost certainly require some overhauls.
In addition to your agent, consult with a local real estate attorney who can advise you about current foreclosure laws, which vary significantly from state to state. Know exactly who's at the door when your opportunity knocks!
Every opportunity presents some challenges, however, and you'll need more than luck to effectively buy a distressed property. These transactions are more complex than traditional sales, and you are strongly advised to seek the advice and representation of a real estate professional well versed in this new marketplace.
While a bank-owned home may look like a great deal, don't assume that any offer will be accepted. Most banks list their foreclosed properties through real estate brokerages, and while they want to sell as quickly as possible, the listing agents have a fiduciary responsibility to get a good price for the owner.
An insultingly low offer can table the transaction permanently, so proceed with common sense and a trusted representative. Keep in mind when negotiating your offer that you should have an additional 10% of the price tag set aside for repairs. A foreclosed property, particularly an older one, will almost certainly require some overhauls.
In addition to your agent, consult with a local real estate attorney who can advise you about current foreclosure laws, which vary significantly from state to state. Know exactly who's at the door when your opportunity knocks!
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