Getting to know the Seller’s Market

You hear it everywhere you go these days, sometimes with a smug smile, sometimes with a resigned shrug, depending on which side of the transaction you are on, but we are definitely in the midst of a significant seller’s market.

What is a Seller’s Market, you might wonder. It arises in the real estate industry when demand for homes exceeds the supply available for purchase. The greater the gap between the two, the bigger a seller’s market exists. Since there are fewer homes on the market, sellers are clearly at the advantage.

When a seller’s market exists, homes sell faster, decisions on purchases happen much more quickly, lacking inventory can lead to bidding wars between potential buyers that can drive the price of the home above the listing price, sometimes far above.

Here is a checklist of things to know, no matter which side of the process you find yourself:

Tips for Buyers

Decide quickly! Get prepared for a loan ahead of house hunting to be assured that the money side of things is covered when you need it to make fast decisions.

Know you are at the disadvantage. A Seller’s Market is not a time to haggle on small things or ask the seller for outrageous concessions to be made. If you are able, a cash offer will always be more appealing to a seller, so they know they will not have to deal with the hassle of financing.

Patience is key! Go into the process knowing that losing out on properties is a real possibility that happens often. Do not allow yourself to become discouraged, frustrated, or be tempted to take it personally. Keep searching and the right property will come along.

Don’t Settle. The home is one of the largest investments a family makes. Be sure you get what you want, and have money built into your budget to pay a little more than you think you will to nab it when it comes along.

Tips for Sellers

Sellers are not completely off the hook in this situation, even though the odds lie in their favor. Sellers are competing with other sellers to attract the best buyers to purchase their property. It helps to understand how to increase a buyer’s interest in what you have to offer.

Keep it clean! An organized, tidy, clean smelling, and artfully presented house that is in good condition will be among the first snapped up by buyers.

Price fairly. If you take the direction of setting your asking price at or even slightly below fair market value, you will be more likely to attract more interest more quickly. Multiple interested buyers could lead to a bidding war which drives prices upward in your favor.

Consider offers carefully. Caution and attention to detail regarding your buyer’s financial and credit strength should be taken into consideration. Accepting an unrealistic offer from an unqualified buyer will just put you back at square one, wasting valuable time.

Ensure pre-approval. Lending institutions use extensive review of a buyer’s financial situation and verify worthiness in order to issue a pre-approval. On the other hand, pre-qualification is much more casually issued using just estimates of a buyer’s money situation.

Weigh out contingencies: Some offers include stipulations such as mortgage, home sale, appraisal, and inspection contingencies that enable buyers to back out of a sale if certain conditions aren’t met.

Whether you are in the process of buying or selling a home, it is essential to know where the market stands and how that effects your decisions in the process. Buyers will obviously have the advantage in a buyer’s market when properties flood in with fewer takers willing to compete for them. Sellers are primed for maximum benefit in this strong seller’s market, however.

No matter the conditions of the real estate market in your area, hiring a qualified real estate agent is the best way to navigate the housing market specific to your needs and get you what you need at the greatest advantage manageable. With a professional on your side, you will have a leg up on the competition, as the agent will have specific knowledge of the area and what you are up against.

For most families, the purchase of a home is the most significant investment they make in their lifetime. When you are making that purchase, having your financial affairs in order is essential for securing the most advantageous position to qualify for the lowest rates available. To be sure you are in the most stable position possible, follow the 10 steps below to assure you are on the straight and narrow path to a successful home loan.

Your Ten Personal Steps for Purchasing a Home

1. You should not change jobs, become newly self-employed, or quit your job.
2. You should not buy a new vehicle. (You could end up living in it if financing falls through, should you choose to ignore this step!)
3. You should not use credit cards unnecessarily or in excess. You should not let current credit accounts fall delinquent.
4. You should definitely not think of spending the money set aside for closing costs.
5. You should not leave out any debts or liabilities from your loan application. (Be transparent.)
6. You should not buy furniture on credit before your home loan finalizes.
7. You should not make any inquiries on your credit. Now is not the time to apply for any other credit cards, loans, or application processes that will require a credit check.
8. You should not make large deposits without consulting your loan officer first. No transactions should be made in any amount out of the ordinary from your normal banking activity in deposits or purchases.
9. You should not change bank accounts.
10. You should not co-sign a loan for anyone. (Good advice always, but particularly during this season in the home buying process.)

Following these steps along with having all financial documentation located and sorted in an organized manner should have you on your way to a happy ending for your successful loan application. As always, if any assistance is needed, be sure to contact your real estate expert or mortgage representative. They are always available to help you through this exciting process.

Is it time to sell your home? Have you been there long enough? How long is long enough? When is the ideal time? There are many factors to consider when timing the selling of your home. Below we have listed the major factors to consider before deciding whether the time is right to list.

The Tax Factor: You want to take taxes into consideration first and foremost. Nobody wants to take a financial hit. The gold standard is two years. This will help you steer clear of capital gains taxation on your home. Besides the financial downside, selling early could lead potential buyers to wonder if there is a problem with the property. This is called negative buyer perception, and can lead to fewer or lower offers on the home.

Equity: The first few years of home mortgage payments are usually dedicated to paying off interest before taking bites out of your principle. Usually it takes 5-7 years before you start eating away at that and begin building equity in your home.

While paying down principle is one way to build equity, another is by improving the value of your home by renovating. Projects such as bathroom and kitchen remodeling, deck additions or flooring upgrades can add equity to your home as well.

Market Conditions: Take the time to do the research on how similar homes in your area are currently selling? Factor in costs like commissions and closing cost on a new home purchase when deciding whether now is the ideal time to list your home. For help with this information consult with a Real Estate Agent before you decide to sell.

While there are many things to take into consideration when trying to calculate the perfect time to sell, these tips will help to give an overall idea of when and where to begin.

The Pros and Cons of

Foreclosure House Hunting

Home buyers are constantly browsing the Real Estate market with the aim of securing a superb property at an excellent price. One of the means to this end is searching through foreclosures.

Just to clarify, foreclosures are the result of a homeowner who has defaulted on their mortgage. Specifically, foreclosures are the legal processes whereby a lender tries to recoup a house in which the owner can no longer pay their mortgage. When such an owner can’t pay off the outstanding debt or dispose the property by a short sale, the property is moved up for a foreclosure auction. Should the property still fail to be sold there, the financing institution (usually the bank) takes possession of the property.

Foreclosure properties are on the rise in the U.S. According to Statistic Brain (https://www.statisticbrain.com/), in the year 2015 alone over 1,147,365 foreclosures were filed while 575,378 of those properties went on to be reclaimed. In 2016, 427,997 foreclosures were sold on from the 956,864 filed. These statistics demonstrate the vast availability of foreclosure properties across the nation.

For prospective property buyers, foreclosures present an opportunity to enter the market at a cheaper rate than usual. Home buyers who want to score a good deal invariably consider this option, thinking that financiers are probably desperate to move some of these properties. Sometimes it may be the case, other times it couldn’t be any further from the truth.

Before you dive into a foreclosure, it is important to have a firm idea of its pros and cons to avoid unpleasant surprises down the line. The advantages of buying a foreclosure may include:

1. Use of regular mortgage financing options like FHA and VA loans.
2. If you have the funds required to pay the outstanding balance on the mortgage you can greatly expedite the buying process.
3. The bank may be motivated to dispose the property, giving you the flexibility of making a down payment. This also allows for better price negotiation, escrow length and closing costs.
4. The title of the home will be clear so you do not inherit any liens, back taxes or mortgages from the previous owner.
5. The original lender may be willing to take care of the necessary repairs on the house to encourage your purchase.
6. Seller may be motivated to sell the property quickly which leaves an opportunity for a below market price.
7. You can obtain preferred inspections within the contingency period.
8. The seller is legally obligated to provide you with a complete history of the foreclosure’s conditions, repairs and problems.
9. The home in question has probably been emptied and is ready for the buyer to move in immediately.
10. The property will be listed on the MLS and the bank will be responsible for paying the real estate commission.

Although securing a foreclosed home may seem like an excellent deal, there are several pitfalls to be aware of. Some of the dangers to be cautious of when buying a foreclosure include:

1. The occupant or owner may still be in the home and might take their time to move out. In the presence of grievances, the occupant might damage the property out of spite or lack of caring.
2. If you purchase at foreclosure auction, you buy the property as it is and become liable for repairs, including those you may not have noticed previously.
3. Home seller may be unable to negotiate a price below the outstanding mortgage balance.
4. Bank will not agree to complete repairs and renovation in some cases.
5. Additional hassles may occur from banks requiring additional paperwork.
6. Banks cannot provide you with information on the repairs, problem history and condition of the house, so it can be a bit like buying a used car from a stranger.
7. You may buy a foreclosure at a very low price but could end up spending more on it if you find hidden damage that is worse than first anticipated.

The Bottom Line

Foreclosures are a great way to enter the real estate market. This method of property acquisition however comes with its risks which should be taken with a grain of salt. While the foreclosure price may be affordable, be sure to evaluate the property in as much detail as allowed.