5 Indicators of Where the Market’s Headed

5 Leading Indicators to Gauge Where
The Real Estate Market Is Heading

There are several key indicators that may predict what to expect in the weeks and months ahead. Instead of relying solely on the more sluggish statistics of home sales and pending contracts, knowing the following info will give you a much clearer perspective on the market.   

In total, there are five leading economic indicators:

#1: New listings available – On the supply side of things, signs of improvement are on the horizon.

In April, Redfin reported there was a staggering year-over-year decline in new listings of just over 50%. Now, however, both Redfin and Realtor.com have shared data from mid-May showing that annual stat has already shrunk to around 30%.

#2: Demand for homes – It’s no secret the real estate market relies heavily on supply and demand.

Thanks to states slowly opening back up for business, CNBC reported buyers have been “coming out in force,” wearing their masks for showings and ready to buy sooner than anticipated. Even in the first week of May, Redfin had noted its agents were experiencing demand that was 5.5% higher than even 2020’s pre-pandemic numbers. And just last week, mortgage applications rose 6% from the week before. Demand has also been fueled by the fact mortgage rates remain generously low, and many agents are doubling-down on using tech to show homes and close deals as needed.

#3: How long houses are sitting – As past trends would show, the longer a house takes to move, the more likely it may sell for less than its asking price.

Some sellers may find themselves waiting a bit longer to close a deal, as  Realtor.com recently found properties in the 99 largest metros across the country have been on the market for an average of 13 extra days, compared to a year ago. And even though buyers have been coming back out of the woodwork, there’s still a decent amount of would-be homeowners waiting until it feels a little safer to make the commitment.  The National Association of Realtors (NAR) did a survey where 40% of agents said their clients put their purchasing on pause for “a couple of months.

#4: Pricing – Although recent data has shown home prices are still 1.4% higher than a year ago,

Zillow has forecasted an overall dip of 2-3% by the end of 2020. While this may not be the news some people want to hear, to put this in perspective, we survived a much larger dip when the Great Recession dented home prices just over 27%. Plus, this is just one perspective. Fannie Mae has forecasted that the average existing-home price in 2020 will be $283,000, which is an overall growth of 4% compared to 2019.

#5: Job markets / unemployment rates

As with any other part of the economy, employment and financial stability influence the real estate market. As noted before, a decent segment of agents have reported their clients hitting the pause button on their home searches for a couple months. When it comes to those looking to sell, it really comes down to their personal situations. Some may want to stay put to avoid struggling to find their next abode, others may need the cash and/or want to shed having a monthly mortgage payment lingering over their head.

The market is still active. Your clients don’t have to sit on the sidelines while rates are at all-time lows. Contact me today to see how we can work together to help your clients match with a mortgage that meets their current needs, while supporting their goals for the future.

Bill Nickerson | Senior Loan Advisor | Flagstar Bank | Email | Bill’s Website

1500 District Avenue, Burlington MA | NMLS #4194

Can you still purchase and negotiate a home during this time?

3 Key Things To Know When Purchasing        Property In A Pandemic

While the ongoing pandemic has created a lot of uncertainty within industries and households alike, one thing is for sure:

Over the last couple months, the entire world has shown an astonishing ability to adapt and get things done. Technology (ex. virtual tours) has allowed agents and clients to continue working together.

If you have clients looking to make a home purchase right now, I’d like to share three key points you can guide them on during this time.

1.How do I negotiate an offer right now?” 
Empathy and awareness are important. While sellers might be open to lower offers during this time, most people won’t want to deal with someone they feel is trying to low ball and take advantage of the situation. Help clients understand the value of the home they’re interested in, and help create a reasonable offer.
2. “Understand a longer closing period is likely”
For now, going straight from getting that offer accepted to the closing table is no longer the norm. With social distancing being a top priority, many of us are shifting to remote work. Clients should know that closing may take longer than the usual 30 days, while appraisers, home inspectors, and repair contractors adjust their workflow and availability.
3. “Waiting for loan rates to drop may backfire”
Due to COVID-19, rates and investor guidelines are changing on a day-to-day basis. Because of this, locking in current mortgage loan rates instead of floating them to hope they go down further may be the wisest choice for clients, right now. With rates already at historic lows to begin with, this also locks in the underwriting guidelines at the same time so clients aren’t affected by subsequent changes.
By locking in a mortgage loan rate today, your clients can rest assured they’ll have a rate (and loan qualifications) that won’t budge due to changes in the market.

Additional Tip: Encourage your clients to over-communicate with their lender. Once again, the credit markets are shifting rapidly right now. It’s more important than ever for your clients to be working closely with a mortgage professional like me that can help keep them in the loop, find and secure the best financing for their current situation (and future goals), and swiftly navigate the closing process.

Contact me today to discuss how we can work together to help your clients negotiate an offer for their dream home during this time!

Bill Nickerson

Bill Nickerson | Senior Loan Advisor | NMLS 4194

Cell: 978.273.3227 | 1500 District Ave |  Burlington, MA  01803

Bill’s Email

Can you answer Yes to any of these questions??

If you or someone you know can answer Yes to any of these questions, we should talk!!

  • Paying PMI (private mortgage insurance)
  • Have an Adjustable Rate Mortgage
  • Credit Card Balances over $10,000
  • Need cash for renovations to your home
  • Have a First and Second mortgage to combine
  • Your Home Equity Line of Credit keeps going up?
  • Simply lower your rate and payment
  • Reduce your term to a 20, 15 or 10 year mortgage
  • Finance your Child’s College Education
  • Is your your 30 Year Fixed Rate mortgage over 4.00%?
  • Is your your 15 Year Fixed Rate mortgage over 3.50%?

These are just some of the reasons it may be time to refinance your home and create cash-flow monthly.  It’s not just about interest rate anymore, it’s about cash-flow!  Creating wealth by increasing your monthly cash-flow.

Will you create a positive monthly cash flow each month?

The longer you have the new loan, the more the savings add up. A $1,200 per year savings could grow to tens of thousands over the life of the loan. If you apply your monthly savings to your principal, you will save even more on interest and own your home sooner.

Bottom Line: If it saves you money  by lowering your rate,  lowering your term or consolidating debts to create cash flow to improve your financial situation, then it is worth looking in to.  If it allows you to create more space in your home, update or renovate, invest in a second home, or even cover the costs of College or a Wedding, then its worth looking into.  Everyone’s loan balance is different, credit score, income and the amount of money borrowed.  So your situation will be different from others.  You owe it to yourself and your family to create your own wealth.

I am always happy to go over real numbers specific to your situation. Reach out anytime and we can see what advantages might be available for you and your family.  

Feel free to call me on my cell at 978.273.3227 or Email

Bill Nickerson NMLS #4194

Proactive Buyers help escrow close on time!

Maybe it’s not the most fascinating topic of the day. If you’re buying a home, however, and that “time is of the essence” phrase on the purchase agreement is really applied, how easily and quickly your escrow closes is indeed the kind of thing that can keep you up at night. No one likes a long, drawn-out closing process if it can be avoided. So let’s look at what YOU and all parties can do to make this closing thing a piece of cake.

Unless your purchase is a cash transaction, the typical agreement calls for a 30 to 45 day close in which buyers, sellers, and vendors are working tirelessly to execute the terms of the purchase. The reason so many buyer agents put an escrow or transaction coordinator (TC) in charge of this process is simple — having one person there to keep everyone on track is more than a luxury. If closing is to take place on time, it’s a necessity. Once a purchase price is agreed to, and your earnest money deposit has been deposited in the escrow account, the TC will become your best friend. If you make him or her happy, you’re halfway there.

The first thing many agents and homebuilder reps do is to have you and the seller fill out a contact sheet. This sounds like a ridiculously simple task, and it is. But its importance should not be minimized. With all contact info of all parties, escrow is then able to proactively reach out and communicate to everyone and begin gathering all the necessary paperwork and information. This includes information on not only buyer and seller, but also their lenders (if the home is paid off, happy day…). The title company to be used is also listed, plus anyone else vital to the transaction closing.

Of course, the purchase agreement needs to be buttoned up with all the necessary signatures, and escrow will need to contact any homeowner associations (if they exist) that need to be made privy to the transaction. Yes. This part is important. Ask any agent around, and they will tell you that escrow is often not made aware when there is a 2nd HOA, leading to closing delays. The more complete the information is upfront, the better the process will be. In fact, it’s wise to ask your agent for a “road map” for how closing works so that you can gaze at it as each step is completed. It may help you stay sane.

Just because you’re in escrow doesn’t mean it’s time to take that much-needed vacation. There will be time for that after the close of escrow, even if it took you many months traipsing through hundreds of houses to find this one. Finding parties to the agreement for vital information is ten times more difficult when they are floating in a pool somewhere on a tropical island. When escrow calls and emails with a request, jump. You heard that right. The quicker you respond, the more time and energy is saved. Check voicemail, texts, and email regularly during this 30-day process and respond promptly to all vendor requests to ensure an on-time close.

And don’t be afraid to ask questions through the process. Typically, the person in charge of your escrow will move quickly through a lot of their checklist, but they are never too busy to answer questions and explain how and what the documents mean. Escrow also appreciates clear communication on any special requests. Can’t be there for the close and prefer to sign documents in the office with a notary, e-sign on your phone or computer, or have a mobile notary visit your home to sign? These are arrangements that need to be put in place long before the closing date. And if there are other parties to the transaction (like co-signers) the same applies to them.

The lender and escrow will inevitably need to rely on each other for accurate and timely disclosure of all fees, so introduce them right away. The sooner they become household words to one another, the quicker the documents can be produced accurately and made available for review. This shortens wait times and helps avoid unnecessary delays when the deal comes closer to final loan documents, which will begin being referred to as “docs” — not of the medical variety.

Home inspections and final loan approval (any and all conditions placed on your approval must be removed) must be satisfied and signed off on before that magic day happens. So, if you’re in doubt that you are not doing all you can, call your lender, the TC, and even the escrow company to ensure that you are doing all you can to make this happen on time. Be the squeaky wheel, even though you may feel you are surrounded by all manner of experts who reassure you everything is fine. They may have dozens of transactions to be concerned about. You only have one.

Source: TBWS

Training for the Pan Mass Challenge

Bill Nickerson | NMLS #4194 | 978.273.3227 | Bill@billnickerson.com 

How does refinancing save homeowners money?

Question: How does refinancing save homeowners money?

There are two categories of refinancing, “rate-and-term” and “cash-out.” Both can save you money.

The first type, rate-and-term, replaces your existing loan with one that has a better rate and/or terms. You might replace an ARM or balloon loan with a fixed-rate loan, for example. Or you may decide to lower your rate AND shorten your term. Some borrowers have been able to refinance from a 30-year loan into a 15 or 20-year loan, reducing the term, without appreciably raising their payments.

A borrower does not receive any significant amount of cash in a rate-and-term refinance; lenders generally consider that any cash proceeds above $2,000 pushes the loan into a cash-out category.

There are always certain costs involved in any mortgage transaction; there will always be fees for title, escrow, underwriting and document preparation, for example. Borrowers can add these fees to their new loan so as to avoid having to pay them in cash. Financing these items is not considered cash-out.

When you are deciding whether to do a rate-and-term refinance, you should evaluate it in two primary ways: first, how long will it take to recover the cost of doing the loan? For example, if the closing costs amount to $3,000 and the reduction in rate gives a saving of $1,500 per year in the first year, it will take approximately two years to “break even.” For most people, this time frame is more than satisfactory, but you should make your own decision. The second criterion is net savings over some time period, say five years, ten years or more.

Homeowners with adjustable rate mortgages (ARMs) may decide to refinance into a fixed rate loan, even though their rate may initially be higher, they might feel more secure knowing that their rate will never change. This is more of a defensive strategy to guard against the possibility of a higher rate in the future, but it may not “save money.”

The other type of refinance, a “cash-out,” is one where the borrower receives cash of more than $2,000 at closing. This is accomplished by getting a new loan that is larger than the balance of the old one plus closing costs. Borrowers can use that money for anything. Some homeowners have used cash-out refinances to pay off consumer debt, like car loans, student loans, and credit cards. Using home equity to pay off credit cards can drop the payment dramatically! But paying down installment loans can create a false economy. A $30,000 car loan with an interest rate of 6% will have a payment of $500, but paying off that loan with the proceeds of a home refinance will effectively drop the payment to $150—but does it really make sense to finance a car for 30 years?

Hope this is useful

Bill Nickerson

Bill Nickerson NMLS #4194  | bill@billnickerson.com | 978-273-3227

Over-improving your Home: doing too much of a good thing

Homeowners doing major renovations this summer may not want to hear it, but there’s actually such a thing as doing too much. Spending too much. Adding too much.

Bankrate‘s Dana Dratch says over-improving means you may be bringing a curse upon yourself: sinking so much into upgrades, renovations or additions that you’ve burned nearly all the equity of your home. If you plan to stay in your house for the rest of your life, perhaps it can eventually pay off. While it may increase the value of your property if you, like many homeowners, need to sell in the next 5-10 years, it’s likely you may never get 100 cents on the dollar, no matter what the improvement.

No. It doesn’t mean to stop dead in your tracks for your next renovation project. But it does mean you need to be careful in planning it, costing it out, and making sure it isn’t an exception to the rule in your neighborhood. Of course, if the improvements are for your own convenience — like adding a first-floor bedroom because you can’t face the stairs any more — that’s fine. But if your sole purpose is to increase the price of your home when you go to sell it, don’t take bets on it.

Dratch recommends asking yourself a few questions before you dive in. As mentioned, go ahead and over-improve if you’re going to stay there for a long time. If not, and your plan is to move in the next three to five years, resist the urge and bide your time. Realtors agree, however: there’s one in every neighborhood. There is always one guy who convinced himself that if he adds enough granite, hardwood, and molding to his modest house, he can get a premium price when it sells. Dratch quotes a Realtor who says, “Just because a house has new countertops and a brand-new master bath doesn’t mean you’ve made more square footage in your house. Compared to houses down the street with the same amount of square footage, the prices will be basically the same,” she says.

Watch a lot of HGTV? Remember that the Fixer Upper couple as well as the Property Brothers look for the shabbiest, lowest-priced house in the BEST neighborhoods. Once they’ve done their magic, that house will simply match the value of the homes around it.

If you own a $400,000 house in a $400,000 neighborhood and do a slew of renovations and additions, don’t plan to turn around and list it for $700,000. Your Realtor can help you by checking values and running comparable properties in your area to see if your plans are in line with what appraisers can get their heads around or you are totally off-base. Why do you need to appease appraisers? Because the majority of homebuyers get a mortgage, and a bank won’t lend on a house unless the appraisal makes sense.

Seems unlikely, but even kitchens and bathrooms can be overdone. AND it can scare buyers. If your house is the most expensive in the neighborhood, potential buyers will be apprehensive about signing on the dotted line. Adding a room and increasing the square footage may mean the house should be worth more, but if that addition puts you at or over the highest prices in the neighborhood, it won’t be a cakewalk to sell. On top of that, you may have just taken up a chunk of yard space with it. The size of the yard matters to buyers, even in the most upgraded house.

Did you go crazy taking out closets to make playrooms, dens, and home offices or using a bedroom as a walk-in closet? You just lowered your bedroom and bath count and lowered the value of your home. Appraisers don’t consider a room a bedroom without a closet. Oh, and that gorgeous pool and spa you spent $50K putting in? To some buyers, it represents hours of good times and entertaining. To others, it represents bigger energy bills and maintenance. It also might take up too much of your yard, leaving little room for kids to play and dogs to romp.

If you are selling your home in the near future, keep your improvements neutral and check with your Realtor about whether the renovations you have planned offer a decent return on investment.

Source: Bankrate, TBWS

Bill Nickerson | NMLS #4194 | 978.273,3227

Bill Nickerson NMLS #4194

Does it make sense to waive a Home Inspection to strengthen an offer?

Okay. It may sound bureaucratic and boring. But there are a number of precautionary contractual conditions for any purchase agreement recommended by the Realtor community that protects homebuyers from liability as well as poor decision-making. And no matter how competitive the bidding for a home, they’ll advise you to include them. One of them is a home inspection.

Even though your Realtor will urge you NOT to waive that contingency and even make you sign a form disclosing they made that recommendation, however, many buyers will still plow ahead and waive the inspection in an effort to make their offers the strongest of the bunch. We do understand: if you’re buying a home in a competitive market, and your offers keep getting pushed to the bottom of the pile, it’s hard not to resort to desperate measures — offering more than the asking price, pledging to close on the home in lightning quick speed, or even waiving the financing contingency and risking your entire earnest money deposit.

But waiving a physical inspection of a house is never a good idea unless the house is close to brand spanking new, which, of course, ups the odds that nothing costly or bothersome might be revealed during the inspection. The problem is, even in newer homes, what you see is not necessarily what you get. It’s what’s beyond the surface, or items that you can’t identify as problematic, that cause the biggest issues, as anyone who watched rehab/remodel programs on HGTV will tell you.

The typical buyer would have a tough time spotting asbestos, knob and tube wiring, lead paint, evidence of termite infestation, a leak inside the HVAC system, how the house is being propped up on jacks, or be aware of how a single toilet flush could change your morning shower from warm and toasty to arctic and shocking. Imagine moving in and trying to turn on the heat, nothing happens, and the fix is $10,000. Picture standing there buck naked in your bathroom, and the power goes off all over the house when you turn on your hairdryer. Traipsing down a flight of stairs to that electrical panel outside the back door semi-dripping wet in 25-degree weather is not something we would wish on our worst family members.

We realize bidding wars can cause buyers to spend an inordinate amount of time finding the right home, making them crazy-desperate, asking themselves “how bad can it be?” when considering waiving the home inspection. But when do you ever hear any GOOD stories about people who took that leap? And waiving an inspection can cost you a fortune. But there are a few things you can do to hedge your inspection bets while remaining competitive.

If you love the home and the buyer will permit it, inspect it before you make an offer or sign a contract. At best, it passes muster and when you offer you can waive the contingency. At worst, you’ve spent a few hundred dollars on a house you don’t end up buying.

If the seller already had their own inspection performed (which is a wise thing to do in order to make a home as marketable as possible), you have the luxury of scrutinizing that report without spending a dime. Even then, however, many buyers will get an inspection of their own because, like an attorney representing a client, the inspector is liable only to the person who paid for and ordered the inspection. And if that person missed something in their report, you would not have any recourse.

Because Realtors understand that time is vital for good outcomes, they will encourage you to get your offer in quickly and advise you to pre-schedule an inspection even before the ink is dry on your offer. Seasoned agents have relationships with inspectors at the ready to ring the seller’s doorbell within a day or two of acceptance. And writing in a short inspection contingency timeframe into your offer assures the seller that momentum is alive and well.

Bidding wars are rife with emotion as well as fear-of-loss, but it’s wise to keep the bigger picture in mind when purchasing what may well be your life’s biggest asset. Your goal is to wake up in that house morning after morning knowing you did all you could to ensure a mostly problem-free investment in yours and your family’s future. Because money pits are no fun.

Source: Zillow/TBWS

Bill Nickerson NMLS #4194 | Email | 978-273-3227

Knowing the difference between a buyer’s and seller’s market is a good idea

There is one verse missing from the famous and well-worn song Turn, Turn, Turn written by the Byrds back in 1962. The one that should be added is “there is a time to buy, a time to sell…” Realtor’s Terri Williams likens it to a card game (which was also a song) about knowing “when to hold ‘em and when to fold ‘em.”

Buyers’ markets and sellers’ markets are simply part of the economy journey, reflecting not just what is happening on a national level, but also what happens depending on supply and demand. They might also reflect tax laws and consumer confidence. It’s a mixed bag. When it’s someone’s “market,” that means the market favors them. So a buyer’s market means it’s a great time to consider buying. A buyers’ market usually means a period of six months or longer where prices steadily soften. Inventory usually rises, and interest rates drop to fuel the market. The bigger the inventory, the more negotiating there will be, including asking for perks such as help with closing costs, a credit in escrow for a new paint job, etc. It may also mean a quick closing if you need the place right away.

So how does this affect sellers? It’s not a happy time for them. It takes longer for homes to sell and hoping to get the price the seller thinks their house is worth is often a pipe dream. They can stack the odds for it, however by making sure their home is move-in ready and shows well both in person as well as in photos.

shopping for a house

 

For some time now, it has been the reverse of this. With little inventory, sellers have been reaping the rewards of the market with multiple offers and naming their terms. That is, however, now changing according to a recent CNBC article, which says that consumer sentiment in housing improved in August and that they believe mortgage rates will keep dropping. Say one Dallas-based real estate agent: “It’s not a seller’s market right now. Now is not the time for sellers to put out these crazy prices. Appraisals have gotten a lot harder, and buyers are a little more cautious. They’re more willing to take their time.” The article goes on to say that while mortgage rates are low, buyers are becoming more cautious. With competition cooling, sellers can no longer command any

price.

“Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy,” said Doug Duncan, chief economist at Fannie Mae in the article. “We do expect housing market activity to remain relatively stable, and the favorable rate environment should continue supporting increased refinance activity.” CNBC writer Diana Olick agrees that home prices are still higher than they were a year ago, but the gains have been moderating.

Source: Realtor, CNBC, TBWS

Bill Nickerson NMLS #4194

As-Is; What does it really mean in a Real Estate transaction?

When Billy Joel wrote the song Just the Way You Are, it wasn’t about buying a house. It would be too unromantic to say, “I’ll take you as is.” But that’s what many sellers are stipulating when they list their homes.

Those few words can have a significant impact on your transaction if you are the buyer. In a typical sale, after the buyers do all their inspections, they’re allowed to negotiate the recommended repairs with the sellers. It’s a “push-me-pull-you” kind of thing. The sellers will agree to have some portion of the work completed by a qualified professional or, alternatively, they will agree to give the buyers a credit towards the cost of the work.

That all changes when you buy a home in “as-is” condition. In real estate terms, a home that’s being sold as-is essentially means that you’re willing to accept responsibility for any work that needs to be done to the home.

This does not mean you have to skip inspections, however. You still have the option to do inspections for your own benefit, but the information you glean will be informational rather for negotiating purposes. That being said, it’s wise to do the inspections to understand what you’re in for — a new roof? HVAC system needs to be replaced? If you find that the house needs more work than you can handle, you’ll have the option to back out of the deal.

By now you may wonder why to consider an as-is purchase at all. The one big benefit is that you can usually get it for a better price. Forbes’ Tara Mastroeni writes, “Since the sellers are unwilling to negotiate on repairs, they’ll often price the home lower than would be expected in order to make their property seem more attractive to potential buyers.” She goes on to say that the other benefit is that you’ll have more control over any repairs done to the home once you’re the homeowner. “In a typical sale, the sellers get to choose who does the repairs that they’ve agreed to make. In this situation, you’d be able to hire professionals that you trust.”

As for reasons NOT to buy an as-is condition home? Risk. Even if you do your inspections, that home that took your breath away at first sight might end up costing more than expected and, in this case, you’d be the one responsible for footing the bill.

If you are on the selling end of the equation, you’ll need to educate yourself before listing a home as-is. Many homeowners assume that selling as-is relieves them from all the general obligations that come with the sale of a home, including unloading the property for whatever price they can get while avoiding the need to talk about or disclose any issues with the home. This is where they’d be wrong. Disclosure still rules, but the terms of disclosure rules can vary from state to state.

Listing agents can often become the fall-guy in as-is transactions, as they are held to a higher standard when it comes to disclosing a home’s defects. This is due to the Consumer Protection Act (Chapter 93A). MaxRealEstate’s Bill Gasset says this means, “Realtors have an obligation to disclose any fact that could influence the buyer not to enter into a real estate transaction. For example, if a real estate agent knows that the seller’s basement floods every spring, this is something a Realtor has to disclose.” As for what might stand up in court if a buyer backs down, it can become a he-said-she-said conundrum.

Gasset lists examples of issues a real estate agent must disclose to a prospective home buyer, such as evidence of a structural defect like a major crack in the foundation, the appearance of mold in the home, termite damage, roof leaks, high radon levels, known plumbing or electrical issues, obnoxious noise levels and especially any legal issues such as a cloud on the title.

As for the issues a home has that are not evident or lie beneath walls and floorboards, real estate agents do have a duty disclose if they discover some problem on their own or the owner lets them know. No secrets allowed. Gasset says most real estate companies ask sellers they are representing to fill out a document called a “Sellers Statement of Property Condition” — a report that outlines what an owner knows and doesn’t know about their home.

So after all this information about as-is listings, why would sellers opt NOT to do this? Simple. There is a negative connotation with buying a home as-is. “Buyers will low-ball you,” says Gasset. “Under the assumption that your home has serious defects, the buyer will bargain with you like you are desperate. You can expect offers that are probably less than what you want, or what your home is worth.”

You’ll also have to work harder at justifying your sales price. “Because buyers will be coming into the transaction with so much negative baggage, it will be difficult to break through the assumptions to show that there are plenty of reasons why your home is desirable.”

Unless selling homes in your area is as easy as fogging up a mirror, you may also drive away a lot of potential buyers with an as-is stipulation. “Even if you are in a position where you want to put minimum effort or money into the home to make a sale, you could still benefit from avoiding the as-is designation in the listing,” says Gasset. “Let buyers come and make offers, see how you feel, and go ahead and turn down requests to make repairs if you feel it is the right choice.”

Sources: Forbes, MaxRealEstate, TBWS

 

Bill Nickerson NMLS #4194  | 978.273.3227  | Email | Website

Take the emotion out of buying a home using good business sense

There is a good deal of emotion wrapped up in buying a home. Determining where we will spend the most intimate as well as memorable moments of our lives is no small decision. And it is no doubt one of the biggest investments most of us will ever make.

Removing emotion is no easy task. But if we make an attempt to screw our heads on as investors and looked at buying home the way we might buy a stock or mutual fund, education is the key — asking what considerations are necessary in order to have a knowledge base before acting.

If you’ve been a renter, you know there are advantages to it as well as freedom. But what about the future, and permanency? The idea of buying goes beyond renting, since you are pouring your money into a single bucket all your own — not someone else’s. Even before that final mortgage payment is made, you will have been living in your investment as physical shelter, which is why buying a home is still considered one of the safest investments around. It’s not just a piece of paper, an account number or a line on a graph.

Look at this as a business proposition first and foremost by scrutinizing the proximity and access to basic services regarding health, supply, security, and transport. That house way up on a hill may make your heart flutter, but if minimum requirements such as electricity and gas systems, lighting, waste collection, and sewer services are a concern, your little slice of heaven can soon turn into a nightmare. It’s also a good idea to inquire about infrastructural projects in the area that have the potential to increase or decrease the value of the property. Can that golf course eventually get sold to developers for more housing? Will those abandoned railroad tracks get used for future transit? Either you or your Realtor can visit the local city planning offices and pose these questions or just take a look at plans for the area.

What about your personal needs? Will local regulations or the governing entity of the neighborhood allow you to build on to the existing structure or renovate the exterior? Speaking of exteriors, building materials are not meant to last forever. Whether the home you are considering is stucco or siding, think about painting and repairs down the road. If most of the interior is carpeted, what kinds of expenses would you be subject to when you replace it all with hardwood?

It’s always recommended that you accompany the individual doing the physical inspection of the house you are considering. Try out the water pressure, check the electric meter and boards, and hold your hand up to the AC vents. If a breaker trips in the middle of the night in a snowstorm, where will you have to traipse to re-set it? This is also when you can educate yourself as to the structural system of the house, including how to access some areas you don’t need on a daily basis. Your home becomes a living, breathing entity when you think of it as a vessel that needs care, maintenance, and an occasional face-lift.

Even though a home can be staged for sale beautifully with furniture and accessories, it’s important to visually remove the temporary fluff and consider whether your own furniture will fit if you don’t intend to buy all new items. A few overstuffed chairs facing a fireplace do not equal a family of four facing a big screen TV over that same fireplace. How much room would be left over for an adequately sized sofa or sectional? And when looking at bedroom space, has the stager used mostly twin beds in secondary bedrooms? Can you turn around in the laundry room when someone opens the door to the garage?

While a home’s listing should give you most of the financial information you’ll need, it may not tell it all. The costs of things like homeowners association fees (if any) should be a concern — how well is the association managed, are there any liens or lawsuits pending against it, how often has the fee gone up and what does it cover? Does the neighborhood have supplemental taxes levied against it for expenses normal property taxes don’t cover, such as lighting and landscape corridors? Some of these extra taxes last up to 25 years from the time a home is built, and not all are write-offs on taxes.

Of course, your knowledge of the market surrounding the house you are considering is key as well. What homes have sold recently, what was included in the price and how long did they take to sell? How does this house compare to any of them, and why might it be worth more or less? It may seem like overreach, but ringing a few doorbells in the surrounding neighborhood and asking a few questions is not a bad idea when you are considering such a large investment.

And lastly, know your rights as a consumer buying real estate, whether you have professional representation or not. Read up about them online or buy a few books so that you are at least armed with a slew of questions. You’ll be glad you did a little prep work, took some of the emotion out of the equation, and looked at this as an important personal business investment.

Source: TBWS

Bill Nickerson NMLS #4194

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