We would like to buy a new home soon but interest rates seem very high – we see advertisements for internet lenders offering what seem to be below market rates. Is this too good to be true?
If you were simply refinancing an existing mortgage debt, you MAY be ok choosing an internet lender. You would just need to be very careful that, before you apply to refinance your loan, you receive from the lender a full disclosure of all the costs and not just the rates. Often times I see lenders have exorbitantly high fees connected with low rates. In a sense, you would be buying down your rate by paying high fees upfront. You would want to be sure to compare them on the same day to a couple of local lenders and understand what you are paying to get the quoted rates. The reason you must compare rates on a singular date is because rates go up and down continuously and a rate may seem lower simply because you called a particular lender on a date rates dropped.
Since you are buying a new home rather than refinancing, I do NOT recommend that you use an internet lender. They do not tend to be familiar with area norms and that can cause you more headaches than you can imagine. There is a long list of particularities to PA Agreements of Sale and the last thing you want to do is have your closing delayed (while your movers are standing at the curb) while you wait for your lender (who does not have a local presence that you can visit personally to address any issues) to sort things out. As they are not familiar with our Agreements and processes, internet lenders may also impose requirements on you that are not requirements generally imposed by local lenders that may disadvantage you later. Finally, internet lenders often do not understand that PA Agreements of Sale declare “time is of the essence” inside the contract – what that means to you is that if you miss your closing date because the lender isn’t ready to close, the seller does have the legal right to declare you in default, keep your hand money and sell the home to someone else.
When buying, why take a risk? Rely on your trusted Realtor to help you find a local lender who offers the most competitively priced loan products and delivers exceptional customer service. Realtors cannot accept referral fees from lenders, so you can be sure we are motivated only by knowing you will have an outstanding transaction. Feel free to reach out to me for help finding you the best local lender to meet your financing needs!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Interest rates jumped up again. Is it time for us to just wait until spring and hope they start to come back down?
If you are a buyer, the real estate market offers you a great opportunity right now! Don’t be fooled by the higher interest rates – this is an awesome market for you to buy in! Why? Because all of the people who you would have been competing with are afraid of the interest rates and sitting by the sidelines. This allows you to have a competition – free opportunity to buy a home! Just six months ago, buyers would have been overjoyed to have an opportunity to buy a home without competition, to have had an opportunity to have had an offer accepted on the first home they offered on instead of their seventh, to have been able to purchase a home at asking price rather than asking price plus 10 percent! Do not miss this golden opportunity – there are some very nice homes available right now. You can refinance later with a convenient no cost refinance loan – get the house now! Once rates start to come back down, the buyers (who have all been sitting by the sidelines with you) will come racing back into the market, and bidding wars will be back. Make the smart move – buy now.
And as a side note, I do not feel we will see a “crash” in prices. Inventory remains at record lows and those homes that are selling continue to increase in their sales prices to new record highs, despite the increasing rates. This is not 2008 – I am not anticipating any “deals” to be had this spring – if anything the natural increase in the buyer pool we see every spring will boost prices because of the extreme lack of inventory. Feel free to reach out to me and we can strategize on how you can take the most advantage of the current real estate market while you still can!
A home’s value is set by the market. Value is always determined by what a buyer is willing to pay for your home. Many factors come into play in setting that value. Market value reflects quantitative factors such as: # bedrooms, # bathrooms, # garages, placement of garages (attached or integral), lot configuration (large and functional back yard? Cliff lot?), location of the home generally, age of roof, age of mechanicals. Market value also reflects more qualitative items: how updated is your home, and is it all new, or just refreshed? What is the floorplan (open concept?) What are your wall colors? There is always a range that value will land in, which we call the range of reasonable. There is no ONE price at which a home will sell. If there are many buyers seeking a home like yours, it will sell at the top of the range of reasonable. If there are not, it will take longer to sell and may sell a bit lower in the range. What the market does not consider in setting a value of a home is what you need from the home. In 2008, many homeowners had used their homes as ATMs and withdrawn large sums of money for educations, vacations and cars. When the market softened, there was not enough equity for them to be able to sell their homes and not be in a short sale situation. This fact, that a homeowner over-extended themselves on mortgages, is not the least bit relevant to market value. The market is also not going to consider what you plan to do next. If you plan to move to Los Angeles to be closer to family and are finding that the Pittsburgh market is not going to yield you enough to be able to buy in L.A., you will need to turn to other investments to make up any difference.
We are in a very robust market – your home is far more likely to garner more now – whatever that may be – than it could have in the past. Forecasters are also suggesting that values will soften by year end. My crystal ball is out for service, but what I can tell you is that every hot market eventually softens. Waiting out the market so that you can get a price that the market is unprepared to deliver at this time may have you waiting many, many years, and during that time you may need to invest even more in your home in order to deliver to the market what it needs in order to deliver an acceptable sale to you.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Can you explain what is going on in Allegheny with property tax assessments?
It’s big news! For property tax appeals in 2023, the PA State Tax Equalization Board has set the common level ration at 63.6%. This is dramatically less than the 81.6% in effect for 2022. What this means is that for homeowners appealing their property taxes in 2023, the tax assessment should be set at 63.6% of the property’s 2022 value. This is great news for people buying their homes in 2022. Buyers have grown accustomed to having their property tax assessment appealed after they purchase their home, and these increased assessments can dramatically impact the monthly cost of owning their homes. This often impacts the sale-ability of a home as buyers often worry about that their monthly payments might increase to, but with new common level ratio, it is a big break for new home buyers.
For example, a home selling for $1million in 2022 should have a tax assessment of $636,000, which is an outstanding possibility. Likewise, a home selling in 2022 for $500,000 should have a tax assessment of $318,000.
Of course, buyers in previous years could consider appealing their tax assessment as well. For example, if a home was purchased in 2021 for $500,000, applying the current year percentages, it might have an assessment of $408,000. We did see dramatic appreciation in 2022, so that home might be worth $550,000 today, but applying the 2022 ratio of 63.6% to 2022 value could result in an assessment of $350,000 which would generate potential tax savings of approx. $1500. Any recent homeowners may want to consult their tax advisors as to whether it makes sense to appeal their tax assessment based on this new information.
The potential concern here is for the taxing bodies. The services we all depend upon require tax revenues to be funded. With the potential erosion of tax bases, this new common level ratio will be a victory for new homeowners, but we may all end up paying more in taxes due to the increased millage rates that may be required to compensate for declining tax bases.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We are thinking of downsizing, but can’t find a place to go. Any ideas on how to approach this transition?
If you’ve been sitting on the sidelines this spring waiting for your downsizer to come on the market, you may be feeling disappointed right now. We continue to have an extreme lack of inventory, and have for years in this particular category. Here are some options for those of you who want to downsize to consider:
If you are looking for patio homes, we have a limited inventory in Sewickley, with Elmhurst (one available) and Sewickley Ridge (nothing available). However, we do have nearby communities that have wonderful patio homes including options off Nicholson Road in Franklin Park and Ohio Twp, all still in “15143” including Diamond Run, The Fields of Nicholson and Traditions Sewickley Ridge. We also have townhomes in Sewickley Village (one currently available), some with elevators, townhomes in Sewickley Heights manor, townhomes in Moon overlooking Sewickley and townhomes in Ohio township (still “15143”). If you are looking for that illusive Village ranch, you may be waiting a while and looking at a large project to bring it up to modern standards, or paying a high dollar amount, as some of our smallest but well done homes are selling in the 700,000s. We often have ranch opportunities outside the Village however. We also have a nice selection of condos. If you are hoping to spend a lot of your time traveling, while a condo may seem on the small side at first, it may be all you need if you won’t be in Sewickley all year. For those with larger budgets, the new condos on Centennial are a very nice option. 316 Beaver Street and the Linden have undergone a smart remodels and offers stylish in-town condos. The Brittany and Normandy provide additional options.
Perhaps you would consider a new adventure for your downsize? We have had many local families move into the city, with some cool options to choose from. If you are really looking to shake up your life, and don’t have a need for our school district, moving into the city might be a fun avenue to explore.
Early fall can be a very strong market. We are encouraging homeowners who are considering a move to list this fall! If your buyer is out there and we can’t find your ideal downsizer, there are the options of a delayed closing to give you more time, as well as an interim rental. Give me a call if you would like to explore this further!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
With all of the bidding wars happening in this hot market, should we put an appraisal contingency in our offers?
Appraisal contingencies are added to agreements when buyers are concerned that their offer may be over market value. If you are getting a mortgage, they really aren’t necessary if you are putting 20% or less down on your home. Your bank will need your new home to appraise so that your debt percentage is not greater than 80%. If it doesn’t appraise, you will either have to throw in more cash or reduce the sales price of the home, or the bank will refuse to fund the loan.
If you are paying cash for your home, or have a small planned mortgage, your only protection from over-paying is to insert an appraisal contingency into your offer. If the home fails to appraise, you will have the option of terminating the agreement if you choose, or possibly re-negotiating the price. While this may sound like a fool-proof option, when we are in a hot market, with limited inventory and limited options for buyers, the goal is to reduce the number of contingencies to make your offer more appealing, not to add more! When evaluating whether they want to take their home off the active market to work with your offer, a seller will weigh all of the components, and an appraisal contingency weakens your offer as it is one more hurdle the seller must overcome before they can proceed to closing.
There is a definite risk that in a hot market you could overpay for a home. Homes are in some circumstances selling for tens of thousands of dollars in excess of the list price. Unfortunately, this may be what it takes to get a home. Inserting an appraisal contingency will only weaken your offer and could cause you to lose a bidding war. The best course of action if you want to win is to ask your agent to prepare an analysis of comparable sales and use that to determine your best offer, leaving out the appraisal contingency and hopefully succeeding in your bid to buy a new home.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
How are rising interest rates impacting home sales?
Rising interest rates are definitely impacting buyers. Many buyers are having to step down their affordability levels and focus on homes that are less expensive homes than those they might have considered three months ago. If you are a buyer and have been looking for more than a month, it’s a good idea to check in with your lender and request a new pre-approval and cost estimate so that you can be comfortable with what your payments will look like at the higher rates.
For most sellers, however, the rising interest rates are not impacting home prices. We continue to sell homes astonishingly quickly and at record prices. The pool of buyers considering a home may be different, but their number is not less. At the present time, it does not appear that the notable increase in interest rates has impacted our market in the “affordable” ranges at all.
However, the high-end market (over $1.5M) has always been much more susceptible to broader market factors such as interest rate increases. There has been a notable (and hopefully temporary) decrease in high-end activity in recent months and rising interest rates may be playing a key role in that decline (along with the volatile stock market and other concerning world events). If your home falls into our high-end market, you may need to exercise patience with our market as your time on the market will likely be more in line with historic norms as compared to the current “flash sale” market we are experiencing in the $1.3M market and below.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
What impact do you think rising interest rates will have on the real estate market?
I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured at rates below 3% fixed. Now they have inched up to 3.75% for conforming loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching upward.
What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.
However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We are interested in diversifying our portfolio and purchasing rental properties – any thoughts?
The first thing to keep in mind when considering a rental property is how you intend to pay for it. Rental properties are investment properties and subject to different lending rules than the home that you live in. Therefore, a lender will expect that you put more down as a down payment on a rental property and you will pay a higher rate of interest. Typically, lenders are looking for no less than 20% down on your purchase. And of course until you establish yourself as a successful landlord, your income is going to need to be sufficient to support the mortgage on your primary residence as well as any debt on your rental investments.
The second thing you need to think about is what kind of tenant you are interested in renting to. If you are hoping to rent to a family who might be in town for a couple of years with a temporary job assignment, then purchasing an apartment building with one and two bedroom apartments is unlikely to attract the type of tenant you hope to find. In that scenario, you would be looking for a single-family home in all likelihood (or possibly a townhome) in a good school district such as Quaker Valley. If you are hoping to find young professionals, you might look for something closer to downtown that has a trendier vibe to it.
You also need to take a look at the return on investment that you are seeking from the property. You will need to consider how much you are putting down on the property, how much you were paying in interest on any mortgage that you take out, your property taxes, maintenance of the building, any homeowners association fees, and any utilities that might be the responsibility of the landlord (these are typically utilities that are not separately divided in the particular structure, such as water). Putting together a spreadsheet with all of the expenses and your expected income will help you to determine whether or not the anticipated net income is worth the risk of investment to you. Be sure to build in some vacancy months – most properties are not leased 100% of the time.
Finally, you need to give some thought to how you will manage the property. Are you going to hire a property management company to handle that for you, or will you be more hands-on? Who is going to handle maintenance requests when something goes wrong? The beauty of being a tenant is that if something breaks, it’s not your responsibility to get it fixed. But as the landlord, are you going to be taking care of the repairs and if not, do you have a reliable handyman on-call that is willing to handle those items for you. If you are planning for others to manage the property on your behalf, you will need to build those costs into your financial projections as well. If investment properties are something you would like to consider, feel free to reach out to me and we can discuss these opportunities further.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We would like to move to Sewickley. Are there any affordable homes anymore?
Of course there are! But Sewickley, particularly in affordable price ranges, has become a very competitive market. It seems the secret is out – many people know about our very unique combination of a highly rated school district and a charming, walkable shopping district. Every agent I know has a list of buyers waiting for affordable homes to become available!
What does this mean for you as a home buyer? First, its critical to make sure you are fully pre-approved for a mortgage. If you are fully pre-approved (having submitted all of the supporting documents to your lender), you may be confident in your ability to get a mortgage and feel comfortable waiving your mortgage contingency, which will make you a much more competitive buyer if there are multiple offers.
Second, keep your offer as “clean” as possible. Try not to add in special requests or inclusions that sellers don’t usually leave with a home (such as furniture). Keep your inspection period as short as possible, or consider waiving inspections altogether if it is a newer home.
Third, keep your offer prices up. If you love a home, that is no time to lowball a seller. Even if a home has been on the market for a while, we often receive multiple offers at the same time. You don’t save anything when you make a low offer and you don’t get the home.
Finally, be open to compromise. If a home meets 7 out of 10 of your wish list items, consider it a home run. In a tight market like we are in, if you hold out waiting for your perfect 10, you will likely find yourself sitting on the sidelines. To get a Sewickley home, you may have to give up a garage, or a two car garage. You may need to take on a few projects. You may need to accept that there is no master bathroom or no main level family room. You may need to accept that the basement ceilings are lower and so any “game room” is a little more basic. You may have to accept a less open floorplan or a longer distance to the center of town. But remember, once you close you will make it your home, flaws and all, and will absolutely love being a part of this vibrant community!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Everything you could ever need, in one home, to live an exclusive life of leisure, luxury, convenience and privacy. This spectacular 11 acre Sewickley Heights estate is less than 1 mile from the heart of Sewickley Village and yet here, you will feel in a world all your own! 6 bedrooms, 7 full & 2 half-baths. Fully equipped chef’s kitchen, expansive family room. 2 home offices. Main level owners’ suite with private den and outdoor patio, spa-bath. Main level laundry, mudroom, attached 3 car garage, home gym, wine room. In warmer months, enjoy poolside entertaining with the walk-out lower level gathering space with kitchenette and two locker rooms that opens onto the lush lawns, heated inground salt-water pool with poolside terrace and sport court. Entertaining is magical on the expansive stone terraces, with covered outdoor living room and outdoor built-in kitchen. Easy access to the Allegheny Country Club, Pittsburgh region luxuries, easy access to I-79 and the Pittsburgh airport. $3,750,000.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We are eager to buy a new home but worry that we may not make a good choice. Any advice?
Surveys have shown that 33% of baby boomer and 64% of millennial home buyers have some level of regret when buying a home, and given the fast-paced market we have been in this year, it is easy to understand why. The leading regrets center around financials – buyer often worry they may not be able to afford the home. Other concerns include the house being mis-sized for their needs, or the location not being ideal. In this market it is important to strike a balance between achieving your dreams and actually getting a house. Inventory is very limited and has been for nearly two years, so holding out for your perfect location, or the precisely correct amenities, may keep you waiting on the sidelines for a very long time. However, there are many things you can do to avoid having financial doubts. Before you enter into a contract to purchase a new home, start with your budget. Make sure you have a realistic idea of how much cash you have available each month after income taxes. Even if a lender can “qualify” you for a mortgage, you may not feel the payments are affordable, depending on how much you need for your monthly “lifestyle” outside of housing. Ask your lender to do a deep dive into your financials and really understand what your monthly payment will be – this number will vary depending on your interest rate, taxes… As you consider whether or not to view a home, look at the taxes, including what they might increase to after you buy the home. Also consider the cost of property insurance as well as some of the costs lenders don’t look at such as utility costs, maintenance costs (this can be grounds, pools, or general household upkeep) and homeowner association fees. Finally, when considering a specific home, consider any deferred maintenance that will need to be attended to in the next 5 years, such as replacing old roofs or heating systems – these items all need to be added into your current budget. Once you have a good sense of what the actual monthly cost of a home will be, make sure that you are comfortable with what is left over. Being “house poor” for a very short term, such as if you are expecting a major promotion, is one thing. Stretching to your maximum affordability long term with no significant income adjustment, however, might start to feel tiresome when you can’t afford the vacations or entertainment that you have come to enjoy. Take the time to do the hard work up front and educate yourself on these factors and you will be far less likely to regret the home choice you ultimately make.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Senior couple having finance problems,they are using laptop for online payments.
We are planning for retirement and thinking of paying off our mortgage – is this a good idea?
When it comes to personal finances, there is never a one size fits all answer. Financial advisors will often tell you that investing in the market will, over the long run, yield you a greater return than the interest rate you are paying on your mortgage (this has certainly been true in recent years what interest rates have been historically low). However, markets are unpredictable and unless you are leaving your funds in a savings account at a bank, there is no guarantee you will not have a negative return in the market (see, for example, 2008). Additionally, if you pay off your mortgage, you are not getting the tax benefits of the mortgage deduction (available for mortgages up to $750,000 in size).
However, the counter argument is equally, if not more, compelling for many people. Without a mortgage, you are freed from having to worry about whether you have enough cash each month to pay your mortgage. Without a mortgage, your monthly expenses will likely be significantly lower. This not only allows you peace of mind, but would also allow you more monthly cash to spend on things you want to spend on, whether they be trips, gifts, or just more “experiences.” If you ever sell your home, you will have a much larger nest egg to move to your next residence, whether it is to be closer to children or grandchildren in another location or whether it is into a retirement community (many of which do you have substantial deposit requirements). Finally, there is no “risk” to the return you will get by paying off your mortgage. You know what your interest rate is on your mortgage and how much of a savings you will get each month when you pay it down.
However, it is never advisable to completely deplete your savings just to pay off a mortgage. If paying off your mortgage would substantially reduce or eliminate your emergency fund, then it is not a good idea. If, however, you still have a few years until you retire and are able to pay down the mortgage at a significantly faster pace by increasing your monthly payment or by making a lump sum payment each year (perhaps designating a portion of a bonus that you receive toward your mortgage payment), tell me this is absolutely an option you should give some serious consideration to.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Do you have any tips on how to get through the mortgage process as smoothly as possible?
I certainly do! Below are a few pointers on what you should not do if you want your mortgage to move smoothly through the process! This is critically important these days when competition is more intense for homes!
Don’t quit your job
Don’t change your job
Don’t get a promotion
Don’t buy any large ticket items (like five hundred dollars or more!)
Don’t make David Copperfield deposits (all funds need to be traceable)
Don’t forget to tell anyone making a funds gift to you that you will probably need a gift letter and some proof (usually a bank statement) that they had the money to give
Don’t forget to tell the lender about child support, alimony, wage garnishments or any other payroll reduction
Don’t co-sign for even a candy bar!
Don’t schedule a vacation before we close (especially a cruise)
Don’t order Direct TV, Cable, Telephone or any utility that will pull a credit report unless you want to write a letter of explanation about the credit report to the mortgage company
Don’t change your name during the mortgage process
Don’t go window shopping and let people pull your credit
Assuming that seems pretty straight forward to you, below are a few more choices some buyers make that make the process more difficult than it needs to be:
Not being up-front with your loan officer (hiding information)
Finding a lender on the internet that offers an unbelievable low interest rate
Using a 100% Online Lender
Not using the name on drivers licenses for mortgage docs (use Jr. and Sr. if required)
Not telling your lender if you lose your job before you close
Not shopping for the lowest costs and best rates
Delaying paperwork because you are irritated by the frequency and number of requests from the mortgage company
Take these pointers to heart and you will greatly simplify your mortgage process!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We hear selling a home can be a trying process. Any annoyances a seller should be expecting?
Below is a short list of many of the “joys” sellers might experience during the listing process. Being aware that these are possibilities will hopefully help you take them in good humor if they happen to you!
The agent showing your home will miss appointments and not call or show up.
Appointments will be made and cancelled at the last minute.
Some showings will last about five minutes and some will last 3 hours.
There will be a day when I call you and say someone wants to see your house, and you are going to ask me when. And I will say: “Look out your windows, they are sitting outside now”!
Agents are going to knock on your door or even drive by, see you in the yard and ask if can they see you house.
Agents showing your home will forget to turn lights off.
Agents showing your home will let your pets out (best to remove them from your home for showings) or your neighbor’s pet in.
Agents will provide unhelpful feedback – buyers buy homes when they attach emotionally to a home and when they don’t, their feedback is often nonsensical.
Agents will not provide any feedback – incredibly annoying, I know.
Expect lowball offers (at least it is a starting point). If your home has been on the market for more than a month, there is a reasonable chance that you priced it too high – maybe the lowball isn’t as low as you think.
Things will come up on the inspection that you had no idea were wrong with your home and you will be sure the inspector made a mistake. A pre-inspection is a great way to protect yourself against this!
The buyer will make ridiculous inspection requests.
The buyer will ask to bring in contractors for estimates for work they want to do after the closing at the seemingly most inconvenient times.
The property might not appraise at what you are selling it for. In a hot market like this one, this is a real risk. Be prepared to adjust your price if your sales price is over the listing price and it doesn’t appraise.
The closing date on the contract may change. Lenders and closing companies remain swamped right now – be open to the possibility of a delay.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
In your articles you often write “when it is priced right, it will sell.” Our home is on the market, has not sold and we feel it is priced right. Is this maxim always true?
The short answer is that it is not always true. Some homes just take longer to sell than others. If your home is “quirky” in its market, then it may take longer to sell, even if it is priced correctly. By quirky I do not mean dated décor or with deferred maintenance you have not yet completed. What I mean by quirky is, for example, if you are trying to sell a 2 bedroom home in a market that is nearly uniformly 3+ bedroom homes, that could slow down its resale.
However, if your home has been on the market for several months and is under $1.5M and has not sold, it is likely it is overpriced. We have a tremendous backlog of buyers looking for homes in our area. It does take time for buyers to view and assess the possibilities of a home, but certainly not months. As a general rule of thumb we like to say that if a home has had 13 showings with no offer or if it has been well-marketed for 13 weeks without an offer, an adjustment must be made to draw an offer. In this hot market, it should take less time than that! Sellers currently have expectations that the market should yield them tremendous premiums, and 2021 has certainly been the year of increasing prices, but it is overall still grounded in reality. In the end, in this market if your home has not sold in the first month, you are likely aiming too high with your listing price. The three time-tested factors that determine sale-ability of a home are price, condition, and location. Location cannot be changed but does have a big impact on price. In Sewickley, even a block can dramatically impact whether a home sells quickly or not. Condition can be adjusted and I suggest you read some of my prior articles on my Ask Kathe blog at www.kathebarge.com for important information on what buyers expect in today’s market.
The final factor is of course price. Depending on the price range your home is in, even a small adjustment can result in renewed interest in the home. Additionally, if you have received constructive feedback regarding either deferred maintenance of dated décor, you will either need to adjust your condition or your price. In the end, price is the key and if this market is not yielding you an acceptable offer, in all likelihood it comes down to one factor – it is not priced correctly and should be repositioned in the market.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We have been sitting on the sidelines for a while now waiting for a home that meets our wish list to come on the market – what’s coming this fall?
You might be surprised to find out, you are one of dozens of prospective buyers sitting on the sidelines waiting for their ideal home to come on the market. Nationally we are at a 20-year low in available housing inventory. What is going on you might ask?
Many blame it on the Baby Boomers! Seventy-eight percent of Boomers own their own homes, and 85% of them have no intentions to move within the next year. This is tying up a significant portion of potentially available housing inventory. Why aren’t Boomers moving? Stated reasons range from being happy where they live and not wanting to uproot their lives, to having inadequate choices in empty nester inventory to escalating prices that make scale down homes more and more expensive. Boomers are reportedly less interested in destinations like Florida and Arizona these days and are choosing to stay in the homes and communities where their family and friends are.
In Sewickley, we have very few opportunities for scale down housing, and so Boomers are remaining in their homes. As a result, our inventory continues to dwindle and there are very few new introductions. There will likely be a few relocations, but with the low inventory and large backlog of buyers, I expect pricing will be high and bidding wars will continue.
To be successful in this housing market, if you define success as actually getting a home and moving, you are going to have to accept a few key premises. First, you need to reevaluate your wish list and see what compromises you are willing to make. We still have many nice homes on the market – they may not be a perfect match for you, but could you make one work? You are more likely to receive a discount on a home that has been on the market. Second, if you decide to wait and a home comes on the market that is a good fit for you, be prepared to act fast and bid high. Complete the preapproval process now so that your offer is as strong as possible.
Our market is a steady one and I do expect we will see some new introductions as we move into fall, but your best recipe for success is one that includes reevaluation of the current inventory, compromise, fast action and generous, well crafted offers.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
With all of the bidding wars happening in this hot market, should we put an appraisal contingency in our offer?
Appraisal contingencies are added to agreements when buyers are concerned that their offer may be over market value. If you are getting a mortgage, they really aren’t necessary if you are putting 20% or less down on your home. Your bank will need your new home to appraise so that your debt percentage is not greater than 80%. If it doesn’t appraise, you will either have to throw in more cash or reduce the sales price of the home, or the bank will refuse to fund the loan.
If you are paying cash for your home, or have a small planned mortgage, your only protection from over-paying is to insert an appraisal contingency into your offer. If the home fails to appraise, you will have the option of terminating the agreement if you choose, or possibly re-negotiating the price. While this may sound like a fool-proof option, when we are in a hot market, with limited inventory and limited options for buyers, the goal is to reduce the number of contingencies to make your offer more appealing, not to add more! When evaluating whether they want to take their home off the active market to work with your offer, a seller will weigh all of the components, and an appraisal contingency weakens your offer as it is one more hurdle the seller must overcome before they can proceed to closing.
There is a definite risk that in a hot market you could overpay for a home. Homes are in many circumstances selling for tens of thousands of dollars in excess of the list price. Unfortunately, this may be what it takes to get a home. Inserting an appraisal contingency will only weaken your offer and could cause you to lose a bidding war. The best course of action if you want to win is to ask your agent to prepare an analysis of comparable sales and use that to determine your best offer, leaving out the appraisal contingency and hopefully succeeding in your bid to buy a new home.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
With all of the bidding wars happening in this hot market, should we put an appraisal contingency in our offer?
Appraisal contingencies are added to agreements when buyers are concerned that their offer may be over market value. If you are getting a mortgage, they really aren’t necessary if you are putting 20% or less down on your home. Your bank will need your new home to appraise so that your debt percentage is not greater than 80%. If it doesn’t appraise, you will either have to throw in more cash or reduce the sales price of the home, or the bank will refuse to fund the loan.
If you are paying cash for your home, or have a small planned mortgage, your only protection from over-paying is to insert an appraisal contingency into your offer. If the home fails to appraise, you will have the option of terminating the agreement if you choose, or possibly re-negotiating the price. While this may sound like a fool-proof option, when we are in a hot market, with limited inventory and limited options for buyers, the goal is to reduce the number of contingencies to make your offer more appealing, not to add more! When evaluating whether they want to take their home off the active market to work with your offer, a seller will weigh all of the components, and an appraisal contingency weakens your offer as it is one more hurdle the seller must overcome before they can proceed to closing.
There is a definite risk that in a hot market you could overpay for a home. Homes are in some circumstances selling for tens of thousands of dollars in excess of the list price. Unfortunately, this may be what it takes to get a home. Inserting an appraisal contingency will only weaken your offer and could cause you to lose a bidding war. The best course of action if you want to win is to ask your agent to prepare an analysis of comparable sales and use that to determine your best offer, leaving out the appraisal contingency and hopefully succeeding in your bid to buy a new home.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
With all that is going on in the world, why should we consider a move now?
I know it might seem counter-intuitive, but local market indicators suggest there has never been a better time to be in the market for a move. Why buy now? Here are my top reasons!
Interest rates are unbelievably low! Fixed 30 year loans under 3%? Yes! You can buy more and spend less!
We have some very nice homes available to purchase – its been a long time since I have seen so many nice choices.
Some buyers are concerned about economic uncertainty right now and sitting on the fence. However, the economic factors associated with the housing crash in 2008 are not present now, so while the economy may slow down, we are not anticipating housing prices to drop. Take advantage of other buyers’ hesitation and buy now before you find yourself in a multi-party bidding war.
Housing prices have continued to rise in our local markets despite the pandemic and economic uncertainty. If you are sitting on the sidelines, there is a good chance you will pay more at a later date!
I have outstanding opportunities across all price brackets. Why buy now? Check out more reasons below!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We’re first time home buyers. Where do we begin? (continued from last week)
For those of who just picking up the conversation today, check out my blog at www.askkathe.com to read the past two weeks’ introduction to the home buying process. If you are following along, so far you have gotten pre-approved for your mortgage, researched and chosen a buyer’s agent to be your advocate, saved money for your down payment, shopped for a home and gotten one under agreement. Now the fun continues!
Once you have a home under agreement and have deposited your hand money, you will be ready to schedule your inspections. Your buyer’s agent should provide you with guidance in finding reputable home inspectors. You will want to consider scheduling a general home inspection as well as inspections for radon, wood boring insects (termites), mold, and possibly of the sewer lines. If the home has a septic system you will absolutely want to fully inspect the system – they are quite costly to replace. If there is a well on the property, you will want to test both the water quality and the capacity of the well. You may also need to have specialists evaluate aging components such as the roof. You generally have 10 – 14 days to complete your inspections and at the end of that period, you will need to make a request of the seller if you would like any items addressed. To reach a successful conclusion of inspection negotiation, it’s a good idea to keep some simple tips in mind. First, anything on the disclosure should have been considered when you were making the offer – its not a great idea to revisit disclosed items. For example, if the seller disclosed that the roof is at the end of its useful life, asking for money toward a new roof is unlikely to be well received. The same can be said for items you could have easily seen. If the inspector notes that the driveway is cracked and you should have seen it while visiting the home, asking for the seller to pay for a new driveway will also not be well received. So when deciding what, if anything, to request of the seller, eliminate disclosed items and things you noticed when visiting the home and then turn your focus to the items that concern you most. Of course, if there were multiple offers and you were the winner in a bidding war, you may not be able to ask for much if anything as there is likely another buyer on standby! Ultimately, you and your seller will need to reach a compromise on the inspection issues and that agreement will be formalized in a written addendum to your Agreement of Sale.
At the same time you are working through inspections, you will also need to make application for your financing. This must be complete (in other words, you must have all of your paperwork to your lender) within 7 days of the final Agreement of Sale. Applying for a mortgage these days can seem quite challenging – be prepared for the lender to ask for what will seem like a mountain of documents. And do NOT make any major purchase until after you close on your home – changes to your outstanding debt at this point could affect your ability to qualify for a loan at all! Once you get through inspections and mortgage application, it should be smooth sailing. We will cover the final step in the process next week!
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Beautifully remodeled Sewickley Village Victorian with high ceilings, open floorplan and fabulous original architectural detailing. Wonderful newer master suite with stylish newer bath. Four finished levels of living space including lower level gameroom. Flat backyard, two car detached garage. In a wonderful Village neighborhood, within a very easy walking distance to Village shops and restaurants. $795,000
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We’re first time home buyers. Where do we begin? (continued from last week)
For those of who just picking up the conversation today, check out my blog at www.askkathe.com to read last week’s introduction to the home buying process. If you are following along, so far you have gotten pre-approved for your mortgage, researched and chosen a buyer’s agent to be your advocate, and hopefully saved money for your down payment. Now the fun begins!
Once you are preapproved for a loan and have determined what price range you are comfortable shopping in, you can start your home search. Typically this begins with an online search – your buyer’s agent should set you up to receive new properties as they become available. As interesting homes come on the market, you will want to tour them immediately. In most price ranges, we have an extreme shortage of inventory and those who snooze tend to lose. It is important to have seen enough properties upfront so when you see the right one, you know it and are ready to make a move. When evaluating homes, it is also important to be realistic. There is no perfect home, so establish your list of criteria upfront. If a home achieves 7 out of 10 wish list items, in real estate we call that a home run. If you are going to hold out for all 10, a move is probably not in the cards for you in the short run.
Once you find a home that works for you, in this market you do need to anticipate a bidding war is a realistic possibility. Interestingly, even homes that have sat on the market for seemingly prolonged periods of time will often receive more than one offer at the same time, so if you find a home that peaks your interest, do not delay in making an offer. Any delay could end up costing you money if another buyer comes along! If there are multiple offers, you must put your best foot forward out of the gate. I have written many articles in the past on how to do that, and they can be found in my AskKathe archives on www.askkathe.com, but briefly stated, you should not assume you will get a second chance – work with your buyers offer to make the highest, “cleanest” offer that you can out of the gate, and consider including a personal letter to the seller telling them why you love their home and hope to make it yours – that personal touch will often sway a seller when they are reviewing multiple similar offers.
Once you have a home under agreement and have deposited your hand money (anticipate 1%-5% of your purchase price depending on your price range), you will be ready to schedule your inspections. Next week I will talk more about inspections and how to get through them!
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Amazing privacy on 10+ acres in Sewickley Heights, this custom designed and built home offers 11,000+ SF of exceptional living space set on a stunning parcel of land. Gorgeous outdoor venues are ideal for warm weather entertaining, including resort-like pool and stunning patio with fireplace. Additional exceptional features include 3 bedrooms including luxurious master suite and nanny/in-law suite, soaring ceiling lines, massive stone fireplaces, finished lower level gameroom and exercise studio, 5 car attached garage, huge custom kitchen open to family spaces and more! An exceptional opportunity. $5,900,000
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We would like to move to Sewickley. Are there any affordable homes anymore?
Of course there are! But Sewickley, particularly in affordable price ranges, has become a very competitive market. It seems the secret is out – many people know about our very unique combination of a highly rated school district and a charming, walkable shopping district. Every agent I know has a list of buyers waiting for affordable homes to become available!
What does this mean for you as a home buyer? First, its critical to make sure you are fully pre-approved for a mortgage. If you are fully pre-approved (having submitted all of the supporting documents to your lender), you may be confident in your ability to get a mortgage and feel comfortable waiving your mortgage contingency, which will make you a much more competitive buyer if there are multiple offers.
Second, keep your offer as “clean” as possible. Try not to add in special requests or inclusions that sellers don’t usually leave with a home (such as furniture). Keep your inspection period as short as possible, or consider waiving inspections altogether if it is a newer home.
Third, keep your offer prices up. If you love a home, that is no time to lowball a seller. Even if a home has been on the market for a while, we often receive multiple offers at the same time. You don’t save anything when you make a low offer and you don’t get the home.
Finally, be open to compromise. If a home meets 7 out of 10 of your wish list items, consider it a home run. In a tight market like we are in, if you hold out waiting for your perfect 10, you will likely find yourself sitting on the sidelines. To get a Sewickley home, you may have to give up a garage, or a two car garage. You may need to take on a few projects. You may need to accept that there is no master bathroom or no main level family room. You may need to accept that the basement ceilings are lower and so any “game room” is a little more basic. You may have to accept a less open floorplan or a longer distance to the center of town. But remember, once you close you will make it your home, flaws and all, and will absolutely love being a part of this vibrant community!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We are planning to buy a new home soon – we see advertisements for internet lenders offering what seem to be below market rates. Is this too good to be true?
If you are simply refinancing an existing mortgage debt, you MAY be ok choosing an internet lender. You just need to be very careful that, before you apply to refinance your loan, you receive from the lender a full disclosure of all the costs and not just the rates. Oftentimes I see lenders have exorbitantly high fees connected with low rates. In a sense, you are buying down your rate by paying high fees upfront. Be sure to compare them on the same day to a couple of local lenders and understand what you are paying to get the quoted rates. The reason you must compare rates on a singular date is because rates go up and down continuously and a rate may seem lower simply because you called a particular lender on a date rates dropped.
If you are buying a home rather than refinancing, I do NOT recommend that you use an internet lender. They do not tend to be familiar with area norms and that can cause you more headaches than you can imagine. There is a long list of particularities to PA Agreements of Sale and the last think you want to do is have your closing delayed (while your movers are standing at the curb) while you wait for your lender (who does not have a local presence that you can visit personally to address any issues) to sort things out. As they are not familiar with our Agreements and processes, internet lenders may also impose requirements on you to “fund your loan” that are not requirements generally imposed by local lenders that may disadvantage you later. Finally, internet lenders often do not understand that PA Agreements of Sale declare “time is of the essence” inside the contract – what that means to you is that if you miss your closing date because the lender isn’t ready to close, the seller does have the legal right to declare you in default, keep your hand money and sell the home to someone else.
When buying, why take a risk? Rely on your trusted Realtor to help you find a local lender who offers the most competitively priced loan products and delivers exceptional customer service. Realtors cannot accept referral fees from lenders, so you can be sure we are motivated only by knowing you will have an outstanding transaction. Feel free to reach out to me for help finding you the best local lender to meet your financing needs!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
My friend’s closing on her existing home was delayed and she ended up having to delay her closing on her new home, and was stuck with all of her stuff on a moving van and unable to move in to her new home. How can these major inconveniences be avoided?
Back-to-back closings do raise the possibility of delayed closings and moving vans sitting curbside waiting to unload. When there are multiple transactions lined up on top of each other, if one in the line-up fails to close on time, it will affect everything in line behind it. Ideally, transactions would not be back-to-back, but this only works if buyers are paying cash out of existing accounts or have sufficient resources to carry two homes, so that the new home can be closed independently of the closing on the old home. But even if transactions are not stacked, closing delays can still occur, causing unhappy buyers and sellers, because lenders aren’t ready.
So how can these inconveniences be avoided? Selection of your lender and closing agent are absolutely critical. There are a lot of people out there who would like your mortgage and closing business. Many may even be your friends, neighbors or family members. But the relevant question, in addition to rates and fees, is whether they close on time every time. This is where you really need to rely on your agent’s expertise. Even consumers who move frequently only engage in the mortgage process once every few years. A busy agent is dealing with lenders daily. We know who stands behind their word and will not let you down, and who will not. A well-intentioned but poor performing lender can cost you significant unhappy delays – make a careful choice up front.
It is also crucial that you get your lender all of the documentation that he needs immediately at the time of mortgage application. You don’t want to be part of any delay. Finally, even once you have turned in all of your paperwork, its important to check in with your lender weekly, daily the week before closing, until they tell you that they have the “clear to close.” The old saying “the squeaky wheel gets the grease” is never truer than when it comes to closing your mortgage loan – stay in close touch with your lender!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
I have a friend who just had a terrible time closing on his mortgage loan because he moved some money into his checking account right before closing. Any tips om making sure the mortgage process is a smooth one?
Mortgage rates remain low, but the process of obtaining a mortgage is more complex than most buyers appreciate. Underwriters are extremely detailed in their review of mortgage applications – one small “mistake” could derail your entire application. Take the time before you buy to understand the possible pitfalls, and then steer clear for a smooth mortgage process.
First, don’t make large undocumented deposits into your bank accounts. Mortgage guidelines require that underwriters review all deposits reflected on bank account statements. If there are deposits present on a bank statement and the underwriter cannot tell where the funds came from, then the underwriter may ask for you to provide a “paper trail” to document the source of the funds used for the deposit. When making a deposit, keep the associated paperwork (i.e. the “paper trail”) you may have received that would show where the funds came from for the deposit (i.e. check stub, copy of check, receipt for liquidation of another account, etc…). Try not to make cash deposits if at all possible as it is difficult to show where “cash” came from. Try not to move your money around between accounts. There will be plenty of time to consolidate funds if you desire after you’ve closed on your new home. Be sure to save ALL pages of your bank statements. Do not throw them away or shred them.
Second, strive to have ‘boring’ bank statements – no NSF charges, no unusual deposits, not a lot of moving around of money between accounts. Achieving this will definitely make your mortgage process go smoother.
Finally, don’t open new credit and don’t take on new debts. Unless advised to do so by your mortgage professional, you should try to avoid having your credit checked by anyone or taking on any new debt (i.e. credit cards, car loans, lines of credit, etc…). Numerous credit inquiries may impact your credit score which in turn could affect your mortgage loan and interest rate quote. In addition, underwriters may require that you write a letter explaining the inquiries on your credit report stating if you did or did not acquire any new debts as a result of the inquiry. While it’s tempting to take advantage of an extra 10% off at a department store if you open a new credit card with them, it may be best in the long run to pass on those offers and use one of your existing credit cards.
Check back next week for more tips on making your mortgage application process a smooth one!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Is the highest offer always the best offer in a multiple offer situation?
For those of you looking for a quick answer, the answer is a resounding no! For those of you wondering why, read on!
There are many important components to an offer, and price is only one of them! First is financial ability to perform. An offer is worth nothing if the buyer is unable to pay for the home. A cash offer with proof of funds is your best bet, but most buyers take mortgages. If the offer is contingent upon the buyer getting a mortgage, make sure you receive a pre-approval letter from a local, well-reputed lender (and not an internet lender).
Second, make sure you receive a substantial amount of hand money. Hand money is all you have if a buyer backs out of the deal. Sometimes buyers just change their minds. Maybe a house they like better comes on the market. Maybe they figure out that the home needs more work thab they originally imagined and the remodeling costs get too high. Maybe they take a new job that is too far from your home. There are many reasons why buyers change their minds and if you lose your buyer, you will want to be sure you have a decent amount of hand money to compensate you for the loss.
Finally, some buyers will offer more for a home with the expectation that they will “beat you up on your home inspection.” Your best line of defense against these tactics is to make sure that you have been exceptionally thorough in your disclosure so that there is nothing (or almost nothing) wrong that you haven’t already told them about. A pre-inspection is a great way to make sure that your home is in great shape and that all issues are disclosed – it will save you money in the long run. Some buyers will even waive inspections if you provide a pre-inspection from a quality home inspector, which is the best scenario of all!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We’ve been out of school for a few years, have been great savers and are thinking about buying our first home, but with the recession not so far behind us, it seems like a risky proposition. Any advice?
The millennials, as they are known, are a very risk adverse generation, having watched first-hand as many family members lost their jobs and/or their homes in the last recession. It’s not hard to understand why they have been the slowest generation to embrace home ownership as part of the American dream. But as scary as it might seem to take that first big step, home ownership remains one of the best investments you can make, and the sooner you get in the game, the sooner you will start making measurable progress toward achieving your financial goals.
Keep in mind that most of the housing losses from the 2008 recession were due to the immediately proceeding banking practices that are now far behind us. People were allowed to borrow without proof of ability to pay, to start with, and many used their homes as ATM machines, financing cars, vacations and college educations on their presumed housing appreciation. Today the lending laws are much stricter in an effort to prevent another crisis, and so you can be assured that if a lender has qualified you for a particular loan amount, you have passed some of the strictest standards and are more than well qualified by any objective standard to get in the housing game.
Owning a home will always be a far better choice than renting. It’s a rare day that owning what you are renting wont cost you less every month, and you are building equity (money you get back when you sell someday) with each payment. If you compare how much it costs you to own a home over 30 years, versus how much it would cost you to rent that home over 30 years, you will always have spent less money and in the end, you will have an asset that you own and can resell if need be. In addition, owning a home gives you certain federal tax breaks that renters don’t get, which further reduces the actual cost to you of owning a home. Home owners also lock in their housing cost for as long as they own that home. So while your $2000 rental payment will go up each year as your landlord increases the rent, how much you spend for a mortgage is locked in for as long as you own your home. Stay there 30 years and you will still be paying the same mortgage payment that you are paying today! No landlord will give you that deal!
This is complex, no doubt, and I would be happy to meet with you to go over the numbers in person, but there is no doubt that its never too early to get into the home ownership game!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We’ve been thinking about starting our search for a new home but were wondering if we should wait until more homes come on the market this spring?
The spring market is here (although with the forecasted low temps for this week it may slow things down a bit)! Buyers are definitely buying right now, so if you think a move is in your future, despite the cold temperatures, the time to get started is now! We have seen homes that have been sitting for months go under agreement in the past couple of weeks, some with multiple offers, and our inventory is dwindling. We still have many nice options available for you to consider, and this is a far better time to buy than March, April or May.
Why, you may wonder? We have such a severe inventory shortage with lines and lines of buyers waiting for homes to come on the market. Many homes are selling in just a couple of days, before many buyers have a chance to get out and take a look. As we head into spring this will only get worse. While none of us have crystal balls, there does not appear to be an avalanche of inventory coming on the market in the coming weeks. I expect by March 1st the bidding wars will begin in earnest for well-conditioned, well-priced homes. (As a side note, even with the inventory shortage that we have now had for well over a year, this is Pittsburgh and not California – buyers still exercise a healthy dose of common sense in making their buying choices and don’t tend to overpay – it is still important to price based on historic sales and not exceed recommended pricing by sizeable amounts). If you don’t want to end up in a bidding war, where there can only be one winner and it may not be you, shop now and avoid the crowd! You may very well get a better deal than you could on the same house in another month!
In doing so, be sure to follow the advice passed on in prior columns (you can refresh your memory on my blog where these columns are posted each week –see www.AskKathe.com). Be SURE that you are pre-approved so that when you are ready to buy, you don’t have to waste precious time with this necessary step. When you do this, be sure your credit is good or clean up any issues and reestablish good credit. Give me a call so we can get you set up to be notified of all new listings immediately! And if you might consider selling your home, call me today! We have lines and lines of buyer prospects for your home!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
I know you don’t have a crystal ball, but what do you think about mortgage rates right now?
The short answer: I think they will only go up! We just had a slight drop in the rates this past week, but that is not expected to hold. If you are considering buying, now is definitely the very best time to take out a loan – by next month rates could have bounced back up again! There is really only one problem I see with this otherwise sage advice – inventory is very limited right now! You may not find anything that you want to buy!
The good news is we do have a new mortgage product that will allow you to lock the rate for 60 days, even if you haven’t found a home! The process is quite simple. The loan application is processed just like if you had found a home – you make full application and turn in your paperwork. You then have 30 days to get a home under agreement and the remaining 30 days to close. For those of you who are committed to buying in the short term, this is a very good option to guarantee you the lower rate while still giving you time to shop. If you don’t find a home within 30 days, you do lose the rate lock but you would have still completed the paperwork for your future loan application!
Prospective sellers, lower rates are good news for you too! Buyers can afford more when rates are lower and home prices therefore tend to be a little higher. We are officially in the long-awaited spring market, rates have dropped a bit AND we have a scarcity of inventory – the perfect trifecta if you are contemplating a sale! Give me a call and we can develop a strategy to maximize your return in this favorable climate!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We are interested in viewing homes but have been told that before doing so, we need to provide a pre-approval letter or proof of funds letter. Is this really necessary?
Getting yourself pre-approved to buy before you start viewing homes is an excellent idea. You will have to have a pre-approval letter to submit an offer (sellers are going to want assurances from an independent third party that you can afford the home before they take their home off the active market to sell to you). And you certainly don’t want to start looking at homes that you think you can afford, or that you were told you could afford last year, before interest rates increased, only to be disappointed to find out that the home you love is outside your price range. Getting a pre-approval upfront is the most sensible approach – in this hot market, you could easily lose out on a home while you wait for a lender to pull your information together and get you the letter. It is best to get it done up front.
Necessary? That depends on the agent you are working with and the sellers of the homes you are viewing. Some agents simply will not put a buyer in their car until they have completed the pre-approval process. On reflection, this makes sense. Realtors are one of the only professions that don’t charge for their time as it is expended – they are paid for their time only when (and if) you actually close on a property. Getting pre-approved upfront shows that you are serious about buying a home and not just out for a house tour! Some sellers also require pre-approvals be provided before they will allow their homes to be shown. As you might imagine, there are some homes that many people would like to see, just for fun, such as very expensive homes or homes of celebrities/ sports stars. However, selling a home is not about providing entertainment to the general public. One would hope that buyers would understand that sellers do not want to take the time to prepare for a showing to a buyer who is just out for fun – and hence, for those homes that might be a curiosity to many, it is important for sellers to require a pre-approval in advance.
If you are serious about a move, then financing, whether through a loan or with cash you have saved, is a necessary part of the buying process. My best advice is to go ahead and line up your financial ducks before you start the home search process. If you need help finding an excellent lender, give me a call!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
It’s a new year and we’re ready for a new home! What should we do first?
Well, you are asking a Realtor that question, so the answer is probably expected! The first thing you should do is call me! Once you have done that, here is a look at what comes next! First, we will meet and determine the likely value of your home in the current market. The market is quite fluid and values move up and down depending on supply. Currently we have had very low inventory for an extended period of time and buyers are getting very frustrated, so it is possible that we may see an uptick in values again this spring. When we meet we will also review all of the many ways I will be marketing your home and the timetable for rolling out the marketing to optimize your result.
Once we set a timetable that works for you, you will want to spend some time “staging” your home. At the most fundamental level, this would involve you “de-cluttering” your home. It’s amazing how quickly we will our closets, basements and attics! Movers are not cheap – you do not want to move more than you know you will want to keep. So now is the ideal time to start the clean-out. In fact, we sometimes have closings as quickly as 3 weeks after an offer is presented, so it is best to assume that you will not have much time to pack later and do the clean-out up-front. This will also help your home show off its spaciousness and storage capabilities! If you are saving things for others (such as the pile of furniture I have stored in my basement for my adult children who I am sure are going to want my 30 year old furnishings someday!), then it would be advisable to find an off-site storage facility and move those items from your home (or more realistically, I would be happy to connect you to charities to come pick them up and give you a tax deduction in exchange – the reality is that those we save for probably really don’t want our stuff anyhow!) If this all seems incredibly overwhelming to you (and you’re thinking you would rather stay put than face the inevitable clean out), I would be happy to connect you to a home organizer that can take on as little or as much as you don’t want to do!
Once you feel you are “de-cluttered,” the next step toward selling your home would be to determine whether any repairs or improvements are needed or recommended. I am happy to walk through your home with you in advance of your listing date and discuss what you might consider addressing and its likely impact on your bottom line. Not ever seller wants to make repairs and improvements and ultimately that choice is yours, but the market data I will provide to you will help you decide whether its worth it to you to make the additional investment in your home. If repairs are not possible, we will work on using the disclosure to make sure you are sharing the items upfront with the buyer and pricing accordingly. This will protect you later from costly repairs if the inspector is the one to raise the issues.
It’s a lot to do, but together we can make your 2019 real estate goals a reality!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We were approached by someone who is interested in buying our home. The buyer has provided us with an unsigned sales agreement as their offer. They are offering 1.5% of the purchase price as their hand money and have not included proof of funds (it is a cash offer). Are we wasting our time with these buyers?
The very short answer is yes! For starters, to be a valid offer, it must be in writing and signed. Without a signed writing, you have absolutely nothing to bind the buyer should you decide to proceed. What you received is not an offer at all and you should not give it serious consideration until the paperwork is signed by the buyer. If there are no agents involved, the buyer needs to hire an attorney to prepare an offer and you will need to hire your own attorney to review it.
Hand money equal to 1.5% of the offer may or may not be sufficient depending on the individual circumstances. Sometimes that is all a buyer can afford. However, this buyer is supposedly paying cash so there should be no problem with them providing a more substantial deposit. Look for a minimum of 5% in this type of scenario. The hand money is your consolation prize should the buyer decide not to close after all contingencies have been satisfied – if you have moved out, you will need at least that much to compensate you for all of your moving costs.
As far as proof of funds, I would recommend that you not engage in any substantive negotiations until the buyer has proven that they do have the cash available to close. Talk is cheap, but if they really do have the cash, they will have no problem producing copies of statements showing the cash or a letter from their banker that they have the needed funds.
Your questions address just a few of the hundreds of complexities involved in getting a home sold and highlight why its really important to engage a full-time real estate expert when buying or selling a home. Selling your home yourself may sound like a great idea in the abstract but the “for sale by owner” sellers that I have spoken to have regretted not engaging a Realtor to represent them as selling a home is far more complicated than it looks and most ended up feeling like they got the short end of the stick at the end of the day!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
This time of year we all take the time to give thanks for all of the wonderful things in our lives. I have much to be thankful for. The obvious chart toppers are good health, wonderful family and friends, and a warm home to come home to each day (which I particularly appreciate on these chilly November days!) My gratitude extends much further, however, to all of the people I work with every day that make real estate transactions so seamless for my clients – from the best mortgage brokers and closers to incredible home inspectors and handymen, contractors, electricians, roofers… that I can count on to give their best to my clients. With them by my side (or on speed dial) I have been able to provide the highest level of service to those with whom I work, and for that I am grateful.
My gratitude, however, extends even further – to forces I can’t control. We have been very fortunate to have historically low interest rates for a very long period of time (and even though they have been inching up, they are still comparatively quite low), and a taxing structure that has favored home ownership as an investment. I am always reminded that Uncle Sam, through the mortgage interest deduction, effectively pays a portion of my mortgage every month. Through the system as structured, we are not only able to own homes for less than we could pay to rent them, but at the same time we are building equity which will be there for us when we retire and are seeking that nest egg to purchase our retirement home with.
Are you taking advantage of all that is available to you? It’s hard to imagine that there will ever be a better time to begin or increase the size of your nest egg in real estate. If you’re ready to downsize and cash in your nest egg, it’s an absolutely ideal time – inventory is low, interest rates are still on the historically low side and we have buyers waiting in line for Sewickley homes. The spring market starts in January – the time to sell is now! Enjoy your holiday, and give thanks for all that is wonderful in your life!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We’ve noticed interest rates are rising on mortgages. What effect do you think that will have on our market?
You are correct – the fed raised the interest rates AGAIN this year, and have indicated that we need to be prepared for two more rate increases in 2018. Those increases are expected in September and December and many forecasters are expecting that rates will be over 5% by 2019. The economy has been incredibly strong and unemployment is lower than it’s been since the 1960s (excepting one month in 2000). With a surging economy, the fed is forced to raise rates in an attempt to keep investors interested in mortgages, control inflation and avoid a possible future economic crash. Rates are ¾ point higher than they were last year. Nonetheless, historically 6% is considered an excellent interest rate and they are still well below that!
With all of that in mind, today is as good as its going to get for years to come for mortgage interest rates. So don’t procrastinate any longer! If you are thinking of a move, there is no better time than now to find a new home and lock in your interest rate. In September you will likely pay more for the same house over the life of your loan than you would if you bought it roday. What impact will these rising rates have on the market? Some buyers will not be able to afford a home that they could have afforded previously – as rates rise all borrowers will qualify to borrow less and that lower number may or may not be enough for you to be able to buy the home of your dreams. All buyers will pay more for their homes over the life of the loan than the could have had they purchased earlier. Ultimately, higher rates could depress home values as buyers can afford less, but I do not see that happening in this market. We just do not have enough inventory for rising rates to depress home prices…yet. But if we ever bring supply in line with demand again, we may see rising rates soften home values.
Of course, as rates rise it becomes very important to shop your loan product. Those who get two lender estimates save on average $1500 upfront and those that get 5 save $3000 upfront on average. Most buyers will take the time to shop around for a new car, so why not take the same approach toward your mortgage. With rising rates, you will appreciate the upfront savings!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA
REAL ESTATE SERVICES 401 Broad Street
Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
With all of the bidding wars happening in this hot market, should we put an appraisal contingency in our offer?
Appraisal contingencies are added to agreements when buyers are concerned that their offer may be over market value. If you are getting a mortgage, they really aren’t necessary if you are putting 20% or less down on your home. Your bank will need your new home to appraise so that your debt percentage is not greater than 80%. If it doesn’t appraise, you will either have to throw in more cash or reduce the sales price of the home, or the bank will refuse to fund the loan.
If you are paying cash for your home, or have a small planned mortgage, your only protection from over-paying is to insert an appraisal contingency into your offer. If the home fails to appraise, you will have the option of terminating the agreement if you choose, or possibly re-negotiating the price. While this may sound like a fool-proof option, when we are in a hot market, with limited inventory and limited options for buyers, the goal is to reduce the number of contingencies to make your offer more appealing, not to add more! When evaluating whether they want to take their home off the active market to work with your offer, a seller will weigh all of the components, and an appraisal contingency weakens your offer as it is one more hurdle the seller must overcome before they can proceed to closing.
There is a definite risk that in a hot market you could overpay for a home. Homes are in some circumstances selling for tens of thousands of dollars in excess of the list price. Unfortunately, this may be what it takes to get a home. Inserting an appraisal contingency will only weaken your offer and could cause you to lose a bidding war. The best course of action if you want to win is to ask your agent to prepare an analysis of comparable sales and use that to determine your best offer, leaving out the appraisal contingency and hopefully succeeding in your bid to buy a new home.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
What impact do you think rising interest rates will have on the real estate market?
I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured, on a good day, at rates below 3% fixed. Now they have inched up to 4.25% for conforming loans and 4.75% for jumbo loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching toward 5%.
What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.
However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
What rights do sellers have to keep buyers in a home sale agreement, once they put a home under agreement? If the buyer back’s out, do we get to keep their hand money?
Assuming the standard Pennsylvania Agreement of Sale is used to sell a home, a home seller has very few rights to keep a buyer in that agreement. First, any home inspection contingencies must be satisfied. Unfortunately, unless modified, buyers have the absolute right to terminate the agreement if there is anything at all on the home inspection that they are dissatisfied with, even if a seller is willing to repair that item or items. Nothing is more disheartening for a home seller than to put their home under agreement, only to lose the deal because of inspection concerns. This is a result that can be mitigated by home sellers. All home sellers can, and should, have their homes pre-inspected to help avoid the inspection termination scenario. Yes, if the inspector finds issues, they need to be repaired or disclosed. But this will be the case anyhow once the buyer finds them, and they will! All too many home sellers adopt the position “we’ll address that if the buyer asks.” The problem with that approach is that a seller may never get the ask – they may just get the termination letter.
Once the inspection hurdle is overcome, there may be additional contingencies that buyers have to overcome before a seller is close to having a secure agreement. A buyer may have to get financing, and if they place a mortgage contingency in the agreement and a lender refuses to give them a loan for any reason, they can terminate the deal. The most frequent cause of mortgage issues is a failure to appraise. An appraisal contingency can be a contingency in its own right, and if a home fails to appraise, the buyer will have the right to terminate the agreement. In this market of low supply and high demand, some sellers of premium properties are extracting market high prices for their homes and appraisal failures are a real risk. If this happens, a seller will need to consider whether to reduce the price or put the home back on the market.
Whenever a buyer terminates under a contingency contained in an agreement, the buyer receives a full return of the hand money and the seller’s only recourse is to put the home back on the market. So sellers, do yourself a favor, pre-inspect your homes. The $500 you will spend is the best insurance policy your money can be in maximizing your chances for a successful sale!
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
If there are so many buyers out there, why aren’t we seeing more sales?
The average time between a first showing and an offer is 3 weeks. Buyers here are historically slow to get going, although some of the fast sales lately are driving home the point that if you like a home, you are well advised to move quickly in making an offer. That said, there are four primary reasons that hold buyers back from buying a home, according to a 2017 REBAC survey. The first and most applicable right now? Seventy-seven percent of buyers aren’t buying because of our inventory – they can’t find what they want. This has been a recurring theme in my articles – we need inventory! I know it’s early in the spring market, but if we don’t start to see homes coming on the market soon it will be a disappointing spring market for buyers.
The second hold back? Fifty-five percent of buyers have unrealistic expectations! If you know anyone looking for a home right now you have probably heard a lot about what is wrong with our homes. Right now, if buyers actually want to get in a home, they are going to have to adjust their expectations. You might have to do some work to make a home work for you. You may have to give up some of the things on your wish list.
Forty-nine percent of buyers hold back from buying for affordability reasons. Often this is price – our prices are increasing, and may be pricing some buyers out of the market. Our property taxes are also quite high here as compared to many other states, and some buyers simply can’t afford the monthly payment once taxes are added in.
Finally, thirty-three percent of buyers have difficulty obtaining financing. This is why it is very important to do the hard work up front! Seek a full pre-approval before you start your home search so that you aren’t disappointed later!
As always, feel free to give me call if I can be of any assistance with your real estate needs. Call or Text 412.779.6060
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
What is going on in our market? It seems things are selling fast!
A very brief update on the status of our housing market: as predicted, our low inventory for the past several months has created a log jam in our housing market. As of today we have only 66 homes in our active inventory, while the norm this time of year is closer to 200! Dozens of buyers are lined up in every price range waiting for their perfect home to come on the market. As a result, new introductions in the Village are selling close to or at asking price, and more often than not, without a mortgage contingency. Many are receiving multiple offers. Buyers participating in this market feel like it is the California market here in Sewickley!
Why is this happening? It’s hard to say. The inventory shortage extends across most of the communities in our area that sit in a top rated school district. People are just not moving out. This could be caused by the fact that there are extremely limited options for “downsizing” if you are in your empty nester years. It could be that Pittsburgh has been steadily growing for years and it is just catching up to us. It could be that we cut new housing starts too sharply after the recession and we aren’t keeping up with demand.
What should a buyer do in today’s market? First, get yourself fully pre-approved (not just prequalified) if you need a mortgage. You need to get comfortable with the fact that you might have to waive your mortgage and appraisal contingencies. Second, be ready to make a very fast decision if a home comes on the market – do not expect that you will have more than a day to decide. It is very much a seller’s market and not a good market at all if you are buying, but if you need a house, it’s the market you are in. Consider looking “up the hill” – we have some amazing homes available offering great living space at significantly better values.
And once again, if you are thinking of selling, give me a call right away and lets design a strategy to maximize your return in this amazing seller’s market! Put my 19 years of full-time experience and dedication selling Sewickley’s wonderful homes to work for your personal benefit!
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
The new tax legislation seems to be on everyone’s mind these days, and seems to be crowding out Christmas cheer a bit. While I do need to advise you to consult your personal tax accountant, I will tell you I have been busy prepaying my 2018 property taxes. Under the new legislation, taxpayers will only be able to deduct a grand total of $10,000 of property and income taxes combined. In our area, property taxes are higher than in many parts of the country, so many people will easily exceed that limit. Paying 2018 property taxes in 2017 helps to insure the full value of their deductibility. Of course, 2018 tax bills have not been issued yet, but if you find your 2017 bills and make a couple of calls, they will be able to tell you how to proceed if this interests you. The taxing bodies are likely thrilled right now with the new legislation – rather than chasing late payers they are receiving their money well ahead of schedule! Of course, if your bank escrows your taxes for you, this may not be an option you can take advantage of.
I’ve also taken the time to pay my 2017 4th quarter Pennsylvania and local income taxes now, for the same reason. While not due until January 15th, the $10,000 limit on the deductibility of property taxes and state/local income taxes combined will result in lost deductions for many. This tax planning is only useful right now, when the old limits (or lack thereof) still apply through 2017.
As far as the legislation itself, I am pleased that congress raised the mortgage deductibility limit to interest on mortgage debt up to $750,000. Interest on debt on second homes is no longer deductible (unless you use it as an investment property, in which case it can offset your rental income), and interest on home equity lines of credit will no longer be deductible. This will definitely affect the way consumers choose to structure their home buying financing. We will be thoroughly digesting the bill so that we can help consumers make the best financing decisions to take advantage of the tax breaks we do have left.
The $10,000 limit on the deductibility of property and state/local income taxes is not ideal, particularly because of the higher property taxes we have in the region. There is a possibility that the limitation will make higher end homes harder to sell, but I doubt that. In the end, consumers will have to have a mindshift and think less of their personal residences as tax breaks and see them for what they really are – a home for their family to come home to every day – their personal sanctuary from what can sometimes feel like a crazy world. And when we see our homes that way, the small piece of our property taxes that Uncle Sam no longer “pays” will seem far less important than it does in the abstract.
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA
REAL ESTATE SERVICES 401 Broad Street
Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
What impact do you think the proposed federal tax legislation will have on homeowners?
For those of you who are unaware, the proposed tax legislation makes several changes to itemized deductions that will impact many homeowners. First, the property tax deduction will be limited to $10,000. In Sewickley borough, if your tax assessment is above approximately $350,000, you will see an increase in your federal income tax as a result of this itemized deduction limitation. Additionally, while existing mortgages are grandfathered, interest will only be deductible on new mortgages of less than $500,000.
The National Association of Realtors believes these new changes could put home ownership out of the reach of many and nullify the home ownership incentive for all but the top 5% of our nation. Home ownership is already at a 50 year low nationwide. For many Americans, a home is the largest investment they will ever own. Studies have also shown that at the end of the day, the net worth of a homeowner is, on average, a shocking 45 times greater than that of a renter, demonstrating how important it is to incentivize home ownership so that Americans have the needed nest egg when they retire.
My predicted impact on our local housing market is that it will soften prices over $350,000. Without the benefit of the tax deductibility of property taxes over $10,000, mid-market buyers will qualify to buy less than they can today, and it will have a downward pressure on prices overall. With the severe inventory shortage we have right now, this is not likely to be immediately evident, but it will likely impede the long-term growth rate. The cap on the deductibility of interest on new mortgages over $500,000 will have a much larger impact on the market overall. Homeowners with large mortgages will be disinclined to make the “choice” moves we are so accustomed to here in Sewickley, because a move will mean they lose the deductibility of a significant amount of interest on their grandfathered mortgage. This will only exacerbate our inventory shortage as homeowners will be likely to just “stay put” and take advantage of the deductibility of interest on grandfathered mortgages. Additionally , for homes priced over $550,000, buyer affordability will drop further as carrying mortgages over $500,000 will be noticeably more expensive, with the potential of exerting further downward pressure on market appreciation. Its hard to know how any of this will help us, but then, I am not an economist – I must be missing something!
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA
REAL ESTATE SERVICES 401 Broad Street
Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Do you have any tips on how to get through the seemingly daunting mortgage process with as few headaches as possible?
I certainly do! Below are a few pointers on what you should not do if you want your mortgage to move smoothly through the process!
Don’t quit your job
Don’t change your job
Don’t get a promotion
Don’t buy any large ticket items (like five dollars or more!)
Don’t make David Copperfield deposits (all funds need to be traceable)
Don’t forget to tell anyone making a funds gift to you that you will probably need a gift letter and some proof (usually a bank statement) that they had the money to give
Don’t forget to tell the lender about child support, alimony, wage garnishments or any other payroll reduction
Don’t co-sign for even a candy bar!
Don’t schedule a vacation before we close (especially a cruise)
Don’t order Direct TV, Cable, Telephone or any utility that will pull a credit report unless you want to write a letter of explanation about the credit report to the mortgage company
Don’t change your name during the mortgage process
Don’t go window shopping and let people pull your credit
Assuming that seems pretty straight forward to you, below are a few more choices some buyers make that make the process more difficult than it needs to be:
Not being up front with your loan officer (hiding information)
Finding a lender on the internet that offers a 0.001 interest rate
Finding a lender on the internet that offers a 000000.1 interest rate and is from outside of the area
Using a 100% Online Lender
Not using the name on drivers license for mortgage docs (use Jr. and Sr. if required)
Not telling your lender if you lose your job before you close
Not shopping the Good Faith Estimate
Delaying paperwork because you are irritated by the frequency and number of requests from the mortgage company
Take these pointers to heart and you will greatly simplify your mortgage process!
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
With cybercrimes constantly on the rise, how can we protect ourselves in a real estate transaction?
You are correct. We are unfortunately seeing a continued increase in the frequency of cyber crimes and the real estate industry is not exempt! It is unlikely that many of can get by in millennium America without your devices, so it is important that you be smart with your personal information. Below are a few suggestions to help protect yourself from cyber crime.
Do not share your social security number with your Realtor. We don’t need it! When you apply for a mortgage, give it directly to the mortgage company – ideally in person or over the phone. If you email documents, only do so over a secure and encrypted server that your lender has specifically set up for these purposes. When it’s time to close there will be forms to fill out. Again, your Realtor should not be the middleman. Give the completed documents containing your personal information directly to the closing agent.
If you wire funds or provide wire instructions, it is imperative that you verify all instructions verbally before the wire is initiated. We have had instances right here in Pittsburgh where cyber-criminals have monitored emails and emailed false wire instructions immediately before the wire is initiated, causing the funds to be wired to their own account. These funds are never recovered – hundreds of thousands of dollars have been lost. Therefore, if you are going to use a wire to either send or receive funds, be very careful and confirm everything verbally in advance. Also be sure if you are verifying over the phone that you independently verify the phone number you are calling so that you are certain that the individual you are speaking with really is who they claim to be.
And of course never do business (of any kind) unless you are using a secured WiFi. Most people have password protected their WiFi by now, but if you have not, move that to the top of your to do list!
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We are distressed about the property taxes in the Sewickley area. We are qualified to buy well above a price point that comes with a level of property taxes we are comfortable affording. Any thoughts to share?
You are not alone in your concern about our local property taxes. They are high when compared to same value homes in many states. But they are commensurate with property taxes on same priced homes in the other top Pittsburgh area school districts. If you want great schools, its just a cost of being in a top district. And if you don’t use our schools, being in a top school district will still provide steady appreciation of what is likely one of your largest assets – your home.
If you are not from Pennsylvania, it might help to frame property taxes as part of your larger tax picture. Our PA state income tax rate on individuals is only 3.08% — much lower than most states. We also do not have sales tax on food or clothes here, which adds up to even more savings. Our yearly vehicle fee is also only $41 – also far lower than most states. Yes, property taxes in highly rated school districts can be high, but overall this is a lower cost area to live in.
Additionally, if you itemize deductions on your federal tax return, there may be a tax savings for you associated with the deductions of your property taxes – they might not actually cost you as much as you think – your tax advisor can help with this.
In the end, most people spend a lot of time in their homes. Your home should be something you love coming home to, love spending time with family and friends in. I suggest you do not isolate out property taxes as the bad guy keeping you from the home you love, but rather look at your entire cost of ownership – mortgage, taxes, insurance, utilities, maintenance — and if the overall package looks manageable for a home you love, go for it!
[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE Associate Broker HOWARD HANNA
REAL ESTATE SERVICES 401 Broad Street
Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
I have a friend who has a mortgage business in another state and he tells me he can handle our mortgage here in Pittsburgh. Thoughts?
It is incredibly tempting to take friends up on offers like this one because we hope when working with a friend we might get a better deal. However, when it comes to mortgages, this is not a good idea! My best advice is to ask your Realtor for several recommendations of local lenders and shop rates and fees. Chances are you will find an equally competitive rate here. Why do I recommend local lenders so enthusiastically?
There are many facets of our real estate contracts that non-local lenders may not be aware of and that may cause a snag in your deal. For example, our contracts declare time is of the essence, so your deadlines are exactly as written in the agreement – there are no automatic extensions as there are in many states. If your lender misses your mortgage commitment date because he doesn’t realize this, the seller could terminate your deal and you could lose your dream house.
Non-local lenders also often do not understand the transfer costs of our area and may mis-quote your loan fees. For example, our transfer taxes vary from borough to borough and are reasonably significant. If an unaware non-local lender does not include the right figures up-front, he might qualify you for more than you can afford, which could cause problems later when your home gets to underwriting and you suddenly find out that you actually don’t qualify!
Local lenders are also far more likely to be vested in the success of your transaction. They probably do a fair amount of business with your Realtor and will go the extra mile because they want to keep referrals from your agent coming. Take advantage of this fact – you are most likely to get the best rates and service from lenders right here in Pittsburgh who are vying for your Realtor’s future referrals and want to make you happy every step of the way!
[contact-form-7 id="115311" title="Get More Information Form"]
As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICES, Kathe Barge, CRS, ABR, CNE, is ready to answer any questions you may have regarding your real estate needs. Feel free to contact her at the office (412) 741-2200 x238, or on her mobile phone (412) 779-6060.
Is it a good idea to pay down the principal on your mortgage if you have extra cash?
I have no doubt that my friends in the financial services industry would tell you that you should invest your money in the market rather than paying down the principal on your mortgage – debt is cheap right now and the stock market has been hitting all-time highs, so if you are comfortable with the risk, investing your excess cash in the market might yield you a higher return than pre-paying your mortgage.
However, possible appreciation is for many only one of several factors that should be considered. For some, eliminating debt provides a feeling of security. Having little to no debt can be a great comfort if you lose your job, choose a new, lower paying career or simply retire. For this reason, some choose to pay down their mortgage as quickly as possible so that they have a significantly lower monthly need for cash.
There is also a significant savings to those who pay off their mortgage early. Simply making one additional payment each year (for a total of 13 payments instead of 12) can make a notable difference in your total cash outlays. For example, if you add an extra 1/12 payment onto your monthly payment and if you have a $200,000 30 year loan at 4.5%, you will pay your debt off 4 years and 3 months earlier than expected and save yourself $27,000 in interest as well!
Finally, the more you pay down your mortgage principal, the faster you build equity in your home, which will put you in a great position when you want to buy a new home. In essence, paying down principal early works as a sort of forced savings plan – before you know it you will have amassed an impressive nest egg!
[contact-form-7 id="115311" title="Get More Information Form"]
As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICES, Kathe Barge, CRS, ABR, CNE, is ready to answer any questions you may have regarding your real estate needs. Feel free to contact her at the office (412) 741-2200 x238, or on her mobile phone (412) 779-6060.
In your May 11th article, your first item you noted about real estate is that a home is worth what a buyer is willing to pay. I thought a home is worth what it appraises for?”
In my May 11th article (available to those of you who missed it on my website), I did list 12 important things everyone should know about real estate, the first being that yes, a home is only worth what a buyer is willing to pay.
Appraisals are typically done in conjunction with a mortgage application, although they are sometimes done as part of an estate administration or by a homeowner who wants to get a better sense of what a home is worth. Many appraisers are not experts in the neighborhood they are trying to appraise a home in and miss the block by block nuances that greatly affect value. However, even if they are well versed in a particular area, they may not have been in every home and may not understand the special circumstances surrounding why one buyer may have paid a premium and another buyer may have purchased at a discount. Appraisers often don’t have their finger on the pulse of buyer expectations – unlike Realtors, they do not interact directly with buyers and don’t have the opportunity to hear them complain about wallpaper, colored carpets, dated lighting and outdated kitchens and baths. They don’t see firsthand how eager buyers are to purchase newly remodeled homes and the premiums they will deliver for those homes and they aren’t privy to the conversations Realtors have trying to convince a buyer to take on a project. So sometimes they are just too high and that price will not be achievable absent a sizable remodel.
It is also irrelevant how much money a seller has invested in a home. It is important to keep in mind unless renovations were made in conjunction with a home-staging professional in an effort to sell your home, improvements were made for the homeowner’s enjoyment and may not carry any value for a home buyer.
In the end, Buyers in 2017 America are quite savvy. Most view all inventory for many months before choosing a home. They probably know better than a home seller how a home stacks up against what has recently sold. If they don’t, it is all readily available online. So in the end, the price is determined by how convinced a buyer is that the value is in the home.
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We have been looking for our dream home for a long time in the Village and we cant seem to find the right combination of features in a home – either the yard is too small or the home needs too much work or its too close to the neighbors or there is no garage – any advice?
Yes! Look “up the hill”! I have yet to understand why more buyers don’t look outside the Village. Yes, the walkability to the Village center is nice, but realistically how often do you do that? I live in the Village, and am usually in a big hurry and drive where I am going! And I see many residents who live up the hill who drive down, park and enjoy the Village by foot more than I do! There are many many advantages to buying “up the hill” that make it worth considering this option.
First, yard sizes are almost always larger. There is generally far more room for the kids or pets to play, more room for gardens, more room for a pool, sport court or auxiliary garage for overflow cars. Larger lots mean there is more space between the homes, so while you still have neighbors, you cant hear them sneeze inside their home, which is the case for some Village residents!
Homes “up the hill” universally give you more value for the dollar. They are generally larger homes in better shape for notably less money. You can spend less, have a smaller monthly mortgage payment, and get more space! Homes “up the hill” are also generally newer homes, so if they require updating, the scale of the project is usually smaller and more of a cosmetic nature. And because you are dealing with newer homes, the cost of any projects is usually less because you are not having to deal with old wiring and plumbing or structural problems. And the overwhelming majority of “up the hill” homes have garages.
You might also be interested in knowing that the tax millage charged in the “up the hill” boroughs is notably lower than the millage in Sewickley borough – there is a real premium paid on a daily basis in property taxes for the privilege of being within ½ mile of Village center.
It’s hard to imagine what’s not to love about our wonderful “up the hill homes.” Larger, newer homes on larger lots with peace and tranqulity. So you have to drive 5 minutes to the Giant Eagle as compared to the 3 minutes Village dwellers drive. It seems like a more than sensible trade-off for all of the advantages offered by our “up the hill” communities.
Step outside the box and venture “up the hill” this Sunday when we will have many of our listings open! You may be surprised at how enticing the “up the hill” homes are!
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I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
It’s true! Bidding wars are back in some neighborhoods! The extremely tight inventory, coupled with the influx of spring buyers has made the competition sometimes fierce for well-conditioned homes in great neighborhoods. The first thing you should do to set yourself up for success in a hot market is to get a pre-approval from a reputable local lender.
The pre-approval process is more than a pre-qualification. It involves submitting all documentation to your lender long before you actually make an offer. This includes tax returns, bank statements… The lender will underwrite your loan subject only to the appraisal of your new home once you find it. This makes you an incredibly strong buyer – you could choose to remove the mortgage contingency altogether and insert only an appraisal contingency, but even short of that, knowing that you have taken the time to get fully approved will impress the seller and give you some advantage over other buyers.
Pre-approval (as opposed to pre-qualification) is also important so that you don’t find out 75% of the way through the home buying process that you cant afford the home. Sometimes lenders miss some of the critical pieces of your puzzle during the pre-qualification process that an underwriter will pick up. For example, it is possible that your gross income is high, and that you reported that figure to the lender, but when the underwriter reviews your tax return they see that your AGI (adjusted gross income) is lower due to alimony. Child support payments will also lower the amount of the loan you can qualify for. You may have co-signed student loans or car loans for a child, or a mortgage for a family member. Any debt you have co-signed for, whether it is an asset you use personally or not, will lower the loan size you can qualify for. And of course, pending actions for divorce, as well as dings on your credit you were unaware of (such as doctors bills you forgot to pay) will affect your ability to borrow. Better to take the time to figure this out up front and target homes you know you can afford, rather than being tempted by those out of your price range!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
Our neighbors home was under agreement and we just heard that it didn’t appraise. Is this a common issue you face and how can it be prevented?
Appraisal failures have become more common since the 2008 recession and the tightening of lending standards. All lenders are required to use pools of appraisers – they cannot control where the appraisal order goes or who does the appraisal. In fact, lenders are to have no contact with the appraiser to avoid undue influence. Unfortunately, some lenders (typically the larger ones as compared to the small local lenders) use large appraisal placement services and an appraisal on a Sewickley home could end up being placed with an appraiser in Monroeville, or worse yet, in West Virginia or Ohio. These non-local appraisers do not know our market and often miss the subtleties of our neighborhoods and inventory. Additionally, many companies use very young people whom they pay a very low wage to complete the appraisal. It becomes a volume business that many rush through, often missing important details (like that third bathroom).
If an appraisal fails (meaning it comes in under the agreed upon purchase price), there is almost nothing anyone can do to correct that appraisal. Unless there is an egregious error, like missing a third bathroom, it is highly unlikely there will be an opportunity to increase the appraisal. Therefore, it is important to set yourself up for success at the time of the initial appraisal. To do this, I ask my sellers to provide a specific list of all updates they have made to their home in recent years. I then personally meet the appraiser at the home and make sure that he is taking note of all of its special features. I also provide him with a list of all of the home’s features and all relevant comparable sales and how they compared to the home he is appraising. By having personal contact with every appraiser and helping him to understand the nuances of our town and the home he is appraising, my sellers are far more likely to receive the appraisal they need to keep their deal on track.
Should your home fail to appraise, rather than reducing your purchase price to meet the appraised price, a creative solution is to pay for the buyer to change lenders and start the appraisal process all over again. This is usually less than $1000 and is usually cheaper than reducing the purchase price. I have seen appraisals come in more than $100,000 apart in a two week time period, which only accentuates how many appraisers just don’t understand our area. It’s usually not that the value isn’t there but that the appraiser just doesn’t get the market. This solution could get your buyer the home they want and you the price you agreed to.
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
What financing options exist for transitioning between homes if we don’t have to sell our current home to buy our new one and our objective is to remain debt free when the transition is complete?
The process of selling one home and buying another often feels like there are many moving pieces. If you are fortunate enough to be able to buy a new home before you sell your old home, you have put yourself in a wonderfully strong position as a buyer to be able to make an offer on a new home that is not contingent on your old home selling. As we enter what will be a very strong spring market, that will be a big advantage for you!
You have a variety of options on how to pay for your new home. Perhaps you have cash – but with the recent run up in the stock market, this may not be the best time to liquidate your investments.
A particularly affordable alternative might be to put a home equity line of credit (“HELOC”) on your current home, IF you have enough equity in your current home to provide the cash you need to buy your new home. HELOCs tend to involve very low costs to the borrower up-front. They can also remain untapped until you need the money, so you are not paying any interest charges while you are searching for your new home. You can pay the HELOC off as soon as your old home sells, leaving you with less debt (or possibly none) on your new home. Finally, it is something you can arrange for now and be well positioned to jump on a great home when one comes on the market.
Of course, being able to buy without selling may mean you can qualify for a traditional mortgage on your new home. Whether this is the right choice for you will depend on whether and how much debt you want to end up with in the end. If you need a large amount of cash upfront but ultimately would prefer to carry a smaller mortgage (or no mortgage) once your old home sells, consider financing through a combination of loans and pay the second loan off when your old home sells, leaving your with only the first mortgage in the smaller amount. If you intend to carry no debt, there are products with low upfront costs that you can pay off as soon as your home sells.
There are many options to consider when creating a plan that to achieve your long term financial goals – give me a call and I can connect you to trusted financing providers who can help you develop a solid strategy before you find your dream home!
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[contact-form-7 id="115311" title="Get More Information Form"]
I’m ready to answer any questions you have regarding your real estate needs.
Kathe Barge, CRS, ABR, CNE, SRES Associate Broker HOWARD HANNA REAL ESTATE SERVICES 401 Broad Street Sewickley, PA 15143 Cell: 412-779-6060 Office: 412-741-2200 x238 kbarge@howardhanna.com
We would like to buy a new home in the new year. How much money do we need to have on hand?
The new year will soon be upon us, and with a new year comes a new opportunity for putting your housing dreams into motion. How much cash do you need to be able to close on a home
First, you must have your down payment. You will receive the best lending rates if you have at least 25% down. 20% down was the normal minimum years ago, and that is still not a bad idea if you want to avoid paying PMI (private mortgage insurance). A 10% down payment is also a possibility – you will likely pay an upfront PMI fee, however, for the privilege of putting less down. You can have this PMI waived if you will pay a higher monthly rate- generally .25% more than the rate would have otherwise been. Five percent down is also possible if your loan amount is under $417,000. And of course, with an FHA loan, you only need to put 3.5% down, although the PMI fees are fairly significant.
In addition to your down payment, and PMI if applicable, you should also budget for the following out-of-pocket expenses when you buy a home:
Inspection fees – you will pay approximately $400 for a general home inspection, $55 for a pest inspection and $135 for a radon inspection. If you add a mold inspection, plan for approximately $225 more.
Appraisal – approximately $350 charged by your lender to have the how appraised to be sure what you have agreed to pay for the home is in line with the market
Application fees – this will vary by lender and can be negotiated upfront – plan on approximately $750.
Transfer Taxes – in Pennsylvania, each party pays a 1% transfer tax (on the sales price of the home)
Title Insurance – a fee regulated by the state, it is a percentage of the purchase price that varies depending on the price of a home. For a 100,000 home, the title insurance is almost 1% of the purchase price. At $1,000,000, the title insurance is slightly more than one half of one percent.
Finally, allow approximately $1000 for other miscellaneous fees (title endorsements, recording, settlement, survey)
The best first step toward buying your new home in the new year is to talk to a lender today and begin the pre-approval process. Once you know how much you can afford to buy, you will be better able to calculate how much you need to close, and to align your new year’s savings goals accordingly!
This time of year we all take the time to give thanks for all of the wonderful things in our lives. I have much to be thankful for. The obvious chart toppers are good health, wonderful family and friends, and of course, a warm home to come home to each day. My gratitude extends much deeper, however, to all of the people I work with every day that make real estate transactions so seamless for my clients – from the best mortgage brokers and closers to incredible home inspectors and handymen, contractors, electricians, roofers… that I can count on to give their best to my clients. With them by my side (or on speed dial) I have been able to provide the highest level of service to those I work with, and for that I am grateful.
My gratitude, however, extends even further – to forces I can’t control. We have been very fortunate to have low interest rates for a very long period of time, and a taxing structure that has favored home ownership as an investment vehicle. I am always reminded that Uncle Sam, through the mortgage interest deduction, effectively pays a portion of my mortgage every month. He helps pay the property tax bill too, through the deduction for property taxes that I take each year. Through the system as structured, we are not only able to own homes for less than we could pay to rent them, but at the same time we are building equity which will be there for us when we retire and are seeking that nest egg to purchase our retirement home with.
Are you taking advantage of all that is available to you? It’s hard to imagine that there will ever be a better time to increase the size of your nest egg in real estate – it just doesn’t get any cheaper to buy than it is today. If you’re ready to downsize and cash in your nest egg, it’s an absolutely ideal time – inventory is low, interest rates are low too and we have buyers waiting in line for Sewickley homes. In fact, the lines of buyers are so long that if you would consider selling your home, I would be even more grateful! The spring market starts in January – the time to sell is now!
After what we have been through in the housing market in the not so distant past, we all have much to be thankful for this holiday season!
What assurances are there to a seller that if they enter into a contract to sell their home, it will actually close?
Reaching an agreement on the sale of your home is an important first step to getting your home closed. However, before a seller has any assurance that a home will actually close, several hurdles must be overcome. First, the inspections have to be completed. In most instances, the buyer has the right to terminate a transaction if they learn anything on the inspection that they are uncomfortable with, and in almost every instance, the buyer has the right to terminate if the seller does not agree to make the buyer’s requested repairs. So a seller has no assurances at all that their home will close until the inspection period is complete, which generally takes 21 days.
The same thinking would apply if the Agreement includes an appraisal contingency – until the appraisal is complete (which also takes 21-30 days), there is a risk that the home will fail to appraise and the transaction will not close.
If the buyer has a mortgage contingency, then there is a risk until a “clean” commitment letter is received from the lender that the buyer will not get their loan approved, in which case the transaction will not close. Usually it takes about 45 days from the date of agreement to know with any certainty that the buyer has received a loan commitment.
There is also the rare instance where a buyer never provides the contractually specified deposit money or second deposit money. This is a breach of agreement and if this happens, it’s reasonably unlikely that the buyer will cure that breach and close.
Finally, very rarely there are buyers who complete all of the steps in the process and just refuse to close. In those instances, the seller is often entitled to the deposit money, but that may seem like a small consolation prize when their home is empty and back on the market.
Working with a skilled real estate professional will help you to manage the risks and move toward a successful closing. So while the short answer is that there is never a guarantee until the home actually closes, with proper management of the details the risk to a seller of moving out and leaving behind an empty home can be minimized.
How important is your credit score – what should I know about it?
Your credit score is more important than you might think! Many people never consider is how much their “not so great” credit is costing them. Just a 100 point differential in a credit score, from a 720 to a 620 for example, could cost you in excess of $91,000 in additional interest fees paid on a $300,000 loan over the life of that loan! That’s a lot of money to forego because of credit issues.
It is therefore well worth your time to understand what goes into credit, what makes your score go up or down, and how to positively influence your credit score. Your payment history forms the largest part of the score. Just one 30-day late payment can reduce your score a full 50 points! Ouch! Put your bills on auto-pay whenever possible and you will be making great progress toward avoiding this costly mistake! If you miss one payment once, take the time to call the credit card company and beg them not to report it – most will forgive one late pay each year.
How much you currently owe on your credit cards is the second largest piece of the equation. Ideally, you do not use more than 15% of your outstanding credit line, but in no event should you exceed 30%. So, for example, if you have $10,000 in credit available to use, you should not be using more than $1500 – $3000 of that credit. This number is easy enough to manipulate when you are planning on buying a home or refinancing – just refrain from charging in excess of 15% – 30% of the available credit line in the 6 – 12 months immediately preceding your mortgage application and you can positively impact your score.
Credit inquiries can also reduce your score – avoid applying for new credit cards or other loans during the months prior to your planned application. Also avoid closing old lines of credit – having open but unused lines of credit will positively impact your credit utilization percentage. When a credit card company chooses to increase your line of credit that also increases your score, but beware – if they decrease your line due to overuse or late payments, this can reduce your score as much as 100 points.
Lenders generally require scores to exceed 650 in order to obtain a loan at all, and the best rates go to borrowers with scores exceeding 760. Even insurance companies look at credit scores these days and give the best rates to customers with the best credit. There is simply no getting away from the impact your credit can have on your budget. So do yourself a favor and take the time to monitor your own credit and understand how your choices impact your scores – you’ll thank yourself in the long run when you have more money left over to spend on the things you love!
We are planning on buying a new home in the coming months? Should we get prequalified or preapproved for a loan? What is the difference?
Its always important to make one of your first steps in buying a home a conversation with a lender. Pre-qualifications are easy – you just pick up the phone and tell the lender your income and amount you have available to put down towards the purchase, they check your credit and issue a preapproval letter. However, this does not hold much clout with the seller.
A preapproval is a much more rigorous process. Basically, you apply for the loan without having found a house. You give the lender all of the documentation they think they need and they out it through the loan underwriters. This is much more time consuming – these days lenders require quite a long list of documentation and explanation to approve a loan. However, this is something you will have to go through anyhow when you are ready to buy, so its not a bad idea to get it done upfront.
The preapproval process will also save you potential heartache later. Sometimes buyers are surprised at what gets in the way of a loan, You may have child support or student loan debt, for example, that you don’t think to mention in the very simple prequalification process that lowers what you can afford on a monthly basis. It would be unfortunate to find your dream home only to go through the loan approval process and find out that you don’t qualify to buy it. Additionally, sellers strongly prefer preapproval letters from buyers because they know lenders have taken a thorough look. A preapproval letter will make your offer much stronger, which could be important if more than one offer is received.
Keep in mind that whether you go through the prequalification or the preapproval process, this does not bind you to a specific lender. Once you have a home under agreement, you are free to shop rates and costs to choose the best lender for you.
We are considering a “move-up.” Should we buy a new home before we have sold our old home?
If you are considering buying a home, you should always start with an analysis of your finances. Before you set out looking at homes, it is absolutely critical that you have a firm understanding of both how much you can pay each month in a mortgage payment and how much cash you will need to close on a home in that price range. What you don’t want to do is to is find your dream home, only to find out that you can’t afford to buy it! Starting with a complete preapproval with a mortgage broker is, therefore, your most important first step.
You may, however, find that due to the historically low interest rates you qualify to buy a new home without selling your old home. When does it make sense to stretch your budget and eat macaroni and cheese?
If you qualify to buy without selling, it probably makes sense to do so, even if it means carrying two mortgages and eating macaroni and cheese for a while. Our market is very hot right now and many homes are selling quickly. If one of those homes happens to be a home you desire, if the mortgage broker can approve the loan, it is probably worth tightening your belt in the short run and getting the home you love. Years from now, you will never remember the short term tightness of owning two homes. Of course, you will want to price your home very realistically when you put it on the market so that you are not carrying two for too long!
It may also make sense to buy at the top of your affordability range if you are anticipating increased earnings as time passes. It is not inexpensive to sell a home. Sellers generally spend about 7-8% of the home’s price total in costs associated with selling their home. Why not buy what you really want the first time and not have to pay twice? It might feel tight now, but in a year or two as your earnings increase you will be glad you sacrificed to end up in the home you really wanted.
And of course, you don’t want to forget the benefits that come with having a higher investment in real estate. Our area has weathered the storms with grace and continued appreciation. As the years tick by, a larger investment will yield greater yearly appreciation and will someday leave you with a much larger next egg to put toward your next adventure – very much worth a short stint eating macaroni & cheese!
My mother recently passed leaving me and my brother a well-maintained but not updated house built in 1960. It’s full of furniture that is clean but bulky and out of style and almond-colored appliances that work fine but are 20-30 years old and don’t match. We plan to sell the house. My brother thinks the house will sell better if it has some furniture and appliances in it; I think it would sell better with empty rooms (it has beautiful hardwood and tile floors that have been covered with carpet since the day they were built) and the distracting appliances removed. What would you advise?
First, you absolutely must empty the home – these days young buyers want Pottery Barn, not grandma and grandpa’s house. Buyers also do not respond well when personal effects of a decedent remain behind after they are gone – so it’s important that it be completely empty before anyone tours the home.
Second, any old carpet should be removed. If there are hardwood floors underneath, that is what buyers want these days and you will do far better in your realized price if the floors are fully exposed. If they are not in good shape, it is possible to buy a Bruce product at the hardware store that does an acceptable job making them look presentable and is easily mopped on.
You must have a stove in the house in order for the buyer to get a mortgage. Therefore, you either need to keep the old one or buy a new one. Refrigerators, however, do not need to be retained and you may be able to get a credit for turning an inefficient old refrigerator in.
I would also recommend that you and your brother have the home pre-inspected and appraised in order to make the selling process as smooth as possible!
Is it possible to buy a new home contingent on selling our current home?
It certainly is possible to make an offer on a new home contingent on selling your current home! However, an offer with a home sale contingency is not a strong offer. You are asking the seller to stop marketing their home in the hopes that you will sell yours, which can feel like a big gamble to the seller. If this is the direction you need to go in, there are some important tips to keep in mind.
Sellers are more likely to consider your home sale contingency if their home has been on the market for a long time with no other interest, if we are in a slow market season (fall) and they are unlikely to have any other serious interest in the short term, and/or if you are offering them a very high price which makes it worth taking a chance on you. If you want your offer with a home sale contingency to succeed, make them an offer at or close to asking price.
Sellers are more likely to consider your home sale contingency if your home is already on the market and you can show that it is priced well for a quick sale and is getting significant showings. If you want your offer with a home sale contingency to be accepted, don’t list your current house at a top-of-the-market price.
Sellers are more likely to consider your home sale contingency is you choose the type of contingency that allows them to actively market the home to other buyers. Of course, from your perspective you would prefer to lock the house up, but that is unlikely to happen. The right to continue marketing contingency at least allows you to know that you can buy the home at an agreed upon price as long as you get yours sold before another buyer comes along.
Of course, two better options include getting your home on the market and sold so that you can make an offer contingent only upon it’s closing, or exploring options with a mortgage broker that would allow you to make a non-contingent offer.
Dear Kathe, Is a seller expected to help pay for the buyer’s closing costs and if so, how much?
Sellers often contribute to buyers’ closing costs in lower price ranges and in first time home buyer situations. Typically buyer closing costs are not less 3% of the cost of the home and may be as much s 6%. Buyer closing costs include expenses such as transfer taxes (1%), lender fees, title insurance, property tax proration, homeowners’ insurance premiums and pre-paid mortgage interest. These fees can add up quickly. Sometimes buyers do not have enough cash saved to be able to pay their required down payment and their closing costs as well. They may be very well qualified to buy in that their salary is high enough to afford the monthly payment, but they just don’t have enough cash saved.
When this happens, buyers will look to sellers for help in paying the closing costs that the buyer would normally have paid. This is normally expressed as a percentage of the purchase price. For example, the buyer might ask the seller to pay 3% of the purchase price toward their closing costs. The seller is automatically netting 3% less in this scenario, before they pay their own closing costs which normally range between 7% – 8% of the sales price.
Before you jump to the conclusion that sellers often won’t agree to contribute toward a buyer’s closing costs, stop and look at the greater picture. Normally sellers who help with closing costs are receiving 100% (or very close to that) of their asking price. On the other hand, it’s a rare day that any listing sells for 100% of its asking price, and the average “realization” before seller expenses in Quaker Valley School District is less than 90%. So paying 3% in closing cost assistance but getting a 100% (or close) offer might be your best deal!
At this point in our journey to your new home, hopefully you have resolved any home inspection issues that you have and your financing is in process.
There are many pieces to the home financing puzzle that you will not see and some that you will. Financing has gotten quite tight now and you will need to be prepared for a high level of documentation required by the lender. They may ask you to document sources of deposits. They may ask you to document other expenses you are responsible for. They may need copies of letters of employment or bonus guarantee letters. Be prepared to respond quickly to any and all requests. While you are addressing these requests, the lender will order an appraisal to confirm value of the home. There is a range of reasonable in which a home may sell – the lender is simply trying to make sure that you are in that range.
Once your loan is approved you begin the long wait until closing. If you had a particularly delayed closing, you will begin to wonder if you are supposed to be doing something else. The next steps happen right before closing. You will set up your insurance coverage on the home with your insurance agent a few weeks in advance. Coverage options vary widely so you will want to work with an insurance agent who will thoroughly review all of your options with you. About a week before, you will need to call the utility companies to move the utility bills to your name. If you forget to do this, the utilities will simply be turned off and it will cost you more to get them turned back on again. For water and sewer, you will need to show up in person to get them connected, so be sure to schedule that in to your work schedule. Finally, the day before closing you will do your walk through to make sure the home is as you expected it would be. If the seller accidentally removed something you thought was to remain or forgot to make a requested repair, now is the time to raise those issues. Once you close, so does your window of opportunity to resolve any last minute concerns with the seller.
On the day of the closing, you will spend about an hour signing many documents and presenting a cashier’s check for any balance you owe above and beyond the mortgage. Once that is completed, you will receive the keys and may begin the happy process of unpacking into your new home!
If you’re following along each week, by now you have been pre-approved for a loan, selected a Buyer’s Agent, looked at and selected a Property, made an offer and are negotiating for your new home!
The process of negotiating for a home is one of give and take. Your Buyer’s Agent should be able to explain negotiating norms in the areas in which you are interested. For example, in our North Hills communities, Sellers price their homes more tightly and they generally sell in the range of 98% of list price. If you bring an offer at 90% of list price, you may not even get a response. In Sewickley, there is often a bit more flexibility. Keep in mind, however, that price isn’t the only concern. Closing date is important – if you can’t get the date you want, you may need to pay for temporary housing and storage of your things. Inclusions are important – if a Seller starts removing things from the home, they are things you may need to spend money to replace and this may affect what you are willing to pay for the home. You must keep all of this in mind as you try to negotiate to a final Agreement to purchase the home.
Once you and the seller reach a deal, both parties sign the Agreement and you are officially “under agreement.” At this point, the contract takes over and specifies exactly what you must do next. Your Buyer’s Agent should lay all of this out for you in easy-to-use timelines. This is absolutely critical – if you miss deadlines, you could lose your deposit money in some scenarios. You generally have 1-2 weeks to apply for a mortgage. Do not delay. The lending process is quite complex these days – there will be a lot of detailed information requested – this will take you time to compile.
At the exact same time that you are applying for your mortgage, you will also be inspecting your new home (yes, it will be very busy for a few weeks). More on inspections next week…
Hopefully after reading my article last week, you were motivated to get serious about buying a home and began the process. As I discussed last week, you should be saving your down payment, keeping your credit in excellent shape, getting pre-approved by a recommended lender and researching and selecting a Buyer’s Agent. So what’s next.? The fun begins!
Your Buyer’s Agent should set you up to receive new listings via email as soon as they become available. To streamline the process, it is a good idea for you to pre-screen these homes before going to see them. Check them out online and on google earth, do a drive by to make sure there is nothing that you would object to that is readily apparent. Once you have done your initial screening, go to see the home as soon as possible. Our inventory is at record lows. If you love a home you can be sure that there are at least a dozen other buyers considering the home and you will need to be ready to make an immediate offer. Along these lines, it is important that you have developed a relationship with your Buyer’s Agent and trust her judgment. When the right home becomes available you may have to pay full price to get it, and you need to be working with someone you feel you can trust on those decisions. In this market there is rarely time to test out the seller if it is a great house and is well priced.
When making the offer, allow about 2 hours to go over the contract with your Buyer’s Agent. You will want your agent to review the details with you and there are many decisions you will need to make when writing the offer.
You will need to work with your agent to decide how much to offer initially, how much hand money to put down, a closing date, the mortgage terms you plan to apply for and time periods for inspections. You will list the items that are in the house that you expect to stay there, such as dishwashers, refrigerators and window treatments. There are many other custom terms you may want to include – you may want to include an appraisal contingency. You may be looking for the seller to address certain deficiencies that you noted while walking through, such as cleaning gutters. All of the things that are important to you about the home must be written into the contract or they will not happen in the future. Oral agreements are not binding when it comes to the sale of property. Your Buyer’s Agent has hopefully paid close attention to everything you noted while viewing the home and will make sure that the Offer reflects all of your wishes.
Once you have signed the offer (and no, you can’t just make a verbal offer – as mentioned above, everything concerning land must be in writing) the offer will be presented to the seller and you will begin negotiations with your seller. Stay tuned as the process of buying your home continues to unfold next week…
Buying a home is one of the best choices you can make. Rather than paying money to your landlord so that he can be closer to owning an asset outright each month, when you make your monthly payment each month a portion actually goes to your benefit – when you sell the home someday, as long as the market is in a good place, that money is refunded to you (called equity) and you can use it to buy again. It is, in effect, a forced savings plan and over time you can amass quite a large amount of savings while you are simply doing what you would have done otherwise – paying for housing each month.
To buy a home, however, you must have two things to start: a down payment and good credit. There a host of specialty loan products for first time home buyers far too extensive to review here, but figure on saving no less than 2.5% of the purchase price for a down payment if you are able to use an FHA product or 10% if you are going to use a typical mortgage. Credit scores are also key. Again, there are many things you can do to help or hurt your credit as you prepare to buy your home. Do not open any new credit – don’t buy any new cars. Pay all bills on time.
When you think you are ready, start by finding a full-time buyers agent. We now have Buyer’s Agency in this state and you need someone looking out for you from the outset. Check the agent’s website, review references, interview if you wish. Make sure you understand what the agent will do for you and be sure you have done your homework and are selecting the best agent for your needs. Once you select an agent, you will need to sign two documents: a Consumer Notice, informing you of your rights, and a Buyer Agency Agreement, whereby you actually hire the agent to work for you. While the seller still pays the commission, an Agreement is still required to create the legal relationship whereby the agent is working for you and not the seller.
Your agent should then refer you to a mortgage broker for a pre-approval. The broker will review your assets, liabilities and credit and give you a written statement of how much you can afford to buy. This step cannot be skipped. There is no sense looking at homes you can’t afford.
With pre-approval in hand and agent on board, you are now ready to begin the home buying process…stay tuned next week and I will continue to walk you through the process…its when the fun begins!
We are planning on buying a new home in 2016 and are waiting to see what comes on the market this spring. Is there anything we should be doing while we wait?
With such little inventory and so many buyers in the market, when a property comes on that you are interested in, you must be really ready to buy. Bidding wars will become commonplace this spring and if you want to win, you must be the strongest buyer the seller considers. What does this mean?
First and foremost, it means having your financing in order. Contact your mortgage broker today, before you start looking at homes. But do more than just run your salary and social security number by him. Ask him to start the approval process and trouble shoot in advance any issues he might see. Don’t make the mistake of assuming that just because you have a good job and pay your bills on time, getting a mortgage will be easy. Lenders have tightened up on their lending ratios – you may be surprised to find out that you have too much debt outstanding and need to pay off car loans or old student loans before you will be approved for a mortgage. Do that before you enter into a contract to buy a home.
What if you have a home to sell? Sit down with the mortgage broker and see if there is anyway that you can buy without selling. Home sales contingencies are rarely accepted by sellers and when they are, they are highly unlikely to work out. Putting a home sale contingency on a home just marks the home to the public as a “wanted” home making it more likely that your offer will drive in another offer from a buyer. Why do all the work so someone else can buy your dream home? Strategize to find a way to buy without selling, even if it means eating macaroni and cheese. Sound too risky to you? Then get your home on the market right away and be prepared to rent for a few months if the home you love isn’t on the market when you are ready to buy.
There are many strategies we can use to make you a strong buyer in our unusually strong seller’s market. Give me a call and we can put an action plan in place for you to be the winning buyer when your dream homes comes on the market!
You have previously written about the new TRID lending regulations. How do they impact me, a prospective home buyer?
The theory behind the new TRID regulations is to protect the mortgage consumer in a real estate transaction by increasing disclosure and privacy requirements. The reality of these regulations is that while they may add slightly more protection, they will also increase the burdens on everyone including you, the borrower. All parties to a real estate transaction that involves a mortgage will need to be more patient – it will become more difficult to close in less than 60 days and all parties need to anticipate that, while lenders adjust to the required processes, deadlines (including closing dates) might be delayed. Here are the new items on your to do list if you are a buyer in a transaction with a mortgage.
You will need to make sure that your home inspector gives you a bill for your home inspection and that you get it to your lender as soon as the inspection has been completed. The lender now has the responsibility of correctly disclosing every cost involved in your purchase and the inspector bill is their proof of those costs.
You will need to arrange for your homeowners insurance right away and get your lender your insurance agent’s contact information promptly – no more last minute calls to your agent to get coverage. Again, your lender must have this information to comply with TRID required disclosure timelines – you do not want to delay your closing because you waited too long to get your insurance.
The privacy laws do not allow your lender to supply the closing statement to anyone other than you. If you want your agent or your closing company to be able to double check the numbers to make sure you are being charged the correct amount, you will need to be the one chasing down your lender to get this and then providing a copy to your agent and closing officer for review.
It will be a period of learning and adjustment for all of us. Realtors should have a process in place to help get their buyers smoothly through these new hurdles.
It’s an age-old adage in real estate – your first buyer is always your best buyer. How true is this, and what does it mean for you, the home seller?
As much as we all love our homes and are absolutely certain they are worth more than a buyer is often willing to pay, it is almost always true that your first buyer is your best buyer, and well worth trying to make it work with. After sixteen+ years in real estate, I can share experiences all day of sellers who let buyers move on, only to ultimately take a lower offer. For example, I had a listing priced at $350,000. The first offer, received in only one week, was for $325,000. The seller wouldn’t budge. 60 days later, a remarkably short period of time, the second offer came in an topped out at $320,000. Again, the seller wouldn’t budge, now holding out for the earlier $325,000. Another 60 days passed – at this point both the first and second deals would have been closed and the seller happily freed from his mortgage obligations. This time, the buyer topped out at $317,000 and this time, the seller had the good sense to grab it, netting $8000 less and closing 120 days later than he would have had he gone with his first buyer.
This scenario is all too common, and yet, despite the sound advice from those of us who do this every day, history continues to repeat itself. If you have an offer out of the gate, it doesn’t mean that you priced your home too low. There is a certain energy that surrounds a new listing. Buyers panic a bit when a new home enters the market, certain that if they like it so does everyone else. This panic will drive them to pay more and keep their terms cleaner than a buyer who comes along later. If you are one of the lucky sellers who gets this early offer, do not second guess yourself or your agent – a better price is never found than one that happens as soon as a home comes on the market. Grab it and be happy that your home is sold!
Working with your buyer is also important during the home inspection. Inspectors are extremely thorough these days and buyers have high expectations about condition. If you are lucky, the buyer will let some issues go. But many buyers will require that you address 100% of inspection issues. If you have to put your home back on the market because you don’t want to make repairs, you will be required to disclose all issues and can be almost guaranteed of a lower offer next time around.
So yes, it is true. Your best offer is most likely from your first buyer – do what you need to do in order to make the deal work!
Dear Kathe, What impact will the new lending laws have on us as future home buyers?
This is a huge topic that I have attended day long seminars on! On October 1st, new laws will take effect that will impact the way that we all buy and sell homes. Its complex and will take some getting used to, but its important to keep in mind that all buyers and sellers should plan to close their transactions in no less than 60 days, unless the buyer is a cash buyer. Stacked closings, where the sellers close on their home and immediately close on their new home, will, at least until we adjust to the new rules, become much trickier.
To start, much of the terminology has changed. Lenders are now called Creditors. Borrowers are called Consumers. The Good Faith Estimate is no more – it has been replaced by the Loan Estimate – this is what your Creditor gives you to set forth the loan terms. The HUD-1 is also gone. It has been replaced by the Closing Disclosure. And the closing/settlement is now called the Consummation!
The most cumbersome change is that the Consumer must receive their Closing Disclosure 3 days prior to closing. It is generally considered that this requires sending the Closing Disclosure 7 days in advance of closing. To meet these deadlines, Consumers will need to be very prompt in making their loan application and all of getting their documents to the Creditor. If documents are delayed, underwriting will be delayed and the above notice requirements may not be met. If these requirements are not met, your closing will be delayed.
It is recommended that walk-throughs go to a two-step process. A preliminary walk through is recommended 7 days in advance of closing to make sure the seller has complied with all terms of the Agreement of Sale. Sellers – this means that you will need to make your inspection repairs well in advance of closing. Buyers, your agents will need to remind Sellers through their agents to be sure they leave all appliances, clear all personal effects and debris from the home… A second walkthrough is recommended for immediately before closing, but if there are any issues that affect value (such as an appliance that was removed from the home), this will cause a lengthy delay in the closing. Therefore it is critical that all parties know and understand their obligations under the contract.
The new laws are complex – be sure to choose a real estate professional who is well educated on these changes to make your real estate transaction is as smooth as possible. Check back next week for more information on how these new laws are affecting all of us.
My friend’s closing on her existing home was delayed and she ended up having to delay her closing on her new home, and was stuck with all of her stuff on a moving van and unable to move in to her new home. How can these major inconveniences be avoided?
Back-to-back closings do raise the possibility of delayed closings and moving vans sitting curbside waiting to unload. When there are multiple transactions lined up on top of each other, if one in the line-up fails to close on time, it will affect everything in line behind it. Ideally, transactions would not be back-to-back, but this only works if buyers are paying cash out of existing accounts or have sufficient resources to carry two homes, so that the new home can be closed independently of the closing on the old home. But even if transactions are not stacked, closing delays can still occur, causing unhappy buyers and sellers, because lenders aren’t ready.
So how can these inconveniences be avoided? Selection of your lender and closing agent are absolutely critical. There are a lot of people out there who would like your mortgage and closing business. Many may even be your friends, neighbors or family members. But the relevant question, in addition to rates and fees, is whether they close on time every time. This is where you really need to rely on your agent’s expertise. Even consumers who move frequently only engage in the mortgage process once every few years. A busy agent is dealing with lenders daily. We know who stands behind their word and will not let you down, and who will not. A well-intentioned but poor performing lender can cost you significant unhappy delays – make a careful choice up front.
It is also crucial that you get your lender all of the documentation that he needs immediately at the time of mortgage application. You don’t want to be part of any delay. Finally, even once you have turned in all of your paperwork, its important to check in with your lender weekly, daily the week before closing, until they tell you that they have the “clear to close.” The old saying “the squeaky wheel gets the grease” is never truer than when it comes to closing your mortgage loan – stay in close touch with your lender!
The rules surrounding lending and closing mortgages is about to change again, in October. In an effort to protect consumers, the process will be getting even more cumbersome and delays should be anticipated. Your careful choice of your service providers will become even more critical!
How can we make our offer stronger so that, if there is more than one offer, the seller is more likely to choose us as their buyer?
One of the best ways to make your offer the strongest one a seller is considering is to make yourself a cash buyer. Before you stop reading, you do not have to have all cash to be a cash buyer. Read on…
If offers are even close to each other, a seller is always better off taking the cash buyer. There is far less risk to a seller to take cash than to wait and see if a buyer can get a mortgage. You may now be thinking, “well, that’s nice, but I don’t have cash, so I can’t compete.” That is not necessarily the case.
It’s true that a cash buyer is most obviously defined as someone who has cash or liquid assets from which she can draw to buy a home. But a cash buyer is also defined as a buyer who has a mortgage commitment and feels certain she can get that mortgage, thereby waiving her mortgage contingency. Even if you don’t have a stash of cash, you can still be a cash buyer and compete to win for your desired home!
Becoming a cash buyer is a process by which you submit all of your mortgage documents in advance to your lender…bank statements, W2s, tax returns… Your lender will then review your information and issue a pre-approval letter to you. To be a cash buyer, you simply need to get adequate assurances from your lender that he will definitely be able to get you the planned mortgage. If you fell confident in his assurances, you can waive your mortgage contingency, and you thereby become a cash buyer.
Of course, you must be absolutely confident that you can get the mortgage. If you need it and fail to get it, you will lose both your deposit monies and the home you desired. But if you feel confident and waive your mortgage contingency, this may be the defining term that makes you the winner in a bidding war for the home you have been waiting for! Feel free to give me a call and we can strategize about whether becoming a cash buyer is the best strategy for you!
How important is it that we get preapproved before we begin our home buying process? Couldn’t we wait until we find a home and then meet with a lender?
Preapproval is an important first step in the home buying process, for many reasons.
First, before you consider any homes, its very important to know not just what you can afford, but what that will cost you each month, and whether you are comfortable with that payment. There are many people who qualify for far more than they want to afford, and there is no sense getting your heart set on something, only to realize that the monthly payment feels much too steep to you. Additionally, you may qualify for more (or less) than you had assumed – it is a far more efficient use of your time to shop in the range you know you can afford and are most comfortable being in.
Second, sometimes the preapproval process will reveal credit issues that will prevent you from getting a mortgage, yet. No credit issues that you know of? Best to double check. With reporting errors and identity theft, you would be surprised how many people have glitches on their credit that they didn’t know about. Its best to be sure upfront – when you start the pre-approval process, the lender will check your credit and this will give you some time if there is any “clean-up” work that needs to be done.
Finally, when you make an offer on a home, the seller will expect your agent to provide a pre-approval letter. In the spring market, there are many buyers out there and another buyer could end up getting an offer in and accepted before you even have your pre-approval letter back.
Prepare yourself for success in this spring market – after you hire your buyer’s agent, get your pre-approval and you will be ready to buy your new home.
We’ve been out of school for a few years, have been great savers and are thinking about buying our first home, but with the recession not so far behind us, it seems like a risky proposition. Any advice?
The millennials, as they are known, are a very risk adverse generation, having watched first-hand as many family members lost their jobs and/or their homes in the last recession. It’s not hard to understand why they have been the slowest generation to embrace home ownership as part of the American dream. But as scary as it might seem to take that first big step, home ownership remains one of the best investments you can make, and the sooner you get in the game, the sooner you will start making measurable progress toward achieving your financial goals.
Keep in mind that most of the housing losses from the 2008 recession were due to the immediately proceeding banking practices that are now far behind us. People were allowed to borrow without proof of ability to pay, to start with, and many used their homes as ATM machines, financing cars, vacations and college educations on their presumed housing appreciation. Today the lending laws are much stricter in an effort to prevent another crisis, and so you can be assured that if a lender has qualified you for a particular loan amount, you have passed some of the strictest standards and are more than well qualified by any objective standard to get in the housing game.
Owning a home will always be a far better choice than renting. It’s a rare day that owning what you are renting wont cost you less every month, and you are building equity (money you get back when you sell someday) with each payment. If you compare how much it costs you to own a home over 30 years, versus how much it would cost you to rent that home over 30 years, you will always have spent less money and in the end, you will have an asset that you own and can resell if need be. In addition, owning a home gives you certain federal tax breaks that renters don’t get, which further reduces the actual cost to you of owning a home. Home owners also lock in their housing cost for as long as they own that home. So while your $2000 rental payment will go up each year as your landlord increases the rent, how much you spend for a mortgage is locked in for as long as you own your home. Stay there 30 years and you will still be paying the same mortgage payment that you are paying today! No landlord will give you that deal!
This is complex, no doubt, and I would be happy to meet with you to go over the numbers in person, but there is no doubt that its never too early to get into the home ownership game!
When is the best time to buy in the spring market? We have seen a couple houses we like, but what if something better comes on the market?
As they say in The King and I, “now is always best time!” And in all seriousness, if you know you want to move this year and have identified a home that you like, there is no reason to sit on the sidelines one minute longer! Right now, our market is only beginning to wake up. Sellers who have endured the typical “holiday dry spell” are eagerly awaiting spring buyers and you are far more likely to get a better price now than if you wait until more buyers join the marketplace, adding greater competition. No matter your price point, there is never a “perfect” house – if its 80% great, it’s a home run from a housing perspective. So if you are waiting to see if a “better” house comes on the market, you will most likely be disappointed. All homes involves some level of compromise. Additionally, new introductions tend to be priced higher than homes that have sat through the holidays, and not only are you unlikely to get a deal, but you might end up over paying as more buyers enter the market and bidding wars become more prevalent.
If beating the spring market rush and getting a good deal on a home that has been waiting for the spring market to begin aren’t reason enough to make an offer, mortgage rates have also dropped a bit, which will pay off in savings month after month for the next 30 years (or until you move again!) Rates are now hovering around 4%. If rates increase 1% as you sit on the sidelines waiting for that “better” house, you will pay significantly more. For example, if you are planning to take a $417,000 30-year mortgage, the payment could be as much as $327 more each month and over the life of a 30 year loan, you will pay in excess of $117,000 more in interest. By sitting and waiting rather than acting now, you are costing yourself money – a lot of money.
Hedging your bets and thinking rates will drop a bit? There is absolutely no reason to do this. Many lenders offer no-cost refinances. If rates drop, you can refinance to a lower rate with no cost to you. You can have your cake and eat it too – if you buy now you can hedge your bets against the likely rate increase and take advantage of a good deal in the pre-seaon, and if rates happen to drop, you can take advantage of a no-cost refinance to capture the lower rate! Call me today and we can strategize about how to get you into your new home in this pre-season!
My wife and I are new doctors and ready to get our own place. We were thinking about renting for a while – how long should we rent for before buying a home?
The rent versus buy decision most often comes down to how much money you have saved. If you have a lucrative job, qualifying for a mortgage at today’s low interest rates is rarely the issue. But coming up with a down payment might be.
If you make $200,000 per year, at current interest rates, and assuming you are not carrying any debt, you could qualify to buy a home for approximately $850,000. That is probably much higher than you imagined. The monthly payment would be approximately $3500/month (principal & interest) with 10% down. But you might find the 10% (or $85,000) down to be the stumbling block and feel renting is your only option.
Renting a nice apartment or small home/townhome would typically cost you $1800 – $2000 each month. That adds up fast – not only don’t you get the opportunity to deduct the mortgage interest that you pay on your tax return each year (thereby lowering the amount of taxes that you owe) but rental payments are all cash lost to you – you are not building any equity that you can recoup someday when you buy. And if you are willing to spend this much each month on rent, you could pay the same amount each month for a mortgage on a $450,000 home if you have the 10% down (which is a much lower $45,000)!
Lenders do typically require 10% down however, unless you use a specialty product like an FHA loan. So if you have no savings, the chances are that unless you can get a “gift” from a family member or incredibly generous friend, you will need to rent until you can amass some savings. However, it is a wise decision to get into homeownership as soon as you can. Even if you buy significantly below what your income qualifies you to buy, just getting in the housing game will save you tax dollars and help you build equity for another home in the future when your savings more closely matches your income. Why pay rent for your landlord to increase his equity in the home you are renting.? With low interest rates, now is the ideal time to explore exactly what it will take to get you in a home of your own!
One of my friends sold her house with multiple offers last week. We are planning to buy a new home this spring – are we going to find ourselves in the middle of a bidding war?
It is true that some of our inventory has seen multiple offers in the past couple of weeks! Even with multiple bids, however, buyers are still cognizant of value and sellers who bought or refinanced their equity out in earlier years may not yet see a return to those value levels.
Why are we seeing multiple bids? As I have mentioned in previous articles, our inventory is down substantially. Our typical inventory sources have been slow. Corporations cut back tremendously on relocations post-2008 and have transferred fewer employees in recent years. Trade-ups or trade-downs have decreased significantly, in many instances because sellers can’t find anything to move to. And so it becomes a vicious circle. At the same time, the lag in inventory introductions has been going on for quite a long time, so many buyers are just plain tired of sitting on the fence and are beginning to compromise on their criteria for a new home. When a new home comes on the market and is well-conditioned and properly priced, or when a home that has been on the market for a while has a price reduction, they spring into action, often resulting in multiple bids.
So what do you do if you are one of those buyers sitting on the fence, waiting for your perfect home? You need to have educated yourself on our market so that you recognize value when you see it. You need to be working with a buyer’s agent whom you feel has a thorough knowledge of the market and can correctly advise you on value. And when that home does become available, you need to make the best possible offer. Weaker offers contain terms such as long inspection periods, long mortgage approval periods, low hand money amounts, delayed closing dates, home sale & home appraisal contingencies and low offer prices. If a home is new to the market or recently had a price reduction, you need to assume it will sell at or close to asking price – if that’s not a price you are willing to pay, stand back – perhaps another buyer will see the value.
As for sellers, you need to follow the advice laid out in my earlier articles. Make your house that shiny penny, price it right, and you could receive a full price plus offer in less than one day!
As our children become young aduts, I am wondering what we can do to set them up for success when buying their first home?
Not too long ago, we experienced a time when money was free flowing and loans could be had with a wink and a handshake. But those days are gone, likely forever. When I was a kid, my parents talked about saving the 20% down and being sure to pay all the bills on time in order to be a good position to buy a home, and, after a couple decades, we are right back where we started – save and establish good credit! After many “easy money” years, our newest group of home buyers may not have been educated with the old mantras – save – pay on time – and they may shocked to find out that they don’t have what it takes to get a loan. So what does it take, and what can you do to help?
Saving enough money takes time, and they can never start too young to be savers, but if you are feeling particularly benevolent, most lenders will allow gifts from family for a down payment, with a proper gift letter, of course! Do NOT make the gifts without a gift letter unless it is years in advance – a lender will review their accounts and require substantiation of all recent deposits.
Establishing god credit is something they will need to do on their own, but you can help set them up for success. A loan applicant must have credit in their name (and not a card they are authorized to use that belongs to mom or dad) on three separate lines (cards, car loans) and they must NEVER have made a late payment. The cards DO NOT have to be actually used to establish a credit history – the potential homebuyer just has to have been granted the cards. If they do use the cards, then as a general rule, it is not a good idea to charge more than 50% of the credit granted in any given payment cycle, at least if they are nearing a time when the plan to apply for a mortgage. If they miss a payment, that line of credit is disqualified and they will need to show the existence of 3 lines of credit on which they have never had a miss. If they don’t have three lines of credit showing on their credit report, they will only be eligible for an FHA loan, and must be able to show 12 months of payment history on other things such as a cell phone bill or utility bill in their own name (note: utilities paid on a budget plan do not satisfy this requirement).
So what should you be doing to help the next generation of home buyers? Educate your kids & grandkids about how they will have to learn to use credit cards responsibly and how they will always have to pay their bills on time. When you feel they can handle a credit card (or 3), help them choose appropriate no fee cards. Consider checking in with them to make sure that they are remembering to pay the bills (preferably in full). Some banks make credit cards available to unemployed students as early as age 18 – while these cards must be secured with a certificate of deposit, they allow young adults to begin building credit in their own name. With a little coaching, we can all help the next generation of homebuyers to be ready to successfully purchase their new home.
In last week’s article I discussed several of the pitfalls that Buyers encounter through the mortgage application process. Keeping your bank statements “boring” is key – avoid undocumented deposits, NSF charges and moving large sums of money around. Also avoid having your credit “pulled” – don’t take advantage of new credit card offers just to save an extra 10%. That’s the start to s smooth application process… but there’s more. Don’t change jobs, and obviously, don’t quit your current job without inquiring about the impact this change could have on your approval/approvability of your mortgage loan. Employment stability is a big factor in the underwriting loan process. Quitting or changing jobs or even positions within the same company can potentially endanger your entire loan approval. Switching from a salaried position to a commission-based position can pose a problem with your financing. Changing from a W-2 employee to a new job where you are paid as a “1099” independent contractor will also pose a problem. There may be long waiting periods if your employment status moves from that of employee to being an independent contractor. Often lenders will want to see 1-2 years of income tax statements as an independent contractor before they will agree to provide financing.
Don’t file disputes on your credit card accounts if you anticipate applying for a mortgage in the short term. You may have a valid reason for disputing an account with a credit card company, but you should avoid filing a dispute unless you are certain that you are not planning on applying for a mortgage in the near future. Lenders will often reject financing if a borrower has a disputed account on their credit report.
Don’t forget to pay your bills on time (all bills, including the doctor and the dentist) Late payments could cause your account to be sent to collections which could take you months to reverse.
Finally, don’t pack away your financial documents. We know that you are moving and that getting a head start on packing is a must. Please don’t pack away your financial documents as your lender may need them for the processing of your mortgage loan. Please keep all financial records handy including tax returns, W-2’s, paystubs, bank statements, divorce agreements, etc….
If you’ll follow these simple steps, getting a mortgage should be easy and straightforward!
Mortgage rates remain low, but the process of obtaining a mortgage is more complex than most buyers appreciate. Underwriters are extremely detailed in their review of mortgage applications – one small “mistake” could derail your entire application. Take the time before you buy to understand the possible pitfalls, and then steer clear for a smooth mortgage process.
First, don’t make large undocumented deposits into your bank accounts. Mortgage guidelines require that underwriters review all deposits reflected on bank account statements. If there are deposits present on a bank statement and the underwriter cannot tell where the funds came from, then the underwriter may ask for you to provide a “paper trail” to document the source of the funds used for the deposit. When making a deposit, keep the associated paperwork (i.e. the “paper trail”) you may have received that would show where the funds came from for the deposit (i.e. check stub, copy of check, receipt for liquidation of another account, etc…). Try not to make cash deposits if at all possible as it is difficult to show where “cash” came from. Try not to move your money around between accounts. There will be plenty of time to consolidate funds if you desire after you’ve applied for your mortgage loan and before the closing date on a home you purchases. Be sure to save ALL pages of your bank statements. Do not throw them away or shred them.
Second, strive to have ‘boring’ bank statements – no NSF charges, no unusual deposits, not a lot of moving around of money between accounts. Achieving this will definitely make your mortgage process go smoother.
Finally, don’t open new credit and don’t take on new debts. Unless advised to do so by your mortgage professional, you should try to avoid having your credit checked by anyone or taking on any new debt (i.e. credit cards, loans, lines of credit, etc…). Numerous credit inquiries may impact your credit score which in turn could affect your mortgage loan and interest rate quote. In addition, underwriters may require that you write a letter explaining the inquiries on your credit report stating if you did or did not acquire any new debts as a result of the inquiry. While it’s tempting to take advantage of an extra 10% off at a department store if you open a new credit card with them, it may be best in the long run to pass on those offers and use one of your existing credit cards.
Check back next week for more tips on making your mortgage application process a smooth one!
If you are considering a move but have a home to sell, then you may find yourself in a common predicament – do you buy first or sell first?
If you buy first, you may face the reality of owning two homes at once, which could require a lot of belt tightening (and cutting back on coffee runs!) While we have a shortage of inventory and well-priced, well-conditioned homes are moving well, there is still a risk that you may carry two homes for a while (our strongest market period will begin again in early 2014). Of course, buying first allows you to lock in a home you really love.
If you sell first, you don’t have the financial risk of carrying two homes. But there is a possibility that you may be unable to find a home you love when yours sells, and be faced with temporary housing for a while. This may be the lesser of two evils, if you achieve a sales price on your home that you are happy with. And of course, you may have no choice – your lender may require you to sell before you buy.
There is the option of making a contingent offer on a home you like, and we now have the “right to continue marketing” option for this contingency that makes a seller more willing to consider such a contingency. However, the stigma of a home sale contingency still stands and many sellers will not entertain this option.
Perhaps the best avenue is to list your home now and start looking for your new home. Once your home is under contract, you will probably have a good sense of what is available to buy and hopefully have isolated a couple of top choices. At that point you will be ready to make your offer and get moving! Fell free to give me a call and we can design a strategy that suits your specific needs!
As mortgage rates continue to rise, if you are thinking that a move might be in your future, now is definitely the best time to make an offer on a new home. Rates are still below 5%, but it is expected that in 2014, they could rise to 6%. On a $417,000 30-year mortgage, the payment could be as much as $327 more each month and over the life of a 30 year loan, you will pay in excess of $117,000 more in interest. By sitting and waiting rather than acting now, you are costing yourself money – a lot of money. If your affordability is capped by income or debt load, you may also be costing yourself the home you want to buy. As interest rates increase, you will be able to buy less home. At the $417,000 mortgage level, a 1.25% increase in interest rates will decrease ability to buy by $50,000. So if you qualified for a $417,000 loan this year (and no more), you may only qualify for a $365,000 loan when rates hit 6%.
Hedging your bets and thinking rates will drop a bit? There is absolutely no reason to do this. Many lenders offer no-cost refinances. If rates drop, you can refinance to a lower rate with no cost to you. You can have your cake and eat it too – if you buy now you can hedge your bets against the likely rate increase, but if they happen to drop, you can take advantage of a no-cost refinance to capture the lower rate!
The fall market is also an outstanding time for buying a home. Competition is lower than it will be in the spring and you will have an increased likelihood of achieving a better price on a home. It is also generally less expensive to hire movers in the fall and winter months.
Sellers, you may be tempted to wait for the spring “crush” to list your home. With the expected increase in interest rates, this plan may backfire as buyers may become even more hesitant as rates increase. If you know you want to sell, we definitely have movement in our market – now is the best time to list!
It has actually been our lucky year! Interest rates fell even lower this year than we would have ever imagined possible, and many buyers were able to buy their dream homes for even lower monthly expenditures. The record low rates certainly spurred a spring market like we haven’t seen in years. As we all know, rates spiked up this summer, with the 30 year conforming rate pushing a little too close to 5% for comfort. Our market slowed significantly in response. From a rational perspective, this is really very surprising. Even at 5%, that is an unbelievable rate compared to historic norms.
In the first ten years of the new millennium, we averaged 5.7% on the same loan products. And in the 80s, when many of today’s homebuyers were born, we averaged 13.99%. So why then does an increase to 4.75% send buyers to the sidelines? We are fortunate to be living at a time when we can still buy at these amazing rates. Why wait for the illusive 3% rates to return, which is unlikely to happen? Inflation will continue to drive prices up, increasing the prices of the homes that are available. The smart answer is clearly to buy now, even at the slightly higher rates.
Today, however, is your lucky day. Rates have dropped for the present moment and, with good credit, you have another chance to buy at 4.25%. Current economic trends suggest that it would be a wise choice to jump on these rates. No cost refinances are still available to you if the rates should drop further, but at least you are hedging your bets against further increases. If you have been sitting on the sidelines feeling like you missed your chance, give me a call and we can design a strategic buying plan for you to maximize your buying power over both the short and long terms.
At this point in our journey to your new home, hopefully you have resolved any home inspection issues that you have and your financing is in process.
There are many pieces to the home financing puzzle that you will not see and some that you will. Financing has gotten quite tight now and you will need to be prepared for a high level of documentation required by the lender. They may ask you to document sources of deposits. They may ask you to document other expenses you are responsible for. They may need copies of letters of employment or bonus guarantee letters. Be prepared to respond quickly to any and all requests. While you are addressing these requests, the lender will order an appraisal to confirm value of the home. There is a range of reasonable in which a home may sell – the lender is simply trying to make sure that you are in that range.
Once your loan is approved you begin the long wait until closing. If you had a particularly delayed closing, you will begin to wonder if you are supposed to be doing something else. The next steps happen right before closing. You will set up your insurance coverage on the home with your insurance agent a few weeks in advance. Coverage options vary widely so you will want to work with an insurance agent who will thoroughly review all of your options with you. About a week before, you will need to call the utility companies to move the utility bills to your name. If you forget to do this, the utilities will simply be turned off and it will cost you more to get them turned back on again. For water and sewer, you will need to show up in person to get them connected, so be sure to schedule that in to your work schedule. Finally, the day before closing you will do your walk through to make sure the home is as you expected it would be. If the seller accidentally removed something you thought was to remain or forgot to make a requested repair, now is the time to raise those issues. Once you close, so does your window of opportunity to resolve any last minute concerns with the seller.
On the day of the closing, you will spend about an hour signing many documents and presenting a cashier’s check for any balance you owe above and beyond the mortgage. Once that is completed, you will receive the keys and may begin the happy process of unpacking into your new home!
If you’re following along and putting a plan into action, by now you have been pre-approved for a loan, selected a Buyer’s Agent, looked at and selected a Property, made an offer and are negotiating for your new home!
The process of negotiating for a home is one of give and take. Your Buyer’s Agent should be able to explain negotiating norms in the areas in which you are interested. For example, in our North Hills communities, Sellers price their homes more tightly and they generally sell in the range of 98% of list price. If you bring an offer at 90% of list price, you may not even get a response. In Sewickley, there is often a bit more flexibility of price. Keep in mind, however, that price isn’t the only concern. Closing date is important – if you cant get the date you want, you may need to pay for temporary housing and storage of your things. Inclusions are important – if a Seller starts removing things from the home, they are things you may need to spend money to replace and this may affect what you are willing to pay for the home. You must keep all of the pieces to the puzzle in mind as you try to negotiate to a final Agreement to purchase the home.
Once you and the seller reach a deal, both parties sign the Agreement and you are officially “under agreement.” At this point, the contract takes over and specifies exactly what you must do next. Your Buyer’s Agent should lay all of this out for you in easy-to-use timelines. This is absolutely critical – if you miss deadlines, you could lose the deposit money you put down in some scenarios. Review all deadlines and expectations with your agent and mark your calendar.
You generally have 1-2 weeks to apply for a mortgage. Do not delay. You must get all of your paperwork to the lender within the time frame. The lending process is quite complex these days – there will be a lot of detailed information requested – this will take you time to compile. Get started right away! Once you get all of the papers to the lender, your part in the mortgage process is basically complete. The lender may ask for a few more things, but the lender takes over all of the details, including ordering the appraisal to make sure that the home is worth what you have offered to pay (if it “fails” to appraise, depending on how much you are borrowing, you may not be able to get your financing and may, therefore, be unable to buy the home). The lender will also refer the loan to a settlement company.
At the exact same time that you are applying for your mortgage, you will also be inspecting your new home (yes, it will be very busy for a few weeks). More on inspections next week…
Hopefully after reading my article last week, you were motivated to get serious about buying a home and began the process. As I discussed last week, you should be saving your down payment, keeping your credit in excellent shape, getting pre-approved by a recommended mortgage and researching and selecting a Buyer’s Agent. So what’s next. The fun begins!
Your Buyer’s Agent should set you up to receive new listings via email as soon as they become available. To streamline the process, it is a good idea for you to pre-screen these homes before going to see them. Check them out online and on google earth, do a drive by to make sure there is nothing that you would object to that is readily apparent. Once you have done your initial screening, go to see the home as soon as possible. Our inventory is at record lows. If you love a home you can be sure that there are at least a dozen other buyers considering the home and you will need to be ready to make an immediate offer. Along these lines, it is important that you have developed a relationship with your Buyer’s Agent and trust her judgment. When the right home becomes available you may have to pay full price to get it, and you need to be working with someone you feel you can trust on those decisions. In this market there is rarely time to test out the seller if it is a great house and is well priced.
When making the offer, allow about 2 hours to go over the contract with your Buyer’s Agent. It is now 11 pages long with 8 more back pages and possibly several addendums. You will want your agent to review the details with you and there are many decisions you will need to make when writing the offer. How much will you offer initially? No less than 10% below asking is an easy rule of thumb if the home is well-priced, but in this market if it is a new listing you may need to be much closer to list price to have a chance at buying the home. How much hand money can you put down? Hand money is an amount of money that your Agent deposits into an account at her brokerage to hold until closing, at which point it is applied against purchase price. If you back out over inspections or can’t get your mortgage, it is refunded to you, but if you just decide later that you don’t want to close, or fail to close for some other reason, the seller keeps the hand money. The more you offer to put up as hand money, the stronger your offer looks to the seller.
You will also need to decide on closing date, what mortgage terms you plan to apply for (you will be glad at this point that you have spoken to a mortgage broken and been pre-approved) and time periods for inspections. You will list the items that are in the house that you expect to stay there, such as dishwashers, refrigerators and window treatments. There are many other custom terms you may want to include – you may want to include an appraisal contingency if you want assurances that the home will appraise. You may be looking for the seller to address certain deficiencies that you noted while walking through, such as cleaning gutters. All of the things that are important to you about the home must be written into the contract or they will not happen in the future. Oral agreements are not binding when it comes to the sale of property. Your Buyer’s Agent has hopefully paid close attention to everything you noted while viewing the home and will make sure that the Offer reflects all of your wishes.
Once you have signed the offer (and no, you can’t just make a verbal offer – as mentioned above, everything concerning land must be in writing) the offer will be presented to the seller and you will begin negotiations with your seller. Stay tuned as the process of buying your home continues to unfold next week…
I was chatting with my friend Bethany a couple weeks ago and she reminded me that if you’ve never bought a home before, or if its been a really long time since you have, the process may seem a bit foreign and likely very confusing. This week, therefore, I am going back to the basics.
Buying a home is one of the best choices you can make. Rather than paying money to your landlord so that he can be closer to owning an asset outright each month, when you make your monthly payment each month a portion actually goes to your benefit – when you sell the home someday, as long as the market is in a good place, that money is refunded to you (called equity) and you can use it to buy again. It is, in effect, a forced savings plan and over time you can amass quite a large amount of savings while you are simply doing what you would have done otherwise – paying for housing each month.
To buy a home, however, you must have two things to start: a down payment and good credit. There a host of specialty loan products for first time home buyers far too extensive to review here, but figure on saving no less than 2.5% of the purchase price for a down payment if you are able to use an FHA product or 10% if you are going to use a typical mortgage. Credit scores are also key. Again, there are many things you can do to help or hurt your credit as you prepare to buy your home. Do not open any new credit – don’t buy any new cars. Pay all bills on time.
When you think you are ready, start by finding a full-time buyers agent. We now have Buyer’s Agency in this state and you need someone looking out for you from the outset. Check the agent’s website, review references, interview if you wish. Make sure you understand what the agent will do for you and be sure you have done your homework and are selecting the best agent for your needs. Once you select an agent, you will need to sign two documents: a Consumer Notice, informing you of your rights, and a Buyer Agency Agreement, whereby you actually hire the agent to work for you. While the seller still pays the commission, an Agreement is still required to create the legal relationship whereby the agent is working for you and not the seller.
Your agent should then refer you to a mortgage broker for a pre-approval. The broker will review your assets, liabilities and credit and give you a written statement of how much you can afford to buy. This step cannot be skipped. There is no sense looking at homes you can’t afford.
With pre-approval in hand and agent on board, you are now ready to begin the home buying process…stay tuned next week…its when the fun begins!
Home Inspectors are extraordinarily thorough these days. If you havent bought or sold a home in a while, you may be surprised just how thorough they are. Additionally, living in a town of older homes, we all need to anticipate that at some point old becomes too old and when that happens, the seller at that time will be left bearing the cost to replace.
For example, if you are living in a 25-30 year old home with its original roof, the roof is likely too old. Back in the 80s, 50 year roofs were not popular and so if your roof was installed then, it is likely near the end of its useful life. Mortgage companies will often want to see no less than five years of life left in a roof before they will agree to place the mortgage on a property. If your roof is at or near the end of its useful life, if at all possible it is probably better to put on a new roof before selling. This will help garner a higher price and will avoid the headaches that come with bad news on the inspection. The same can be said for old furnaces, water heaters and other components. If you own them at the tail end of their lives, expect to bear the cost of replacing them, either pre-listing or as a credit to the eventual buyer. Hopefully, you will have owned your home long enough to be entitled to some appreciation that can be applied toward the replacement costs.
Our oldest homes often have components that are simply no longer acceptable to the buying public. If you own a home with knob and tube wiring, you should expect to bear the cost of replacing it. Yes, it has been there forever and worked without incident in most cases, but its old very old and most insurance companies will no longer insure homes with knob and tube wiring. It has to go and if you are the unfortunate owner at the time it is discovered, the bill will most likely be yours (if you want to sell, that is). The same can be said for iron pipes supplying water to a home. Copper, or plastic, piping is what a home should be plumbed with. Iron develops a layer of rust on the inside of the pipe to which stuff adhere to, causing the pipe to slowly close over time. This will cause a diminished water supply to the home. Again, if your pipes are so closed that you are experiencing a noticeable decrease in water supply, the pipes will all need to be replace and you will be expected the pay the bill.
Need some help figuring out which components are so old that they are likely to hold up your sale? Feel free to give me a call and we can walk through your home together and take a careful look.
A lot has been said the past few weeks about the impending financial cliff and the negative impact it may have on the economy. If Congress doesn’t act, the Bush tax cuts will expire and tax rates will increase on all American taxpayers. At the same time, spending cuts will go into effect and a second recession is predicted to be the result. Some fear this will plunge our housing market into another downturn. This anticipation of a second possible disaster seems to have paralyzed some home buyers, at least for the moment.
While I don’t have a crystal ball, what I do know is that the Pittsburgh housing market made it through the last recession reasonably unscathed and we have every reason to expect to be able to weather any oncoming storm equally well. Many articles have been written about the strength of the local economy, and of the stabilizing impact the natural gas industry has had on the region. Like the economy, the housing market is very localized.
Right now, we have a tremendous back log of buyers. There are lists of people waiting for the right home to become available. If you are a possible home seller, now is not the time to be wringing your hands in worry over a predicted downturn. Instead, now is the time to heed all of the advice from my prior articles – get your home cleaned out, fixed up, staged, price right and on the market in the next 2 months. The spring market is almost here. It promises to be a good one for us locally despite all of the national concern. If you want to move, don’t sit on the sidelines paralyzed with fear. Our local real estate market is showing signs of great strength and stability. Feel free to call me and we can set in place an action plan to get your home sold this spring!
And if you are a homebuyer, there is much speculation about where interest rates might be going. While we don’t know for sure, what we do know is that rates are great right now – so take advantage – have no regrets – make your move now and lock in years of low mortgage payments – you’ll thank yourself later!
There are many reasons that folks are concerned about the national debt, but have you thought about how it impacts your housing choices? Your first reaction might be that with the economy remaining less than robust, conservative financial choices are your best and safest bet. These economic times have seen people scaling back, and many have opted for smaller homes and rentals, preserving their cash, unsure where the market is headed.
Such an approach may not, however, be your best bet. In the long run, you may be better off buying as much house as you can comfortably afford. Sound risky? You may be risking more to play it safe.
If our nation cannot resolve its debt issues, economists predict that we may enter a period of inflation and high interest rates. If this happens, your home should keep pace with inflation while other assets may not. If you have more invested in your home as a “place holder” you can rest assured that your net worth is not losing ground as prices skyrocket around you. Of course, there is no better time to invest in your “place holder” than when the cost of borrowing is low. With interest rates as low as they are today, regardless of the uncertainty that some fear lies ahead of us, there is simply no better time than to be choosing real estate as your hedge against inflation. And while some investors may enjoy watching their investments grow on paper, your home is the only investment you can come home to every day and enjoy with family and friends. So invest in real estate with confidence — not only can you buy more for less right now, but you can actually enjoy your investment for years to come.
Buyers are often questioning whether they are paying too much for a home. But what about sellers? How much is your home costing you to keep? Depending on where you are in the selling process, this is something you need to consider.
The most obvious scenario involves a vacant (or essentially vacant) home where the seller has already relocated to a new home. That seller continues to meet monthly ownership obligations, which usually include mortgage payments, property taxes, homeowner’s insurance, utilities and yard upkeep. If you are looking at the possibility of carrying two homes at some point in your moving process, think carefully about whether you are paying too much to carry the old home month after month, or does it make more sense to adjust your asking price down or work with an offer that comes in lower than you would have hoped? Even if you have to bring some money to the table to satisfy a loan you took out a few years back when money was flowing more freely, that may be cheaper than carrying the home for months or even years hoping to recoup a lost idea of value.
But what if you haven’t committed to buying a new home, but have only listed your home with the hopes of making a move? Is it still possible that you could be paying too much? If what you need is to move to a smaller or less expensive home, then yes, every day that you hold on to your old home, you are paying too much. Marketing your home aggressively and being realistic on price will in the end save you significant money when you get your old home sold and get into a new home that costs you less each month.
But even if you are moving up, you may still be paying too much as a seller. Staying too long in a home when you know a move is what is needed may have a lot of hidden opportunity costs – you might miss out on the great rates that are currently available. You might be forced to pay for unexpected repairs because you stayed just a little too long and costly items started to break. You might miss out on a great deal because you haven’t positioned yourself successfully as a buyer. These are all high prices for a seller to pay. End message: price your home well, consider all offers and be realistic about realization and while you may initially think you are losing too much, in the end, you will prevent yourself from paying too much.
Buyers often assume that if more than one offer is presented on a property, they will end up paying too much money. In light of this view, many buyers back away when they find out a home is getting multiple offers. Is this a sensible approach? Is a bidding war evidence that someone will overpay for the home? Will they ultimately lose money on the resale?
I would assert that is not the case. Multiple bids may in fact be evidence of exactly the opposite scenario. When more than one offer comes in on a home, it is usually because it has been well priced and/or is in excellent condition – that the home in fact represents a terrific value. Looking exclusively at price fails to acknowledge the most important component – value.
If you are renting and considering buying, then an analysis of value must include an analysis of how your rental payment compares to the mortgage payment. With interest rates as low as they are, mortgage payments are often far lower than rental payments. This potential savings alone can represent real value to you.
When considering whether to jump into a bidding war, don’t forget to take into consideration that with each mortgage payment you are building equity in your home and increasing your net worth. Additionally, it is important to consider the value of the mortgage interest deduction on your tax return – when you consider the tax savings currently available as a result of the deduction, you are “out-of-pocket” significantly less than it initially appears.
Interest rates have never been lower. Inflationary times are predicted. Inventory is at a low point. Expect bidding wars. But a higher price does not necessarily mean that you are getting a bad value. Take the time to analyze all of the factors that create value with your real estate advisor before shutting down on price alone. Don’t sit by the wayside and let someone else buy a home that is a good match for you – jump in and win! When interest rates go up and inflation escalates, you will look back and be happy that you did!
Our real estate contract is very long, indeed. With 11 “front” pages, plus 8 “back” pages, that is a lot of information for a real estate consumer to digest. Buyers and sellers alike tend to focus on price, price, price and often neglect some of the document’s most important terms. In our state, the Agreement of Sale declares “time is of the essence” inside the Agreement. This is a legal term of art and yet all of the non-lawyers are expected to understand what it means. To the real estate consumer, it means that the days mean what they say they mean – you get no extra time (without a signed addendum, that is) to meet you deadlines. And so it is absolutely critical for every party to a real estate contract sit down with their contract and their realtor and write these critical dates on their calendar. Gone are the days of a handshake forming the basis of a real estate transaction. It is all very legal now and if you are not watching your deadlines, you very well could live to regret it.
So what harm may come, you may wonder, by missing a deadline by a day or two? If you are a buyer and you fail to respond to your home inspection on time, you are taking the house as is. This could mean absorbing a lot of inspection deficiencies. Your only option if you miss this deadline? Default on the contract and lose your hand money – it might be cheaper than absorbing a lot of inspection deficiencies. Better yet – don’t miss the deadline!
If you are a buyer and the lender you choose fails to provide the seller with a compliant mortgage commitment on time, the seller has the right to terminate your transaction – this little slip-up could cost you your dream home. Choose your lender wisely and make sure you impress upon them the importance of meeting this deadline – if they seem too busy with refinances, consider shopping for a lender who can guarantee that they will meet the deadline.
If you are a buyer or seller and you don’t make the closing date, you could be paying damages to the other party for the expenses they incur for your failure to close on time.
There are no automatic extensions or free days in PA – you need to know and abide by your deadlines or be prepared for the possibility of some unpleasant consequences. Before you sign a contract, make sure you check your calendar and that you can focus your undivided attention to meeting these deadlines and making your real estate transaction a success.
Last week I talked about how important it is for both parties to respect the contract they sign, and specifically addressed important things for sellers to keep in mind as they move toward a closing. Sellers are not the only ones, however, that need to be sure to honor the contract they sign. Buyers, you too need to understand the contract and abide by its terms.
Let’s start with deadlines. The contract gives you a set period of time to address your contingencies, such as inspections, appraisals and mortgage applications. The contract is very clear – miss your deadline and you waive your contingency. So once you have a signed agreement, take the time to write the deadlines on your calendar and then be sure that you comply with them. If you don’t, you will lose your bargaining right and your only option if you are unhappy at that point is to terminate and forfeit your hand money. That’s a real shame when you have taken the time to find a home you love and a compromise may have been reached if you had been watching your calendar.
Understand the mortgage approval process. You generally must apply for a mortgage within 7 days of reaching agreement. It is possible that you could pay out mortgage application fees only to decide you are unhappy with the inspection, terminate the deal, and lose your mortgage application fees. This is something to work out with your lender before you make an offer on a home – some will allow you apply fees to future home purchases if a deal falls apart – but in any event, you absolutely must make timely application even if this means you risk losing the fees.
If your home purchase is contingent upon the sale of another home, or if you have an extended closing period, you will likely have to pay for two appraisals – one at the time of initial application, and one prior to closing. This will add approximately $350 to your expenses. Again, while it is additional funds you must expend, it is part of the deal you struck and only fair to the seller who is likely abiding by all of the terms that apply to him.
Understand that if you do back out of a deal once your contingency periods have expired, you will lose your hand money. It is the deal you struck when you offered to buy the home and just compensation to the seller, who has taken his home off the market with the understanding that you will buy it. Put yourself in his shoes before you decide to tie up the release of hand money in arbitration.
As I said last week, contracts are lengthy and complex and it is important that you really understand what you are signing and what you are obligating yourself to do — be sure to hire a realtor that you have confidence will thoroughly explain what you have signed and help you to be a good buyer and honor all of its terms!
Obtaining financing to purchase a home seems to get more and more complex as the years pass by. Many of my readers are likely long term homeowners who pay their bills on time and are not concerned about getting their next loan, whether its time to move up, down or just across town. But what about the next generation of home buyers? The next generation of home buyers may very well be your kids or grandkids. Our housing market starts at the bottom and builds from there. People buy their first home, which allows someone else to make a move, and eventually all of these moves will affect you and your property value. So equipping the next round of first time home buyers with the tools it takes to actually buy a home benefits us all.
When I was a kid I overheard my parents talking about saving the 20% down and being sure to pay all the bills on time. But we recently moved through a period in our nation’s lending history when money was free flowing and loans could be had with a wink and a handshake. But those days are gone, likely forever.
After many “easy money” years, our newest group of home buyers may not have been educated with the old mantras – save – pay on time – and they may shocked to find out that they don’t have what it takes to get a loan. So what does it take? A loan applicant must have credit in their name (and not a card they are authorized to use that belongs to mom or dad) on three separate lines (cards, car loans) and they must NEVER have made a late payment. The cards DO NOT have to be actually used to establish a credit history – the potential homebuyer just has to have been granted the cards. If they do use the cards, then as a general rule, it is not a good idea to charge more than 50% of the credit granted in any given payment cycle, at least if they are nearing a time when a loan application is planned. If they miss a payment, that line of credit is disqualified and they will need to show the existence of 3 lines of credit that have never had a miss. If they don’t have three lines of credit showing on their credit report, they will only be eligible for an FHA loan, and must be able to show 12 months of payment history on other things such as a cell phone bill or utility bill in their own name (note: utilities paid on a budget plan do not satisfy this requirement).
So what should you be doing to help the next generation of home buyers? Educate your kids & grandkids about how they will have to learn to use credit cards responsibly and how they will always have to pay their bills on time. When you feel they can handle a credit card (or 3), help them choose appropriate no fee cards. Consider checking in with them each month at first to make sure that they are remembering to pay the bills (preferably in full) by the deadline each month. With a little coaching, we can all help the next generation of homebuyers to be ready to successfully purchase their new home.
For those of who just picking up the conversation today, check out my blog at 
For those of who just picking up the conversation today, check out my blog at 
Of course there are! But Sewickley, particularly in affordable price ranges, has become a very competitive market. It seems the secret is out – many people know about our very unique combination of a highly rated school district and a charming, walkable shopping district. Every agent I know has a list of buyers waiting for affordable homes to become available!
If you are simply refinancing an existing mortgage debt, you MAY be ok choosing an internet lender. You just need to be very careful that, before you apply to refinance your loan, you receive from the lender a full disclosure of all the costs and not just the rates. Oftentimes I see lenders have exorbitantly high fees connected with low rates. In a sense, you are buying down your rate by paying high fees upfront. Be sure to compare them on the same day to a couple of local lenders and understand what you are paying to get the quoted rates. The reason you must compare rates on a singular date is because rates go up and down continuously and a rate may seem lower simply because you called a particular lender on a date rates dropped.
Back-to-back closings do raise the possibility of delayed closings and moving vans sitting curbside waiting to unload. When there are multiple transactions lined up on top of each other, if one in the line-up fails to close on time, it will affect everything in line behind it. Ideally, transactions would not be back-to-back, but this only works if buyers are paying cash out of existing accounts or have sufficient resources to carry two homes, so that the new home can be closed independently of the closing on the old home. But even if transactions are not stacked, closing delays can still occur, causing unhappy buyers and sellers, because lenders aren’t ready.
Mortgage rates remain low, but the process of obtaining a mortgage is more complex than most buyers appreciate. Underwriters are extremely detailed in their review of mortgage applications – one small “mistake” could derail your entire application. Take the time before you buy to understand the possible pitfalls, and then steer clear for a smooth mortgage process.
For those of you looking for a quick answer, the answer is a resounding no! For those of you wondering why, read on!
The millennials, as they are known, are a very risk adverse generation, having watched first-hand as many family members lost their jobs and/or their homes in the last recession. It’s not hard to understand why they have been the slowest generation to embrace home ownership as part of the American dream. But as scary as it might seem to take that first big step, home ownership remains one of the best investments you can make, and the sooner you get in the game, the sooner you will start making measurable progress toward achieving your financial goals.
The spring market is here (although with the forecasted low temps for this week it may slow things down a bit)! Buyers are definitely buying right now, so if you think a move is in your future, despite the cold temperatures, the time to get started is now! We have seen homes that have been sitting for months go under agreement in the past couple of weeks, some with multiple offers, and our inventory is dwindling. We still have many nice options available for you to consider, and this is a far better time to buy than March, April or May.
The short answer: I think they will only go up! We just had a slight drop in the rates this past week, but that is not expected to hold. If you are considering buying, now is definitely the very best time to take out a loan – by next month rates could have bounced back up again! There is really only one problem I see with this otherwise sage advice – inventory is very limited right now! You may not find anything that you want to buy!
Getting yourself pre-approved to buy before you start viewing homes is an excellent idea. You will have to have a pre-approval letter to submit an offer (sellers are going to want assurances from an independent third party that you can afford the home before they take their home off the active market to sell to you). And you certainly don’t want to start looking at homes that you think you can afford, or that you were told you could afford last year, before interest rates increased, only to be disappointed to find out that the home you love is outside your price range. Getting a pre-approval upfront is the most sensible approach – in this hot market, you could easily lose out on a home while you wait for a lender to pull your information together and get you the letter. It is best to get it done up front.
Well, you are asking a Realtor that question, so the answer is probably expected! The first thing you should do is call me! Once you have done that, here is a look at what comes next! First, we will meet and determine the likely value of your home in the current market. The market is quite fluid and values move up and down depending on supply. Currently we have had very low inventory for an extended period of time and buyers are getting very frustrated, so it is possible that we may see an uptick in values again this spring. When we meet we will also review all of the many ways I will be marketing your home and the timetable for rolling out the marketing to optimize your result.
The very short answer is yes! For starters, to be a valid offer, it must be in writing and signed. Without a signed writing, you have absolutely nothing to bind the buyer should you decide to proceed. What you received is not an offer at all and you should not give it serious consideration until the paperwork is signed by the buyer. If there are no agents involved, the buyer needs to hire an attorney to prepare an offer and you will need to hire your own attorney to review it.
This time of year we all take the time to give thanks for all of the wonderful things in our lives. I have much to be thankful for. The obvious chart toppers are good health, wonderful family and friends, and a warm home to come home to each day (which I particularly appreciate on these chilly November days!) My gratitude extends much further, however, to all of the people I work with every day that make real estate transactions so seamless for my clients – from the best mortgage brokers and closers to incredible home inspectors and handymen, contractors, electricians, roofers… that I can count on to give their best to my clients. With them by my side (or on speed dial) I have been able to provide the highest level of service to those with whom I work, and for that I am grateful.
You are correct – the fed raised the interest rates AGAIN this year, and have indicated that we need to be prepared for two more rate increases in 2018. Those increases are expected in September and December and many forecasters are expecting that rates will be over 5% by 2019. The economy has been incredibly strong and unemployment is lower than it’s been since the 1960s (excepting one month in 2000). With a surging economy, the fed is forced to raise rates in an attempt to keep investors interested in mortgages, control inflation and avoid a possible future economic crash. Rates are ¾ point higher than they were last year. Nonetheless, historically 6% is considered an excellent interest rate and they are still well below that!