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Protecting Against Overpaying

How do you guard against overpaying in this competitive market? 

You have a good reason to worry about prices in the market that we are in.  Currently it seems that prices have risen at least 10% in some price brackets since the new year.  That’s an incredible amount for the Pittsburgh market which typically appreciates at the rate of 1 to 2% per year. That increase is not being seen a crossed all price brackets – the million dollar plus market has as a general rule seen less. However, the majority of our homes are still seeing multiple offers and the prices are still coming in over the asking price.

Given the current state of the market, there is a high likelihood that those participating in some of the more intense bidding wars going on right now are going to end up overpaying for their homes. If they remain in their homes for 5 to 7 years, however, that should not be an issue. We should see enough market appreciation in a 5 to 7 year period to make up for any premium that might be paid in the current market. 

If you are getting a mortgage, the appraisal required by the mortgage company provide some level of protection. However, most appraisers are trying to make their appraisals come in where the market is presently, so that doesn’t exactly protect you from the “bubble” we may be experiencing. Additionally, if you are involved in a multiple offer situation, to be the winning bidder you will probably have to offer some level of “appraisal gap coverage” meaning that you agree to accept the appraisal at a lower number than the purchase price, should that occur.   So, you will not benefit from the typical protections afforded by an appraisal.

In the end, the answer to your question is that if you are buying in this market, you are just going to have to come to peace with the fact that you may need to do what appears to be overpaying in order to get a home for you and your family. However, in the end, even if the market does settle down a bit, as long as you are not planning to move in the near future, the market will eventually catch up with any premium you might have to pay.

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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

Waiving a Home Inspection

The market is so hot right now and we aren’t having any luck getting a home – should we waive home inspections? 

You are correct –the market under $1million is very fast paced right now, and in many instances, the winning bidder has waived home inspections.  That does seem to be what it may take to “win” right now but I cannot recommend that you make that choice.  Now several months into the “waive inspections” craze we are starting to hear stories about the expected fallout from this hasty decision.

From the seller’s perspective, I highly recommend that you have your home pre-inspected and repair or disclose the relevant items.  While an inspection might cost you upwards of $500, it is money well spent toward a smooth closing.  If you have pre-inspected your home and provide the report to prospective buyers, you are doing your part to make sure your buyer is well-informed.  In the absence of a pre-inspection, I do not recommend that you accept an offer from a buyer who has not inspected your home.  I have started hearing from home inspectors that disgruntled buyers are seeking post closing inspections to find problematic items and sue the sellers for failure to disclose. You don’t want that to be you. If you have not pre-inspected, we can discuss strategies to allow a buyer’s inspection and still protect you.

From a buyer’s perspective, as we all imagined would happen, the post-closing stories are starting to mount about buyers who purchased without an inspection and are now having all sorts of forseeable issues – roofs leaking, furnaces failing… If you are going to make this risky choice, you need to do so knowing that you will be assuming the risk of potentially tens of thousands of dollars of issues The contract specifically states that your inspection is your opportunity to find issues – if you waive that, you will be fighting an uphill battle to recover against anyone. Before you make an offer without an inspection contingency, you really do need to ask yourself if you are prepared to absorb those costs!

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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

The Effects of Rising Interest Rates

 

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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[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

Things to Consider

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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[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

Seller’s Market


We keep reading that now is a seller’s market.  Do you agree?

YES!  We currently have the perfect storm for a seller!  We have been experiencing historically low inventory for several months.  It has been suggested that as a great portion of our population is fully vaccinated, we may see an influx of inventory.  Some sellers, who may have been on the fence about having prospective buyers in their home because of COVID may start to feel more comfortable once we achieve higher vaccination levels and may be more willing to put their homes on the market.  Some homeowners have seen COVID as an opportunity to retreat to homes they own elsewhere and, returning to Pittsburgh, are deciding they would prefer to remain in their alternate location on a permanent basis. Some have simply taken a longer vacation to a new location and decided to make that home – with the rise of telecommuting it is now possible to work in remote locations.  Whatever the reason, we are expecting a return to more normal inventory levels as we move through 2021, and with that will likely come a cooling in demand – so if you are a seller, NOW is your chance to get your best price from our market.

Also in a seller’s favor are the low interest rates.  Rates have creeped up a bit and have seemed to stabilize again – still at historically low rates.  Low rates allow a buyer to afford more home, while still paying the same each month.  This supports the increasing prices we have seen.  If rates continue to climb, that will likely soften the prices a buyer is willing to pay.

It is worth noting, however, that the perfect storm is really happening in our middle market and below.  High end homes have not been experiencing the same demand this spring, and are not as affected by interest rate fluctuations. Our high end market is its own entity – yes, it is fair to assume that if you were ever going to achieve your desired price, it would be in this very robust market.  But we simply don’t have the same influx of buyers in this price range, and those that we do have tend to be very exacting about what they want in their new home. If yours is a high end home, then its important to be patient – the market does surge in the high end as well – its just less predictable! 

QUICK SEARCH

[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

Multiple Offers

Are you still seeing multiple offers on homes these days? 

Yes, we are, depending on location, condition and price range.  Multiple offers are primarily coming in the under $500,000 market.  If your home is in a higher price range, that does not mean that you won’t get an offer, and it doesn’t mean that it won’t be a good offer – but you may only get one, and you may need to wait for it – the market does not always offer instantaneous results.  The market is still strong, just not as crazy as it was a few weeks ago – more homes are coming on the market and the buyer demand is starting to be satisfied.

Multiple offers, over-asking-price offers and full-price offers are also far more likely in our hottest neighborhoods and historically most popular locations.  Additionally, sellers who have conditioned their home for market, both in staging and making changes to meet current buying trends, are most likely to be those with multiple and/or full price offers.  It is very important, however, to keep in mind that your initial asking price will dictate whether or not you receive a high offer.  If you choose to challenge the market with your asking price, and are at the top of your neighborhood, it’s unlikely your home will be snapped up or will receive an asking price offer – you may need to be patient and wait for a buyer who sees the value as you do.  On the other hand, if you price with last year’s prices, or shoot below market, you are far more likely to spur a bidding war.  Yes, we are selling at premium pricing on premium products, but this typically happens because the asking price feels a little on the low end to buyers to begin with. So my best advice to sellers is to take the time to condition your home to meet market expectations and then price carefully – no one wants to give their home away, but do be careful not to overshoot the market’s historic guidance on pricing.

Buyers – you still have a lot of competition out there.  If you are looking for a historically hot property (based on size, location or price range), you still need to plan to be very aggressive with your offers if you want to win!

QUICK SEARCH

[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

Housing Shortage

We continue to look at homes on the Howard Hanna website and have noticed there doesn’t seem to be many homes coming on the market. Just wondering if we’ve missed the peak of the spring real estate season? Have you found that there are typically more houses coming on the market in early summer as school ends? 

Historically, our market peaks in April, so if you have been watching our market all spring, you would have noticed the surge in April and the much more modest introductions in May. We will continue to have properties come on the market during the summer months, but fewer than we see in the spring months. The late summer is not a typical time to see new introductions, but they will pick back up after Labor Day.

However, if you are one of the many buyers sitting and waiting for their perfect Village home, this may be a good time to reevaluate your priorities.  Inventory is at an all time low and if your goal is to move into our community, you may need to start making compromises. With our continued Village development and all of the exciting new amenities as well as the top-ranked school district, Sewickley has become an extremely popular community choice for buyers.  Homes have been selling like hotcakes!  Not because they are perfect homes but because buyers are making compromises on their wish list and choosing homes that will work despite their imperfections.   Some might need updates.  Some might not have the desired lot size or configuration. Some might not have enough garages or even a garage.  Some might have too few bathrooms or a less than typical bedroom configuration. Some might be in a noisier location. Some might check every box but be a slight drive “up the hill” where we still have a wonderful selection of fantastic homes available.  If Sewickley is your dream, it may be time to start thinking about how to work with one of the many wonderful homes still available rather than sitting on the sidelines as values continue to increase and you get even less for more.

Considering a move outside Sewickley?  It is true that the North Hills have a larger selection of inventory due to the larger population base, but the prices are no lower and they are struggling with an equally tight inventory.

One final thought:  If you are a seller and you have been sitting on the fence about selling your home, now is the time to call me! 

  • We have a severe inventory shortage across many price ranges and many eager buyers. 
  • This spring market will yield your very best possible price. 
  • The fall market is much more typically a buyers market, so lets get your home on the market today!

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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

Pocket Listings


We have noticed that several homes have sold lately before they have hit the MLS. Are these “pocket listings” a good way to sell your home?
 

If a home sells before it hits the MLS, as a “pocket listing” as they are often called, it is highly likely that the seller could have sold the home for significantly more money, particularly in this market. The MLS exposes a home to a large number of prospective buyers in a very short amount of time. This widespread exposure is what has the potential to drive the price up for the seller.

A “pocket listing” is more like a secret sale. The agent you are dealing with may have a buyer that is willing to buy your home, but if it’s that easy, chances are you could have received more money if the general public had a chance at your home, and a bidding war could have possibly ensued. If an agent is being straightforward with the seller and discusses the strategies involved with using the market pressure of the MLS to drive in a higher price, it’s a rare seller who will willingly leave money on the table.

So why do we occasionally see these seemingly “secret sales” taking place? Some sellers perceive these pocket listings as a good thing – some don’t want to be hassled with multiple showings, some don’t want the general public to know their home is available for sale. If a seller’s goal is to maximize financial return, however, a pocket listing, or accepting an agreement of sale before the home is marketed in the MLS, is rarely the best strategy.

So no, my 22 years experience indicates that a pocket listing is usually not in a seller’s best interests. The highest returns I have seen sellers achieve occur in scenarios when they have used strategies to maximize the excitement within the buying community through proper pricing, excellent conditioning and staging and full MLS exposure.

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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

School:Home Value Ratios


Do you think living in a top ten school district adds value to our homes?

Absolutely! There is no doubt in my mind that living in the Quaker Valley School District, ranked in the top ten in Western Pennsylvania, adds both value and sale-ability to our homes. We are fortunate to live in a district with well state-of-the-art elementary and middle schools and a hard-working board that continue to work to keep the caliber of our schools at a very high level.

How do these impressive rankings translate into more money for you? Families moving into Pittsburgh have been a significant force behind our home sales for decades. Buyers with children almost universally start their home search considering school districts. Our school district not only offers top numbers, but it is small and can afford more personal interactions between families and faculty. This personal touch makes Quaker Valley both unique and a highly sought-after school district for people moving to Pittsburgh.

Relocation buyers are not our only customers. We see dozens of home sales each year to families living in other Pittsburgh communities where the school districts are not as acclaimed looking to improve the educational opportunities for their children. Pittsburgh neighborhoods that seemed fun and exciting to DINKS give way to sensible communities with outstanding schools like Quaker Valley once kids come along.

And yet we are a small community, with limited housing options. As our educational performance continues to shine, living in Quaker Valley continues to be a strong draw for buyers coming from both near and far, and yet we only have so many places to house these buyers. The increased demand for housing in the District has continued to push our housing prices up, and that has become particularly evident in some of our more affordable price brackets, which are feeling less affordable each year.

So yes, absolutely – living in such a highly acclaimed school district is a very important component of housing value and driving more and more families to explore the possibility of living here. Despite our new construction, the very limited nature of our housing inventory, when combined with the strong demand resulting from the excellent reputation our school district has maintained, is continuing to put strong upward pressure on our housing values.

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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’s Your Contingency Plan?

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.

QUICK SEARCH

[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 About an Appraisal Contingency?

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.

[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 WILL THE FALL MARKET BRING

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.  USA Today recently reported (as shared on my Facebook business page, Kathe Barge Howard Hanna Sewickley) that we are nationally at a 20 year low in available housing inventory.  What is going on you might ask?

USA Today reports that the Baby Boomers are to blame! 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 as we move into the spring market, but with the low inventory and huge backlog of buyers, I expect pricing will be high and bidding wars probable.  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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As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICESKathe 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 x238or on her mobile phone (412) 779-6060.

For What It’s “Worth”…

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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[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

The Power of Pre-Approval

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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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

Are You 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!