What’s In Store for Real Estate in 2012?

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It has definitely been a rollercoaster ride – one that seems to keep going up in some areas and down in others as we continue to rifle through the aftermath of the big mortgage meltdown of 2007.  But as 2011 comes to an end and we have a new, refreshing start ahead of us – what can we expect to happen in our real estate market?

We examined some of the numbers of the past and projected some foreseen market performance in the future and here is what we have come up with:

Buyers Will See More Competition

Though the market will remain heavily leaning toward the buyer’s side, there will be far more competition on the table when it comes to deals they are trying to close.  Homeowners will receive multiple offers, meaning that the edge buyers had recently will begin to soften.  What this means is that buyers will have to be seriously ready to compete against other serious contenders for the property of choice – a situation that has not been as prevalent in 2011.  Nonetheless, interest rates continue to be at all time industry lows and the low housing prices reflected in the most recent housing index report will provide buyers continued fantastic opportunities and renewed excitement to get in on the house of their dreams for the price of a lifetime!

Sellers Will Enjoy Stabilizing Prices

For the first time that we have seen in three or four years, sellers will finally enjoy prices that will be stabilizing again.  After months and months of uncertainty, sellers will be able to sell more confidently – especially beneficial given the state of our economy as it remains today.  In some pockets, we will see housing values increasing.  Our prediction is that in 2012 housing values will come up as much as five to eight percent from their current levels in those areas.  When you consider that in 2006 prices had dropped as much as 26%, the news of a projected incline in home values is fantastic news!  The coming year will be the best time to sell for many sellers in a long time – and finally – we are going to see happy sellers at the table in addition to the myriad happy buyers out there.

What You Can Expect From Us in 2012

As we strive to continue to provide our esteemed and valued clients with useful and valuable information that can be implemented with our without our help, we promise to bring you more exciting topics, great ideas and insightful information that will help making homeownership or potential homeownership a wonderful endeavor for you and your family.

From our family to yours, we wish you a very Happy Holiday Season and a Happy New Year!

Ten AWESOME Reasons Why You Should List Your Home During the Holidays

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Traditional school of thought dictates that selling a home during the holidays is a bad idea.  People are busy celebrating with their families and will hardly go shopping for a home, right?  Not so!  There are numerous advantages to listing a home during this season and below are ten great reasons to put a home on the market now. 

More serious buyers – Less time wasted

These are people who are interested in buying so there is a far greater chance of actually selling the property.  Nothing is more promising to a seller than a motivated and qualified buyer that knows what they want and is actively seeking to get it.

Fewer Homes On the Market

The less competition there is, the higher the chance there is for homes on the market to sell. Where during the peak season sellers might be dealing with some interest from buyers on their home, nonetheless there is more selection for buyers to choose from and they can stray to another property.

In January Inventory Increases – Chances of Selling Decreases

With so many homeowners assuming the holidays is a taboo time to sell there is a plethora of new listings in January, resulting in a diminished chance of your home selling.  Also, there is a risk that the price you may receive on the home can be less.

Decked Halls Look Great!

Homes are very appealing to prospective buyers when they are decorated for the holidays.  With all the festive décor, lights, greenery and added beauty of the season – the home shows very well and attracts buyers faster than if shown during other times of the year.

More Time To Browse Homes

Buyers have extra time off from work and are on vacation, which translates to a more aggressive buying pattern and more chances of your home being viewed.

Tax Advantages That Benefit the Buyer

Some buyers need to buy a property before the year ends so that they are able to claim a particular credit or exemption on their tax return.  The biggest tax benefit is filing for homestead. This requirement means that they are going to seek out a home and definitely purchase it prior to the New Year. 

Show The Home With Flexibility

Sellers that have their home listed prior to the holidays have the added advantage to be able to “pause” the process so they can celebrate the holidays, essentially not showing the home during a period of time during the break.  When the festivities die down, things can pick up again and the seller has not only managed to save potentially lost time but can also jump right back into the market.

Sell Now For More Money Then Delay Closing

Extended occupancy can be negotiated, leaving both parties the leniency to get through the holiday season and past the New Year so that all sides can rest assured the deal is done but it can follow through at a more convenient time.  For sellers this option is great because they are able to secure a higher selling price on the property before the market is inundated with new listings come January when the selling values drop.

Enjoy Non-Contingent Buyer Freedom

With the home sold, sellers can enjoy non-contingent buyer status during the rest of the slow season and take advantage of the market when there is a flood of new listings upon the New Year. 

Fewer Foreclosures On the Market

Many banks will suspend foreclosure listing during this time of year, especially on properties where there are still families occupying the home.  As a result of this, some of the competition that arises for sellers from low-priced foreclosures can be avoided during the holidays.
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Keep in mind that the idea of your home’s value increasing significantly over the next several months is a myth.  The truth is that housing values likely only go up when consumer income rises.  Pay rates increase at a rate of three to five percent each year and that is about the maximum yearly increase we can expect to see in a home as well.  So if you are wondering whether or not to put your home on the selling market now, or to wait – one important factor is that waiting will not provide much benefit.

You Can REALLY Learn Some Important Things Just By Doing Your Homework About Interest Rates

Like anything else that consumers tend to buy, a home is available under a variety of different plans and packages – only in this case it’s usually packaged in the form of mortgage rates instead. With choices there will be decisions and before you can make a sound decision regarding the purchase of your new home, you need to be armed with as much knowledge as possible. Knowing what to look for in this scenario is key and we’ve put together some important tips that will help you move forward.

Look Beyond the Interest Rates

From the moment you decide you want to purchase a home, the excitement mounts. You’ll start asking and telling your friends, family and colleagues. You’ll begin looking at houses everywhere you go and think about the house from an entirely different perspective now – a buyer’s perspective. And you’ll be thinking about dollar signs. How much will it cost? Will I be able to afford the monthly payments? What all is entailed in the home buying process?

When you do start answering those questions, remember that what’s usually the first thing to consider, interest rates, is not necessarily the most important. Even though you may be able to come away with the “lowest mortgage rates of the season” if you’re not careful, you could also suffer the “highest fees” too. Depending on the entire package, a low interest rate package may not be all that it’s cracked up to be, so it’s important to be full aware of all the facts.

All Lenders Are Not Created Equal

When you are new to the industry, you may not realize the plethora of choices available, including when choosing a lender. Depending on your specific needs, your qualifications and expectations, you can tap into several avenues when considering financing for your home.

BANKS AND MAJOR LENDING INSTITUTIONS
Borrowing from regular to large lending institutions has its advantages but can bog you down too. Not particularly known for their flexibility, it can become difficult when trying to accomplish smaller, more specialized services that may be possible through smaller institutions. Further, there is additional overhead that is rolled into the end figure, something passed on directly to you.

CREDIT UNIONS
This is a favorite option for many prospective homebuyers since credit unions offer excellent values and top-notch service to go along with the regular transactions you would experience anywhere else. The downside, however, is that credit unions only serve their members – and obviously not anyone else.

MORTGAGE BROKERS
By opting to go through a broker, homebuyers can avail any number of rates and products but the cost ends up being higher since the middleman nature of a broker results in additional costs incurred after having to deal with several lenders to get that variety of rates and products. The other ‘ding’ is that brokers earn from selling higher interest rates to the end-consumer.

When in Doubt, Check the GFE Out

Lenders are required to provide home buyers with a Good Faith Estimate, completely outlining important aspects of the sale and pending transaction. With key information about costs, from expenses to closing and other fees – as well as an idea of your expected average monthly payment, the document is a good source of preparation for you. It’s important to study the contents carefully and if possible have a lawyer review it for any glitches or hidden clauses that may hurt you in the long run. The opportunity to thoroughly question anything that doesn’t seem right is there and should be availed if you’re unsure of anything like how certain fees are structured, for instance.

Negotiate Your Way To More House for Less

First-time home buyers often do not realize the potential for successfully negotiating lower interest rates, among other things. Large financial lending institutions with their long processes and industry jargon tend to be intimidating, but at the end of the day the transaction boils down to the purchase of an item, through funds obtained as a loan. While the paperwork can seem daunting, as long as you keep your eye on the bigger picture and keep in mind the simplicity of the transaction, you should be able to negotiate a better deal than the one that is offered originally. Using the services of an experienced industry regular, like your Realtor, is very useful during times likes these, when banks can be intimidating.
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With a little bit of industry savvy, coupled with the knowledge of where to look for the information that will help you, your home buying process and the bottom line can be exactly what you want it to be. With interest rates as historically low as they are these days, by playing your cards right you can easily get into a home that just six months ago would have valued at as much as $40,000 less! With things changing on a daily basis, it’s important to have all your information lined up and ready.

And if you’re a seller, the super low interest rates work in your favor because that means more buyers can potentially qualify for your home.

Everybody wins!

"D.O.M." Your Way to better Value When Buying a Home!

Generally speaking, the longer a home is on the market, the more willing a seller is to negotiate. And that means you might be able to get a good deal!

However, notice that I said “generally speaking.” I put in that disclaimer because there are several reasons a home might be on the market for a long time.

One is that it might simply be overpriced. If that’s the case, then you’re in an excellent position to negotiate since the sellers may be anxious to sell the home.

A second reason may be someone has already put an offer on the property, but their financing, credit rating, etc. hasn’t met the requirements of the deal. In short, there was something wrong with the buyers, and nothing wrong with the home. Again, there may be an opportunity for you in this situation.

A third reason is that someone made a simple mistake in the Multiple Listing Service (MLS)! Perhaps the home got listed in the wrong ZIP code or the wrong neighborhood, or the price was simply wrong and listed too high. Now, normally, MLS is very accurate, but, as always, it’s dependent on humans entering information into the system, so mistakes happen!

Fourth, the house may have stayed on the market for so long because the owners simply refuse to negotiate! A real estate agent can help you identify these individuals for you so you don’t waste time and energy on a sale that will never happen.

Finally, a home may stay on the market for a long time because there is something wrong with it either structurally or cosmetically or both!

Depending on the situation, this can also be an opportunity for you as a buyer! You can use it as a bargaining tool; that is, either the home seller fixes the defects or lowers the price to account for the cost of repairing those defects.

However, you should always, always get a home inspection done on such houses! (Or on any house you’re considering, for that matter!). It prevents you from buying a “money pit,” in which you have to throw a small fortune in order to get defects repaired.

Here’s the short and long of it: DOM can sometimes get you a great value in a home; however, you need the expertise and guidance of an experienced real estate agent to pinpoint such values! I can provide you with that expertise. Contact Brian & Diane today!

Ride the Magic Carpet of Increased Home Value!

Your carpet. Maybe it's full of dirt tracked in by the kids and pets. Maybe you're exasperated because it's hard to maintain. Don't despair! You just need to realize that your carpet is… FULL OF MONEY!

No, I'm not kidding; it really is! And here's the simple "magical" proof - when you clean your carpet or replace an old one, you can increase the value of your home by as much as 10%! How can that be? Well, you know the old saying, "You only get one chance to make a good impression?" That's doubly true when buyers come to look at your home!

When they see a dirty or worn carpet, they think, "Oh, wow, there's an expense I don't need. What else is wrong with this place?" Ouch!With one 10-second glance, your home's value has fallen off a cliff! It's not fair, is it? But, the good news is that you can "magically" get things headed in the opposite direction of increased value by taking one of two simple steps!

Clean the Carpet!

Okay, you have two choices here. You can shampoo/steam clean/dry clean that magic carpet of yours by yourself. There are all kinds of rental systems available to you. The dry system (Oreck, for example) dries almost immediately and kills almost all mold and bacteria. These methods are cheap because you supply all the labor.

The second choice is to hire a professional carpet cleaning service (Stanley Steemer, etc.). If your carpet has a lot of bad stains, we recommend you use one of these professionals. They're experts at it, and their equipment is much more high powered than anything you can rent. It'll be more expensive, but the results will be worth it! Like magic, your carpet will look like new and have a great impact on visitors!

Replace the Carpet!

I know, I know - your first reaction is, "Wow, that's going to be expensive!" Yes, but this initial outlay has the potential to make you money in the long run. How can that be?

Well, let's assume you want to sell your home in the future. A $4,000 investment in new carpet can make a $10,000 difference in the sale price! In other words, by investing $4,000 in a new carpet, you may end up adding $6,000 to the value of your home! Now that's some financial magic that makes you look at your carpet in a whole new way, isn't it?!

So, what are you waiting for? Clean or replace that carpet right now and let your house soar upward with increased value!

P.S. If you've never called anyone on the carpet, now's the time to do so!

Stay Within Your Means to Get the Best Value When Buying a Home!

Before you make any kind of investment in a home, check your financial "pulse" to make sure you're financially healthy and able to comfortably afford both the down payment and the monthly payments. Below are common-sense guidelines to follow in this regard:

Guideline 1: Check your credit rating!

One of the first things lenders will check before loaning you money is your credit rating. If it’s good to excellent, your chances of borrowing money for a mortgage are very much improved. Currently, depending on circumstances, you need a credit score of at least 620 and the money for a down payment (the percentage varies with the type of loan).

If you have a credit score below the 620 benchmark, then additional documentation (and more time) will be required to prove to the lender that you're worthy of a loan - and even then there's no guarantee that the mortgage will be granted. So, as you can see, it's important to know what your credit score is before you approach a lender. You can find out this information from one of the "Big Three" major credit reporting agencies shown below:

• Equifax (exquifax.com)
• Experian (experian.com)
• Transunion (transunion.com)

If you're wondering exactly what such agencies do, the best explanation is that they act as a clearinghouse for lenders. That means they collect financial information. They then sell it to banks, credit card companies, mortgage companies and other lending agencies. In essence, lenders use that information to decide if you’re a good financial risk.

So, if you have a credit score of 620 or better, no problem! But what if that score is below 620? What can you do then? Follow the guideline below.

Guideline 2: Reduce or Eliminate Debt!

The only method of raising your credit rating is to pay off credit cards or any other kind of debt you have. Now, no matter what you hear or see on television, radio or the Internet, there's no "magic bullet" for reducing or eliminating debt. It has been and always will be a matter of personal discipline on your part! You can accomplish that discipline by taking the following steps:

Step 1: Pay your bills on time—all the time.
Step 2: Don’t open unneeded credit card accounts to increase available credit.
Step 3: This is the most important step. You must figure out where you stand financially by budgeting. In other words, you have to reduce unnecessary expenditures so you can apply saved monies to your debt and improve your credit score.

In this step, you must analyze your current financial situation. The first question to ask yourself is, "How much debt is too much?"There’s an easy formula for coming up with an answer to that question. It’s called the debt to income ratio. It’s a simple method of measuring your net monthly income against your debt.

For purposes of illustration, let's assume the following: Your net monthly income is $2,000. Your monthly debt payments are $500. Divide $500 by $2,000, and you’ve calculated your debt to income ratio:

500÷2000 =.25 (25%)

Financial experts generally agree that debt expenses should be 25% or less of your income. A ratio of 10% or less is great. Anything above 25% waves a red flag in the face of lenders in general. In that case, you definitely need to reduce or eliminate debt. So, what is your debt to income ratio?

Answer that question by doing the following:

• Review last month’s bills. Add up all the fixed expense items (rent, mortgage, car payments, child support, loan payments, etc.)

• Review your credit card bills. Add up the minimum payments owed on each card.

• Figure your monthly take-home pay (net salary).

• Now divide monthly fixed expenses by monthly income.

What percentage did you get? If it’s 25% or greater, then it's time to take action to reduce your debt. It’s time to budget!Okay, let's assume that your credit rating is in the good to excellent category and you have the money for a down payment on a house. That's great news!

But, you still need to stay within your means! So, upfront decide what you want in a home (two bedrooms, attached garage, etc.) and then stick to those guidelines!

Don't get swayed by an ultra-beautiful home with, say, four bedrooms and a state-of-the-art kitchen. If such a house is beyond your means, it won't look very beautiful when you can't make the monthly payments!

The best approach to take is to tell your Realtor upfront about your guidelines and ask him or her to show you only homes that meet them.

Believe me, I or any other Realtor love to work with customers who know what they want! It not only helps you but us as well because we can locate such properties faster and easier and get you into a new home that much more quickly!Please contact me so I can answer any more questions you might have about buying a great new home within your means!

Are Bi-Weekly Mortgage Payments Worth the Time and Effort?

In most cases, yes! It’s essentially a process by which you make extra payments on your mortgage. That way, you save interest costs and pay off the loan faster.

How Does It Work?

You make a payment to your lender every two weeks instead of once a month. This means that each payment is equal to half of the monthly amount due. The result – you’re paying the equivalent of 13 full payments rather than the usual 12.

It gets even better! The full amount of the extra payment is applied toward the principal. And because the principal balance is the amount on which interest is calculated, paying down principal results in a reduction in accrued interest!

Let’s look a traditional payment monthly schedule vs. a bi-weekly schedule so you can see exactly how it works.

Example 1: Traditional monthly payments

Let’s assume you have a loan balance of $250,000 with a 6 percent interest rate and a 30-year loan term. In this example, your monthly payments are $1,498.88. So, over the life of the loan, you’d pay a total interest of about $289,595.

Example 2: Bi-weekly payments

Using the same loan balance and terms described above, the difference would be the following:

• $749.44 paid every two weeks

• About $225,490 paid in total interest

• This results in a savings of more than $64,000 in interest!

• In addition, the loan is paid off in 24 rather than 30 years

Bi-monthly payments are still a good strategy if you’re an individual who doesn’t plan to keep your house for 24 or 30 years. Why? Because bi-weekly payments still reduce principle, even over a short period of time.

For example, in the first year, the principle is reduced by nearly $1,600. And, at the end of the fifth year, the principle amount has been reduced by about $9,000!

How Do I Arrange Bi-Weekly Payments?

The first task is to contact lenders to find out if they do offer a bi-weekly payment schedule.

If they offer one, ask what the participation requirements are. In typical situations, lenders require you to have payments automatically withdrawn from your bank account since they dislike processing checks every two weeks.

Often, it’s the case that a one-time fee is charged for this service. The fee can be minimal or be in the several-hundred-dollar range, depending on the lender.

So, after all these benefits, how can there possibly be disadvantages to bi-weekly mortgage payments?

Well, the first disadvantage relates to a situation I mentioned above - the lender’s fee is very expensive for the service provided. In such a case, the costs may outweigh or cut down your overall savings.

A second disadvantage occurs when paying bi-weekly is too hard on your budget. Upfront, you need to make sure that you have the money available for the increased payments.

The final potential disadvantage relates to the length of time you plan to stay in your home. That can affect your overall savings on interest.

I recommend that you weigh the pros and cons of bi-weekly mortgage payments by using one of the many online calculators. Just enter your numbers and the calculator will give you a comparison.

If you’d like the assistance of an expert on the subject, contact us immediately!