Jun 5, 2018 | Real Estate
The drama of home and garden TV shows may be fun to watch, but no matter what you think, reality shows are not at all like real life. If you think it’s easy to buy a house that needs updating and turn it quickly for substantial profit, you might want to think again.
That doesn’t necessarily mean, though, that you should shy away from the idea of buying a “fixer-upper” — just that you should approach such a home purchase with eyes wide open.
Here are some valuable tips:
- Buying a house that needs cosmetic updates can make financial sense, particularly if you’re handy with a paintbrush, or don’t mind tackling DIY projects in your spare time. The willingness to make a house your home through ongoing TLC can be rewarding in terms of both dollars and good sense, if the structure is sound and all systems are in working condition.
- Modern appliances, updated lighting and water-saving plumbing fixtures and faucets — even new carpeting and tile — are all items that can be replaced over time as your budget allows. But if the existing home systems aren’t in working order, you may be in for big surprises that can be hard to handle.
- Buy a house that needs a new roof, major structural work, new HVAC or major kitchen renovation only if you can roll the work into a home improvement loan and, preferably, complete the rehab before you move in. If a house isn’t habitable, it’s really not a bargain!
- Always pay for a home inspection prior to making an offer. While an independent inspection is not a guarantee that all systems are “go,” it should allow you to plan the next move. The best strategy might be to walk away and look for another well-priced property.
- Remember that homes are priced under market for a reason. Sometimes the reason has nothing to do with physical problems and everything to do with the seller. Older homes in stable neighborhoods often represent great deals for sellers and buyers alike!
The best way to find a great deal, though, is to work with a professional REALTOR who is familiar not only with the local market, but who can advise you about real estate trends, financing options and the best ways to realize an appropriate return on your investment.
If you have dreams of becoming the next HGTV phenomenon, take the words of Chip and Joanna to heart: Their book confirms that they worked long hours, faced plenty of discouragement and experienced a fair amount of luck. In fact, as they note, their “overnight success” took many years!
After all, owning your own home, even if it does require some fixing, is still the American Dream!
Jun 4, 2018 | Financial Reports
Last week’s economic reports included readings on Case-Shiller home prices, pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims were released, along with monthly labor-related reports on job creation and the national unemployment rate.
Case-Shiller: Home Prices Maintain Rapid Growth
S&P Case-Shiller home price indices for March showed home prices continued to grow at blazing rates. Seattle, Washington held on to first place with a seasonally-adjusted annual rate of 13.00 percent; Las Vegas, Nevada reported 12.40 percent growth in home prices in March.
Analysts said Las Vegas markets benefitted from homebuyers relocating from high-priced coastal areas. Las Vegas home prices were 25 percent below their housing bubble peak. San Francisco reported year-over-year home price growth of 11.40 percent
Home prices were driven by short supplies of homes for sale and high demand among buyers, which led to bidding wars in high-demand areas. Rapidly rising home prices sideline first-time and moderate-income buyers who face hurdles of affordability and strict mortgage approval requirements.
While real estate pros and economic analysts expected home price growth to reach a tipping point where demand for homes would slow down, it hasn’t happened yet. Strong economic conditions and jobs data provided first-time buyers incentives to transition from renting to owning.
Pending Home Sales Slow in April
Pending home sales, which are sales under contract but not yet closed, dropped by -1.30 percent in April as compared to the March reading of 0.60 percent. Severe winter weather contributed to the lag, but analysts said severe shortages if available homes squeezed would-be buyers to the sidelines as they waited for more buying options. The National Association of Realtors® said that April’s reading was the third consecutive month of lower pending home sales.
Construction spending rose by 1.80 percent in April and surpassed expectations of a one percent increase and the negative March reading of -1.70 percent. This could be a hopeful sign if accelerated spending is due to growing construction projects, but ongoing concerns over increased materials and labor costs may have contributed to builders’ cash outlay.
Mortgage Rates, Weekly Jobless Claims Fall
Mortgage rates eased last week, with average rates lower across the board. Freddie Mac reported the rate for a 30-year fixed rate mortgage fell by 10 basis points to 4.56 percent. The average rate for a 15-year fixed rate mortgage was nine basis points lower at 4.06 percent; rates for 5/1 adjustable rate mortgages averaged 3.80 percent and were seven basis points lower. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.
First-time jobless claims fell last week to 221,000 claims filed. Analysts expected 225,000 new claims filed based on the prior week’s reading of 234,000 new claims filed. May payroll reports supported stronger labor markets as ADP reported 178,000 jobs added as compared to 163,000 private-sector jobs added in April. Non-farm payrolls, which measure private and public-sector job growth, rose by 223,000 jobs in May as compared to 159,000 jobs added in April. The highlight of May labor reports was an 18-year low of 3.80 percent national unemployment rate for May.
What‘s Ahead
This week’s scheduled economic reports include readings on job openings, mortgage rates and new jobless claims.
Jun 1, 2018 | Real Estate
Buying a property out of foreclosure can be a very smart move, financially. But it can also be complicated, expensive, and stressful.
Here are 5 things to keep in mind before you take a first step in that direction:
Cash Or Preapproval Required
Buying a house that has been returned to the lender through foreclosure means dealing with bureaucracy rather than with a motivated seller. Large lenders are notorious for taking their time to approve a contract, even if the offer is for the exact amount specified.
Then there’s the paperwork, which can seem endless. Most lenders require that prospective buyers have cash on hand, or a pre-authorized loan in place in order to even submit an offer.
There’s Little Room For Negotiation
Although in certain circumstances there may be an opportunity for some discussion about the price, that is not the norm in a foreclosure. The minimum price is usually written in stone, even during an on-site property auction, and the only direction is up! The days of buying foreclosures for a song are long past, if indeed they ever really existed.
As-Is Condition Means Just That
Some buyers specialize in foreclosures while other investors run the other direction. There are pros and cons, of course, to every transaction. Sage advice is to always pay the fee for a property inspection on a foreclosed property, even if you have experience. A third-party evaluation is especially valuable if the home has been vacant for an extended period of time, if the utilities have been turned off, or if there are extensive visible defects.
Foreclosures can be like icebergs: What you see may be nothing compared to what lies below the surface. Also, with the findings in writing, always confirm that your loan commitment and insurance quotes will be honored in spite of the existing condition.
The Need For An Experienced REALTOR
Navigating the landscape of property foreclosures is a specialty field, and caution is the name of the game. As a prospective buyer of a pre-foreclosure, a short-sale or a foreclosed home, an experienced REALTOR is your best resource. A real estate professional will help you deal with all timelines and requirements, and has the knowledge and expertise to recommend lenders, inspectors, insurance agents and contractors to help you make a decision.
Always Consider Future Value
Although the initial price might be right, there are additional variables at play in every real estate transaction. What can you expect in terms of appreciation over the short term? What is the long-term outlook for the neighborhood? Will needed repairs and improvements add to the home’s value, or simply bring its condition up to standard? Do you plan to live in the home, or is it strictly for resale?
Your trusted real estate professional is the best resource to help you thoroughly evaluate all the information about every foreclosure.
May 31, 2018 | Real Estate
While a kitchen herb garden or pot-grown tomatoes may be commonplace in both suburban backyards and on urban condo patios, an increasingly large number of homeowners look to backyard farming as a way to relieve some of the stresses of modern life. Other benefits include cutting grocery bills, living a more sustainable life, and teaching children about food.
The New Food Landscape
Do new trends signal a return to simpler times, or are they a pushback against higher food prices and loss of control over the food supply? Is it a lasting change that will spread across the country or a trendy, elitist phenomenon?
The answers may not be simple, but a huge increase in the popularity of farmers’ markets and community gardens leads some analysts to predict that a major change in attitude as well as lifestyle is taking place in American neighborhoods. There is evidence that family health and nutrition improve when access to gardens and fresh food is made easier. It is as true in affluent neighborhoods as it is in disadvantaged communities.
In cities as diverse as Seattle, Boston and Fort Worth, Texas, community groups and activist neighborhoods have developed community gardens. Some of the more innovative offer food free for the taking to anyone in need. Seattle boasts more than one edible park, meant to help eliminate the city’s food deserts. Numerous community gardens throughout the Dallas-Fort Worth metroplex encourage pick-your-own plots that are open to all.
Growing Food for Personal Consumption
For homeowners who want to grow their own fresh produce and salad greens, the way forward is not always as easy. Zoning stipulations and HOA regulations sometimes specify that food plants are unauthorized landscaping elements. The times, however, have begun to change in many communities.
New subdivisions in some cities offer community gardens for homeowners that are every bit as popular as community pools and clubhouses. They exist in million-dollar neighborhoods as well as more modest surroundings. Other cities allow some types of food gardens while discouraging plants like corn. Still others allow edible plants only behind a backyard fence.
The Future Of A Backyard Farm
The movement goes beyond growing edible plants, however. Keeping chickens and even goats is allowed by some municipalities, and urban farmers experience success with soil-free growing methods, including aquaponics, hydroponics and aeroponics.
While these alternative methods are usually found under roof, some aquaponics systems — which incorporate growing fish and plants together in a closed loop system — thrive in simple outdoor hoop-house structures. The growth of food-based “cottage businesses” is also worth watching.
In short, as huge farms disappear from the scene, smaller home-based farms may take their place, not only in the Midwest, but in cities large and small from coast to coast. If you are in the market for a new home with a garden-friendly yard or want to create greater sustainability in or near your home, contact your trusted real estate agent today to see what the housing market has to offer.
May 30, 2018 | Mortgage
When buying a home, there are certain steps a buyer should go through before the home sale is official. First the buyer makes the offer, then the offer is accepted.
Next the buyer schedules the inspection and home appraisal. Finally, everyone is ready for closing.
It’s easy to overlook the impact of some of these steps, but when it comes to a mortgage, the home appraisal is actually quite important. Banks want to see that they are lending money for an investment that is worthwhile, so that appraisal is a crucial step to getting financing. Here is what buyers need to know about how the appraisal could affect their mortgages.
Understanding The Home Appraisal Process
The home appraisal gives a home valuation expert the chance to evaluate the home a buyer’s considering to determine its market value. Home appraisers are highly trained, state-licensed professionals that know how to evaluate homes and assign value to them.
The appraiser will use various approaches to determine the final appraised value. The appraisal typically happens after an offer on the home was approved but before the lender loans the money.
The Appraisal And Mortgage Approval
The appraisal is one factor that a mortgage lender considers when deciding whether or not to approve a final loan request. Even if a borrower had preapproval, a low appraisal could cause the mortgage to fall through.
Why is this? A lender only wants to lend enough to cover what the home’s actual value, and if the appraisal comes in lower than what the borrower is asking for, the lender can deny the loan.
If the lender does not deny the loan completely, they may refuse to lend more than the home’s value. In order to buy the home at the agreed price, the buyer may need to come up with the difference in cash at closing.
What Can Buyers Do If The Appraisal Is Low?
If an appraisal comes in low on the home someone wishes to buy, the buyer shouldn’t panic. It is possible to get a new appraisal at a higher value.
First, consider the condition of the home. Did the seller let some things fall into disrepair? If the seller fixes those items, a new appraisal may be higher.
Does the home look rundown or cluttered? This shouldn’t affect the appraisal, but it can sometimes cause the appraiser to trend lower. Sometimes, simply asking for a second opinion might get a slightly different appraised value. That said, if the appraisal is low, make sure to evaluate the purchase price. Is it in line with current market conditions and the overall condition of the home?
If the answer to that question is no, then the offer may be too much for the home. The appraisal, in this case, gives the buyer the opportunity to reevaluate the purchase decision.
When it comes to mortgage approval, the appraisal is one of the critical steps in the process. If a buyer has shopped wisely, the home should pass with flying colors, and soon the home sale process will be over. As always, your trusted real estate professional is the best resource for appraisal information in your local market.
