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Dec. 7, 2023

5 Reasons Why Buying a Home Right Now Makes Sense—Despite High Interest Rates

By Jillian Pretzel

 

Dec 5, 2023

While most Americans might dream of buying a home, today’s high interest rates have prompted many to hit pause and ponder: Is now really the right time to buy, or should I wait?

The concern is understandable. In late October, rates for a 30-year fixed-rate mortgage reached a 23-year high of 7.79%. That’s more than double the rates two years earlier, adding approximately $1,000 to a typical monthly mortgage bill (assuming a 20% down payment).

Since then, mortgage rates have nudged down, but many home shoppers are still skittish about where rates might go next, according to real estate agents.

“Rates have absolutely changed the landscape of affordability for buyers over the last year,” says Cara Ameer, an agent with Coldwell Banker who is licensed in California and Florida. “They feel rates are too high, and there’s too much uncertainty of where the numbers might land.”

While many home shoppers might be convinced that this is a terrible time to buy, quite a few housing experts believe the current market could be hiding a window of opportunity.

Here are five reasons why purchasing a property right now makes a lot of sense—and why homebuyers might regret waiting on the sidelines.

1. You can buy a house now, then refinance later

Mortgage rates topping 7% might feel like a heavy financial burden month after month, but borrowers should note that they aren’t necessarily stuck with this same rate forever.

After their purchase, if rates subside, homeowners can refinance their home loan at a lower rate, a tactic some refer to as “Date the rate, marry the house.” A high rate, in other words, might be just a temporary inconvenience. But a home can be forever.

While no one can predict what mortgage rates will do next, real estate experts can look to other macroeconomic conditions and make some educated guesses.

“In October, mortgage rates hit a 23-year high as concerns about inflation, faster economic growth, and more government borrowing pushed up longer-term interest rates on all kinds of investments,” explains Realtor.com Chief Economist Danielle Hale. “Since then, mortgage rates have eased back roughly half a percentage point. Further declines could mean that today’s buyers get an opportunity to refinance.”

Max Carr, a real estate agent in Orange County, CA, says many of his clients are buying now with the hopes of refinancing down the road.

“While we certainly don’t have a crystal ball, the general consensus by many is that rates will decrease as inflation is brought under control,” he says.

Refinancing comes with hefty closing costs, so you’d want to crunch the numbers to make sure that rates have dropped enough for a refinance to make sense. The Realtor.com refinance calculator can help you with this math.

2. Home prices are probably heading up

While mortgage rates seem to be trending downward, home prices are lately inching up. This is yet another reason it might make sense to lock in a property now rather than later.

“Although experts and forecasters have been warning of the potential for home price declines, home prices have been remarkably resilient,” says Hale. “Weekly data show that home prices in November have trended above year-ago levels so far.”

Of course, different areas have different pricing trends, but Carr says that low inventory has kept average sales prices moving upward in his highly sought-after Southern California market.

In Orange County, home prices are up 9.4% year over year, he notes.

Likewise, Ameer says that she continues to see increases in both her Florida and California markets.

“All my clients who bought during the last four years have been very happy they got in when they did,” she says.

3. There’s less competition

One silver lining of high mortgage rates: They’ve persuaded many home shoppers to drop out of the running. With less competition, the buyers who remain have a surprising amount of negotiation leverage.

“The increasing rates have cooled the market and created these incredible opportunities for those buyers who are ready to jump in,” Carr says.

And while today’s market is tough financially, it’s important to remember that the market buyers faced during the COVID-19 pandemic years might have been much tougher in terms of competition.

“Anyone who went home shopping during the pandemic saw the outrageous competition and multiple-offer scenarios that the low-interest rates caused,” Carr explains. “It was a challenge for many buyers.”

Now, however, it’s a different game with different rules.

“If you’re comfortable with the monthly payment, there’s an opportunity now to lock down a home you love without having to compete at that level,” Carr says.

This tactic has worked for his recent buyers, he explains. “A first-time buyer of ours just purchased a beautifully renovated single-level home in Long Beach, with a huge yard and perfect location. In 2021, the seller wouldn’t likely have needed to finish a renovation like this to get their home sold. The buyer’s timing meant they enjoyed a brand-new kitchen, bathroom, flooring, and more.”

4. Inventory of homes is on the rise

Some buyers might be nervous about buying now because of low inventory. Indeed, the number of houses on the market has been reported at 41.8% below typical 2017 to 2019 levels. But things are looking up. Inventory grew 5.1%from September to October, and experts, including Hale, think more homes might be on their way to market.

“Seasonally, the number of homes on the market begins to stabilize or drop as we move past September into October,” she reports. “However, in 2023, the number of homes actively for sale increased by 5.1% from September to October instead. Additionally, price reductions, which are typically stable at this time of year, saw a pickup much like the market experienced in 2022.

“Although price cuts are rarer than one year ago, the increase from September to October could signal a shift in momentum and more negotiating room than usual for homebuyers in today’s housing market,” adds Hale.

5. If it’s the right time for you to buy a house, then it never makes sense to wait

While high rates and low inventory might make it difficult for many buyers to get into their next home, market conditions are only part of the equation.

“The advice I give to home shoppers is that if you find a home that fits your needs and your budget and you’re ready to commit to homeownership and living in the same place for the next several years, it makes sense to move forward,” says Hale.

 

Source: Realtor.com By Jillian Pretzel

Sept. 14, 2023

Seller Beware! 6 Half-Truths That Can Destroy the Odds of Selling Your Home

 

By Kathleen Willcox

Aug 29, 2023

The truth, as you’ve heard, can set you free. And when trying to sell your house, that old adage is especially relevant.

Sometimes bending or obscuring the reality of a home’s past might seem like the easiest path when dealing with potential buyers or even agents. But home sellers should resist any urge to fudge the facts when it comes to the home disclosures they are required to share with buyers.

While home sellers might already know it’s wrong to lie about your leaky roof or wonky electrical system, other potentially sticky fibs are less obvious. So read on for some of the most common half-truths real estate pros see—and make sure you’re not unintentionally telling any whoppers yourself.

The lowdown on disclosures

While it might be tempting to inflate your home’s square footage—and gloss over a mold infestation from years past—doing so imperils your chances of selling.

There are federal laws requiring certain disclosures from sellers. For instance, if you’re selling a home built before 1978, you must inform buyers that the home could contain lead paint. And many states have specific disclosure laws, as well.

But in general, a typical seller’s disclosure will include information on the state of the roof, any history of flooding or severe leaks, defects in the foundation, pest infestations, issues with plumbing, or boundary disputes.

So here’s what to never, ever say—or write—when describing your home to possible buyers.

1. ‘All the appliances work’

Even the tiniest details matter when it comes to home sales.

“I had a deal almost blow up over a microwave,” says Jimmy Hughes, a broker with JMR Realty in Oklahoma City. “I was representing the buyer and the seller. And the seller accidentally checked the wrong box on the disclosure form, stating that the microwave was in working condition.”

It wasn’t.

Hughes says all parties eventually were able to settle the matter, but it caused “quite a bit of controversy.”

So whether you’ve got a bum burner on the stove or your ice maker is kaput, be sure to tell buyers the whole truth about your appliances’ health.

2. ‘The closets have tons of space’

Is your closet truly a walk-in? If not, don’t paint a rosier-than-real-life picture of this seemingly small part of your home.

“Making false claims, even about minor details like the size of a closet, can hurt you,” says Ben Kuhl, CEO of Shelf Expression in Charlotte, NC. “If a homeowner says they have a large walk-in closet, but in reality, they have a modest one, it can create disappointment. And this can make potential homebuyers question other details about the property.”

For a closet to be a walk-in, someone must be able to actually walk into the closet (as the name suggests) and have enough room for someone to comfortably browse the racks and shelves.

3. ‘This neighborhood is so peaceful’

While it could be tempting to hide unpleasant details about the quality of life in your home, you need to be upfront about any drama you’ve had with the neighbors or any major sources of noise.

“I’ve come across a lot of people who tend to omit the truth about their neighbors,” says Alex Cappozzolo, co-founder of Brotherly Love Real Estate in Philadelphia. “Around 45% of homeowners will not disclose the fact that they have had issues.”

Although a neighborly dispute might not seem that significant, it is. And sellers have a legal obligation to disclose it, says Cappozzolo.

“It might be something, small such as a noise complaint, but the buyer has the right to know,” adds Cappozzolo.

4. ‘All the renovations are on the up and up’

One surprisingly common fib? Sellers stretching the truth about a remodel.

“Most communities insist that you have a permit before you are allowed to remodel your home,” says Cam Dowski, founder of We Buy Houses Chicago. “Unfortunately, many homeowners don’t go through the processes as prescribed by the authorities and end up telling lies in order to sell their home.”

But if it comes to light during the home inspection that you did unpermitted work, it will lead to major issues—and could scuttle the deal.

“In my experience, revelations like this make potential buyers nervous about purchasing the property, since they don’t know what else sellers may have lied about,” says Dowski. “Buyers also don’t want to get caught up in unnecessary paperwork or a lawsuit that may arise from the situation.”

5. ‘What mold problem?’

You’ll have to spill the beans if your home has been subjected to mold or pest infestations—even if you eliminated them.

“Mold and pests are serious health threats,” says Shaun Martin, owner and CEO of We Buy Houses Denver. “So if you’re aware of any kind of current or former infestation, it needs to be addressed—and disclosed—before you put your home on the market.”

6. ‘Our home holds only happy memories’

A seller with a home that has been through a natural disaster or that was the scene of a heinous crime must share the gritty facts with buyers.

“You can’t fudge or omit a property’s history,” says Mike Qiu, owner of Good as Sold Home Buyers in Kirkland, WA. “Previous fire damage, natural disasters, or crimes that have occurred on the property must be shared. Hiding the information can make the property seem more attractive, but it risks putting the buyer in an unwanted situation.”

So save the tall tales for your next campfire. And if you do fudge, exaggerate, or fib in your disclosure statement, the buyer could walk—or file a lawsuit against you for fraud.

 

May 8, 2023

5 Stress-Reducing Tips for Planning Your Long-Distance Move

5 Stress-Reducing Tips for Planning Your Long-Distance Move

5 Stress-Reducing Tips for Planning Your Long-Distance Move

 

By Realtor.com Creative Studio

 

Move-in day excitement shouldn’t be overshadowed by moving day anxiety. Some smart preparation can go a long way towards making moving a little more uplifting (and a little less heavy lifting). Here are 5 things you can do leading up to your move to make for less stress on moving day.

1. Consider Your Move Date

Like tomatoes and pumpkin spice lattes, there is a peak season for moving, which falls between Memorial Day and Labor Day. But unlike tomato sandwiches, moving is actually best done during the off season for the most options and the best prices. Considering that the first and last weeks of the month can be particularly popular as well, a mid-week, mid-month move during the months of October–April is recommended as your best bet.

Having access to the widest array of dates and times means that you’ll be able to plan your move when it’s most convenient for you. Plus, you’ll save money by scheduling during a slower time of the year.

2. Have a Packing Plan

Less stuff equals less stress when it comes to packing. Instead of blindly beginning to box your belongings, take stock in what you actually want to bring with you when you move. To get started, consult this step-by-step guide to the pre-move purge for tips on what you should consider when deciding what stays and what goes.

This meticulous approach keeps you sane and helps you plan—knowing exactly what you’ll be moving and how unwieldy those items is key for deciding what kind of moving company you’ll need.

Compare quotes from long-distance moving companies.

3. Do Your Research

Options can be overwhelming, but having the right information will make you feel confident that you’re hiring the right team for your move. When it comes to moving companies, they generally fall into 3 major categories: full-service, self-service, and specialized. How much you have to move, what kind of items you’re moving, and your budget will determine which category of moving company makes the most sense. In broad terms, a full-service moving company handles every part of the move—from packing to transporting to unloading at your final destination. A self-service company generally handles only the transportation part of the move (meaning that packing, unpacking, loading, and unloading the truck are up to you) and specialized moving companies are trained in proper techniques for moving unique items like antiques, art, appliances, or pianos.

Once you have an idea of the type of moving company you’ll need, get 3-4 moving quotes from properly licensed and insured professional movers to thoroughly compare your options.

4. Budget Accordingly

Expenses can add up quickly when you’re moving long-distance, so keeping track of your budget is a crucial step in your pre-move plan. Your moving quote will be a powerful tool to help you budget. There are a few different types of estimates you can receive, but the most popular type is called a binding not-to-exceed or guaranteed not-to-exceed estimate. This type of estimate ensures that the most you’ll pay is the quoted price, but you’ll pay less if the actual weight of your belongings is less than the estimated weight. Once you have an idea of what you’ll pay for your moving service, remember to additionally budget for tipping your movers. $10 per person for a half-day move and $20 for a full day is a good place to start.

5. Think About Moving Insurance

When you’ve taken care to pack only your most meaningful belongings, the last thing you want is to worry about them being damaged on their way to your destination. Moving insurance can give you peace of mind. By law, all moving companies must provide 2 coverage options for out-of-state moves: Full Value Protection and Released Value Protection. Full Value Protection requires movers to replace items damaged during moving or reimburse the current value. Released Value Protection only requires reimbursement at $0.60 per pound. You can ask the moving companies giving you quotes what expanded coverage they may offer, or, if your items are particularly valuable, you may want to consider carrying your own third-party moving insurance policy as well.

Ready to get moving? Start by comparing your options with Moving.com to get quotes from their network of licensed and insured professional movers. You’ll be on your way to planning a happier move.

April 24, 2023

What is an Easement in Real Estate?

When you’ve found the perfect house, you may be surprised you have to work around a property easement. You’ll want to include learning about any easements among your steps to buying a house because the rights granted by an easement could affect your privacy and future plans for the property. 

What is an easement on a property? 

An easement grants someone else the limited right to use your land for a specific purpose. Common easements include access to shared driveways or sidewalks, utility company access to cables and piping, or access to a pond or hunting land adjacent to the property. In some cases, an easement can be unfavorable, such as when it allows someone to cross your property to reach theirs.

As a homebuyer, before you offer to purchase a house, you should determine if the property has an easement. If you’re working with a real estate attorney or title company, they’ll run an easement search on your behalf. 

To search for property easements on your own, follow these four simple steps: 

Check with the county land records office or the county clerk to determine whether the prior deed shows an easement.

Check with the utility companies to see if they have a property easement. 

Order a property survey to identify any easements and where they’re located.

Ask the owner for a warranty deed. A warranty deed shows that the grantor (or current owner) guarantees, or warrants, that they have legal title to the property. It also shows property easements. 

If you discover that the property has an easement, you’ll want to know if the property you’re buying is the dominant or servient property before making an offer. If you own the dominant property, you’re the easement user and can make full use of the property according to the terms of the easement, often whenever reasonably convenient.

If you own the servient property, you must allow the dominant property owner to use your property according to the easement terms. Here’s a rundown of the most common types of easements used in real estate today. 

Common types of easements and how they affect you as a property owner

 

Different easements have consequences and required actions based on the terms of each easement. Here is a list of the most common easements and how they can affect you as a property owner. 

 

Utility Easements

This type of easement gives public utilities – gas, electric, water, and cable/internet companies – the right to access and maintain equipment on your property to provide service to the community as a whole. This easement doesn’t give a utility company the freedom to do anything they want on your property, just the right to perform necessary actions for the community’s good. 

For example, the utility company may install underground lines or utility poles without your permission. A utility easement can also restrict your own actions on your property — like planting a tree – that could interfere with power lines. 

Public Easements

These easements give the general public a right to use the area according to the easement. For example, if you have a sidewalk in your backyard that leads to a local park, people can use that sidewalk at any time if the city has an easement for it. 

Easement Appurtenant

This type of easement is tied to the property itself and remains in place even if ownership changes. An example of this is an easement on a property that offers the only access to a private fishing pond shared by two neighbors. Even when the property sells, the new owners must continue to allow their neighbors access to the pond through the easement because the easement stays with the home.

Easement in Gross

An easement in gross is tied to a person or entity, not the property, such as utility easements. Another example could be an easement that allows a friend to hunt or fish on your property. Because you granted the easement to a specific party, the easement is irrevocable until you, as the easement holder, pass away or sell the home.

Upon the sale of a property, the seller may transfer the easement in gross to the new owner, but they can choose to deny the easement. However, if the easement has been granted to a public entity like a utility company, the public entity could challenge the denial in court. A new homeowner can also transfer the easement to a new servient property, but the dominant easement holder cannot transfer their rights.

Such as in the fishing pond example above, your friend cannot transfer the easement to another person and give them rights to use your property. Neither can the utility company transfer its easement to another company without your consent as the property owner. Any new homeowner buying a new property must file for a new easement. 

Implied Easements

Implied easements are not written contracts. However, if two neighbors have agreed to a specific use of the property a certain way over time, an implied easement can serve as a legal theory for the party who isn’t the owner to gain an easement. If a dispute arises, this habit or past use pattern will serve as grounds for the easement. An implied easement does not appear on a deed and could be disputed if the property changes hands.

Prescriptive Easements

Prescriptive easements occur when someone openly uses your land regularly for a particular purpose over a specific time. For example, suppose your neighbor cuts across the property as a shortcut. They may not have an official road, but continued use without objection from the property owner could create a prescriptive easement.

Another example of a prescriptive easement would be when a homeowner allows the neighbor to use their boat dock. The neighbor never specifically asked permission but has been using the boat dock for the last five years. The neighbor could get an easement of prescription to continue to use your property for such activities in the future.

Easements by Necessity

Easements by necessity can be granted out of an absolute need if your property comes between your neighbor and access to their land, such as a public road or a sidewalk. This can also happen in landlocked situations if your property is behind another property with no road access. An easement by necessity can be either implied or written, based on the fact that the other party must be able to fully use their property.

How can you deal with negative easements?

Once in place, an easement stays with either the property or person depending on the type of easement described above. Change in ownership does not always provide grounds to revoke an existing easement. As the new owners, you must abide by the easement terms. If you want to take action on an easement, you can contact a local real estate attorney in your area to help.

Some easements may also have an expiration date – instead of fighting an undesirable easement, you can simply wait until it expires. You could also talk to the party involved to see if they’ll release their easement rights. If that approach fails, another remedy is to offer to purchase their land. Merging the two properties under one owner will cancel the need for the easement.

If you can terminate an easement, you need to record the termination with the local recorder’s office. Recording the termination will also help you if there are issues in the future. 

 

As a new homeowner, you may have some rules to follow in connection with an easement on your property. When you understand the type of easement placed on the property, you’ll be in a better position to decide whether to contest the easement or allow it to stand.

April 10, 2023

Which Is a Better Fit? Move-In Ready Homes vs. Fixer-Upper Homes

You have a lot of things to consider when house hunting. One of the most significant is –  do you want a home that you could move into tomorrow or a home that you can fix up and customize to your liking? Choosing between move-in ready homes and fixer-upper homes can be challenging given they each have their own unique set of advantages and disadvantages. 

To help you determine the right type of home for you, we have created this guide that’ll break down the definitions of move-in ready and fixer-upper houses, some of the top pros and cons of each type of house, and even how to find these homes in your area. Let’s get started.

What is a fixer-upper?

If you’ve ever toured a home with shag carpets, peeling paint, and kitchen appliances from the 1970s, then you know all about fixer-uppers. A home described as a fixer-upper is usually livable – but the property needs significant maintenance work such as redecoration, redesign, or reconstruction. Every fixer-upper is different; some only need cosmetic updates, while others may have more severe problems like mold or structural flaws. 

What does move-in ready mean?

The definition of ‘move-in ready’ can vary depending on who you ask. At its core, move-in ready means the current state of the house or property is ready for immediate occupancy. However, the term is more broadly used to describe a house that doesn’t need any major renovations or aesthetic updates prior to moving in. Turnkey homes are more likely to have key features that many homebuyers are looking for, like modern appliances, updated flooring, and sleek interior design.  

Pros and cons of move-in ready homes

Before buying a home that’s move-in ready, here are some advantages and disadvantages to consider. 

Pros

Immediate move in: After house hunting,home inspections, bidding wars, and more, the last thing some homeowners want is a remodeling project. Buying a move-in ready home allows you to unpack your boxes and enjoy your home immediately.

Fewer surprises: Move-in ready homes are safe for immediate move in. If you complete the proper inspections, you can expect fewer surprises like a septic tank issue or foundation problem that could cost a lot of time and money to fix. 

It’s easier to stick to your budget: You’ll likely have an easier time sticking to your budget when buying a move-in ready home. Since these homes typically don’t need renovations, you won’t need to worry about going over budget during construction. 

You may have an easier time qualifying for a loan: Move-in ready homes are usually seen as a less risky investment than fixer-uppers to mortgage lenders. This can makeapplying for a home loan easier for you if you’re buying a turnkey home. 

Cons

More expensive: Convenience comes at a price. Move-in ready homes are often more expensive than fixer-uppers.

Limited opportunity for customization: Other than interior design, there isn’t much opportunity to customize these homes to your liking. Changing the floor plan to add a bedroom or bathroom could be extremely difficult and costly.

Lots of competition: The benefits of a move-in ready home are appealing to many homebuyers. Because of this, you may have a more challenging time buying a house because of the high competition. 

You may not be able to find a truly move-in ready home: Based on your preferences and the houses currently on the market, you may not find a home that perfectly fits your needs without any renovation.

Pros and cons of fixer-upper homes

A fixer-upper can be a great option for some homebuyers. Below are some of the major pros and cons of fixer-upper homes. 

Pros

Better value: As mentioned previously, fixer-uppers are often sold at a lower price than turnkey homes. If you have the time and money to invest in a fixer-upper, you can get a large house in a great neighborhood for a fraction of the cost.

You can personalize your home: A fixer-upper allows you to tailor your home to your personal needs and style.

Lower property taxes: Since property taxes are calculated on a property’s original purchase price, you’ll likely pay less in taxes when buying a fixer-upper than if you were to buy a home that you can move into immediately. 

Investment opportunities: When done correctly, buying a fixer-upper and transforming it into a turnkey property can be a great investment opportunity for some homebuyers.

Cons

 

You may need temporary housing: You may not be able to live in your home during construction. If that’s the case, you’ll have to find a temporary housing solution like moving in with family or finding a short-term rental property – which can be expensive. If problems arise during the renovation process, who knows how long you’ll have to be in your temporary housing solution. 

Unknown problems: You never truly know what you’re getting yourself into. During demolition, you may find significant issues like structural flaws, asbestos, mold, etc., that can quickly eat away at your budget. 

High risk: Some mortgage lenders may see your home renovation as a risky investment. Because of this, they may choose not to finance your purchase, or you may have to use more expensive loan options

March 27, 2023

How Much Should I Spend on a House? 5 Tips to Help You Make a Decision

How Much Should I Spend on a House? 5 Tips to Help You Make a Decision

Once you’ve decided to buy a house, the next step is to decide how much you can realistically afford. To help you get started and make the process easier, here are five tips to follow when deciding how much you should spend on a house.

1. Understand what percentage of your income should go toward your mortgage

To calculate how much you can afford to pay for a mortgage each month, start by adding up your gross annual income from all sources, including salary, wages, tips, and commissions. If you have a spouse or partner whose income will also contribute to the mortgage, make sure to include that as well. Divide the total by 12 to get your monthly income, and use that figure as the basis for your mortgage calculations.

Once you’ve determined your monthly income, it’s time to follow the 28/36 rule. According to this rule, you should not allocate more than 28% of your monthly income to housing and no more than 36% to all outstanding debts, including your mortgage. By staying within these parameters, you will have sufficient funds for groceries, fuel, holidays, and saving for your future.

Example: Let’s say you and your spouse are looking to buy a house in Anaheim and have a combined monthly income of $6,000. Applying the 28/36 rule, you wouldn’t want to spend more than $1,680 on house related expenses ($6,000 x .28) and $2,160 on total debt ($6,000 x .36).

2. Use an affordability calculator to calculate how much house you can afford

By inputting information such as your location, annual income, down payment savings, and current monthly expenses, our home affordability calculator can provide you with an overview of what kind of house you can afford to purchase.

Adding advanced filters such as monthly homeowners’ insurance, mortgage interest rate, private mortgage insurance (when applicable), loan type, and the property tax rate can further refine your calculations. The more data you enter, the closer you will be to finding out the ideal amount of house you can afford.

3. Consider current mortgage rates

The mortgage interest rate is the amount charged by a lender in exchange for loaning money to a buyer. It is expressed as a yearly percentage of the total loan amount but is calculated into the monthly mortgage payment.

The mortgage rate offered is a major factor in determining if you can afford to buy a home. It is important to note that even a small difference in the rate, such as one basis point (one-hundredth of a percentage point), could mean the difference between a home being affordable or unaffordable. Be sure to shop around and speak to numerous lenders to find the best rate.

4. Factor in additional costs of homebuying

It’s not all about your home’s purchase price. Below are the common costs associated with buying a house.

The largest initial expense is the down payment. When purchasing a home, a down payment is the cash you put towards the purchase price. Among the various loans available, you can find down payment requirements ranging from 3-20% of the home’s purchase price. If your down payment is less than 20%, you will likely need to pay private mortgage insurance (PMI). This insurance is to protect the lender in the event of you defaulting on your mortgage payments. The cost of PMI is between 0.5% and 1% of your annual mortgage, and this amount is added to your monthly payment.

Remember to include closing costs. Closing costs typically consist of lender and escrow fees, insurance, and taxes—all of which are necessary to finalize the sale of the home and make it legally yours. Expect to pay between 3-6% of the home’s total purchase price for closing costs. If you are purchasing a $500,000 home in Austin, for example, you can expect to pay somewhere in the range of $15,000–$30,000 in closing costs.  These costs are due with your down payment when you close on the home.

5. Remember, being a homeowner comes with recurring expenses

When closing day is over, your responsibilities are not finished. Make sure to allocate enough funds in your budget to cover your monthly home expenses. Additionally, it is wise to save some money to make repairs and updates to your house in the future.

Utilities. If you have been renting in the past, you may not be familiar with the cost of utilities when owning a home. It can be difficult to estimate these expenses since some landlords cover sewer, water, and garbage in the rent. As the new homeowner, you should plan to pay for these utilities on top of your mortgage, as well as for internet, cable TV, natural gas, and electricity. 

Property taxes and insurance. When purchasing a home, at closing, you will be expected to pay an initial part of the property taxes and homeowners insurance. However, you will need to keep up with them as long as you own the house. Property taxes and homeowners insurance can vary depending on the worth of your home, its locality, and any changes that may arise annually.

Home maintenance and emergency repairs. As a homeowner, it is your responsibility to take action when something breaks down or is damaged. This could be due to a malfunctioning major appliance, a plumbing leak, a broken air conditioning system, or a storm causing damage like ripped off roof shingles or uprooted trees. Additionally, it is important to set aside money for tasks that need to be done periodically, like cleaning out gutters, carpets, and pressure-washing the deck. For a comprehensive list of home maintenance tasks, consult a home maintenance checklist.

How much should you spend on a house: the bottom line

Many factors influence how much you should spend on a house, and the answer is personal. However, becoming aware of the basic costs can help you determine if this is an opportune time to buy and even save you money when purchasing your new home.

 

Source: By Ryan Castillo https://www.redfin.com/blog/how-much-should-i-spend-on-a-house/

March 17, 2023

It’s All About Curb Appeal: The Simple Landscaping Task That Can Boost Your Home’s Value the Most

It’s All About Curb Appeal: The Simple Landscaping Task That Can Boost Your Home’s Value the Most

It’s All About Curb Appeal: The Simple Landscaping Task That Can Boost Your Home’s Value the Most

 By Clare Trapasso

 

March 13, 2023

What is a Listing Agreement?

You’re ready to sell your home. You found the perfect real estate agent, and you’re more prepared than ever to get your property on the market. But first, you’ll probably need to sign a listing agreement.

A listing agreement is a legally binding contract between the seller (you) and the real estate brokerage that helps you sell your home. It states that the seller is hiring the agent to handle their home sale and authorizes them to find a buyer. In exchange, the seller agrees to pay the agent a commission fee.

Only sellers need to sign a listing agreement. But potential buyers may need to sign a buyer’s agency agreement before an agent will represent them.

Signing any contract can be nerve-wracking, but it doesn’t have to be as intimidating as it sounds. Here’s what you need to know.

What to expect in a listing agreement

A real estate listing agreement lays out a framework of duties and expectations between you and your agent. They’re used almost everywhere, from homes in Miami, FL to Vancouver, BC, and in countless markets in between.

The agreement usually includes several essential details about the upcoming sale. You’ll want to look them over carefully to make sure everything checks out.

The listing agreement will include things like:

  • Contact information
  • Listing price
  • Agent fees
  • Agent duties
  • Property description
  • Items included in the property sale
  • Items that will be removed after closing
  • Agreement duration
  • Conflict resolution details
  • Protection periods
  • Type of agreement

Here’s what to expect from each one:

Contact information

This can include names, phone numbers, addresses, and other information for the seller and real estate broker or agent. Which contact details are included depends on how the agreement is written.

Listing price

This is the sales price your home will be listed at. You and your agent will talk about the listing price ahead of time, so make sure it matches your earlier conversations.

Agent fees

Real estate agent fees usually come as a percentage of the home’s final sale price. Total commissions tend to hover around 6%, split evenly between the buyer’s and seller’s realtors. The seller usually pays both.

For example, if a property sells for $250,000 and the agreed-upon commission is 6%, the seller would owe 3% to their agent ($7,500) and 3% to the buyer’s agent ($7,500). Real estate commissions are negotiable.

Agent duties

These are your expectations of the agent and what you give them permission to do. For example, if you want your agent to hold open houses or list your home on an MLS (multiple listing service), you’ll grant them formal permission in this section.

Understanding the agent’s responsibilities will give you a clear idea of what they will (and will not) do during the selling process.

Property description

Items included in the sale: Here you’ll find any personal property left behind after the property is sold. It often includes large appliances like washers, dryers, ovens, and refrigerators.

Items not included in the sale: Anything you’re taking with you or getting rid of before the buyer takes possession of the home.

Agreement duration

The amount of time the realtor will represent you before the agreement terminates. Most real estate listing agreements include a default duration, but this is negotiable.

Some agents prefer a longer term (six months), but you may decide a shorter period would be better (three months). An agent may be willing to change these details if you’d like them to.

Conflict resolution details

This legal-heavy part of the document lays out how any potential disputes are resolved between the property owner and agent. It will probably specify whether conflicts are settled using mediation (a third party helps the parties reach an agreement) or arbitration (a third party makes the decision).

Odds are you probably won’t have to deal with a formal dispute. But it always helps to understand this section, just in case you need it down the road.

Protection period

A protection period, sometimes called a tail period, helps protect the seller’s agent from losing their commission. It stays in effect for a certain amount of time after the listing agreement expires.

A protection period kicks in when the agent shows the house to someone during the listing agreement period, but that person doesn’t buy the home until after the listing agreement has expired. If there’s a protection period clause in the agreement, the seller would still pay the agent their full commission.

Type of agreement

Most agreements will specify one of four types of listings:

  1. Exclusive right-to-sell listing
  2. Exclusive agency listing
  3. Open listing
  4. Net listing

 

Read on to learn how each type changes your relationship with a real estate agent.

4 types of listing agreements

Listing agreements usually come in one of four types. Your agreement type is often listed at the top of the document itself.

These names can vary based on where you live, so read the listing agreement closely to understand the specific contract you have with your broker or agent.

  1. Exclusive right-to-sell listing agreement: The most common type of listing agreement. Exclusive right-to-sell listings give the listing agent and their brokerage exclusive rights to represent the seller’s home. The agent is entitled to their commission regardless of who sells the property, as long as the listing agreement is in effect.
  2. Exclusive agency listing agreement: This is similar to an exclusive right-to-sell listing. The only difference is that an exclusive agency listing gives the seller a way out of paying a commission: by selling the home themselves. If they successfully sell the property on their own, they don’t have to pay their agent.
  3. Open listing agreement: Think of an open listing as a “last agent standing” competition. This non-exclusive agreement allows the seller to use multiple real estate agents to sell their home. The agent who sells the home is the only one who gets a commission. It also gives sellers the power to try to sell the home themselves, even while other agents are trying to sell it too. If the property owner succeeds, the agents walk away empty-handed. For this reason, most real estate agents will be hesitant to sign an open listing agreement.
  4. Net listing agreement: With a net listing agreement, the seller agrees on an acceptable home sale price with their agent. If the agent sells the home for more than that price, they get to keep the proceeds. Net listings are uncommon, and actually illegal in some states.

5 easy things to double-check (and triple-check) before you sign a listing agreement

The entire listing agreement is important, but you can double-check five crucial details in a handful of seconds:

  1. The listing price
  2. The agreement’s expiration date
  3. The commission rate and how it’s divided with the buyer’s agent
  4. The type of listing agreement
  5. Your personal property that is or isn’t included with the transaction

 

These details are easy to verify, but they aren’t the only things you should look for in your listing agreement. Try to read it as many times as you need to completely understand what’s in it.

Listing agreement FAQs

When do you sign the listing agreement? 

You’ll sign the listing agreement after you and the agent have agreed on all the details of your real estate transaction. By signing, you’re stating that you’re ready for the agent to move forward with the steps needed to sell your home.

Do I have to sign the listing agreement?

Yes. The listing agreement is a legally binding document that outlines your preferences along with the agent’s duties. If you choose to sell your home yourself, you won’t need to sign a listing agreement since you’ll represent yourself.

Can I negotiate a listing agreement?

You can negotiate several parts of a listing agreement. These include:

  • Agent commission
  • Agent duties
  • List price
  • Agreement duration
  • Listing type

Most minor changes can be made right on the contract, but bigger changes might need to be added to an addendum at the end of the agreement.

How long does a listing agreement last?

In general, a listing agreement can last for any amount of time you and your agent agree on. Most listing agreements last three to six months.

Shorter time frames allow you to hire a new agent if you aren’t happy with your current agent. But if the duration is too short, an agent may not want to risk walking away without a commission.

If the agreement expires and you’re satisfied with your agent’s work, it’s easy to renew the contract.

How much does a listing agreement cost?

It usually doesn’t cost anything to sign the listing agreement itself. You probably won’t pay anything upfront, but the contract will specify the broker or agent’s commission fee. This fee is paid at closing once the title company confirms a clear title and the property is formally signed over to the buyer.

What if my home doesn’t sell?

If your home doesn’t sell within the time frame outlined in the listing agreement, you have two options:

  1. Renew the agreement and keep your current agent
  2. Hire a different agent

If you choose to find a new agent, review the termination section of the agreement to make sure you won’t owe any fees for the expenses incurred during the listing period.

Can I make changes to the listing agreement after I sign it?

Yes, but only if all parties agree. Most modifications to a listing agreement are done in writing, either directly on the agreement itself or through a listing agreement addendum (more information added to the end of the document).

I have questions about my specific listing agreement. Who should I talk to?

 

A licensed, local attorney is the most qualified person to answer your questions. They’ll be able to address your concerns and point out any potential issues in the contract.

Feb. 27, 2023

Is It Time to Sell Your Second Home?

During the pandemic, second homes became popular because of the rise in work-from-home flexibility. That’s because owning a second home, especially in the luxury market, allowed those homeowners to spend more time in their favorite places or with different home features. Keep in mind, a luxury home isn’t only defined by price. In a recent articleInvestopedia shares additional factors that push a home into this category: location, such as a home on the water or in a desirable city, and features, the things that make the home itself feel luxurious.

A recent report from the Institute for Luxury Home Marketing (ILHM) explains just how much remote work impacted the demand for second and luxury homes:

 

“The unprecedented ten-fold increase towards remote work since the pandemic is an historic development that will continue to fuel second home demand for many years to come.”

 

But what if you bought a second home that you no longer use? If you’re now shifting back into the office or are seeing your priorities and needs change, you may find you’re not utilizing your second home as much. If so, it may be time to sell it.

 

And if you own what’s considered a luxury home, buyer demand for it may be even greater. In another report, the Institute for Luxury Home Marketing explains:

 

“. . . the last few years have left their legacy for the luxury market. While it might only represent a small percentage of the overall real estate market, luxury homeownership’s influence is growing. Not only has the purchase of homes valued over $1 million (a figure considered by the National Association of Realtors to be a benchmark for luxury) tripled from 2.6% to 6.5% since 2018, but demand for multiple luxury properties has soared over the last two years.

 

This phenomenal increase has been driven by a growing affluent demographic who consider owning a luxury property a necessity in their asset portfolio. All indications are that this trend is here to stay, albeit that demand is set to return to a more sustainable level.”

 

If you own a luxury second home that isn’t being used as much anymore, now’s the time to sell. There are still buyers in the market who are looking for a home like yours today.

Bottom Line

 

Let’s connect to explore the benefits of selling your second home this year.

 

 

Feb. 13, 2023

Mortgage Rate Drop Creates a Homebuying Window, but How Long Will It Last?

Mortgage rates have dropped yet again—could this spell an opportunity for homebuyers?

The average interest rate for a 30-year fixed-rate home loan fell to 6.09% for the week ending Feb. 2, according to Freddie Mac. That’s down nearly a full percentage point from October’s 20-year high of 7.08%.

Meanwhile, the number of homes for sale is soaring, flying 71% higher for the week ending Jan. 28 compared with this same week a year earlier, according to a recent analysis by Realtor.com®.

This dip in mortgage rates, combined with plenty of homes on the market, adds up to a potential win for homebuyers.

“The less competitive market may have created chances for first-time homebuyers who are looking to become homeowners in 2023,” says Realtor.com® Chief Economist Danielle Hale in her analysis.

We’ll break down what the latest real estate statistics mean, and how homebuyers can use them to their advantage, in this latest installment of “How’s the Housing Market This Week?”

Inventory is booming and homes are lingering

Not only are there more homes on the market, but buyers can take their sweet time checking them out. In January, homes typically sat on the market for 75 days. And for the week ending Jan. 28, listings lingered 17 days longer compared with that same week a year earlier. That’s 27 weeks straight of time on the market increasing.

“This slower market pace is a welcome relief to shoppers, particularly first-time homebuyers who need more time to think through their buying options,” says Hale.

But what homebuyers don’t have is fresh listings, which were down for the week ending Jan. 28, by 9% from a year ago. The number of new properties hitting the market has been on the decline for 13 consecutive weeks now.

“As mortgage rates remain high, homeowners looking to sell and buy at the same time—who are likely to have a good rate on their current mortgage—may be pausing their moving plans to see if the market improves before putting their home up for sale,” explains Hale.

Home prices are normalizing

In January, home prices clocked in at a median of $400,000, down from June’s peak of $449,000. Yet home prices for the week ending Jan. 28 are still up by 7.7% compared with this same week a year earlier.

So even though prices are still growing annually, they’re tapering off from the double-digit growth that characterized much of 2022.

“The overall price growth in January continued its downward trend as we move into 2023, suggesting that the normalization continues in price growth,” notes Hale.

The affordability factor still looms

Despite the trifecta of positive news in the housing market—more homes for sale, lower mortgage rates, and stabilizing prices—the affordability challenge remains a persistent issue for many prospective homebuyers.

Plus, Hale predicts, “The Fed’s determination to fight inflation may keep mortgage rates remaining at high levels in the short term.”

But she also notes that rates could fall in the second half of the year, so home shoppers who aren’t able to afford a home now can take heart that 2023 looks bright overall.

“For buyers looking at a housing market with a rising number of home inventories and retreating prices, there is hope that 2023 will offer more opportunities,” says Hale.

Source: By Margaret Heidenry  https://www.realtor.com/news/trends/mortgage-rate-drop-creates-a-homebuying-window-but-how-long-will-it-last/

Posted in Market Updates