Author: Shannon

This is a question we hear frequently and the answer is: it depends.

On what?

On whether or not the appliance is considered personal property or a fixture.

What’s the difference between personal property and a fixtures?

The former includes anything that is not permanently affixed to the home and can be removed without damaging the structure. Examples of personal property include:

• Most refrigerators, washers and dryers
• A range that isn’t built in to the cabinetry
• Outdoor potted plants
• Furniture
• Tools
• Curtains and draperies

A fixture, on the other hand, is anything that is permanently attached to the property or structures on the property and to remove them would cause damage to the home. Fixtures include:

• A built-in microwave, dishwasher or range.
• Toilet
• Chandelier that is hardwired into the ceiling
• In-ground plants
• Ceiling fan
• Plantation shutters and blinds on the windows

What is and what is not a fixture confuses many homebuyers and sellers. There are several “tests” you can perform to separate personal property from fixtures.

• How is the item attached to the home? “Use of nails, bolts, cement or glue indicates permanent attachment,” according to Robert J. Bruss at com.
• The item was installed explicitly for the property. Wall-to-wall carpet is an example.

If in doubt about anything, however, ask your listing agent.

There is a way to get around this

You and the buyer can agree to include or exclude a fixture from the sale as long as the wishes are stated in the agreement and agreed to by both parties.

For instance, the seller wants to remove the dining room chandelier, as it belonged to his grandmother and he has a sentimental attachment to it. He can either remove and replace it before the home goes on the market (the smartest move) or try to get the buyer to agree to exclude it from his or her purchase of the home.

As mentioned earlier, the best course of action is to remove and replace any fixtures you want to take with you when you move.

Before you put your home on the market, take a tour of the interior and the exterior and remove anything that you don’t want to sell with the home that might be considered a fixture.

It is important to do this before buyers visit the home.

Consider each fixture carefully and, should you decide to take it with you, consider the cost to replace and install another. For example, expensive ceiling fans are often removed and replaced with another.

Another common fixture that sellers remove are certain landscape plants that they value. Since they’re fixtures when planted in the ground, get them dug up and into a pot before showing the home to buyers.

Again, removing and replacing items must be done before showing the home to potential buyers. If you have any doubts as to whether or not an item is a fixture, please ask. We’re happy to help.

If money wasn’t a part of the equation, what’s the one feature you absolutely have to have in your new home?

What is the one feature of your current home that you can’t wait to dump?

Finding the answers to these questions is the best place to start when creating a home wish list.

And, yes, you most certainly should make a list. Just as it isn’t wise to go grocery shopping without a list, shopping for a home without understanding your priorities is a waste of time and, down the line, you may be very sorry.

The problem families run into, as opposed to couples and singles, is that very often priorities differ. That’s when compromise comes into play.

Let’s take a look at the wish list, how to compile it and how to approach compromises.

The perks of having a home shopping wish list

As you’ve no doubt heard, the real estate market is moving fast. Knowing how to eliminate a particular home or to jump on one, is key.

The wish list will accomplish this and keep you on track and ready to make an offer when the right home comes along.

Another advantage of taking the time to compile a list is that it will help the family hammer out comprises before entering the market. Again, speed is king right now, so prioritizing what you can’t live without and making compromises before shopping will help immeasurably.

The wish list roundtable

Gather the family, however large or small, to brainstorm what each considers the perfect home.

Ask each person to make a list of what they don’t like about your current home. What will they be grateful to leave behind?

If anyone is having trouble with this, do an actual walk-through of the home, starting at the front door. You’d be surprised at the ‘aha moments’ you’ll encounter in this exercise.

Even small annoyances should go on the list as they will be whittled down during later steps in the process.

Next, ask each family member what aspects of your current home they will miss the most.

For instance, the backyard is the family gathering spot all summer long, something they look forward to all year. A suitable backyard would therefore be something they don’t want to forego in a new home.

Time to compromise

We suggest that you refine your lists by using a scale of one to five or one to 10 to rank each item.

Those scored with a one or two ranking are considered as “would-be-nice-to-have,” whereas something ranked nine or 10 are must-haves and therefore “deal-killers” if not present in the new home, according to Tara-Nicholle Nelson at businessinsider.com.

Everything ranking in between the two extremes is negotiable.

For example, your partner longs for a walk-in pantry, yet ranks it at three on the scale. The longing is obviously not deep and is something he or she may be willing to compromise on.

Naturally, what Mom and Dad need in a home will trump what small children think they need. But it’s important to get buy-in from all family members.

The biggest challenges come up when the two adults want wildly different things in a new home. This is where the prioritization method, mentioned previously, comes into play.

Although a wish list isn’t set in stone and may change along the way, it’s important to get clear on what each family member is willing to subject to compromise and what items are must-haves.

The national average time that a home spends on the market (as of January 2022) is 19 days, according to Anna Bahney at CNN.com.

Since no two homes and no two real estate markets are identical, the speed at which your home sells will vary, depending on a number of factors.

For instance, one recent study finds that the average home in the 50 largest housing markets sold within 39 days.

Taking a closer look at these metros, you’ll find that homes in one region sold within 9 days.

The simple answer to how long it will take to sell your home, then, is “it depends on where you live and market conditions in that area.” There are, however, other impacts to how long your home may remain on the market.

Let’s take a look at what else influences the speed of a home sale.

Your home’s architectural style

Some of the factors that determine how quickly your home will sell include those over which you have no control, such as its architectural style.

Ranch-style homes are the most popular in the U.S. right now. They typically sell quickly and for more than list price, according to a national real estate research platform.

Since many homebuyers are first-timers, small starter homes, in any architectural style, in decent neighborhoods, tend to sell the quickest.

Condition

It’s rather obvious that a home in decent condition will sell faster than a fixer, yet often we see homeowners unwilling to do the repairs required to sell a home quickly.

In these cases (an as-is sale), expect your home to sit on the market significantly longer than homes around you that are in more of a move-in condition.

We’re happy to share our knowledge of which repairs to undertake to speed up the sale of your property, so don’t hesitate to give us a call.

Amenities

A home’s amenities can include anything from a guard-gated entry, view, home theater or wine cooler to the types of appliances included in the sale.

The latter, specifically stainless steel appliances, help to sell a home 15 percent faster than homes with other types of appliances, according to an older realestate.com study. Add granite countertops to the equation and you’ve hit the exacta of home-sale speed.

Your real estate agent

While it may seem that all real estate agents are alike, it’s simply not true. There are listing agents and buyers’ agents and agents who do both.

The listing agent’s job requires experience in determining appropriate listing prices, massive marketing chops and the ability to multi-task while paying close attention to each detail.

Not all listing agents have the budget required to properly market a home. Hire one of those and your home will take longer than it should to sell.

Finally, how the home is priced will impact the number of days it spends on the market. Price it too high and it will linger far longer than if it’s priced attractively out of the gate.

Reach out to us to get an idea of your home’s current market value. It’s a service we provide free of charge and with no obligation.

When Americans consider whether to rent or buy a home, affordability is top-of-mind. Perceptions of affordability, however, don’t meet reality, according to a recent survey by Freddie Mac.

“More than 80% of renters now view renting as more affordable than homeownership,” according to the survey.

They’re wrong

“Owning the median-priced home is more affordable than the average rent on a three-bedroom home in 58% of the country,” says CNBC’s Michelle Fox, citing an ATTOM Data report from January.

The Freddie Mac survey finds that nearly 35% of renters reported that their rent payment consumes more than one-third of their income. Homeowners? Only 25% of them spend that much of their income on their mortgage.

Then why don’t they ditch the landlord and buy a home?

The quick answer to that one is, again, a perception that doesn’t jive with reality.

Nearly 90% of renters named the down payment and closing costs as major obstacles in their path to homeownership.

This perception is based, no doubt, on the many online articles erroneously claiming that a homebuyer needs 20% of the loan amount as a down payment.

While it’s financially better to have a large down payment, it is by no means a hard and fast rule set by lenders. Many offer mortgages with as little as 3.5 percent down and, believe it or not, there are zero-down options as well.

Still seems like too much money?

There are more than 2,000 down payment/closing cost assistance programs, nationwide. Some offer the help as a grant while others offer no-to-low-interest loans. Your lender can help you find the ideal program to fit your needs.

You’ll be glad you did it

“There is a reason so many Americans choose to develop their net worth through homeownership,” according to Matthew Desmond of the New York Times Magazine. “It is a proven wealth builder and savings compeller.”

When renters write their rent check every month, they’re helping their landlord to build wealth. The mortgage check that homeowners write each month? It goes toward building their own wealth.

And the proof is in the numbers. Not only do homeowners spend a smaller percentage of their income on housing each month, their net worth is, on average, $195,400 which is 36 times that of the average renter’s net worth ($5,400).

Yes, there are challenges for many renters who would like to buy a home. But they are far from insurmountable. You may be surprised what is possible with the right mortgage/real estate team to back you up.

In a perfect world, we could walk into a mortgage lender’s office and tell the folks there how much we think we can afford to pay for a home each month and they’d hand over the money to buy the home.

Ah, if only.

In reality, lenders have their own criteria for determining who they’ll lend money to and a system by which they make that decision.

Today we’ll look at how that decision is made so that you better understand what it takes to get a mortgage.

There’s this thing called a “DTI”

It’s a shortened version of “debt-to-income,” expressed as a ratio. All that paperwork you’re asked to submit with your loan application helps the lender determine exactly what yours is.

In other words, they’ll learn how much income you have left after paying your debts every month.

There are two types of DTIs, known as “front-end” and “back-end.”

The front-end ratio, should be no higher than 28 percent of your pre-tax income (31% for FHA-backed loans). Calculate yours:

• Add up your monthly expenses for housing. Examples include rent or mortgage, second mortgage payment, HOA fees and insurance (if not included in your mortgage payment).
• Take the sum of the above and divide it by your gross monthly income.
• Multiply that result by 100.

The back-end DTI ratio lets the lender know how much of your income is spent on debt. This figure should be no more than 36% of your income (43% for FHA loans).

Calculate your back-end ratio:

• Add up all of your monthly bill payments. This includes mortgage or rent payment, credit card minimum payments, student loan payments, personal loan payments, auto loan payments, alimony and child support payments. Don’t include utilities, groceries and other living expenses.
• Divide the sum by your monthly gross income.
• Multiply the result by 100

The lowest acceptable ratio isn’t set in stone, but you’ll most likely struggle to find a lender if yours is well under that number.

The good news is that you can raise your DTI by paying off debt or bringing in additional income.

How’s your credit score?

The amount of money you can borrow is based primarily on how risky it is to lend to you. The lender can glean this information from your credit score.

The dreaded FICO score – it has a lot to do with not only how much you can borrow for a house but for a car, a consumer loan and even has an impact on how much you will pay for insurance.

If your credit score is too low (typically below 580) you may not even qualify for even a government-insured loan. Borrowers with the best scores, 740 or higher, not only qualify more easily for a mortgage but get better interest rates as well.

We aren’t mortgage professionals but we’re happy to connect you with a trusted pro to answer any additional questions you may have. Feel free to reach out!

Whether you are buying or selling a home, the appraisal is the most critical aspect of the process.

No matter how carefully the seller’s agent researched the current market, no matter how much the buyer is willing to spend on the home, the fact remains that the lender relies solely on the appraiser’s estimate of value when deciding how much to lend to the borrower for the purchase.

A low appraisal, therefore, changes the whole game.

Let’s take a look at the process and three things you should know about it.

1. The Appraiser

The appraiser is a specialist hired by the buyer’s lender to determine a property’s current market value and they use a number of methods to figure it out.

First, they measure the property and then they will compare the measurements to the legal descriptions of the property held by the city or county.

They will also evaluate the neighborhood in which the home is located. They’ll use city or county sources, along with MLS statistics, to obtain information on recent sales in the area. They may draw land diagrams and they always write a written report for the lender and the buyer.

2. Why the Appraisal may be low

The market value determined by an experienced real estate agent typically matches, or comes close to, the appraiser’s estimation of value.

Low appraisals generally occur when the seller uses an inexperienced agent and they are also quite common when the home has received multiple offers. Bidding wars frequently cause a home to go into contract for more than it’s worth.

Then, there are homeowners who don’t take the agent’s advice and overprice the home. They feel vindicated if they receive a full price offer but that feeling is dashed when the appraiser agrees with the agent that the home isn’t worth as much as the buyer is willing to pay for it.

Other reasons for a discrepancy in the home’s evaluation include:

• A shift in the local economy that impacts the housing market. If a whole bunch of foreclosures hit the market quickly, for instance, surrounding home values decline.
• The agent and/or the homeowner may undervalue certain improvements made to the home. In this case, the appraisal may come in higher than expected.
• The appraiser may feel the home’s location, or problems, drag down its value more than the agent and homeowner did.

3. How to Deal with a low Appraisal

Let’s face it, a low appraisal is the pits. Buyers and sellers have only a few choices when faced with one.

“For the sale to go through, the buyer will need to either negotiate with the seller to take less for the home or make up the difference – also known as ‘the appraisal gap,’” according to Andrew Dehan at rocketmortgage.com. 

Taking less for the home is not an attractive option for most sellers. The truth is, you’ll be faced with this same dilemma with the next buyer, the next buyer and the one after that.

By the same token, buyers typically don’t want to fill that appraisal gap by paying more for a home than it’s worth.

Another solution to a low appraisal is for the buyer and seller can meet half way. The seller can lower the price and the buyer can bring in more cash.

Finally, the buyer can challenge the appraisal. This isn’t as easy as it may sound. The seller will need to get involved by verifying the accuracy of the report.

Appraisers are human and they sometimes get things wrong. Some of these include square footage, the number of bedrooms or bathrooms and the age of the home and these errors may be on the subject property or the comparables used by the appraiser.

Sometimes sellers have knowledge about the conditions of a particular sale in the neighborhood that the appraiser isn’t privy to. Perhaps your neighbor got a job offer in another state and to get there quickly, took a low offer.

At any rate, if you find inaccuracies you can challenge an appraisal and request a new one from the lender. The lender is under no obligation to agree with your request, but it’s certainly a question worth asking.

Questions about selling or buying a home? Feel free to contact us.

The latest housing market statistics show continued good news for home sellers. The nationwide median sale price in March increased 13.5% from March 2021 to a record-breaking $405,000 (Monthly Housing Trends Report).

During this time period, sellers, on average, received 1.4% over the asking price for their homes. In fact, nearly half of all sold homes were purchased for more than the asking price.

Despite this, homeowners, by and large, are still not putting their homes on the market. To add to a homebuyer’s woes, new home construction is at a standstill for many builders.

“… supply chain disruptions from the pandemic have meant garage doors are on back order, floor tiles keep getting discontinued mid-construction, and appliances are marooned aboard waylaid shipping vessels,” according to Alicia Wallace at KCRA.com.

There has rarely been such an ideal time to sell a home. You’ll have little competition and will enjoy record high prices.

But, it won’t last forever.

Mortgage rates are rising

The Fed warned us that interest rate hikes were coming and they came through on the promise. We can expect a total of “… seven quarter-of-a-percentage-point interest rate hikes this year,” according to Ann Sipher, (citing Chicago Federal Reserve President Charles Evans) at Reuters.com.

He adds a caveat, however: because the economy is facing uncertainty, he reserves the right to change his mind.

With every hike in mortgage rates, home buying becomes more expensive, so a number of homebuyers are knocked out of the market. When fewer people are fueling the demand for homes, prices soften.

We’re hearing, in fact, that some housing market experts are predicting that the housing market nationwide will cool as we near the end of 2022.

“The higher rates and prices go in 2022, … the more buyer pushback we should see next year,” Devyn Bachman with US housing industry research and consulting service John Burns predicts at fortune.com.

Are you willing to take a chance that you will get less for your home in the future than you will if you sell now?

“Better three hours too soon than a minute too late”

No, William Shakespeare wasn’t referring to the real estate market when he wrote those words in  1602 (The Merry Wives of Windsor). But the importance of not procrastinating certainly fits our discussion.

Trying to time the market – waiting on the sidelines for the right time to jump into the local housing market to sell your home – isn’t a wise move. Here’s why:

All markets are cyclical, including the housing market

You can watch all the economic indicators available and still be getting only part of the story.

And, since none of us has a crystal ball, the odds are good that your home is worth more now than it may be down the line

According to the researchers at CoreLogic, “In the fourth quarter of 2021, the average homeowner gained approximately $55,300 in equity during the past year.”

Think about this. That is a substantial rise in equity and it could help make the transition into your next home a lot more comfortable.

For instance, that equity will help you pay a larger down payment on your next home, which could mitigate the effects of a higher interest rate on your mortgage.

We’re happy to put you in touch with a trusted lender to help you crunch the numbers and to offer a complimentary, no-obligation analysis of your home’s current market value.

When you’re looking at homes, pay close attention to your first impressions: they can be very powerful. They’re also often incorrect. A carefully appointed house with good curb appeal and a compelling atmosphere can blind buyers to its flaws and potential problems.

How Important are First Impressions When Home Buying?

First impressions have a dramatic influence on home buyers. Many buyers decide whether or not they are interested in buying a home within minutes of seeing it from the street.

Both real estate agents and home sellers understand that choosing a home often comes down to first impressions. There are companies that do nothing other than “”stage”” homes to lure buyers.

It’s important to remember this when looking at homes. The homeowner who repaints the exterior of a house to increase curb appeal understands first impressions. So too does the staging company that comes in to rearrange furniture and add accessories to a room.

The goal is to make people viewing the house feel welcome and, well, at home. Of course, the furniture and accessories that make up the bulk of your first impressions won’t be part of the house sale in most cases- and they may distract you from flaws that the house may have.

First Impressions and Home Buying Pitfalls

There’s nothing wrong with sellers trying to make their homes as attractive to buyers as possible. The danger is that your first impression of a house could influence your decision to buy or not.

Curb appeal, or how attractive a home looks from the street, is a good example. The home may have a fresh coat of paint and planters full of flowers by the front door, both of which improve curb appeal. Both features, however, really aren’t that important when choosing a home.

Sure, fresh paint is nice, but it doesn’t influence a house’s structural integrity or floor plan, both of which are more important considerations than the exterior paint. Potted plants are a lovely touch, but easy to replace, and not as important as well-established flower beds and other permanent landscaping features.

Similar dangers occur inside the house. People tend to take in the overall “feel” of a room when they should be looking at the room itself. Furniture and decorations can distract from checking the level of the floor or the size of the room. A finished family room in a basement is a bonus, but could mask cracks in the foundation.

In other words, when looking at homes be aware that, as with people, first impressions are important, but can also be deceiving. Before you choose your home be sure that you’re looking past the curb appeal and décor.

Finally, don’t skip the home inspection and feel free to ask your real estate agent for an opinion on the home. We’re here to help.