Author: Shannon

So, you’ve heard that home prices are falling, the inventory of available homes is beginning to grow and, if you look closely, you’ll see a crack beginning to form in that once-fiery sellers’ market.

Whereas in the recent past, homebuyers were a dime a dozen, you may just be on the precipice of being an in-demand commodity and, with that status, comes power.

It’s already begun in the new-home market, with builders and developers offering buyers (and their real estate agents) attractive incentives. The resale market is expected to catch up, so let’s get you prepared to get the best deal possible when you buy a house.

1. Why are they selling?

There are a number of reasons people sell their homes and a seller’s reason, or motivation as it’s known in the real estate industry, is powerful information in the hands of the buyer.

It’s not easy to learn a seller’s motivation, but it’s not impossible either. The key is to be face-to-face with the seller, a situation often discouraged by real estate agents.

If you or your agent can arrange a meeting, however, (perhaps during a tour of the home), strike up a conversation. “How long have you lived here?” can lead to an opening for the “and why are you moving, if you don’t mind my asking?”

If you can’t meet with the owner in person, try asking the neighbors. Take a weekend walk through the neighborhood, stopping to chat with folks working on their cars, in their yards or playing with their kids.

Let them know you’re thinking of buying the neighbor’s home and ask if they’d mind answering some questions about the neighborhood. During the conversation, ask if they know why their neighbor is selling. You’d be surprised how much neighbors know about one another.

If the homeowner is selling because of a divorce or job relocation they may be in a bit of a hurry to sell. This is information we can use in structuring your offer (offering a quick close, for instance) to soften the blow of a lower price.

2. How long has the home been on the market?

This is information that we can get for you from our MLS. Why is this information important?

Recently listed homes are still in their “honeymoon” phase with buyers and agents. There is a lot of activity surrounding a new-to-the market home so the seller has very little motivation to accept a low offer.

As the home sits on the market with few offers, the seller may become more desperate to sell and, thus, more likely to entertain a lower sales price.

We can also let you know the average number of days homes in the neighborhood remain on the market. If the home you have your eye on has been listed for longer than that, you may be dealing with a very motivated seller, putting you in a strong negotiating position.

3. Study the pricing history

We’re happy to look up the pricing history of homes you’re interested in. From the time the home is first listed, the MLS will show us how many price changes have occurred, whether they were price hikes or reductions.

A seller who has reduced the home’s price more than once is a seller who needs to get the home sold.

4. Soften the blow of a low-ball offer

Ask for everything in the offer to purchase. That’s right, EVERYTHING. Even if you don’t want their furniture and appliances, ask for them.

Ask for the drapes, the barbecue, everything you can think of to put the sellers in overload. You want to divert their attention away from the low price you are offering and toward all their “stuff.”

Once the bartering begins all of their focus will be on trying to hang on to their backyard furniture, not that you’ve offered several thousand dollars less for the home than what they are asking.

Compromise with them; you didn’t really want all those items anyway. Keep your eye on what it is that you really want: your price.

No, it doesn’t always work, but in the end, you might get that price and maybe even a few appliances as well.

One more tip about what to include in the purchase offer: make sure you don’t give the sellers too much time to think about it. A 24-hour acceptance request is quite common and a strategic move in your position as a bargain hunter.

5. Get help with your closing costs

Getting the best deal on a home doesn’t always mean getting the home for a discounted price. If the seller won’t budge on price and you truly want the home, we’ll find ways for you to save money in other parts of the transaction.

One of the easiest is to negotiate closing costs by asking the seller to pay them. Sure, some will balk at this. Others might raise the sales price of the home to absorb the costs.

The danger in the latter scenario is that the new price may exceed market value and not meet the bank’s appraisal amount.

Put yourself in the seller’s shoes. The sale of a home is often an emotional event. The right real estate agent in your corner will be able to negotiate on your behalf while appealing to the sellers’ emotions.

It may seem like an understatement, but life completely changes when you have kids. They’re so tiny, yet so powerful that they impact our lives more than anything that came before.

Years ago, you may have lived in an apartment, never thinking about buying a house. With kids, that changes, doesn’t it? They need room to grow, to play and to build memories.

So, Mom and Dad, today we take a look at what constitutes a “kid-friendly” neighborhood.

Safety is at the top of the list

Parents’ concerns about their child’s safety are reflected in the popularity of the cul-de-sac.

“From the beginning, builders noted that  . . . they prevented strange cars from speeding by on their way to somewhere else. Ads for cul-de-sacs often pictured children riding bikes and tricycles in the street,” claims NPR’s John Nielsen.

He goes on to state the irony in those statements because “cul-de-sac communities turn out to have some of the highest rates of traffic accidents involving young children.”

Rather than a home on a cul-de-sac, consider a home on a street located away from a major thoroughfare and one that lacks an exit that allows drivers to use the area as a shortcut.

But safety from vehicles isn’t the only concern when we have kids; there are human predators to consider as well. We aren’t allowed to address that concern directly, but we can point you to the local police station for crime rates.

And, the FBI’s Sex Offender Registry is online, so you can learn if there is a dangerous predator living in a neighborhood you have your eye on. The U.S. Department of Justice also offers an online database.

Are there opportunities to socialize?

Are there other children living in the neighborhood? Kids need to socialize and use their imagination in play with their peers.

If there are few or no other children in a neighborhood, your child’s opportunities for this critical developmental milestone are curtailed.

Sure, they can socialize and play at school, but, let’s face it, a neighborhood without other kids to play with just isn’t kid-friendly.

You’ll know there are other children in a neighborhood by checking out the other homes. Look for basketball hoops, bikes and other toys that children sometimes leave outdoors.

The best time to tour a neighborhood is on weekends or just when school lets out on a weekday.

Kid-friendly amenities nearby

A neighborhood within walking distance to a park is ideal for children, and their parents.

Parks are handy places for socializing, whether it’s parent-on-parent or kid-on-kid. Barbecues, birthday parties and other get-togethers at the local park are signs of a kid-friendly neighborhood.

What recreation you enjoy as a family? Bike rides? Look for bike paths. Swimming? A community pool nearby will be handy.

Does a kid-friendly neighborhood have to be in the suburbs?

You’ll find fabulous, vibrant neighborhoods in urban centers, many with a surprisingly suburban vibe. In fact, many parents prefer city life for their children.

“I grew up in a small apartment sharing a room with my sister so it never fazed me to live in a small space and not have a backyard—the city is our backyard,” mom of three Amy tells Michelle Cohen at 6sqft.com.

If many of your family’s favorite activities are located downtown, by all means, search for a kid-friendly neighborhood nearby.

No neighborhood offers everything a family wants but when considering whether the one you have your eye on is kid-friendly you can’t go wrong if it’s safe, walkable and has lots of playmates for your children.

Funny thing about houses – we often outgrow them. Especially in the throes of family-building, pretty soon a house is like our kids’ shoes – it gets tighter and tighter until it’s time for a new one.

The new year promises to bring a different real estate market than we’ve grown accustomed to. Hopefully, multiple offers on homes are a thing of the past and homebuyers can slow down and take their pick from among several homes, priced attractively.

If you’re considering moving up, we think 2019, especially the early part, before the Feds hike interest rates again, will be the ideal time to sell that cramped home and set your family free in a larger space.

Naturally there is more to moving up than merely needing to. So, let’s take a look at some of the factors you’ll want to consider.

Consider the financial aspects

“Bigger,” when it comes to homes at least, generally means “more expensive.” That in and of itself shouldn’t scare you away from your hunt for more room.

The equity you’ve built up in your current home may surprise you. Consider using it to make a larger-than-20 percent down payment on the new home. This may just bring your monthly mortgage payments close to what you’re paying now.

But, as we both know, there’s more to homeownership than a house payment.

• Larger homes cost more to heat and cool.
• Your property taxes and homeowner insurance may be higher
• More space comes with the cost of more money spent on home maintenance.

If it looks like a larger home may negatively impact your budget, take a look at where you can cut expenses. Put your budget on paper (or created digitally) to make it easier to scrutinize every penny you spend.

Good credit will help you afford the larger home

Depending on when you bought your current home you may find that the lending landscape has changed. Rates are still relatively low, although they aren’t expected to remain this way for long.

While lending standards tightened significantly in the wake of the housing implosion, over the past few years they’ve become more relaxed.

Credit scores, however, are still relied on when it comes to the rates offered to homebuyers.

Order your credit reports from all three major credit reporting agencies. By law, every American is entitled to one free credit report every 12 months from AnnualCreditReport.com.

Because mistakes are common, financial experts agree that even those of us who aren’t planning on buying on credit should check their reports annually.

Check yours for discrepancies in your name, address, date of birth and other personal information. Then, go over each account, looking for errors. ConsumerFinance.gov has a walkthrough of what to look for when checking your report.

If you find mistakes, file a dispute with the credit reporting company. Learn how to do so at USA.gov.

There’s more to financing than a credit score

Lenders use what is known as a DTI, short for debt-to-income ratio when calculating how much you can safely pay each month for a house payment.

You can determine your DTI by adding up how much you pay in debt payments every month. This includes items such as your car payment, the minimum amount due on your credit cards each month and all other recurring monthly debt payments.

Take the sum of these payments and divide it by your monthly gross income and then multiply that result by 100.

The last step expresses your DTI as a percent, which is what lenders look at, and, as a rule of thumb, it should never exceed 43 percent, although some experts say that the ideal DTI is no higher than 36 percent.

If yours does, consider ways to lower it. These include raising your income (taking on a part-time job) or paying down debt.

Learn more about the importance of your debt-to-income ratio at the U.S. government’s Consumer Financial Protection Bureau website.

Your current home

Lucky you if the home is paid off because you’ll have lots of equity to spend on the new home. It is estimated that 63 percent of U.S. homeowners have a mortgage payment, however, according to Lending Tree.

We’ve come a long way since the housing bubble burst. In fact, “homeowners gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017,” according to CoreLogic, a property analytics provider.

Most economists expect 2018’s numbers to be even more stunning, but we’ll have to wait until spring for study conclusions to be published. The bottom line is that you may be pleasantly surprised by just how big of a nest egg you’re sitting on.

As we move into 2019, we’re facing a changing real estate market. Home prices have slowed their previously skyward trajectory, the tight inventory of homes for sale is easing and the year looks like it will be far kinder to buyers as we move forward.

Upsize your home before the Feds raise rates again and you’ll have made one of the wisest financial moves of your lifetime.

Speaking of which, we aren’t tax or financial experts, so consult with yours about upsizing.

When you want to sell your home, don’t bother asking Alexa because when we asked Google how to find a listing agent it gave us more than 6.5 million results.

Read some of the results and you’ll walk away only more confused. It seems like every real estate agent on the planet, even those who deal primarily with buyers, is an “expert” when it comes to helping homeowners sell their homes.

What they fail to let you know is that a listing agent’s primary duty is to market his or her client’s home.

So, while it’s important to feel comfortable with the agent you choose, you aren’t looking for a friendship. You are looking for an ace marketer who gets results.

We’ve learned that good listing agents share three qualities.

1. Good listing agents are exceptional communicators

The biggest complaint about real estate agents is that most are unresponsive. Calls, texts and emails go un-returned, or agents take forever to get back to their clients.

Here’s how we look at this: that period of time that your home is on the market is stressful, especially if this is the first time you’ve sold a home.

The last thing you need is to be cast adrift, with no support from the expert you hired to guide you through the process. That’s just downright wrong.

It’s too bad so many real estate agents are unable to put themselves in their clients’ shoes. So, look for an agent who does. Seek out a listing agent who responds quickly to your calls and is able to effectively communicate the sometimes-complicated aspects of the home-selling process.

2. The best real estate listing agents have abundant experience in pricing homes like yours

The homeowner has the final say in how much a home is listed for and, naturally, buyers have the final say in how much the home eventually sells for.

The listing agent, however, analyzes the market to determine a home’s current market value and makes a pricing suggestion to the homeowner.

This is a critical decision for the homeowner. Price the home too high and there will be little interest in it. Price it too low and you’ll leave money on the table.

Beware of the listing agent whose price suggestion is significantly higher than expected or higher than other agents have recommended.

It’s an old trick, performed by dishonest real estate agents, and it’s known as “buying the listing.”

What happens is that the homeowner falls for the ruse, lists the home too high and when buyers are uninterested in viewing the overpriced home, the listing agent then pesters the homeowner for price reductions.

Thankfully, this isn’t a common practice, but it does happen.

3. The best listing agent is a marketing master

Marketing masters laugh at the lazy real estate agents who employ the “list and pray” strategy. They’ll do the basics, like installing a sign at their listings, affixing a lock box to the door and, of course, taking five minutes to add a cursory listing in the Multiple Listing Service database.

Then, they’ll sit back and pray that another local agent brings in a buyer and sells the home.

Pretty pathetic, isn’t it? And, in some real estate markets, it may even work. But, why take a chance?

Marketing requires knowledge of the ideal potential buyer for your home and then laser-targeting that group. It often requires a multi-pronged approach, including a robust online plan.

It’s the most important facet of a listing agent’s job, which is why we take our marketing plan so seriously.

As you interview listing agents for the job of marketing your home, pay close attention to how they market themselves, both online and off. Ask for information on how each agent plans to market your home.

Call the agents to find out how responsive they are.

Avoid those who don’t return your calls, can’t clearly answer all your questions and those who offer amateur marketing examples.

This is an important job you’re interviewing for – take your time and hire smart.

The process of buying your first home involves a steep learning curve. From how to get started to understanding the roles of the various players in the process, it can be confusing.

Probably the most misunderstood aspect of the home buying process is the mortgage. Sadly, it’s also the most important. We see far too many real estate consumers who, in their haste to get it over with and get on with house hunting, don’t pay attention to exactly how much the loan will cost.

We don’t want this to happen to you, so let’s take a look at how to avoid overpaying for your home loan.

1: Dig deeper than the loan’s interest rate

When comparing home loans, most inexperienced homebuyers use the interest rate as a benchmark. Why not? It’s what the media focuses on and what lenders advertise.

But which interest rate are they talking about? There are two that you need to consider when shopping for a loan.

The advertised rate is typically what you’ll see first, with the APR, or annual percentage rate, located in the fine print. Because it represents the total cost of the loan, including points, fees and other loan costs, it’s the APR that you want to compare across loan offers.

Learn more about this by visiting the Consumer Financial Protection Bureau’s website.

What are points?

As you learn more about the mortgage process you’ll hear a lot about “points.” There are two types that you need to pay attention to: origination and discount points.

Origination points are often referred to as “origination fees” and it’s what the lender charges for its services. These are negotiable and represent yet another way to save money on your home loan.

Discount points, on the other hand, offer a way to “buy down” your interest rate. Each point is worth 1 percent of the loan amount. For example, for a $200,000 mortgage, one discount point equals $2,000.

And, each point that you purchase will lower your rate “from one-eighth to one-quarter of a percentage point,” according to Dona DeZube at interest.com.

When comparing loans, ensure that you are comparing “offers that include points to those that don’t and determine how much you’re really saving by paying thousands of extra dollars up front,” cautions DeZube.

To simplify the process, request that each lender put the loan’s points in dollars instead of percentages, according to the Federal Trade Commission. Not only does this help you compare loans, but it helps you understand the total cost.

2: Lock your Rate

Just as a loan pre-approval isn’t binding on the lender, neither is the interest rate offered. If you like the rate, lock it in. Rate locks typically last for 30 days but the costs depend on the number of days.

When comparing loans, ensure that you compare quotes with the same rate lock period.

Should you decide to lock your rate, ensure that it clearly states not only the length of the lock period, but the interest rate and number of points as well.

Your mortgage payment will likely become the largest check you write each month, so take all the time you need to ensure that you’re saving the most money possible.