Buyer Market or Sellers Market?

Question: I was talking to my neighbor and he said he isn’t selling yet because it’s a Buyers’ Market. What exactly determines a Buyers or Sellers’ Market?

Answer:  During a Sellers market, homes sell quickly and sellers have a lot of pricing power. As a result, prices rise more rapidly than at other times. During buyers markets, homes may sit on the market for a while before selling, so sellers become more flexible and may even drop their prices. The market is determined by supply and demand.

In real estate, the relationship between supply and demand is calculated as “available inventory”. At the current sales price, how long would it take to sell the total number of houses available on the market? That is how the real estate industry measures inventory.

Longer inventory times are associated with buyers markets.  Shorter inventory periods are associated with sellers markets. At this time, many local markets are still in a buyers market, but not all. For example, a town that has high inventories and lower demand may still have homes that defy the usual formula for a buyers market. These homes that are priced right and are beautiful will usually sell rather quickly compared to homes that are overpriced or lack that wow factor.

Real estate is part of a business cycle and we all know that investment returns are cyclical. Real estate is just like any other investment, it has its ups and downs.

Here is some good advice: Give your home that wow factor so you can smile and enjoy it while living in it, and then, when you are ready to sell, that same wow factor will attract more buyers at a price that will make you smile even more!

Question: There is a home down the street that is identical to mine that just sold for $9,000 more than my current list price. I am furious at my Broker and want to raise my price. I can see the home down the block has more updates, but my home is still very nice. I have included both addresses for your review. Please let me know your opinion.

Answer: Thank you for including both addresses so we can better understand your position in the market. After reviewing the information, it is pretty clear that the home down the block sold for the price it did, because of its condition.                     This home was completely updated and beautiful. Although your home appears to be very nice, you lack the updates that would yield top dollar in the market. The homeowner down the block spent thousands of dollars in updates and is entitled to top dollar. Beautiful, updated homes are in high demand and will have a higher selling price. This is the basic economics of supply and demand: High demand, higher prices.                                                                                                    We are not sure why you feel your home is worth as much as your neighbor’s home? Buyers do not care that you feel you have a nice home. They have compared homes and have decided that the other home is the better value. If your home is not selling, we would suggest that you lower the price or add updates that would yield a higher price. This should be discussed with your Broker.

It is unfortunate that you did not add these updates earlier. Not only would you have been able to enjoy these improvements, but you probably would’ve sold your home by now for a higher price than you are currently listed for.

In a Rush to Buy a Home before My Wedding Day!

Question: I'm a first time home buyer. I'm 18 years old and getting married in April to a man who is 23 years old. He has good credit but I'm afraid we won't be able to get a mortgage in time for the wedding.

He has two car loans already and his jobs aren't really that great. If you put all three of his jobs together he makes around six to seven hundred dollars a week.
Where do you think would be the best place for us to get a loan. Where is the first place we should try?

Answer: You should be congratulated for thinking ahead and your future husband should be recognized for his willingness to work.

It's not necessary to have a mortgage in place by the time you're married. In fact, it may not be a good choice. The reason is that you, at age 18, need some time to either continue your education or get a job. The first choice will increase your potential earnings while the second will help you generate dollars that can be used to build savings and pay off those pesky car loans.

Before buying a home you need to consider your local market and your preferences. Are home prices rising or falling? Is the job base growing? Is the population increasing? How will you get to work? Where will you be living in five years?

You can speak with several lenders regarding loan programs that might work for you. Once you can qualify for a program you will know how much house you can afford. Then speak with a local broker regarding properties now available that would meet your needs.

As to a new home by your wedding day, allow me to suggest that you are best served carefully examining your options and waiting until the right property is available. If that happens by your wedding day that's great; if not, that's okay too. The purchase of a home is a long-term investment, a process which should not be rushed.

 

Interest Rates are Great...Here's Why

A $200,000 fixed rate loan for 30 years at 4.5% yields a $1,013 monthly principal & interest payment.
Take this same loan with a 5.5% interest rate and the monthly payment increases to $1,136.
Not only is the monthly payment $123 per month higher, the additional interest paid over the life of the loan would be huge!
If you are thinking about buying, now is definitely the time.

In our opinion, home prices are on their way up, especially in Indiana. Take advantage of these interest rates and lower home prices. Nothing this good lasts forever.

New Home Buyer? Beware of this Mistake

After finally finding that "dream home," what buyer isn't tempted to stretch as far as possible -- and drain all available savings -- just to make the numbers work?  It's one of the big homebuyer mistakes.

Often, buyers fall in love with a property, and they try to rationalize the decision. You need to be disciplined about it.

Too often, buyers set a price range and then fall in love with something that costs more. So they figure they'll borrow the difference.

But you need a reserve fund -- something you hold back to address unexpected problems, like the refrigerator that quits in mid-July, or the "like-new" water heater that dies the day after you move in. Or the realization -- after seeing the neighbors sunbathing once too often -- that you need a privacy fence, quickly.

In most homeownership situations, there are going to be some unforeseen circumstances. So you want to make sure you have some funds behind you.

My Agent isn't Showing My Home

Question: I signed a contract to sell my house. My problem is that I have yet to see my agent with anyone at my door. We have other agents showing it. I don’t have a problem with that because we wouldn’t have any showings if it weren’t for them. When I asked my agent why he never showed my house, the response was it is a conflict of interest. Huh? I’m the one who signed the contract. Who are they working for?  

Answer:  Let’s take your concerns step by step. First, there are thousands of agents out there looking for homes for their buyers. So, obviously there is a much greater chance that other agents will show your home more than your agent. Keep in mind that 94 % of the buyers search for homes on the Internet. These buyers, if they are interested in your home, will most likely call their agent (not your agent) to show it to them.                                                                                                                                                               I suggest you review your agents marketing plan to ensure you are visible on all the popular internet home search sites, and that you are happy with the home remarks and pictures.

Second, not sure why your agent feels there is a conflict of interest in showing your home. The goal is to get your home sold. Is it possible he felt uncomfortable with this dual agency situation and had another agent from his office show your home? You need to discuss this with him. It doesn’t make sense that your agent is putting off buyers because of the “conflict of interest.” Your agent does not get paid if your home doesn’t sell.

You are now immersed in one of the biggest changes in your life….selling and moving! Communicate your concerns to your agent. We stress this with our clients. If our clients have a concern, we want to know about it!

Call your agent for a meeting to discuss his marketing plan.                                                  George Bernard Shaw once said: “The single biggest problem with communication, is the illusion that it has taken place.”

It also sounds like you are unhappy with the number of showings on your home. If you are getting a lot of internet views of your home and they are not equating to actual showings, then during this meeting with your agent, you need to review your PRICE!

4 Money Facts you need to know before you buy a home:

1. Lenders qualify buyers based on their incomes and debt-to-income ratios without considering how much the borrowers spend on items such as transportation, savings, food and other necessities.

"A lot of first-time buyers are optimistic about the future and excited about buying a home, so they borrow the absolute maximum they can afford instead of allowing themselves wiggle room for a partial loss of income or for future expenses such as children," Harrison says.

Financial experts recommend that consumers decide how much they want to spend each month on housing before meeting with a lender.

"Every buyer should create their own budget and know their limits," says Stephen Adamo, president of Weichert Financial Services.
Adamo says many first-time homebuyers experience a sizable change in their housing payments. Some new owners may go from $500 per month in rent to a monthly mortgage payment of $2,000, he says.



2. Meeting with a lender for a buyer consultation and prequalification for a mortgage should be the first step toward homeownership. Yet many first-time homebuyers wait until they are ready to start house hunting before contacting a lender.

"It's never too early to set up a free buyer consultation with a lender," Adamo says. "Every buyer needs to get prequalified early enough in the process so that they can make some changes if they need to or correct errors on their credit report."

Some buyers may need to spend up to a year saving more money, increasing their incomes or cleaning up their credit before making an offer on a home.

A buyer consultation should include creating long-term financial goals and strategies for buying property, Adamo says.



3. While most consumers know it's important to have a high credit score, not everyone understands how costly a low score can be.

"All mortgage lending is done with a tier of interest rates and terms based on consumer credit scores," Harrison says.

Borrowers with credit scores of 740 and above tend to get the lowest rates and fees, saving potentially thousands of dollars. Mortgage-related fees usually are a little higher for credit scores from 720 to 739, and they go up for every 20-point downward increment in credit scores. Interest rates can go up, too. Consumers should learn about credit scores the minute they start working, Harrison says.

Even after a mortgage approval, consumers must avoid applying for new credit or taking on new debt, Adamo says, because a second credit check is often required before settlement.



4. First-time homebuyers today typically opt for a 30-year fixed-rate mortgage.

But Harrison says home loan alternatives to a 30-year fixed sometimes make more sense. For example, buyers who are certain their companies will relocate them within five years may find a 5/1 adjustable-rate mortgage "could be a much better mortgage," he says.

"There's no reason to pay a premium for a product you don't need like a 30-year loan," Harrison says.

Homebuyers eager to build equity in their homes or who are older and want to live mortgage-free in retirement should consider a 15-year fixed-rate loan or, if they can afford it, even a 10-year mortgage to reach their goals.