Five Common Mistakes of Home Buyers


Five Common Mistakes of Home Buyers

Buying a home can be a tedious proposition as anyone who has bought a home knows.  But there are some steps you can take to reduce the tension and help you get into the home you truly want with a lot less stress.

1.   The first error that many home buyers commit  is that they do not “shop” for the real estate agent that will best suite their needs.  Having the correct agent is the first critical step you should make when looking to buy – or sell for that matter.  Your agent can be the catalyst between the sellers (or buyers), the mortgage agent, home inspector, and on and on.  Who you pick for your agent depends a lot on what you need and how comfortable you are with this transaction.  All too often people pick someone who knows someone, and they may not be the best choice for them.

I always, and I mean always, advise clients to have their own REALTOR represent them.  Many times clients will look at a home during an open house and start talking with the agent on duty there.  That agent on duty represents the seller.  It is in your best interest to have your own agent who will represent you.  Don’t get me wrong, the agent representing the seller will most likely do a good job representing both parties, but the critical test will be at the closing.  Does that agent sit with you on your side of the table or do they sit with the seller?

In the majority of cases, there is no cost to the buyer to have their own representative.  It is my strongest advice to buyers.  Also, if you have an agent agreement, always tell any other agent you come into contact with.  It helps keep the matters clear.

2.   Shop around for a mortgage.  Not all mortgage companies are the same and it is important for such a large investment that you get the right mortgage.  Ask questions of any fees or issues you may not understand.  Again, the mortgage representative should welcome any questions you may have.  If they do not seem to want to answer your questions, find a different mortgage broker, it’s that simple.

Most of the larger mortgage companies will welcome any questions you may have.  Don’t be afraid to ask questions.

3,   Right now, it is a buyers market, but in time that will change.  There are many homes to choose from and sellers will most likely be happy to receive any reasonable offer.  However, it is important that once you have made a decision to make an offer on a house, to move quickly.  The saying in real estate is “Remember, the house you looked at today, and wanted to think about until tomorrow, may be the house someone looked at yesterday, and wanted to think about until today.”   You do not want to get into a bidding war with another potential buyer.

4.   The age-old battle is that the buyer wants the lowest price possible while the seller wants the highest price possible.  Many times a buyer will come in with an offer that is very low.  The seller, who can counter offer, accept or reject the offer will many times either reject the offer outright or dig in their heels and not want to budge on the price of the home.  Getting either side to start giving in can be a nightmare for a real estate agent.

If you are making an offer on a home, talk to your agent about the reasonableness of the offer.  Remember, the seller wants to sell, and the buyer wants to buy.  Getting them on the same page sometimes takes the patience of a saint.

There is nothing wrong with offering a low bid.  If that is necessary to make the deal happen, that’s fine.  There may be other areas that a buyer can compromise to make the deal more palatable to the sellers, such as a longer period before closing to enable them to move out or to find their next home.

5.   The last item that I want to mention is to always consider re-sale.  On average, homeowners stay in their homes from 4 to 7 years before relocating.  First time home buyers, on average, stay in their home for 4 years.  Those whose career requires relocations may move every few years.

Whether it is the schools or proximity to something of interest, resale should always be considered when buying a home.  Researching the area to learn what is going on can be a big plus.  If you learn that the local planning commission in entertaining the idea of a dump site, find out more information, it can affect your resale.

I have mentioned in many of my postings, your REALTOR can be a big help in sorting out these issues.  Talk to a REALTOR to get the facts on what is going on in the market.

As always, if I can help with any of your real estate needs, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland

Advertisements

FSBO – For Sale By Owner


One of the hottest topics in real estate is whether to retain the services of a real estate agent or to put your home on the market as an FSBO – for sale by owner.  Just as there are any number of reasons why people may be selling their house, there are just as many reasons why someone would try to sell their house themselves.

One reason of course is that the seller is not obligated to pay a commission to a real estate agent.  In most markets that can be anywhere from 5% – 7% on the sale price of the home.  A few years ago 8% -9% was acceptable.  That is not the case today.  If an agent has a client whom he believes may be interested in buying a FSBO property, the agent may approach the seller and ask if they would entertain the idea of paying the buyer agents commission.  Many times the FSBO seller will be happy to do that.  If not, the agent can still present the property to the buyer, but in all liklihood, the buyer would be responsible for the agents commission.  That alone will many times knock the buyer out of the market.  Of course by not being willing to pay a commission to an agent, you limit the amount of traffic or prospective buyers that you may encounter.

There are many times when a FSBO makes sense and I would encourage a seller to look at that as an option.  For example: if you are selling your property to a relative or someone you know, it may simply be a question of dotting the “i”s and crossing the “t”s and processing the paper work.  But even a FSBO (not including relatives) need to comply with certain legal requirements such as a property disclosure statement.

Recently I talked to someone who was telling me that they had sold their house by themselves (this was several years ago when the market was hot) and he was very proud of that fact.  He went on to explain that he had mold in the basement of the house and was very glad to get rid of the house.  I asked him how the buyers handled the mold issue and he replied that he didn’t tell them.  I asked him if he had provided the buyer with property disclosure statement and he replied quite assuredly that he did not have to because he sold it FSBO.  Not true.  Unless you are selling to a relative or in a few other circumstances, you are required to provide a property disclosure statement.  In the case I mentioned above, neither the seller nor the buyer used a real estate agent.

FSBOs can encounter several unexpected issues that they have to content with, such as the property disclosure statement.  They also have to handle any advertising that needs to be done and it must be done consistant with the law.  For example: you can not market your property to a specific age group, or race or even religion.  Mentioning that your property is within walking distance to a partcular church may be in violation of the law.  These are issues that a licensed real estate agent can walk you through.

Additional issues may be handling phone calls, showing the property and then the negotiating of the price and any others items to be negotiated.

There are two issues that FSBOs will encounter in handling the transaction that can be a stumbling block.  The first one is determining the listing price.  When a real estate agent does a CMA (Comparative Market Analysis) they use a wide array of data and experience in determining the listing price.  It is important to detach the emotions involved in the property when determining the price.  All to often FSBOs list their property based on what they want out of the transaction rather than what the market determines.

The second stumbling block is the negotiating process.  Buyers look at the property and think about the money they are spending.  The beautiful red paint in the dining room that the sellers recently applied is the first thing the buyers may look at and determine they will have to spend money to repaint the dining room.  That  is when the feathers begin to fly.

I remember clients I had that were looking at a property and commented that they would have to paint the interior.  The sellers, who had not left, reacted instantly and were offended that they did  not like their “designer” paint.  Feathers flew and they did not buy the house.

Studies have shown that statistically speaking, homes that are sold with the use of a real estate agent typically sell for 17% more than FSBOs.  Even if you deduct the commission most FSBOs would be better off utilizing the skill and expertise of a real estate agent, especially in this market.

Never the less, there are some sellers who want to do it themselves.  And that is OK if they know what they are up against and are willing to deal with that.  I would suggest that anyone who is thinking of selling their property by themselves to at least talk to a REALTOR® to get the facts on the market conditions.  REALTORS provide much more service than what I am covering in this posting and it is important to look at all the information before making this decision.

Most REALTORS® that I know would be happy to spend some time with FSBOS and talk about the process.  Some may even be willing to hold an open house for you provided you will pay their commission should they find a buyer.  In any event, and as I have mentioned many times, talk to a REALTOR® to get the facts.

As always, if there is anything I can do to help you with any of your real estate needs, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland

Mortgage Rate Update – The Economic Reality


A day doesn’t seem to go by without the media reporting how bad the economy is.  It reports about companies that are laying employees off; retail sales slumps; companies closing; and of course the roller coaster ride of the stock market.  Tucked somewhere in all that chatter the media reports that mortgage rates are down.

I have stated many times on this blog that interest rates for mortgages are at an extremely low rate – 4.1% as of September 12, 2011 for a 30 year fixed.  Adjustable rate mortgages are at 2.8%.  These rates are the lowest they have been for “at least 40 years” according to the National Association of REALTORS®.  Yet, there are few buyers jumping into the market!

There are a lot of reasons for buyers not wanting to get into the market, and there are as many reasons as there are buyers.  But some of the more common reasons revolve around the job market and the ability to get a mortgage.

With the unemployment rate around 9.2% there are literally millions of men and women who have lost their job or may be underemployed.  And, there are millions more who undoubtedly are concerned waiting to see if their job will be the next to go.  Bank of America just announced laying off 30,000 employees in the next couple of years.  Several other companies have announced lay offs and that has to wear on those who are employed.  Retired individuals who rely on their savings have seen dramatic drops in the stock market and many of those folks have seen large drops in the money they expected to receive.

Yet, there are millions of people – in fact the majority of people – who are working and have the money to get into the home market, yet, in large part, they do not.  Why?

Again, there are as many reasons as potential buyers why someone does or does not do something, but there is one reason that seems to be a recurring theme.  Banks are not loaning mortgages.

Even though home prices have fallen dramatically in the last few years and interest rates are at historical lows, potential buyers are not able to obtain the mortgages needed to purchase homes.  People with pristine credit ratings are complaining that the banks are requiring them to “jump through hoops” to obtain a mortgage.  The normal credit score for a 30 year fixed mortgage historically was 650, now the banks are requiring a credit score of 700.  Even with the higher score, buyers are bewildered with the requirements banks are insisting on to approve a loan.

To make matters worse; when a potential buyer hears of interest rates in the vicinity of 4.1% and then talks to the mortgage lender and are told that they will  only qualify for an interest rate of say 6.5%, they feel ripped off.  Even though 6.5% is still a respectable interest rate, buyers are put off and walk away with bad feelings.

I encourage anyone who is thinking of buying real estate to talk with a REALTOR to get the facts of todays market.  If you do not know a mortgage broker who can help you get through the maze of information, your REALTOR will be able to help you with that.  Real estate is still a viable option in attaining wealth and this is a good market to buy a home.

As always, if I can help you with any of your real estate needs, please don’t hesitate to text or call me at 615 417-8182, or email me at RolandLow1@gmail.com.

Roland

The Politics of Real Estate


As the nation continues to endure a shaky economic recovery, the National Association of REALTORSÒ, of which I am a member, is working hard to provide stability and growth in the housing market, which will lead to a quicker and greater economic recovery.

History has shown that the housing market has almost always led the economy to recovery – and that is what we truly need today.  According to an article in REALTOR magazine (July 2011) by Robert Freedman, “…the housing market today, while showing signs of recovery, remains weak, in part because of all the talk in Washington about changing the rules of the game.”  In addition, mortgage companies continue to make it  difficult for borrowers to obtain the mortgages they need to buy homes.

The unemployment rate, holding at 9.1% makes it difficult for many people to make the purchases needed to drive the economy.  But it is the housing market that I believe needs to be kicked into high gear.  Once the housing market increases there will be an upturn in the economy, provided Washington does not make legislative changes that will prevent homeowners from making purchases.

The importance of home purchases driving the economy can not be overstated.  In addition to the purchase of the home, most homebuyers need to buy a list of other items; such as furniture, appliances, lawn mower and on and on.  It is that domino effect that will drive the market out of the slump that it is currently in.  I remember a college professor in economics that said the most important thing in an economy is how often money changes hands – that is what drives an economy and that is what our economy is lacking.

One area that Congress is looking at is the QRM (Qualified Residential Mortgage).  The QRM is a proposal that would have the effect of requiring a minimum 20% down when purchasing a home.  Although this proposal seems to be supported by a relatively few individuals, if passed, this proposal would have a detrimental effect on the housing market and the economy in general. This would make it significantly harder for people to obtain a mortgage to buy a home.  This would obviously have a detrimental effect on the economy.

In a separate and unrelated discussion,  there has been talk about eliminating the mortgage interest deduction from federal taxes. It appears that there is very little support for that measure in Congress.  Never the less, it is that type of talk that has made buyers – and lenders – hesitant to leap into the housing market again.

One other comment that I would like to make.  In the news recently, you have heard a lot about Freddie Mac and Fannie Mae.  These two organizations are part of the “secondary mortgage” market and has come under a lot of scrutiny and have been the target of what is wrong with America lately.  I want to mention that it is important to remember that in this country we have always held home ownership as an important part of who we are as a people.  The secondary mortgage market has been a major factor in making home ownership a reality in America.  You only need to look at other countries to realize what we have here.  Let us not give up on institutions that were part of what got us to the level of success we have enjoyed.  Lets fix what needs to be fixed and not throw the baby out with the bath water.  Talk to your elected officials and let them know how important you think the housing market is to the success of this country.

As always, I remain optimistic about home ownership.  So if  you, or someone you know, is thinking about buying or selling a home, talk to a REALTORÒ
to get the facts needed to make your decision.

If I can help with any of your real estate needs, please don’t hesitate to contact me.  You can text or call me at 615 417-8182 or email me at rolandlow1@gmail.com

Roland

Best Cities to Live In!


I know that I am probably beginning to sound like a broken record when I talk about the benefits of home ownership and particularly living in Tennessee.  However, once again a study has been conducted and the Nashville market has come in with glowing scores.

A recent blog that I published on August 15 by Forbes magazine listed Nashville as the number 3 ranking city.  They looked at 52 of the largest metro cities in the United States and ranked them based on various data indicating past, present and future vitality.  They looked at data from the past ten years and focused on how the cities were growing in the last two years to account how cities were dealing with the recession.

The top two cities in the Forbes study were no surprise.  They were Austin, Texas and Raleigh, North Carolina.  The third place city was Nashville, Tennessee.  The Forbes Magazine went on to say, “Perhaps less expected is the No. 3 ranking for Nashville, Tenn. The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth…”

Another study, just released by Kiplinger’s Personal Finance,  rated Nashville as the number three place in the nation in their study.  Their study was based on its unemployment rate, median household income and cost of living among other factors.

In their study Omaha, Nebraska came in first place while Charlotte, North Carolina came in second place.  But once again, Nashville ranked in the top level of best cities to live in coming in third! 

I should also mention that Tennessee was the only state to have two cities within the top six: Nashville came in third while Knoxville, Tennessee came in fifth.  That has got to say something about this market.

I would encourage anyone who is thinking about buying a home to contact a REALTOR and get the facts on the real estate market.  The most recent interest rate for mortgages is 4.2% making this a great time to buy.

As always, if I can help answer any questions you may have regarding real estate, please don’t hesitate to contact me: You can text me at 615 417-8182 or email me at rolandlow1@gmail.com.  I look forward to helping you

The Importance of Interest


The mortgage interest a buyer receives for the purchase of a home is a major factor in how much home they can buy.  I have reported in several posts that the interest rates at this time are extremely low and can truly work to the benefit of both buyers and sellers!  Buyers for obvious reason, and for sellers, a good incentive for buyers to buy if the home is priced right.

The most recent interest rate for a 30 year fixed mortgage is 4.2%.  A rise of 1% interest rate to 5.2% may not sound like a lot, and it is still a remarkably low-interest rate, but that increase can be a substantial amount of money.

For example: A home purchased for $250,000 with an interest rate of 4.2%, 30 year fixed would result in a P&I (principle and interest) monthly amount of $1,222.54. (These examples do not factor in insurance or taxes.)

That same scenario with an interest rate of 5.2% would result in a P&I monthly amount of $1,372.79.

The difference of $150.23 may not sound like a deal breaker (although it may be in some cases) over the life of the mortgage the homeowners would pay an extra $54,082.80.

These numbers are the reason I urge people who are thinking of buying a home, or moving up to their dream home, to act now.  The low home prices and extremely low-interest rates make buying a smart choice.

As always, if I can help with any of your real estate needs, please feel free to contact me.

Roland

To buy, or not to buy, that is the question.


Over the weekend I received an email from someone who was asking if I thought this was a good time to buy real estate in Tennessee.  My reply: Absolutely! Let me tell you why I think that.

I am always amazed at watching the stock market.  The market goes down and everyone jumps on the bandwagon and wants to dump their stock.  The old adage, “Buy low and sell high” goes right out the window.  I am not a stock expert, and I too, want to get rid of stock when it is going down instead of buying more, but you have to admit, it makes sense to  buy when the price of a stock is down.

That being said, real estate is no different.  The last couple of years have been tough for the real estate market, but homes are still selling if they are priced right and builders are still building.  Sure there are areas that are harder hit than others, but in the Middle Tennessee, especially Greater Nashville and Williamson County area, sales are definitely on the rise.

In addition, the interest rates are historically low.  As of August 25, 2011 the interest rate for a 30 year fixed mortgage was 4.22% (actually went up from a 4.15%); a 15 year fixed rate is 3.44%.

The biggest indicator of the housing market was the falling prices of homes on the market.  Comparing home prices in the nation for the second quarter of 2010 to the second quarter of 2011, home prices fell 5.9%, which made homes very affordable.  The price of homes nationally comparing the first quarter of 2011 to the second quarter of 2011 only dropped .6%.  This clearly indicates a stabilizing of the prices at a time when interest rates are extremely low.

As homes continue to sell and the inventory goes down, you will eventually see an uptick in home prices and in all likelihood a rise in interest rates.  These two factors will result in getting less home for your money in the future than what you can get right now.

As the market heats up, it is important for sellers to have their home priced to sell.  Many times sellers list their home for the amount they want to get out of it.  If you are looking to sell, talk to a REALTOR® who can do a CMA and provide you with an amount to sell, not list, your house.  Having the correct price on your home is imperative.

If you are looking to buy a home, I strongly urge you to talk to a REALTOR® and a mortgage professional and see about making it happen.  Just as buying stock when the market is down, so is buying real estate.

As always, if I can help with any of your real estate needs, please don’t hesitate to contact me.  I look forward to helping you.

Roland

Whether you are a first time home buyer, moving up, scaling down or an investor in real estate, this blog has something for you!

%d bloggers like this: