Category Archives: Real Estate

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Eight mistakes to avoid when buying your first home

Posted on January 23, 2018 in Real Estate

Eight mistakes to avoid when buying your first home

Buying a home is overwhelming for most first-time buyers. It’s the biggest purchase most people will make in their lives, and the process is like no other financial transaction.

Because of their unfamiliarity, first-time buyers often sabotage their home searches by making easily avoidable mistakes along the way. With the help of real estate agents, lenders and title insurers who have worked extensively with first-time buyers, we have collected a list of typical blunders. Avoid them and you will be well on your way to a smooth home-buying experience.

Mandy Mills, a real estate agent with Compass, passed along some general advice, as well.

“Find an agent who will educate you on the process before you get in the car, so that you understand the steps of the process,” she said. “A lot of people will put you in the car and start showing you things. But if you don’t know what you’re doing, that can make an overwhelming situation even more overwhelming.”

Waiving the inspection

“We never would recommend buying a house without doing a home inspection,” said Derrick Swaak, managing broker for the McLean office of TTR Sotheby’s International Realty. “But what we do see . . . is doing a pre-home inspection. With the seller’s [approval], going in and inspecting the house, making sure there’s nothing alarming. So you’ve done the home inspection, then you make the offer and you can exclude the home inspection contingency because you’ve already had a professional go through the property. That is done all the time, particularly in a really hot market.”

Failing to get preapproved for a mortgage

“Going through a preapproval process with a reputable lender should be done very early in the process,” said Steve Wydler of Wydler Brothers Real Estate. “It can be a huge waste of your time looking at homes that you can’t afford. It’s also difficult emotionally to ‘dial down’ on price.”

Know the difference between prequalified and preapproved. Prequalified is an informal conversation with a lender. Preapproved is a formal process that involves an application, lots of documentation and an extensive check of your financial background and credit.

“Get preapproved the moment you start thinking about buying a home,” said Craig Strent, chief executive of Apex Home Loans. “It’s free and can easily be renewed.”

“Another big mistake [is] not allowing a lender to check your credit ahead of time for fear that the inquiry will drag your score down,” he said. “Better to find out upfront if there are any issues so you have ample time to deal with them.”

Spending more on a house than you can afford

“Just because one can borrow up to a certain amount doesn’t mean one should,” said David Howell, executive vice president of McEnearney Associates. “There are often expenses associated with owning a home — small home improvement projects, purchase of furniture, etc. — that can be easy to overlook when securing a mortgage.”

Neglecting to consider additional expenses

“Consider potential monthly association dues if you are focused on condos or co-ops,” said Marc Ross of Compass. “These fees historically increase 1 to 5 percent a year. Also, if your search is for a detached, single-family house, are you budgeting for potential repairs down the road? Set aside a monthly amount similar to a condo [fee] for these potential expenses.”

Besides your monthly mortgage payment, you’ll need to budget for property taxes, insurance, maintenance and utility bills.

Using the seller’s agent

“Agency matters. The listing agent’s job is to negotiate the best possible price/terms for the seller,” said Hans Wydler of Wydler Brothers Real Estate. “Letting the listing agent ‘help’ you with your offer is like letting your ex-spouse’s attorney dictate your divorce settlement.”

Or thinking you don’t need an agent.

“Sometimes buyers will say, ‘I am a lawyer and I negotiate million dollar deals every day. I don’t need help from a real estate agent,’” said Donna Evers of Long & Foster. “Heed the old saying, ‘A lawyer who represents himself has a fool for a client.’ All buyers should realize they can get emotional when they are trying to negotiate their own purchase. Home-buying is a very specific transaction that is not like other sales and purchases.”

Letting emotions influence your decisions

Feelings about a home can blind buyers, causing them to overpay. Perhaps they fell in love with a house that is out of their budget or they got caught up in the heat of a bidding war. Or conversely, they are so exhausted and discouraged by the process they settle for something that isn’t right for them.

“A good agent can help you navigate the emotional roller coaster of buying a home and make informed, reasoned decisions,” Steve Wydler said.

Avoid trying to find the perfect house or the better deal.

“We liken buying real estate a lot to dating,” Mills said. “You know when you find that right person. You don’t keep looking for other people. Being able to act on a gut feeling even if you’ve only seen three or four houses, knowing this is the one. It’s often the one that gets away.”

Going with the first lender, settlement agent or real estate agent you find

“It is always a good idea to shop for services,” said Joe Gentile, president of Federal Title. “Often buyers don’t realize that there can be significant differences in costs as well as service. They should check online reviews and obtain written quotes to compare.”

“A subpar lender, agent or title company can cause major problems and stress, and in some cases, actually scuttle the purchase,” Hans Wydler said.

Making a big purchase or switching jobs before loan closes

Lenders pull credit reports just before settlement to make sure a borrower’s financial situation hasn’t changed. A big purchase can jeopardize your closing.

“This is a financing red flag,” Ross said.

Sell Your Home in Early 2018: 5 Reasons It Will Pay Off

Posted on January 12, 2018 in Real Estate

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It’s been nearly a decade since the Great Recession delivered the worst housing crash in modern memory. But these days, the fallout feels squarely in the market.

“We’ve seen two or three years of what could be considered unsustainable levels of price appreciation, as well as an inventory shortage that resulted in a record low number of homes for sale across the country,” says Javier Vivas, director of economic research for realtor.com®.

In other words: Today’s buyers are exhausted. And in many cases that means they’re willing to sacrifice to get a toehold in the market.

Sounds like the stuff of seller’s dreams, right? But know this: If you plan to sell in 2018—and you want to unload your home quickly and for maximum money—your window of opportunity may be rapidly narrowing. Here’s why you should get moving ASAP.

1. Rates are still historically low, drawing buyers into the market

We may not be enjoying the rock-bottom interest rates of yore, but by historical standards, today’s 30-year mortgage rates—hovering just above 4%—are still low. And experts agree mortgage credit will remain relatively cheap for most of the year.

That means the getting’s still good for buyers—and, subsequently, for sellers looking to unload their homes.

But rates are on the rise, and it’s been widely predicted that they’ll reach 5% before year’s end. Buyers know that the longer they wait to buy, the more expensive it will be.

Roughly translated, that means you’d be wise to list your home earlier in the year, before more rate hikes kick in. Not only will you capture the market of buyers scurrying to close a deal, but if you’re buying after you sell, you’ll also benefit from those lower rates.

2. Inventory remains tight—and demand high

Simply put, there are more buyers than available homes—particularly in red-hot markets where land is scarce and it isn’t cheap to build.

And the housing shortage will likely get worse before it gets better: Realtor.com data predict inventory will remain tight in the first part of this year, reaching a 4% year-over-year decline by March.

Sellers, that means this is your opportunity to be wooed. Buyers, their choices limited, are going to great lengths (and making some major concessions) to win the house, says Katie Griswold, a Realtor® with Pacific Sotheby’s in Southern California.

“We’re in a very favorable seller’s market,” she says. “We’re seeing bidding wars—which push up prices—and buyers are submitting offers with very pro-seller terms, like forgoing the repair request or waiving the appraisal contingency.”

And cash investors are in the mix, too, accounting for 22% of all home sales transactions in November 2017 (up from 20% in October), according to the National Association of Realtors®.

Those cash buyers are snapping up homes in an already tight market and keeping some first-time buyers at bay (sorry, buyers!). But if you’re selling, you stand a better shot at an all-cash offer—one you just might be crazy to refuse.

Of course, there’s a catch: Inventory levels are predicted to begin rising in the fourth quarter, marking the first inventory gain since 2015 and setting the stage for more dramatic housing gains to come. So if you’re thinking of selling, start preparing now in order to walk away with a sweet paycheck.

3. Home prices are still increasing

From coast to coast, home prices continue to rise—which translates to more money in your pocket when you sell.

But the gains are predicted to be more moderate than in years past. Realtor.com data suggest a 3.2% increase year over year, after finishing 2017 with a 5.5% year-over-year increase.

Bottom line: You still stand to make a pretty profit if you sell this year, but the earlier you can list, the better off you’ll be.

4. People have more money in their pocket

Record levels of consumer confidence, low unemployment, and stock market surges are setting the stage for high home buyer turnout in 2018. For the first time since the 1960s, the Fed has projected that the unemployment rate will drop below 4%, and the domestic stock market is enjoying a nearly unprecedented rally.

The housing market is already reflecting this boom: Existing-home sales soared 5.6% in November 2017 (the most recent month for which data are available) and reached their strongest pace in almost 11 years, according to the NAR.

“Incomes are growing and people are finding better and more stable jobs,” Vivas says. Buyers “are feeling pretty good about (their) finances.”

And thanks to the GOP tax legislation, which nearly doubles the standard deduction, we’ll see fewer people itemizing, says National Association of Home Builders Chief Economist Robert Dietz.

“The income effect of that is that most people are getting a tax cut—which should help (buyer) demand,” Dietz says.

All of these factors combined mean more buyers could be on the hunt, with more money in their pockets to shell out on a home for sale—possibly yours!

5. Millennials are ready to commit

Millennials, often crippled by student debt, have been especially hampered by rising interest rates and high home prices.

But the aforementioned conditions are ripe in 2018 for these first-time buyers to take the plunge, and experts predict that millennials will make up a vital part of the buyer pool over the coming year: Millennials could account for 43% of home buyers taking out a mortgage in 2018 (a 3% year-over-year increase), according to realtor.com data.

“As people move into their 30s, they’re looking to move from renting to homeownership,” Dietz says. “And we predict that trend will continue even more this year.”

More home buyers flooding the market can only mean good things for sellers—at all price points.

©1995-2018 National Association of REALTORS® and Move, Inc. All rights reserved.realtor.com® is the official site of the National Association of REALTORS® and is operated by Move, Inc., a subsidiary of News Corp.

Why Getting Pre-Approved Should Be Your First Step

Posted on December 11, 2017 in Real Estate

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In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

1. Capacity: Your current and future ability to make your payments
2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.