No more HUD1 settlement statement at closing

May 27th, 2015

beginning August 1, 2015. This Federally required Settlement Statement showing the actual settlement costs of a real estate transaction will be replaced with the ‘Closing Disclosure‘ form. The HUD1 has slowly changed over the years since the RESPA Act of 1974 first required the closing document. The new ‘Closing Disclosure’ form is now referred to as the ‘CD’ in real estate discussions. The required use of ‘CD’ is the result of the new rules of the Consumer Financial Protection Bureau (CFPB). The CFPB was created by the ‘Dodd Frank Act‘ in 2010.  Also, beginning August 1, 2015, The ‘Good Faith Estimate’ provided by your mortgage company will be replaced by the ‘Loan Estimate’, now referred to as the ‘LE’.

REQUIREMENTS: The most important change in real estate transactions nationwide, is that the ‘CD’ is required to be in the hands of the buyer and seller three days prior to closing. No more showing up to closing and seeing the closing documents for the first time. This should improve and make closing go smoother.  With the ‘LE’, it is required to be in the hands of the buyer within three days after making application for the loan.

It’s Open House season for FSBO’s

April 20th, 2015

we have often blogged that there is no one way to find a buyer for your property. Some call off of the yard sign. Others find your property online. Others from referrals, etc. And, some find their new home driving around the area’s in which they plan to buy. This is the time of year that buyers drive in the area’s they are interested in, so you might as well help them. I would pick a weekend and hold an Open House from noon to 5pm on Saturday and Sunday. On the Monday prior to the weekend I would do the following:
1. Lower your price a little and change the Remarks to:

PRICE REDUCED, THIS PROPERTY WILL BE SOLD THIS WEEKEND. OPEN HOUSE SATURDAY AND SUNDAY FROM NOON TO 5PM

2. update FSBO.com, Zillow and all other online ad’s with that headline
3. each day put a new ad on Craigslist
4. send/deliver flyer’s to all real estate offices that are close to your property
5. put balloons on your mail box and Open House signs every place that will help
6. the day of the Open House, park your cars at the street so it looks like people are looking at your home
7. remove pets, small children and any other distractions from your property on the day of the Open House.
8. be prepared to be there to discuss your property and to negotiate with any interested parties.
9. have a notebook and get all parties to write down their name and number. You need to know who is entering your property and this gives you a way to follow up later and get feedback.
10. some suggestions for security: a. place all valuables in a secure place b. keep all parties together, do not let one person go upstairs alone, while the other keeps asking you questions to keep you busy c. Make sure, you are not alone during the Open House, either your spouse, relative or other adult is with you.
fsbo open house

does it take 3 washing machines to do your laundry?

April 9th, 2015

Does it take three automobiles to get to work each day? Does it take three of anything to get the same job done? NO!  So why does it take three real estate agent websites to search and get the same results. Search FSBO.com and you’ll find houses for sale that you won’t see any where else. Zillow, Trulia and Realtor.com, you put in the same requirements and the exact same properties come up. Why? Because they all take direct feed the the local MLS system. It is the same information w/photos going to the three different websites. Something has got to change. Redundant?? When one changes or adds a new feature, the other two follow suit. Now, if an effort to be different, Zillow is dropping the MLS feeds, causing quite a stir in the realtor industry. And, Zillow now has acquired Trulia. A backlash is coming. Already we are seeing old listings of properties replace the new ones. Outdated information, wrong price and photos. What’s up with that? Is this possible, change actually has made things worse. I loved the quote yesterday by Rory McIlroy, when asked what Tiger Woods needs to do to compete at the Masters golf tournament this week. His response to Tiger: “Keep it simple” and “use your talents without over thinking every shot”. Hmm! I could say the same thing about the real estate industry. Do we really need so many new versions, new changes, new everything, etc? My brother just bought a new construction house. He had to sign or initial a 46 pages contract. Really?? Are that many pages really necessary to build a new house. In the end, buyers tell me “I just want to buy a new home to live in”, that’s it. The more complicated it gets, the less likely it will happen. Let’s see if Tiger takes Rory’s advice this weekend.

Tiger Rory FSBO

Easiest time to buy? While you are renting..

April 7th, 2015

Why? Because you remove the pressure of selling at the same time as buying. If you buy a new home, but have not sold your existing home you end up with double payments. No one wants that. If you are constantly spending time cleaning, organizing and getting your current home ready to be shown, that is time you could be searching and negotiating for the new home. Selling and buying simultaneously means you are trying to keep the potential buyers happy, the sellers happy, the mortgage company happy, your family happy, plus you still need to go to work and do your best. That’s a lot to ask. Once you find a good property, it takes time and patience when negotiating. You want the best price and terms, but you may be under pressure because of your current home. Renters do not have these problems. We suggest to renters that your first property will be the best experience, because you are not under pressure to buy. You can search and negotiate without pressure to get the best deal. Enjoy it, the second and third home you buy may be more difficult. Millennials made up 28% of the housing market in 2013 and 32% in 2014. In 2015, over 5 million say they plan to buy. Rents keep rising it, so it makes sense. We have been blogging about this for over two years.  This is the year to buy.

thank you builders for helping me sell FSBO

March 18th, 2015

Home Builder prices are now 30% higher than comparable resale properties. Historically, it is 15% higher. Thank you home builders for making my FSBO property more appealing to the home buyer. “Builders are making a conscious decision to sell fewer homes at higher prices than to sell more homes at lower prices.” according to ZIllow economist, Stan Humphries. Between 2008 to 2012, I saw many builder developments go back to the banks and resold for 20-40 cents on the dollar. Plus I saw many larger builders selling developments for 40-50% of the development costs. To put this is real dollars. Example: an 80 lot development, ready to have homes built on it cost (in major metro areas) $80,000 to $100,00 per lot. This includes the cost of purchasing the raw land, getting it developed and approved with roads, utilities, etc. These developments were then sold for $40,000 - $50,000 per lot. Today, with an improving economy, low interest rates the buyers are looking to purchase. The builders owning these properties now own them for $50,000 less then the cost 5 years ago, plus materials & labor have stayed the same. So, why do they ask so much for these properties? Simple answer is ‘because they can’. To their surprise, the public is not buying it.

FSBO Prices

FSBO properties asking prices are 30% that of a comparable new builder home. Plus the resale development is already finished. Have you ever lived in a new home and over half of your community had vacant lots. When these lots are finally built on, you take the risk they will have smaller, less expensive homes which hurt your value. Big risks.

Single most important item to get right

March 11th, 2015

searching online for a new home. First thing that jumps out at you is the main photo. This is the single most important item to get right, if you plan to market your property online. SELLERS TAKE NOTE! Buyers searching in your area first see a home page. Lot’s of Main Photos. Once a search is completed, many houses are seen. Do they click on all, or just the good ones? Northern properties with snow or dormant lawns are understandable in the winter time, but as soon as the snow melts or the grass turns green you need a new photo right away. It’s easy to replace photos online. Log in, click manage your photos, then add new ones and remove old ones. If you have someone doing this for you, they should have no problem with it. It they tell you they can’t, won’t or are unable, then it is time to find someone else. Main photos don’t necessarily need to be the front of your property. New, beautiful updated kitchens can work. Or maybe the backyard deck with a view. Utility rooms, bath rooms, and unfinished basements are a no, no. Are you taking the photos with a smart phone. Some photos you take can be horizontal, vertical or upside down. Review them and correct before putting them online. If you have trouble opening the photos quickly on your home computer, then possibly they are too large of a file. Resize to a slightly smaller size. The websites you use automatically resize the format and this process maybe slow if your photos are too large. Another suggestion for those that have many trees in the front yard that block the view of your home. Take several photos today, right now, while the leaves are off of the trees. Save those photos for the day you put your property on the market. Buyers want to see the front of your property and this will help you in the sale.

FSBO

do I buy or sell first ?

February 18th, 2015

that is the century old question. Like many things in life, you need to do your homework, be prepared and fully understand your options. What are the current market conditions? Is it a hot buyers market or a soft sellers market? What can you expect to net out of your current home and is it ready to be put on the market? If your current house sells fast, but you have not closed on the new one, where do you live? Can you afford two house payments? Here are some thoughts and suggestions:

- get several opinions of the value of your current home via appraisers, agents, Internet and your own search

- meet with your mortgage broker (more then one is a good idea). Find out your options regarding mortgage approvals for two properties, temporary (home equity, bridge) loans, locking in interest rates, and get any suggestions from your mortgage person regarding current market conditions

- go inside and take a look at as many properties as possible. This will give you a good idea of the new home you will be buying. Plus it gives you a good idea of how your current property needs to look to sell fast

- consider all options. If you sell first, do I have a temporary place to live. If I buy first, can I afford two mortgage payments.

It is very rare to buy the new home at a low price, then sell your current one at a high price. I usually prefer to buy first. This way you get the house you want and at the best price. Put in as many offers as it takes to get the best price. Once you get a good deal, now you can price your home just below the competition and it should sell fast.  If you sell first, then you are under a lot of pressure to pay top dollar and it may not be the perfect property you were looking for. Remember, the three most pressured moments of your life will be dealing with    1. a family death 2. a divorce 3. buying a new home

Know your competition

February 9th, 2015

You only need one buyer, but you have multiple competitors. You need to know them so you can convince the buyer yours is the best one for them. First, there is the Investor resale property. The investors with deep pockets either flip or wait for their tenant to move out. Then put their property on the market with newly finished hardwood floors, new interior and exterior paint, new carpet, upgraded fixtures and more. Their property is vacant and in move in condition. Plus they will pay the buyers closing cost. Second, is the builder of new homes. Their properties are brand new, with new roof, appliances, move in condition and never lived in. They offer  Home Warranty’s between 1 - 10 years. They also will pay the buyers closing costs. Third, is the owner occupied resale property down the street from yours. They know your property is for sale and they watch your asking price very closely.

We strongly suggest you view the inside of each of the competitors property. As stated in the Godfather movie: ‘keep your friends close and your enemies closer’. The buyer for your property will do their research online, then quickly try to view all properties in their price range and location desired. Be ready to answer all questions and give out extra information based on anticipated questions that may come up.

another Window has opened

January 14th, 2015

2015 is the year to take ‘charge’. 5% is the magic number. For the past five years interest rates have been at historic lows (the first Window opened). During that time you should have either refinanced or bought a new home with a mortgage rate below 5%. If not, this is the year to ‘take charge’ and do it. Auto loan rates, whether new or used, are below 5%. If you are paying more, this is the time to refinance or trade in. Gas prices are down dramatically (the second Window opened). What are you going to do with the savings? I learned an interesting fact over 30 years ago. Approximately 50% of all credit cards have a balance and only the minimum is paid each month. That means you are paying 18% or higher interest rate each month. Today, the number is still approximately 50% of all credit card holders. That’s terrible. I strongly suggest to those with a balance, use the gasoline savings to pay down your balance. This is a huge step towards improving your credit score and setting yourself up to buy a home. If you have any loans that you are paying over 5% interest rate, now is the time to make a change. Another 5% suggestion. Right now job openings are at a 14 year high, 5 million unfilled positions. It’s time for a 5% raise at your current job or a new job that pays 5% more.

Remember, the more you make and the better your credit will equal a better home for your family.

Gas Prices

FSBO.com predicts a big 2015

December 24th, 2014

New buyers: with 5.2 million foreclosed homes in 2007 & 2008, these owners will be passing the seven year mark in which their foreclosure drops off their credit report. Starting now, they will be able to qualify for a non-FHA mortgage. Plus with their credit improved and tired of renting, we look for these buyers to be back in the market.

New sellers: current average time staying in a home is over 13 years (longest ever). Sellers that have been waiting for prices to rebound will be putting their homes up for sale. Those baby boomers and empty nesters that are anxious to downside. Plus the first time home buyers from a few years ago that need a larger home will be selling to move up.

Interest rates: we are always talking about how low they are. This year will be the bottom and you better hurry to lock in. Federal Reserve policy of lower rates were based on employment, inflation and GDP. Historically, the Fed has been slow to react and it looks like they are doing it again.

Renters: 35% of households rent. This has slowly increased each year since 2005, with a low of 30%. Today, with millions of properties owned by investors for rental purposes, the renter with large families are opting to rent 3 or 4 bedroom homes versus renting the two bedroom apartment. Get ready in 3-4 years when the investors decide to sell/cash in and these renters turn into buyers.

New developments for 2015: Look for mortgage qualifying to get easier. Look for builders to keep increasing the home price. Look for developers to over build new apartment buildings. Look for investors to start selling.