The percentages move up or down slightly, but on average, the adults living in the United States, 1/3 rent, 1/3 own a home with no mortgage and 1/3 own a home with a mortgage. 23% of those owning a home with a mortgage are under water (they owe more then the house is worth), that total is currently 12 million homes. In the past year, with homes values moving up, this number keeps getting smaller. That’s the good news. Still, in Las Vegas, Atlanta and Orlando, under water properties are very high. With out the ability to put these homes up for sale, inventories will remain low. Low inventories and high demand mean prices will go up and eventually the market place should stabilize. In the end, with low or no equity in your home, more sellers try to avoid the selling commission paid to an agent. This has caused the for sale by owner (FSBO) inventories to rise. More buyers are figuring this out and on the Internet there are plenty of places to find them.
Archive for August, 2013
As the real estate market transitions from Govt/bank owned sellers and investor cash buyers to a more normal ‘owner occupied’ seller and a ‘mortgage needed’ buyer, FSBO sellers need to get back to basics. Some quick bullet points to remember if you are selling by owner:
1. Property condition - similar to selling a used car, condition counts. Kelley Blue Book says used cars that sold in:-EXCELLENT CONDITION 3% - VERY GOOD CONDITION 23% - GOOD CONDITION 54% - FAIR CONDITION 18% - POOR CONDITION 2%
2. Market analysis - you have a great property, but there are others on the market just as great. Do your homework checking out other properties for sale nearby and looking online for market values in your neighborhood. Buyers are doing this prior to giving you an offer, they especially like to check out Zillow.
3. Buyers need your help - have ready contracts, mortgage info, neighborhood info, seller disclosure statement, closing company, title insurance company, who holds the deposit, etc. Also, buyers getting a mortgage pay a large sum in closing costs. The buyer quite often will ask you to pay part or all, plus they will ask you to pay for items, such as; Home Warranty, inspection and appraisal costs, survey, etc. Be ready to negotiate all items.
4. Marketing - you want all buyers to know your property is for sale. This starts with professional yard signage and brochures for those driving by, online presence (FSBO websites), and there is a good chance a local real estate agent may approach you with a buyer (commissions are negotiable).
Good news keeps coming for the real estate markets. Now many experts have set very high expectations. You see, 80% of the time the current trend will continue. So to be an expert, you just predict the direction will continue, sometimes predicting too much. Experts can confirm the direction, but you need to do your own research and thinking. News this week that housing starts were up again, but not quite as high as predicted. Resale homes also went Under contract at a faster pace, but not as fast as predicted. Home prices have moved up, the big question is ‘How much higher?’. Mortgage rates have hit a two year high and most experts predict them to go higher, but maybe not as high or as fast as many predict. We’re not always right, but right now we still feel rates will move higher quickly. This weeks news is that mortgage applications fell again, mostly from lack of refinancing. Those that have been waiting to sell are now faced with the decision, ‘do I refinance and stay or do I sell at current prices?’ It’s a big decision. In the past few years it was easy, ‘Just Refinance and wait for values to go back up’. We are believers that if you plan to stay in an area for five years or longer, buying now, yes, right now, will work out better than renting.
It is a great time to buy a home and finance the purchase. Main Street, Wall Street and the banks know this. Buyers are taking advantage of the good prices and low mortgage rates. Mortgage companies are also taking advantage of this. According to Bankrate.com, your closing costs to get that mortgage is up 6% from a year ago. The increase is in origination fees, underwriting fees, appraisal and credit check fees. On top of this, if you are putting less then 20% down, FHA & VA have increased their mortgage insurance premium and interest rate. It is absolutely crucial that the buyer receives a “Good faith estimate” from the lender prior to giving any money to them. Lenders are required by law (Real Estate Settlement Procedures Act) to give this estimate to you. Once you have it, shop around. Check with other lenders. Buying a home is the largest purchase you may ever make in your lifetime, take your time, stay in control and get the best deal.