The True Cost of NOT Owning a Home

 

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The True Cost of NOT Owning 

Buying remains the more attractive option in the long term – that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option…as people get more savings in their pockets, buying becomes the better option.”

 

 

Understanding Market Value

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Understanding Market Value

If you were going to sell your car, what would you do? Well, you would probably check to find out how similar vehicles to yours are priced. Then you would set your advertised price within that range.

What you would be doing, perhaps without knowing it, is determining the “market value” of your car.

Market value is simply what buyers today are willing to pay for a particular product.

When you decide to put your house up for sale, one of the first things you and your real estate professional will do is determine the market value of your property. That’s important to know because if you price your home too much above its market value, you probably won’t get any offers. Alternatively, if you price your property too low, it might get snapped up quickly but you’ll have left a lot of money on the table.

How does a real estate professional help you determine your home’s current market value?

He or she will look at a variety of factors, such as the desirability of the area, the features of your home, how well it has been maintained, renovations and other improvements you’ve made, and of course, its location.

Your real estate professional will also review what similar homes in your area have sold for recently – which is, perhaps, the strongest indicator of current market value.

Once you know the market value of your home, you can make an informed decision as to how to price it so that it will attract the right type of buyers and the best possible price.

Should you price your home high above its market value in the hopes that some unwary buyer will purchase it? Unfortunately, that rarely works.

The good news is, your property may be worth more than you think. One of the best ways to find out is to invite a good real estate professional to your home to do an assessment.

5 Things Home Buyers Don’t Want To See

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When preparing a property for sale, homeowners often focus on the things that will impress buyers, such as clean and uncluttered spaces, well lit rooms, staged furniture designed to maximize appeal, and so forth.

But it’s equally important to pay attention to those things you don’t want buyers to see… those little turn-offs that, although seemingly minor, can distract buyers and cause them to lose interest in your property.

For example, you don’t want buyers to see these things:

Pets. Although many people love pets, some don’t. Others are allergic to them. Dogs, in particular, can take a keen interest in new visitors, jumping and barking excitedly. It’s best to take pets for a walk during viewings.

Unfinished repairs. Dripping taps. Gouges and marks on walls. Broken tiles. Squeaking gates. Home buyers will notice, and may mistakenly think there are other deficiencies lurking in your home. Do as many repairs as you can. Then be upfront about those that are in progress.

Clutter. It’s common for main rooms, like livingrooms and kitchens, to be clean and uncluttered during a viewing. But buyers who become interested in your property will take a closer look, and check out the garage, cupboards, backyard shed and other places where things tend to accumulate. The more you de-clutter, the better your property will show.

Smells. Obviously not something a buyer will see, but he or she will definitely notice lingering smells associated with pets, garbage, exotic cooking, and smoking. Scents have a strong influence on emotions. That’s why perfume companies do so well! So make sure your home is as scent-free as possible.

You. Nothing personal. When buyers view your home, they want to visualize themselves living there, not you. So let your REALTOR® be the host. Remove as many personal items, such as family pictures and trophies, as possible.

 

A+ Reasons to Hire a Real Estate Pro

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  • Hiring a real estate professional to help you buy your dream home or sell your current house is one of the most ‘educated’ decisions you can make!
  • A real estate professional has the experience needed to help you through the entire process.
  • Make sure that you hire someone who knows current market conditions and can simply and effectively explain them to you and your family!

Don’t Get Caught in the Rent Trap!

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There are many benefits to homeownership, but one of the top benefits is protecting yourself from rising rents by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by Apartment List addressed rising rents by stating:

Our national rent index is up 0.1 percent month-over-month, marking the sixth straight month of increasing rents. Year-over-year growth now stands at 1.2 percent.”

The article continues, explaining that:

Rents increased month-over-month in 62 of the nation’s 100 largest cities, down significantly from the 85 cities that saw rents rise last month. That said, rents are still up year-over-year in most of the nation’s largest markets — 77 of the 100 largest cities have seen rents increase over the past twelve months.”

Additionally, Urban Land Magazine explained that,

Currently, nearly half (47 percent) of renter households are cost burdened (i.e., paying more than 30 percent of income for housing), while 25 percent (totaling 11 million households) are severely cost burdened, paying over 50 percent of their total household income for rent.”

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 2% less expensive in Honolulu (HI), all the way up to 48.9% less expensive in Detroit (MI), and 26.3% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 1,166 renters found that 34% said they rent because they cannot afford to buy, 29% said they cannot afford to buy where they live, and nearly a quarter (24%) were saving to buy.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time homebuyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage today!

 

The Advantage of Getting Pre-approved

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One of the best things you can do to ensure you get the home you want is to arrange for financing before you go shopping. This is often referred to as getting “pre-approved”.

Getting pre-approved simply means that your lender has calculated how much of a mortgage they’re willing to offer you, depending on your down payment and current financial situation.

There are two advantages to having a pre-approved mortgage. First, you know exactly what you can afford when shopping for a new home. Second, when you make an offer, you’re likely to be taken more seriously.

These are the best times of year to buy a home (according to the experts)

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Buying a home in the spring and summer these days looks like something you’d see out of “The Hunger Games.” For sellers, it’s the golden opportunity to get the most return on their real estate investment. Buyers, on the other hand, might feel like they’re in a gladiator ring.

A lack of affordable homes in many markets, along with fierce competition, rising prices and higher mortgage rates, have sidelined many buyers this year. That was evidenced in July by a continued slump in existing-home sales, which crawled to their slowest pace in two years, according to data from the National Association of Realtors.

As summer fades to fall, though, recent market shifts could give buyers a leg up in the latter part of the year. In July, for instance, the national inventory of homes listed above $350,000 rose 5.7 percent, according to new data from Realtor.com. The inventory swell is mostly in markets that have seen continual price growth that’s starting to decelerate. In fact, 16 major housing markets had a year-over-year increase in their inventory levels, Realtor.com found.

These slight changes, along with less buyer competition and sellers eager to get to the closing table before the holidays, could give serious buyers more latitude, says Danielle Hale, Realtor.com’s chief economist.

“Make no mistake: It’s still a sellers market in many places, but we’re starting to see the tide shift,” Hale says.

Fall and winter give buyers more negotiating power

Homebuyers with children tend to abandon their homebuying plans by August because they want to be settled before school starts. National housing data shows that August and September tend to have the most drastic price reductions of any time during the year, Hale says.

Although there’s less inventory in the fall than in the spring, buyers can often get better deals on what is available. Fall is a last-ditch opportunity for sellers to close on their homes before the end of the year. And with fewer buyers coming through the door, sellers tend to price their homes more aggressively to get buyers’ attention, says Bill Gassett, a real estate agent with Re/Max Executive Realty in Hopkinton, Massachusetts.

Aside from nabbing a better price, you might also score more flexible terms in the fall, such as an extended closing time, or home inspection repairs or credits, Gassett says. The longer a home sits on the market, too, the more willing a seller will be to negotiate, he says.

Once November sets in, substantially more buyers and sellers drop out of the market. The odds of finding a home become much slimmer because inventory levels typically plummet further in November and December, Gassett says. You can use that lull to your advantage — and gain the upper hand.

“Sellers who can’t wait until the spring to sell are even more motivated (in the winter),” Gassett says. “The weather isn’t nice, people are celebrating the holidays and no one wants to move during that time.”

To narrow your buying window, look at local data

The saying “all real estate is local” isn’t just a catchy mantra; it’s rooted in fact. The best time to buy (or sell) in your area depends on its supply and demand, as well as local seasonality, climate, economic conditions and historical trends.

“When demand is low and supply is high, there’s an opportunity to pounce,” says Jay Phillip Parker, CEO of Douglas Elliman Florida Brokerage. “Buyers can’t control supply, so they have to look for periods of low demand.”

Those low periods of demand can vary from market to market. Buyers should ask their real estate agent to get granular with local market data to help them figure out a more precise window for scoring a good deal.

Here are some important questions Parker suggests you ask:

  • For the house type I want, how many of those homes are for sale or have recently sold?
  • What was the list-to-sales average for these homes?
  • How many days are these types of homes staying on the market?
  • How many of these homes are on the market today compared with last year?
  • How many price reductions have there been for these type of homes?

Parker agrees that buyers have more leeway in negotiations during off-peak times, but says that asking for too many contingencies can still be a deal-killer. Buyers should always get a home inspection to identify major issues, but there’s a much bigger picture to consider, Parker says.

“You’re better off focusing on price,” Parker says. “Once you know what you’re buying and you know you can afford it, the most important thing is price.”

Location Location Location

You find a beautiful home available on the market, but you’re not so sure about the location. Does it really matter all that much? Yes, it does. That’s why you’ll often hear REALTORS® say, “Location, location, location.”

 

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The location of a home you’re considering buying will affect you in two ways.

First, it will affect the property’s future resale value, especially if the area is becoming less desirable.

Second, it will affect your lifestyle. If the area doesn’t have the features you want – nearby schools and playgrounds, walking trails, proximity to activities that interest you, such as golf or restaurants – you probably won’t enjoy living there.

A good REALTOR® will help you find the right home in the best location for you.