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5 Reasons You Shouldn't For Sale By Owner

Selling Your HomeIn today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale By Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Purchasers

Recent studies have shown that 95% of buyers search online for a home. That is in comparison to only  17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

  • 49% on the internet
  • 31% from a Real Estate Agent
  • 7% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone.  Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find  some problems with the house
  • The appraiser if there is a question of value

FSBOing Has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own.  Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

A study by Collateral Analytics revealed that FSBOs don’t actually save anything, and in some cases,  may be costing themselves more, by not listing with an agent. One of the main reasons for the price  difference at the time of sale is:

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

If more buyers see a home, the greater the chances are that there could be a bidding war for the property. The study showed that the difference in price between comparable homes of size and location is currently at an average of 6%.

Why would you choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more?

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together and discuss your needs.

Contact the Ternullo Real Estate Team today to learn how we can help you sell your home.

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5 Reasons Homeownership Makes 'Cents'

Home Ownership Makes CentsThe American Dream of homeownership is alive and well. Recent reports show that the U.S.  homeownership rate has rebounded from recent lows and is headed in the right direction. The personal reasons to own differ for each buyer, but there are many basic similarities.

Today we want to talk about the top 5 financial reasons you should own your own home.

1. Homeownership is a Form of Forced Savings

Paying your mortgage each month allows you to build equity in your home that you can tap  into later in life for renovations, to pay off high-interest credit card debt, or even send a child  to college. As a renter, you guarantee that your landlord is the person with that equity.

2. Homeownership Provides Tax Savings

One way to save on taxes is to own your own home. You may be able to deduct your  mortgage interest, property taxes, and profits from selling your home, but make sure to  always check with your accountant first to find out which tax advantages apply to you in your area.

3. Homeownership Allows You to Lock in Your Monthly Housing Cost

When you purchase your home with a fixed-rate mortgage, you lock in your monthly  housing cost for the next 5, 15, or 30 years. Interest rates remained around 4% all last year,

marking some of the lowest rates in history. The value of your home will continue to rise with  inflation, but your monthly costs will not.

4. Buying a Home Is Cheaper Than Renting

According to the latest report from Trulia, it is now 37.4% less expensive to buy a home of  your own than to rent in the U.S. That number varies throughout the country but ranges from  6.5% cheaper in San Jose, CA to 50.1% cheaper in Detroit, MI.

5. No Other Investment Lets You Live Inside of It

You can choose to invest your money in gold or the stock market, but you will still need  somewhere to live. In a home that you own, you can wake up every morning knowing that your investment is gaining value while providing you a safe place to live.

Bottom Line

Before you sign another lease, let’s get together to help you better understand all your  options.

For more information, please contact the Ternullo Real Estate Team.

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New Study Shows Best States for Millennials

A new study by WalletHub used “30 key metrics, ranging from share of millennials to millennial unemployment rate to millennial voter-turnout rate” to find out which states are the ‘Best States for Millennials.’

The Top 5 Best States for Millennials are:

  1. Washington, D.C. (also ranks highest in percentage of millennials already living there!)
  2. North Dakota (lowest unemployment rate)
  3. Minnesota (highest millennial homeownership rate)
  4. Massachusetts (highest percentage of millennials with health insurance coverage)
  5. Iowa (ranked #1 in lowest housing cost for millennials)

Below is a map with the rankings for each of the 50 states:

New Study Shows Best States for Millennials | MyKCM

We recently reported on a study that set out to find out “How Much You Need to Make to Buy a Home in Your State,” which may have left you wondering what the average salaries are in each of the five states listed above.

According to WalletHub’s research, the top 5 states with the Highest Average Millennial Salaries are:

  1. Washington, D.C.
  2. New York
  3. Massachusetts
  4. Washington
  5. California

Every day, more and more millennials are aging into the ‘Responsibility Zone,’ the time in their lives when their responsibilities start to dictate their behaviors. For many, this includes buying a home. The top 5 states with the Highest Millennial Homeownership Rate are:

  1. Minnesota
  2. West Virginia
  3. Indiana
  4. Utah
  5. Delaware

Bottom Line

If owning a home is next on your list, let’s get together to answer any questions you may have and set you on the path to homeownership!

Homeowners: Your Home Must Be Sold Twice

Sold SignIn today’s housing market, where supply is very low and demand is very high, home values are  increasing rapidly. Many experts are projecting that home values could appreciate by another 4.5%+  over the next twelve months. One major challenge in such a market is the bank appraisal.

If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in  the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity  between what a homeowner who is seeking to refinance their home believes their house is worth, and an appraiser’s evaluation of that same home.

Bill Banfield, Executive VP of Capital Markets at Quicken Loans, urges anyone looking to buy or sell in today’s market to remember the impact of this challenge:

“The appraisal is one of the most important pieces of data in the mortgage process. Often the entire transaction hinges on the appraisal showing a number similar to what the homeowner estimated at the beginning of the process.

If the appraisal is lower it could mean the homeowner needs to bring additional cash to close, or the loan may need to be reworked. It’s very promising to see the homeowner estimate and the appraiser opinion so close together.”

The chart below illustrates the changes in home price estimates over the last 12 months.

Appraiser Home Value Opinions Compared to Homeowner Estimates

Appraiser home Value Opinions Compared to Homeowner Estimates

Bottom Line

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank  (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult  than the first. If you are planning on entering the housing market this year, let’s get together to discuss this and any other obstacle that may arise.

Contact us for more information.

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4 Reasons To Buy A Home This Spring!

Keys to Your New HomeHere are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.6% over the last  12 months. The same report predicts that prices will continue to increase at a rate of 4.3% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years.  Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage  hovered close to 4.0% in 2017. Most experts predict that rates will rise over the next 12 months. The  Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting that rates will increase by nearly a full percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing  expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in  your home that you can tap into later in life. As a renter, you guarantee your landlord is the person  with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current  mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have  a great place for your children to grow up, you want your family to be safer, or you just want to have  control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather  than later could lead to substantial savings.

Contact us for help with your home search today!

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Rising Mortgage Rates Do Not Lead to Falling Home Prices

Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.

Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:

 “For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move. 

Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home. 

Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.”

The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:

“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.

They went on to reveal that the Freddie Mac National House Price Index is…

“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%.

Bottom Line

Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.

 

 

 

5 Reasons To Sell This Spring

For Sale SignHere are five reasons listing your home for sale this spring makes sense.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase…and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.

Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.

The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd,  including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping.  According to Ellie Mae’s latest Origination Insights Report, the average time it took to close a loan was 47 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly AND you’ll be able to find a premium home to call your own!

Prices are projected to appreciate by 4.3% over the next year according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

5. It’s Time to Move on With Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Thinking about selling your home? Contact us today to find out how we can help!

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