No… You Do Not Need 20% Down to Buy NOW!

No… You Do Not Need 20% Down to Buy NOW!

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

This brings us to two major misconceptions that we want to address today.

 

  1. Down Payment

 

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.

 

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

 

  1. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.

 

No… You Do Not Need 20% Down to Buy NOW! | Keeping Current Matters

 

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, sit down with a professional who can help you understand your true options.

 

 

Mortgage Interest Rates Reverse Course in 2017

Mortgage Interest Rates Reverse Course in 2017

To start the year, housing experts all agreed on one thing: 2017 was going to be the year we would see mortgage interest rates begin to rise. After years of historically low rates, and an improving economy, the question wasn’t if they would increase but instead how much they would increase. Some thought we could see rates hit 5-5.5% by the end of the year. However, the exact opposite has happened. Instead of higher rates as we head into the middle of 2017, we now have the lowest rates of the year (as reported by Freddie Mac). Here is a graph of mortgage rate movement since the beginning of the year:

Projections still call for an increase…

Four major entities (Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors) are still projecting that rates will increase by the fourth quarter of the year. Mortgage Interest Rates Reverse Course in 2017 | Keeping Current Matters

Bottom Line

No one knows for sure where interest rates will be in six months. However, if you are thinking about buying your first house or trading up to the home of your dreams, you can still get a mortgage at historically low rates RIGHT NOW.

 

Housing Market Expected to “Spring Forward”

Housing Market Expected to “Spring Forward”

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2016 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2017, let’s get together to evaluate the opportunities in our market.

Where Did Americans Move in 2016?

Where Did Americans Move in 2016?

Where Did Americans Move in 2016? | MyKCM

Some Highlights:

  • For the 5th year in a row, the Northeast saw a concentration of “High Outbound” activity.
  • For the first time ever, South Dakota held the top spot for “High Inbound” states.
  • Much of America’s outbound activity can be attributed to Boomers relocating to warmer climates after retiring.
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Top 5 Reasons You Should Not For Sale By Owner

Top 5 Reasons You Should Not For Sale By Owner

In 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 Buyers

Recent studies have shown that 94% 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?

  • 51% on the internet
  • 34% from a Real Estate Agent
  • 9% 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

4. 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.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. 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.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together and discuss the options available in your market today.

Listing in the Winter Attracts More Serious Buyers

Listing in the Winter Attracts More Serious Buyers

A recent study of more than 7 million home sales over the past four years revealed that the season in which a home is listed may be able to shed some light on the likelihood that the home will sell for more than asking price, as well as how quickly the sale will close.

It’s no surprise that listing a home for sale during the spring saw the largest return, as the spring is traditionally the busiest season for real estate. What is surprising, though, is that listing during the winter came in second!

“Among spring listings, 18.7 percent of homes fetched above asking, with winter listings not far behind at 17.5 percent. While 48.0 percent of homes listed in spring sold within 30 days, 46.2 percent of homes in winter did the same.”

The study goes on to say that:

“Buyers [in the winter] often need to move, so they’re much less likely to make a lowball offer and they’ll often want to close quickly — two things that can make the sale much smoother.” 

Bottom Line

If you are debating listing your home for sale in 2017, keep in mind that the spring is when most other homeowners will decide to list their homes as well. Listing your home this winter will ensure that you have the best exposure to the serious buyers who are out looking now!

The study used the astronomical seasons to determine which season the listing date fell into (Winter: Dec. 21 – Mar. 20; Spring: Mar. 21 – June 20; Summer: June 21 – Sept 21; Autumn: Sept 21 – Dec. 20).

Buyer Demand Is Outpacing the Supply of Homes for Sale

Buyer Demand Is Outpacing the Supply of Homes for Sale

The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

Buyer Demand Is Outpacing the Supply of Homes for Sale | MyKCM

The darker the blue, the stronger the demand for homes in that area. Only six states had a weak demand level.

Seller Supply

The Index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

Buyer Demand Is Outpacing the Supply of Homes for Sale | MyKCM

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

 

Fix it or Leave it?

Fix it or Leave it?

This is the question on most seller’s mines when it is about time to sell. Will it be worth the expense of repairing and upgrading the house? There really is no way of telling if any one thing would be worth it for sure. But there are general guide lines to consider.

Who will be buying your house? Obviously you won’t know the individuals but you can guess the type of person. If it is a very low dollar house that is all-around outdated, it is likely going to be bought by an investor to be used as a rental. They are mostly interested in how much work NEEDS to be done to be fit to rent and getting it for bottom dollar. Certain things can still be done but don’t waist your money upgrading to nicer counter top or nicer carpet. If what’s there is in decent shape, skip it.

However, if it is a medium to high priced house, you will likely be appealing to someone who actually wants to live there. These are the type of people who will actually care about the style of the house.

So what should be upgraded? Take a look with fresh eyes at your house and fix the most obvious problems first. Does it need to be painted? That can be a worth while investment. Chipping paint on the exterior can make the entire house look poorly cared for. And the opposite is true. A very nice exterior paint job can make the entire house looked cared for.

Most importantly is to fix the ugliest and visually broken/neglected parts of your house first. Crumbling front steps take priority over wallpaper. Too much overgrown shrubbery takes priority over new windows. Stained and fraying carpet takes priority over upgrading the bathroom vanity. Water damaged ceiling take priority over new light fixtures.

Is your house almost immaculate? You might be appealing to someone who doesn’t want to make any repairs. If your house is “almost perfect”, consider doing what it takes to make it actually “perfect”.

One last bit of advice… clean and clean more. When you are done cleaning, clean even more. That is the cheapest thing you can do to a house that will give it a leg up. Shampoo the carpet. Wipe down the wood work and cabinets. Dust the fans and make everything sparkle. Buyers will notice, possibly subconsciously,  but they WILL notice a clean house and think more favorably of it.


If you have a specific question about whether a repair/upgrade is worth it, please don’t hesitate to give me a call. Angie Uttecht 605-350-2553

 

How will Student Loans affect the Housing Market?

Here are some statistics to think about.

  • The average graduate of the class of 2015 has $35,000 in student loan debt.
  • Since 2010, 40% of households under 35 had a student loan.
  • The average American household with at least one credit card has nearly $15,950 in credit-card debt (in 2012), according to CreditCards.com, and the average interest rate runs in the mid- to high teens at any given time.

When a lender looks at debt, they see it all the same. A $260/month student loan payment is looked at in the same light as credit card debt or a car payment. If someone has all three debts, getting a mortgage can be a very difficult task.

Because of this increase in debt, for the first time ever, young people who did not seek a college education are more likely to buy homes than their college educated peers.

This is bad news for all homeowners looking to sell a home. If there are less young people who are looking to buy small and inexpensive homes, it will be harder for those trying to sell to move up. The ripple effect continues as those selling medium priced houses will have less potential buyers because they are stuck in their entry-level homes.

The twist? According to NAR, 88% of Millennials home purchases have been for houses over $100,000. And 45% of Millennials pay over $250,000 for their first home.

 

Temporary Relocating? Leave it vacant, sell, or rent?

When you bought your house, you weren’t likely thinking about selling it. But life can throw some nasty curve balls! Temporary Relocation happens for a number of reasons. Going back to school, being closer to a family member, accepting an internship, or doing some serious traveling are all examples. And unless your house has wheels, it isn’t coming with!

If you have built up some equity and would like a fresh start when you get back, selling your house might be right for you. And you won’t grow any gray hairs being so far apart.

What if you love your house and want to come back? Then you should keep it! But here is some advice.

Don’t leave it vacant. Your house needs a care giver. Houses that have been vacant for a long time start to really fall into disrepair! You need to keep the pipes from freezing, the lawn mowed, the sidewalk clear of snow, and the list goes on forever. Little leaks turn into gaping holes in the roof if no one fixes it. For this reason, insurance rates for vacant homes are much higher.

Vacant homes appeal to vandals, thieves, squatters, and raccoons. None of which are responsible beings who want to take care of your home. As a result, a vacant home holds more risk than having renters.

Renting? Hire a property manager. This could be just a responsible friend, preferably one that is a homeowner. Have them drive by the property every once in a while to ensure that the tenants haven’t left without notice. They will also respond to any emergencies. No heat? Have them go over and confirm it isn’t user-error on the thermostat before calling a repair man.

Have them sign a lease. Being long distance, you cannot afford to have a turn-over of tenants. The tenants know that they are legally bonded and are much less likely to want to fight that battle. Unleased tenants are well aware of their freedom and will jump at a better opportunity.

Choose trust-worthy tenants. Get to know your prospective tenants as well as you can before letting them move in. If they had to leave their last place because of damages or failure to pay rent, chances are their habits haven’t changed.

If you have questions or would like to know what your house could sell for, give me a call or email — Angie Uttecht 605-350-2553 angie@soldbyangie.com