February 26, 2012
4 steps to buying a house in 2012
REThink Real Estate
By Tara-Nicholle Nelson
Inman News®
Q: I am on a mission to buy a home. I've wanted to own a home my entire life, and thought I would miss the opportunity to buy while the market was down, because I had no real savings when the market crashed. I think I'm ready, though, and prices still seem low. What should I be doing now to make this happen in 2012?
A: Let me count the ways -- I mean, the things -- you can and should be doing now if you want to buy this year. The recession has done lots of favors for buyers-to-be, including dropping prices and interest rates to bargain levels. But it has also created a lending and housing market climate in which loans are tough to get, tensions about buying into a down market run high, and transactions are harder and longer to close than they have ever been.
If I were talking to a friend who wanted to throw a New Year's 2013 party in her new home, here are the things I'd tell her to do, stat:
1. Fix credit problems. More deals than ever are dying on the vine, and credit problems are a top reason home-sale transactions fall out of escrow. Detect and correct errors on your credit report now by reviewing the federally mandated free reports you can get at AnnualCreditReport.com.
2. Study up. Do some research, both online and offline, into things like:
Areas: Start your online research into decision points like tax rates, school districts, neighborhood character and even prices in various areas. Check out NabeWise.com for some local insight into neighborhood flavor and personality.
When you start connecting with local agents, ask them to brief you on neighborhood market dynamics. They can give you a deeper view into need-to-knows like how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search vis-à-vis what you have to spend.
Agents: This is the perfect time to ask your family and friends for a referral to an agent they know, have used and love. Then, follow up by doing an online search for the agent's name and seeing what sort of online reviews and activities you find. When you've narrowed the field down to a few, call them up and set up a meeting to find out if you're a good fit.
Distressed properties: In some areas, more than 40 percent of the homes on the market are short sales and foreclosures, and they involve a very different timeline and set of facts than traditional home sales. Read up and talk with the agent candidates you interview about what you should expect from these types of listings, to minimize surprise and manage your expectations way in advance.
3. Save even more. Sounds like you've worked hard for a number of years to save enough cash that you think you're in the clear when it comes to funding your down payment and closing costs. Studies show that after months of saving, people often let up and relax into a spending season. Even at your early stage in the process, it's easy to start noticing and buying the furnishings and touches you want to install in your new home.
While I don't want you to feel deprived or forgo amazing and affordable deals on things you know you're going to need, I assure you that no matter what amount of cash you have on hand, when you start house hunting, making offers, closing your transaction or moving in, the time will definitely come when you'll wish you had more.
You might want to ratchet up your offer a bit to best another buyer, or you might just end up with a place that needs a little sprucing up. It might be months before you know exactly what you'll need extra cash for, but now is not the time to press the gas pedal when it comes to your monthly spending.
4. Purge. Now's the time to sell, donate or give away as much of your junk or, excuse me, precious personal possessions as you can. Use the proceeds to pad your cash cushion, or tuck the donation receipts away for your tax records next year.
Start here, and chances are good that your house hunt -- and purchase -- will be in full swing by spring, if not sooner.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Wednesday, February 29, 2012
Tuesday, February 28, 2012
Mortgage rates probe new lows
February 26, 2012
Mortgage rates probe new lows
Eight out of 10 loan applications are for refis
By Inman News®
Mortgage rates plunged to new all-time lows this week as investors in bonds that fund most home loans reacted to news that the economy grew more slowly than expected during the last three months of 2011.
Freddie Mac's weekly Primary Mortgage Market Survey showed rates on 30-year fixed-rate mortgages averaged 3.87 percent with an average 0.8 point for the week ending Feb. 2, down from 3.98 percent last week and 4.81 percent a year ago. That's a new all-time low in Freddie Mac survey records dating to 1971.
Rates on 15-year fixed-rate loans averaged 3.14 percent with an average 0.8 point, down from 3.24 percent last week and 4.08 percent a year ago. Rates on 15-year loans have never been lower since Freddie Mac began tracking them in 1991.
For five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.8 percent with an average 0.7 point, down from 2.85 percent last week and 3.69 percent a year ago. That's a new low in records dating to 2005.
Rates on one-year Treasury-indexed ARM averaged 2.76 percent with an average 0.6 point, up slightly from last week's record low of 2.74 percent. At this time last year, the one-year ARM averaged 3.26 percent.
"Most mortgage rates eased to all-time record lows this week as fourth-quarter growth in the economy fell short of market projections," said Freddie Mac chief economist Frank Nothaft in a statement. "The gross domestic product rose 2.8 percent in the final three months of 2011, below the market consensus forecast of 3 percent, while consumer spending in December was flat. One bright spot, however, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent."
Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans was down a seasonally adjusted 1.7 percent during the week ending Jan. 27 compared to the week before. Demand for purchase loans was down 4.3 percent from the same time a year ago.
Requests to refinance accounted for 80 percent of all mortgage applications, down from 81.3 percent the week before.
"The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low levels until the end of 2014," said MBA chief economist Michael Fratantoni in a statement. "Longer-term Treasury rates dropped in response, and mortgage rates for the week were down slightly as a result."
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Mortgage rates probe new lows
Eight out of 10 loan applications are for refis
By Inman News®
Mortgage rates plunged to new all-time lows this week as investors in bonds that fund most home loans reacted to news that the economy grew more slowly than expected during the last three months of 2011.
Freddie Mac's weekly Primary Mortgage Market Survey showed rates on 30-year fixed-rate mortgages averaged 3.87 percent with an average 0.8 point for the week ending Feb. 2, down from 3.98 percent last week and 4.81 percent a year ago. That's a new all-time low in Freddie Mac survey records dating to 1971.
Rates on 15-year fixed-rate loans averaged 3.14 percent with an average 0.8 point, down from 3.24 percent last week and 4.08 percent a year ago. Rates on 15-year loans have never been lower since Freddie Mac began tracking them in 1991.
For five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.8 percent with an average 0.7 point, down from 2.85 percent last week and 3.69 percent a year ago. That's a new low in records dating to 2005.
Rates on one-year Treasury-indexed ARM averaged 2.76 percent with an average 0.6 point, up slightly from last week's record low of 2.74 percent. At this time last year, the one-year ARM averaged 3.26 percent.
"Most mortgage rates eased to all-time record lows this week as fourth-quarter growth in the economy fell short of market projections," said Freddie Mac chief economist Frank Nothaft in a statement. "The gross domestic product rose 2.8 percent in the final three months of 2011, below the market consensus forecast of 3 percent, while consumer spending in December was flat. One bright spot, however, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent."
Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans was down a seasonally adjusted 1.7 percent during the week ending Jan. 27 compared to the week before. Demand for purchase loans was down 4.3 percent from the same time a year ago.
Requests to refinance accounted for 80 percent of all mortgage applications, down from 81.3 percent the week before.
"The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low levels until the end of 2014," said MBA chief economist Michael Fratantoni in a statement. "Longer-term Treasury rates dropped in response, and mortgage rates for the week were down slightly as a result."
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Monday, February 27, 2012
Q&A: Credit Aside, Abandoning Home Has Consequences
Q&A: Credit Aside, Abandoning Home Has Consequences
Posted By susanne On February 6, 2012 @ 4:51 pm In Today's Home Spun Wisdom
QUESTION: I have been relocated, and my property is underwater. My credit is not important to me, so I am thinking about just walking away from my house as opposed to taking the trouble of doing a short sale. Is there any reason I should not just walk away?
ANSWER: Yes. If you just walk away, you are doing more damage than just accepting a bad credit score. You have the strong possibility of a money judgment following you for 20 years. Also, you are hurting your neighbors by not paying association dues and by leaving an abandoned property in the neighborhood.
Further, there are psychological ramifications from abandoning a responsibility, hurting your neighborhood and not trying to gain closure for yourself. You and your neighbors are much better off if you work with your lender to complete a short sale or a deed in lieu of foreclosure. Aside from the benefit you gain in a legal sense, trying to do the right thing is its own reward.
Q: I just received updated paperwork, and my house has been removed from a flood zone. I have sent copies to the mortgage company. Can the bank still make me carry flood insurance?
A: No. Under most mortgage loans, you have to carry flood insurance only if you are in a flood zone. But in all contractual relationships, it is the paperwork that makes the rules, so check yours to make sure of the answer for your individual situation.
Q: One day I came home to find that my neighbor had cut down several mature shrubs on my side of the property line. I spoke to him about it a while ago, and he said that he thought they were his and that he would replace them with new plants. But I’m still waiting. What can I do?
A: You should make every effort to work this out before taking any court action. It is not a great idea to be involved in any lawsuit if it can be avoided, especially if it is someone you will see every day. If all of your efforts to resolve this in a friendly way fail, you can try to sue him. While your neighbor is allowed to cut branches and roots that extend onto his land, he is not allowed to cut anything over the property line. If you are successful in the lawsuit, you will be able to collect the value of the plants or the reduction of your property value from the neighbor. But, again, try your best not to let it reach that point.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Posted By susanne On February 6, 2012 @ 4:51 pm In Today's Home Spun Wisdom
QUESTION: I have been relocated, and my property is underwater. My credit is not important to me, so I am thinking about just walking away from my house as opposed to taking the trouble of doing a short sale. Is there any reason I should not just walk away?
ANSWER: Yes. If you just walk away, you are doing more damage than just accepting a bad credit score. You have the strong possibility of a money judgment following you for 20 years. Also, you are hurting your neighbors by not paying association dues and by leaving an abandoned property in the neighborhood.
Further, there are psychological ramifications from abandoning a responsibility, hurting your neighborhood and not trying to gain closure for yourself. You and your neighbors are much better off if you work with your lender to complete a short sale or a deed in lieu of foreclosure. Aside from the benefit you gain in a legal sense, trying to do the right thing is its own reward.
Q: I just received updated paperwork, and my house has been removed from a flood zone. I have sent copies to the mortgage company. Can the bank still make me carry flood insurance?
A: No. Under most mortgage loans, you have to carry flood insurance only if you are in a flood zone. But in all contractual relationships, it is the paperwork that makes the rules, so check yours to make sure of the answer for your individual situation.
Q: One day I came home to find that my neighbor had cut down several mature shrubs on my side of the property line. I spoke to him about it a while ago, and he said that he thought they were his and that he would replace them with new plants. But I’m still waiting. What can I do?
A: You should make every effort to work this out before taking any court action. It is not a great idea to be involved in any lawsuit if it can be avoided, especially if it is someone you will see every day. If all of your efforts to resolve this in a friendly way fail, you can try to sue him. While your neighbor is allowed to cut branches and roots that extend onto his land, he is not allowed to cut anything over the property line. If you are successful in the lawsuit, you will be able to collect the value of the plants or the reduction of your property value from the neighbor. But, again, try your best not to let it reach that point.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Sunday, February 26, 2012
Michigan Monthly Real Estate Market Update - January 2012
Michigan Monthly Real Estate Market Update - January 2012
January continued to show positive growth signs with pending sales jumping compared to last January. Values per square foot also moved up in most price categories, with even the upper end showing positive movement. The Months Supply of Inventory dropped quite a bit even with a slight increase in new listings, as pending sales rose more than enough to absorb the extra listings. Percentage of new listings that are bank owned listings had reached a two year low of 30% (Washtenaw County is the lowest is SE Michigan at 17%, with NW Michigan at about 10%), but that is expected to rise as the year goes on as lenders finally begin to release their inventories.
Buyer activity has grown as well over the past 90 days, with the number of property showings up 3% and the number of open house visitors up 20% (certainly influenced by milder weather compared to last year), which means our spring selling season may get a head start this year!
Showing activity per listing is up as well in all counties, moving from about 1.8 showings per week last Dec/Jan to 2.0 this past Dec/Jan an 11% increase.
Prices have shown the same upward movement. Values per square foot in every price category have shown positive numbers over the past 90 days.
CHART: Value Trends by Price Range - SE Michigan
CHART: Value Trends by Price Range - NW Michigan
We have the strongest pent up demand we have seen in the past six years going into the spring market. A good share of that pent up demand is being held back until prices rise a bit more, but even a small rise in prices will bring an increase in listing activity.
All that said, Sellers should continue to be aggressive in correctly pricing their home since statistically 70% of homes are listed above the price that will attract an offer. Buyers should be aggressive with their offers since the majority of buyers are all focusing on the 30% of properties that are priced to market.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
January continued to show positive growth signs with pending sales jumping compared to last January. Values per square foot also moved up in most price categories, with even the upper end showing positive movement. The Months Supply of Inventory dropped quite a bit even with a slight increase in new listings, as pending sales rose more than enough to absorb the extra listings. Percentage of new listings that are bank owned listings had reached a two year low of 30% (Washtenaw County is the lowest is SE Michigan at 17%, with NW Michigan at about 10%), but that is expected to rise as the year goes on as lenders finally begin to release their inventories.
Buyer activity has grown as well over the past 90 days, with the number of property showings up 3% and the number of open house visitors up 20% (certainly influenced by milder weather compared to last year), which means our spring selling season may get a head start this year!
Showing activity per listing is up as well in all counties, moving from about 1.8 showings per week last Dec/Jan to 2.0 this past Dec/Jan an 11% increase.
Prices have shown the same upward movement. Values per square foot in every price category have shown positive numbers over the past 90 days.
CHART: Value Trends by Price Range - SE Michigan
CHART: Value Trends by Price Range - NW Michigan
We have the strongest pent up demand we have seen in the past six years going into the spring market. A good share of that pent up demand is being held back until prices rise a bit more, but even a small rise in prices will bring an increase in listing activity.
All that said, Sellers should continue to be aggressive in correctly pricing their home since statistically 70% of homes are listed above the price that will attract an offer. Buyers should be aggressive with their offers since the majority of buyers are all focusing on the 30% of properties that are priced to market.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Monday, February 20, 2012
5 Negotiation Need To Knows
5 Negotiation Need-to-Knows
Reactions to the prospect of negotiating run the gamut, almost like a Rorschach of people’s comfort levels when it comes to thinking, talking and asserting themselves about money matters. Some people get so excited about haggling they adopt an entirely new persona when the time comes to talk their way into saving even a few bucks here or there. Others cringe at the mere thought of trying to suss out what’s going on in the minds of those on the other side of the bargaining table in order to strike a deal, even when hundreds of thousands of dollars (and their own best interests) are at stake.
And in light of the current market, it can seem like every real estate pundit you’ve ever seen on TV, the old guys from the Fed, Suze Orman, Jim Cramer - even the President! - have each pulled a chair up to the table and chimed into your transaction, too! Trying to factor market dynamics into your personal negotiation equation only ups the complexity factor (and the fear factor to boot).
When it comes to buying or selling your home, there is a handful of negotiation need-to-knows that can go a long way toward protecting your best interests - and your cash! Here are five essential negotiation need-to-knows for savvy home buyers and sellers:
1. Work from a foundation of sound information. It’s essential that you amass an arsenal of information, and use that as the basis for your negotiation. You are in no position to negotiate, aggressively or otherwise, unless and until you are well acquainted with the real estate market immediately surrounding your home, including:•what have similar homes recently sold for;
•how much above or below asking do they normally sell for;
•how long do homes stay on the market, on average, compared with the home you’re buying or selling?
Not only will your agent help you understand these numbers and how they should relate to your own offer or response, your agent is also in a good position to reach out to the other agent and collect any available information about what is important to the other party: do they care more about moving quickly, getting top dollar, or certainty that the other side can close the deal? The other agent isn’t obligated to divulge any information but often will, in the interest of facilitating a deal that addresses their client’s priorities.
Finally, it’s uber-critical to know what your own priorities are. Ultimately, the bar for whether your negotiation for your home is successful is based on what the home and the terms of the contract are worth to you. Know your own bottom and top line for price, and what your own priorities are, before the negotiation begins.
2. Approach the negotiation as a problem-solving challenge. Today’s negotiations are really more like problem solving scenarios, when you take into account all the parties whose needs must be met for the transaction to move forward. Traditionally, negotiations were a two-way power struggle between the buyer and seller, based primarily on their wants and their respective bargaining leverage. But on today’s market, the bank - or banks on both sides -- often have their own guidelines and needs that impact the terms of the deal, whether it be the seller’s lender insisting on a certain price in a short sale, or the buyer’s lender and appraiser refusing to lend anything above a certain price.
Many a buyer has thought they were scoring a great deal by scoring a bargain basement price on a short sale, only to have the seller’s bank condition approval of the deal on a massive increase in the sale price. And the opposite is also true: a significant number of the deals that fall apart on today’s market do so because the home fails to appraise for the purchase price the buyer has agreed to pay. Ultimately, this is even the case when it comes to the buyer’s and seller’s needs: if the buyer can’t qualify for a high enough mortgage, or the seller can’t pay their mortgage balance off, at the price in the other party’s mind, there will be no deal, and the negotiation is inherently unsuccessful.
In this context, it’s more important than ever to approach your negotiation as an exercise in problem solving, with the aim of meeting the needs of as many parties involved as possible. If you get some of your wants met, too, you’re golden!
3. Manage your own mindset. You probably shouldn’t even try to buy a home that you don’t strongly like, or even love. It often makes sense to hone in on a specific offer price (within the range what is reasonable for a home) based on how much you want it, or how much you’d hate to lose it - especially in a multiple offer situation, where you may only have one chance to make an offer.
With that said, be aware that when it comes to negotiating, she who is the least emotionally attached to a particular outcome usually has the greater bargaining power. The more attached you are to a particular home or a particular price point or set of terms for your home, the more likely you are to panic, freak out, throw money at the situation or cave in on important points unnecessarily when you get even the faintest sense that your desires may be at risk.
When it comes to managing your own mindset and stamina through the course of a negotiation (uncertainty is tiring!), knowing what is and what isn’t within each party’s - control is key. Your agent can help you stay clear on this, which will help you avoid the emotional exhaustion that results from trying to negotiate things that are not really negotiable (e.g., the bank’s bottom line, cosmetic repairs on most foreclosures, etc.). On the flip side, knowing the full range of items that can be negotiated - which extends beyond price into areas like deposit amount, length of escrow, seller repairs, and whether the property is to be taken in as-is condition - empowers you to maximize how compelling your offer is to the other side, given the resources at your disposal.
4. Minimize time pressures. Over the years, I have seen many a buyer and seller make brow-raisingly questionable offers and counteroffers based solely on the fact that they have to move by a certain deadline. Because shelter is a basic human need, the prospect of having to move out, relocating to a new job or moving to a new town without having housing in place can cause even the most nimble among us to feel ungrounded.
Problem is, in the context of buying a home, moving deadlines can cost you thousands and thousands of dollars - and can even cause you to make needless compromises in terms of the actual property itself: compromises you might later (deeply) regret. If you are approaching a deadline for moving out or relocating, you’d do better to find a rental housing situation that will work for awhile or will work as a Plan B than to try to hurry your home’s purchase or sale to meet the deadline.
5. Act and react quickly - not impulsively. When you find ‘your’ place, make an offer. When you get an offer or counteroffer), respond to it. In real estate, time is always of the essence, and prolonged hesitation often results in lost opportunities. There’s nothing wrong with sleeping on a decision overnight, especially if the ‘right’ move is unclear. But you never know when another buyer or another property might show up on the scene and change the whole bargaining dynamic, costing you more money or wooing away your home’s buyer.
This is why it’s so important to be clear on the market data, your own budget and your own top and bottom lines from the start, so that you are positioned to act quickly, strategically and intelligently when the circumstances require it.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Reactions to the prospect of negotiating run the gamut, almost like a Rorschach of people’s comfort levels when it comes to thinking, talking and asserting themselves about money matters. Some people get so excited about haggling they adopt an entirely new persona when the time comes to talk their way into saving even a few bucks here or there. Others cringe at the mere thought of trying to suss out what’s going on in the minds of those on the other side of the bargaining table in order to strike a deal, even when hundreds of thousands of dollars (and their own best interests) are at stake.
And in light of the current market, it can seem like every real estate pundit you’ve ever seen on TV, the old guys from the Fed, Suze Orman, Jim Cramer - even the President! - have each pulled a chair up to the table and chimed into your transaction, too! Trying to factor market dynamics into your personal negotiation equation only ups the complexity factor (and the fear factor to boot).
When it comes to buying or selling your home, there is a handful of negotiation need-to-knows that can go a long way toward protecting your best interests - and your cash! Here are five essential negotiation need-to-knows for savvy home buyers and sellers:
1. Work from a foundation of sound information. It’s essential that you amass an arsenal of information, and use that as the basis for your negotiation. You are in no position to negotiate, aggressively or otherwise, unless and until you are well acquainted with the real estate market immediately surrounding your home, including:•what have similar homes recently sold for;
•how much above or below asking do they normally sell for;
•how long do homes stay on the market, on average, compared with the home you’re buying or selling?
Not only will your agent help you understand these numbers and how they should relate to your own offer or response, your agent is also in a good position to reach out to the other agent and collect any available information about what is important to the other party: do they care more about moving quickly, getting top dollar, or certainty that the other side can close the deal? The other agent isn’t obligated to divulge any information but often will, in the interest of facilitating a deal that addresses their client’s priorities.
Finally, it’s uber-critical to know what your own priorities are. Ultimately, the bar for whether your negotiation for your home is successful is based on what the home and the terms of the contract are worth to you. Know your own bottom and top line for price, and what your own priorities are, before the negotiation begins.
2. Approach the negotiation as a problem-solving challenge. Today’s negotiations are really more like problem solving scenarios, when you take into account all the parties whose needs must be met for the transaction to move forward. Traditionally, negotiations were a two-way power struggle between the buyer and seller, based primarily on their wants and their respective bargaining leverage. But on today’s market, the bank - or banks on both sides -- often have their own guidelines and needs that impact the terms of the deal, whether it be the seller’s lender insisting on a certain price in a short sale, or the buyer’s lender and appraiser refusing to lend anything above a certain price.
Many a buyer has thought they were scoring a great deal by scoring a bargain basement price on a short sale, only to have the seller’s bank condition approval of the deal on a massive increase in the sale price. And the opposite is also true: a significant number of the deals that fall apart on today’s market do so because the home fails to appraise for the purchase price the buyer has agreed to pay. Ultimately, this is even the case when it comes to the buyer’s and seller’s needs: if the buyer can’t qualify for a high enough mortgage, or the seller can’t pay their mortgage balance off, at the price in the other party’s mind, there will be no deal, and the negotiation is inherently unsuccessful.
In this context, it’s more important than ever to approach your negotiation as an exercise in problem solving, with the aim of meeting the needs of as many parties involved as possible. If you get some of your wants met, too, you’re golden!
3. Manage your own mindset. You probably shouldn’t even try to buy a home that you don’t strongly like, or even love. It often makes sense to hone in on a specific offer price (within the range what is reasonable for a home) based on how much you want it, or how much you’d hate to lose it - especially in a multiple offer situation, where you may only have one chance to make an offer.
With that said, be aware that when it comes to negotiating, she who is the least emotionally attached to a particular outcome usually has the greater bargaining power. The more attached you are to a particular home or a particular price point or set of terms for your home, the more likely you are to panic, freak out, throw money at the situation or cave in on important points unnecessarily when you get even the faintest sense that your desires may be at risk.
When it comes to managing your own mindset and stamina through the course of a negotiation (uncertainty is tiring!), knowing what is and what isn’t within each party’s - control is key. Your agent can help you stay clear on this, which will help you avoid the emotional exhaustion that results from trying to negotiate things that are not really negotiable (e.g., the bank’s bottom line, cosmetic repairs on most foreclosures, etc.). On the flip side, knowing the full range of items that can be negotiated - which extends beyond price into areas like deposit amount, length of escrow, seller repairs, and whether the property is to be taken in as-is condition - empowers you to maximize how compelling your offer is to the other side, given the resources at your disposal.
4. Minimize time pressures. Over the years, I have seen many a buyer and seller make brow-raisingly questionable offers and counteroffers based solely on the fact that they have to move by a certain deadline. Because shelter is a basic human need, the prospect of having to move out, relocating to a new job or moving to a new town without having housing in place can cause even the most nimble among us to feel ungrounded.
Problem is, in the context of buying a home, moving deadlines can cost you thousands and thousands of dollars - and can even cause you to make needless compromises in terms of the actual property itself: compromises you might later (deeply) regret. If you are approaching a deadline for moving out or relocating, you’d do better to find a rental housing situation that will work for awhile or will work as a Plan B than to try to hurry your home’s purchase or sale to meet the deadline.
5. Act and react quickly - not impulsively. When you find ‘your’ place, make an offer. When you get an offer or counteroffer), respond to it. In real estate, time is always of the essence, and prolonged hesitation often results in lost opportunities. There’s nothing wrong with sleeping on a decision overnight, especially if the ‘right’ move is unclear. But you never know when another buyer or another property might show up on the scene and change the whole bargaining dynamic, costing you more money or wooing away your home’s buyer.
This is why it’s so important to be clear on the market data, your own budget and your own top and bottom lines from the start, so that you are positioned to act quickly, strategically and intelligently when the circumstances require it.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Thursday, February 9, 2012
Qualify to buy before selling current home
Qualify to buy before selling current home
Bridge financing, hybrid loans take stress out of equation
By Dian Hymer
Inman News®
Buying a first home is hardly easy, but it pales in comparison to buying your next home. Usually, two transactions are involved: the purchase of the new home and the sale of your current home. In other words, double the complexity.
Most homeowners would rather know where they're going to live next before they let go of their current home, particularly if they have small children. However, stringent lender qualifying requirements make it impossible for most buyers to buy before selling.
Lenders require enough cash for a down payment and closing costs without having your home sold. You will also need enough income to qualify carrying both homes. If you don't have enough income to qualify but it makes sense financially for you to keep your home as a rental property, the lender will use a portion of the rental income to help you qualify for the mortgage you need to buy the next home.
HOUSE HUNTING TIP: Buyers wedded to 30-year fixed-rate financing can make qualifying easier by changing to an adjustable-rate mortgage (ARM). There are ARMs that are fixed for a number of years -- say five, seven or 10 -- before they convert to an adjustable. These loans are available at much lower interest rates than 30-year fixed-rate financing.
If you plan to stay in the new home for longer than 10 years and want to take advantage of today's low fixed interest rates, you can refinance after your current home is sold. If you take this route, make sure there isn't a prepayment on the fixed ARM. Also, be aware that the interest rate on a 30-year fixed-rate refinance loan is a bit higher than it would be on an equivalent purchase-money mortgage.
In one instance recently, buyers were able to buy before selling, but only with the help of creative financing. The buyers had a generous down payment and applied for a jumbo conforming loan in the amount of $625,500. They hadn't sold their current home, so that mortgage was taken into account for qualification. Their overall debt-to-income ratio was too high. The lender of the mortgage for the new home would qualify the buyers for a conforming loan only in the amount of $417,000.
These buyers were able to arrange a short-term interim loan from friends to bridge the gap until the sale of their current home closed. Check with your loan agent or mortgage broker to make sure this will be satisfactory with the lender. All cash for the down payment needs to be carefully documented, and certain restrictions apply.
Another buyer who couldn't qualify to buy a new home without selling first was able to secure a private loan. Expect to pay a higher interest rate for such a loan, but you shouldn't have to pay it for long if you're selling a well-located home in good condition and you price it right for the market.
In some cases, parents are willing and able to provide bridge financing, and are happy to make more interest than they will on CDs or Treasurys.
In some markets that have a surplus of homes for sale, you may be able to buy contingent on the sale of your current home. However, banks selling foreclosure properties (REOs) usually won't accept a contingent-sale offer. Neither will sellers in desirable, low-inventory areas where there is plenty of buyer demand and buyers with a lot of cash who don't need to sell first.
In this situation, you will need to sell first to be competitive and have a chance of buying in a choice neighborhood. It could require making a move to an interim rental.
THE CLOSING: Although not popular, at least you buy time to find the right house that will suit your long-term needs.
Bridge financing, hybrid loans take stress out of equation
By Dian Hymer
Inman News®
Buying a first home is hardly easy, but it pales in comparison to buying your next home. Usually, two transactions are involved: the purchase of the new home and the sale of your current home. In other words, double the complexity.
Most homeowners would rather know where they're going to live next before they let go of their current home, particularly if they have small children. However, stringent lender qualifying requirements make it impossible for most buyers to buy before selling.
Lenders require enough cash for a down payment and closing costs without having your home sold. You will also need enough income to qualify carrying both homes. If you don't have enough income to qualify but it makes sense financially for you to keep your home as a rental property, the lender will use a portion of the rental income to help you qualify for the mortgage you need to buy the next home.
HOUSE HUNTING TIP: Buyers wedded to 30-year fixed-rate financing can make qualifying easier by changing to an adjustable-rate mortgage (ARM). There are ARMs that are fixed for a number of years -- say five, seven or 10 -- before they convert to an adjustable. These loans are available at much lower interest rates than 30-year fixed-rate financing.
If you plan to stay in the new home for longer than 10 years and want to take advantage of today's low fixed interest rates, you can refinance after your current home is sold. If you take this route, make sure there isn't a prepayment on the fixed ARM. Also, be aware that the interest rate on a 30-year fixed-rate refinance loan is a bit higher than it would be on an equivalent purchase-money mortgage.
In one instance recently, buyers were able to buy before selling, but only with the help of creative financing. The buyers had a generous down payment and applied for a jumbo conforming loan in the amount of $625,500. They hadn't sold their current home, so that mortgage was taken into account for qualification. Their overall debt-to-income ratio was too high. The lender of the mortgage for the new home would qualify the buyers for a conforming loan only in the amount of $417,000.
These buyers were able to arrange a short-term interim loan from friends to bridge the gap until the sale of their current home closed. Check with your loan agent or mortgage broker to make sure this will be satisfactory with the lender. All cash for the down payment needs to be carefully documented, and certain restrictions apply.
Another buyer who couldn't qualify to buy a new home without selling first was able to secure a private loan. Expect to pay a higher interest rate for such a loan, but you shouldn't have to pay it for long if you're selling a well-located home in good condition and you price it right for the market.
In some cases, parents are willing and able to provide bridge financing, and are happy to make more interest than they will on CDs or Treasurys.
In some markets that have a surplus of homes for sale, you may be able to buy contingent on the sale of your current home. However, banks selling foreclosure properties (REOs) usually won't accept a contingent-sale offer. Neither will sellers in desirable, low-inventory areas where there is plenty of buyer demand and buyers with a lot of cash who don't need to sell first.
In this situation, you will need to sell first to be competitive and have a chance of buying in a choice neighborhood. It could require making a move to an interim rental.
THE CLOSING: Although not popular, at least you buy time to find the right house that will suit your long-term needs.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Bridge financing, hybrid loans take stress out of equation
By Dian Hymer
Inman News®
Buying a first home is hardly easy, but it pales in comparison to buying your next home. Usually, two transactions are involved: the purchase of the new home and the sale of your current home. In other words, double the complexity.
Most homeowners would rather know where they're going to live next before they let go of their current home, particularly if they have small children. However, stringent lender qualifying requirements make it impossible for most buyers to buy before selling.
Lenders require enough cash for a down payment and closing costs without having your home sold. You will also need enough income to qualify carrying both homes. If you don't have enough income to qualify but it makes sense financially for you to keep your home as a rental property, the lender will use a portion of the rental income to help you qualify for the mortgage you need to buy the next home.
HOUSE HUNTING TIP: Buyers wedded to 30-year fixed-rate financing can make qualifying easier by changing to an adjustable-rate mortgage (ARM). There are ARMs that are fixed for a number of years -- say five, seven or 10 -- before they convert to an adjustable. These loans are available at much lower interest rates than 30-year fixed-rate financing.
If you plan to stay in the new home for longer than 10 years and want to take advantage of today's low fixed interest rates, you can refinance after your current home is sold. If you take this route, make sure there isn't a prepayment on the fixed ARM. Also, be aware that the interest rate on a 30-year fixed-rate refinance loan is a bit higher than it would be on an equivalent purchase-money mortgage.
In one instance recently, buyers were able to buy before selling, but only with the help of creative financing. The buyers had a generous down payment and applied for a jumbo conforming loan in the amount of $625,500. They hadn't sold their current home, so that mortgage was taken into account for qualification. Their overall debt-to-income ratio was too high. The lender of the mortgage for the new home would qualify the buyers for a conforming loan only in the amount of $417,000.
These buyers were able to arrange a short-term interim loan from friends to bridge the gap until the sale of their current home closed. Check with your loan agent or mortgage broker to make sure this will be satisfactory with the lender. All cash for the down payment needs to be carefully documented, and certain restrictions apply.
Another buyer who couldn't qualify to buy a new home without selling first was able to secure a private loan. Expect to pay a higher interest rate for such a loan, but you shouldn't have to pay it for long if you're selling a well-located home in good condition and you price it right for the market.
In some cases, parents are willing and able to provide bridge financing, and are happy to make more interest than they will on CDs or Treasurys.
In some markets that have a surplus of homes for sale, you may be able to buy contingent on the sale of your current home. However, banks selling foreclosure properties (REOs) usually won't accept a contingent-sale offer. Neither will sellers in desirable, low-inventory areas where there is plenty of buyer demand and buyers with a lot of cash who don't need to sell first.
In this situation, you will need to sell first to be competitive and have a chance of buying in a choice neighborhood. It could require making a move to an interim rental.
THE CLOSING: Although not popular, at least you buy time to find the right house that will suit your long-term needs.
Bridge financing, hybrid loans take stress out of equation
By Dian Hymer
Inman News®
Buying a first home is hardly easy, but it pales in comparison to buying your next home. Usually, two transactions are involved: the purchase of the new home and the sale of your current home. In other words, double the complexity.
Most homeowners would rather know where they're going to live next before they let go of their current home, particularly if they have small children. However, stringent lender qualifying requirements make it impossible for most buyers to buy before selling.
Lenders require enough cash for a down payment and closing costs without having your home sold. You will also need enough income to qualify carrying both homes. If you don't have enough income to qualify but it makes sense financially for you to keep your home as a rental property, the lender will use a portion of the rental income to help you qualify for the mortgage you need to buy the next home.
HOUSE HUNTING TIP: Buyers wedded to 30-year fixed-rate financing can make qualifying easier by changing to an adjustable-rate mortgage (ARM). There are ARMs that are fixed for a number of years -- say five, seven or 10 -- before they convert to an adjustable. These loans are available at much lower interest rates than 30-year fixed-rate financing.
If you plan to stay in the new home for longer than 10 years and want to take advantage of today's low fixed interest rates, you can refinance after your current home is sold. If you take this route, make sure there isn't a prepayment on the fixed ARM. Also, be aware that the interest rate on a 30-year fixed-rate refinance loan is a bit higher than it would be on an equivalent purchase-money mortgage.
In one instance recently, buyers were able to buy before selling, but only with the help of creative financing. The buyers had a generous down payment and applied for a jumbo conforming loan in the amount of $625,500. They hadn't sold their current home, so that mortgage was taken into account for qualification. Their overall debt-to-income ratio was too high. The lender of the mortgage for the new home would qualify the buyers for a conforming loan only in the amount of $417,000.
These buyers were able to arrange a short-term interim loan from friends to bridge the gap until the sale of their current home closed. Check with your loan agent or mortgage broker to make sure this will be satisfactory with the lender. All cash for the down payment needs to be carefully documented, and certain restrictions apply.
Another buyer who couldn't qualify to buy a new home without selling first was able to secure a private loan. Expect to pay a higher interest rate for such a loan, but you shouldn't have to pay it for long if you're selling a well-located home in good condition and you price it right for the market.
In some cases, parents are willing and able to provide bridge financing, and are happy to make more interest than they will on CDs or Treasurys.
In some markets that have a surplus of homes for sale, you may be able to buy contingent on the sale of your current home. However, banks selling foreclosure properties (REOs) usually won't accept a contingent-sale offer. Neither will sellers in desirable, low-inventory areas where there is plenty of buyer demand and buyers with a lot of cash who don't need to sell first.
In this situation, you will need to sell first to be competitive and have a chance of buying in a choice neighborhood. It could require making a move to an interim rental.
THE CLOSING: Although not popular, at least you buy time to find the right house that will suit your long-term needs.
If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
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