How to Search for a Home in a Buyer’s Market
September 22, 2010 by Erin Schedler · 1 Comment
The market has changed, so buyers should adjust their search accordingly.
1. Less Inventory Means More Time Touring
With a buyers’ market, more sellers are choosing to stay in their homes and wait to sell. As a result, there are fewer homes on the market and available to buyers and more time between new listings. If you are looking to buy in the near future, my suggestion is to start touring homes sooner than later. This way, you’ll get to see more homes over a longer span of time, have more choices as a result, and be more familiar with your options when you’re ready to make an offer.
2. Search Above Your Preferred Price Point
While it is not my practice to push buyers’ past their comfort zone in price, I do recommend looking $25-$40k above your pre-approved price when searching online. This is because, in this market, many listings see 1 or 2 (and sometimes 3!) price reductions in their time on market. A home that originally lists for $425k may end up at $390k after 6 months on the market. By broadening your online search criteria, you’ll expose yourself to more properties that fit your needs.
3. Be Reasonable
One of the favorite parts of my job is negotiating contracts, and playing “hardball” for my clients. Saving them money and getting them a great deal provides me a lot of satisfaction!
That being said, a buyer’s market does not mean you can be wildly unreasonable with offers. If a home is listed for $400k, don’t plan on offering $320k and having it accepted. Because we’ve been in a slower market for some time, sellers have become more reasonable and aggressive with their list prices. Many of the homes are priced-to-market and are already a deal on their own.
An offer 2 to 5% below list price is a safe expectation. Keep in mind, with extremely low interest rates, credits and prepaids, and seller-paid repairs, you can get a deal in more ways than one!
4. Don’t Second Guess Yourself
In a slower market, many buyers are plagued by fear. Even when they find a property that fits all their criteria, they will start finding fault with minor things like paint colors and light fixtures and decide to “wait” until they find a home that is 100% perfect. My advice is, when you find a home meets your wish list and financial criteria, don’t be afraid to buy it. Passing on a home that’s a 98% fit in hopes you’ll find 100% wastes your time and stresses you out, not to mention it’s a little unrealistic. Every home will have a little quirk, but if you love it and it suits you, your search is over.
Never Forget
September 11, 2010 by Erin Schedler · Leave a Comment
Today I am thinking of and sending prayers for the families and loved ones who lost their lives in the Sept 11 attacks. We must never forget. I am so grateful to be an American, and so proud of the men and women that continue to serve and protect our wonderful country.
King County Stats – End of August 2010
September 7, 2010 by Erin Schedler · Leave a Comment
| Single Family Residence | ||
| Time Period | Number of Sales | Median Sale Price |
| Jul 2010 | 1,313 | $397,000 |
| Jul 2009 | 1,711 | $380,000 |
| Jun 2010 | 1,876 | $389,975 |
| Jun 2009 | 1,805 | $393,000 |
| 2010 YTD | 11,136 | $380,000 |
| 2009 | 16,646 | $378,000 |
| Condominium | ||
| Time Period | Number of Sales | Median Sale Price |
| Jul 2010 | 277 | $275,000 |
| Jul 2009 | 521 | $275,000 |
| Jun 2010 | 472 | $249,000 |
| Jun 2009 | 498 | $261,400 |
| 2010 YTD | 2,907 | $259,000 |
| 2009 | 4,804 | $265,000 |
Washington State – Real Estate Market Snapshot
September 2, 2010 by Erin Schedler · Leave a Comment
I am a passionate Husky fan (Go Dawgs!), but this report by WSU is pretty interesting.
It goes over real estate statistics for Q2 of 2010, how it compares to Q1 as well as this time last year.
One of the interesting things to note is that only one county dropped in recorded sales in the last year. Similarly, prices only dropped 3% in King County (a roughly $10k difference on the median home price). There isn’t a significant difference between the past two quarters for number of sales or prices, which means we’re still in a pretty stagnant market.
Link to full report: http://www.wcrer.wsu.edu/WSHM/2010Q2/Snapshot%202010Q2.pdf
Tax Tips for Homeowners Looking Ahead to 2010 Returns
September 2, 2010 by Erin Schedler · Leave a Comment
From energy tax credits to vacation home deductions, check out these tax tips for homeowners looking ahead to 2010 returns.
If you believe your real estate assessment is too high, you can always appeal it and possibly save on your property tax bill.
Tax planning for homeowners should start well in advance of the April 15 filing deadline each year. If you delay until the last minute, it might be too late to maximize tax credits and tax deductions. These tax tips for homeowners looking ahead to 2010 returns explain some of the things you can do now that’ll pay off later on your 1040.
Take a day to formulate a tax plan for the year. Depending on your circumstances, you might want to take advantage of energy tax credits or max out your vacation home deductions. The “What’s New in 2010” section of IRS Publication 17 offers a sneak peek at tax changes that might affect homeowners.
Claim remaining energy tax credits
It’s time to get cracking if you didn’t exhaust your full allotment of residential energy tax credits during 2009. Although tax credits for big projects like residential wind turbines and solar energy systems have no upper limit and are good through 2016, energy tax credits capped at $1,500 expire at the end of 2010. Eligible capped projects include new windows and doors, insulation, roofing, water heaters, HVAC, and biomass stoves. Read more
What Are Mortgage Points?
August 31, 2010 by Erin Schedler · Leave a Comment
Whether you are thinking about refinancing or getting a mortgage for the first time, whether or not to opt for points can be a confusing and sticky decision. Here is a quick explanation of points and some general guidelines about whether or not it is worth paying down points to get a lower interest rate.
What are points?
When applying for your mortgage loan, you may be asked if you want to pay points. Points are a lump upfront sum of interest that you can pay at the initiation of your loan to lower your overall interest rate. The more points you pay, the lower the interest rate of your mortgage. Each point is the equivalent of 1 percent of your loan. So, if you are taking out a $200,000 loan, then one point for your mortgage would cost you $2,000.
Should you opt to pay points?
There are two main things to consider when dealing with paying points for a lower interest rate. The first is the length of time that you will be in your mortgage. You’ll get the greatest benefit from points if you plan on paying your current mortgage long term, without refinancing or selling your home and moving. Over the life of your loan, the lower interest rate can be a huge savings and well worth the initial points payment.
The second thing to consider is if you can actually afford to pay the points. You want to make sure that paying down points doesn’t hurt you in some other way.
For example, if don’t put down at least 20 percent down payment, then you will probably be required to purchase mortgage insurance, or PMI, which can get expensive and does nothing to help pay down your premium on your mortgage. A better bet would be to place the money you might have used for points into the down payment.
In Short Supply
August 26, 2010 by Erin Schedler · Leave a Comment
Currently I’m working with a wonderful engaged couple, who is looking to purchase their first home together. We’ve toured a few times but the problem we run into is the lack of inventory.
In this slow market, everyone is anxious and fearful of what is to come. As a result, sellers are not quick to list homes and many people are “hunkering down” and not selling until the market returns to a better state. The result is a very small amount of homes on the market.
A year or two ago, I often had 3-5 new homes each week that would fit a buyer’s criteria. This meant we found them their ideal home sooner. These days, because I don’t have new inventory to show as often, the buying process takes a bit longer and there is less to choose from.
The upside is, when you do find your dream home, the price and rate will likely be ideal. Sellers are more open to negotiation than ever, and your monthly payment and buying payment will be better in this market than a hot one.
If you’re interested in purchasing a home in the next year, I would recommend starting sooner than later as you’ll have more choices and options to look at. Email me if you’d like to meet for a consultation or head out on tour!
How does an FHA loan work?
August 11, 2010 by Erin Schedler · Leave a Comment
Since 1934, FHA loans have been helping people achieve the American dream of home-ownership. This type of loan offers better deals for people who may otherwise have trouble getting a desirable mortgage.
What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. It has several key components.
- Low down payment. FHA loans usually require just a 3.5 percent down payment. Because this down payment can be gifted to the borrower, it makes home ownership much more obtainable for the first-time home buyer.
- Low closing costs. Using an FHA-approved lender generally means lower closing costs than a conventional mortgage.
- Easier qualifying. Those with less-than-perfect credit find approval easier through FHA programs because the federal government insures FHA loans.
- Lower overall costs. An FHA loan can have a better interest rate, which cuts down on the overall cost of the loan.
- Avoiding foreclosure. The Federal Housing Administration provides programs to help avoid foreclosure in case of financial difficulties.
How does an FHA loan work?
An FHA loan has a lot of beneficial characteristics. What steps are involved in requesting and receiving such a loan?
1. Request an FHA loan through an FHA-approved lender. This includes being approved for the loan, which entails providing financial information such as income, assets, and debt load and undergoing a credit check. (See if you may be eligible for an FHA Loan.)
2. After loan approval, the federal government does not provide the funds but does insure the loan.
3. Because the Federal Housing Administration insures the loan, the borrower receives several benefits:
- A down payment that can be as low as 3.5 percent
- A down payment that can be gifted to the borrower
- Lower closing costs than with a conventional mortgage
- Possibly a lower interest rate than what is available through a conventional product
- Assistance from the federal government in case of foreclosure.
4. Once the loan process is complete, you go through closing — the meeting that involves the legal transfer of the property.
5. You move into your new home and make your monthly mortgage payments.
As with any loan, it is important to comparison shop. Although you may find a great deal with an FHA loan, it is still smart to compare it to a conventional mortgage product to be sure that you get the best deal available to you.
Credit: LendingTree.com
What is a reserve study on a condo?
August 10, 2010 by Erin Schedler · Leave a Comment
When you purchase a condo unit, you own the “walls in”. Other areas of the building (i.e. halls, roof, siding) are considering “common areas” and are funded and maintained by the HOA (homeowner’s association). In addition to the mortgage you’ll pay on the unit, you also pay a monthly HOA fee. What is included in this fee depends on the building but usually it covers a few utilities and a contribution to the building’s reserve.
A condo’s reserve is essentially its savings account. If a repair is needed on a common area, the HOA can use funds from the reserve to cover the cost.
Unfortunately, until a couple of years ago, the amount of reserves a condo maintained was not regulated. Some HOAs kept large reserves and others, in the interest of keeping the monthly dues low, maintained very little reserves. This is where the trouble started. Read more
Fed To Meet Tomorrow, Wednesday August 10th
August 9, 2010 by Erin Schedler · Leave a Comment
The Federal Reserve
See article below. I doubt interest rates will be affected, but the big question is if they plan on increased purchasing of mortgage-backed securities (MBS):
Confronted with a U.S. economy that appears to be decelerating, the Federal Reserve may ratchet up cautionary language but many expect the central bank will refrain from buying more bonds to bolster growth.
“I am sure they are going to do nothing,” said Bill Cheney, chief economist at John Hancock in Boston.
“The whole question” will surround the language of the statement, he said, where the central bank will want to stress it is “on the job and aware of downside potential,” Cheney said.
The Federal Reserve is due to announce its decision from its one-day meeting on Tuesday at 2:15 p.m. Eastern.
The pace of the recovery has been slowing, putting pressure on the Fed to act to ward off a double-dip recession and falling consumer prices known as deflation.
After the weak job report for July on Friday, pressure for the Fed to take action mounted in financial markets, said John Canally, economist at LPL Financial Corp. in Boston. Economists at Goldman Sachs said Friday they expect the central bank to reinvest the income from mortgage-backed securities it holds back into the bond market – a “baby step,” in their words, in the direction of unconventional easing.
