Real Estate Rapture

Courtesy of Lisa Schupbach:

Inflation has once again become a front-burner issue thanks to news that higher-than-expected import prices, lead by energy, could cause some firms to pass increased costs on to their customers. The price increase so concerned the Federal Reserve that it felt compelled to say that higher interest rates might “prove necessary” to quench inflationary embers.

Fortunately these concerns were assuaged somewhat by a benign producer price index (PPI), which showed that finished producer goods rose 1% in March, versus 1.3% in February. The truly good new was that the more closely watched core PPI, which excludes food and energy, was unchanged, though it was expected to increase 0.2%

Given the overall inflationary biases, it was no surprise that mortgage rates rose slightly last week. On that front, Freddie Mac reported that the 30-year fixed-rate mortgage averaged 6.22%, the 15-year fixed-rate mortgage averaged 5.87%, and the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.93%. All rates include a 0.5% point.

God is good!

If you ever want to sell your home lease-purchase, please be careful.

My recommendation on a lease-purchase is that you write it up so that they are responsible for all repairs and maintenance, that you get a sizeable non-refundable down payment, and that the monthly rent is at least your payment, your taxes, and your insurance.  If they want a portion of the monthly rent to go to the principle, then add that on to the payment.  Since you would really still be the owner, you will be responsible for taxes & insurance & making your monthly payment to your lender.  Your loan may not allow you to lease the house though, so check that out.

God is good!

One of the things we don't have as a real estate professional is a built in retirement plan.

Being self-employed, it's up to each of us to plan for the future when we've shown or listed our last house.  There are many ways to do this, some are very hands on, some require financial investment on our part, and some involve doing what we already do but getting paid for it.

We can buy rental properties and be a landlord.  As time passes, a rental property appreciates in value, rents go up, and the monthly house payment stays the same.  So, a house you buy today for $100,000 may cost you $700 a month, but you can rent it for $800.  With just a 5% appreciation and a 5% increase in rent each year, by the 10th year you're still paying $700 a month, but your tenant it paying $1240 a month, and the house is worth $155,000.  Year 20 you're still paying $700 a month, the tenant is paying $2000 a month, and the house is worth $252,000.  And so on...  How many rental properties would you like?

We can invest into typical retirement vehicles such as CDs, 401ks, etc..  These take personal investments from our commissions.  Plus, historically, real estate, even with its ups and downs, has been an excellent investment, one that other investments don't often outperform.

Another one available at Great Commission Realty is what we call our "permanent referrals".  This is something you likely already do wherever you currently have your license, but you're not getting paid for it.  If you come across someone you think would make a great real estate agent you recommend them to your broker right?  Or how about someone that already has their license and they ask you how you like your company?  You refer them to your broker right?  Does that give you a warm, fuzzy feeling or does it put money in your pocket?  At Great Commission Realty it does both!  You see we pay you a portion of the broker's share of every commission for any agent you have referred to us for as long as you both are licensed with our company.  You get paid on their referrals, and their referrals, and their referrals, and their referrals too!  You can run your own numbers on this, but here's one example:

You refer one agent to Great Commission Realty each year for ten years, and each of them does the same.  At the end of ten years you would be amazed.  Twenty years even more so!

God is good!

Like it or not, there are 2 guidelines bankers and mortgage lenders use to determine how much loan you can afford.

The first guideline is the Payment To Income Ratio. This guideline compares your income – or your total household income – to the amount of mortgage payment you’re considering.

To calculate the “payment” part of the formula, the lender will take the mortgage payment (principal + interest) and add to it Property Taxes and Insurance. Hence the term “PITI” (principal, interest, taxes, and insurance).

Usually lenders will loan up to 28% of your total household income.

But before you think you’re home free, there’s something else you need to know…

It’s called the Debt To Income Ratio. Debt refers to ALL the major monthly payments other than your mortgage payment (PITI). To arrive at this amount, the lender will consider…

Your car payment…

Your credit card debt and payments…

Any IRS liens or payments due…

Any other payments and debts you have (boat, 2^nd home, etc.)

Then, they’ll compare your total debt to your ability to make current payments with your new home loan added into the equation.

Now, here’s the “stickler.” Each mortgage company sets different limits on your Debt To Income ratio. Which is why it’s critically important to find a MOTIVATED LENDER.

Don’t follow the “canned” financial advice like you see on TV. Most of that advice is “rule of thumb,” and designed for the lowest credit rating and highest interest rates.

Think about this…

If you spend 2 or 3 days to find a loan that saves you $40,000 to $150,000 over it’s term, your time is WELL WORTH SPENT! Doing a little homework on your own will literally save you thousands over the term of your loan.

God is good!

Real estate law and regulations can be very complex. When you sign a contract for the sale of your property, it’s a legally binding document. An improperly written contract can create many problems for you: a sale could fall through, cost you thousands in forced repairs, inspections, and remedies for items included or excluded in the purchase offer.

You must understand what repairs and closing costs you are responsible for in a contract. And you must know whether the property can legally be sold “as is,” or how deed restrictions or local zoning will affect your transaction.

You also need competent review of your title, and whether or not your property is in conflict with local restrictions or laws. If you have to remedy these items yourself, you can spend thousands on legal bills, fines, contractors, and other costs. Using a competent REALTOR up front can help identify and avoid these issues before they become “problems.”

God is good!

Agents, if you're listing a home you should not include the square footage of any unfinished areas in the total square footage.

When I have a buyer that wants 2400 square feet of living space and I search the MLS computer for matches I then email those properties to my clients.  If your house makes the list of homes they want to go see and when we get there we find out that the main floor is a beautiful 1300 square foot living area, but the basement is only concrete walls and 2x4 studs we will not be pleased.  We definitely won't make an offer because the house isn't what we're trying to find.  In fact, I've had clients go so far as to make a note of agent names in cases like this and say "don't show me any more of their listings."

Ouch.

God is good!

When buying a home, there are two things you need to consider here: Your NEEDS…and your WANTS. They’re two very different things.

You may need 4 bedrooms because of your children, or need a 3 car garage because of your 3 cars…

What you’ll find is your needs are fairly basic. It’s the “wants” that take a little more time to clarify. Here is a list of needs you should consider BEFORE looking for your home:

1. General price range of home – I’ll cover this ahead when discussing financing options and the amount of home you can afford.

2. Approximate size of home (in square footage) – make a reasonable range

3. General location, area, or subdivision

4. Number of bedrooms required (don’t forget to include any home offices or guest rooms).

5. Number of bathrooms you need – frequently determined by the number of children you have.

6. Style and layout of home: Do you want a more formal plan, or a contemporary plan with great room designs, etc.

7. School requirements or districts

God is good!

Thinking Your Appraisal Is The Market Value Of Your Home

An appraisal is an opinion of value for an entirely different purpose than selling your home. Usually an appraisal is to provide a bank or mortgage institution information to fund a loan. If a lender is motivated to loan you money, their appraisal may come in higher than the true market value of your property. The appraiser might ignore other issues in the analysis, such as foreclosures in the market or distressed sales.

When a buyer looks at a home, they look at all the factors: foreclosures, distressed sales, bankruptcies, divorces, and area fluctuations. Don’t make the mistake of thinking the “appraisal” value of your home is what a diligent buyer would pay.

If you like, I will provide you with ALL of the information you need to make a competent, reliable market value for your home. I’ll research your area, gather specifics on recently sold homes, discuss trends, and answer questions you have about the value of your home – with market facts, not opinions.

God is good!

I'm not an expert on global warming and I have not researched it myself, but I am in favor of some Springfield warming!

This morning I was putting gas in the truck and it was sleeting.

When I came out of Bible study at 8:30 it had been snowing as there was about a quarter inch on the windshield.

Yesterday I spent three hours plotting homes on a map, calculating my route and drive times, then calling each homeowner to schedule showings for today.

While I was in bed last night my client called and said he needed to cancel our appointment for today.

Now I will call all the homeowners to cancel my appointment and apologize for the inconvenience.

It's part of what I do, and part of me is glad that I didn't have to go out in the rain and snow driving 160 miles showing 14 homes, another part of me is disappointed that I didn't get to work with a client today and help him find the home of his dreams.

So, if you're reading this and want to go see some homes...I have some free time!

God is good!

March 2007 has closed and here are some interesting facts:

In Springfield 294 homes were sold.  The average home sold had 3 bedrooms, 2.12 baths, 1883 square feet, and sold for $156,444 in 58 days.

The least expensive honors goes to a home in northwest 2.  A 3 bedroom, 1 bath, 1008 square foot home, sold for $16,500 in 2 days.

The most expensive honors goes to a home in southeast 5.  A 4 bedroom, 4 bath, 4300 square foot home, sold for $745,000 in 69 days.

God is good!

Finally, some much-needed good news on housing: The National Association of Realtors' index for pending sales of existing homes rose in February at a seasonally adjusted annual rate of 0.7%. The consensus was for a contraction of 0.4%. Fears that subprime mortgage problems would decimate the sector had been a major factor in market volatility of the past several weeks, and so the upsurge in pending home sales comes as a welcomed surprise.

Further good news was found in the employment situation, where the unemployment rate dropped 4.4%, matching a five-year low, and where workers saw bigger paychecks – average hourly earnings rose 0.3% to $17.22 in March, matching expectations. It was a surprisingly strong performance in an economy that has otherwise shown stubborn signs of sluggishness.

On the mortgage front, rates inched up slightly, but continued a pattern of relative stability. The 30-year fixed-rate mortgage averaged 6.17%, the 15-year fixed-rate mortgage averaged 5.87%, and the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.92%, according to Freddie Mac’s weekly survey. Depending on the duration, rates today are 25 to 30 basis points lower than where they were at this time last year.

God is good!

One of the perks of being in real estate is that we are constantly reminded about how beautiful the Springfield area is.  It never fails that when we're out showing homes or farms to out-of-state clients how impressed they are with the natural beauty of southwest Missouri.

Another comment we almost always hear is "we can't believe how friendly everyone is!"

Two excellent reasons to live here or to move here.

God is good!

There's a myth that occasionally still haunts the real estate industry:

"The bigger the real estate company, the faster my house will sell."

Hogwash!

Before the computer age and before the MLS (multi-list service) that could have been the case, but today it most definitely is not.

No matter what size the company is that you list your home for sale with, if they are a member of the MLS then every other company and agent in the area that is also a member of the MLS is also trying to sell your home!

Why are they trying to sell your home?  Because they will get paid to do so.  That's right.  When I put a sign in your yard and notify the MLS that your house is available it goes on the MLS computer.  That means well over 2000 other agents know your home is for sale.  They know how many bedrooms, bathrooms, garage stalls, square footage, lot size, school district, year built, and every other fact about your home, just like I do.

Better still, thanks to computers, they also know if it is a close match for all the buyers they are currently working with!  Not only that, but with the internet and the public access to the MLS, all the independent buyers know about your house too!

So who should you list your home with if we all try to sell it?

My bias would lead me to tell you us, but being objective, I would recommend you work with an agent that you feel comfortable with.  Is the agent honest?  Do they return your phone calls or emails promptly?  Do they have a professional website?  Can you find their website by using a search engine (such as Google.com or Yahoo.com)?  Do they showcase their current listings with photos, not just one photo, but multiple photos?  Do they use virtual tours?  Do they have professional signage?  Anything you want to ask is fair game when you hire a REALTOR to represent you, so do your homework!

God is good!