To Buy Or Not To Buy, That Is The Question

If you are debating purchasing a home right now, you are surely getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and/or what is currently happening in real estate.  So, is now is actually a good time for you to buy a home?  To answer that one question, there are 3 more you need to answer first!

1. Why am I buying a home?3-Questions-KCM

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances.

A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home actually have nothing to do with money.  The study found what people “really, really want” is:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What non-financial benefits will you and your family derive from owning a home? There are generally A LOT, and they will be the biggest reason you decide to purchase or not.

2. Where are home values headed?

This is and has been one of my biggest concerns for my buyer clients in this sellers’ market!  When looking at future housing values, Home Price Expectation Survey provides a pretty fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

Here is what the experts projected in the latest survey:

  • Home values will appreciate by 4.1% in 2015.
  • The cumulative appreciation will be 18.1% by 2019.
  • Even the most bearish (love that word, don’t you?) experts in the survey still are projecting a cumulative appreciation of over 10.5% by 2019.

So what does that really mean for you and your family?

The chart below was made using the Home Price Expectation Survey’s predictions:

Homeowner's Family Wealth Over the Next 4 Years | Keeping Current Matters

If the experts are right and you were to purchase a home by January 2016 for $250,000, that home would appreciate by over $34,000 over the next four years! This means that homeownership is and continues to be one of the best ways to build your family’s wealth.

3. Where are mortgage interest rates headed?

A buyer must be always be concerned about more than just house prices…the ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates.  In a word, mortgage rates are headed UP; I predicted that at the beginning of 2014.  BUT this doesn’t mean it’s not a good time to buy a home, because current rates are still at historic lows.

The Mortgage Bankers Association (MBA), the National Association of Realtors and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months as you can see in the chart below:

Mortgage Rate Projections | Keeping Current Matters

Bottom Line

Answering these questions will help you answer that ultimate question, “is now the right time to purchase a home?” For great advice (if I do say so myself) and/or if you just want to ask some general market questions, please don’t hesitate to get in touch!

Price to Sell, NOT to Negotiate

In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges we real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, I believe that it’s always best to tell the homeowner the truth…this is more important than getting the seller to “like me”, because I’m there to try to help them sell a house! Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.”  But this is important to remember: there is no “later”.

Research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes. John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:

“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”

Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.

Don’t build “negotiation room” into the price. Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house. Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it! One great way to see this is with the chart below. The higher you price your home over its market value, the less potential buyers will actually see your home when searching.Price & Visibility | Keeping Current Matters

The best strategy is to price your house properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house. Look at it this way: if you only receive one offer, you are not in as much of a “power position” with the one prospective buyer as you are when you have multiple offers. When you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

The Price is Right…Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.  Questions? Comments?  Get in touch with me…I’m here to help with any of your real estate needs!

Top 10 Reasons Loans Go Bad

One of my preferred lenders, Kristy Osborn with Service First Mortgage, sent out an e-mail the other day that I thought would be so helpful to both Buyers and Sellers.  It really illustrates how there are so many things to think about in the home-buying and selling processes, and how it’s so important to surround yourself with a good realtor, good lender, good title people, ApplyNowButtonetc. when you’re going through it.  Getting the contract is not the end of the process!  You can breathe a sigh of relief, of course, when you do get that contract, but that’s only half the battle – getting it to close is the other half.  How can you ensure that the loan will close?  The short answer is that’s it’s never 100% guaranteed (that’s only death and taxes, right?).  But, educating yourself on the various issues that could come up during the processing of a loan to buy a house is a great way to help you to understand what it really takes to get that house closed, whether it’s your loan as the buyer or you’re on the seller side.  So, in the words of one of my fabulous lenders, here are the Top Ten Reasons Loans Go Bad…

  1. Got No Time Left–    In the market that we are in, one of the #1 ways to sabotage a smooth closing is having unrealistic expectations for the time it will take to close.  A minimum of 18 business days from the time we get the contract in our hand (providing that we can order the appraisal and the title work immediately) is the time it takes to close on a home.  It is taking 2 weeks to get tax return verifications through the IRS.   It is important to also understand that appraisers, title companies, inspectors, underwriters, etc, etc are maxed out in this unprecedented market and over commitment will only lead to frustration.
  2. Needing 411–  Lack of Disclosure/Information–    So many times we think of this when it comes to sellers.   But when a buyer is not up front with the lender, there is a very good possibility that the transaction will blow up during the verifications.   Lenders are required now to verify tax returns, employment, income, and bank accounts as well as various other information.   It is vital that the buyers  get all their documentation upfront so that there are no surprises at the end.
  3. Gimme More–  Delay of Information/Documentation–   The guidelines are tighter, underwriters have no “wiggle room” to overlook any discrepancies and over documentation is the name of the game.   Borrowers must get all requested documentation to their lender immediately and upfront and also understand that there is a very good possibility that more will be asked for during the process.
  4. For What It’s Worth– The art of appraising a home and opinion of appraisals is harder than ever.   Lenders want the majority of comps to be within 90 days and second review appraisals are very common (and subject to underwriting discretion).   If you cannot find the comps, neither can the appraiser- there is no secret to this :).   The old “adage” of if the buyer is willing to pay it then the appraisal should reflect it is no longer true.  Bottom line: if the comps are not there, it will not appraise.
  5. What You Don’t Know WILL Hurt You–   Buyers using inexperienced loan officers (or bank or call center “order takers”) to handle the most important financial transaction of their life is like having a 1st year med student perform open heart surgery on them.      Don’t let inexperienced loan officers and call center order takers “practice” on your loans.  Trust only experienced and knowable loans officers that are highly competent and passionate about their commitment to their buyers and know what it takes to close smoothly.
  6. Wastin’ Time– Even (and especially because)  in this volatile time period in our market, we are continually  amazed when realtors and buyers write up contracts on properties without having the buyer be pre-approved through a knowledgeable mortgage professional.    Speaking first (not after) with an experienced loan officer before writing up a contract is so important and eliminates wasting the time of everyone involved.
  7. Calculate This–   To make certain that closings go smoothly, it is important to ensure that buyers AND sellers understand their cost involved before agreeing to a contract.   This seems to be so simple, yet we see the opposite on a daily basis.    It is important for the buyer (or agent) to contact us once they have found a specific home so that we can run the numbers again to make certain that they are comfortable with the out of pocket and estimated monthly payment (and can then call the listing agent and let them know that they have been pre-underwritten as part of our First Assure Program).
  8. It is NOT Like The Old Days–   Currently, Conventional Loans Are Not a “Catch-All” for Distressed Properties–   We still hear on a weekly basis “The property has foundation issues;  The property is distressed;  The property is in bad condition…… so we need to go Conventional”.  Did you know that PMI companies (needed on Conventional loans with less than 20% down) are just as strict on property condition as FHA?
  9. Flip This House–   According to FHA and USDA guidelines, a re-sale of property occurring 90 days or less from the date the seller acquired the property is not eligible for FHA insurance.  In addition, the contract to purchase this home, using FHA or USDA financing CANNOT be executed until the 91st day.  It is very important to understand the Flipping Guidelines so that the closing is not delayed or comes to a screeching halt.
  10. The Times They Are ‘A-Changin’– It is so important to understand that we are in a market unlike most of us have ever experienced.   Guidelines are tighter for credit, income, employment, assets, ratios, down payment as well as other factors.  A perfect example of this is that lease agreements are typically not allowed to offset current house payments for those buyers wanting to purchase but keep another property. You need a lender who has the latest information on all guidelines involved in processing and closing a loan.

I’d love to hear from you if you’re wanting to start the pre-approval process or if you have questions about home buying or selling, and I know that Kristy Osborn is also ready to help in any way she can!

The Process of Buying a Home (Made Easy!)

The process of buying a home is such a mystery to most people.  It’s this overwhelming “thing” with all these moving parts and strange lingo, not to mention the legalese of the documentation (thank you, attorneys!).  For my buyers, I’ve wanted to break down the process into easy-to-understand steps, so I created a flowchart to help.  The terms are described along with the timing of the different things – like the inspection, financing, appraisal, etc. – that have to happen to get to the closing table, and to get those keys!

Home Buying Process_Page_1 Home Buying Process_Page_2 Home Buying Process_Page_3

Believe it or not, I can’t get all the ins and outs of home buying into one flowchart, even one that spans three pages.  But, if you’re looking for a quick guide to the process, I hope this is helpful.  If you’d like to receive this flowchart in PDF or a cleaner jpeg format, just let me know and I’m happy to send it to you!

As always, if you need anything house-related, I’m here for you – give me a call, shoot me a text or e-mail, just don’t tweet, because I’m not on twitter (yet!).

5 Ways to Add Quick Value Before You Sell Your House

February is the month of LOVE…so, if you’ve loved your house in the past, but are ready to leave it, this blog post is for you!  A big part of the selling process is to get top-dollar for you when you sell your house.  I consider that a big part of my job, which is why I feel so strongly about professional staging and photography.  But the other part of the equation is what a home seller can do – prior to putting a house on the market – to also help ensure they get the most money out of their home sale.

When I go on a listing appointment, I walk around the house and take notes. I ask the potential sellers what made them buy this house…what features did they love about it when they purchased the home?  I find out what upgrades and updates they’ve done, both visible (like granite countertops, wood flooring, etc.) and behind the walls (new AC unit, new water heater). An important part of this walk-thru is identifying what things the potential seller should do to get ready to sell.  This is not the time for big renovations! Postcard Back Cropped for Blog It’s the time to freshen things up a bit.  Here are the top five ways I advise sellers that they can quickly and inexpensively get a home ready to sell for the most money (in the least amount of time), because that’s the goal!

  • #1 CLEAN UP – De-clutter by doing it yourself, or hire a realtor (like me!) who provides this as a service to you! Buyers want to see the house, not the stuff inside it.
  • #2 KITCHEN DUTY – The kitchen is the heart of the home, and it alone can sell a house! Consider painting, upgrading cabinet pulls, updating to stainless steel appliances.
  • #3 BATHROOM BEAUTY – Master baths are especially important, so anything you can do to make it spa-like, such as painting, updating lighting, even fresh towels, can make a big difference with little time and money!
  • #4 MAKE-UP FOR WALLS – The scuff marks and evidence of years of living in a home, especially with dogs and kids, can vanish with a fresh coat of paint to walls – grays and beige are best. And don’t forget those baseboards – make them stark white for a great finishing touch!
  • #5 DRESS IT UP – Add some curb appeal with masses of flowers, trimmed up landscaping, and a painted door. Make buyers excited when they drive up to your house, so they can’t wait to see what’s inside!

I tell sellers that the most important thing – which is very appropriate for February, the month of Valentines Day – is that a home should feel loved and cherished, and like the sellers take great care of it.  These things make it easier for a buyer to fall in love with it too.  Want to know more?  I’m always here for you, just get in touch!

Buying a Love Nest

With Valentine’s Day just around the corner, I thought it would be interesting to review data on homebuying trends for singles and married couples. According to the Wall Street Journal, single men and women bought homes at approximately the same rate in the 1980’s. Today, that has changed: approximately 20% of homebuyers are single women, while 10% are single men (stats from Todd Manning at Regions Mortgage). These higher percentages may relate to the fact that people are getting married later in life…I bought my own home as a single woman because I figured, why wait?  I’d venture to say that thinking is prevalent among young, single professionals who have the credit and income to buy a home, but are just “missing” the spouse…the husband or wife is nice to have (of course!), but not a requirement, and home ownership has so many benefits that many are deciding to go ahead and go it alone.

Another interesting trend in homebuying is that more couples who are not married are buying homes together (see the article here). While this can complicate the loan and title processes, couples say that it brings them closer together.  Picture1This may seem like an unconventional thing to do, but it’s becoming more common, and I see one big advantage – it’s a great way to ensure that you and your significant other are on the same page in terms of finances.  A lender is going to go over credit history, debt-to-income ratios, etc. in depth, so it’s a great way to determine whether you are both a good financial match prior to being connected financially (and otherwise) for life.

So, what about LOVE and MARRIAGE? Do they still go together like a horse and carriage?  Well, the short answer is yes.  One interesting fact is that cities with a high percentage of married people typically have higher homeownership rates. For example, in cities where more than 30% of the population is married, on average, 50% of homes are owned (stats from Todd Manning at Regions Mortgage).  Also,married homeowners are also less likely to have homes with negative equity than their single counterparts (see the article here).  I think the long-term commitment that couples enter into for marriage is mirrored in the commitment to a 15- or 30-year financial commitment, and that for most couples, the childhood dream of getting married and having a family goes hand-in-hand with having a dream home…even though the trend of white-picket fences has long-since passed!

I may not be able to help you with your love life or finding that Valentine, but I sure can help you in your home search, whether you’re single, almost-married, or married forever!  Get in touch and let me know what I can do for you.

Home Buyers Will Pay More By The End of 2015

20150204-Cost-of-Waiting

The Cost of Waiting (Source: keepingcurrentmatters.com)

There could be a high cost for buyers to pay if they’re hesitating to purchase a home within the next few months.  Why?  There are two main factors, both of which should be considered when looking to buy a home – 1) the rate at which home values are increasing and 2) the amount home mortgage rates are projected to increase.  Home values have increased by 20% (gasp!) within the past few years, and values will continue to increase as long as supply (for sale inventory) stays low.  And, as I wrote about in this blog not too long ago, I anticipate the mortgage rates to increase by the end of this year, 2015.  Mortgage rates have been in the high 3% and low 4% range for a while now.  But, what do both of these factors together mean for the average homebuyer?  Well, it means there could be a high cost for waiting to buy, to the tune of hundreds of dollars per month. Take a look at the graphic…

By the end of the year, if current projections become reality, it’ll cost a buyer $10,000 more to purchase AND almost $200 more monthly to pay for a home.  That’s a lot of money, folks!  Want to discuss this more?  Get in touch by phone, text, e-mail, or carrier pigeon, I’ll answer to them all!

Staging Really Does Help Sell Homes

I know from my own experience in real estate that hiring a professional stager to stage the house is key to a successful (and less painful) home selling process.  In fact, it’s part of what I call my Show & Tell Strategy – the “Show” part being to set up a home to show well through professional staging, the “Tell” part being to tell the home’s story through professional photography.  So, I was excited to read this new article, Can Home Staging Really Win Over Buyers?, that

Every home, every room, the outside of the house, it all communicates a message - Barb Schwarz

Every home, every room, the outside of the house, it all communicates a message – Barb Schwarz

now provides legitimate research that supports my strong feelings that staged homes sell faster and at higher prices than their unstaged (and frankly, sad) competition!  One of the strongest statements in the article is that 81% of real estate agents who represent buyers say that their buyers can more easily visualize the home as their own…this is so important to getting a buyer to fall in love with a home.  And I don’t care how cute your home is – every home benefits from staging it to sell!  Why is that?  Because a house may be decorated beautifully, but staging is NOT decorating.  A decorated home in my opinion is very personalized – there are family photographs, unique treasures, big comfy beds, etc. A staged home is very de-personalized and items are placed in ways that allow a buyer to see the home in it’s best possible light…and to seem as large as possible, because size does matter to buyers!  My advice for home sellers everywhere – get a professional realtor who provides staging services to you. My advice for home sellers in DFW – contact me (Heather Kinder Sims) and let me show you how my Show & Tell Strategy can make you a believer in the home staging process too!

Real Estate in 2014 & 2015 – What’s the Story?

The real estate market could really not have been better in 2014.  The DFW market was crazy busy, with…

  1. Very few days on market for listed homes,
  2. Multiple offers on homes being the norm for buyers and sellers (not great for buyers, but great for sellers!),
  3. Mortgage rates continuing to be at or near historic lows,
  4. Big percentage increases in average home values (about 20%!) as described in this article, State of the DFW Market.

On a personal note, I was so thankful to have had my best year yet in 2014.  Listings were selling extremely fast – almost 60% had offers within 24 hours – and my total sales volume was over $8 million.  You can take a look here at my 2014 Year in Review…

It was a fabulous year, but notice I said “best year yet” about 2014?  That’s because I’m gearing up for 2015 to be even better!  As this new year begins, I’m ready to look into my crystal ball (while also stepping out on a limb) and make some predictions about what is going to happen in residential real estate this year.  Here we go!

1) Mortgage Rates Will Increase.  Rates have stayed at record lows for a good while now.  In Texas, we’ve benefited from the national housing market (especially in California, Florida, etc.) still needing some help to absorb the remaining foreclosures, short sales and related slow markets.  In recent months, the tide is turning and those markets are improving.  This fact, in my opinion, means that rates are going to have to increase, BUT I don’t expect a big jump; I think it’ll be one percent at most.  In terms of timing, I expect to see the rate increase occur in the late Spring months, prior to the Summer selling season, which is typically the prime time of the year for home sales.

2) North Texas Will Continue to Have a Strong Market. Here in the Dallas area, we have seen several major employers – Toyota and State Farm to name just a couple – choose to locate here due to our business friendly environment.  This means we have thousands of employees moving here, and those employees and their families have to have a home to move into.  When the economy is already strong, and growing, it means good things for the real estate market.

3) Three Buyer Trends to Watch.  Three trends that I have seen and that I think will continue to become even stronger in 2015 are…

  • LOCATION (e.g. in a certain neighborhood, near work, near family) is more important than SIZE of home,
  • Paint and flooring are top-of-the-list IMPROVEMENTS of what buyers are willing to do when they purchase a home (anything else, sellers need to address prior to listing), and
  • The great OUTDOORS is going to continue to be a big feature that buyers look for, as a way of visually/emotionally expanding the home’s living space, and as a way to relax and entertain at home.

I am so excited about the year to come, about all the people – singles, couples and families – I’m going to help “make a move” in 2015.  Want to know more about selling your house, buying a home, or just about real estate in general?  I’m here for you by e-mail, text, or the old-fashioned way by phone!

Should You Sell Your Home During the Holidays?

The short answer is “Yes!”  But I’m a realtor and of course I’m going to say that, right?  Well, I’ll be honest and tell you that I think there are times of the year that are better than others to sell a home, and there are pros and cons to them all.  It’s a fact though that homes sold in November and December sell faster and sell closer to their asking price, according to a National Association of Realtors (NAR) study (go to link).  This is not conventional wisdom – everyone says that the summer months are the best time to buy and sell!  Think about it for a minute though…if you’ve just run a marathon and there are only two companies selling bottled water at the end of the run, aren’t those two companies going to be able to sell the bottled water at a higher price than if there are ten companies selling bottled water?  It’s supply and demand.  As a runner, you need that water and you’re going to pay for it, and you’re probably not going to haggle over the price, at least not much – you not only need it, you need it quickly!  As a bottled water company at that race, you’re in a pretty good position.

During the holidays, sellers are in a good position too.  One, there are not as many homes for buyers to view and choose from, so there’s less competition.  Two, the buyers that are looking during this time of year are serious buyers – they are out looking because they have a serious need to buy a new home, either a relocation for work, a lease ending, their home has sold, or something similar.  Three, the buyers that are looking very likely want to be in their new home by Christmas and/or the beginning of the year, which means they want a new home quickly.  (Check out this video for more information!)

All of these are pros for sellers!  Now, sellers still can’t get crazy and list their home during the holidays for $30,000 more than market price and think it’s going to sell due to these factors…price and condition of the houses listed are still important…we can’t ever forget those cornerstones of selling.  The bottom like is, if you’re thinking of selling, don’t listen to conventional wisdom and try to sell during the late Spring and Summer months like most people do!  Get your home on the market in November or December – if it’s priced well and looks good to buyers, it will sell it quickly  for the price you set.  Want to know more?  I’m always here to help!

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