The decline of today’s housing stock

Posted on June 13, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Is the decline of today’s housing stock a concern or an opportunity?

new homeWhile taking part in a recent home inspection, the home inspector unexpectedly began to talk about the concern for today’s housing stock. After listening intently for a short time, I realized that his dissertation about the quality of existing homes was not just his opinion or home inspectors as a group, but rather a consensus of growing concern among housing experts of the condition of many older homes.

The issue that the home inspector pointed out is that much of the existing housing stock is aging without significant necessary maintenance or repair. Because the lifespan of many of home systems (including roofs and HVAC) range from 15 years to 30 years, as well as structural materials can have an average lifespan of 40 years; he surmised that homes that exceed thirty years of age are at significant risk.

As a home inspector, this gentleman has a unique perspective about how people take care of their homes; and unfortunately, many home owners have put off important and necessary maintenance and/or system replacements such that the home’s condition is considerably affected. And although he didn’t attribute the deteriorating housing stock with the recent recession, it is assumed that the recession contributed to the housing stock’s declining quality – if not accelerated it.

A February 2013 article by Kermit Baker for the Harvard Joint Center of Housing Studies entitled “The Return of Substandard Housing” highlighted the relative considerable reduction in maintenance spending by home owners during the Great Recession. He stated that “improvement spending” decreased 28% between 2007 and 2011, which essentially “erased” such spending during the housing boom (housingperspectives.blogspot.com).

Mr. Baker concluded that this crisis needs attention, stating; “The longer-term fate of the current slightly larger number of inadequate homes is unknown. Many of these homes likely will be renovated to provide affordable housing opportunities. However, many may not recover without extra help. Given the extraordinary circumstances that many homes have gone through in recent years, particularly foreclosed homes that often were vacant and undermaintained for extended periods of time as they worked their way through the foreclosure process, they may be more at risk than their inadequate predecessors…

Considering the number of re-sale contracts that are falling out because of home inspections, this all makes sense. New home sales aside, many home buyers want “turn-key” homes that are updated with relatively new systems. It seems as if that home buyers don’t want to be burdened with major maintenance costs for the first five years of ownership. Some of the costly considerations that can put off home buyers are replacing a roof, windows, siding, and/or HVAC. Additionally, hazardous materials that can be commonly found in older homes (such as asbestos and lead paint) are becoming an increasing concern with first time home buyers.

The reason is uncertain, but during the “go-go” market of 2004-2006, a home’s condition didn’t seem to be as much of a concern for home buyers as it is today. However, one reason may be that during that period home equity loans were relatively easier to obtain to finance renovation projects.

The result of the deteriorating quality of the existing home stock may be that we may see declining values in homes requiring the most attention; such homes may either be renovated by home buyers, or might be razed to make way for a new home.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of June 10, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in home condition, home improvement, home maintenance, home remodeling, home renovation, home repairs, housing, property condition, real estate | Tagged , , , , , , , , | Leave a comment

Unusual considerations when owning an unusual home

Posted on June 6, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Luxury Real Estate“Be different and be damned…” is a telling quote from Margaret Mitchell’s Gone With The Wind.  Social commentary aside, the quote can be somewhat of a warning to those who build or purchase that unique, unusual, and one of a kind home.  Although it is just a quote from one of the highly celebrated novels of the twentieth century, “damned” is a strong word to use in a real estate column.  However, because of the many considerations of owning a unique home, there may be an occasion or two you might feel “damned.”

When would you consider a home as being unique?  Mostly, the degree of uniqueness can be to a person’s perception of a home as well as what they consider to be unusual.  However, there is some consensus to what is generally accepted as “mainstream” in the real estate industry; and if a home falls outside these norms through its construction, size, floor plan, etc – it may be considered as unusual/unique.

Some homes are so extreme in their construction, either in size and/or building materials, that it is clear they are unique and one of a kind; there are other homes that may have been converted from commercial or industrial buildings that may also indicate a unique flair.  However, there are many homes that appear to fit in their respective neighborhood, but the custom nature expresses a specific style and preference; which is often found in the luxury home market.

Some considerations you might think about when purchasing a unique home include: financing, insurance, maintenance, and resale.

If you’re set on purchasing a home that is unique, check with your mortgage lender about financing; lenders may have objections on lending on an unusual home.  It is also not unheard of that extreme unusual homes appraise lower than market value due to uncertainty of value.  Unusual homes, including the “Über-luxury” market, may require specialized loan products that are offered by specialized lenders.

Additionally, you should consult with your insurance agent as the home may not meet your underwriting guidelines for home owners insurance.  Many people don’t realize that insurance carriers may rate your home based on construction materials, zoning, size, etc, which can affect the premium.  And it’s not unheard of that an insurance carrier may also limit or even deny coverage because the home does not meet their underwriting standards.

Maintaining a unique home can sometimes be challenging too.  Many unique homes are constructed with materials that may be exotic, uncommon, and/or can be found in commercial applications.   Repairs and labor costs can be much more than the typically constructed home.  Finding replacement materials and qualified contractors to work with those materials may also be difficult.

Home ownership is often a labor of love for the home, and that emotion can be carried into the resale.  You could easily be disappointed in the time it takes to sell the home as well as the sale price.  Be prepared for an extended time on the market because your unusual home may have a very limited pool of buyers, and negotiation could be long and dragged out due to variances in perception of value.

“Doing it your way” may be the theme of a popular song and an advertising campaign for burger joint; but when it comes to building or buying a home – being unique and unusual can sometimes come at a cost.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of June 3, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in custom homes, Home Buyer, home design, home maintenance, home owner, home purchase, home seller, homebuyer, homeowner, Luxury Real Estate, real estate, resales, unique homes | Tagged , , , , , , , , , | Leave a comment

Handling buyer feedback and objection for home sellers

Posted on May 31, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

houseYou’ve spent months preparing your home by de-cluttering, painting, and maybe even making renovations; the last thing you want to hear are objections from home buyers why the home is not suitable for them. Obviously, you’ve had years of enjoyment and you’re thinking about all the benefits the home offers. However, getting honest feedback from home buyers and their agents who come through your home is invaluable information to help get your home sold.

Asking for feedback is one of the tasks that your agent performs throughout the listing period. However, soliciting feedback from agents who bring buyers to your home is often hit or miss; although many agents offer good and honest feedback, just as many don’t respond (for various reasons) to feedback requests unless their buyers are interested in the home. Additionally, feedback is asked of home buyers who visit during open houses and includes questions such as: “What do you find most appealing about the home?”; “What do you find least appealing about the home?”; and “Is the home priced right?”

Ok, it’s nice to hear the good things people have to say about your home; these are obvious benefits and what others find appealing. Buyers may list various home features, upgrades, and/or renovations as appealing or beneficial; but it is also important to put weight on the negative feedback too. All the de-cluttering and neutralizing can make a home look good, but it may not change home features that do not fit other’s needs. Likewise, making cosmetic and minor repairs also increases your home’s appeal; but may not make obsolete systems acceptable.

One of the most common pieces of feedback you might encounter is about the home’s price. Since home buyers typically view similar homes, you get perspective about how you priced your home compared to other similar homes. If there is overwhelming feedback that the home is overpriced, then you should consider reviewing additional comps with your agent and correct the price as needed. It is also not uncommon that buyers may feel that the home is priced well, but for various reasons they are not interested in making an offer.

Keep in mind that the feedback you will receive is subjective and offered from various points of view, so don’t be surprised with seemingly contradictory objections from different home buyers. Some objections can be addressed readily while others cannot.

For example, objections about the size and/or location of the home or yard are not easily overcome; and it may be that buyers offering such objections are looking at the wrong home. However, objections about shabby flooring or lack of updates can be addressed by either taking action or changing the list price to reflect the home’s condition.

Sometimes in pushing their client’s limits, home buyer’s objections may actually be a commentary on their limitations rather than the home’s attributes. In the hopes of getting a great deal, buyers are taken to view homes that are out of their price range and/or in need of updates they cannot make.

Buyer and agent feedback is the easiest way to gauge how your home is positioned in comparison to your competition on the market. Clearly, the home’s positive attributes and benefits should be highlighted as these items would be appealing to home buyers. However, buyer objections should also be considered and addressed if possible to help facilitate a sale.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of May 27, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in agent feedback, first time home buyer, first time homebuyer, Home Buyer, home buyer behavior, home seller, home seller behavior, Home selling strategy, homebuyer, objections, real estate | Tagged , , , , , , , | Leave a comment

New smoke detector technology in the home

Posted on May 24, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Home fire preventionAmong some of the new disclosure requirements for home sellers here in Maryland include those regarding smoke detectors.  Currently, home sellers are required to disclose whether or not smoke detectors “provide an alarm in the event of a power outage.”  However, there are new disclosure and updating requirements.

Effective July 1st, home sellers will be required to disclose to home buyers if installed smoke detectors exceed ten years of age, and if installed smoke have a sealed 10-year battery.  Approved by the Governor on May 16th, HB 1413/SB 969 was described by the Maryland Association of Realtors® Government Affairs Committee as having to provide such disclosure on an updated Maryland Property Condition Disclosure Form.  The summary also describes requirements for home owners, whose systems malfunction when tested or who have smoke detectors and battery operated systems older than ten years of age, to update older smoke detectors to new sealed battery systems.  Additionally, hardwired systems are required to be updated every ten years or at time of malfunction.  Additionally, landlords of one and two unit dwellings are required to upgrade to the new sealed battery systems when there is a change of occupancy or if current smoke detectors malfunction; in the case of buildings that contain more than two units, the legislation states that responsibility falls on the occupants to test and notify the landlord to replace smoke detectors (mdrealtor.org).

Although smoke detectors have been around for some time now, the technology is changing and is the main focus of the Maryland Smoke Alarm Technology Task Force Final Report (available at the Montgomery County Fire and Rescue Service website; montgomerycountymd.gov).  The Task Force was requested by the Maryland Fire Marshall to review smoke alarm data to determine strategies to reduce fire related deaths as well as identifying technology to improve smoke detectors.

One of the top recommendations made by the Task Force was to have battery operated smoke detectors “be the type that contains a long life sealed battery as its power source.”  Other recommendations include: the requirement for all State jurisdiction to adopt the International Residential Code (IRC) requirement to update smoke detectors whenever applications for permits are submitted; the requirement of installation of smoke detectors in all bedrooms and every level of existing homes; and the requirement for home sellers to provide smoke detectors that meet the building code.

Even though the smoke detector has been a regular feature of the home for many years, most home owners don’t understand the technology.  There are currently two fundamental types of smoke detectors, the ionization type and the photoelectric type:  The ionization smoke detector contains a very small quantity of radioactive material inside a component known as a sensing chamber, and “provides a somewhat faster response to high-energy or open flaming fires, due to the fact that these types of fires generally produce smaller aerosols.” While photoelectric type “responds faster to the aerosols generated by low-energy or smoldering fires, since these types of fire tend to produce larger particles.”  While many experts recommend that homes have both types of detectors, new technology smoke detectors will combine both types of detectors (from the Maryland Smoke Alarm Technology Task Force Final Report).

In addition to properly installed smoke detectors, experts recommend to plan and practice escape routes to reduce the time needed to escape a burning home.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of May 20, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in disclosure, property disclosure | Tagged , , | Leave a comment

A balanced real estate market emerges despite fears of a housing bubble

Posted on May 15, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

real estate bubbleAs talk of a housing recovery is gaining traction, some experts are saying the recovery may be artificial and short lived. Warnings from economists and a former mortgage executive paint a picture of a possible housing bubble being caused by the source they claim is cause for increasing home prices.

Steve Cook, of Real Estate Economy Watch, revealed a recent survey of 105 economists, real estate experts and investment and market strategists. Although respondents predicted positive home price appreciation through 2014; the experts expect that home prices won’t fare as well during ensuing years through 2017. Furthermore, 48% of the respondents felt that current Federal Reserve monetary policy might be the reason for recent home price spikes; which may be creating a future housing bubble (www.realestateeconomywatch.com/2013/05/survey-of-economists-finds-fears-of-new-bubble/).

A majority of the expert panel suggested that requiring a minimum down payment in the Qualified Residential Mortgage (a provision to allow lenders to bypass credit risk retention rules) would create a long-term sustainable housing market. However, only about a third of respondents believe that a minimum down payment should be 20% or more.

An April 9th online article for The Wall Street Journal titled “Is the Fed Blowing a New Housing Bubble?” written by former Fannie Mae executive, Edward Pinto, explores the source for of the housing recovery. Pinto pointed out that although recent home price surges are the highest since 2006, data released by the Federal Housing Finance Agency (FHFA) indicate that home price increases may not be due to “broad based improvements in the economy’s fundamentals.” But rather, home price increases are being driven by low interest rates due to the Fed’s Quantitative Easing program (http://online.wsj.com/article/SB10001424127887323646604578400252745095518.html).

Pinto compares current market conditions to those of 2006, when government policies also likely contributed to a housing bubble. During that period, like today, income is not keeping pace with home price increases. As an example, he cited FHFA’s conventional home-financing data that indicated new home purchase prices increased 9% during February 2013 and 15% during February 2013; while income barely increased 2% (keeping relative pace with inflation).

Pinto and his assessment of recent home price spikes are getting some attention. John Aidan Byrne of the NY Post wrote on May 6th (“Next Home Crisis”) about Pinto and his concerns. Because suppressed interest rates are pushing home sale prices up, Pinto surmises that when the Fed’s QE program ends, interest rates will rise creating an “inevitable housing disaster.” However, he concludes that to avoid a housing disaster: income must increase 33%, home sale prices will drop about 25%, or lending standards must loosen significantly. He points out that loose lending policies did not end well in the last housing bubble (http://www.nypost.com/p/news/business/next_home_crisis_lJoi2HNNojY2NGeDei8MsL).

Regardless of murmurs of another housing bubble, current market conditions might indicate a balanced market. The trend of monthly local absorption rates compiled from the local multiple list service has consistently shown to be in recent months between a buyer’s market and a seller’s market (absorption during a buyer’s market tends to be below 50%, while a seller’s market tends to be above 60%).

Even though there is little inventory, supply and demand may be in overall balance. However, that being said; supply and demand seems to be out of balance for well priced updated homes, which appear to the source of bidding wars and escalation clauses. Homes priced above the market and/or needing repairs/updates take longer to sell.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of May 13, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in balanced housing market, housing bubble, housing market, housing recovery, real estate | Tagged , , , , , | Comments Off

Don’t delay home maintenance

Posted on May 9, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Take action – consequences of deferred maintenance can hurt home sale.

Home MaintenanceAs we slowly emerge from one of deepest recessions that has hit in generations, one of the top issues facing home owners (especially those who plan a home sale) is deferred maintenance.  Although a lack of financial resources could be a main reason for postponing repairs and/or regular maintenance, other reasons for doing so may include a home owner’s lack of time as well as a home owner’s psycho-social issues getting in the way of carrying out maintenance (as in the case of severe hoarding).

Deferred maintenance in a home is simply putting off repairs and timely upkeep of its systems.  Delaying maintenance may turn today’s minor repair into tomorrow’s major problem.  Of course not all minor repairs turn into major issues, but even minor issues can be a nuisance.

Preventative maintenance can help prevent the elements from entering the home.  If delayed, issues can develop and affect other home systems.  Maintaining caulking and seals around windows and doors as well as flashing on roof components can prevent water penetration into the home.  Putting off repairs may allow water leaks, which can seep through walls and ceilings deteriorating drywall and even possibly weakening floor trusses/beams.  Openings in seals and caulking may also allow pests to enter the home, which can also create additional issues if not addressed.

Many home owners do not pay much attention to the exterior because they spend most of their time indoors.  The roof, gutters, and downspouts are often neglected due to a lack of awareness; many home owners don’t often check these systems and usually put faith in that they are doing their intended job.  Home owners may not even know there is a problem with these systems until it’s too late.  Water penetration from these systems can not only create problems as described above, but if left unchecked can also create problems in the basement and foundation.

Water does not have to penetrate from the exterior to create problems, it can originate from unrepaired plumbing leaks as well.  In addition to causing staining on walls and ceilings, plumbing leaks if left unattended may likewise, weaken floors.

Another regular maintenance item that is not often performed is HVAC servicing.  Ideally, a home’s furnace and air conditioning system should be serviced in spring and fall.  Regular servicing of the HVAC systems can not only possibly extend the systems’ life but also can help identify safety issues (such as carbon monoxide leaks in some systems).

Home MaintenanceDeferred maintenance issues often decrease a home’s value and can prevent a home from selling for top dollar; sometimes preventing a home from selling at all.  If you’re planning a sale and recognize that there may be deferred maintenance issues, you might ask your agent about having a pre-sale home inspection or home audit to determine the home’s condition and urgent repairs.  Your agent can provide guidance on repairs and pricing your home.

If you’re like many home owners, you might have deferred maintenance on your home.  Some experts recommend a “home audit” to determine your home’s condition.  It’s never too late to start budgeting for home maintenance; to meet regular and emergency maintenance needs, some experts recommend an annual savings of one to three percent of the home’s value. Planning ahead can make home maintenance easier as well allow you to make informed decisions to possibly lower your maintenance costs.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of May 6, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in home maintenance, home owner, home repairs, home seller, homeowner, real estate | Tagged , , , , | Comments Off

Hybrid housing market not for the squeamish

Posted on May 1, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

real estate trendsA “hybrid” housing market is has a little bit of everything. There are the multiple offers and escalation clauses, as well as the homes that sit idle for days (both could be on the very same block!); buyers willing to pay more than list and those offering less. The result is frustration among buyers and sellers who are disappointed by not having their expectations met; and even a few real estate agents are losing their cool. What is becoming increasingly apparent is that the current housing market is not for the squeamish!

Although few home owners are venturing to list their homes, those who do may be seeking a premium price; most likely due to the optimism permeating the air. Furthermore some are expecting the prize of getting multiple offers with escalation clauses. Owners of homes that do not sell within the first week of listing are anxiously wondering, “Why hasn’t my house sold yet?”

The flip side is that although home buyers are plentiful (compared to the current home inventory), there still seems to be many home buyers who seek to buy a home at a 5%+ discount. Unlike the “bargain hunter,” many of these home buyers are more concerned with future home resale (which may be indicative of a lack of confidence in the future housing market).

Pressure on home buyers and sellers is likely originating from reports of bubble activity pockets that seems to be popping up, and recent home price indices that indicate increasing national average home prices. Regardless, there appears to be a lack of symmetry among home sales as well as a lack of consistency among home buyers and sellers.

So if you’re planning a home sale or purchase, what are you to make of this? You should understand that national home price indices are comprised of multiple regions, and much of the national home price increase is due to regions that had the highest home price declines over the last six years, as well as a few pockets of very hot activity (unlike the home price climb during 2004-2006, which was mostly due to high confidence in the housing market, easy credit, and a much different economy). Likewise, the Metro DC region is microcosm of the national picture, such that it is comprised of a number of counties that realized double digit home price decreases, as well as a few pockets of hot activity.

To add some perspective to local market trends, the average days-on-market of a home in Montgomery County is roughly 60 days (depending on the source). Additionally, Montgomery County single family home data compiled by the Greater Capital Area Association of Realtors® (gcaar.com) indicated that median and average single family home price decreased year over year for the last three consecutive months. And while the number of homes listed continues to decline, the number of pending home sales (homes under contract) has also declined in March year over year, as well as year to date.

Getting into the market requires solid data, a strategy, and an open mind. If you’re selling: consult with your agent about recent neighborhood prices; and stay informed of all activity, as it could be your cue to decisions made on the sale. If you’re buying: in addition to discussing comp data, you should consult with your agent about a strategy to deal with competition from other home buyers.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 29, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in economics, economy, first time home buyer, first time homebuyer, Home Buyer, home buyer behavior, home owner, Home Price Index, home prices, home seller, home seller behavior, home values, homebuyer, homeowner, housing, housing bubble, housing market, hybrid real estate market, real estate, Real Estate Market | Tagged , , , , , , , , , , , , , , , | Comments Off

Your credit report reveals more than you might know

Posted on April 24, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Why is your credit report important?

Bethesda real estateInformation contained therein could determine whether or not you qualify for a mortgage, and possibly the interest rate you are offered. Typically, lenders use credit reports to determine how you generally manage your debts and financial obligations. Besides being used by mortgage lenders; some banks may review your credit report when you apply for a checking account, and even some insurance companies may use your credit report for underwriting purposes.

Your credit report may say more about you than you might know. The report is considered to be a “snapshot” of your financial management ability. The major credit bureaus, Equifax (equifax.com), Experian (experian.com), and Trans Union (transunion.com), act as information repositories for collected information, and make it available to those who need it. The credit bureaus are informed of your activities by your creditors as well as collecting information from public records; the collected information may include details about your identity, existing credit, public records, and recent inquiries.

Identity information may list your name and aliases, address, Social Security number, date of birth, and possibly employment information. Existing credit information lists accounts that are granted to you, and may include: credit cards, mortgages, student loans, and car loan accounts, payment history, and current balance. Public records may reveal liens, judgments, bankruptcies, and open collections.

Anyone with a legitimate need for your credit report can obtain it. Besides banks, lenders, and those who extend credit, others who may be able to view your credit report include (but not limited to) employers, landlords, and child support enforcement. These inquires are listed in the report.

Your credit score is also included in your credit report. Because each of the three credit bureaus use their own algorithms to determine your score based on the bureaus’ information, the three scores may vary somewhat. Many credit decisions are initially determined on credit scores, so it’s important to ensure that the reports are accurate so as to reflect in your credit scores.

Factors that may negatively impact your credit scores include (but not limited to): late payments, accounts referred to collection, and/or reported bankruptcy; having high account balances relative to credit limits; applying for many accounts in a short period of time; and having an excessive number of credit accounts.

With such importance placed on credit reports, it’s important to ensure your reports contain accurate information about you and your credit history. Unfortunately, inaccurate data may find its way into your report through poor reporting, misidentification, and even non-reporting of (positive) information. Additionally, identity theft has been a law enforcement issue for years; and is increasingly considered a major public threat.

You can dispute erroneous data with the reporting company, and/or the credit bureau. If you dispute to the credit bureau, the bureau will undergo an investigation. To assist the investigation, the bureau may require your identifying information, an explanation why the reported information is incorrect, and supporting documentation (such as receipts, police reports, and/or fraud affidavits).

Your credit report is considered to be a “snapshot” of your life and your ability to manage credit. Financial experts recommend that you request your report from each bureau annually to ensure the information is accurate. For more information on credit reports and scores, refer to the Federal Reserve (federalreserve.gov/creditreports), the FTC (ftc.gov), and the Consumer Financial Protection Bureau (consumerfinance.gov).

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 22, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in buy a home, credit report, Equifax, Experian, Fair Credit Reporting Act, first time home buyer, Home Buyer, home purchase, mortagage application, mortgage approval, real estate, Trans Union | Tagged , , , , , , , , , , , | Comments Off

Get out of your way and negotiate to win

Posted on April 17, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Self defeating attitudes can  interfere with your negotiating tactics; so get out of the way and negotiate to win.

negotiating tacticsWhat seems like many years ago, I read a book titled “Get Out of Your Own Way: Overcoming Self-Defeating Behavior” by Mark Goulston and Philip Goldberg. If you don’t get the gist of the book by its title, the book describes how people can become obstacles to their own success. And although the book was about personal growth, the premise can apply to self defeating attitudes brought forward during negotiating a real estate transaction.

Obviously, the purpose to entering into a real estate transaction is to either buy or sell a home. However, buyers and/or sellers can sometimes become obstacles in their own path to success; they may lose sight of the bigger picture and can make poor decisions – especially in negotiating price, repairs, and other issues that may pop up throughout the process. For example, a home buyer who seeks a low priced bargain may become frustrated wondering why he is constantly outbid; while the home seller who insists on an unsupported high price might become disappointed when there are no offers.

It is common knowledge that “the first rule” of negotiation is to not be emotional. However, many decisions about buying and selling a home are often based on emotion; additionally, expectation and anticipation often influence home buyers and sellers. If emotions take over, the larger goal is often lost to a narrow focus on seemingly insignificant and petty matters.

Get out of your way by sticking to the facts. Armed with data and facts, there is less conjecture and you are more likely to be persuasive in your arguments. Additionally, concentrating on facts can also help you stay focused on the larger picture of buying or selling your home. For example, when pricing or making offers – use recent neighborhood comps and look for data driven market sales trends (rather than relying on what you hear on the news). Looking at all the facts can also help negotiate other items, such as home inspection repairs; having contractor estimates may assist in resolving an impasse.

Sometimes buyers and sellers go into a transaction with a “win-lose” attitude, where they expect that their position is always correct. Being “aggressive” towards your counterparts may seem the best way to get what you want; however, fighting for an uncompromising position may lead to all parties becoming inflexible and a transaction that does not close. In fact, being forceful and antagonistic about your offer may make others become ill tempered and even possibly hostile to further negotiation.

One of the definitive texts on warfare, “The Art of War” by Sun Tzu, has also been a guiding resource for top negotiators. “The Art of War” doesn’t talk about going to the enemy and forcing them “to eat steel.” Rather, it is a thoughtful treatise on dealing with people. The upshot is that the best way to “win” is to prevent war through positioning, data, and understanding of the counterpart. In other words, negotiating to get your way may require positioning of the facts and being persuasive (rather than approaching the transaction with a take it or leave it attitude).

Negotiating tactics are an often misunderstood part of the real estate process. Hire a savvy real estate agent to assist you in collecting data and persuasively presenting your position. For a successful transaction – get out of your way!

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 15, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in Home Buyer, home seller, housing market, negotiation, real estate | Tagged , , , , , , | Comments Off

Your real estate agent’s experience is more important than you know

Posted on April 10, 2013 by Dan

by Dan Krell © 2013
Google+
DanKrell.com

Why your real estate agent’s experience is more important than you think:

Real Estate AgentsThe National Association of Realtors (realtor.org) publishes an annual profile of home buyers and sellers that includes data and descriptions about how consumers go about choosing a real estate agent.  There are obviously many factors that are involved in the choice, but it is striking that an agent’s experience is not a major reason for their hire; it seems as if most buyers and sellers hire an agent who was referred by someone the consumer knew, and that many buyers and sellers did not talk to more than one agent.

Even though experience is not heavily weighted in agent choice, it may be one intangible that should be considered when you choose your real estate agent.  A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the intuitive notion that an experienced agent can yield a better result than an inexperienced agent.

They concluded that hiring a “veteran” agent will have a positive effect on your home sale.  The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.  Data collected from their sample indicated that rookie agents sold homes for about 10% less than experienced agents, which according to their sample data yielded an average net difference of $18,000 (the average list price was $201,297).  Homes listed by “veteran” agents sell about 32% faster than inexperienced agents.  And, experienced agents are more likely to expedite the transaction to completion.

One possible explanation provided by the researchers is that the experienced agents are more likely to list higher quality property that typically sells faster and for more money.  Although they concede that they cannot substantiate this rationalization by this study, they suggest that veteran agents are more successful in obtaining luxury real estate and new home listings.

Real Estate AgentA more likely reason for differences between rookie and veteran agents is the mindset brought forward to the business of real estate.  The investigators discuss how those who consider selling real estate their career are more successful and have better outcomes for their clients than those who do not.  They also suggest that those who consider themselves as “part-time” agents are less likely to achieve as high of a result in their transaction as the full time counterpart; they contend that successful veteran agents are dedicated and devoted to their career.

Other possible reasons for their conclusions (but not discussed in the study) are that veteran real estate agents are more acquainted with the nuances of the housing market and have an increased ability to engage the parties in the transaction.  Full time agents are invested in being aware of listing and sale activity in their respective markets, and network with other agents to compare notes.  Additionally, experienced agents may have developed the ability to easily connect with home buyers and sellers; as well as have greater capacity to understand the specific needs of buyers and sellers – thus facilitating a smoother and successful transaction.

The business of real estate is increasingly complex and difficult.  Rapidly changing demands on home buyers and sellers can be challenging and frustrating for those in the market.  Your agent’s experience, both general and specialized, could make the difference in your success.

More news and articles on “the Blog”
Protected by Copyscape Web Plagiarism Detector
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 8, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Posted in first time home buyer, first time homebuyer, home buyer behavior, home buyer profile, home sale, home seller, home seller behavior, homebuyer, housing market, real estate, real estate agent, Real Estate Market, Realtor | Tagged , , , , , , , , , , , | Comments Off