buying a home Archives - Page 7 of 15 - Real Estate News and Commentary

June 16, 2017July 14, 2019

Homeownership crisis?

The housing market made significant strides last year with regard to home sales and home prices. However, even with housing’s good news, the homeownership rate continues to be at generational lows. Economists and real estate professionals are stumped. Is there a homeownership crisis?

The homeownership rate for the first quarter of 2017, reported by the U.S. Census Bureau (census.gov), was 63.6 percent. This is a slight improvement from homeownership rate recorded in 2016. However, in their analysis, the Census Bureau stated that when the rate is adjusted for “seasonal variation,” there was no statistical difference from the 63.5 percent rate recorded in the last quarter of 2016.

The homeownership rate peaked at 69.2 percent in 2005, but has steadily declined since the Great Recession. Industry experts have been flummoxed as to why there have not been more home buyers taking advantage of historically low interest rates in an upward economy. (Freddie Mac reported last week that the national average interest rate for a 30 year fixed rate mortgage was 3.94 percent; freddiemac.com). Even mortgage lending has become looser, as some mortgage companies have rolled out low and no-down payment programs in recent months.

A homeownership crisis in the making, why is there lack of interest in homeownership? A recent study co-sponsored by the Fisher Center for Real Estate and Urban Economics, UC Berkley and the Rosen consulting Group (Hurdles to Homeownership: Understanding the Barriers; June 2017) asserted to have the answer to this question. According to a NAR press release (realtor.org), the study was announced this month in honor of National Homeownership Month, and presented at the National Association of Realtors Sustainable Homeownership Conference.

The authors discussed regulatory issues that has hindered housing and mortgage lending. They also identified issues affecting would-be home buyers, which include: student debt; availability of mortgages; housing affordability; low home sale inventory; and “post-foreclosure stress disorder.”

You may already have heard much about regulatory issues, consumer debt, mortgages, affordability, and low housing inventory. But, what is “post-foreclosure stress disorder?” The Rosen Consulting Group coined the phrase to give a name to the concept of perceived home buying risks derived from a financial crisis.

Even though a number of consumer surveys continue to indicate a strong positive sentiment towards homeownership, the authors point to post-foreclosure stress disorder as a major influence on home buying decisions. They believe that many individuals have been directly and indirectly affected by the Great Recession, and therefore have changed their behaviors based on perceived financial risks. And the greater the financial risk, the greater the caution exercised. They claim this is confirmed by a Federal Reserve survey where 80 percent of respondents indicated they would like to own a home someday, but only one in six who were financially able to purchase a home felt that renting was the best choice for now. The authors stated that although the trauma of the Great Recession will fade over time, they assert the need to rebuild confidence in homeownership benefits.

Post-foreclosure stress disorder may account for a decline in the homeownership rate, but this is not a homeownership crisis. It is shift in values and a major shift in lifestyles. Surveys have indicated that millennials are expected to be the largest group of homebuyers, but many millennials don’t want to be anchored by owning a home. They want to be able to take advantage of global opportunities without the burden of having to sell a home. There is a shift away from the old standard of being house-centric to mobility.

By Dan Krell
Copyright© 2017

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

June 9, 2017September 10, 2018

Home inspectors make mistakes too

The home inspection has become a standard part of the home buying process. Even in very competitive buyer situations, you can still work in an inspection without hurting the chances at getting the home of your dreams. And although you should never forgo the inspection, you should know that the home inspection offers an opinion. However, home inspectors are not always accurate or relevant, they make mistakes too.

Nick Gromicko and Kenton Shepard, of the International Association of Certified Home Inspectors, shared their thoughts on the limitations of the home inspection (The Limitations of a Home Inspection; nachi.org). First, home inspectors are “generalists.” They may not necessarily be an expert in all aspects of home building and/or systems. However, they are trained to spot potential problems and may recommend you consult with an expert.

They pointed out that home inspections are limited to what the inspector can see. Anything that is not accessible to the inspector cannot be seen and inspected. This includes anything behind walls, under floor coverings, or blocked by furniture or other items.

Gromicko and Shepard stated:

“Safety can be a matter of perception. Some conditions, such as exposed electrical wiring, are obviously unsafe. Other conditions, such as the presence of mold, aren’t as clear-cut.”

They further stated:

“Every home has mold and mold colonies can grow very quickly, given the right conditions. Mold can be a safety concern, but it often isn’t. The dangers represented by mold are a controversial subject.”

They conceded that “other potential safety issues that fall into the same category.” Hazardous materials and environmental issues require specialists, and most often require samples for lab analysis.

Daniel Goldstein wrote that some home inspectors go too far (10 things a home inspector won’t tell you; marketwatch.com; February 23, 2016). Some inspectors dwell too much on “superficial” items such as chipped paint and surface mold. And they often provide long lists of items that may or may not be a problem without putting them into context. He stated:

“So what constitutes going too far? A less helpful inspector might dwell on things like surface mold, chipped paint or other superficial problems, or present buyers with a long litany of issues, with no context about their relative importance and no estimate of the cost of fixing them.”

Understand your home inspection has limitations, so moderate your expectations. A good strategy is to have a conversation with your inspector about what you could expect. Every home is different for many reasons, but often present similar issues. Your inspector should be able to explain what you might expect due to the home’s age and level of maintenance. Some inspectors may also be able to point out future potential issues based on the inspection.

Additionally, when it comes to hazardous materials, environmental issues, and other controversial subjects, you must go beyond the hysteria and educate yourself. Getting the facts about such topics, which many home owners encounter, can help you understand the risks and how to reduce or eliminate them. If issues are identified in the inspection, get an expert’s opinion. An expert can provide further information, advice and context.

Choose an experienced home inspector with references. Check to ensure their license is active. Home inspectors in Maryland are licensed by the Department of Labor, Licensing and Regulation (dllr.state.md.us/license/reahi). The stated requirements to become a licensed home inspector include the completion of an approved 72-hour home inspector training course and pass the National Home Inspector Examination. Although Maryland home inspectors are licensed, look for an inspector with additional credentials. Many inspectors are also certified by professional organizations such as the International Association of Certified Home Inspectors (NACHI.org) or the American Society of Home Inspectors (homeinspector.org).

Original published at https://dankrell.com/blog/2017/06/09/home-inspectors-make-mistakes/

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.

May 25, 2017

Home buyer multiple offer survival guide

The real estate market is getting increasingly competitive for home buyers. But it’s not true for all homes. Neighborhood homes that have been selling the quickest and for most money are the homes that fill the discerning home buyers’ need for a turn-key home. You can count on these homes attracting many home buyers, as well as multiple offers. These situations can be frustrating, but being prepared can possibly increase your chances of winning the multiple offer scenario. Many home buyers need not come up empty, confused, and frustrated when they encounter multiple offer situations. Here’s a home buyer multiple offer survival guide.

The Home buyer’s survival guide to multiple offers

When confronted with a multiple offer scenario, you must understand the seller is in the driver’s seat. This is a hard pill to swallow for many expecting it to be a buyer’s market. But for the homes that show the best and are priced the best, you should expect competition from other home buyers. Giving up the expectation that you’ll be able to negotiate a contract on your terms will help you in formulating a competitive offer.

Although you may not realize it, your emotions guide much about your home buying decisions. Formulating your offer for a multiple offer situation will be more sound if you stick to the facts. Focusing on the facts will help you stay focused on the larger picture of buying a home. Using data and facts can also help you be more persuasive when you present your offer to the seller.

Home buyer multiple offer survival guide on the housing market

Understanding the local market can be a major plus when putting your offer together. Housing trends can influence home buyer competition and price. However, understanding your limitations can help your home buying strategy too. You may be limited in the amount you are willing to spend, the type of mortgage for which you qualify, your closing date, and a number of other issues that may affect the terms of the contract. Don’t be discouraged if you think your limitations may lessen your offer’s attractiveness when it’s compared to others.

Certainly, don’t get caught up in media reports on real estate. The housing market is a hyper-local phenomenon. Regional markets are different and have different sales trends. Locally, even neighborhoods may differ significantly. Be prepared with local market information, as well as your limits.

Home buyer multiple offer survival guide on financing

The general consensus when competing with multiple offers is to put your best foot forward. Decide on the best price you feel comfortable paying for the home. Cash deals are difficult to compete against. However, you can beat a cash deal if your offer has a higher price and your lender has provided you a very strong approval letter. If you didn’t meet with your lender prior to looking at homes, make an effort to provide your lender with all necessary documents for them to provide you an approval letter that is only subject to underwriting and appraisal (or the equivalent). The stronger the lender letter, the more confidence the seller will have in you to complete the transaction without delays or hiccups.

Haven’t met with a lender yet? Start your own mortgage file with basic items the lender will need from you. Your lender will need recent pay stubs, W-2 statements, bank statements, 401k statement, and any other financial information you think you may need (which may include child support or disability income). Self employed individuals will need whatever documentation they can muster (including tax returns) to support their declared income. Being organized will facilitate the mortgage process.

Home buyer multiple offer survival guide on contingencies

Try to keep your contingencies to a minimum. There may be some contingencies you may be able to avoid, and some may be necessary. You must consider contingencies carefully and soberly, as they offer some protections if you can’t (or don’t want to) move forward with the purchase.

Home buyer multiple offer survival guide on home inspections

Although some agents suggest skipping the home inspection contingency in a multiple offer situation, I do not recommend that. Many homes have deferred maintenance that can lead to costly repairs. Even renovated homes that appear to be in good condition can have major issues which can go unnoticed. Instead of skipping the home inspection, try to have a short inspection period (have the inspection scheduled ahead of time). Some home buyers have an opportunity to conduct a pre-offer home inspection. This allows them to eliminate the contingency from their offer, as well as knowing the general condition of the home.

Home buyer multiple offer survival guide on finding homes

If you’re finding multiple offer situations too intense, try to find homes that have little or no home buyer competition. Ask your agent about finding homes that are not listed in the MLS. Some agents already seek out such homes. Alternatives could be For Sale By Owner, bank owned, auctions, and even farming specific neighborhoods for owners ready to sell. Your agent can also search through expired and withdrawn MLS listings to find homes.

There are a couple of disadvantages to looking for homes not in the MLS. Although you may reducing the home buyer competition, you may encounter competition from real estate agents looking for listings. Additionally, finding a willing seller of home you desire may take some time.

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.

March 9, 2017December 13, 2022

NAR should promote Realtor Authenticity

Several years ago I told you about the National Association of Realtors’ attempt in shifting consumer attitude towards Realtors. They are pivoting away from selling Realtor integrity, to selling Realtor value. In 2014, the NAR voted on creating a Code of Excellence to demonstrate competency. It wasn’t until this past November that the NAR approved a framework of competencies for agents to achieve. The eagerly anticipated implementation will allow Realtors to assess and grow their skills and knowledge in many aspects of the business of real estate. But this Commitment to Excellence, as it is named, may help Realtors increase their competency; but in the end, just like being proficient in the Code of Ethics, it will likely fall short in building consumer trust. The NAR should promote on Realtor authenticity.

Having agents commit to more training is a good idea in building competency among real estate practitioners. However, research has demonstrated that showing off accolades and awards doesn’t instill value, nor does it increase sales (Valsesia, Nunes, & Ordanini: What Wins Awards Is Not Always What I Buy: How Creative Control Affects Authenticity and Thus Recognition (But Not Liking). Journal of Consumer Research. Apr2016, Vol. 42 Issue 6, p897-914).

Realtors have a trust gap. And a badge indicating competency and a Commitment to Excellence won’t bridge that gap. The business of residential real estate is likened to a game of smoke and mirrors. Instead of encouraging Realtor authenticity, agents are often taught techniques of persuasion to increase sales. Many agents devise gimmicks and expensive marketing materials to entice you to do business with them. Even before you meet with a real estate agent, they are likely scheming how to gain your trust. Whether or not they earn it is an entirely different matter.

Instead of creating another Realtor badge, designation or code, the NAR should consult with James Gilmour and Joseph Pine II (of the Strategic Horizons LLP). The title of their 2007 groundbreaking book sums it up nicely: “Authenticity: What Consumers Really Want.” Realtor authenticity is sorely lacking in the industry, and it’s not just the NAR; it stems from the brokers who train real estate agents as well. In order for Realtors to build trust, they need to be authentic.

A brief 2004 article by Michael Angier (Authenticity Matters: Are you the real McCoy; Sales & Service Excellence Essentials. Vol. 4 Issue 9, p10) highlighted the necessity for authenticity in the sales environment. He stated that “People like to do business with people they like. And they like people who are like themselves… Buyers today are savvy. They have more choices. And they can tell whether the company and the people in it are congruent. They seek out, resonate with and tend to be loyal to companies that are authentic. Your uniqueness and the things you’re best at doing are part of your differentiating position. It’s who you are—your identity. It’s what people can relate to. If there’s anything false, made up or covered over, your prospects will sense it. And they can’t even tell you why they didn’t buy…” Realtor authenticity would certainly positively affect client satisfaction.

Realtor authenticity will not only build trust but can also increase sales. And indeed, a 2006 research article by Allen Schaefer and Charles Pettijohn (The Relevance Of Authenticity In Personal Selling: Is Genuineness An Asset Or Liability? Journal of Marketing Theory & Practice. Vol. 14 Issue 1, p25-35) confirms that authenticity is related to sales performance. Their results indicated that salespeople who felt more authentic in their roles performed at higher levels and had a higher commitment to “personal selling.”

What do you think? Below is the framework of the Commitment to Excellence Program as adopted by the NAR is below (from nar.realtor/policy/commitment-to-excellence). It seems to me that Realtors should already be striving to be competent in these areas:

1) Being current and knowledgeable about the laws, regulations and legislation affecting the real estate disciplines the REALTOR® engages in, and about real estate in their community generally.

2) Understanding the Code of Ethics is a living document, and keeping themselves informed about its duties and obligations on an ongoing basis.

3) Providing equal professional services to all consistent with Article 10 of the Code of Ethics.

4) Advocating for property ownership rights in their community, state and nation.

5) Acknowledging and valuing that honesty and integrity are fundamental and essential to REALTORS® being known as consumers’ trusted advisors.

6) Becoming and remaining proficient in the use of technology tools to provide the highest levels of service to clients, customers and the public, and facilitating cooperation by sharing accurate, current information with consumers and with other real estate professionals.

7) Keeping up-to-date on laws and regulations governing data privacy and data security, and taking necessary and appropriate steps to safeguard the privacy and integrity of information entrusted to them.

8) Committing themselves to enhancing their knowledge and skills in the real estate areas of practice they engage in on an ongoing basis.

9) Providing superior customer service.

10) Appreciating that courtesy, timely communication and cooperation are fundamental to facilitating successful real estate transactions, and to building and maintaining an impeccable professional reputation.

11) As a broker-owner or principal of a real estate company, being committed to creating and maintaining an environment that promotes excellent customer service consistent with these standards.

Original published at https://dankrell.com/blog/2017/03/09/nar-promote-realtor-authenticity/

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.

February 17, 2017November 23, 2021

Unpacking is part of the buying process

People don’t really give it much thought until they’ve already moved. Maybe that’s the reason for a lack of information and guidance about unpacking. I estimate that for every six articles about packing and moving, there’s probably one about unpacking. And like buying a home and moving; there should be more thought to unpacking because it’s the first activity that makes your new digs feel like home.

Unlike packing for a move and decluttering, unpacking seems to get left out of the home buying process. Many believe that you instinctively come home after settlement (or signing a lease) and just unload all the boxes and just begin living as you did in your previous home. But the reality is that unpacking can be just as, if not more, overwhelming than the move itself. And this applies to whether you’ve hired a moving company or concierge service to unpack for you, or you do it on your own.

That’s correct, you can hire someone to unpack for you. However, just like packing house, it can get expensive. Of course, charges vary. However, if this is the way you decide to go – get multiple estimates from insured and bonded companies. Once the service unpacks for you, consider taking the time to review where they stored items. This will save you time later when you need to find something in a hurry.

Unpacking a house on your own may seem overwhelming (even with the help of friends), but don’t give in to procrastination. Extreme procrastination can lead you to living out of moving boxes for a prolonged period. Instead, make a simple unpacking plan and prioritize. Although the chore of unpacking seems to be the physical aspect of unloading boxes; there can be an emotional drain of deciding where to best place and store items.

When packing your previous home, you most likely packed each room and labeled each moving box for their destination room. And although unpacking each room in sequence may seem logical, you most likely won’t get it all done in one day. The result can leave you frantically digging through boxes searching for items you use on a daily basis.

To avoid this trap, consider unpacking essential items first. Having the essentials put away first will help you feel as if there is continuity. You will find it easier going about your daily routine without disruption – even if you don’t unpack all the boxes. Of course, it helps if you’ve marked the boxes containing essential items when you packed. However, if you didn’t, that’s ok too.

If you’ve unpacked the essentials first, you’ll notice that you’ve become aware of the available storage spaces. As a result, you’ve set the tone for each room, and the entire unpacking process becomes easier. You’ll be able to go through your room priority list quicker and get through storing items where they belong with less deliberation and angst.

When unpacking essentials, focus on the kitchen and bathrooms first. Chances are that you will need to use these rooms throughout the day as you unpack. Then go through your priority list of rooms, unpacking the essentials.

Once the essentials are put away, you may feel at ease and in control. You can then unpack rooms in sequence or as prioritized. You may also decide to go through the remaining boxes at a leisurely pace.

If you like this post, do not copy; instead please:
link to the article,
like it at facebook
or re-tweet.