Whose Responsibility is it anyway?

When selling a home, the seller is obligated to provide a set of disclosures to the home buyer. The disclosures cover almost everything from home condition to local zoning compliance. Even common ownership community (condo/HOA) disclosures are incorporated into the home sale contract. However, buyers always have questions. Some questions are easily answered because they are about the physical property.  However, some questions require a call to the county/city or the condo/HOA association for an answer. When the buyer or their agent poses a question that requires a call to the locality or condo/HOA association, whose responsibility is it to gather and provide those answers?

whose Responsibility is it
Homebuying goals

This is not a new issue, and buyer agents usually make the call themselves. But I recently received from a buyer agent asking about a condo listing I had. The agent asked specific questions about the possibility of the property being used as a rental. She asked also asked about general condo rules for rentals in the community. I told the buyer agent to call the condo association and ask them directly. Taken aback expecting an answer from me, she apologized saying she thought I was the listing agent. I confirmed that I was the listing agent and directed her to seek the answers directly from the condo association, because they would be from the source.

Some agents would have given her some information, whether it was accurate or not. To be honest, I did not know the answer, therefore I couldn’t provide her with the info. Even if I did know something about it, I still would have directed her to the condo association for the complete accurate answer.

Whose responsibility is it anyway?

Home buyers rely on the information when making buying decisions, and how much to offer. So, it goes without saying that home buyers want accurate information. That’s why most agree that it’s best practice to direct the buyer/agent to get answers from the source. This way they can make the best decision based on correct answers.

Whose Responsibility is it to verify information? Regardless of what information is provided (or not provided) on the sell disclosures, the home buyer should verify doing due diligence. The home buyer should confirm the accuracy of what is disclosed, as well as investigate any areas of concern.  Although it’s easy to verify some information because of its public information availability, some information can only be obtained via a phone call or email to the locality where the house is located. 

By Dan Krell
Copyright © 2023

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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.

Mortgage rates are on the move

This week’s Freddie Mac press release headline “Mortgage Rates Exceed Six Percent for the First Time Since 2008” grabbed everyone’s attention.  Indeed, mortgage rates are on the move and what does that mean for you and the housing market?

Mortgage rates are on the move
Get pre-approved before home shopping

According to Freddie Mac’s Chief Economist Sam Khater, “Mortgage rates continued to rise alongside hotter-than-expected inflation numbers this week, exceeding six percent for the first time since late 2008. Although the increase in rates will continue to dampen demand and put downward pressure on home prices, inventory remains inadequate. This indicates that while home price declines will likely continue, they should not be large.”

In her blog post, Nadia Evangelou, Senior Economist and Director of Forecasting for the National Association of Realtors, points out that the change in mortgage rates increased monthly payments about 60% compared to the same time last year. She also calls attention to the fact that the pace of rising rents is at a forty-year high! Regardless if you are renting or buying a home, housing affordability is declining.  Using a little math, she underscores how increasing rents outpace a fixed-rate mortgage on the purchase of a home.

Yes, mortgage rates are increasing. But a little history will put things in perspective. We all know that mortgage rates reached its peak in the early 1981 as a result of the deep recession of the late 1970’s.  Shortly afterward, average mortgage rates dropped of the next several decades (albeit the occasional peak). 

However, after the peak housing market of 2007, average mortgage rates dropped slightly in 2008 as a reaction to the market crashes and a decimated housing market. It wasn’t until five years later and average mortgage rates hovering in 3 percent range, that the housing market once again became broadly attractive to owner occupants (as opposed to investors). Mortgage rates have been averaging below 4 percent since then, with the exception of 2018 when rates rose above 4 percent.

Mortgage rates are on the move. Average mortgage rates are now above 6 percent, and there may be a silver lining.  Many are hoping that the rising interest rates will reduce home prices (although that remains to be seen).  However, after the brief rate shock is over, increased mortgage rates will likely incentivize banks to lend which could increase the pool of home buyers

By Dan Krell
Copyright © 2022

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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.

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Get a mortgage preapproval

Many years ago, the home buying process was very different than it is today.  For example, home buyers relied on their real estate agents to qualify them to figure out how much home they could afford, instead of getting a mortgage preapproval.  Making an offer on a house was done without a mortgage preapproval letter.  And the mortgage application was usually made after the contract was ratified.  The process may seem backwards by today’s standards, but that’s how it was done. 

real estate mortgage preapproval
Real estate is voted as best investment

The problem with the old process was that sometimes the loan was denied, causing heartache and anguish for the homebuyer and seller. Times have changed.  In today’s market, homebuyers are expected to be more organized, which helps streamline the homebuying process. The includes getting a mortgage preapproval letter.

You may have heard it called a prequalification or a preapproval, the purpose is the same.  The preapproval letter not only qualifies you, but also gives the home seller confidence that you can complete the sale.

To preapprove you, your lender checks your credit and reviews your financial documents.  This will give the lender an idea of what loan program is best for you, as well as calculating your debt-to-income ratio to determine your maximum loan amount.

Your preapproval gives you a head start on the home buying process.  When the lender reviews your credit and finances, they can see if there are any obstacles to getting your loan.  The lender can help structure your loan in advance, which will guide you in your preparations.  Additionally, the preapproval letter will show your agent and sellers that you’re a serious buyer because you’ve already started the mortgage process.

Don’t feel pressured to work with any lender, even if they are affiliated with your agent.  As a homebuyer, you have right to choose the lender you want.  Some buyers will go where they bank for a mortgage, because there is a mutual familiarity.  Some look for the best interest rate, and others look for personal service.  It can help to understand the lender better by comparing several by talking to a local loan officer.  The bottom line, however, is to make sure the lender is licensed and is knowledgeable of the jurisdiction where you are buying.

By Dan Krell
Copyright © 2022

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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.

Rent vs Buy 2021

rent vs buy 2021
Increasing rent

Thinking of your Rent vs Buy 2021 question? Consider Quarterly Residential Vacancies and Homeownership released by the US Census (census.gov) for the third quarter of 2020 is very interesting.  First the good news is that the US homeownership rate is the highest it’s been in a decade!  The seasonally adjusted US homeownership rate of 68.2 percent recorded in the second quarter 2020, was the highest rate since 2007.  In fact, the homeownership rate hasn’t had two consecutive quarters above 67 percent since 2009.  As you remember, the homeownership rate progressively dropped through 2015 to hover in the 63 percent range, which was the lowest homeownership rate in several generations.

rent vs buy 2021
Homeownership rate 1997-2020

The story of the housing market this year has been nothing short of phenomenal.  Initially thwarted by a dismal spring market, only to rebound at a record setting pace.  Even with historically low existing home sale inventory and rising home prices, eager home buyers are actively pursuing homeownership. 

On the flip side, the second and third quarter US rental vacancy rates are the lowest since 2008.  And the mean US rental asking rent of $1,600 marks a high point as rents continue to creep higher.  Of course, homeownership rates and rental vacancies will vary significantly depending on the region and locality.  However, looking at the US averages is a good benchmark to see trends develop.

For many, comparing increasing rent versus a low interest mortgage rates makes buying a home the answer to the rent vs buy 2021 question.  A November 8, 2012 article from Realtor Magazine (Rising Rents Press More Americans to Make Big Decision; magazine.realtor) describes the renter’s plight, by saying, “Rental price expectations continue to rise and are much higher than home price expectations…” This sentiment continues to hold true.  Besides escaping rising rents, many home buyers are drawn to the touted benefits of homeownership, including increased well-being and wealth-building.

How do you know if renting or buying is better?  First, when deciding on the rent vs buy 2021 question, there are many other considerations besides rising rents.  Consider how long you intend to live in the area.  Renting is often the housing solution if you think your residence in the area is temporary. 

Next, if you don’t already have one, create a housing budget.  Besides deciding on how much rent you can afford, talk to a mortgage lender to get prequalified to further help you understand how much you can afford to pay for mortgage or rent. 

Once you have a budget of what you can afford, create an estimated renter’s and home owner’s budget to compare.  Besides the basic housing payment (rent or mortgage), there are other items that need to be taken into account and can vary depending if you rent or own.  These other items include (but not limited to) monthly utilities, insurance, and maintenance.  To help with estimating the “extras,” start by asking the landlord and/or home seller for twelve months of utility bills (Montgomery County MD requires home sellers to provide this for owner-occupied homes).  Ask your insurance agent for a quote to compare renters’ vs homeowners’ insurance. 

Home maintenance is usually forgotten and not budgeted.  Tenants typically have minimal maintenance, which is an attraction to renting.  Generally, home maintenance for owners usually includes having seasonal or annual inspections on the home’s systems (e.g., HVAC, roof, etc).  Additionally, you have to budget to repair and/or replace systems as they age. 

By Dan Krell
Copyright © 2020

Original located at https://dankrell.com/blog/2020/12/13/rent-vs-buy-2021/

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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.

Real Estate Agent Personality

real estate agent personality
Working with a real estate agent (infographic from keepingcurrentmatters.com)

Many home buyers and sellers don’t give much thought in choosing their real estate agent. They may decide to work with an agent after meeting once or a phone call.  But having the right agent by your side can mean the difference in having an event-free home buying or selling experience, or one that is full of pitfalls and non-communication.  Besides professional expertise and experience, is there a real estate agent personality trait that gives you an advantage?

Lee Davenport conducted a groundbreaking study comparing real estate agent personality differences (Home Sales Success and Personality Types: Is There a Connection?; Journal of Real Estate Practice and Education; 2018; Vol 21, No 1; p29-57.)  The study investigated the question whether there is a connection between successful real estate agents and their personality type.  Success was measured through lead generation (e.g., meeting new clients).  Although you might think there is a personality that is better suited for real estate, the study concluded that there wasn’t one specific personality type that correlated to real estate success.  However, he suggested that there should be further research to understand why there is no difference in the success among real estate personality types.

Back in 2014, Graham Wood wrote an article for NAR that also questioned if there was a perfect agent personality (Are You Sure Your Agents Have the Right Personality for the Job? nar.realtor; April 11, 2014).  Although the article was not a study published in a peer reviewed journal like Lee Davenport’s, it does provide food for thought and an obvious conclusion. 

Wood, like Davenport, questioned which personality dimension on the DISC test was better suited for real estate.  After testing himself, Wood believed his personality traits were not suited for a people-skills intensive field (such as real estate sales).  However, after interviewing several brokers, he learned that there is place in real estate for pretty much any personality type.  The DISC (discprofile.com) is a behavioral assessment tool that helps people be more self-aware, and increase productivity. 

What should you look for when choosing your agent?  First, make sure they are licensed in the area you intend to buy and/or sell.  I can tell you that there are agents who try to do business over state lines where they are not licensed.  It happens more than you think. 

Second, what’s their experience and expertise?  In today’s market, most agents don’t confine themselves to specific neighborhoods.  The idea of “neighborhood specialists” is antiquated.  Information is abundant to agents and consumers, and can easily be applied to any neighborhood.  You can learn more about an agent by how they handle adversity. Instead of asking about how many sales they have or neighborhood experience, ask about specific transactions where they overcame obstacles.

Other considerations include getting a referral from a friend or relative. But referrals should be vetted.  Just because your friend had a good experience with their agent, doesn’t guarantee success for you.  Sometimes agents and clients connect and work well together, and sometimes they don’t. Just in case, make sure you can walk away from your agent by ensuring your buyer or listing agreement provides for termination without a penalty.

Also, it doesn’t hurt asking the agent for a couple of references from recent clients.  You can get insight into the agent’s business by calling the references and asking about their experience with the agent. 

By Dan Krell
Copyright © 2020

Original located at https://dankrell.com/blog/2020/11/28/real-estate-agent-personality/

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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.