home buying process Archives - Page 3 of 11 - Real Estate News and Commentary

May 6, 2019May 6, 2019

Home buying process simplified

An article by Tracey Barbour for the Alaska Business Monthly (Younger buyers partial to homeownership, home-buyer education, online resources: akbizmag.com; September 2017) describes the growing phenomenon of millennial homeownership. Not surprisingly, many millennial home buyers are taking advantage of home buyer assistance programs. Because millennials grew up with the internet, you might think that they would rely less on professionals when home buying. But the opposite seems to be true. A majority of millennials prefer to connect with a single point-of-contact when applying for a mortgage (and likely when dealing with real estate agents). However, millennials do rely on the internet when it comes to understanding the home buying process. They spend copious amounts of time doing their own research on the home buying process.

It’s not just millennials, but most home buyers are taking advantage of online and digital resources to learn about the home buying process. Maybe it’s because we live in an era of information overload that home buyers are more aware of the many factors that need to be considered before buying a home. Regardless, the abundance of “home buying process” resources are helping home buyers decide if they are suited to buy a home, assisting with financial planning of buying a home, finding down payment assistance, mortgage application information, and so much more.

It used to be that if you were a first-time home buyer, you relied heavily on your real estate agent for the education of the home buying process. You placed a great deal of trust on their guidance. The home buying process was envisioned as a step-by-step formula to purchasing a house. The purpose of explaining the home buying as a process was to reduce the major aspects of home buying into distinct parts and make it seem simple and trouble-free.

The home buying process is a big ball of stuff…

Today, the standard “home buying process” as explained by real estate agents seems nebulous and lacking detail. Maybe even a little pedestrian. Maybe it’s because real estate agents tried to make their job easy and have control, but the word “process” incorrectly suggests that there is an exact order that is “one size fits all.” However, the home buying process is more aptly described by adapting the “timey-wimey” quote of the 2007 episode of Dr. Who (Blink) to say “People assume that home buying is a strict progression of cause to effect, but it is more like a big ball of home buying stuff.”

Moreover, all home buyers are different. Not just in their preferences, but also in their needs and expectations. And thus, home buyers will experience the process differently. One thing I can confirm from eighteen years of listing and selling homes is that all transactions are different.

But don’t discount the value of the traditional “home buying process” meme. Consider it a framework of mini-processes that are critical to buying a home. Each mini-process will be proceeding at its own pace parallel to other processes.

Choose your buyer agent well. The role of your buyer agent should go beyond helping you visit homes and writing an offer. Your agent should be there every step of the way to settlement helping you maneuver through the “big ball of home buying stuff.” When going through home buying process you can encounter pitfalls and setbacks that are time consuming and emotionally draining. Your agent should be able to offer guidance on coping and resolving any potential issues.

Original published at https://dankrell.com/blog/2019/05/06/home-buying-process-simplified/

By Dan Krell
Copyright © 2019

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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.

January 25, 2019July 23, 2019

Buy vs rent market

After last year’s active spring, the housing market’s fall home sale decline shocked many. Although home sales were on target to outpace the previous year’s activity, the slowdown diminished the spring’s impact. In fact, the National Association of Realtors (nar.realtor) January 22^nd press release indicated a sharp decline of home sales during December. The 6.4 percent month over month nationwide decline should not have been a surprise because of the season. However, December’s nationwide 10.3 percent sales decline from the previous year is significant. The Greater Capital Area Association of Realtors (gcaar.com) indicated that Montgomery County single family home sales decreased 12.2 percent during December. Is this an indication of another buy vs rent market?

Back in August, I predicted and discussed the causes for the fall’s sales slowdown. Among the issues that contributed to the slowdown include increasing mortgage rates and the continued home sale inventory shortage. However, it’s important to note that although home sales seemed to go to sleep during the early winter, home sale prices continue to increase. It’s not the 4-5 percent price gain that home owners have become accustomed. But the 2.9 percent nationwide price increase (2.7 percent increase in Montgomery County) during December is indicative that home ownership is still valued.

Although there are many who are saying it’s now a buyer’s market, it’s not entirely true. The current housing environment has home buyers under pressure. Increasing mortgage interest rates are making buying a home more expensive, and there are not many homes from which to choose. Consequently, motivated home buyers who are eager to buy a home during the winter are pushing back against high home prices. The reality is that home sellers will remain in the driver’s seat as long as they price their homes correctly.

There is a lot of promise for the spring, but it still depends on many factors (such as inventory). But the push back on increasing home prices will likely continue, as home buyers are increasingly sensitive to housing costs. “Buy vs rent” and housing affordability will once again become hot topics this spring.

Buy vs rent is on the mind of home buyers. Although buyers are in the market to buy, there is no urgency. However, it’s clear that this market is about value.

If you’re a home buyer trying to figure out the market, consulting with a professional Realtor can help you decide if it’s the right time to buy a home. Trulia’s Rent vs. Buy Calculator (trulia.com/rent_vs_buy/) is a tool that compares the cost of buying to renting a home over time in a specific area. It can estimate the point at which home buying is better than renting. However, depending on your budget and area, renting may be a better financial option. Montgomery County Department of Housing and Community Affairs (montgomerycountymd.gov/DHCA) and the Housing Opportunities Commission (hocmc.org) offers affordable housing programs for first time home buyers and renters.

If you’re a home seller, think back to the 2014 spring housing market when home buyers pushed back at the sharp home price gains of 2013. It’s recommended that you don’t take home buyers for granted, buyers are just as savvy as you. Keep in mind that buyers are thinking about “buy vs rent.” Don’t over-price your home, however expect to negotiate the price. Make your home show its best through preparation and staging. Stay away from cheap renovations meant to look expensive, this can actually decrease your home’s value. If you’re selling “by owner,” consider consulting a staging professional to help prepare and stage your home. If you’re listing your home with a Realtor, your agent should have a strategy to sell for top dollar in this market.

Original published at https://dankrell.com/blog/2019/01/25/buy-vs-rent-housing-market

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November 21, 2018April 25, 2019

Real Estate Thanksgiving

Thanksgiving is a time to take stock and be thankful. Although the original Thanksgiving may have had a religious purpose, today’s secular holiday is about traditions. However, it seems as if the tradition of enjoying a peaceful meal with family and friends has been increasingly difficult over the past few years. But since the election is over, let’s try to talk about something worthy of discussion (at least until the next election cycle begins), such as real estate and housing. Yes, it’s a “Real Estate Thanksgiving.”

Why shouldn’t we focus on something we all can get behind? There is a good chance that your dinner guests will include someone will be moving next year. Whether they are buying, selling, or renting a home, someone at the dinner table will be affected by such issues as housing affordability, mortgage rates, and availability of homes.

Things to talk about during your Real Estate Thanksgiving might be about mortgages, home sales, home prices, rent, maintenance, etc. The topics are seemingly endless.

Talking about mortgages during the Real Estate Thanksgiving. The current news is about mortgage interest rates. How high will mortgage rates go? Housing experts agree that mortgage rates will likely be about 5 percent next year (although the Fed just announced they may hold off on interest rate hikes after spring). Paying more interest on your mortgage may not be your idea of positively affecting home sales. However, increasing mortgage rates typically moderate home price growth because of affordability. Another silver lining of increasing interest rates is a stimulated lending environment. As a result, mortgage companies will likely further loosen lending requirements, which will increase the home buyer pool.

Real Estate Thanksgiving and home sales could focus on the reasons for the fall slowdown. Will home sales rebound this spring? You’re probably aware that home sales have dropped off during the fall. Major media outlets have grasped the news and created the meme depicting “housing bubble 2.0.” You can’t really blame them because there are many economists who are projecting bleak home sales to continue through spring.

The main reason for a disappointing 2019 forecast given by many industry insiders is affordability. I contend that this rationale is shallow and one-dimensional. There is no doubt that rising interest rates and increasing home prices are on the minds of home buyers. However, the lack of home sale inventory is a dimension that is often forgotten when discussing home sales and rentals. The lack of available homes for buyers and tenants to choose has forced many into fierce competition. The result has been upward pressure on home prices and rents.

You have to also consider the economy at your Real Estate Thanksgiving. The strength of the economy is an aspect affecting the housing market that many haven’t discussed. Whether you want to admit it or not, the economy is the strongest it has been in decades. Consumer outlook is optimistic. Home buyers and renters have expressed confidence about their job prospects too. Employers are competing for talent, influencing the highest wage increases in over a decade.

Commenting on the economy, First American chief economist Mark Fleming believes that the economy will be a major force in the housing market (How Will a Potential September Rate Hike Impact Existing-Home Sales?; blog.firstam.com; September 18, 2018). One of the features of his analysis for 2019 is “It’s the Economy and First-Time Home Buyer Demand, Stupid.” He described a pent-up demand from a wave of millennial of first-time home buyers who will be in the market next year.

Fleming explained that home sales slump during an adjustment period that home buyers undergo when interest rates increase. The same thing occurred in 2010 when rates increased from 4.5 to 5 percent. However, the economy was struggling at that time, and home sales were stagnant. Fleming described First American’s positive housing forecasts overcoming rising interest rates, saying,

“According to our Potential Home Sales Model, the boost from the strong economy and first-time home buyer demand should overcome any downward pressure from rising rates on home sales.”

Original article is published at https://dankrell.com/blog/2018/11/21/real-estate-thanksgiving/

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October 19, 2018July 21, 2019

Real estate services personality

The “one-size-fits-all” service model is becoming an all too familiar experience in every day life. You encounter it when you go to the doctor’s office. A day at the mall is certainly a one-size-fits-all adventure. Now, there is also the pressure towards automated buying and selling systems in the real estate industry. Real estate services that is one-size-fits-all? The idea of a one-size-fits-all real estate transaction is becoming trendy from both online companies and local real estate companies.

How do real estate services treat clients?

The move toward systematizing consumer encounters comes from the corporate goal of profiting from efficiency. Don’t get me wrong, there is nothing wrong from a business making money. After all, making money is the basis of our economy. And the one-size-fits-all system for home buying and selling is a business solution during a healthy housing market where homes sell quickly.

However, the systematization of the service industry, including real estate, is not welcome by all consumers. There is some acknowledgement that a systematized real estate transaction can have unfortunate outcomes when the plan is derailed. Not all real estate transactions are easy, nor do all homes sell quickly. It is a fact that that most home buyers and sellers still want an expert they can count on to help them navigate one of the most expensive and stressful transactions of their life.

Customer service research

Gauging the effects of a systematized service industry on the consumer is a growing interest. One recent study examined customer service reactions when the provider system fails (Diaz, Gomez, Martin-Consuegra, Molina; The Effects of Perceived Satisfaction with Service Recovery Efforts: A Study in a Hotel Setting; Ekonomie a Management; 2017, 20:4 p.203-18). The study suggested that customer issues are inevitable. They conclude that customer service models should have strategies to address and resolve issues to maintain positive customer relationships.

Another study suggested that when it comes to automated service, some service industries are better suited than others (Scherer & Von Wangenheim; Man Versus Machine-How the Service Channel Affects Customers’ Responses to Service Encounters; AMA Winter Educators’ Conference Proceedings; 2016, Vol. 27). The authors suggest that a consumer’s expectation is guided by how a service is provided. Satisfaction levels are increased when personal services are delivered by a human. Furthermore, they found that consumers who prefer technology or automated services tend to be ego-centric. These “self-service” consumers attribute success to their abilities, while shifting blame to externals when there is a failure.

Real estate services for all personalities

The growing body of research may explain why real estate agents have not become extinct in a technological world. Instead, the profession has endured. Moreover, Realtors have embraced technology (for better or worse). As new technologies make the home buying and selling process easier, the industry will undoubtedly adapt. The fad of systematizing the real estate transaction, as well as buyer and seller encounters, is in reality a “one-size-fits-some” solution. In other words, there is a place for the automated and systematic real estate transaction, but it’s not for everyone.

Before you embark on your home buying or selling journey, you should think about your needs. What are your expectations?

As a real estate consumer, you have a duty to explore your options for real estate services. You should interview and compare real estate services. Questions to ask your real estate agent before you buy or sell a home:

Is there one point of contact, or do you have to deal with a “team” of people for different situations.
What do you do if the point of contact is not available?
How do they handle unexpected obstacles or emergencies?
Ask for recent client references whom you can call.

By Dan Krell
Copyright © 2018.

Original is located at https://dankrell.com/blog/2018/10/19/real-estate-services-personality/

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September 27, 2018July 23, 2019

Rent vs Buy puzzle

For some, committing to buying a home is an easy decision. However, some struggle rationalizing homeownership. Adding to the confusion are the attempts to persuade tenants to be home owners by flaunting its benefits and financial savvy. To be sure, there are personal and financial factors that go into deciding Rent vs Buy. However, the reality is that the Rent vs Buy question is a complicated personal puzzle.

Are you weighing the decision of Rent vs Buy? Consider that homeownership does have benefits over renting. Besides having a place to live, the consensus is that homeownership provides stability and belonging to a community. Numerous studies have associated being a home owner with increased well being and better health outcomes. Research by the Harvard University’s Joint Center for Housing Studies concluded that homeownership and growing wealth are associated (Herbert, McCue, and Sanchez-Moyano; Is Homeownership Still an Effective Means of Building Wealth for Low-income and Minority Households? Was it Ever? Joint Center for Housing Studies Harvard University, September 2013).

But frustrated home buyers are returning to their rentals because of inventory shortages, intense competition, and increased home prices can be aggravating.

The latest National Association of Realtors (nar.realtor) press release indicted a 1.5 percent decrease in home sales from the previous year. Although home sales were weak for the previous four months, home prices have increased for the 70^th consecutive month! Nationwide median existing home prices increased 4.6 percent from the previous year to $264,800. The lack of home sale inventory is partly to blame for the decreased home sales, which increases the upward pressure on home prices.

The Greater Capital Association of Realtors (gcaar.com) release of August housing data for Montgomery County is not much different from the national figures. Single-family home sales in the county decreased 0.7 percent from the previous year. Inventory is 8.3 percent below last year’s available homes for sale at the end of August. But median home sale prices jumped to $443,000, which is an increase of 4.2 percent.

Those who are dissuaded from buying a home because of increasing home prices are facing rent increases. The median rent for Montgomery County is $1,647. But according to Healthy Montgomery (healthymontgomery.org), there is upward pressure on rent. This is not just a local phenomenon, it is nationwide. According to the Census Bureau (census.gov), some metropolitan areas and cities have experienced increases well over $300. Rent increases are in part due to inflation and the increasing cost of owning a rental property. However, tenants are mainly experiencing rent increases because of supply and demand. Rental inventory is just as tight as home sale inventory. The Census Bureau reported that the vacancy rate decreased year over year. Additionally, the Census Bureau reported last year that the percentage of renters who moved during 2017 was the lowest recorded since 1988.

The robust economy has prompted the Fed to increase interest rates this year. Another rate hike is expected this week. According to Freddie Mac (freddiemac.com), mortgage rates have increased in anticipation of the Fed’s rate hike. According to Freddie Mac’s Mortgage Market Survey, the average 30-year fixed rate mortgage is 4.65 percent. Although mortgage rates are the highest in several years, rates continue to be historically low.

For many who continue to rent, they’re perspective may be justified by comparing housing costs. The Trulia Rent vs Buy Calculator (trulia.com/rent_vs_buy) is a tool that compares these factors. Paying rent for a long term may make sense if your rent is low. However, buying can be a better long-term decision when comparing similar size properties and housing costs.

Consulting with Realtor can help too. You can find out which is feasible Rent vs Buy. You can see if there are any homes for sale in your affordability range. You can also find out what rentals are available in your rent range. Regardless of your Rent vs Buy decision, your real estate agent can assist you with housing and the process for home buying or renting.

By Dan Krell.
Copyright © 2018.

Original located at https://dankrell.com/blog/2018/09/27/rent-vs-buy-puzzle

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