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The Critical First Step To Buying A Home
By Michael
June 27, 2017

Pre-Approval Should Always Be Your First Step | Simplifying The Market

Pre-Approval Should Always Be Your First Step

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” 

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted. In the competitive market today with more buyers than homes for sale, many sellers will not even consider an offer without either pre-approval from a lender or the ability to prove you have the cash on hand to buy.

There are a variety of loan products available to fit everyone from the first-time buyer with limited capital or cash reserves to invest up front to the more financially established buyer who can invest more up front for lower interest rates and better terms.   Some lenders have programs that are much easier for self-employed persons to get, compared to traditional banks.  A professional REALTOR® can steer you toward lenders who offer products most favorable to your situation and review loan offers to help you determine which is most advantageous to you.

Many lenders are now doing up-front credit underwriting.  This means that potential buyers can have the entire individual credit review process done first.  Once it's complete the buyer knows they have qualified for a mortgage of a given amount and all that remains is to 1.Locate a home in that price range and have an offer accepted then 2. Have the lender complete the property appraisal to verify that the property has sufficient value to act as collateral for the loan!   If the buyer has already completed the underwriting process, the time needed from contract acceptance to closing is reduced.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.  And getting a pre-approve (preferably with underwriting done up front) can reduce your stress, speed up the process and make your offer more attractive to the seller!    

 

 
What Would You Sacrifice to Save For Your Next Home? [INFOGRAPHIC]
By Michael
June 2, 2017

What Would You Sacrifice to Save For Your Next Home? [INFOGRAPHIC]

What Would You Sacrifice to Save For Your Next Home? [INFOGRAPHIC] | Simplifying The Market

 

Some Highlights:

  • 95% of first-time homebuyers are willing to sacrifice to make homeownership a reality.
  • The top item that buyers sacrifice is new clothes, at 54%.
  • Even repeat or experienced buyers say they sacrificed taking a vacation or buying a new car to buy their last home.
Who Needs A REALTORĀ® ?
By Michael
May 31, 2017

Why Working with a Local Real Estate Professional Makes All the Difference | Simplifying The Market

Why Working with a Local Real Estate Professional Makes All the Difference

CentSai, a financial wellness online community, recently surveyed over 2,000 millennials (ages 18-34) and found that 75% of respondents would use a local real estate agent over an online agent, and 71% would choose a local lender.

Survey respondents cited many reasons for their choice to go local, “including personal touch & handholding, longstanding relationships, local knowledge, and amount of hassle.”

Doria Lavagnino, Cofounder & President of CentSai had this to say:

“We were surprised to learn that online providers are not yet as big a disruptor in this sector as we first thought, despite purported cost savings. We found that millennials place a high value on the personal touch and knowledge of a local agent. Buying a home for the first time is daunting, and working with a local agent—particularly an agent referred by a parent or friend—could provide peace of mind.”

The findings of the CentSai survey are consistent with the Consumer Housing Trends Studywhich found that millennials prefer a more hands-on approach to their real estate experience:

“While older generations rely on real estate agents for information and expertise, Millennials expect real estate agents to become trusted advisers and strategic partners.”

When it comes to choosing an agent, millennials and other generations share their top priority: the sense that an agent is trustworthy and responsive to their needs.

That said, technology still plays a huge role in the real estate process. According to the National Association of Realtors, 95% of home buyers look for prospective homes and neighborhoods online, and 91% also said they would use an online site or mobile app to research homes they might consider purchasing.

Bottom Line

Many wondered if this tech-savvy generation would prefer to work with an online agent or lender, but more and more studies show that when it comes to real estate, millennials want someone they can trust, someone who knows the neighborhood they want to move into, leading them through the entire experience.

How does an option period affect the sale?  What if there are unexpected repair issues with the house?  What if the financing doesn't pan out?  How do I know that the title will be clear when I purchase the home?  How do I arrange for inspections?  What fees on top of the purchase price will I pay?  How do I know my family and property are safe while the house is being shown?   If you don't have 100% confidence in your ability to answer those questions and a hundred more, you need a REALTOR®.  I'd love to help.

Latest Tarrant County Home Sales Report
By Michael
May 17, 2017

NTREIS is the multilist service for our area.   Tarrant county home sales meidan prices have risen 13.9% over the past year from a combination of tight supply (a decrease in new listings) and heavier demand with new buyers coming into the area as a strong local economy continues to generage jobs.   Wellers are still in control.   Homes are selling for 99% of list price, so only overpriced houses are eventually selling at a discount to the list price.   Days on the market is another indicator of how hot our market is.   As a general rule, having three month's supply of inventory or more is considered a buyer's market.  We are firmly in seller's market territory with our supply of inventory down to 1.7%.   Here;s a chart of Tarrant Counting activity for the latest month available, April of 2017

Tarrant-County_Apr_2017.pdf

So what does it mean to you?

BUYERS:  Use your owner buyer's agent and let them help with your search.   An agent can set up a search that will update you much soonner than most consumer sites with information when a new home is available.  Guess what?  In most cases, you pay the agent NOTHING for the service.  The listing agreement the seller signed provided for payment of the agen't commission.  So why not use a professional that represents, YOU, not the seller to locate the home, negotiate the terms and navigate the schedule of inspections, appraisals, title review and closing?  Be prepared to compete for the home you find that fits your needs.   Contact a lender for a preapproval.  Determine how much home you can afford.  Have the preapproval letter in hand from the lender and be prepared to work with your agent to make an offer on the home you want quickly.  Don't be surprised if there are multiple offers for the home when you decide to make a move.   Discuss the ways you can make your offer attractive to the seller in terms of closing times, minimal seller expenses and as few conditions as possible.

SELLERS:  Have your agent run a Comparative Market Analysis that helps determine an accurate market value price for your home.   Discuss ways to make your home attractive to buyers in terms of condition, availablity and price.   There's a saying, "If it isn't compelling,, it isn't selling."  Don't leave money on the table when a small investment in a storage unit to let you remove clutter in the house or inexpensive landscaping that give the home it's best possible curb appeal.  It's temping to just say, "It's such a hot market right now, I don't have to do anything."  And you're right IF you are willing to trade 1,000 in expenses for 5,000 to 10,000 in returns on your property.   Ask the agent you interview how the agent intends to market the property.  What websites will he use (since 70% of buyers find their home there.  Will he do mailings, open houses, direct marketing to individuals?   One of the BIGGEST mistakes I see sellers make is to get hung up on a commission amount for the listing.   If the listing agent is cutting the commission, be sure the listing agreement pays the Buyer's agent a competitive rate with other homes on the market.  If most homes will pay a buyer's agent a 3% commission, why would they bring a buyer to see your home if it is paying 2%?   You're not hiring ONE agent when you list a home.  You're hiring every agent that is a member of the MultiList to bring buyers.   I recently spoke to a seller who was proud of the fact he sold his home himself and saved all that commission.  (6% is a pretty common listing percentage and the buyer's agent gets half that.)  He had sold his home for $ 180,000, and had a gain of more than 40,000 from the time he bought the home a few years ago.  I congratulated him on getting the deal he wanted.   When I got back to my office, I ran a Comparative Market Analysis for the property.  Homes of the same type in the same subdivision built within two years of his home averaged $ 198,750.   Even after paying a 6% commission, my estimate was that he received nearly $7,000 LESS than he would have using an agent.  Not to mention the hassle of several people who called, made an appointment and never showed and the call he got at 12:30 AM from someone who saw the sign.

BUYING AND SELLING SIMULTANEOUSLY:  Follow the seller's advice above and have your home ready for the market.   Work with the agent to get the work done you agree would  bring a better return, have PROFESSIONAL photography done and all listinging information in the system and ready to turn on.   NOW do the hard part:   Find your new home and get it under contract.  As soon as you have an executed offer, immediately implement the marketing plan for you current home.   

It's a challenging time in a hot market when you're shopping for a home.  The good news?  With the continued growth of jobs in our area, ongoing construction to modernize and update infrastructure and the resulting predicted growth in market prices, your new home can be a great investment!   Let's talk and see if it's right for you!

Have Paper Checks for your Real Estate Transaction
By Michael
May 16, 2017

Today's banking convenience with electronic processing and debit cards is great but they can lead to one problem in your real estate transaction.    It's important to have a "Paper Trail" that shows everything that goes in and out of your accounts related to the transaction and the amounts have to be an EXACT match.  Here's some simple rules to follow that will make things go smoother as you work with the lender and title company to get things moved from offer to closing:

  1. Be sure you have PAPER CHECKS for your account so you can pay earnest money and option fees with them.  If you don't have paper checks for your account, your local branch MAY be able to help by printing some temporary checks, but most banks will let you order a small quantity on their website.  But it can take a couple  of weeks to process your order.  Plan ahead.
  2. For any funds you receive for the transaction like option fees, gifts to help with down payment or closing costs, be sure to deposit the ENTRE amount into your account.  Don't make a deposit that gives you cash back in the same transaction.  If you need cash out, deposit the entire check and then withdraw funds from your account on a separate transaction.
  3. Keep in mind that for large amount of cash or checks from other branches or banks, your bank may not make funds available immediately.  There may be a "hold period" to make sure it clears.   
  4. Take a picture of any check you receive before you deposit it.   That way, you have a backup image if something happens.

New laws like the Patriot Act, regulations designed to reduce mortgage fraud and conservative lender underwriting requirements may seem like they give you hoops to jump through, but keep in mind  tha you're asking the lender to trust you with a large amount.  They don't loan their own money, but the funds deposited by investors and have an obligation to make sure that investor has the best possible chance to get a return on their investment.  Help them help you by staying organized and doing things in a way that not only gets it done but show independent verification it was done right.  You'll save time and reduce stress for everyone!   

If you have a question about any aspect of the process, remember, your agent is there to help and answer questions.