Once upon a home, buying a home was as simple as saving some dough, spending a couple of weekends visiting Open Houses and writing up a contract. The time frame from house hunt to move-in was a couple of months, max. These days, super-tight mortgage guidelines, market concerns, distressed sales and appraisal dramas complicate and prolong both buying and selling.
If you need to pull both buying and selling off at the same time, it can seem like you're signing up for these complications, squared. On top of that, the very real prospect of spending some time homeless takes the stress of home buying and selling to an entirely new dimension.
Fortunately, getting yourself educated about what to expect on today's market and knowing all your options empowers you to obliterate panic with a strategic approach, an amazing logistics plan (and backup plan) and comprehensive preparedness for all possible outcomes. In that vein, here are four need-to-knows for those who want or need to sell their current home and buy a new one, at the same time.
1. Meet with a local agent who actively sells homes in your neighborhood, far in advance of listing or house hunting. You need them to brief you on items like how long you should expect your home to take to sell on today's market, what (if anything) you can do to move it faster, and whether listing after doing some improvements to your home, at a different time of year or at a different price point than you had planned can realistically be expected to make an impact on your time frame.
You also need their professional opinion as to what price you can expect to get for your home. This will impact whether you need to consider a short sale (if your home's value is less than you owe on it, for example) which, in turn may affect your ability to qualify for a home loan in the short-term. (Short sales often make it difficult to qualify for a new home loan for a couple of years.) If you need to buy in the near-term, but your home is unlikely to sell except as a short sale, you'll need to discuss the legalities and logistics with your mortgage pro, attorney and/or a CPA, as well.
Actually, the information about how long your home will take to sell, how much you can expect to sell it for and whether you're expecting to have to unload it at a short sale is all information you'll need to provide to your mortgage pro, so definitely collect it as early as possible in the process. A year before you need to move is not too soon to have your first meet up with your agent.
2. Meet with your mortgage broker before your start looking for homes or put your own home on the market. Of course, this is something you would have done eventually in preparation for your purchase, but it's essential that you have them walk with you through both your sell and your plans to buy, before you do either.
Why?
Well, a good local mortgage broker can work with you and your agent to help you:
•do the math on what you'll net from your home sale;
•help you know how much you (a) can qualify to buy, and (b) will need to come up with for your purchase;
•understand whether the sale will impact your credit at all all and by how much, if so; and
•time your sale vis-a-vis your purchase.
There are dozens of ways the sequence might need to play out, to be successful at both buying and selling, and you'll need your mortgage pro to be a partner in the process of determining how to order things - before you actually do anything. For example, you might be under the impression that you can't buy before you sell, because you can't qualify for both, when in fact your mortgage pro could suggest a solution like a low- or no-cost refi first, to bring your payment down so you can qualify to buy before you sell. Or maybe you ARE in a situation where you can't qualify to carry two loans, so you need to sell first and use your own cash to make up the difference between what you owe on your home and what it sells for to avoid a short sale so you can still qualify to buy your next property.
In any event, you won't know what exactly your capabilities are, from a mortgage and timing perspective, until you hear it from the source. So, get that meeting on the calendar, too, as early as possible.
3. Know your options for staying in after closing - or moving in early. Many homeowners try to buy and sell at precisely the simultaneous moment, with very little overlap, because they don't want to throw money away on rentals. The reality of today's market is that very, very few sales close precisely when they are expected to, mostly for reasons entirely out of the control of either party. The seller's bank takes months longer than expected to allow a short sale to close, or the buyer's bank takes eons to sign off on the appraised value of the home. In any event, if you are selling your home, before your purchase will be complete, know that it's okay to ask for a "rent-back" where you can stay in the property for as long as a month or more after the sale closes by agreement with the buyer to pay them rent on the property in the amount of their mortgage payment, taxes and insurance for the time you remain in the home.
On the other hand, if you are buying after your sale closes, some sellers will allow you to move in before closing on a similar arrangement - essentially a lease or early move-in arrangement. They may ask you to sign a document waiving their liability for your belongings and anything else that goes wrong while you're there, before closing - you'll have to negotiate and decide what works for all involved. Before you start to freak out at the thought that your 'buy' won't close when you need it to, know that this option might be available, and talk with your home's seller to see if they'll consider it.
4. Plan for gaps - and for overlaps. There is very little in this world we can be sure of, except the high probability of your escrow closing late. Having a backup plan in place just in case you close one or both transactions off-schedule is essential to avoiding the surprise-induced panic attacks so frequently suffered by those intrepid housing consumers who try to buy and sell homes at the same time. And, frankly, sometimes the best defense against these surprises is simply to plan for gaps and/or overlaps.
So, if you want or need to buy before you sell, build a cash cushion that can cover double payments for a couple of a months - and just plan on that. If that's not in the budget, or if you'd like to try out your new neighborhood or town before you buy, close your home's sale, then plan on renting a place during your house hunt - if you just need a place for a month or two, you might want to consider a suite hotel or a short-term, vacation-style rental like those you can find on sites like Airbnb.
Tuesday, August 30, 2011
Tuesday, August 23, 2011
How to Educate Your Buyers Before They Move To The Neighborhood
For most home buyers, buying a property isn’t just about the house, it’s about the neighborhood. Making a decision about where they want to live is a crucial part of the home buying process. In addition to determining if they are going to buy a three bedroom, two bathroom rancher or a 4 bedroom, 2 bath two story, they also have to buy into the lifestyle. Are there parks near by? Playgrounds? Is there a church they can attend? Is the neighborhood safe? Do houses in the neighborhood hold their value?
These are all important questions your prospective buyers are probably searching for. As the neighborhood expert, you’ll be making sure your buyers understand the ins and outs of the neighborhood they select. Here are three ways to educate your buyers on the neighborhood (with a downloadable tip sheet to give to your homebuyers).
Drive them around
Get your buyers in your car and drive them around the community. We tend to take one entrance into a neighborhood, often the pretty one. Are there multiple entrance points? Most likely yes- make sure they see all access points. Show them the neighborhoods on different days, and at different times of the day. Sure backing up to the main street doesn’t sound noisy on a weekday at 10am, but what about at evening rush hour? Drive the surrounding community. Identify parks, shopping centers and other points of interest that your buyers might care about. Make sure your buyers have an opportunity to get a complete picture of the community.
Direct them to resources about neighborhood safety
What one buyer thinks is “safe” is very different from another. I remember when I first moved to San Francisco from Arizona, I thought the neighborhood was “seedy”. The locals considered it “posh”, but I had never lived in a big city before. Be it the local police station or Trulia’s Interactive Crime maps, make sure your buyers are armed with information to help them evaluate the neighborhood and determine what’s “safe” to them.
Give them the stats
Most homeowners will eventually move again. When they go to sell, you want them to call you. Many times we focus on comps for a particular house, but don’t forget about the overall neighborhood. Give them the stats to show how the neighborhood has performed over time relative to other nearby neighborhoods. Sure, it may have seen a dip in home values in recent years, but when we look at the last 20 years, how did it perform? Did it recover faster in the dips or get hit harder? Give your homebuyers a source of comparison. Perhaps it hasn’t performed well, but major revitalization of the area is about to get underway, giving them a larger potential upside. Homebuyers often work on emotion, but make sure to give them the hard numbers too.
Happy, educated buyers yield more client referrals. We’ve put together a handy tip sheet for your home buyers with 5 “need to knows”- download it and share it with them!
These are all important questions your prospective buyers are probably searching for. As the neighborhood expert, you’ll be making sure your buyers understand the ins and outs of the neighborhood they select. Here are three ways to educate your buyers on the neighborhood (with a downloadable tip sheet to give to your homebuyers).
Drive them around
Get your buyers in your car and drive them around the community. We tend to take one entrance into a neighborhood, often the pretty one. Are there multiple entrance points? Most likely yes- make sure they see all access points. Show them the neighborhoods on different days, and at different times of the day. Sure backing up to the main street doesn’t sound noisy on a weekday at 10am, but what about at evening rush hour? Drive the surrounding community. Identify parks, shopping centers and other points of interest that your buyers might care about. Make sure your buyers have an opportunity to get a complete picture of the community.
Direct them to resources about neighborhood safety
What one buyer thinks is “safe” is very different from another. I remember when I first moved to San Francisco from Arizona, I thought the neighborhood was “seedy”. The locals considered it “posh”, but I had never lived in a big city before. Be it the local police station or Trulia’s Interactive Crime maps, make sure your buyers are armed with information to help them evaluate the neighborhood and determine what’s “safe” to them.
Give them the stats
Most homeowners will eventually move again. When they go to sell, you want them to call you. Many times we focus on comps for a particular house, but don’t forget about the overall neighborhood. Give them the stats to show how the neighborhood has performed over time relative to other nearby neighborhoods. Sure, it may have seen a dip in home values in recent years, but when we look at the last 20 years, how did it perform? Did it recover faster in the dips or get hit harder? Give your homebuyers a source of comparison. Perhaps it hasn’t performed well, but major revitalization of the area is about to get underway, giving them a larger potential upside. Homebuyers often work on emotion, but make sure to give them the hard numbers too.
Happy, educated buyers yield more client referrals. We’ve put together a handy tip sheet for your home buyers with 5 “need to knows”- download it and share it with them!
Thursday, August 18, 2011
5 Questions You Need To Answer Before Deciding To Buy A Home
In most parts of the country, the housing market is good (or great!) for buyers right
now - interest rates are bizarrely low, lots of inventory means lots to choose from, and the cost of renting has increased in a lot of markets. But just because the market’s good doesn’t mean it’s the right time for everyone to buy.
The decision whether to buy a home is a very personal one; you need to carefully examine your own situation to determine whether it’s right for you.
So, what are the questions you need to answer in deciding whether you’re ready to buy? Here are some of the big ones:
1. Do I have enough money for a down payment?
And how much, exactly, is “enough?” Today’s minimum down payment requirements range from 3.5 percent on an FHA loan to 10 or even 20 percent for conventional loans. That means coming up with anywhere from $7,000 to $40,000 on a typical $200,000 house. While there are still programs that can give you a down payment assist (see last week’s post, 5 Insider Secrets for Coming Up With Cash for Down Payment), much of the heavy lifting here will need to come from you - in the form of saving up your hard earned cash. And keep in mind there are also closing costs you’ll probably have to pay in cash, which can run as high as 3-4% of your total purchase price.
Talk with a real estate pro and a mortgage broker in your areas to start wrapping your head around how much “cash to close” (i.e., down payment + closing costs) will run, approximately, on a local property that would meet your needs. Can your savings cover this? If not, where will you get the money - what’s your plan for coming up with it?
Putting down as much as you can a) makes you more attractive to lenders, so you might qualify you for better loan terms and b) gives you additional purchasing power, either decreasing your monthly mortgage payment or increasing your purchase price limit for a home.
2. Can I handle the not-so-glamorous aspects of homeownership?
If you can’t even fathom the prospect of having a home maintenance crisis without having a landlord to call to fix it, you might want to reconsider homeownership - or at the very least, buy a lower maintenance condo or townhome in great condition, and make sure you get a home warranty! As a home owner, after all, you essentially are your own landlord. Pipe bursts in the middle of the night? Guess who’ll be up fixing it or calling (and paying) the plumber? (Hint: you.)
There are also some less-than-glamorous bills you’ll have to deal with in your new role as a homeowner that you never laid eyes on as a renter: property taxes and hazard insurance, to name two. When you go from renter to owner, you also need to account for the cost of appliances and maintaining the property’s roof, windows, and landscaping, among other things.
3. How long do I intend to stay in the house?
If you think you might move out of the area next year, then you really shouldn’t be thinking about buying a house (unless of course, you want to play landlord and rent it out after you leave - a prospect which requires its own risk/rewards analysis). For your home purchase to pencil out as a good deal, financially, you’ll shouldn’t buy unless you’re comfortable staying in the house at least 5-7 years - even longer, if you’re buying a home in a foreclosure hot spot or an area with a sluggish job market.. This gives you some time to build up equity and make up for the costs of buying, selling and moving.
4. Are my job and finances stable?
Maybe you just went through a major career change and are in the process of working your way back up from the top. Or maybe you work in a field that has been hit really hard by layoffs and cutbacks. The worst case scenario is to find yourself in a spot with mortgage payment you have no way to make, when you could have avoided that by seeing the writing on the wall. If you feel like there’s a real chance you could lose your job or income tomorrow, you may want to hold off on buying a house - that has the added bonus of giving you the geographic freedom to move, if needed, to get a new job.
Is there really such a thing as 100 percent job security in today’s economy? Probably not. But the best practice is to be confident that your finances could handle a temporary loss of income and still make your mortgage payments, before you buy. One way to do this is to have enough money in the bank to cover 4-6 months’ worth of living expenses, calculating them to include your mortgage payment - before you deem yourself ready to buy. That way, even if you lose your job with no warning at all, you’ll at least have a reasonable window of time to find a new one without digging yourself into a hole - or worse, losing your home altogether.
5. What are my real reasons for buying?
Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change - don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:
•You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you'll eventually pay it off. That's not possible when you're renting.
•You want a place to call your own, where you can paint a wall purple, add a pottery spinning studio or build your dogs an obstacle course (oops - that's my reason for homeownership!), because it's your prerogative.
•You want the tax advantages of homeownership.
•You want a stable place you and your family can live for as long as you'd like.
Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership - consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.
now - interest rates are bizarrely low, lots of inventory means lots to choose from, and the cost of renting has increased in a lot of markets. But just because the market’s good doesn’t mean it’s the right time for everyone to buy.
The decision whether to buy a home is a very personal one; you need to carefully examine your own situation to determine whether it’s right for you.
So, what are the questions you need to answer in deciding whether you’re ready to buy? Here are some of the big ones:
1. Do I have enough money for a down payment?
And how much, exactly, is “enough?” Today’s minimum down payment requirements range from 3.5 percent on an FHA loan to 10 or even 20 percent for conventional loans. That means coming up with anywhere from $7,000 to $40,000 on a typical $200,000 house. While there are still programs that can give you a down payment assist (see last week’s post, 5 Insider Secrets for Coming Up With Cash for Down Payment), much of the heavy lifting here will need to come from you - in the form of saving up your hard earned cash. And keep in mind there are also closing costs you’ll probably have to pay in cash, which can run as high as 3-4% of your total purchase price.
Talk with a real estate pro and a mortgage broker in your areas to start wrapping your head around how much “cash to close” (i.e., down payment + closing costs) will run, approximately, on a local property that would meet your needs. Can your savings cover this? If not, where will you get the money - what’s your plan for coming up with it?
Putting down as much as you can a) makes you more attractive to lenders, so you might qualify you for better loan terms and b) gives you additional purchasing power, either decreasing your monthly mortgage payment or increasing your purchase price limit for a home.
2. Can I handle the not-so-glamorous aspects of homeownership?
If you can’t even fathom the prospect of having a home maintenance crisis without having a landlord to call to fix it, you might want to reconsider homeownership - or at the very least, buy a lower maintenance condo or townhome in great condition, and make sure you get a home warranty! As a home owner, after all, you essentially are your own landlord. Pipe bursts in the middle of the night? Guess who’ll be up fixing it or calling (and paying) the plumber? (Hint: you.)
There are also some less-than-glamorous bills you’ll have to deal with in your new role as a homeowner that you never laid eyes on as a renter: property taxes and hazard insurance, to name two. When you go from renter to owner, you also need to account for the cost of appliances and maintaining the property’s roof, windows, and landscaping, among other things.
3. How long do I intend to stay in the house?
If you think you might move out of the area next year, then you really shouldn’t be thinking about buying a house (unless of course, you want to play landlord and rent it out after you leave - a prospect which requires its own risk/rewards analysis). For your home purchase to pencil out as a good deal, financially, you’ll shouldn’t buy unless you’re comfortable staying in the house at least 5-7 years - even longer, if you’re buying a home in a foreclosure hot spot or an area with a sluggish job market.. This gives you some time to build up equity and make up for the costs of buying, selling and moving.
4. Are my job and finances stable?
Maybe you just went through a major career change and are in the process of working your way back up from the top. Or maybe you work in a field that has been hit really hard by layoffs and cutbacks. The worst case scenario is to find yourself in a spot with mortgage payment you have no way to make, when you could have avoided that by seeing the writing on the wall. If you feel like there’s a real chance you could lose your job or income tomorrow, you may want to hold off on buying a house - that has the added bonus of giving you the geographic freedom to move, if needed, to get a new job.
Is there really such a thing as 100 percent job security in today’s economy? Probably not. But the best practice is to be confident that your finances could handle a temporary loss of income and still make your mortgage payments, before you buy. One way to do this is to have enough money in the bank to cover 4-6 months’ worth of living expenses, calculating them to include your mortgage payment - before you deem yourself ready to buy. That way, even if you lose your job with no warning at all, you’ll at least have a reasonable window of time to find a new one without digging yourself into a hole - or worse, losing your home altogether.
5. What are my real reasons for buying?
Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change - don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:
•You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you'll eventually pay it off. That's not possible when you're renting.
•You want a place to call your own, where you can paint a wall purple, add a pottery spinning studio or build your dogs an obstacle course (oops - that's my reason for homeownership!), because it's your prerogative.
•You want the tax advantages of homeownership.
•You want a stable place you and your family can live for as long as you'd like.
Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership - consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.
For Sale By Owner- No Go's
Interesting story which recently appeared in the Wall Street Journal regarding Colby Sambrotto, the founder and former CEO of forsalebyowner.com. It seems the founding father and lifelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do. After failing to sell his NYC apartment on his own as a For Sale By Owner (FSBO), Sambrotto hired a broker and paid a 6% commission in order to get the job done. His personal experience helps refute some of the myths Sambrotto has been espousing for over a decade. Let’s look at two of those myths:
Myth #1 – You Will Pocket More Money Selling on Your Own. Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale? From the WSJ article:” The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers. By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”
Myth #2 – The Internet Alone Can Sell Your Home. Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet? From the WSJ article: “Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling successes and switched to a broker because many buyers were so reliant on brokers.”
Bottom Line There is a reason the real estate industry has been around for centuries: you perform a valuable service. Have a great day.
Myth #1 – You Will Pocket More Money Selling on Your Own. Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale? From the WSJ article:” The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers. By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”
Myth #2 – The Internet Alone Can Sell Your Home. Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet? From the WSJ article: “Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling successes and switched to a broker because many buyers were so reliant on brokers.”
Bottom Line There is a reason the real estate industry has been around for centuries: you perform a valuable service. Have a great day.
7 Deadly Sins of Overpricing
“We can always go down, but we can’t go up.”
Have you ever heard that from a client? If you have been on many listing appointments, you have probably heard this statement once or twice. When setting the sales price of their home, many sellers are tempted to tack on a few percentage points to “leave room to negotiate”.
Overpricing a home can have many ramifications for a home seller. It can limit the number of potential buyers who can afford your home, reduce showings and create an impression in the marketplace that the homeowners aren’t really serious about selling their home. Serious homeowners who overprice their home often get caught in the trap of price reduction after price reduction trying to catch up to the market.
During the past year, U.S. home sellers slashed more than $24 billion from home listings on Trulia.com. Trulia’s Q1 Home Offer Report indicated that on average, most sellers will reduce their list price after 79 days on the market, choosing to cut their original list price by 8 percent. Following a first reduction, 35 percent of these sellers will make a second.
Most homebuyers look at 10-15 homes before making a buying decision. Because of this, setting a competitive price relative to the competition is an essential component to a successful marketing strategy. Underpricing a home isn’t good either- educating your clients about the importance of properly pricing a home is key to the home sales process.
We put together this handy tip sheet to share with your sellers on the seven deadly sins of overpricing.
Have you ever heard that from a client? If you have been on many listing appointments, you have probably heard this statement once or twice. When setting the sales price of their home, many sellers are tempted to tack on a few percentage points to “leave room to negotiate”.
Overpricing a home can have many ramifications for a home seller. It can limit the number of potential buyers who can afford your home, reduce showings and create an impression in the marketplace that the homeowners aren’t really serious about selling their home. Serious homeowners who overprice their home often get caught in the trap of price reduction after price reduction trying to catch up to the market.
During the past year, U.S. home sellers slashed more than $24 billion from home listings on Trulia.com. Trulia’s Q1 Home Offer Report indicated that on average, most sellers will reduce their list price after 79 days on the market, choosing to cut their original list price by 8 percent. Following a first reduction, 35 percent of these sellers will make a second.
Most homebuyers look at 10-15 homes before making a buying decision. Because of this, setting a competitive price relative to the competition is an essential component to a successful marketing strategy. Underpricing a home isn’t good either- educating your clients about the importance of properly pricing a home is key to the home sales process.
We put together this handy tip sheet to share with your sellers on the seven deadly sins of overpricing.
Thursday, August 4, 2011
Top 5 Characteristics Home Buyers Want in a Real Estate Agent
1. Honesty and Credibility-Win them over with the Truth! When these buyers talked about honesty and credibility, it often came with stories about past negative experiences with agents. The stories were about agents trying to push them towards a more expensive purchase and a strong dislike for the false sense of urgency they feel agents create when it comes to placing an offer on a house. Buyers have expressed how hard it is to trust anyone in today’s real estate market so it’s even more important for agents to help them feel comfortable.
2. Area Familiarity - Do your neighborhood homework!
These buyers place a high importance on finding an agent who not only sells homes in a specific neighborhood, but also knows that neighborhood well. They want an agent who knows all about the schools, local parks, safety, restaurants and even the secret gems the neighborhood has to offer.
3. Good Follow Through-You say it, you do it.
During the conversation our buyers constantly verbalized their frustration with agents who didn’t do what they said. Email me, call me and send me the things you say you will. It seems like such a small thing to ask for. Do what you say, combine it with some honesty, and you’ll be an agent buyers feel comfortable working with.
4. Organization-Keep it in order.
You’re honest, you know the area like the back of your hand, and you try your hardest to follow through but it’s just so hard to keep track of your to-do lists and return every phone call. Buyers are expecting agents to be organized and put together. There are a ton of tools out there to help with this. (We love Evernote!)
5.Good Listener-Everyone is unique. Treat them like it!
Users want an agent to listen to them with a blank mind. I heard phrases such as “pigeon hole”, “judge”, “they aren’t listening”, “tell me what I want”…etc. come up in our discussion. Users don’t want an agent to assume they need A just because they hear B. They want an agent who listens to what they want and will ask as many questions as required to really understand who they are and what they are looking for.
Make sure you get those references too- recommendations and testimonials followed closely in the 6th position.
2. Area Familiarity - Do your neighborhood homework!
These buyers place a high importance on finding an agent who not only sells homes in a specific neighborhood, but also knows that neighborhood well. They want an agent who knows all about the schools, local parks, safety, restaurants and even the secret gems the neighborhood has to offer.
3. Good Follow Through-You say it, you do it.
During the conversation our buyers constantly verbalized their frustration with agents who didn’t do what they said. Email me, call me and send me the things you say you will. It seems like such a small thing to ask for. Do what you say, combine it with some honesty, and you’ll be an agent buyers feel comfortable working with.
4. Organization-Keep it in order.
You’re honest, you know the area like the back of your hand, and you try your hardest to follow through but it’s just so hard to keep track of your to-do lists and return every phone call. Buyers are expecting agents to be organized and put together. There are a ton of tools out there to help with this. (We love Evernote!)
5.Good Listener-Everyone is unique. Treat them like it!
Users want an agent to listen to them with a blank mind. I heard phrases such as “pigeon hole”, “judge”, “they aren’t listening”, “tell me what I want”…etc. come up in our discussion. Users don’t want an agent to assume they need A just because they hear B. They want an agent who listens to what they want and will ask as many questions as required to really understand who they are and what they are looking for.
Make sure you get those references too- recommendations and testimonials followed closely in the 6th position.
Wednesday, August 3, 2011
4 Steps to Minimize the Risk of Owning a Home
Not so long ago, in a not-so-distant land, owning a home was thought of as the safest "investment" around. Fast forward to the present day, and home ownership seems super scary to many people who can afford homes, and would like to own them, but are paralyzed by the fear of buying a lemon, or having a mortgage catastrophe.
Here are 4 simple steps to minimize the risk that you'll become the main character in a homeownership horror story.
1. Stick with a fixed-rate mortgage. Recent data shows that adjustable rate mortgages, or ARMs, are increasingly popular, rising from 9 percent of the mortgage market in the fourth quarter of 2010 to 12 percent in the first quarter of this year. This might seem crazy to some, but in financially aggressive crowds, the lure of low, 3 percent(ish) interest rates on ARMs is enough to overcome any qualms. As well, today's ARMs tend to have lower lifetime interest rate caps and require payment of principal, so they don't adjust as violently as the subprime interest-only and option ARMs that contributed to the foreclosure crisis.
If the thought of your mortgage payment changing over time gives you the shakes, you don't want to live in a state of interest rate obsession for the next few decades, or you simply crave the simplicity and predictability of knowing what your housing payment will be for the next 15, 20 or 30 years, then stick to
a fixed-rate mortgage. The rates are higher, but with a fixed-rate loan, the risk of scary payment changes are not only lower, they are non-existent.
2. Put - and keep - a home warranty in place. One of the most frightening things about going from renter to homeowner is the prospect of being solely responsible for the care and feeding of your home and all its systems and appliances. Responsibility for both the costs and the actual logistics of repairing things like a leaky roof, a broken hot water heater or a haywire electrical fixture looms large in the minds of first-time buyers, in particular.
A home warranty plan kicks in when escrow closes, and depending on the coverage you select, will cover your home against the breakdown of major systems and even some appliances, like furnaces and water heaters. In some cases, you can even upgrade the coverage to protect against roof leaks and some plumbing issues. When a covered item breaks down, just remember to call the home warranty company first - for the cost of a service call you can get the item repaired or even replaced, if necessary. I remember the home warranty company replacing a $900 water heater in my first home; what a godsend!
Talk with your agent - you might even be able to negotiate for the seller to pay for the first year's cost of the warranty. Just remember to renew it when it expires every year, to keep a cap on your risk of unexpected repair costs for the duration of your tenure as a homeowner.
3. Get repair bids and estimates, not just inspections. After you find the home of your dreams (or the home of your budget!) and get into contract, you'll have a contingency or objection period ranging from 7 to 17 days during which you can obtain all the inspections you want. Most buyers start out with a general property inspection, a pest inspection and a roof inspection, then get more specialized inspections if the property calls from it. Pest and roof inspectors will generally provide an inspection report AND a repair bid for any work they find needs to be done.
But the overall home inspection could very well list a dozen needed repairs, upgrades and maintenance items, without providing any information about how much those repairs will cost. If your inspection report surfaces work you'll need to have done to fix things (or avoid bigger fixes down the road), work with your agent to schedule actual repair contractors to come in and give you bids on the work before your contingency or inspection period expires. That will position you to negotiate around repair costs with the seller, or to know what you're getting yourself into, cost-wise, if you take the property as-is.
4. Buy on the 10-year plan. Warren Buffett once famously advised stock investors to "only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." The same advice is good for buying a home in today's real estate market. Take on a mortgage you know you can sustain, buy at a price you can comfortably afford and avoid having to sell because you need to move for some urgent reason, or because the home no longer meets your needs.
You can take this last step to hedge against losing money on your home by planning your space, career and lifestyle needs out 5, 7, even 10 years in the future - everything from how many bedrooms and garage spaces you'll need to where you'll want to be located, geographically - and selecting a home that will meet those needs for that foreseeable future. As a general rule of thumb, the harder hit the area was in the recession, the longer you should plan to hold it.
Here are 4 simple steps to minimize the risk that you'll become the main character in a homeownership horror story.
1. Stick with a fixed-rate mortgage. Recent data shows that adjustable rate mortgages, or ARMs, are increasingly popular, rising from 9 percent of the mortgage market in the fourth quarter of 2010 to 12 percent in the first quarter of this year. This might seem crazy to some, but in financially aggressive crowds, the lure of low, 3 percent(ish) interest rates on ARMs is enough to overcome any qualms. As well, today's ARMs tend to have lower lifetime interest rate caps and require payment of principal, so they don't adjust as violently as the subprime interest-only and option ARMs that contributed to the foreclosure crisis.
If the thought of your mortgage payment changing over time gives you the shakes, you don't want to live in a state of interest rate obsession for the next few decades, or you simply crave the simplicity and predictability of knowing what your housing payment will be for the next 15, 20 or 30 years, then stick to
a fixed-rate mortgage. The rates are higher, but with a fixed-rate loan, the risk of scary payment changes are not only lower, they are non-existent.
2. Put - and keep - a home warranty in place. One of the most frightening things about going from renter to homeowner is the prospect of being solely responsible for the care and feeding of your home and all its systems and appliances. Responsibility for both the costs and the actual logistics of repairing things like a leaky roof, a broken hot water heater or a haywire electrical fixture looms large in the minds of first-time buyers, in particular.
A home warranty plan kicks in when escrow closes, and depending on the coverage you select, will cover your home against the breakdown of major systems and even some appliances, like furnaces and water heaters. In some cases, you can even upgrade the coverage to protect against roof leaks and some plumbing issues. When a covered item breaks down, just remember to call the home warranty company first - for the cost of a service call you can get the item repaired or even replaced, if necessary. I remember the home warranty company replacing a $900 water heater in my first home; what a godsend!
Talk with your agent - you might even be able to negotiate for the seller to pay for the first year's cost of the warranty. Just remember to renew it when it expires every year, to keep a cap on your risk of unexpected repair costs for the duration of your tenure as a homeowner.
3. Get repair bids and estimates, not just inspections. After you find the home of your dreams (or the home of your budget!) and get into contract, you'll have a contingency or objection period ranging from 7 to 17 days during which you can obtain all the inspections you want. Most buyers start out with a general property inspection, a pest inspection and a roof inspection, then get more specialized inspections if the property calls from it. Pest and roof inspectors will generally provide an inspection report AND a repair bid for any work they find needs to be done.
But the overall home inspection could very well list a dozen needed repairs, upgrades and maintenance items, without providing any information about how much those repairs will cost. If your inspection report surfaces work you'll need to have done to fix things (or avoid bigger fixes down the road), work with your agent to schedule actual repair contractors to come in and give you bids on the work before your contingency or inspection period expires. That will position you to negotiate around repair costs with the seller, or to know what you're getting yourself into, cost-wise, if you take the property as-is.
4. Buy on the 10-year plan. Warren Buffett once famously advised stock investors to "only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." The same advice is good for buying a home in today's real estate market. Take on a mortgage you know you can sustain, buy at a price you can comfortably afford and avoid having to sell because you need to move for some urgent reason, or because the home no longer meets your needs.
You can take this last step to hedge against losing money on your home by planning your space, career and lifestyle needs out 5, 7, even 10 years in the future - everything from how many bedrooms and garage spaces you'll need to where you'll want to be located, geographically - and selecting a home that will meet those needs for that foreseeable future. As a general rule of thumb, the harder hit the area was in the recession, the longer you should plan to hold it.
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