Is Renting An Option?
Considering the pressures that sellers have on their listings these days, it might be time to consider an alternative to selling. To avoid foreclosures, short sales, and/or selling for less than your current mortgage, you might evaluate whether renting your present home makes sense for you.
With the current economic conditions, many potential home buyers find themselves priced out of the market. The home buyer may have gone thru the economic realities of having gone thru a foreclosure, short sale, having lost a job, or for whatever reason, they now have to rent an apartment. While new home construction has been virtually non-existent, that is not true of apartment construction.
So, the point that I would like to suggest is that if you have been unsuccessful in selling your home at a price that makes economic sense, why not consider renting your property. Obviously, there are tax advantages which your tax advisor can assist you with. Also, if you can cover your mortgage payment and taxes by renting your property, wouldn’t that be better than taking a hit. Even if the rent is somewhat less than your mortgage and taxes, you still might be financially in a better position. You also will then be able to sit out a market where prices have not appreciated and wait for home prices to begin to appreciate again.
If you have questions about my suggestions, I would suggest that you discuss it with your real estate agent as it might be a reasonable alternative.
Top US Suburbs for Retirement
Forbes recently announced the 15 top retirement suburbs in the United States. Brentwood, MO was listed in 4th place which is quite an honor. You can click on this link http://money.msn.com/retirement/top-us-suburbs-for-retirement?cp-documentid=6856281>1=33013 to see the complete article.
Brentwood is located just outside the city limits of St. Louis. The location is adjacent to major shopping centers like the St. Louis Galleria. It is also minutes away from Washington University. Highway 64(40) is on the northern side of the suburbs which allows very quick access to Central West End, Barnes Hospital complex, and downtown. Plus you can quickly be out to West County or St. Charles. Also, you have access to the airport and north county via Highway 170. Additionally, public transportation is readily available.
For homes, you have your choice of several townhouse complexes as well as moderately sized homes. Brentwood is really ideal for retirement or for raising a family. Schools are superb.
Renting or Buying
This afternoon, I was doing an open house when a young couple came into the townhouse. They identified themselves as friends and that the young woman was going to open houses today. At that point, she indicated that she wasn’t sure whether she was going to buy a home or rent. They went thru the townhouse and were very impressed with it.
Later, I received an email seeking additional information about the house. I responded with the info and then went into a discussion about the merits of buying now as opposed to renting. Renting is obviously an option that many people are contemplating as a result of the economy. Homes that I have had on the market for sale are now being listed as “for rent” and are getting strong response.
However, if the economy is not a problem for you, then buying deserves strong consideration for many reasons:
1) Today, sellers are much more realistic in their pricing. If they aren’t, their homes are going to continue adding “days on the market” in the MLS. Plus, the seller is going to continue paying a mortgage placing more financial strain on the seller. While the depressed prices for homes will not be reversed for a couple of years, it still is a great time to buy a home and take advantage of the current market.
2) Today’s interest rates are historically low. But, if you listen to the lenders, they expect the rates will soon be increased. So, today’s interest rates are strong incentives to buy now.
3) There has been considerable discussion as a result of financial crisis that the country is facing that one avenue for increasing revenues is to eliminate the mortgage interest deductions on homes over $500,000. While that is a price that is considerably above the average market price, it still is another reason to consider buying now and not waiting for another day.
4) Another discussion is that the low down payment requirements should be stopped so that “people have more skin in the game.” Conceivably, downpayment requirements could go up to 20% if you list to some of the pundits. While this could have a very bad effect on the real estate market and hopefully will not happen, it could.
5) Getting into the market as a buyer today would probably allow you to acquire a home at a monthly payment that could be cheaper than rent. If you are on the fence regarding purchasing or renting a home, please talk to a mortgage lender.
6) Finally, if you rent, what do you have? RENT RECEIPTS.
Is the St. Louis Real Estate Market Getting Better?
Today, I had a conversation with a potential client who wants to list his condo. He tried to sell it two years and finally ended up renting it since he couldn’t get the price that he wanted. Obviously, that is very typical of many home owners. Now, he has decided to put it back on the market as he is no longer living in St. Louis and doesn’t wanted to be a long-distance landlord. Like any potential home seller would do, he wanted to know how the market is these days.
When I looked at his zip code and reviewed activity for the last 6 months, I had to be very honest with him. Based on the stats, there are currently a 8.5 month of supply. While I told him that my suggested listing price was totally based on stats and without having been able to tour his home, my suggested listing price was $5,000 less than the last listing price that he had on his home. Also, I don’t really see any home of improvement for the balance of the year. Considering that today’s buyer is typically demanding a home without blemishes and at a price that is probably not acceptable to the seller, I don’t have hopes for common sense and good judgement to return any time soon.
On a more positive side, it is encouraging that interest rates have gone down in the last couple of weeks. I don’t know why they have gone down when it looked like they were beginning to climb from the low 5′s. But, obviously, it is good news.
Also, the open houses that I have held recently have drawn more viewers that I have seen in a long time. Where previously, I might have seen 3 in a two-hour span, I have had 8-10 recently. Theses viewers were more than just out for a nice drive on a Sunday afternoon. Very couraging.
Finally, home showings by agents have definitely improved. Perhaps, winter is now behind us and the potential buyer has come out of their cocoon.
So, is the St. Louis Real Estate Market getting better? S-L-O-W-L-Y.
First Time Home Buyers E-Book
Recently, I was introduced to Anna Banana Krutchen who is a real estate agent from Phoenix. She has written an e-book that can be downloaded from the Internet which addresses the issues confronting first time home buyers. The e-book is called “8 Secrets to Make Your First Home Easy.” This manual is a 50 page summation describing the opportunities and problems that a first-time home buyer faces. While some of the discussion might be repetitious of what you have seen before, it is an excellent reference tool. Anna has given me permission to post it on my website. I would encourage you to click here to download it. If you have questions, please email me at ronaldgorman@me.com.
Lowe’s and the FHA Streamlined 203(k) program
RISMedia on January 5, 2011 reported on the decision by Lowe’s to become involved in the 203(k) program. This is a program aimed buyers who are interested in purchasing a home that is in need of substantial renovation. It is also aimed at a current home owner who wants to make repairs and/or renovations to their homes.
Here is what the article reported on Lowe’s new program:
“Already a leader in the home improvement space, the retailer made a bold decision recently to take its real estate efforts a step further, unveiling a new, nationwide, in-store program, in connection with REbuildUSA, geared toward offering customers a one-stop destination for repairs, renovation products and service needs through the FHA Streamlined 203(k) program, which adds money into a mortgage for repairs and renovations.”
“Always looking to make the process easier for consumers, REbuildUSA and Lowe’s recently added lending partner Bank of America. The Charlotte-based company joins Wells Fargo as an approved lender in this program.”
“Another plus for faster facilitation: Lowes’s is an approved contractor, which significantly cuts down the contractor validation process, from three weeks for independent contractors to about three days.”
“Specially trained Lowe’s associates in stores across the country, except in Texas, can help the customer plan the project and select products, and Lowe’s independent subcontracted installers can handle the installation. The program allows Streamlined 203(k)-qualified customers to have a huge selection of products and services under one roof, and it gives customers the ability to immediately improve their homes by adding equity with the repairs and renovations.”
This is really a great opportunity for those in need of repairs and renovations. However, not all lenders do 203(k) loans. If this is a need and you are having difficulties finding a lender, send me an email.
What’s The Right Price to Offer?
Whether you have read the doom and gloom regarding home prices on your internet sources or heard discussions on television, there is no doubt that there is considerable confusion in the market these days regarding home prices. With the glut of home inventory plus short sales plus foreclosures, the concern that I now have is how do I determine what reasonable price offering out to be made for a home once my client has decided on a home. It is a given that to sell a home that it has to be perfect in the “eyes” of the buyer. It is also a given that even making an offer that is close to the asking price is like a mortal sin. ”Stealing” a home seems to be the norm.
For example, I currently have a listing that is listed at 196,500. I had a potential buyer who was testing the seller to see if they would accept a verbal offer of 170,000. My client turned down the offer since they are not under pressure to sell and since I have taken the listing which had expired at 219, 900. When I did an analysis on mortgage payments if the offer was at 185,000 or 196,500 and showed that the spread was only $103 per month on a mortgage payment, the potential buyer was firm at 170,000. Considering that the home met her needs and that other homes in the neighborhood did not, I was surprised that her decision was to stick at 170,000. Also, I do believe that her financial strength was sufficient to obtain a loan up to 196,500. The good news, however, is that I later received a telephone call that she wanted to show the home to her parents the following week.
This is just one example of the difficulties that I have faced when buyers were so convinced that the bottom was falling out of the real estate market that they were stuck on offering prices that previously would not even have been countered. Hopefully, sanity will soon return and buyers will recognize when they have a good deal.
Search Like An Agent!
Whether you are a buyer or a seller, how would you like to be able to have access to the MLS like a real estate agent? As a potential buyer, how would you like to be able to receive listings that match your criteria each and every day as they come on the market? How would you like to be able to adjust your criteria at will? If you are a seller, how would you like to be able to see what is selling in your area, what price changes have taken place, how many agents and/or potential buyers have reviewed your listing? How would you like to be able to obtain comps for your property? How would you like it if you could send notes to your agent and vice versa?
Whether you are a buyer or a seller or just a prospective buyer, you can use a search tool that buyers and/or sellers have found to be very useful. The tool is called Listingbook and is available to any of my clients at no cost. Listingbook is available at no cost and is easily set-up by emailing me or calling me. All that I need is your email address, your criteria if purchasing (number of bedrooms, bathrooms, square footage, price range, desired location, type of home, etc) , and any other information that would allow me to better serve your needs.
For more information, click here or contact me. Listingbook is a great tool for helping the seller or buyer become a more educated client.
Whether you are a buyer
13 “Don’ts” Every Home Buyer Should Know
Not long ago, I received a check list for buyers that I believe should be extremely important for today’s buyers. This check list came from a seminar that I attended…but unfortunately, I don’t remember the source as I would want to give credit for this list.
1) Don’t wait for the perfect house. There isn’t one. Compromise and prioritizing are necessary elements in home purchasing.
2) Don’t buy before you do some comparison shopping…especially if you are new to the area.
3) Don’t write an unrealistic offer or you will simply be helping someone else’s offer look good (too low of a price..to many contingencies).
4) Don’t feel a need to negotiate if a property is fresh to the market, priced right and popular…the good ones often go quickly and at full or close to full price.
5) Don’t think all real estate agents and companies are created equal..they are not. Find an agent/company with a great track record and proven home buying system.
6) Don’t be afraid to write an offer above or below the asking price..offer what it is worth to YOU.
7) Don’t work with more than one agent. Find one you like an stick with them. If you make a bad choice, change but stick with one.
8) Don’t wait for perfect conditions to buy. The best time to buy is when you have found the right home.
9) Don’t get too many friends and family involved in your buying decision…you’ll got NUTS!
10) Don’t wait until you find a home to shop for the best loan. Start up-front.
11) Don’t wait until after you find a home to be qualified for a loan. Do it up-front.
12) Don’t work with an agent who can’t show you Checklists and Systems. Only pick a friend or relative that is licensed as an agent if they are GOOD! Look for value-add services.
13) Don’t be surprised if you get buyer’s remorse at some time before closing..most buyers do. It is normal and will pass.
What does it take??
If you are a home seller or considering selling your home, today’s market in St. Louis is currently quite a challenge. While we are going into the slowest period of the year for selling homes, there is no question but that the current market is slower than last year. There is noticeably fewer showings of homes right now. One of the reasons for the current lack of activity is the coming elections in November. Traditionally, major elections have had a negative effect on retail activity. Hopefully, once we get past the election, the level of activity will pick up.
So, what do you do in the meantime as a seller? What does it take? Considering the surplus of inventory and the employment situation (or lack of employment or uncertainty of employment), home sellers today face: (1) the need to extremely realistic about the price of their homes and (2) your home has got to be in perfect condition. Potential home buyers are overwhelmed by the number of homes that are on the market. If you bought your homes within the last 3 years, you may be facing the situation where a final selling price might be less than what you paid for the property. That may be a bitter pill but is more likely the reality.
On the other side of the coin is that if you are selling your home and wanting to buy another home, you can take advantage of the current prices. Plus, with the interest rates being so very low, you will probably be able to buy another home that is larger for the same monthly payment that you now have.
So out of the negative, there are many positives. You can’t fight the market but you can take advantage of it.
