Now’s the Time to Prepare To Be A Spring Market Homebuyer

CHESTER, N.J. (Dec. 22, 2012) — The winter holiday season gets many people thinking how nice it would be to gather the family in a home of their own. If that describes you, now is the time to start thinking about making that dream a reality in the coming months.

The winter months are a good time to prepare to become a homeowner when the spring market kicks off after Jan. 1. Here are five things to do over the next few months:

  •  Decide what you want.

If a new home is on your mind, you and whoever you’ll share that home with, should decide what you want. A small condo to get started? A large home with space for a large family and pets? A smaller home that requires less time to maintain? New home? Pre-owned home?

  •  What can you afford?

Dreams are nice, but eventually reality sets in. You’ll be required to put cash to put toward the purchase and the closing of your new home. You’ll borrow the rest of the money as a mortgage. Even if you’re not going to start looking until the spring, talking with a Realtor, a banker or your financial counselor now can help you get an idea of what you can afford.

  •  Are your finances in order?

Now is the time to check your credit reports and make sure your credit card bills, rent, car payments and other debts are up to date. This will be part of the conversation when you talk with a professional about how much home you can afford. Bluntly, your credit-worthiness is probably more important than how much money you have on hand, so be prepared to do some sprucing up of your financial condition if necessary.

  •  Start talking with a Realtor now.

You need to find a Realtor with whom you can be comfortable. First, you should know that Realtor and real estate salesperson aren’t interchangeable. A Realtor is a member of the National Association of Realtors and adheres to that organization’s Code of Ethics. Second, you should know that there are seller’s agents and buyer’s agents. You need someone who is working for you, knows the area, understands financing and is ready to go to bat on your behalf. Check with your friends and the many different real estate Web sites. Call and interview agents.

In addition to counseling you on preparations to buy, your agent can start searching for the types of home you’re looking for and keep you informed about new listings as they come on the market.

  • Get pre-approved

Once your financial house in order, it’s time to talk again to your banker about getting pre-approved for a loan. This is an agreement to provide you with a mortgage up to a certain amount, assuming the home meets with the institution’s approval and nothing in your credit picture changes. It lets you know what you can look for and gives the seller a powerful incentive to work with you.

Now that you know what you want and what you can afford, you have a Realtor, and you’re preapproved, it’s time to start looking at homes! Good luck.

If your dream of a new home involves selling your old home, you’ll also need to spend these next few months getting ready to sell as well as buy. Your Realtor can help you determine what needs to be done to get ready for market. He or she can also help you understand your home’s market value.

You will, of course, want a seller’s agent to help you sell. While it could be the same person, seller’s agents understand the nuances of selling in this market and, again, have your interests at heart. Some agencies, like The Holmquist Team, offer you a team of agents, each of whom has a specialized area of practice, including selling your home.

Owning your own home is a terrific investment and a wonderful feeling. This market presents an opportunity to buy that hasn’t been seen in generations. And gathering your family in your home at a special time underscores the wonderful feeling of being a homeowner.

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Consider Your Holiday Decorations If Your House is On The Market

CHESTER, N.J. (Dec. 13, 2011) — Holiday decorations done right can help sell a home all year around. But experts say that decorating for the holidays when your home is on the market can be tricky.

Many people feel their homes are at their warmest and most welcoming when the Thanksgiving table is set and awaiting the turkey, or when the December holiday decorations are set up. We counsel our clients to take photos of their home at its best. We also warn them to decorate with care.

When people are shopping for a home, they’re trying to hard to envision themselves living in your home. A beautifully decorated table or a tastefully decorated living room can help them see what a happy place your home could be for their family.

If you’re thinking about putting your home on the market this spring, take some photos of your home in its full holiday décor. Set out photos of holiday celebrations in your home that emphasize the décor. Leave the pictures of the relatives in the drawer.

We also get a lot of questions about how much decorating should be done in a home that is on the market. Those are good questions because holiday decorating and home sales don’t always go hand in hand. Keep in mind that your home must always be at its best and you must be always ready to welcome people into your home.

Here are five thoughts about decorating your home during the holidays:

  • Less can be more

Remember that people are coming to see your home, not your decorations. You want to showcase how roomy your home is. A few things can give your home that holiday feel without making it appear cluttered. Be careful of too many lights and decorations on the outside. Think about a smaller tree that decorates, but doesn’t dominate, the room inside.

  • Avoid messy decorations

Real trees can dry out and drop needles. Aside from being a fire hazard, they are a mess to clean up. Menorahs can drip wax. Stick with decorations that won’t make a mess. If you use candles or menorahs, place a sheet of foil under them so they can be picked up and cleaned up easily. Be careful of decorations that leave a trail of glitter. And stack the wrapped gifts in a corner or put them away in a closet.

Never, by the way, leave candles burning unattended.

  • Keep things somewhat non-denominational

Touchy subject here, but one worth thinking about. Consider keeping your decorations somewhat generic. It’s a very personal decision, but consider these two thoughts. First, like it or not, people bring their preconceptions with them into a home. Decide how much your want to reveal about yourself through your decorations. Second, you want visitors to remember and talk about how beautiful your home was, not the crèche or other intensely religious items.

  •   Some decorations and activities help sell

Decorating wisely can highlight the features of your home. Stockings or candles can highlight a beautiful mantle and a bow or wreath can brighten a doorway.  Centerpieces of pine cones or other winter reminders of nature can highlight a table. Some experts suggest using splashes of red instead of green because red is an emotionally appealing color.

  • Holiday-themed refreshments for visitors

Consider setting out a plate of holiday cookies and festive paper plates and napkins for visitors. Another idea is to simmer spicy apple cider on the stove, which will also fill your home with a delicious scent.

For better or worse, your holiday decorations become part of your sales strategy. As with everything else regarding the sale of your home, you should work with your Realtor. He or she can explain local custom and practices and give you an objective opinion of your decorating. And, as always, if you have questions or need guidance, give us a call.

Whatever you choose to do, we wish you very happy holidays.

 

Another Seller’s Decision: How Much Fixing Up To Do?

(MOUNT OLIVE, N.J. ) Nov. 9, 2011 — As if deciding whether or not to list your house isn’t enough of a challenge these days, the decision brings with it a second question that we’re often asked: Should a seller fix up his or her home before selling it, or leave it as is?

It’s not an easy question to answer. It’s a decision to be made with the help of an experienced seller’s agent who knows your market well. That, perhaps, is just what you’d expect a Realtor to say, but here’s why it’s the right answer.

A few years back, agents told sellers not to put a lot of work into their homes before putting them on the market. It was a seller’s market and people paid top dollar for homes no matter what shape they were in. The market today, as you know, is much tougher.

These days, homebuyers want homes that are move-in ready. What’s more, studies show that when they see an area they regard as troublesome, they’re likely to overestimate what it would cost them to fix it themselves.

A  study done by Old Dominion University asked people to look at photos of a home and estimate its value. When those photos included a room painted in an ugly pink, the perceived value dropped $3,500. That’s obviously a lot more than it would cost to paint the room white, even if a few coats were required.

Other studies show that you probably won’t recover the amount you put into major renovations. The bigger problem, though, is that you’re in competition with homes that have been fixed up and staged. The decision not to invest in a make-over could leave you in the league of other homes that appear to be tire and, therefore, discounted.

The requirements to compete in a neighborhood of top-drawer, beautiful homes are different than what you need to do in a neighborhood of rental homes. Neighborhoods in this area cover the entire spectrum. Your agent can look at your home with an unbiased eye and knowledge of the competition.

Inexpensive cosmetic faults, repairs and maintenance items are a must. Improvements should, most likely, be avoided. A good rule of thumb is to always make major improvements and renovations for personal enjoyment, keeping resale in mind. Don’t do major improvement and renovations for the purpose of resale.

At the very least, you should plan on having your home decluttered and staged, all wallpaper removed and a fresh coat of paint applied – and builder’s white doesn’t cut it anymore. Your agent can offer other ideas.

Listing a home requires the counsel of an experienced – meaning successful – seller’s agent. You don’t need to make these decisions alone. You should speak with your financial advisor, accountant and your Realtor.

By the way, the rules for fixing up your home are a little different if you’ve decided to sell your home short, meaning your agent has convinced your bank to allow you to sell your home for less than you owe. It’s one way of avoiding a foreclosure. Short sales are the topic of a workshop to be held at 7 p.m. Nov. 14 at the Lamplighter Restaurant inChester. Attorney Martin D. Eagan and I will talk about short sales as an alternative to foreclosure. The workshop is free and open to the public.

 

 

Believe It Or Not, There’s a Shortage of Some Homes

(CHESTER, N.J. ) Nov. 11, 2011 — Although we keep hearing about the glut of homes on the market, there is actually a shortage of homes available. That means that if you’ve been thinking of selling, this is a good time to list your home.

There were about 100 homes listed but unsold in the Chesters as of the end of September. At the end of June, that number was 211. InMountOlive, there 28 homes listed but unsold in March. That number slipped to 20 in August and down to 18 in September.  AcrossMorrisCounty, there were 439 homes available at the end of May. That number is now down to about 317.

A recent report says the pace of home sales inNew Jerseywas stabilizing in September, with the rate of sales dropping back to last year’s pace after a brief increase. This same report says that the number of unsold homes fell for the fourth consecutive month in September.

The question, of course, is why is this happening and how does is it impact you if you’re thinking about listing your home. The first answer is typically murky: Most experts cite the low point of the selling season and that people have taken their homes off the market or chosen not to list them until they can get more for them.

But for those thinking of listing their homes, it means less competition in a market where it’s tough to sell homes.

OK, enough confusing statistics: What do you need to know for your decision whether to list or not list?

First: If you need to sell your home because your family, financial or job situation has changed, there is no bad time. Prices are not going to rise soon, but interest rates and the number of houses on the market will.

Second: While supply and demand usually impact price, it isn’t working this time because consumer confidence, employment numbers and other factors. But basic math tells you that the chance of your home being chosen from among three homes is better than your chances of being chosen from among six homes.

Third: Your circumstances are as unique as you are. You’re Realtor or financial advisor is in the best position to counsel you about listing your home, the price at which to list it and what expectations you should reasonably have about sales success.

One more thing to think about: Some Realtors specialize in helping people buy homes, others specialize in helping people sell homes. You should make sure you’re working with a seller’s broker.

Finally, this note: If you’re thinking about selling your home because your mortgage is swamping you and you really don’t want to have the bank foreclose on you, there are lots of options. One of those is a short sale, where the bank agrees to take less for the home than you owe them. Mark you calendar for 7 p.m. Nov. 14, when a panel of experts will discuss short sales as an alternative to foreclosure.

 

 

Interest Rates Continue to Fall Creating Opportunities

CHESTER, N.J. (Oct. 13, 2011) — Loan rates hit record lows last week. According to bankrate.com, which is a well-respected chronicle about all things financial, the 30-year fixed-rate mortgage fell to 4.21 percent, although they started back up this week. A year ago it was 4.45 percent and a month ago, it was 4.34 percent.

Rates have never been better on mortgages, but the rate you get will depend on a lot of individual factors: what are you buying, what’s your credit score, how much money are you putting down, what kind of mortgage you are applying for.

My friend Bob Davis, who is a mortgage broker with Black River Mortgage in Chester, says if you’re looking for a 30-year fixed-rate mortgage, you have a high credit score and a 20 percent down payment, you’ll get “about 20 percent.” The rate is less for a 20-year or 15-year mortgages.

“If you have a 20 percent down payment,” he told me, “you’re going to get a good deal.”

So what can you do to take advantage of these low rates?

  • Get yourself prequalified before you start looking for a home. Your Realtor, banker or a mortgage broker like Bob can help you do that. It lets you know what you should be looking for and gives you a lot of negotiating power.
  • Check your own credit scores. You can do it free through government-sponsored Web sites.
  • Work with a Realtor to find a home that fits your needs and lock in a price.
  • While you should definitely shop for the best rate, don’t get frustrated if you can’t find rates as low as those touted in news stories. The rates we’re seeing are incredibly low and there’s so much involved in setting a rate, that you may never see the 3.94 percent the Daily Record mentioned last week.
  • Don’t wait. It’s a long process to get a mortgage and the tiny bit you save or lose won’t make a different. Besides, most experts say mortgages won’t drop much lower.
  • Similarly, if you have a commitment, don’t throw it out for a few tenths of a percent. You have to start the entire process over again, including all of the application fees.

Another impact of low rates is increased buying power and affordability. If you want to be a homeowner but you’re not sure you qualify, call a Realtor and discuss your situation with him or her.

Meanwhile, I just returned from a meeting in Texaswhere Keller Williams agents from around the world talked about what’s working and what’s not in this crazy real estate market. We talked about giving buyers and sellers better service, responding more quickly to your phone calls and emails and using technology to make the home-buying experience easier. New technology, for instance, makes it easier to give a virtual tour of a home that’s for sale. If you’re selling your home, you need all the advantages you can get, and a virtual tour is a good advantage over nearby homes without one.

Talk to your Realtor about interest rates, virtual tours and other developments in buying and selling homes, or call me and I’ll answer your

Short Sales One Way to Avoid a Foreclosure

(LONG VALLEY, N.J.)  Sept. 30, 2011 — People sell their homes for a variety of reasons. Among the toughest situations is the person who is behind or struggling with payments because of job loss, divorce or other problems. While the popular wisdom is that people can just abandon a home, walking away will lead to a foreclosure that sparks devastating long- and short-term financial, tax and legal implications for the former property owner.

An experienced seller’s agent can help you avoid such a desperate move. Among the options is a “short sale.” In a short sale, the bank allows you to sell your home for less than what you owe. The bank forgives the difference and you walk away with a smaller impact on your credit than you would with a foreclosure and nobody is chasing you for damages.

When I first started encountering short sales, the banks were the biggest problem. Bankers had no idea how to handle short-sales. Files were missing, banks had no system for tracking documents and everything was hand-written. It was a mess and nothing was consistent. In those early days, I had one bank approve a $250,000 loss in three weeks and another take more than a year to decide on a loss of $50,000.

Things have gotten better and banks now have standardized the process. A short sale can happen in 90 days from application to closing. These transactions, however, aren’t the norm and require an experienced attorney and Realtor to negotiate with the lenders. You also can’t get away with accepting any offer. Banks bring in an appraiser to make sure the home sells within an acceptable range of market value.

Even the federal government has gotten into the short-sale act. The Home Affordable Modification Program (HAFA) was created last year to help homeowners who apply for but do not qualify for a loan modification. The rules are:

  •  The property is your principal residence;
  • The mortgage on it was originated before Jan. 1, 2009;
  • The mortgage is owned or guaranteed by Fannie Mae or Freddie Mac;
  • You are delinquent in your payments or default is foreseeable;
  • You can demonstrate hardship;
  • Your total monthly housing payment exceeds 31 percent of your gross income;
  • The unpaid principal does not exceed $729,750.

Talk to an experienced real estate agent about selling your home as a short sale. It’s not the best way to sell a home, but it’s better than a foreclosure.

By the way, the government considers any debt you don’t pay as income. Expect a 1099 IRS form from the bank for the amount of the shortfall that is forgiven. More information about that is here.

Buyers know there still are bargains to be found among short sales. They need flexibility because there’s no guaranteed closing date and they must be willing to accept some up-front expenses such as attorney’s fees, home inspections and so forth. Buyers need to make a reasonable offer because of the banks are using appraisers now.

The good news is that the majority of homes have been well maintained and there aren’t many surprises. That’s because, unlike a foreclosure, the seller usually occupies the property until the closing and agrees to maintain it.

As with the seller, buyers need an experienced real estate agent to properly represent them. And the HAFA rules, while mostly aimed at the seller, also impact the buyer:

  •  Buyers must present documentation of funds or a pre-approval letter from a lender. The seller will need to present this to his or her lender within three days of receiving the offer.
  • Lenders must approve or deny the offer for the home within 10 business days.
  • Settlement must take place within a reasonable period, but the lender cannot require a closing earlier than 45 days from the date of the sales contract unless the homeowner agrees.
  • If you buy property under this act, you can’t sell it again for 90 days.
  • Sellers can’t sell the property to a relative or anyone else with whom they have a close personal or business relationship.

Buying and selling real estate is complicated in the best of conditions. Short sales make the waters muddier. You’ll need an experienced agent, like those on the Holmquist Team, to guide you through the process.

By the way, you have nothing to gain by paying a third party to supply you with lists of foreclosures or so-called pre-foreclosures. Homes that are foreclosed and homes where the seller wants to sell short will be listed on the Multiple Listing Service when they are available. Your agent will watch for them and alert you. Those third-party sites just take your money.

Interest Rates Hitting Lows Not Seen in a Generation

CHESTER, N.J. (Sept. 16, 2011) — A piece of news announced Thursday should add a bit of excitement to your hunt for a new home this weekend: Interest rates have hit lows not seen since the Ozzie & Harriett looked for a new home in the same neighborhood as the Nelson Family.

Of course, it’s been almost as long since mortgages required as much paperwork as they do today!

Freddie Mac Thursday said rates for a 30-year fixed mortgage averaged 4.09 percent, the lowest since 1950 and 1951. Rates back then went to 4.08 percent for several months. Bankrate.com, a well-respected mortgage news Web site, cited rates that were a bit higher, but still at the lowest level since its weekly survey started 26 years ago.

While the pundits are debating the reasons for the low rates, homebuyers should take advantage of them.  The pundits agree that the current spate of bad economic news is what’s keeping the rates down, and as soon as some positive news hits the market, they’ll go back up.

While mortgage rates seem to move only little bits at a time, those small figures can mean a lot in what you pay. For instance, if you took a mortgage for $250,000 at the 4.08 percent rate cited by Freddie Mac, you’d pay $1,206.55 per month, principle and interest only. If the rates went up to just 4.19 percent – still a great rate – you’d pay $1,221.08. It’s only $14.53 a month more – dinner at a restaurant, maybe – but over the course of the mortgage, you’d pay more than $5,000 more. And that’s enough to change your qualification status.

If you haven’t already done so, talk with your Realtor, banker or mortgage broker about what rates are available to you in this area, and how you can lock in that rate now…

…Which brings us to the other piece of this discussion: The hoops to jump everyone must jump through to get a mortgage. Anybody who’s stuck a toe into the housing market knows that rates may be low, but it’s not as easy getting them as it was just four short years ago (Making mortgages available without any qualifications is one of the ways we got into this mess to begin with). This, again, is a conversation you need to have with your Realtor, banker or mortgage broker. And, again, it’s time for a cold, hard and unemotional assessment of your situation.

There are some things you can do to take advantage of the low rates.

First, check your credit score for inaccuracies. Each of the credit agencies – there are three — are required to show you your score once a year for free. A good place to start is the Annual Credit Report Service, www.annualcreditreport.com.

Second, be realistic about what you can afford. One guideline is that your proposed housing expenses, including monthly mortgage payments plus all monthly debt payments, should not exceed 45 percent of your gross income. Like all such guidelines, it merits some discussion and a look at your situation. Your Realtor has special training, tools and insights to help you figure this out.

Finally, see if you can be pre-approved for a mortgage. Again, your Realtor, banker or mortgage broker can help you with this. Having a mortgage commitment in your pocket takes a lot of the guesswork out of the process. You know what you can afford. And a seller would rather negotiate with someone who has already been approved than someone else who’s willing to pay a higher price, by doesn’t have a mortgage locked in.

By the way, this isn’t the time to buy cars or take on other big expenses. Wait until you close on your home and then do another assessment.

It’s true that the banks have tightened the mortgage criteria, but it’s not as bleak as the folks on television would have you believe. Banks are looking for people to give mortgages to.

It may sound trite, but it’s very true: There’s no better time to buy a home. Take the first steps by talking to us or any other Realtor about what you can afford and what homes are available in that price range.

Who knows? You could be celebrating the winter holidays in a new home!