5424 Penway Dr. Orlando, FL
Wednesday, December 12, 2018
Thursday, November 15, 2018
How to Lose a House in 10 Ways
Home buying is one of the most stressful experiences in adult life (second only to getting a divorce). Why is the process so draining? Unfortunately, there are tons of things that can make a deal fall through– especially if you aren’t working with an experienced professional. Here are 10 ways you might to lose out on your dream home (and how to avoid them):
1. You don’t have enough saved up for the down payment
Surprise! Houses are expensive. The down payment for which you’ve spent so much time saving might not be enough. In addition to closing costs, there can also be unexpected fees around every corner. Make sure that you have significant cushion savings in addition to whatever you plan on putting down for your house—you never know how these things will play out.
2. You don’t have your ducks in a row
Staying organized is essential when you’re house hunting. Are you serious about the bid you’re putting down? Make sure that you’re fully aware of all deadlines, contingencies, and paperwork involved in moving forward with your home purchase.
3. You’re shopping out of your budget
Looking for houses way outside of your budget is the first way to “lose a house”—you’ll just be losing a home you never had a chance of having. When you shop above your budget you’re sure to find a dream house that’s nothing more than that: a dream.
Also plan for the strong possibility of putting in an offer above asking price. This may mean looking at homes listed a few thousand below your budget to create padding in your budget to make a higher offer.
4. You lose a bidding war
Quick, decisive, assertive—these are all necessary traits to winning a bidding war. Working with an agent who can negotiate on your behalf is a great way to ensure you play your cards right. Make sure you’re easy for your agent to reach during talks with the seller, otherwise the house may be gone before you can say “Here’s my offer”.
5. You come down with a bad case of buyer’s remorse
Buyer’s remorse plagues homebuyers across the nation. What’s the most obvious symptom of this condition? Cold feet. Sales contracts fall through all the time because buyers back out at the last second, succumbing to the fear of such a life-altering decision. Keep your wits about you and trust your gut.
6. You close too slowly
Sellers are trying to get sales contracts through as swiftly as possible. In this climate of high demand and limited inventory, residential real estate is a hot market. There will almost always be someone behind you, vying for your potential future home—if you really want it, work hard to satisfy the seller and make things official as soon as possible.
7. Your inspections aren’t timely
Speaking of closing quickly—inspections are sure to take some time. If you’re lucky, all you’ll need is one inspection. However, the inspection is just a first step. If an inspector discovers any problems, you’ll have to start making appointments with specialists to look further into the house’s issues. This is a race against the clock, limited by the time frame set out in the sales contract. Don’t waste any time getting the inspections going or you might find yourself without a house to inspect.
8. Your seller isn’t happy with their appraisal
An appraisal that comes in lower than anticipated is always taken by the seller as a personal blow. This proves to be an issue for the buyer, too. Either the seller will become difficult or, even worse, you’ll have to pay the difference between the appraisal and the sales price out of pocket. There’s another one of those pesky additional spends! Make sure to keep communication with the seller open and diplomatic when frustrations are running high.
9. You can’t secure a mortgage
You’re so close to the finish—and then your mortgage application is declined. Nothing will lose you a house faster than the inability to pay for it! Apply for pre-approval so the seller knows that you’ll actually be able to buy their home; don’t wait for something to go wrong. If you are proactive throughout the buying process the odds of you losing the home are significantly slimmed.
10. You don’t have an agent on your side
None of the above issues are simple. Having someone on your side that knows the ropes of the home buying process is the most valuable tool in your box. Your agent is there to take the brunt of the work off your shoulders and hold your hand along the way. Let a professional help you with the most important purchase of your life.
Going agentless leaves you exponentially more susceptible to the nine other ways to lose a house. Contact me today to work with an experienced professional during your next home search.
Shawn Barral, RE/MAX Revealty
1. You don’t have enough saved up for the down payment
Surprise! Houses are expensive. The down payment for which you’ve spent so much time saving might not be enough. In addition to closing costs, there can also be unexpected fees around every corner. Make sure that you have significant cushion savings in addition to whatever you plan on putting down for your house—you never know how these things will play out.
2. You don’t have your ducks in a row
Staying organized is essential when you’re house hunting. Are you serious about the bid you’re putting down? Make sure that you’re fully aware of all deadlines, contingencies, and paperwork involved in moving forward with your home purchase.
3. You’re shopping out of your budget
Looking for houses way outside of your budget is the first way to “lose a house”—you’ll just be losing a home you never had a chance of having. When you shop above your budget you’re sure to find a dream house that’s nothing more than that: a dream.
Also plan for the strong possibility of putting in an offer above asking price. This may mean looking at homes listed a few thousand below your budget to create padding in your budget to make a higher offer.
4. You lose a bidding war
Quick, decisive, assertive—these are all necessary traits to winning a bidding war. Working with an agent who can negotiate on your behalf is a great way to ensure you play your cards right. Make sure you’re easy for your agent to reach during talks with the seller, otherwise the house may be gone before you can say “Here’s my offer”.
5. You come down with a bad case of buyer’s remorse
Buyer’s remorse plagues homebuyers across the nation. What’s the most obvious symptom of this condition? Cold feet. Sales contracts fall through all the time because buyers back out at the last second, succumbing to the fear of such a life-altering decision. Keep your wits about you and trust your gut.
6. You close too slowly
Sellers are trying to get sales contracts through as swiftly as possible. In this climate of high demand and limited inventory, residential real estate is a hot market. There will almost always be someone behind you, vying for your potential future home—if you really want it, work hard to satisfy the seller and make things official as soon as possible.
7. Your inspections aren’t timely
Speaking of closing quickly—inspections are sure to take some time. If you’re lucky, all you’ll need is one inspection. However, the inspection is just a first step. If an inspector discovers any problems, you’ll have to start making appointments with specialists to look further into the house’s issues. This is a race against the clock, limited by the time frame set out in the sales contract. Don’t waste any time getting the inspections going or you might find yourself without a house to inspect.
8. Your seller isn’t happy with their appraisal
An appraisal that comes in lower than anticipated is always taken by the seller as a personal blow. This proves to be an issue for the buyer, too. Either the seller will become difficult or, even worse, you’ll have to pay the difference between the appraisal and the sales price out of pocket. There’s another one of those pesky additional spends! Make sure to keep communication with the seller open and diplomatic when frustrations are running high.
9. You can’t secure a mortgage
You’re so close to the finish—and then your mortgage application is declined. Nothing will lose you a house faster than the inability to pay for it! Apply for pre-approval so the seller knows that you’ll actually be able to buy their home; don’t wait for something to go wrong. If you are proactive throughout the buying process the odds of you losing the home are significantly slimmed.
10. You don’t have an agent on your side
None of the above issues are simple. Having someone on your side that knows the ropes of the home buying process is the most valuable tool in your box. Your agent is there to take the brunt of the work off your shoulders and hold your hand along the way. Let a professional help you with the most important purchase of your life.
Going agentless leaves you exponentially more susceptible to the nine other ways to lose a house. Contact me today to work with an experienced professional during your next home search.
Shawn Barral, RE/MAX Revealty
Thursday, October 18, 2018
Americans’ FICO scores hit record-high average
704! That's the new, record-high average FICO credit score among millions of Americans, and it's positive news for homebuyers, sellers, lenders, and the economy overall.
What it signifies, according to Ethan Dornhelm, FICO's vice president of scores and analytics, is that 10 years out from the housing bust and the global financial crisis, Americans are "making more judicious use of credit." They're using less than the maximum amount of credit available to them, paying their monthly mortgages on time and exhibiting fewer glaring negatives in their credit bureau files.
FICO scores predict the probability that a borrower will default on a loan. They run from 300 – indicating that the individual is extremely high risk – to 850, meaning almost no risk of default. A score of 704 is considered good and, along with other favorable factors in your application, will help get you approved for a mortgage – though not necessarily at the lowest interest rate and fees available.
A score of 750 will get you primo rates and terms but a 450 will probably get your application tossed. In the mortgage arena, FICO scores are used by virtually all lenders and are the only scores that mega-investors Fannie Mae and Freddie Mac accept. They are also used extensively for credit card, auto loan, and other loan applications.
FICO periodically studies a 10-million-persons sample of the 200 million-plus consumers whose credit histories are on file at the three national credit bureaus. In 2009, the average score of consumers nationwide was 686. Since then, average scores have been improving gradually along with the economy, lower unemployment, and rising incomes. The 5-point increase from 699 in 2016 to 704 this year is one of the largest two-year improvements on record.
A few noteworthy trends jump out of FICO's latest data on Americans' scores:
© Copyright 2018, Richmond Times-Dispatch, Richmond, VA, Kenneth R. Harney.
What it signifies, according to Ethan Dornhelm, FICO's vice president of scores and analytics, is that 10 years out from the housing bust and the global financial crisis, Americans are "making more judicious use of credit." They're using less than the maximum amount of credit available to them, paying their monthly mortgages on time and exhibiting fewer glaring negatives in their credit bureau files.
FICO scores predict the probability that a borrower will default on a loan. They run from 300 – indicating that the individual is extremely high risk – to 850, meaning almost no risk of default. A score of 704 is considered good and, along with other favorable factors in your application, will help get you approved for a mortgage – though not necessarily at the lowest interest rate and fees available.
A score of 750 will get you primo rates and terms but a 450 will probably get your application tossed. In the mortgage arena, FICO scores are used by virtually all lenders and are the only scores that mega-investors Fannie Mae and Freddie Mac accept. They are also used extensively for credit card, auto loan, and other loan applications.
FICO periodically studies a 10-million-persons sample of the 200 million-plus consumers whose credit histories are on file at the three national credit bureaus. In 2009, the average score of consumers nationwide was 686. Since then, average scores have been improving gradually along with the economy, lower unemployment, and rising incomes. The 5-point increase from 699 in 2016 to 704 this year is one of the largest two-year improvements on record.
A few noteworthy trends jump out of FICO's latest data on Americans' scores:
- Age matters. Young people age 18 to 29 tend to have lower scores than other age groups – they score an average 659. Part of the reason might be that many of them have "thin" files with relatively few credit accounts or transactions. When they fail to make payments or pay late on a credit card, the event weighs more heavily on their score than it would if they had longer histories. The average score for people ages 40 to 49 is 690 and, for seniors 60 and older, it's 747.
- Fewer people are hobbled with collection accounts. When you don't pay back what you borrowed, your lender might hire third-party collectors. That gets reported to the credit bureaus and can depress your FICO score for years. Twenty-eight percent of all Americans had collection accounts on their credit files in 2015; today, it's just 23 percent.
- Rock-bottom FICO scores are fewer. In 2009, 7.3 percent of American consumers had terrible scores, ranging between 300 and 499. Now that's down to 4.2 percent. In 2009, 8.7 percent of consumers scored between 500 and 549; today, it's down to 6.8 percent. Overall, fewer Americans now have FICO scores below 650. In 2009, 35 percent scored 649 or less; today, it's 28.7 percent.
- Super scorers are increasing. A record number of Americans – nearly 22 percent – have FICO scores of 800 and higher. Forty-two percent score between 750 and 850.
- Mortgage borrowers' scores are dropping. Though FICO scores for most categories of consumers are up, average scores for people taking out home mortgages are sliding in the opposite direction. In 2009 and 2013, borrowers had average scores of 745; now, they're down to about 733. This might seem odd, but FICO says it shows that lenders are relaxing their approval standards slightly to include a broader range of borrowers. Think millennial first-time buyers and people who hit a rough patch during the Great Recession.
© Copyright 2018, Richmond Times-Dispatch, Richmond, VA, Kenneth R. Harney.
Monday, June 18, 2018
Mortgage interest rates 2018: Rates hit 7-year high
Is the housing market, an engine of economic growth, starting to sputter?
Home sales are slowing, spurring debate about whether the culprit is rising mortgage rates or low housing supplies.
The past week, the average 30-year fixed mortgage rate increased from 4.61% to 4.66%, the highest level since May 2011, mortgage giant Freddie Mac said Thursday. The rate is up from 3.95% at the start of the year and a recent low of 3.78% last September.
Thirty-year mortgage rates have risen in 15 of the first 21 weeks of 2018, the largest share since Freddie Mac began tracking the data in 1972. The healthy economy and prospects of higher inflation are pushing up yields on the 10-year Treasury bond to about 3%, and that rate directly affects mortgage rates.
The nearly three quarters of a percentage point increase in mortgage rates so far this year would boost the monthly payment on a $200,000 mortgage by about $85, according to Greg McBride, chief economist of Bankrate.com.
The higher costs may already be damping sales. Existing home sales fell 2.5% last month to a seasonally adjusted annual rate of 5.46 million and were 1.4% below the year ago level, the National Association of Realtors (NAR) said Thursday. From January through April, home sales are down 1% from the same period a year ago, according to NAR Chief Economist Lawrence Yun.
Some economists largely blame low housing supplies, not rates. There was a four-month inventory of existing homes on the market in April – the time it would take to exhaust the supply at the current sales pace -- compared with a balanced six-month stockpile. When units go up for sale, buyers are snapping them up. Homes typically stayed on the market 26 days in April, the shortest time frame since NAR began tracking the data in 2011.
“I think the reason home sales are not rising is just that there’s no inventory,” says Freddie Mac Chief Economist Sam Khater.
Also, the skimpy supplies are pushing up prices, another factor that could be discouraging some buyers. The median price of an existing house was $257,900 last month, up 5.3% the past year.
But amid solid job and income growth and a stronger economy, higher rates and prices won’t stop the vast majority of Millennials from buying their first homes, Khater says. Most will simply buy smaller units, he says. Alternatively, they’ll buy homes further from the urban areas where they work, says Zilllow Senior Economist Aaron Terrazas.
Yet both economists say higher rates are likely discouraging some existing homeowners who might otherwise sell their houses and buy larger ones. They may balk at forgoing their current low rates for a bigger monthly payment.
“If they don’t really need the extra space, they’re not going to move, Terrazas says. He believes home sales have been tempered by a combination of the low supplies, higher prices and mortgage rates, and wages that have risen only modestly.
But Ian Shepherdson, chief economist of Pantheon Macroeconomics, mostly attributes the tepid sales to higher mortgage rates. An index of mortgage applications for home purchases is up 3.5% from a year ago. But it’s down 6% on a seasonally adjusted basis since it peaked in December, Shepherdson says. Mortgage applications reflect home buyer demand and current rates, he says, rather than obstacles that may ultimately prevent shoppers from buying a house, such as low supplies and competition from other buyers.
“It’s wishful thinking to argue that this isn’t about rates,” he says. In recent years, he says, every half percentage point increase in rates has cut mortgage applications by about 8%.
Applications to refinance mortgages are more sensitive to rates and fell last week to the lowest level since December 2000, according to the Mortgage Bankers Association.
The effects of higher rates are likely to intensify, economists say. Khater predicts the average 30-year fixed rate will climb to about 5% by the end of the year.
Source: USA Today
Home sales are slowing, spurring debate about whether the culprit is rising mortgage rates or low housing supplies.
The past week, the average 30-year fixed mortgage rate increased from 4.61% to 4.66%, the highest level since May 2011, mortgage giant Freddie Mac said Thursday. The rate is up from 3.95% at the start of the year and a recent low of 3.78% last September.
Thirty-year mortgage rates have risen in 15 of the first 21 weeks of 2018, the largest share since Freddie Mac began tracking the data in 1972. The healthy economy and prospects of higher inflation are pushing up yields on the 10-year Treasury bond to about 3%, and that rate directly affects mortgage rates.
The nearly three quarters of a percentage point increase in mortgage rates so far this year would boost the monthly payment on a $200,000 mortgage by about $85, according to Greg McBride, chief economist of Bankrate.com.
The higher costs may already be damping sales. Existing home sales fell 2.5% last month to a seasonally adjusted annual rate of 5.46 million and were 1.4% below the year ago level, the National Association of Realtors (NAR) said Thursday. From January through April, home sales are down 1% from the same period a year ago, according to NAR Chief Economist Lawrence Yun.
Some economists largely blame low housing supplies, not rates. There was a four-month inventory of existing homes on the market in April – the time it would take to exhaust the supply at the current sales pace -- compared with a balanced six-month stockpile. When units go up for sale, buyers are snapping them up. Homes typically stayed on the market 26 days in April, the shortest time frame since NAR began tracking the data in 2011.
“I think the reason home sales are not rising is just that there’s no inventory,” says Freddie Mac Chief Economist Sam Khater.
Also, the skimpy supplies are pushing up prices, another factor that could be discouraging some buyers. The median price of an existing house was $257,900 last month, up 5.3% the past year.
But amid solid job and income growth and a stronger economy, higher rates and prices won’t stop the vast majority of Millennials from buying their first homes, Khater says. Most will simply buy smaller units, he says. Alternatively, they’ll buy homes further from the urban areas where they work, says Zilllow Senior Economist Aaron Terrazas.
Yet both economists say higher rates are likely discouraging some existing homeowners who might otherwise sell their houses and buy larger ones. They may balk at forgoing their current low rates for a bigger monthly payment.
“If they don’t really need the extra space, they’re not going to move, Terrazas says. He believes home sales have been tempered by a combination of the low supplies, higher prices and mortgage rates, and wages that have risen only modestly.
But Ian Shepherdson, chief economist of Pantheon Macroeconomics, mostly attributes the tepid sales to higher mortgage rates. An index of mortgage applications for home purchases is up 3.5% from a year ago. But it’s down 6% on a seasonally adjusted basis since it peaked in December, Shepherdson says. Mortgage applications reflect home buyer demand and current rates, he says, rather than obstacles that may ultimately prevent shoppers from buying a house, such as low supplies and competition from other buyers.
“It’s wishful thinking to argue that this isn’t about rates,” he says. In recent years, he says, every half percentage point increase in rates has cut mortgage applications by about 8%.
Applications to refinance mortgages are more sensitive to rates and fell last week to the lowest level since December 2000, according to the Mortgage Bankers Association.
The effects of higher rates are likely to intensify, economists say. Khater predicts the average 30-year fixed rate will climb to about 5% by the end of the year.
Source: USA Today
Monday, April 16, 2018
It’s the Best Time to Sell in a Decade
Prices are rising and homeowners are staying put longer, and that means more homeowners can cash in when they go to sell. Home seller profits surged to a 10-year high in the fourth quarter of 2017. Sellers saw an average home price gain since purchase of $54,000, up from $47,133 a year ago.
That $54,000 average seller profit represents an average 29.7 percent return on investment compared to the original purchase price. That is the highest average home seller return on investment since the third quarter of 2007, according to ATTOM Data Solutions’ Q4 2017 Home Sales Report, released this week.
“It’s the most profitable time to sell a home in more than 10 years, yet homeowners are staying put longer than we’ve ever seen,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While home sellers on the West Coast are realizing the biggest profits, rapid home price appreciation in red state markets is rivaling that of the high-flying coastal markets and producing sizable profits for home sellers in those middle-American markets as well.”
Among the 155 metro areas that ATTOM Data Solutions’ tracked, the locales with the highest average home seller ROI were: San Jose, Calif. (90.9%); San Francisco (73.3%); Merced, Calif. (64.6%); Seattle (64.4%); and Santa Cruz, Calif. (59.8%).
Meanwhile, homeownership tenure set a new record high in the fourth quarter of 2017. Homeowners who sold in the quarter had owned their homes on average 8.18 years, up from 7.78 years in the fourth quarter of 2016. It is the longest average home seller tenure since ATTOM Data Solutions has tracked it starting in the first quarter of 2000.
National Association of Realtors
That $54,000 average seller profit represents an average 29.7 percent return on investment compared to the original purchase price. That is the highest average home seller return on investment since the third quarter of 2007, according to ATTOM Data Solutions’ Q4 2017 Home Sales Report, released this week.
“It’s the most profitable time to sell a home in more than 10 years, yet homeowners are staying put longer than we’ve ever seen,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While home sellers on the West Coast are realizing the biggest profits, rapid home price appreciation in red state markets is rivaling that of the high-flying coastal markets and producing sizable profits for home sellers in those middle-American markets as well.”
Among the 155 metro areas that ATTOM Data Solutions’ tracked, the locales with the highest average home seller ROI were: San Jose, Calif. (90.9%); San Francisco (73.3%); Merced, Calif. (64.6%); Seattle (64.4%); and Santa Cruz, Calif. (59.8%).
Meanwhile, homeownership tenure set a new record high in the fourth quarter of 2017. Homeowners who sold in the quarter had owned their homes on average 8.18 years, up from 7.78 years in the fourth quarter of 2016. It is the longest average home seller tenure since ATTOM Data Solutions has tracked it starting in the first quarter of 2000.
Tuesday, February 20, 2018
2018's Housing Market Looks Good Unless You're A First-Time Buyer
The nation’s housing market for 2018 continues to look good, according to two recently released reports. But first-time millennial buyers will continue to struggle with affordability, especially in high-priced areas like Los Angeles, San Francisco, Boston, New York and Washington DC.
Listen to Ralph G. DeFranco, Ph.D, global chief economist, Mortgage Services, Arch Capital Services Inc.: “With interest rates and home prices both on the rise, first-time homebuyers – largely millennials – may want to consider making the jump from renting to owning sooner rather than late.”
Median price for homes currently listed in Boston is $735,000, according to Zillow.com.
DeFranco further said: “Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill.”
Arch Mortgage Insurance Co. (Arch MI) recently released its winter 2018 edition of The Housing and Mortgage Market Review® (HaMMRSM), authored by DeFranco. [The data shows] a 6.2% increase in home prices in 2017 compared with the year before.
The HaMMRSM also makes market predictions to 2020. Among them: Home prices will continue to increase around the country in most markets. Look to annual increases of 2-6%, with most housing markets currently at low risk for a downturn.
Mortgage rates will rise, causing people to move less often. According to the report, “rising rates give existing borrowers with fixed-rate mortgages a financial incentive to stay put.” In addition, “homeowners will have more incentive to seek second liens or home improvement loans rather than move to a new home or refinance.” Makes sense since a new mortgage would likely be a higher rate cutting into the key affordability factor.
Realtor.com also released its “State of the Housing Union," "which shows the strong U.S. economy and unprecedented housing shortage pressuring potential home buyers striving to attain the American Dream.” Realtor.com’s analysis pointed to the fundamentals. “Strong buyer demand, constrained inventory, and ready-to-buy first timers are the key underlying dynamics driving today’s housing market. The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry,” said Joe Kirchner, senior economist for realtor.com.
Boston, a city millennials love continues to have inventory and affordability issues. According to Zillow, the median price for homes currently listed in Boston is $735,000.
“I pay attention to numbers and we don’t have enough good property on the market. There is big demand in Boston with companies moving to here either from outside of the city or from other states,” observes David Bates, broker associate at William Ravis Real Estate.
“I would be surprised to see a slowdown. I see increasing demand and very good appreciation,” adds Bates who is also known for writing about the Greater Boston real estate market for Banker and Tradesman, Boston Magazine, The Boston Globe, Boston Herald and Boston.Curbed.com.
Clearly, getting your foot in the proverbial front door of your first house remains the key to achieving the American dream.
Ellen Paris - Contributor, Forbes
Listen to Ralph G. DeFranco, Ph.D, global chief economist, Mortgage Services, Arch Capital Services Inc.: “With interest rates and home prices both on the rise, first-time homebuyers – largely millennials – may want to consider making the jump from renting to owning sooner rather than late.”
Median price for homes currently listed in Boston is $735,000, according to Zillow.com.
DeFranco further said: “Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill.”
Arch Mortgage Insurance Co. (Arch MI) recently released its winter 2018 edition of The Housing and Mortgage Market Review® (HaMMRSM), authored by DeFranco. [The data shows] a 6.2% increase in home prices in 2017 compared with the year before.
The HaMMRSM also makes market predictions to 2020. Among them: Home prices will continue to increase around the country in most markets. Look to annual increases of 2-6%, with most housing markets currently at low risk for a downturn.
Mortgage rates will rise, causing people to move less often. According to the report, “rising rates give existing borrowers with fixed-rate mortgages a financial incentive to stay put.” In addition, “homeowners will have more incentive to seek second liens or home improvement loans rather than move to a new home or refinance.” Makes sense since a new mortgage would likely be a higher rate cutting into the key affordability factor.
Realtor.com also released its “State of the Housing Union," "which shows the strong U.S. economy and unprecedented housing shortage pressuring potential home buyers striving to attain the American Dream.” Realtor.com’s analysis pointed to the fundamentals. “Strong buyer demand, constrained inventory, and ready-to-buy first timers are the key underlying dynamics driving today’s housing market. The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry,” said Joe Kirchner, senior economist for realtor.com.
Boston, a city millennials love continues to have inventory and affordability issues. According to Zillow, the median price for homes currently listed in Boston is $735,000.
“I pay attention to numbers and we don’t have enough good property on the market. There is big demand in Boston with companies moving to here either from outside of the city or from other states,” observes David Bates, broker associate at William Ravis Real Estate.
“I would be surprised to see a slowdown. I see increasing demand and very good appreciation,” adds Bates who is also known for writing about the Greater Boston real estate market for Banker and Tradesman, Boston Magazine, The Boston Globe, Boston Herald and Boston.Curbed.com.
Clearly, getting your foot in the proverbial front door of your first house remains the key to achieving the American dream.
Ellen Paris - Contributor, Forbes
Tuesday, January 23, 2018
Loan-To-Value (LTV) Ratio: What it means for you!
Many terms and acronyms may be thrown around during the loan approval process, especially when refinancing. Unless you’re well-versed in personal finance and banking, you may not fully understand the information you receive. In order to be a more informed and conscious consumer, it’s important to know what some of those terms mean. One of the most commonly question acronyms is “LTV”, or loan-to-value ratio.
LTV is a number that compares the value of the asset to the loan that it secures. Put another way, when you purchase a car, your lender issues a loan plus interest to help you make the deal. Technically, because your lender issued the funds to purchase the car, that car is collateral in the event that you default on your payments. So, LTV is the ratio that determines the level to which the asset will pay off the loan.
A more common phrase associated with LTV is being “upside down.” When a borrower is “upside down,” it means that they owe more than what the car is worth. People who are “upside down” have a high LTV.
So, why is LTV important?
LTV is an assessment of risk. Lenders are notorious for favoring less “risky” applicants for loans. They assess a number of criteria (credit score, LTV, DTI, and others) to determine the likelihood that each person will make their payments, on time, for the duration of the loan. After all, lenders want to get not just their money back, but also the interest rate on top of that.
LTV determines risk because in the event that the borrower defaults, it determines the return on the loan that the collateral’s value would provide. A higher LTV means that the asset is less likely to pay off the loan, and that’s why higher LTVs are less likely to be approved for refinancing.
I might have a high LTV. Am I doomed?
You’re not doomed. A high LTV will make your loan application less appealing for lenders, but isn’t guaranteed that you’ll be denied. Instead, your lender may give you a higher interest rate or add certain stipulations onto your loan in order to mitigate risk.
There’s more to the story...
Though LTV ratios are an important component in lender decisioning, it’s not the only piece to the puzzle. Offers are typically based on the combination of several factors, so even if you have a high LTV you could still be eligible for refinancing.
We always advise customers that the earlier you refinance your current loan, the better. Because cars lose value relatively quickly, the sooner you refinance, the less likely you are to have a higher LTV ratio.
By Julia Guardione @ RateGenius.com
LTV is a number that compares the value of the asset to the loan that it secures. Put another way, when you purchase a car, your lender issues a loan plus interest to help you make the deal. Technically, because your lender issued the funds to purchase the car, that car is collateral in the event that you default on your payments. So, LTV is the ratio that determines the level to which the asset will pay off the loan.
A more common phrase associated with LTV is being “upside down.” When a borrower is “upside down,” it means that they owe more than what the car is worth. People who are “upside down” have a high LTV.
So, why is LTV important?
LTV is an assessment of risk. Lenders are notorious for favoring less “risky” applicants for loans. They assess a number of criteria (credit score, LTV, DTI, and others) to determine the likelihood that each person will make their payments, on time, for the duration of the loan. After all, lenders want to get not just their money back, but also the interest rate on top of that.
LTV determines risk because in the event that the borrower defaults, it determines the return on the loan that the collateral’s value would provide. A higher LTV means that the asset is less likely to pay off the loan, and that’s why higher LTVs are less likely to be approved for refinancing.
I might have a high LTV. Am I doomed?
You’re not doomed. A high LTV will make your loan application less appealing for lenders, but isn’t guaranteed that you’ll be denied. Instead, your lender may give you a higher interest rate or add certain stipulations onto your loan in order to mitigate risk.
There’s more to the story...
Though LTV ratios are an important component in lender decisioning, it’s not the only piece to the puzzle. Offers are typically based on the combination of several factors, so even if you have a high LTV you could still be eligible for refinancing.
We always advise customers that the earlier you refinance your current loan, the better. Because cars lose value relatively quickly, the sooner you refinance, the less likely you are to have a higher LTV ratio.
By Julia Guardione @ RateGenius.com
Tuesday, December 19, 2017
The #1 Reason To List Your House Today!
Many people believe that selling their house during “the spring buyers’ market” is the best thing to do. Their reasoning is that there will be more buyers than there are during the winter months and, therefore, their house will sell quicker and for a higher price.
Historically, this made sense. However, today’s real estate market is not following the rules of the past.
The National Association of Realtors (NAR) measures buyer “foot traffic” each month. It receives data on the number of properties shown to a prospective purchaser by a Realtor® (based on the number of lockboxes used). The data reveals the number of buyers out actively looking for a home, not just window shopping on the internet. NAR explains:
"Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future."
According to the latest Foot Traffic Report, buyer traffic is greater now than it was during this year’s spring market and there are more buyers out now than at any other time in the last five years (March of 2012).
The chart below shows that buyer activity over the last three months (blue bars) was greater than it was during this past spring market (green bars).
Bottom Line: If you are waiting for next spring to list your home because you think that’s when the buyers will be out in force, perhaps you should reconsider. Buyers are out right now!
Historically, this made sense. However, today’s real estate market is not following the rules of the past.
The National Association of Realtors (NAR) measures buyer “foot traffic” each month. It receives data on the number of properties shown to a prospective purchaser by a Realtor® (based on the number of lockboxes used). The data reveals the number of buyers out actively looking for a home, not just window shopping on the internet. NAR explains:
"Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future."
According to the latest Foot Traffic Report, buyer traffic is greater now than it was during this year’s spring market and there are more buyers out now than at any other time in the last five years (March of 2012).
The chart below shows that buyer activity over the last three months (blue bars) was greater than it was during this past spring market (green bars).
Bottom Line: If you are waiting for next spring to list your home because you think that’s when the buyers will be out in force, perhaps you should reconsider. Buyers are out right now!
Thursday, December 7, 2017
Bitcoin is finally buying into US real estate
Buy a home with bitcoin? Here's how one buyer did it...
Bitcoin is already in retail and restaurants — so it was only a matter of time before the cryptocurrency took on real estate. That time is now. Bitcoin is slowly making its way into closings on everything from Lake Tahoe land in California to Manhattan condos to single-family homes in the heart of Texas.
"Our buyer has evolved, they've moved from mom and pops to young people who want to pay with various forms of payment," said Ben Shaoul, president of Magnum Real Estate Group. "Cryptocurrency is something that has been asked of us — 'Can you take cryptocurrency? Can we pay that way?' — and of course when somebody wants to pay you with a different form of payment, you're going to try to work with them and give them what they want, especially in a very busy real estate market."
Shaoul is redeveloping a building on Manhattan's Lower East Side, turning it into condominiums priced between $700,000 and $1.5 million. He admits that there is currently a lot of inventory in the market, and therefore having an edge over his competitors is especially key. Bitcoin, he hopes, will be that edge.
"I think the demographic of the crypto user is a younger millennial, but, that being said, you have a lot of people come over from other countries, who are buyers from different places, who like to trade in different types of currency. Not everyone wants to trade in dollars or yen or euros," Shaoul said.
He intends to hold the bitcoins, rather than convert them to dollars. As an investor in the art market, where bitcoin is also increasingly present, he sees an opportunity to make even more money. Bitcoin has also been appreciating at lightning speed lately.
Others, however, are not as comfortable with the relatively new currency. The first ever single-family home sale in Texas involving bitcoin was announced last month. The buyer, who works in the tech industry, purchased the newly built home in Austin using bitcoin, but the seller, a custom homebuilder, wanted the currency converted to dollars during the transaction.
"Austin is a really technologically advanced city, I'd say, so I was surprised we hadn't heard anybody wanting to do this before," said J Kuper at Sotheby's International Realty, which brokered the deal. "But, candidly, we didn't know how to do it. It was a quick challenge and scramble to figure out all the moving parts, but we were instantly excited about the opportunity to figure that out."
They used BitPay, a global bitcoin payment service provider headquartered in Atlanta. It converted the bitcoins into dollars for the buyer. Given that bitcoin's value is a moving target day to day, the risk was all on the buyer side. The seller agreed to a fixed price in dollars.
"We found that on the day of the closing, we were kind of watching it [bitcoin's value] through the day," said Kuper. "The timing actually ended up perfect for the exchange, very well for our client, so there was really no hesitation, no need to postpone."
Kuper said the client got a "very fair" exchange rate, though he could imagine how it could've been more volatile. He says bitcoin has proven to be a bit more stable in the past six months.
There is, however, still a lot of nervousness for newcomers to the currency. Neither the buyer nor the seller in the Austin deal would talk about the transaction. Much of the concern may be around the lack of regulation so far in cryptocurrency and the lack of understanding as to how gains in bitcoin are taxed. The Internal Revenue Service issued some guidance on bitcoin and cryptocurrencies in 2014.
"What they said in that guidance is if you hold bitcoin or ethereum or one of these other convertible digital currencies as a capital asset, when you use that bitcoin to purchase goods or services — so for example, if I were to take $1 million in bitcoin to buy an apartment building or something — to the extent that bitcoin has appreciated since I acquired it, any of that gain, that built-in gain, would be taxed when I used the bitcoin to buy the building," said Jeremy Naylor, a tax attorney and partner at the firm Cooley.
He added that whether people are voluntarily paying that tax might be a separate question, but from a technical, legal perspective, it would be similar to selling stock to generate the cash to buy an apartment. In a direct transaction, buyers simply skip the part where they convert the bitcoin into dollars. Using BitPay, the buyers are 'selling' the bitcoin, and therefore any appreciation is taxable.
The complicated nature of real estate may be why bitcoin has been slow to move into the market. One of the first deals in the U.S. involved a $1.6 million sale of land — a home site — in Lake Tahoe in 2014. Martis Camp Realty President Brian Hull, who brokered that deal, said his firm has not received any other inquiries from buyers interested in using bitcoin.
International buyers seem more comfortable with the currency. Last month British entrepreneurs Michelle Mone and Doug Barrowman launched a bitcoin-priced real estate development in Dubai.
The U.S. market has been slower to buy into bitcoin for real estate. All of the deals so far have been done without a mortgage, and Shaoul said the bulk of those inquiring about his Manhattan condos are foreign buyers.
"This industry of real estate is notorious for lagging behind in technology, and innovation," he said. "Now we are starting to innovate, so we're very far behind. Bitcoin and payments with bitcoin have been around for years. Why it hasn't touched down in real estate in the sale of an apartment is odd, quite frankly."
— CNBC, Diana Olick
Bitcoin is already in retail and restaurants — so it was only a matter of time before the cryptocurrency took on real estate. That time is now. Bitcoin is slowly making its way into closings on everything from Lake Tahoe land in California to Manhattan condos to single-family homes in the heart of Texas.
"Our buyer has evolved, they've moved from mom and pops to young people who want to pay with various forms of payment," said Ben Shaoul, president of Magnum Real Estate Group. "Cryptocurrency is something that has been asked of us — 'Can you take cryptocurrency? Can we pay that way?' — and of course when somebody wants to pay you with a different form of payment, you're going to try to work with them and give them what they want, especially in a very busy real estate market."
Shaoul is redeveloping a building on Manhattan's Lower East Side, turning it into condominiums priced between $700,000 and $1.5 million. He admits that there is currently a lot of inventory in the market, and therefore having an edge over his competitors is especially key. Bitcoin, he hopes, will be that edge.
"I think the demographic of the crypto user is a younger millennial, but, that being said, you have a lot of people come over from other countries, who are buyers from different places, who like to trade in different types of currency. Not everyone wants to trade in dollars or yen or euros," Shaoul said.
He intends to hold the bitcoins, rather than convert them to dollars. As an investor in the art market, where bitcoin is also increasingly present, he sees an opportunity to make even more money. Bitcoin has also been appreciating at lightning speed lately.
Others, however, are not as comfortable with the relatively new currency. The first ever single-family home sale in Texas involving bitcoin was announced last month. The buyer, who works in the tech industry, purchased the newly built home in Austin using bitcoin, but the seller, a custom homebuilder, wanted the currency converted to dollars during the transaction.
"Austin is a really technologically advanced city, I'd say, so I was surprised we hadn't heard anybody wanting to do this before," said J Kuper at Sotheby's International Realty, which brokered the deal. "But, candidly, we didn't know how to do it. It was a quick challenge and scramble to figure out all the moving parts, but we were instantly excited about the opportunity to figure that out."
They used BitPay, a global bitcoin payment service provider headquartered in Atlanta. It converted the bitcoins into dollars for the buyer. Given that bitcoin's value is a moving target day to day, the risk was all on the buyer side. The seller agreed to a fixed price in dollars.
"We found that on the day of the closing, we were kind of watching it [bitcoin's value] through the day," said Kuper. "The timing actually ended up perfect for the exchange, very well for our client, so there was really no hesitation, no need to postpone."
Kuper said the client got a "very fair" exchange rate, though he could imagine how it could've been more volatile. He says bitcoin has proven to be a bit more stable in the past six months.
There is, however, still a lot of nervousness for newcomers to the currency. Neither the buyer nor the seller in the Austin deal would talk about the transaction. Much of the concern may be around the lack of regulation so far in cryptocurrency and the lack of understanding as to how gains in bitcoin are taxed. The Internal Revenue Service issued some guidance on bitcoin and cryptocurrencies in 2014.
"What they said in that guidance is if you hold bitcoin or ethereum or one of these other convertible digital currencies as a capital asset, when you use that bitcoin to purchase goods or services — so for example, if I were to take $1 million in bitcoin to buy an apartment building or something — to the extent that bitcoin has appreciated since I acquired it, any of that gain, that built-in gain, would be taxed when I used the bitcoin to buy the building," said Jeremy Naylor, a tax attorney and partner at the firm Cooley.
He added that whether people are voluntarily paying that tax might be a separate question, but from a technical, legal perspective, it would be similar to selling stock to generate the cash to buy an apartment. In a direct transaction, buyers simply skip the part where they convert the bitcoin into dollars. Using BitPay, the buyers are 'selling' the bitcoin, and therefore any appreciation is taxable.
The complicated nature of real estate may be why bitcoin has been slow to move into the market. One of the first deals in the U.S. involved a $1.6 million sale of land — a home site — in Lake Tahoe in 2014. Martis Camp Realty President Brian Hull, who brokered that deal, said his firm has not received any other inquiries from buyers interested in using bitcoin.
International buyers seem more comfortable with the currency. Last month British entrepreneurs Michelle Mone and Doug Barrowman launched a bitcoin-priced real estate development in Dubai.
The U.S. market has been slower to buy into bitcoin for real estate. All of the deals so far have been done without a mortgage, and Shaoul said the bulk of those inquiring about his Manhattan condos are foreign buyers.
"This industry of real estate is notorious for lagging behind in technology, and innovation," he said. "Now we are starting to innovate, so we're very far behind. Bitcoin and payments with bitcoin have been around for years. Why it hasn't touched down in real estate in the sale of an apartment is odd, quite frankly."
— CNBC, Diana Olick
Monday, November 20, 2017
5 Mistakes That Make House Flipping a Flop
House flipping has become the day trading of the first decades of the 2000s. But in the rush to make a profit, far too many would-be real estate moguls overlook the basics and end up failing. In this article, we'll look at the five biggest mistakes investors make in this market and how to avoid them.
1. Not Enough Money
Dabbling in real estate is an expensive proposition. The first expense is the property acquisition cost. While low/no money down financing claims abound, finding these deals from a legitimate vendor is easier said than done. Also, if you're financing the acquisition, that means you're paying interest. Although the interest on borrowed money is tax-deductible, it is not a 100% deduction. Every dollar spent on interest adds to the amount you will need to earn on the sale just to break even. Research your financing options extensively to determine which mortgage type best suits your needs and find a lender that offers low interest rates. An easy way to research a prospective property's total cost is by using a mortgage calculator. This tool will also allow you to compare the interest rates offered by various lenders.
Paying cash eliminates the interest, but even then there are property holding costs, such as taxes and utilities. Renovation costs must also be factored in. If you plan to fix the house up and sell it for a profit, the sale price must exceed the combined cost of acquisition, the cost of holding the property and the cost of renovations. Even if you manage to overcome these hurdles, don't forget about capital gains taxes, which will chip away at your profit.
2. Not Enough Time
Renovating and flipping houses is a time-consuming business venture. It can take months to find and buy the right property. Once you own the house, you'll need to invest time to fix it up. Before you can sell it, you'll need to schedule inspections to make sure the property complies with applicable building codes. If it doesn't, you need to spend more time and money to bring it up to par. Next, you'll need to invest time to sell the property.
If you show it to prospective buyers yourself, you'll spend plenty of time commuting to and from the property and meeting with potential buyers. If you can make a 10% profit on a house that cost $50,000, you'll make a $5,000 profit. For many people, it might make more sense to get a good job, where they can earn that kind of money in a few weeks or months via a steady paycheck – with no risk and a very consistent time commitment.
3. Not Enough Skills
Professional builders and skilled professionals, such as carpenters and plumbers, often flip houses as a sideline to their regular jobs. They have the knowledge, skills, and experience to find and fix a house. Some of them also have union jobs that provide unemployment checks all winter long while they work on their side projects.
The real money in house flipping comes from sweat equity. If you're handy with a hammer, enjoy laying carpet, can hang drywall, roof a house and install a kitchen sink, you've got the skills to flip a house. On the other hand, if you've got to pay a professional to do all of this work, the odds of making a profit on your investment will be dramatically reduced.
4. Not Enough Knowledge
To be successful, you need to be able to pick the right property, in the right location, at the right price. In a neighborhood of $100,000 homes, do you really expect to buy at $60,000 and sell at $200,000? The market is far too efficient for that to occur on a frequent basis.
Even if you get the deal of a lifetime, you need to know which renovations to make and which to skip. You also need to understand the applicable tax laws and know when to cut your losses and get out before your project becomes a money pit.
5. Not Enough Patience
Professionals take their time and wait for the right property. Novices rush out and hire the first contractor that makes a bid to address work they can't do themselves. Professionals either do the work themselves or rely on a network of pre-arranged, reliable contractors.
Novices hire a realtor to help sell the house. Professionals rely on "for sale by owner" efforts to minimize their costs and maximize profits. Novices expect to rush through the process, slap on a coat of paint and earn a fortune. Professionals understand that buying and selling houses takes time and that the profit margins are sometimes slim.
The Bottom Line:
Before you get involved in flipping houses, do your research. Like any other business venture, flipping requires time, money, patience, skill, and it will likely wind up being harder than you imagined.
Lisa Smith - Investopedia
1. Not Enough Money
Dabbling in real estate is an expensive proposition. The first expense is the property acquisition cost. While low/no money down financing claims abound, finding these deals from a legitimate vendor is easier said than done. Also, if you're financing the acquisition, that means you're paying interest. Although the interest on borrowed money is tax-deductible, it is not a 100% deduction. Every dollar spent on interest adds to the amount you will need to earn on the sale just to break even. Research your financing options extensively to determine which mortgage type best suits your needs and find a lender that offers low interest rates. An easy way to research a prospective property's total cost is by using a mortgage calculator. This tool will also allow you to compare the interest rates offered by various lenders.
Paying cash eliminates the interest, but even then there are property holding costs, such as taxes and utilities. Renovation costs must also be factored in. If you plan to fix the house up and sell it for a profit, the sale price must exceed the combined cost of acquisition, the cost of holding the property and the cost of renovations. Even if you manage to overcome these hurdles, don't forget about capital gains taxes, which will chip away at your profit.
2. Not Enough Time
Renovating and flipping houses is a time-consuming business venture. It can take months to find and buy the right property. Once you own the house, you'll need to invest time to fix it up. Before you can sell it, you'll need to schedule inspections to make sure the property complies with applicable building codes. If it doesn't, you need to spend more time and money to bring it up to par. Next, you'll need to invest time to sell the property.
If you show it to prospective buyers yourself, you'll spend plenty of time commuting to and from the property and meeting with potential buyers. If you can make a 10% profit on a house that cost $50,000, you'll make a $5,000 profit. For many people, it might make more sense to get a good job, where they can earn that kind of money in a few weeks or months via a steady paycheck – with no risk and a very consistent time commitment.
3. Not Enough Skills
Professional builders and skilled professionals, such as carpenters and plumbers, often flip houses as a sideline to their regular jobs. They have the knowledge, skills, and experience to find and fix a house. Some of them also have union jobs that provide unemployment checks all winter long while they work on their side projects.
The real money in house flipping comes from sweat equity. If you're handy with a hammer, enjoy laying carpet, can hang drywall, roof a house and install a kitchen sink, you've got the skills to flip a house. On the other hand, if you've got to pay a professional to do all of this work, the odds of making a profit on your investment will be dramatically reduced.
4. Not Enough Knowledge
To be successful, you need to be able to pick the right property, in the right location, at the right price. In a neighborhood of $100,000 homes, do you really expect to buy at $60,000 and sell at $200,000? The market is far too efficient for that to occur on a frequent basis.
Even if you get the deal of a lifetime, you need to know which renovations to make and which to skip. You also need to understand the applicable tax laws and know when to cut your losses and get out before your project becomes a money pit.
5. Not Enough Patience
Professionals take their time and wait for the right property. Novices rush out and hire the first contractor that makes a bid to address work they can't do themselves. Professionals either do the work themselves or rely on a network of pre-arranged, reliable contractors.
Novices hire a realtor to help sell the house. Professionals rely on "for sale by owner" efforts to minimize their costs and maximize profits. Novices expect to rush through the process, slap on a coat of paint and earn a fortune. Professionals understand that buying and selling houses takes time and that the profit margins are sometimes slim.
The Bottom Line:
Before you get involved in flipping houses, do your research. Like any other business venture, flipping requires time, money, patience, skill, and it will likely wind up being harder than you imagined.
Lisa Smith - Investopedia
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