What Home Buyers Wish They’d Known

What Home Buyers Wish They’d Known

Nearly half of American homeowners recently surveyed said they would do something differently if they were to go through the home buying process again, according to the NerdWallet’s Home Buyer Reality Report, which analyzed the steps more than 2,200 Americans took to home ownership.

If you want to help prevent buyers’ remorse, the following are some things you can focus on with your clients. These are the top things consumers say they regretted:

• 20 percent wished they had saved more money before buying a home;
• 13 percent would do more research on the mortgage-lending process;
• 14 percent would have shopped around more for a mortgage;
• 13 percent would research the home buying process more.

The majority of buyers’ remorse seems to stem around the financing of a home purchase, the report finds.

“According to our research, borrowers who don’t understand the mortgage process or don’t know enough about their own credit history tend to hit obstacles or be rejected when applying for mortgages,” says Tim Manni, mortgage expert at NerdWallet. “They also tend to feel regret after their deal is done, even if they succeeded in buying a home. That tells me borrowers aren’t doing enough research—on themselves or the mortgage process—before applying for a home loan.”

Forty-one percent of Americans surveyed who applied for a mortgage say they felt they were not aware of all of their loan options during the lending process. Twenty-eight percent of consumers say they felt like they were not a priority to their mortgage professional during the loan process.

Overall, 42 percent of American homeowners called the home buying process stressful. Thirty-two percent said it was “complicated” and 21 percent called it “intimidating,” the survey found. That said, 41 percent of respondents also called the process manageable and 30 percent called it rewarding. Thirty-two percent of respondents say their real estate agent made the home buying process easy.

Source: “Home Buyer Reality Report 2017,” NerdWallet (Feb. 23, 2017)

All-Cash Sales Falling Nationwide

All-Cash Sales Falling Nationwide

All-cash sales are on the decline, accounting for 32.4 percent of total home sales in November 2016, down 4.5 percentage points year over year, according to CoreLogic’s most recent housing data. That’s a significant drop from January 2011, when cash sales were at their peak: a whopping 46.6 percent of all home sales nationally. CoreLogic experts predict cash sales will fall to a historical norm of about 25 percent by mid-2017.

Cash sales are most common in the REO market (60.2 percent of REO sales were cash in November 2016), followed by resale homes (32.3 percent), short sales (31.9 percent), and newly constructed homes (15.5 percent), according to CoreLogic. REO sales have been steadily declining since their peak in January 2011, which helps explain the overall drop in cash sales.

The state with the largest number of cash sales in November was New York, at 47.4 percent of transactions, according to CoreLogic. Other states with elevated percentages of cash sales include Alabama (47.3 percent), Michigan (44.1 percent), Florida (42.4 percent), and Indiana (41 percent).

Source: “Cash and Distressed Sales Update: November 2016,” CoreLogic Insights Blog (Feb. 27, 2017)

Parents May Need a New Mortgage Perspective

Mortgage Perspective

Parents are having a tough time saving money. Fifty-one percent of parents recently surveyed say their mortgage was having a “major impact” on their ability to save, according to Bankrate’s Money Pulse survey for February.

“It’s probably not as much about the mortgage as it is that stage of life,” says Jonathan Smoke, realtor.com®’s chief economist.

Homeowners with children are likely to be in their early 30s to mid 50s and have many financial goals. They’re not only tending to the needs of their children but also saving for college and retirement, maintaining a home, and paying the mortgage.

Jim Sahnger with Schaffer Mortgage in Palm Beach Gardens, Fla., says parents may need to change how they think of mortgage payments: It’s not just another form of paying off debt but it’s a form of savings.

“If you look at it from the aspect of you’re building equity, that’s obviously important,” Sahnger says. Further, home ownership can help shield you from rental cost increases, and there are tax benefits to owning, he adds.

Two in three parents who don’t own a home say that financial issues such as poor credit or being unable to afford the down payment are preventing them from buying.

The Bankrate survey also found that 15 percent of Americans say they’re very or somewhat likely to purchase a home this year, with older millennials (ages 27 to 36) and Generation Xers (ages 37-52) showing the greatest likelihood of buying.

Source: “Parents Have Trouble Saving Because of Mortgage Payments, Bankrate Survey Finds,” Bankrate.com (February 2017)

Contract Signings Would Be Higher If…

Contract Signings Would Be Higher If…

Pending home sales weakened in January as insufficient supply levels of homes for sale continues to press on many markets, particularly in the Midwest and West, the National Association of REALTORS® reported Monday.

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 2.8 percent to a reading of 106.4 in January. The latest reading on the index is about 0.4 percent above a year ago, but it’s the lowest reading since that time.

“The significant shortage of listings last month, along with deteriorating affordability as the result of higher home prices and mortgage rates, kept many would-be buyers at bay,” says Lawrence Yun, NAR’s chief economist. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it’s not uncommon to see a home come off the market within a month.”

Yun says that Americans’ interest in purchasing a home is at the highest level since the Great Recession. More households are feeling confident about their financial situation, and job growth is strong. However, despite their optimism, more home shoppers are faced with limited choices due to a shortage of homes for-sale. The limited supply is also driving up prices in many areas.

“January’s accelerated price appreciation is concerning because it’s over double the pace of income growth and mortgage rates are up considerably from six months ago,” says Yun. “Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location.”

Further, real estate professionals may see their sales more limited over the next few months. Yun says existing-home sales will likely “be choppy in the coming months as buyers compete for the meager number of listings in their price range.”

Source: National Association of REALTORS®

What Threatens Your Closings the Most

What Threatens Your Closings the Most

The majority of contracts settle on time, but more than a quarter of practitioners are citing delays due to common culprits.

In the latest REALTORS® Confidence Index report, 29 percent of real estate professionals say they faced a delay to settlement and 5 percent reported a contract that was terminated. Sixty-seven percent of practitioners reported their contracts were settled on time.

Among the contracts that had a delay to settlement, 38 percent were due to issues related to obtaining financing and 22 percent were from appraisal issues. Survey respondents blamed appraisal-centered delays on the shortage of appraisers, valuations that were not in line with market conditions, and “out-of-town” appraisers who were not familiar with local conditions.

Other issues that caused delays involved titles, sales contingencies, problems related to distressed sales, home/hazard or flood insurance issues, or a buyer losing a job.

Among contracts that were terminated, the most common reasons were related to home inspections, obtaining financing, and appraisal problems.

The median number of days to close a contract was 40 days in January, down slightly from 42 days a year ago in January 2016, NAR reports.

Source: “REALTORS® Confidence Index: January 2017,” National Association of REALTORS® (Feb. 22, 2017)