Remind Your Clients: Do an Annual Inspection

Remind Your Clients: Do an Annual Inspection.Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Do your buyers think that once the home inspection is over and the concessions have been negotiated, they’re done? Remind them that their own annual inspection can save them a bundle by preventing headaches and spotting problems while they’re still minor.

Outside the house, they can use binoculars to get a good look at the status of high walls, the chimney, and the roof line. Make sure everything is level and looks solid. There shouldn’t be any crumbling in masonry or rot in wood. Also, look for crags and clogs around gutters and downspouts, cracked or peeling paint, and blockages or cracks around the chimney. The roof might be missing shingles, or tree branches might provide a path for pests to enter the house. Anything that lets water in can be a particular source of long-term problems.

Lower down, they should keep an eye on the grade around the foundation, check the driveway and garage for loose or cracked asphalt, examine caulk and other seals around windows, and check above and below stairs, decks, and porches for problems.

Inside, a flashlight comes in handy even in well-lit areas to help highlight small flaws. Check walls and ceilings for stains that suggest mildew or mold, kitchen backsplashes and seals for open spaces that let moisture in, tub surrounds for entry points for water, stairs and railings for solid structures, and other features to prevent long-term deterioration.

Finally, turn on hot and cold water at every faucet to look for leaks; start the heating and cooling systems to find loose pipes and listen for irregular sounds; and check boilers and heaters for problems. Doing this regularly ensures that your customers understand what normal is like so they can spot anything not normal as soon as possible.

And remind them that knowing their house inside and out gives them not only a solid home but also a line on a good market price and the comfort of knowing the home should receive a good inspection when it finally does go on the market.

Source: “How to Do Your Own Yearly Home Inspection,” Lifehacker.com (Sept. 2, 2015)

Were Low Interest Rates a Good or Bad Thing?

Were Low Interest Rates a Good or Bad Thing? Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

“Could the Fed’s low interest rates come back to bite us?” That’s the question Bankrate.com recently posed to leading economists.

The Federal Reserve has kept key interest rates basically at zero since December 2008, which has also helped keep mortgage rates at historically low levels. But will the decision of Fed Chair Janet Yellen and policymakers to keep interest rates low for so long end up setting the stage for a new crisis in the future?

Many economists, including National Association of REALTORS® Chief Economist Lawrence Yun, said that the low interest rate environment didn’t set the economy up for doomsday in the future.

“[The Fed] needed to get the economy going before everything else, and the zero interest rate policy accomplished that,” Yun told Bankrate.com. “The asset price increase in home prices could have been relieved with increased housing starts, but that is outside of the Fed’s purview.”

David Crowe, chief economist of the National Association of Home Builders, also told Bankrate.com that he felt the low interest rates won’t end up doing more harm in the end.

“A weak recovery is a closer danger than runaway inflation,” he said. “Current levels of continuing slack in the labor market point to a low inflation risk.”

Some economists believe the low interest rates may pose a problem in the future when the Fed does start raising them, which is largely predicted to be on the horizon in the coming weeks.

“People now believe the current levels of rates are normal rates and value any changes as slowing the economy rather than easing up on the gas pedal,” says Joel Naroff, president of Naroff Economic Advisors. “Think of housing, where people say a 5 percent mortgage rate would ‘crush’ the housing market.”

Read what other economists had to say at Bankrate.com.

Source: “Economic Indicator,” Bankrate.com (September 2015)

Homes Still Selling Fast Heading Into Fall

Homes Still Selling Fast Heading Into Fall. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

With home buyer demand starting to slow along seasonal trends, properties for sale are staying on the market slightly longer. For transactions that closed in July, the homes were typically on the market for 42 days, according to the latest REALTORS® Confidence Index. NAR notes that the number of days on market typically rises after June because of seasonal changes and an overall slowdown in the housing market heading into fall.

But with inventory still tight, properties are moving faster than they did a year ago — when they averaged 48 days on the market, according to NAR. In July, 43 percent of sold properties spent less than a month on the market.

Short sales are on the market for the longest time, at 135 days, while foreclosed properties are staying on the market an average of 49 days. Non-distressed properties averaged 41 days, according to NAR.

Properties are selling particularly fast in a pocketful of markets. They typically sold within a month in Washington, Oregon, California, Utah, Colorado, North Dakota, Kansas, Texas, Michigan, Massachusetts, and the District of Columbia.

Source: “In What States Did Properties Sell Quickly in May-July 2015?” National Association of REALTORS® Economists’ Outlook blog (Sept. 1, 2015)

More Consumers Have Higher Credit Scores

More Consumers Have Higher Credit Scores. Image courtesy of dream designs / FreeDigitalPhotos.net

Nearly one in five consumers have a FICO credit score that is 800 or higher. The percentage has slightly risen from 19.9 percent currently from 19.6 percent six months earlier, according to the Fair Isaac Corp.

As such, fewer consumers have credit scores below 550, a steady decline that has been appearing since late 2009.

Since Fair Isaac Corp. started tracking in October 2005, the national FICO score is at an all-time high at 695. The improvement in credit scores does seem to be showing some signs of leveling off, however.

FICO scores are one of three key metrics lenders use to evaluate prospective borrowers and determine mortgage rates. The rates borrowers get between the highest and lowest acceptable FICO scores can vary by more than 2.4 percent.

For example, a FICO score between 760 and 850 may get an APR at 3.612 percent whereas a borrower with a FICO score between 620 and 639 may get one at 5.201 percent.

Source: “One in Five Consumers Is a Member of the FICO 800 Club,” Real Estate Economy Watch (Aug. 31, 2015)

Signs Indicate No Drop-Off for Home Sales

Signs Indicate No Drop-Off for Home Sales. Image courtesy of hywards/ FreeDigitalPhotos.net

It appears existing-home sales won’t drop off at the end of the summer, as sales contracts rose modestly in July, reflecting an overall upward trend for the past seven months, according to National Association of REALTORS® data.

The housing market has begun the second half of 2015 on an upbeat note, with NAR’s Pending Home Sales Index — a forward-looking indicator based on contract signings — inching up 0.5 percent in July to 110.9. It is now 7.4 percent above year-ago levels.

“Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer,” says NAR Chief Economist Lawrence Yun. “While demand and sales continue to be stronger than earlier this year, REALTORS® have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust.”

Housing inventory shortages likely will persist into the fall, which will also prompt existing-home prices to continue to rise, Yun notes. The national median existing-home price will likely rise 6.3 percent this year to $221,400, according to NAR. Existing-home sales also are expected to rise by 7.1 percent this year, totaling 5.29 million. That’s still about 25 percent below the 2005 peak of 7.08 million.

“In light of the recent volatility in the stock market, it’s possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment,” Yun says. “Overall, the prospects for ongoing strength in the housing market remain intact for now. The U.S. economy is growing — albeit at a modest pace — and the labor market continues to add jobs.”

Source: National Association of REALTORS®