Making an Offer: 5 Mistakes to Avoid

Making an Offer: 5 Mistakes to Avoid

In competitive housing markets across the country, making an offer that sticks has become increasingly difficult. Ensure your client doesn’t make the process even tougher by succumbing to one of these common mistakes.

Delaying

“Time kills deals,” says Andrew Sandholm of BOND New York Properties in New York. “Dragging your feet means you could wind up paying more in a bidding war situation or missing out on the property altogether.” Buyers need to be ready with their paperwork, such as bank statements, a preapproval letter, and documents supporting proof of funds, from the day they begin house-hunting mode. That way they can pounce quickly with an offer when they do find a home they like.

Making an offer for their preapproved amount

Smart buyers are getting preapproved to show a seller they’re financially able to purchase a home. However, Chuck Silverston, principal at Unlimited Sotheby’s International Realty in Brookline, Mass., warns buyers against using that document to come up with an offer amount.

“Many buyers come in with a preapproval for the exact offer price, but when you’re competing against other offers, including cash offers, you want to show financial strength,” Silverston says. “An exact preapproval could make a listing agent nervous because not only does the buyer not have any wiggle room to negotiate, but they might no longer qualify if interest rates rise.”

Submitting a lowball offer

Lowballing a seller often backfires, particularly in a seller’s market. “A lowball offer that isn’t backed up with math or comparable sales data is disrespectful and could turn off the seller and possibly mean you will miss out on the property completely,” Sandholm says.

Waiving inspection contingencies

“I don’t care whether it’s new construction or even your mom’s house you’re buying from her – get it inspected,” urges Joshua Jarvis of Jarvis Team Realty in Duluth, Ga. Further, if you waive the inspection contingency in your offer, you may lose the earnest money if you later back out of the deal.

Not presenting yourself well enough

In a seller’s market, buyers need to take steps to make sure they look good in the eyes of the seller. “In today’s highly competitive environment, the listing agent is trying to determine which buyer will be the easiest to deal with,” Silverston says. Buyers may want to avoid pointing out every defect, making nitpicky queries, or questioning the seller’s tastes.

“Basically buyers who act less than enthusiastic will see themselves at a competitive disadvantage when sellers are comparing multiple offers,” he says.

Source: “In It to Win It: Land Your Dream Home By Avoiding These 7 Mistakes on Your Offer,” realtor.com® (May 10, 2017)

Seriously Underwater Homes Still a Big Issue

Seriously Underwater Homes Still a Big Issue

With home prices on the rise, more home values are climbing up above water, but in a few cities, the number of seriously underwater homes is still alarming.

Nearly 5.5 million U.S. properties, or 9.7 percent of all properties, were considered seriously underwater in the first quarter of this year. That number is down by more than 1.2 million from the 6.7 million seriously underwater in the first quarter of 2016, according to ATTOM Data Solution’s First Quarter 2017 Home Equity & Underwater Report.

“While negative equity continued to trend steadily downward in the first quarter, it remains stubbornly high in often-overlooked pockets in the housing market,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “For example, we continue to see one in five properties seriously underwater in several Rust Belt cities along with Las Vegas and central Florida. Additionally, close to one-third of homes valued below $100,000 are still seriously underwater.”

Cleveland, Las Vegas, and Akron, Ohio, posted the highest share of seriously underwater properties in the nation during the first quarter.

On a metro level, the areas with populations of at least 500,000 that had the highest share of seriously underwater properties at the end of the first quarter were:

1. Cleveland: 22.9%
2. Las Vegas: 22.1%
3. Akron, Ohio: 20.3%
4. Dayton, Ohio: 20.3%
5. Toledo, Ohio: 20%
6. Baton Rouge, La.: 19.7%
7. Detroit: 17.1%
8. Chicago: 16.4%
9. Lakeland, Fla.: 16.2%
10. St. Louis: 15.3%

Source: RealtyTrac

College Grads Could Get Home buying Help

College Grads Could Get Home buying Help

Several states are offering home ownership assistance programs to recent college grads that may help them receive thousands of dollars toward the purchase of a home. In New York, Gov. Andrew Cuomo recently announced the “Graduate to Home ownership” program, which provides assistance to first-time buyers who have graduated in the past two years from an accredited college or university with an associate’s, bachelor’s, master’s, or doctorate degree. Program participants may be eligible for up to $15,000 in down-payment assistance or a reduced-rate mortgage—but they have to agree to live in one of eight upstate New York communities in order to be eligible.

“Upstate colleges and universities have world-class programs that produce highly skilled graduates, who then leave for opportunities elsewhere,” Cuomo said in a statement. “This program will incentivize recent graduates to put down roots.”

Nearly half of states offer some form of housing assistance to student-loan borrowers, according to an analysis by Credible.com. Ohio offers Grants for Grads, which, like the New York program, offers down-payment assistance or lower-rate mortgages to people who have graduated from college in the past four years. Rhode Island’s Ocean State Grad Grant program offers up to $7,000 in down-payment assistance to college graduates who earned a degree in the past three years.

Many of these state programs, however, require college grads to live in certain cities within the state, similar to New York’s program. “It can certainly help people who are dealing with high student debt burdens,” says David Reiss, research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School. “But programs like this have to deal with a fundamental issue: Do these communities have enough jobs for recent college graduates? Time will tell.”

Source: “College Grads Can Get Home Grants – But There’s a Catch,” realtor.com® (May 5, 2017)

Bad Credit Can Triple Home Insurance Costs

Bad Credit Can Triple Home Insurance Costs

Homeowners with a bad credit score can expect to pay double—in some cases, even nearly triple—what owners with solid credit pay for their home insurance, according to a new state-by-state study by insurance Quotes.

Policyholders with fair credit pay an average of 36 percent more than those with excellent credit, the study found. When a consumer’s credit is poor, premiums can more than double, increasing an average of 114 percent.

“Many consumers aren’t even aware that, in most states, credit plays a significant role in determining how much you pay for home insurance,” says Laura Adams, senior insurance analyst of insurance Quotes. “So, even if you don’t plan on using credit to borrow money, it still affects your finances.”

Consumers in these states saw the greatest spike in home insurance premiums when their credit was poor:

• South Dakota: 288.1%
• Arizona: 268.6%
• Oklahoma: 248%
• Nevada: 235.3%
• Oregon: 234.9%

On the other hand, consumers in these states saw the smallest increase:

• North Carolina: 0.2%
• Florida: 25.7%
• New York: 29.3%
• Wyoming: 43.9%
• Hawaii: 53.1%

The list excludes California, Massachusetts, and Maryland, which prohibit the use of credit scores when setting home insurance rates, the authors note.

Source: insuranceQuotes 

First-Time Buyers Aren’t Afraid of Renovation

First-Time Buyers Aren’t Afraid of Renovation

First-time home buyers are showing a strong desire for taking on remodeling projects. First-time buyer renovators in 2016 spent $33,800, on average, on their projects. That marks a 22 percent increase over 2015, according to the sixth annual Houzz & Home survey of more than 100,000 respondents in the U.S.

Average Investment in Living Spaces

Here is what remodelers spent in renovating their homes in 2016:

• Kitchens: $19,100
• Master bathrooms: $11,700
• Living/family rooms: $5,400
• Master bedroom: $3,400
• Laundry room: $2,800
• Dining rooms: $2,600
• Guest bedrooms: $1,900

Source: “Houzz & Home Survey,” Houzz (May 4, 2017)

“Younger and cash-constrained first-time buyers are responding to the low inventory of affordable homes by purchasing properties that require more than just cosmetic upgrades,” says Nino Sitchinava, Houzz principal economist. “Not surprisingly, we are seeing their spending on home renovations increasing significantly in 2016 and expect this trend to continue through 2017.”

Both first-time and repeat buyers are taking on larger scope projects, such as remodeling up to four rooms at the same time, the Houzz survey shows. Kitchen and bathrooms continue to be the most popular rooms in the house to renovate.

And while “recent home buyers drive a significant share of home renovations today, repeat buyers are investing twice as much in their home as first-time home buyers,” Sitchinava notes.

Baby boomers and earlier generations, who are age 55-plus, continue to spend three time more than millennial homeowners aged 25 to 34.

Overall, homeowners spent $60,400 in 2016 on home renovation projects, up from a $59,800 average in 2015.

Source: “Houzz & Home Survey,” Houzz (May 4, 2017)

An Uptick in Housing Starts Matters to Buyers

An Uptick in Housing Starts Matters to Buyers

Your home buyers may want to look more closely at the housing starts numbers, even if they don’t intend to buy new.

Housing starts, or the number of new homes that builders have begun construction on, tend to follow a seasonal pattern—increasing in the spring, peaking in the summer, receding in the fall, and dropping to their lowest levels in the winter.

An increase in housing starts should make for good news for home buyers.

“Housing starts, when they are completed, add supply [and in turn] reduce upward pressure on new-home prices and may even reduce them,” says Andres Carbacho-Burgos, a senior economist at Moody’s Analytics.

Therefore, even if buyers aren’t buying new, they can still benefit from a healthy level of housing starts, says Danielle Hale, managing director of housing research at the National Association of REALTORS®. A high number of homes, whether old or new, will decrease prices for all homes, she notes.

Housing starts have been in gradual recovery mode the last few years. In 2016, starts were at 1.23 million units.

“We’re relatively optimistic” for 2017, says Carbacho-Burgos. “By the end of 2017, we expect housing starts to be closer to 1.7 million,” a 10 percent increase from a year earlier.

Source: “What Are Housing Starts, and Why Should Home Buyers Care?” realtor.com® (May 1, 2017)