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Posts Tagged: Selling a home

That Darn Supply

Whenever talk turns to home sales, you can be sure it will also turn to home supply, and for good reason. 

Existing home sales dropped 2.8% to a lower-than-expected 5.49 million on an annualized rate. Most market watchers were expecting better (including us). One positive in the sales data was November sales, which were revised up to 5.65 million on an annualized rate. 

December sales had trouble gaining traction for the same reason they’ve had trouble gaining traction in most down months -- supply.  The NAR reports the number of homes for sales fell 11% for the month to 1.65 million. At the current sales pace, supply, at 3.6 months, is at the lowest level since 1999. If you don’t have a lot to sell, it’s hard to sell a lot. 

Interestingly, many sellers were unable to exploit their advantage. The median price of an existing home was down 0.9% to $232,200 in December. If demand holds steady and supply drops, prices should rise. (It’s possible demand also dropped on higher interest rates, though purchase-mortgage activity suggests otherwise.) Of course, we all know that housing markets are local markets, and what holds for the national market won’t necessarily (and likely won’t) hold for any particular local market.

Investment is another variable impacting home supply. Over the past five years, a record number of homes, most notably single-family homes, have been converted to rentals. We’ve seen this conversion occur on an unprecedented institutionalized scale, with large investment firms buying hundreds of thousands of homes. What’s more, most of these conversions have occurred at the lower end of the market, thus driving up prices for what would be starter homes for first-time buyers. 

Increased construction activity helps, but it’s not helping enough. Housing starts were up 11.3% to 1.226 million on an annualized rate last month. But the surge was confined to multi-family starts, which jumped 57%. The more important single-family category actually declined 4%.

Though home constitution has trended higher in recent years, it hasn’t trended high enough. The historical annual average for starts is around 1.5 million. NAR economist Lawrence Yun has mentioned that excess regulation -- concerning land use in particular -- has held construction in check. 

Love him or hate him (because there is no middle ground), but President Trump has vowed to reduce  business regulation across the board. Should Trump follow through, we should see a pick-up in new-home construction. 

Who Pays Closing Costs?

The time has come: You've found the home of your dreams, you've completed the negotiations with the seller, been approved for your loan and are ready to sign the papers closing your loan. Now comes a big question, and a potentially costly one at that - who pays the closing costs?

By this point, your closing costs shouldn't be a surprise. Your lender should have disclosed any fees related to purchasing a home well before the time you reach closing as part of the Loan Estimate during the pre-approval stage. These fees may include:

  • A fee for running your credit report.
  • A loan origination fee.
  • Attorney's or realtor's fees.
  • Inspection, survey and appraisal fees.
  • Discount points.
  • Title insurance.
  • Title search fees and background checks.
  • Escrow deposit.
  • City or county land record.
  • Underwriting.

Added together, closing costs can quickly become anywhere between 2 and 5 percent of the total purchase price. Such a significant cost raises a fundamental question: Who pays these fees?

"Closing costs can be anywhere between 2 and 5 percent of the total purchase price."

Typically, closing costs are paid on some level by both the buyer and the seller, though the distribution of these costs can vary. According to Zillow, buyers typically pay a higher volume of distinct costs while the seller may pay fewer line items, but more significant ones. Since the majority of the aforementioned fees are related to the loan itself, these tend to fall to the buyer to pay.

That said, there is nothing that bars sellers from taking on some portion of the closing costs. Many sellers will do so as an enticement to buyers to close the deal faster, akin to offering a discount on the sale price. Sellers do often pay the real estate commission fee, as well as any existing property taxes incurred by the home so as to clear the title. 

 

Can you still get a home improvement loan with bad credit?

Home improvement loans can help bump up the value of your property in a more meaningful way than a simple coat of paint can provide. While many rely on credit cards, savings or gifts from friends and family to pay for a major renovation, others find that a loan is the only option that allows them to do what they need to do to make their home look and feel its best.

But what if the issue standing in the way of home improvement is your credit? Bad credit can limit your options when it comes to financing a major renovation, but it does not have to be a dealbreaker. Here are a few mitigating factors that could qualify you for a home improvement loan, even if you have poor or insufficient credit: 

"Bad credit can limit your options for financing a renovation."

Higher interest rates
Poor credit may not automatically rule you out for qualifying for home improvement loans, but it may result in higher interest rates to help borrowers mitigate the risk. While not ideal, this may not be a bad thing if you are able to pay off your loans relatively quickly.

Tapping your equity
Have you already paid in a significant amount to your home? Tapping your home equity allows you to leverage what you already own into cash - which you can, in turn, funnel back into your home and raise its value.

Co-signers
Adding a co-signer with solid credit can often assuage the apprehension of a lender. When applying for a loan with a co-signer, the lender will typically either average out the credit scores of the applicants or - depending on the loan product - look at the highest score only. 

To learn more about home improvement loans, call New Penn Financial today.

How to Get the Most Out of a Home Appraisal

An essential part of the mortgage refinance process, a home appraisal is a way to judge what your property is currently worth - and how lenders can ensure that you are able to leverage the full value of your equity. When it comes to an appraisal, it is in the homeowner's best interest that it be evaluated as high as possible. With that in mind, here are a few simple steps to make sure that your appraiser sees a home at the peak of its value:

Focus on the small stuff
Does your bathroom faucet have a persistent drip? Is there a tiny water stain on your ceiling? These are the kind of details that, when tallied all together, can have a significant impact on the overall value of a home. Use the time before your home evaluation is scheduled to get everything in order from top to bottom, fixing little issues and making your home clean, well-maintained and inviting. 

 

Make sure your safety equipment is fully-functional and properly installed
Often in the rush to gussy up the decor of a home, people forget about the non-aesthetic elements that add value. Smoke alarms, carbon monoxide detectors and fire extinguishers properly installed in strategic safety areas will show an appraiser that you are making efforts to protect your home, making it more valuable. 

Make sure your appliances work
While not part of the home per se, appliances like a refrigerator and dishwasher can add value to a property - assuming they are clean and fully functional. Don't neglect these essential components of everyday life when you do a walkthrough and check for issues.

Home sellers turning to smart tech to attract buyers

While limited home supply has helped drive up interest in homebuying, the truth is that some homes are more desirable than others. To help their listings rise to the top, some home sellers are converting their properties into smart homes via the judicious application of technology. 

"Simple technological additions create a distinct and appealing listing." 

 

Smart homes represent the harmonious collaboration of high tech gadgets with unobtrusive design, all creating a thoroughly modern living experience. According to a Coldwell Banker Harris Poll, nearly half of Americans either already use smart technology in their home, or plan to do so in the next year. Most interestingly, the technology is largely seen as a foregone conclusion: The same study showed that 36 percent of those using smart tech do not consider themselves to be early-adopters.

Simple technological additions can turn a slow moving, antiquated listing into something distinct and appealing. And buyers - particularly millennial buyers looking for their first homes - are taking notice. 

Why you should list your property in the winter

While Spring is commonly considered the peak home-selling season, it can pay to list your home in the Winter. This is supported by a recent study by online brokerage firm Redfin that reveals that sellers on average net above asking price during the Winter months of December, January, February, and March than they do from June through November even in colder climates.

"There is a lack of inventory and multiple offers coming in on houses," says Nichole DeMario, director of Communications & Professional Development for the Greater Northwest Indiana Association of Realtors, referring to homes on the market in the winter months. "And they're not staying on the market long."

"This is a great time to list or to start preparing to list your home because tax season is around the corner which motivates buyers but most importantly is the lack of inventory," says Jordan Orr, a real estate broker with T.J Boyle Real Estate Inc.