FIRST TIME BUYERS 4 BIGGEST MISTAKES

The Covid-19 pandemic put your efforts to buy your first house on hold, but now there is light at the end of the stay-at-home tunnel. You have decided to re-entry the housing market. 

The pool is always the fullest in the first-time buyer market.  Young couples or singles who are getting established looking for the best deals.  So, here are the four biggest first-time buyer mistakes you can avoid.

1. Closing cost - Closing costs are the fees and payments you make at the closing to complete the transaction.  Your real estate agent will guide you through what takes place at closing and will be able to tell you the exact amount of cash you will need to finalize the sale.  Once you have signed a contract and the seller has accepted your offer, the easiest way to calculate closing costs is to have on hand an additional 3-4% above your agreed sale price.   

2. Straighten up your credit report - You should review your current credit report to clear up any incorrect entries.  You may find it difficult to acquire a loan if there are questionable remarks on your credit report.  Take care of any "questionables" before going to obtain a loan.

3. It is the block, not the house - Before submitting an offer on a house, check out the block/neighborhood.  There is truth to the fact that location is everything.  You may find the ideal home in the worst neighborhood which could impact the future value of your home.  Set emotions aside and take a good look at your neighborhood. Is it run down or are there parks and public venues close by that make the area desirable?

4. Cash is King - If you have heard this once; you have heard it a hundred times - CASH IS KING!  The difference between you securing the home and losing it may be your finances.  Your approved loan is your cash-in-hand and will provide you with the leverage you need to close the deal.  

Avoid these four biggest mistakes and you will be able to eliminate undue stress in your search for your dream first time home.

BUYERS: GET A HEAD START ON THE NEXT WAVE IN THE HOUSING MARKET.

The National Association of Realtors just released the April 2020 Existing Homes Sales report.  The report was no surprise as the home sales declined 17.2% year-over-year to 4.3 million homes. 

Buyers who forged through the pandemic to acquire a new home did so with determination as mortgages rates dropped to all-time lows, despite the fact banks upped the ante on FICO scores to qualify for loans.  

Now as America and other countries around the world begin to open-for-business some buyers who backed off from buying houses are reconsidering getting back into the market. 

1. Be positioned to buy early - Nationally, the inventory of available single-family homes is low, but sellers are still interested in making a deal.  Home prices have risen, yet there are still sellers who need to sell and are willing to discuss terms.  It is not a matter of luck; it is preparedness meeting opportunity for those looking to buy early.

2. The pool will get crowded - As buyers begin to regain a sense of how the economy is moving and find themselves more stable financially, the pool will get crowded with new buyers eager to find deals.  Don't be surprised to find bidding wars over properties or properties moving much faster than one may have thought.  

3. The wants will outweigh the needs - Now that most states have relaxed the stay-at-home standards, families are re-evaluating the utilitarianism of their home.  During the past few months, homes have become school rooms, stay at home hospitals, business offices and production centers for new businesses.  No longer will buyers be looking for the right schools, the right neighborhoods or the dream home; now their attention will be directed at finding a house that will multi-task and serve as more than a sanctuary from work.  

The next housing market wave is on the horizon.  Will you be one to ride the wave or be washed out in the swirls and swells?

SELLING DURING THE CORONA VIRUS OUTBREAK

Virus or no virus, people still need to sell their house. Making that happen is what this blog is about today.  Sellers are keenly aware that much of the country is still in various stages of shelter-at-home orders and that taking extra precautions is a must.  It means taking responsibility for public health and doing the best you can to protect yourself and others.  Here are critical areas to consider as you move forward with selling your house during the virus outbreak.

1.Pricing -   As the economy comes to a grinding halt and the stock market continues its roller coaster ride, the question arises as to how this will affect the housing market, especially as would-be buyers find themselves in precarious financial straits.

Virus or no virus, there are buyers who still have to buy and sellers who have no other choice.  Finding the right price that will attract as many qualified buyers as possible is job#1.  The question still remains - How low should you go in this market?

2. Marketing - The old tried and true methods have become taboo in many locations due to the widespread shelter-at-home orders, but innovative  and creative marketing means now open houses to more potential buyers.  Video tours, Facetime showings and Zoom open houses now walk buyers through houses and answer questions live.

3. Inspections -  As the seller, get the inspection done before even listing and use that as a marketing tool.  Some states have placed limitations on real estate activities and having a pre-listing inspection makes for a strong selling point.

4. Appraisals - On March 23, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac "to provide alternative flexibilities to satisfy appraisal requirements and employment verification requirements through May 17, 2020." 

In short, Fannie and Freddie will allow mortgage loans to go through with "appraisal alternatives" in order to "reduce the need for appraisers to inspect the interior of a home for eligible mortgages."

5. Closing table - The National Association of Realtors advises, "Brokers should use their best judgement when formulating a plan" for closings. Your real estate agent should advise you as to the guidelines established for your area.

Virsus or no virus, houses are bought and sold every day.  The ground rules for the game may have changed during this viral outbreak, but opportunities are still out there for both sellers and buyers.  Exercise caution and work with agents in protecting your house and family.

THINKING OF MOVING TO A RETIREMENT COMMUNITY...READ THIS!

Many retirees ponder the decision to trade in the "old homestead" for a age-restricted active adult community. If that idea has been moving around the back roads of your mind, then you will want to read this weeks blog.  Here are a few things for you to consider before making any move.

1. Why move?  Make certain you have a compelling why.  Are you drawn by the appeal of living in a safe environment away from rush hour madness, difficult neighbors or families with too many children?  Will moving enable you to maintain your social life with little inconvenience?  What are the financial benefits to the relocation in a retirement community?  Will you be moving closer or further away from your extended family?

2.  Can you live with the rules?  Most, if not all, retirement communities are governed by a homeowners association which has established rules for the residents.  The rules dictate what pets you can own, how you can decorate the exterior of your home and how long younger guest may visit.  Acquiring a copy of the rules of the homeowners association and becoming familiar with them is one of your first considerations before moving.

3. How much and what do the HOA fees cover?
Asking what do my monthly fee provide is a legitimate question.  What do they provide?  Normally, HOA fees inculde your share of the cost of common area maintenance, the community's employees, insurance and property taxes, just to name a few.  Are there other service that are covered by the HOA fees?  More importantly, will you be paying for service you won't use.

4. Is the HOA in good financial shape and is the property well managed?  You are not doing an IRS audit, but it is in your best interest to understand whether or not the money you are investing is going where the HOA says it goes.  Along with a copy of the HOA rules, you should obtain a copy of the HOA's financial statement and minutes from recent HOA meetings.

5. Will you be happy there?  Try talking with several residents from the community you are interested in moving into.  Try to determine if they are happy with the community and how do they get along with their neighbors. Do they have any specific concerns or complaints.   Finally, pay attention to how they treat you and your questions.

Moving to any new location always brings it own set of questions.  Moving into an age-restricted community fosters a new set of questions - ones that deal with lifestyle and fiances.  Do your due diligence.  Gather as much information before hand before making any decision regarding this move.

"THE LITTLE ENGINE THAT COULD"

One of my favorite childhood books was Watty Piper's The Little Engine That Could.  I can not tell you how many times I had various family members read this book aloud to me until I learn to read it myself.  Although the story is a fairy tale, the theme is ultra-relevant today.  It is a story of optimism and hope that challenges the reader in the face of all adversities to continually push forward.

As the United States and the rest of the world moves to reopen their economies and begin to redefine normal in a post Covid-19 era, the underlying theme of the book is just the idea we need to embrace.

One of the "little engines" that will reignite our ecomonic growth and prosperity will be the housing market.  Both buying, selling, renting and investing in real estate will play a vital role in moving our country ahead.

According to the National Association of Realtors, "the total economic impact of real estate and related industries (home construction, mortgage lending and title insurance) is almost double when you purchase new construction, given the sheer number of workers it requires to design, build, equip, and finalize the sale of the home."

Bottom Line:

Buying a home is a substantial economic driver today, and when new construction picks up again, it will be an even stronger recovery force throughout the country.  If you are positioned to buy a home this year; you can have a significant impact on your local neighborhoods and safely make the move you've been waiting for.  It is a win-win! *

* Special thanks to Keeping Current Matters for their content contribution to this week's blog.