3 Tips for Seller’s ‘Stay Or Go?’ Dilemma

3 Tips for Seller’s ‘Stay Or Go?’ Dilemma
Written by PJ Wade

Although the focus is on selling price during negotiations, sellers know that how they use their real estate, and all that represents, present and future, is the true measure of value. It’s this accumulated value, not just how much money they’ll get, that sellers should concentrate on when tackling the “Should we stay, or should we go?” dilemma.

Lack of experience or uneasiness with the unknown should not dissuade you from the mental adventure of weighing your options. Don’t shy away from a thorough, creative comparison of all that can be gained by staying and all that this would cost versusall that can be gained by going and all that would cost. Have fun talking to friends and exploring the internet to discover other people’s successes and experiments. Here’s 3 tips to get you started on your real estate adventure:

1. Don’t just compare possible selling price to potential purchase price.

When deciding whether this is the real estate market to jump into, many sellers concentrate on the possible selling price of their current real estate and the potential purchase price of the next property. These dollar figures get the most attention, but they are not all that buying and selling real estate involves. Yes, selling and purchasing prices matter, but it’s your TOTAL NET GAIN from the combined sell-and-buy real estate transactions that really counts:

TOTAL NET GAIN = NET GAIN from Sale + NET GAIN from next Purchase

Your real estate professional can help you estimate how much will end up in or out of your pocket after mortgages and a long list of fees (including theirs) for both the sale of your current real estate and the purchase of your next property. Add to the “sale cost” list any long-standing service contracts for which you’ll lose price benefits when you move, and any accumulated benefits like-lower-than-neighbours realty tax, earned by consistently disputing tax increases. Moving, legal, and renovation costs must be included in the equation, too. Broad strokes will get you started, so you can assess net benefits and net losses in every aspect of life and homeownership. Often this exercise reveals clear “stay” benefits or disadvantages that make deciding easier.

2. Don’t let financial promise distract you from assessing the true value ownership represents to you.

Before setting goals and scribbling down a “what comes next” action plan, assess the true value of ownership of your current real estate and all it connects you to, not just its financial value. One measure of what your home means to your life and family is whether you want to move out of the neighbourhood or just to a new location within it. If you don’t want a dramatic location change, list what you value about the neighbourhood. Will these items persist, or is social or economic change putting those value elements at risk? While you assess what’s keeping you here, consider these connections with open eyes not just nostalgia for what was. Moving to a new location brings change on many levels. How will the new neighbourhood enrich life and what will be sacrificed?

3. Don’t overlook how ‘staying’ could involve significant change.

Just because you are not handy and have never undertaken a renovation before does not mean you can’t or that you won’t be great at it. If there is a strong pattern of extensive renovation and new builds in the neighbourhood, take a close look at what these options, or a less ambitious refreshing of your property would give you and at what cost. If this pattern is common in your area, moving to a new location in the same neighbourhood may represent a lateral financial move or even require additional expenditure. Then, your choice may be to renovate your current property or move to a less expensive area. Also, check with your municipal office to see if secondary suites or duplexing would be an option for your property. Adding an income-generating suite will also give you choice in the future.

For example, you could live in the suite and spend time travelling on the rental income from the rest of your home. Tied to these considerations are modernizations and upgrades that are necessary, or will be, since 15 to 20 years is the average life of most residential systems. If you project ahead 5 or so years, what overhauls will be necessary? If a new furnace, roof, windows…are on the horizon, a renovation now may make sense. This may allow upgrades like solar panels, heat pumps, and energy-efficient windows which can also improve building efficiency, increase comfort, and reduce maintenance and costs, while increasing property value. Architects, renovation contractors, builders, and real estate professionals are the idea people to involve in these value investigations.

This mental exercise will open doors and expand horizons in ways you may not have been able to foresee. This is research, so step back from anyone intent on getting you to sign a contract for anything until you have had time to explore your options. This may take a while, especially if you have only a few gripes about your current home or cottage.

May I suggest a great place to start? Write out a two or three sentence description of how you want your life to change. Be very specific. I suggest this exercise to clients who want things to improve or who are faced with change they wish to triumph over. The clearer the future is to you, the more likely you are to achieve it. Finish this sentence with what a brilliant outcome represents to you: “When I/we are successful…”. If you don’t know where you want to end up, how will you know the best way to get there?

Onward & Upward…The directions that really matter!

Advertisements

Sacramento Home Prices Rise in the Midst of Low Inventory…

Sacramento-area home prices rise in February amid low inventory

 

 

Approaching Real Estate in 2014…

How to Approach Real Estate in 2014 & Beyond

DATE:JANUARY 10, 2014 | CATEGORY:TIPS & ADVICE | AUTHOR:

 

The current real estate recovery is like a marathon. Last year, buyers and sellers sprinted out of the gates at full speed, fueled by lowinterest rates and affordable home prices. The press and social media were full of stories about limited housing inventories, bidding wars and multiple offers. In 2013, real estate was sexy and headline-worthy.

As we move into 2014, it’s clear we’ve only run the first few miles of this marathon. Last year’s excitement will surely wear off, and there will be a lot less flashy magazine covers, posts, tweets or evening news stories about real estate. Most experts predict a slower, steadier, more even “pace” this year in most of the country, even as interest rates and home values inch up.

This doesn’t mean 2014 won’t be as good a time to buy real estate. It helps to look at the bigger picture and not get caught up in the micro stats or the latest headlines. Sure, we likely won’t see interest rates as low in 2014 as we did in 2013. But to put that into perspective, interest rates were as high as 18 percent in the 1980s, yet people still bought homes.

As you approach buying a home this year, it helps to focus on the long term by keeping the following five best practices in mind. These were best practices for home buying a generation ago. And they’ll most likely still be practical when the next generation of home buyers sprints out of the gate.

Buy when you’re ready

Just because you didn’t buy last year when the market was super hot doesn’t mean you’ve missed out. Could you have gotten in when the rates were at their lowest and values near the bottom? Sure. But were you ready to buy then? Probably not. The main thing to remember is that you should buy a home when you can afford it, you have your financing and you’ve found a home that meets your needs. That will always be the best time to buy.

Home buying is a journey

Despite how quickly the world works today, you can’t force a home purchase. It’s not like buying a television or a laptop. A home is a much more expensive and complicated purchase. It’s where you can feel safe and calm from the outside world, a place you can customize to your needs, and where you will make lasting memories. Because of this, buying a home comes with emotional and practical implications on top of the financial ones. Remember that a home is your place to live first and an investment second. Take the time you need to find the right home.

Don’t be driven by data

If you watch the nightly news or read news online, you’ll hear real estate market predictions and numbers on a national level. And at any given time, you’ll likely get conflicting real estate forecasts. A lot of information and data will come at you from many different angles — including social media. Don’t take anything to be an absolute. Keep your own goals and needs top of mind at all times.

Real estate is local

The national real estate news headlines may be about multiple offers and bidding wars. But that situation may only be relevant to one part of the country or even to just a handful of cities. Meanwhile, the neighborhood where you want to buy a home still has distressed sales and is more of a buyers’ market.

All that really matters in real estate is what’s happening in your own community. If you’re interested in getting into the market, follow the local economy and housing markets. Go to open houses and learn. Get connected to a real estate agent who has “feet on the street.”

Go with your gut

You know your financial situation better than anyone. You know your down payment amount, credit score, amount of savings and the upper limits of what you can afford to put toward homeownership every month. Apply what you know about your finances to your local real estate market. You know the neighborhoods, the commercial districts and the types of homes for sale. By merging these two, your gut will inform you on what’s a good buy, when it’s the right time to buy and how to approach a purchase.

In 2014, stay focused on what you know, stay local, take your time and don’t let outside forces sway your decision to buy a home. People have bought and sold homes for years, at higher prices and with higher interest rates. If you’re in it for the long haul, consider yourself at mile 3 of a 26-mile marathon.

Related:

 

Money Saving Strategies for Home Buyers…

Homebuying: Money-Saving Strategies at Time of Purchase

By AJ Smith



For nearly all of us, buying a homerepresents one of the biggest financial transactions of our lifetime. There's really nothing that compares to buying a home, since not only do we have to put up thousands of dollars of our own money but we also (usually) have to borrow much more than that.

There's really no getting around the fact that buying a home is expensive. It takes a lot of financial discipline to save up a down payment and make the monthly payments.



Along the way, there are bound to be problems that eat into your savings. Everything from a new roof to a broken water heater is going to cost you. (Of course, renting can also have costly surprises such as escalating rent and being forced to move.) While there's not a whole lot you can do about some of the costs of buying a home, there are ways to reduce your out-of-pocket costs.



Do You Really Need a 20 Percent Down Payment?: You may have heard that the standarddown payment is 20 percent. But it's possible to get a mortgage with little or nothing down. The best known of the low-down-payment options is backed by the Federal Housing Administration. The 3.5 percent down payment on an FHA loan requires you to pay a mortgage insurance premium every month along with your house payment. Obviously, your monthly payment will be higher with an FHA loan since you're borrowing more money but it might still make sense for you.



Shop Around for Your Mortgage: One of the easiest ways to cut costs when buying a home is by finding a low-interest loan. Get quotes from big banks, online banks and credit unions so that you can compare their fees and interest rates.



Some banks like to "massage" their annual percentage rates so that their rates seem lower than they are. Make sure that you compare the Good Faith Estimate given to you by each bank. One thing to note is that you are allowed to get as many quotes as you want within a three-week period. Normally, each quote would be a separate credit check, but when you're shopping for a mortgage, multiple quotes are considered only one inquiry on your credit reports.



Negotiate With the Seller: If you're looking to get a portion or even all of your closing costs covered, then negotiating with the seller is your best bet. Depending on the state of the real estate market in your area, you could ask for more or less. If the real estate market is struggling or the property in question has been on the market for an extended period of time you may be able to get the seller to cover all of your closing costs.

FHA to lower maximum mortgage amount next year…

FHA to lower maximum mortgage amount next year

 

Published: Monday, Dec. 9, 2013

The federal government announced Friday it's lowering home loan limits in many areas across the country next year.

The change takes effect Jan. 1, the U.S. Department of Housing and Urban Developmentsaid.

"As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play," Federal Housing Administration Commissioner Carol Galante said in a statement. "Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved."

FHA loans, with their low down payments, are popular with first-time homebuyers.

"Anything you do to make it harder for people to get loans is going to have an impact on the marketplace," said Jim Heidisch, a broker in Pompano Beach, Fla.

Roughly 650 counties nationwide will see lower limits, according to HUD, which oversees FHA. The higher limits were part of the 2008 economic stimulus package designed to help the country during the Great Recession.

HUD said the lower limits were meant to take effect in 2009, but Congress delayed implementation because of the ongoing lending crisis.

 

 

Home Prices Rise Overall but Some Areas Decline…

Home Prices Rise Overall, but Some Areas Seeing Sharp Declines

Home prices rose again nationally in September Lender Processing Services (LPS) said today, but in many areas, notably a lot of the older mill towns in the Northeast, prices are still declining, in some cases sharply.  LPS's Home Price Index (HPI) was up 0.2 percent from August to $232,000 and has risen 8.2 percent since the beginning of the year and 9.0 percent since September 2012. 

Nationally the HPI has climbed back to within 14.1 percent of the peak level reached in June of 2006 when the index was at $270,000.  In many states however, such as Florida (-35.1 percent) and even, despite its recent unprecedented gains, California (-25.3 percent) prices have far from fully recovered.  

LPS derives its data from residential real estate transactions and its own property and loan-level data bases.  The HPI is the result of a repeat sales analysis representing the price of non-distressed properties by taking into account price discounts for bank-owned real estate and short sales.

Five states had increases in their HPI of half a percent or more from August to September, Nevada was up 0.8 percent, Georgia and South Carolina increased by 0.7 percent and both Florida and Illinois were up 0.5 percent.  The largest month-over-month declines were in Connecticut (-0.9 percent), New Hampshire (-0.6 percent), Massachusetts (-0.5 percent) and Colorado and Pennsylvania each of which declined 0.4 percent. 

Colorado along with Texas established new peak prices in July but while Texas has gone on to even higher HPI levels and established another peak in September, Colorado has declined every month since.  The state is now down 0.7 percent from its recent peak.

The biggest price gains among metropolitan areas were almost all in the south.  Myrtle Beach, South Carolina gained 1 percentage point in September followed by Charleston South Carolina, Atlanta, and Miami with 9 percent increases.  There were five metro areas that were up 0.8 percent, Naples, Florida, Reno and Las Vegas, Ocean Pines, Maryland; and Key West. Austin, Texas gained 0.6 percent and established a new peak price at $241,000.

The big losers were mostly in New England.  Torrington (-1.0 percent), Bridgeport (-0.9 percent), and Norwich (-0.9 percent), Connecticut were followed by Springfield, Massachusetts and New Haven, down 0.8 percent.  York, Pennsylvania and Kennewick, Washington, down 0.7 percent.   Worcester, Massachusetts and Manchester, New Hampshire each lost 0.6 percent in value from September.  Denver, which had, along with Colorado, set a new peak in July is now off that peak by 0.8 percent after falling half a point in September.