What Makes A House A Home?

We frequently talk about why it makes sense to buy a home financially, but more often than not the emotional reasons are the more powerful or compelling ones.

No matter what shape or size your living space is, the concept and feeling of a home can mean different things to different people. Whether it’s a certain scent or a favorite chair, the emotional reasons why we choose to buy our own homes are typically more important to us than the financial ones.

1. Owning your home offers stability to start and raise a family

From the best neighborhoods to the best school districts, even those without children at the time of purchase may have this in the back of their minds as a major reason for choosing the location of the home that they purchase.

2. There’s no place like home

Owning your own home offers you not only safety and security, but also a comfortable place that allows you to relax after a long day!

3. You have more space for you and your family

Whether your family is expanding, an older family member is moving in, or you need to have a large backyard for your pets, you can take all this into consideration when buying your dream home!

4. You have control over renovations, updates, and style

Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit for your apartment building? Or maybe you want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t do all of these things in your own home?

Bottom Line

Whether you are a first-time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a home.

5 Reasons To Sell This Winter!

Here are five reasons listing your home for sale this winter makes sense.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.

Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.

The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the time to close a loan has dropped to 46 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own!

Prices are projected to appreciate by 4.8% over the next year according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

5. It’s Time to Move on With Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Don't get caught in the rental trap in 2019

Every year around this time, we take time to reflect and plan for next year. If you are renting your current home but have dreams of homeownership, your plan for the new year may include buying, and you wouldn’t be alone!

According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on buying in the next 5 years, with 38% planning to buy in the next 2 years!

When those same renters were asked why they disliked renting, 52% said that rising rental costs were their top reason, and 42% of renters believe that their rent will rise every year. The full results of the survey can be seen below:

It’s no wonder that rising rental costs came in as the top answer! The median asking rent price has risen steadily over the last 30 years, as you can see below!

There is a long-standing rule that a household should not spend more than 28% of its income on housing expenses. With nearly half of renters (48%) surveyed already spending more than that, and with their rents likely to rise again… why are they renting?

When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44%) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20% down payment is required to buy a home.”

If the majority of those who believe they haven’t saved a large enough down payment believe that they need 20% down to buy, that means a large number of renters may be able to buy now!

Bottom Line

If you are one of the many renters who is fed up with rising rents but may be confused about what is required to buy in today’s market, contact a local real estate professional who can help you on your path to homeownership.

California Passes Solar Panel Requirement on New Homes

Starting in 2020, all new homes constructed in California will be required to have between 2 kilowatts and 3 kilowatts of electricity sourced directly from solar panels. State legislators, whom have been considering such a measure for some time, officially voted recently to amend state building codes. Other states are watching how the change plays out and may want to follow suit, California officials have said. “These provisions really are historic and will be a beacon of light for the rest of the country,” says Kent Sasaki, chair of the California Building Standards Commission. “It’s the beginning of substantial improvement in how we produce energy and reduce consumption of fossil fuels.”

The new mandate, however, won’t be cheap to homeowners. The upfront costs of installing typical solar panels ranges from $8,000 to $12,000. The timing of the move also worries residents who lost their homes in recent wildfires in California because the mandate will add to their rebuilding costs. “With median home prices in California already more than double the national average, this decision will make it even more difficult for the average Californian to afford a home,” California Assemblyman James Gallagher wrote in a recent letter to the Building Standards Commission.

But the commission says the extra costs, which will be applied to a homeowner’s mortgage, should be minimal over the life of the loan. In the case of a 30-year fixed rate mortgage, the additional cost amounts to an extra $40 per month—but the savings in monthly utility charges could be around $80 per month. The commission also says homeowners can lease solar panels instead of buying them up front.

Source: 

“California Has Become the First State to Require Solar Panels on New Homes,” TechSpot.com (Dec. 9. 2018)

The #1 Reason To Not Wait Until Spring To Sell Your House

Many sellers believe that spring is the best time to place their homes on the market because buyer demand traditionally increases at that time of year, but what they don’t realize is that if every homeowner believes the same thing, then that is when they will have the most competition!

The #1 Reason to List Your Home in the Winter Months is Less Competition!

Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months’ supply of listings from the National Association of Realtors.

As you can see, the ‘sweet spot’ to list your home for the most exposure naturally occurs in the late fall and winter months (November – February). 

Temperatures aren’t the only thing that heats up in the spring – so do listings!

In 2017, listings increased by nearly half a million houses from December to June. Don’t wait for these listings to come to market before you decide to list your house.

Added Bonus: Only Serious Buyers Are Out in the Winter

At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers.’ The lookers are at the mall or online doing their holiday shopping.

Bottom Line

If you have been debating whether or not to sell your home and are curious about market conditions in your area, talk with a local real estate professional who can help you decide the best time to list your house for sale.

Where Are Home Values Headed Over The Next Few Years?

There are many questions about where home prices will be next year as well as where they may be headed over the next several years to come. We have gathered the most reliable sources to help answer these questions:

The Home Price Expectation Survey – A survey of over 100 market analysts, real estate experts, and economists conducted by Pulsenomics each quarter.

Zelman & Associates – The firm leverages unparalleled housing market expertise, extensive surveys of industry executives, and rigorous financial analysis to deliver proprietary research and advice to leading global institutional investors and senior-level company executives.

Mortgage Bankers Association (MBA) – As the leading advocate for the real estate finance industry, the MBA enables members to successfully deliver fair, sustainable, and responsible real estate financing within ever-changing business environments.

Freddie Mac – An organization whose mission is to provide liquidity, stability, and affordability to the U.S. housing market in all economic conditions extending to all communities from coast to coast.

The National Association of Realtors (NAR) – The largest association of real estate professionals in the world.

Fannie Mae – A leading source of financing for mortgage lenders, providing access to affordable mortgage financing in all markets always.

Here are their projections of prices going forward:

Bottom Line

Every source sees home prices continuing to appreciate – just at lower percentages as we move through the next several years.

The Home Selling Process

The home selling process requires knowing how to advertise, market, review contracts, negotiate, understand laws, and what escrow entails. Seems like a lot to learn. That’s why we wrote this helpful guide.

Your home selling process includes these 14 steps:

1. Get Your Finances in Order

Contact your mortgage lender to find out about any penalties for paying off your mortgage early.

If you plan to purchase a new home, inquire about the types of mortgages available for you. 

2. Choose a Realtor®

What’s the difference between a Realtor® and a real estate agent? A real estate agent is anyone who earns a state real estate license. A Realtor® is a real estate agent who joins the National Association of Realtors® and must uphold the association standards and its Code of Ethics. 

Knowledge, ethics, skill, and access to modern real estate selling tools combine to make your Realtor® the best at obtaining the highest sales price for your home.

Choose a Realtor® experienced with selling homes, knows your neighborhood and its market, who you trust.

3. Get Your Home Ready

Prior to listing your property for sale, prepare your home for buyers. Think about strangers viewing your home and how to make a positive first impression. Hide the clutter, tidy up the front and rear yards, and fix any eye sores.

You only get one chance around 5 seconds for your home to make a great first impression, so make it count.

4. List Your Home For Sale

Your Realtor® advises you regarding the best sales price based on recent comparable sales in your neighborhood and market conditions. Your listing agent prepares a Comparative Market Analysis (CMA) report to assist you with deciding the sales price. The CMA takes emotions out of the sales price by providing neutral facts based on current market conditions.

Overpriced listings simply do not sell, realistic expectations sell.

Another advantage with using a Realtor® is the power of the Multiple Listing Service (MLS) which advertises your home to every local real estate agent. A further benefit of the MLS allows agents to cooperate with selling your home by splitting the total commission between them.

To a real estate agent, 50% of a commission trumps 100% of nothing if the home never sells.

5. Marketing Your Home

Getting your home into the local MLS is just the first step in your agent’s marketing plan. The next step involves coming up with advertising words based on the best features of your home. Expect a full blown advertising and marketing campaign to get your home sold fast. How and where to advertise your home becomes the essence of your Realtors® marketing plan.

Hiring a professional virtual tour company to take high quality photos and video of your home inside and out enables a virtual online tour for potential buyers. Saturate online social media platforms with descriptions, photos, and videos of your home.

6. Open House

Letting your Realtor® install a lockbox so other agents can view and show buyers your home (after making an appointment) increases the chances for a sale.

Prepare for an open house which is a formal previewing for other agents and potential buyers. An open house showcases your home. Your Realtor® can advise you how to make your home shine.

In addition, your Realtor® gets an opportunity to receive valuable feedback from agents and buyers regarding your home’s condition and price.

7. Reviewing and Negotiating Buyers Offers

Depending upon market conditions, if your home is priced right expect multiple offers. Don’t take really low offers personally. Try to negotiate all of them with a counteroffer. Don’t be shy about making a full-price counteroffer when your price is fair and competitive.

If you don’t already have your replacement home lined up, make your counteroffer contingent on your buying a home before closing your sale. 

If the buyer’s offer is contingent on selling his or her home before closing on your sale, include a “kickout” clause or right of first refusal against such a contingency.

8. Open Escrow

Once you reach an agreement with a buyer and sign a purchase agreement, it’s time to open escrow and order a title policy.

An escrow company is a neutral third party authorized by the state to collect the buyer’s earnest money and hold it in escrow until the sale completes. The escrow company coordinates with you, the buyer, the agents, lender, and other necessary parties to complete their responsibilities under the purchase agreement.

9. Appraiser Appointment

The buyer’s mortgage lender will require an appraisal to determine the true value of your home, called an appraisal value.

The appraiser schedules an appointment to inspect your home. Prior to the appointment, clean your entire home and hide the clutter.

If you receive a low appraisal, talk to your Realtor® about alternatives.

By law, since the buyer’s lender paid for the appraisal, you are not entitled to receive a copy. However, if the buyer attempts to cancel the sale because of the appraisal, ask your lawyer or Realtor® about how to access the appraisal.

10. Home Inspection

Besides an appraisal, the buyer hires a professional home inspector to view your entire property. Ask your Realtor® for a copy of a home inspection checklist in advance of the inspection to know what things the inspector looks at. This helps you with preparing areas like the attic, basement, and garage for the inspection.

A few days before closing, be prepared for a final walk-through inspection with the buyer.

11. Seller Required Inspections

Your purchase agreement may require a roof inspection and/or a state required termite or other pest inspections. as the seller, you pay for them. 

12. Seller Disclosures

The law requires that if you know of any material facts which impair the value of your home, you must disclose them.

U.S. homes must provide lead-based paint disclosures. Homes built after 1978 probably won’t have any, but the disclosure form is still required.

If you belong to a homeowner’s association, additional documents may be required such as the Covenants, Conditions & Restrictions (CC&Rs) which the association can provide you.

13. California Disclosure Requirements

California disclosure laws requires every home seller to provide written disclosure about the condition of the home (Section 1102 California Civil Code). The law protects home buyers by making sellers inform them of any potential repairs or upgrades that the home needs.

While the law does not specify when the disclosures must be made, real estate professionals recommend as soon as possible. Some sellers prepare their disclosures when the home is listed so prospective buyers can receive them right away. Other sellers wait until a buyer submits an offer.

The official disclosure form called the “Transfer Disclosure Statement” (TDS). Your Realtor® can provide you with a copy, or the California Association of Realtors provides one online by Clicking Here.

In addition, California home sellers must submit another disclosure form called the “Natural Hazard Disclosure Report/Statement” before the home sale closes. Again, your Realtor® can provide you with a copy, or you can download one online here 

14. Escrow Closes

Finally, the home selling process concludes when escrow closes.

When the buyer’s loan is approved, the funds go to the escrow company who pays you. In return of payment, you provide a signed and notarized deed transferring ownership to the buyer. Once the deed is recorded with the appropriate government agency, the sale closes.

Steven Rich, MBA – Guest Blogger