Do Open Houses work…Or are they a waste of time?

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There are definite reasons to hold open houses, and reasons to not. Read more to evaluate your best course of action!

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When you hire a real estate agent to sell your home, one of the first things they’ll suggest is hosting an open house so that potential buyers can casually check out your property on a weekend afternoon. But while open houses are promoted by agents as a great way of finding a buyer, a US study by the National Association of Realtors (NAR) found that the success rate of open houses is a mere 2% to 4%. Similar studies in other countries have mirrored these results.

That means out of 100 open houses, only 2 to 4 homes are purchased by buyers who came through the open house. Of course, the vast majority of open houses are not conducted well, and many are unnecessary. Out of 100 open houses, perhaps only 20 are done correctly. 

They’re held at the wrong times, wrong days of the week, wrong times of the year. They are not marketed effectively, the homes are not prepared, and the agents are unskilled at communicating value to potential buyers. Eliminating the 80 useless open houses would make the purchase percentages look more like 10% to 20% of homes being sold on open house. In other words, the chances of selling your house based on an open house are higher if the open house is done well, according to best practices. 

Consumer sentiment about open houses has waxed and waned over the years, along with the ups and downs of the real estate market. In 1995, 41% of sellers tried open houses to sell their homes, according to data from NAR. By 2000, it had dropped to 28%. Beginning in 2003, however, as the market started to heat up again, that number began rising. By 2014, 51% of all sellers were using open houses, though not all agreed they were effective. 

Some 45% of sellers have recently found open houses only “somewhat useful” and another 12% didn’t consider them useful at all, according to the NAR. This is survey data, so there is no evaluation of what those sellers meant by “useful” and “somewhat useful.”

So with all the sketchy data, why do real estate agents still promote open houses as a listing and selling tool? Let’s look at a few arguments for and against open houses, and explore the pros and cons.

Reasons not to hold an Open House

There are many people—agents and consumers—who argue against open houses. Some sellers just don’t like the idea of random people and neighborhood “lookie-loos” traipsing through their house. Some are concerned about theft. 

Some agents are concerned about their own safety when holding an open house, especially in out-of-the-way locations. Some agents consider it a waste of their time, based on the low potential results…they’d rather be managing other aspects of their business (or golfing) during that time. 

One of the main arguments used by sellers and the general public against open houses is that agents only use them to find buyers that they’ll take away to other houses. 

But this is not necessarily a bad thing. Real estate is a community product and selling it is a community event. Buyers may meet an agent at your open house, then go buy another house…but another buyer somewhere is meeting another agent at another open house, and that agent is bringing the buyer to your house. 

Open houses bring buyers out. By having an open house, you’re contributing to the overall health of the industry. As many as 45% of buyers use open houses to research the market. Many go to open houses, then discover they like the neighborhood and look for other homes in that area with their agent. Your house might be one of their “test” houses, or it may be one that they decide to buy because of another person’s open house in your neighborhood. It’s a network.

Reasons to Hold an open house

In addition to being part of a network of buyers and home sellers, consider these five additional reasons to hold an open house:

  1. Get “shoppers” out of the way

A lot of buyers will want to see your house as soon as it’s listed. You can quickly become overwhelmed by the repeated appointment requests. Showing your home is disruptive and quickly becomes annoying. Having to keep the place clean and be ready to vacate on the spur of the moment may seem fine for the first two days or so, but you’ll quickly lose patience. 

A better approach would be to take a day trip away from your home on the first weekend of your listing and let your agent hold an open house. 

Your agent can get a ton of those early “shoppers” through your house at one time, rather than bothering you with appointment after appointment. Most of those buyers (99.9%) will eliminate your house as an option during the open house. Some will want to view it again. And some very small percentage may want to make an offer. But the biggest reason to hold the initial open house is to get the lookie-loos and initial round of buyers out of the way. They’re just shopping, not buying.

You may want to ask your agent to hold the house open on both Saturday and Sunday of that first weekend. By doing a “new listing” open house, you won’t eliminate all appointments (some people can’t come during the open house time), but a large percentage will come during the open, and that means those people won’t be bothering you during the week to set appointments.

  1. Create an “auction effect”

There is a principle in psychology called scarcity – it’s the desire that’s in all of us to want to get something valuable before someone else does. For instance, have you ever heard of a situation where more than one person was interested in a house? In those situations, there was a bidding war, where several buyers competed for the same house. In most cases like this, the house sold for more than the owners were asking – and the buyers felt great about it because they won. Someone else wanted the house, but they got it first!

Situations like this are called the auction effect. Your agent can orchestrate a sense of scarcity using an open house as the centerpiece of a plan to generate a lot of interest very quickly.  Again, this is best done at the start of the listing period, or at a significant price reduction if the house hasn’t sold yet.

  1. Raise the profile of a community

While open houses may be declining in many parts of the country, some neighborhoods are finding them effective ways to raise the profile of an entire community, if a number of open houses are all done at the same time. 

Recently, four neighborhoods in the Lemon Grove area of San Diego teamed up for a joint open house with 25 of the area’s homes open for viewing on a single day. The result was that the entire area saw a spike in sales of 20%.

4. Get valuable feedback

A new listing open house is a great time to get feedback on the property. Information is valuable. Your agent should be asking things like, “How does this house compare to others you’ve been seeing?” “What do you like about the home?” “What would prevent you from making an offer?” Your agent can use different techniques to gather feedback, such as surveys, direct conversation, feedback forms, etc. 

It’s very important that you then take that information to heart. If you keep hearing the same messages over and over again, then those things are real. Those are the very things MAY prevent your home from selling for as much as you’d like, or as quickly as you like. It doesn’t hurt to listen and then have an open-minded discussion with your agent about how to remedy those issues.

Contrary to popular opinion, most agents are not trying to keep your house price artificially low in order to move it out of inventory and get paid faster. Most agents will just tell you the truth, and back it up with evidence, including comments by buyers. 

  1. Showcase a unique property

In some cases, a house is just too unique to market without an open house.  Art professor Mercedes Teixido and her husband had three open houses in six weeks showcasing their Pasadena, California home. Their house, they say, was the kind you had to see to believe. “It had a unique sensibility,” Teixido said, with spacious rooms and a large amount of built-in furniture that was crafted by hand. Sometimes you have to get people into a house in order to get them to fall in love with it. Many houses in less desirable locations have sold because someone went inside on an open house and fell in love with it.

Final Word

When you hire us to represent you in the sale of your home, we’ll discuss the pros and the cons to having open houses as part of your marketing plan.

We’ll let you know what’s happening in the market—whether open houses are effective right now or not—and whether your house would benefit from open houses, given its style, price, and location.

Please call to set a listing appointment, if possible at least 2 months before your planned move. Kevin and Jennifer Hanley, REALTORS http://www.HanleyHomeTeam.com Keller Williams Realty Atlantic Partners Southside

7 WAYS HOME BUYERS LOSE MONEY BEFORE THEY EVEN BUY A HOME

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A MORTGAGE IS THE BIGGEST DEBT MOST OF US WILL EVER HAVE. BECAUSE THE NUMBERS ARE SO BIG, THOUSANDS OF DOLLARS (OR POUNDS, SHEKELS, OR OTHER MONETARY SYMBOLS) CAN SLIP AWAY WITHOUT A BORROWER EVER NOTICING. HERE ARE 7 MONEY-DRAINING CRACKS THAT HOME BUYERS NEED THINK ABOUT.

1. Ignoring the true cost of home ownership

Owning a home comes with new expenses that surprise many buyers. Even experienced home owners can forget how much it costs to upgrade a home, improve outdated features, and fix hidden problems. It’s wise to take these costs into consideration before signing on the dotted line.

Before purchasing, calculate realistically what you’ll need to spend to get the home up to your standard. In some cases, you may be better off paying more for a home that’s already been upgraded than paying for a cheaper home that needs more work. 

On the other hand, if you are struggling to make a down payment on a more expensive home, then buying cheaper and putting money into it over time and using your own sweat (“sweat equity”) might offset the higher down payment you would have had to make on the more expensive home. 

A 20% down payment on a $300,000 is $60,000. If you can’t afford that, consider buying a nearby fixer-upper. That home might only cost $225,000, with a down payment of $45,000. The extra $15,000 might be enough for you to do many upgrades that would bring it close to the standard of the more expensive home, but you won’t need to come up with that extra $15,000 up front. This might be a good investment option—as long as you go into it with eyes wide open…along with a really good home inspection.

Ongoing Maintenance

The longer you own a home, the more you’ll want or need to make expensive fixes. A new roof may be in your future, as well as repairs to a cracked driveway or installation of a new fence. Some items can sneak up on you, like tree removal service, a broken water main, and termites!

As a rule of thumb, budget 1 to 2% of your home’s purchase price annually for maintenance. If your home will cost you $250,000, expect to spend $2,500 to $5,000 annually on unglamorous purchases like a new water heater or having your furnace serviced. The older your home and the larger it is, the more you’ll spend. 

Also consider a savings fund for big ticket items. If your roof has a life expectancy of 5 years, start putting aside a little each month now.

2. Becoming house poor

There are many places in your life where you’ll need to put money besides your house. Replacing a worn-out car. Saving for retirement. Building a college fund for the kids. Life-altering vacations. Even buying furniture for your home. If you’re spending too much on a mortgage, you won’t have money for these other investments.

A general rule for housing affordability is to spend no more than 28% of your gross income on a mortgage. So, if you earn $75,000 a year, you should spend no more than $1,750 a month on payments, including insurance premiums and association fees. You can use a mortgage calculator to see how much house you can buy for the amount you can afford monthly, and how much down payment money you’ll need.

3. Not shopping around for loans

While it may seem to the average consumer that all mortgage loans are alike, and a loan broker may not even offer any options, the truth is that you do have options. You may be more or less qualified for some kinds of loans that offer better rates or terms. A military veteran’s loan is a good example of this, offering a zero down payment for some people. There are also loans for teachers and other job types, and loans for buying in certain areas.

Aside from special loans, your standard loans also come with different price tags…

According to Sergei Kulaev on the website, Consumer Financial Protection Bureau, “Our research showed that a borrower taking out a 30-year fixed rate conventional loan could get rates that vary by more than half a percent. Getting an interest rate of 4.0% instead of 4.5% translates into approximately $60 savings per month. Over the first five years, you would save about $3,500 in mortgage payments. In addition, the lower interest rate means that you’d pay off an additional $1,400 in principal in the first five years, while making lower payments.”

To compare prices, you can use one of many websites that allow you to request bids from mortgage brokers. One broker may know of a special loan that another doesn’t know about, and all may have different fees. The fees and interest rate differences between these loans can be huge, especially over the life of the loan. 

You can also compare loans by calling different loan brokers personally. Be sure to include one or two bank lenders and credit unions on your list. Many of these bankers have in-house loans that might be better than another company’s loans. 

4. Ignoring the APR

Some lenders advertise low interest rates but make up for the low rates with high up-front fees. If you were to spread the cost of those fees out over the life of your loan, you might discover that your effective interest rate is actually higher than you could have gotten with another mortgage. Sometimes a lower rate loan has a higher “effective” APR…making your loan more expensive over time.

APR means Average Percentage Rate and includes all the fees as though spread over the life of the loan. For instance, imagine a $100,000 30-year fixed-rate loan with an interest rate of 3.85%. Now imagine the lender charges two points (a 2% buy-down of the interest rate), a 1% origination fee, and $1,500 in other closing costs. That brings the “real” interest rate from 3.85% to 4.215% APR.

Next, imagine a $100,000 loan at 4.05%, but with no points (no buy-down), a 1% origination fee, and just $800 in other closing costs. That loan’s “real” rate is 4.199% APR.

The first loan looks cheaper on the surface, but it’s really more expensive. The difference may only amount to $10 or $11 per year, but that’s your money, year after year. If you paid your mortgage for 30 years, you would pay an additional $3,650. That’s money you could have in your hand at the end to pay off another bill, put into your retirement account, or take a vacation!

Of course, if you plan to sell in 5 years, the extra $50 might not matter to you, in exchange for working with a broker you like, or someone more willing to give you a loan based on your credit rating.

5. Making a small down-payment

Most loan programs require a 20% down payment to get the best rates and avoid paying mortgage insurance — an extra cost that typically adds $100 or more to your monthly payments! You want to avoid paying that extra premium if possible. It goes away after the home’s value rises to more than 20% of the loan value, but until that time, you could be paying an extra $100 per month for many years, with nothing to show for it.

If you can’t afford 20% down, consider three things:

  1. Maybe you should wait until you’ve saved up enough down payment.
  2. Maybe you should buy a cheaper home, where you have a 20% down payment.
  3. Maybe you can put 15% down…that will help.
  4. If you have to buy now and pay the mortgage insurance premium, but you plan to make renovations, consider getting a reassessment of value as soon as possible. Ask the lender how soon you can do that…some loans won’t reassess under two years, leaving you stuck with $2,400 in extra payments! 

6. Not checking and fixing credit reports

Checking your credit report should be a part of your annual financial health checkup anyway, but when you are about to apply for a mortgage, it’s extra-important. Why? Because credit rating equals interest rate. 

A low or poor credit rating will result directly in higher interest rates and higher monthly payments. The worse your credit, the higher the rate. Conversely, a lower rate might mean you can buy a more expensive (nicer) house. 

But many credit reports make mistakes. Sometimes it may be a legitimate financial shortcoming on your part, but one that you “fixed” a long time ago, such as an unpaid library bill. It should have been removed from your report, but lingers. You have a right in most countries to contest that item and have it removed. Then have your credit rating rebalanced. 

Doing this can mean the difference of many thousands of dollars, and even determine whether or not you get the home of your dreams.

Also, keep an eye on your credit usage. A high credit usage will cause lenders to be concerned that you are over-extending yourself. Lower credit usage demonstrates wise or controlled spending, which they like. However, don’t pay off or close your credit lines entirely. Keeping some credit also demonstrates credit-worthiness more than keeping no credit at all.

7. Not waiting until you’re more financially stable

As alluded to earlier, sometimes a buyer just needs to wait until they have more money before buying a home. 

Down Payment—Coming up with a 20% down payment can be financially wise. It will result in less to pay off, and a lower monthly payment, and it will save on the mortgage insurance premium. It can be hard to wait, to delay gratification, but it can make a huge difference over the years to come.  

Quality of Life—Also, making sure there is enough income to afford the maintenance, and be able to enjoy life besides, are strong reasons to plan long term for a home purchase. 

Balance of Interests—However, there are legitimate reasons to buy a house, even if it stretches you financially. If it seems that house values are rising fast, or you’re able to score a great deal, or you need to purchase for another personal reason, then you may be better off jumping now, rather than waiting for the perfect financial picture.

Contact me for smart home buyer representation BEFORE YOU START HOUSE HUNTING! WE’LL HELP YOU AVOID SOME OF THE HIDDEN EXPENSES.  Simply reach out to Kevin and Jennifer Hanley, REALTORS The Hanley Home Team of Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com Team@HanleyHomeTeam.com

Home Flipping Hits 14-Year High

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While the real estate market in general is adapting to new challenges and market conditions, one segment of the market is going strong. Home flipping is boasting its best numbers in 14 years.

The newly released first-quarter 2020 U.S. Home Flipping Report from ATTOM Data Solutions shows that “53,705 single-family homes and condominiums in the United States were flipped in the first quarter. That number represented 7.5 percent of all home sales in the nation during the quarter, up from 6.3 percent in the fourth quarter of 2019 and from 7.3 percent in the first quarter of last year.” Those are the highest numbers since the second quarter of 2006.

The gross profit for home flips across the country also rose over the same time period, to $62,300. “That was up slightly from $62,000 in the fourth quarter of 2019 and from $60,675 in the first quarter of last year,” the report said.

If you’re looking to get in on the flipping trend, here are a few insights:

  • You don’t need to buy a million-dollar fixer. “Homes flipped in the first quarter of 2020 were sold for a median price of $232,000.”
  • Profits will be larger where the home prices are higher. “The highest first-quarter 2020 profits, measured in dollars, were concentrated in the West and Northeast. Among metro areas with enough data to analyze, 13 of the top 15 were in the those regions, led by San Francisco, CA (gross profit of $171,000); San Jose, CA ($165,000); Los Angeles, CA ($145,000); New York, NY ($141,899) and Honolulu, HI ($140,190).”
  • The lowest profits were generally in southern metro areas, such as “Springfield, MO ($20,203); Daphne, AL ($20,650); Raleigh, NC ($21,250) and Durham, NC ($25,000).”
  • Don’t think you have to turn the home around and sell it in 30 days. “The average time to flip nationwide is 174 days.”
  • You don’t need to pay cash upfront for the home, as the percentage of flipped homes purchased with financing in the first quarter of 2020 was 40.5 percent.

Need some advice on investing and flipping? Get in touch today!  Kevin and Jennifer Hanley, REALTORS – The Hanley Home Team of Keller Williams Realty Atlantic Partners Southside – 904-515-2479 http://www.HanleyHomeTeam.com Team@HanleyHomeTeam.com

Boost Your Home’s Value Ahead of Your Appraisal

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Painting TrimWhether you’re planning to sell or refinance, a home appraisal is a necessary step in determining the true value of your home. This means your home should be in the best possible condition, so it will be appraised at the highest potential value. While it may be tempting to swing for the fences with big-ticket renovations, there are smaller things you can do to efficiently raise the market value of your home.

Start Small with a Little Spackle
If you’ve lived in your home for any length of time, you’ve probably hung things on the walls, put up shelves, or simply had accidents that resulted in minor damage. Now is the time to repair those blemishes. Filling these holes and crevices with a little spackle and painting over the area will leave your walls looking like new. While this may not boost the value of your home, it will keep the appraiser from deducting for the damage.

As Long as You’re Painting…
After you’ve touched up your walls, you might want to consider freshening up the paint. Repainting worn trim and moldings around the home can give it a fresh look. Venture outside and touch up the trim around the windows and doors too. This will boost curb appeal and help you add value to the home. Any area where the paint is peeling, chipping, or simply has lost its luster should be retouched with a fresh coat.

Update Your Crawl Spaces
An upgrade that’s growing in popularity (and will grow your home value) is crawl space encapsulation. Crawl spaces are essential for providing homeowners and contractors with access to important systems of the home. However, these spaces are vulnerable to moisture and water damage caused by humidity and harsh weather conditions. In drier climates, dust and insects can interfere with HVAC systems. To protect crawl spaces, homeowners have started sealing these spaces with polyethylene barriers to keep out moisture, dust, and pests.

Do a Deep Clean
This is also the time to really clean your home from top to bottom. If you have young children and pets, there may be odors and damage that might not be noticeable to you, but strong odors and scuffed hardwood floors will be the first things your appraiser notices. Consider hiring professionals to wax the floors, shampoo the carpets, and conduct an intensive cleaning of the entire home.

Conduct Other Repairs
At some point, you should tour your home with the mindset of a home buyer. This will help you identify problems that you live with every day but just don’t notice anymore. Look for things that need to be repaired, such as a loose handrail, a leaky faucet, or a shorted electrical outlet. Repairing these problems ahead of time will ensure you won’t lose money on the appraisal.

By taking the time to spruce up the home ahead of the appraisal, you may be able to increase the value by thousands of dollars. The suggestions offered here should give you a head start, but if you have additional questions on how to add more value to your home, please don’t hesitate to reach out us – Kevin and Jennifer Hanley, REALTORS, The Hanley Home Team of Keller Williams Realty http://www.HanleyHomeTeam.com 904-515-2479

When Should You Stop Renting and Buy Your 1st Home?

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This choice often comes down to a financial decision: Can you afford what you want? But that’s not the whole story. There are more things to think about when trying to decide if it’s time to take your first real estate plunge.

Cost-Benefit Analysis is the term for figuring out if something is worthwhile doing or not. When you analyze a situation and decide that the benefits are greater than the cost, then you may want to go forward. Conversely, if the cost exceeds the benefits, you may decide to wait.

Sometimes when you weigh the benefits against the cost, the benefits are higher, but not high enough. In that case, you might want to increase the benefits or lower the cost before taking action. These are exactly the thoughts you should be having as you plan to buy your first home.

To help you weigh the benefits and costs of buying vs. renting, this report offers key elements to think through, including evaluating the monthly payments correctly, estimating home ownership costs, weighing location against price, evaluating purpose and home investment strategy, and improving credit and interest rate to decrease payments. 

The most important factor when thinking about buying is to not “panic buy.” Don’t jump in just because interest rates might rise or prices might rise. Buy when you are ready and don’t let the market dictate your timing.

What are the benefits of renting? 

  • One benefit is living in a property without having to spend great chunks of money to replace the roof or fix the plumbing. 
  • Another benefit is that you may be able to rent a type of home or in a location that you could never afford to buy. 
  • You have no stress or worry about maintenance. That’s the landlord’s job.
  • You can pick up and move without wondering if you can sell your house. 
  • If your income drops, you can rent somewhere less expensive. It’s a pain to move, but you won’t face a foreclosure or fire sale. 
  • If you are late with a payment, you can discuss it with the landlord. 
  • You probably won’t get a serious ding on your credit if you’re a month late. 
  • In many places, renting is the only option because there isn’t enough housing for sale, or the prices are beyond reach for the average mortal.

What are the costs of renting? 

The landlord charges you X amount and as long as you pay that amount, you get to live in that property. The cost is X. But there are other costs:

  • By renting, you lose the opportunity to build equity (the money you gain if you sell the property). So when you move, you move with no money in your pocket.
  • You lose the opportunity to pay off the house and eventually own it outright.
  • You lose the opportunity to put down permanent roots, do what you like to the property, and raise capital by getting a second mortgage or home equity loan.

What are the benefits of owning?

  • Build equity through rising values and making payments. 
  • Pay off the home and eventually have the security of owning outright. 
  • Be able to increase your wealth…by selling and profiting, by renting it to someone else, or by getting a home equity line to use the money in some other way.
  • Put down deep roots in the house and community.
  • Do what you want to the house…paint it orange and pink if you want (as long as you don’t live in a Planned Community or Condominium).

What are the costs of owning?

  • Monthly fixed and variable maintenance costs are significantly higher than renting.
  • Interest on your mortgage loan (which may be a tax deduction, so that may actually be a benefit)
  • Time involved in maintaining a home that would not be involved when renting.
  • Possible falling values making it harder to sell when you want to. 
  • Inability to work with the loan holder when you’re late with a payment.
  • Possibly higher monthly payments than would be with renting.
  • Possibly not being able to live in the community you want because you can’t afford to buy there.

Compare Costs and Benefits 

Here are several questions that will help you decide if it’s time to buy, or if you should keep renting.

What can you REALLY afford to pay each month?

Let’s look at an example. (This example uses US$.)

  • Suppose you feel that you can afford to comfortably pay $1,500/mo. in a mortgage payment. 
  • Now, imagine putting aside a little each month to pay for maintenance and improvement projects (painting, new roof, new kitchen, emergencies, etc). Let’s say 10% per month for homes in decent condition. That’s $150/month, based on your $1,500 comfort level.
  • Now, instead of paying $1,500/mo, you’re really looking at paying $1,500 + $150 = $1,650. Can you afford $1,650? If not, then you need to be looking at a monthly mortgage closer to $1,350.
  • That small difference in monthly payment can mean a difference of $30,000 in your purchase price, so it is important to calculate maintenance costs before buying. 

If you don’t include maintenance costs up front, then the costs will come from somewhere else after you buy—your vacation budget, your new car budget, etc. You could become what’s known as “house poor,” a term that means you have a house, but a lower quality lifestyle.

So before you buy, try to look at you monthly payments realistically, inclusive of your lifestyle goals.

What mortgage would you qualify for?

You may feel comfortable paying $1,500/mo, but the important question is ‘What loan amount will that qualify you for?’

Several factors go into determining what the lender will decide you can pay and what you can buy:

  • Your loan amount is based on your income, debt, and interest rate.
  • Your interest rate is determined based on your credit rating—which is based on your history of paying your debts, as well as the amount of overall debt you carry.
  • The interest rate you are given may mean a $20,000  to $40,000 difference in the price of home you can buy. 

So, although you feel comfortable paying, say $1,500/mo, the mortgage lender might say that based on your income, debt, and credit score, you really are more comfortable paying $1,400/mo.

And that means, instead of getting a mortgage for $239,000, you can only get a mortgage of $219,000.

So work with your mortgage professional, and go through the entire loan application process. Fill out the loan application. Provide the documentation. Yes, it’s arduous. But it’s the only way to get accurate figures, and get the coveted “pre-approval letter” that you need when buying a home.

Why do you really want to own a home?

Here are your choices: 1. Financial reasons.  2. Pride and roots reasons. Of course, it’s both for most people. As a first time buyer, you’re aware that ownership has financial benefits. And you also want to live in a place you love and put down roots.

 Unfortunately, for many home buyers, the price of a home in their desired location is too high for them. That means that first time buyers need to focus on the first choice: buying for financial reasons. 

Look at lower cost alternatives that allow you to build equity and eventually buy up into the area you want to put down roots. Here are a few ideas for first time buyers to make their first home a smart investment:

  • Buy a much smaller home or condominium near the
    area you want to live.
  • Buy a fixer-upper near where you want to live.
  • Buy a home in an area you don’t want to live. After a few years, decide to either keep it, and put a renter in it, perhaps using the equity to buy another home, or sell it and use the cash to move up.

Each choice has its own costs and benefits. With each choice, the goal is to increase equity so that you can sell and have a larger cash down payment on a home in your preferred location. Create a long-range plan. Then work towards that goal by increasing savings, building equity, and improving your income. And always, always work on reducing debt.

Is your rent low enough?

If you’re paying $1,000/mo in a $3,500/mo area, and you have a good landlord, maybe you’re better off investing in other things instead of buying a home. Or perhaps buying an investment home in a cheaper area. It is OK to not own the home you live in, if it makes financial and emotional sense not to. 

But be smart about it. Do the analysis. There are many factors involved in home ownership that may benefit you, such as rising values, interest rate deductions, and the potential to control an asset.

Using a Mortgage Calculator

Mortgage calculators should be used as guidelines only, as just another data point. Once you’re really serious about buying, the only truly accurate way to know what you can afford and what your payments will be is to go through a full pre-approval process with a mortgage professional. 

But until then, mortgage calculators can be a useful tool to help you see how adjustments in down payment, interest rate, and income can affect purchase power.  Just be dead sure that the estimate you get is includes Principle, Interest, Taxes, Insurance, and Extras charged on the loan, such as Private Mortgage Insurance. If you leave out any of these costs, you will be surprised when your mortgage professional shows you a figure lower than you thought.

 Calculators come in several varieties. Here are four calculator suggestions you can look up on Google. Use a calculator designed for your country.

1. House Price, Based on Payment

2. Payment, Based on House Price

3. Payment, Based on Income

4. Rent vs. Buy

Final word

As a first time buyer, you are swept up in the excitement of buying—the dream of owning. You look at homes online and imagine putting in your own garden, painting the baby’s room, and decorating the way you want. 

But you are smart. You know you’re making a financial decision, not simply an emotional one. You know the factors that go into deciding when to stop renting and buy a first home are complex.

There are no simple answers. But we’d like to leave you with this final word:

Don’t let fear of buying stop you from buying a home. There are plenty of professionals out there who can guide you through this decision and help you make a sound financial choice. If not me, then find a real estate consultant you trust to sit down with you and discuss the ideas presented in this report. Work with a mortgage professional to get accurate figures. 

We want you to know that I’m always available to you—or your friends and family—for a home buying consultation. And we want you to know that we’ll spend whatever time you need to answer your questions so you can make the right decision in your own time.

 Call to arrange a consultation appointment – Simply call 904-515-2479 OR email Team@HanleyHomeTeam.com Thank you! Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside

It’s True What You Hear! There’s Never Been a Better Time to Sell!

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home for sale illustration
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NAR: Pending Home Sales Soar 44.3% in May

The increase broke all records since NAR started tracking the sales. At May’s 99.6, the pending sales level was about equal to those in 2001. NAR’s economist calls it a “spectacular recovery for contract signings” and shows “the resiliency of American consumers.”

WASHINGTON – Pending home sales mounted a record comeback in May, seeing encouraging contract activity after two previous months of declines brought on by the coronavirus pandemic, according to the National Association of Realtors® (NAR). Every major region recorded an increase in month-over-month pending home sales transactions – and the South also experienced a year-over-year increase in pending transactions.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – rose 44.3% to 99.6 in May, chronicling the highest month-over-month gain in the index since NAR started the series in January 2001.

While the increase broke records, however, year-over-year, contract signings fell a slight 5.1%. An index of 100 is equal to the level of contract activity in 2001.

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” says Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

“More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun says. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

According to data from realtor.com, active listings were up by more than 10% in May compared to April in several metro areas.

“The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10% – even after missing the spring buying season due to the pandemic lockdown,” Yun says.

NAR now expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000.

“All figures light up in 2021 with positive GDP, employment, housing starts and home sales.” Yun says that in 2021, sales are forecast to rise to 5.35 million units for existing homes and 800,000 for new homes.

The month of May saw each of the four regional indices rise on a month-over-month basis after all were down in April 2020. The Northeast PHSI grew 44.4% to 61.5 in May, although it was still down 33.2% year-to-year. In the Midwest, the index rose 37.2% to 98.8, down 1.4% from May 2019.

Pending home sales in the South increased 43.3% to an index of 125.5 in May – a 1.9% increase year-to-year. The index in the West jumped 56.2% in May to 89.2, down 2.5% from a year ago.

© 2020 Florida Realtors®

The Mortgage Business Is Alive, Well, and Online

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With some segments of the economy tentatively reopening, many who are buying a home or refinancing an existing mortgage may be wondering how and where to get financing. The good news is, the loan process hasn’t changed much, and it can all be done online.

While some loan officers still prefer to meet their clients in person, more and more mortgage professionals are equipped to meet virtually and communicate by phone and video conference. Loan officers know many borrowers can’t take off work during the day in order to meet, so they tend to work on-demand, around their client’s schedules.

The rest can be done remotely as well. Clients can submit loan applications online, which are then reviewed at the mortgage office. The loan is then submitted to an online automated underwriting system, or AUS. The AUS then provides a list of all the items needed for a final approval.

Loan officers get their rates online. They order third party services like credit reports and appraisals online. For years, the mortgage industry has been moving toward a remote-ready model, so for many professionals in the sector this isn’t a ‘new’ normal. Just normal.

For those currently in the market for a loan, there’s no need to wait. The mortgage industry is alive and well. And online.

Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com

Has quarantine forced you to consider a split from your home?

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Has spending more time at home lately had you reconsidering your space? The quirks you lived with just a few months ago might not be so easy to dismiss when you’re stuck with them all day, every day. Here’s how to tell if your relationship with your house can recover or if it’s time to move on.

You have no appetite for a renovation
Your home might be a good candidate for a makeover, but if the thought of living in a dusty construction zone with contractors coming and going is unbearable to you, then it’s time to start over. There’s no shame in foregoing renovations for something move-in ready. After all, there will be plenty of eager DIYers happy to make you an offer.

You’re not crazy about your neighborhood
You know what they say: location, location, location. We’ll put up with a lot for our home to be in a nice spot, close to work and in a good school district. But maybe that spot doesn’t work for you anymore. Do schools still matter or are your kids older now? Are you working from home permanently and your commute is no longer a factor? When you’re no longer tied to a specific neighborhood, the possibilities are endless.

It’s just too small
If the quarantine has made your small space feel even more crowded, or you need to make space for a new home office (or two), it might be time to upgrade.

It’s too old
We all love a heritage home. The architecture! The charm! The 100-year-old… everything. You may have been ready for the sweat equity when you moved in, but when paired with everyday life, ‘this old house’ can feel more like ‘this new nightmare.’

If the emotional and financial toll of living in a home that is just too much of a project is getting to you, consider shopping for a new one. A new construction home might not give you the same character, but you will get a house that’s brand new in every way and a warranty to boot.

Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com

National Homeownership Month Has New Meaning This Year By Kerry Smith

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During the June celebration, Americans honor the benefits of ownership – yet many already have a new respect for homeownership after months of self-isolation.

ORLANDO, Fla. – June is National Homeownership Month, a time to celebrate the benefits of homeownership for families, neighborhoods and communities.

This year, however, many Americans already understand the importance of home as the nation slowly emerges from two months of self-isolation. Before the pandemic, home for many people was a source of operations – the place where they slept before leaving for work, school and exercise.

Suddenly, home is the safest place in the world, and many Americans’ attitudes about ownership have changed. Some renters look around and realize that the place they call home could be bigger or better. They want to paint the walls, change the flooring and own something that continues to rise in value over time.

For many Americans, however, homeownership is at risk. Owners who lost jobs due to COVID-19 may find themselves on a forbearance plan, while some of those renters who dream of ownership have been shut out by tightened credit restrictions and stay-at-home orders.

Still, Americans generally agree that homeownership is one of the best vehicles for building wealth. In 2019, overall home prices rose 4% year-to-year. And while the coronavirus has created issues for the American economy, home prices have continued to rise with demand still outstripping supply.

National Homeownership Month has changed over time. It started as a week-long celebration in the 1920s by local real estate associations and eventually became a month-long celebration created by the U.S. Department of Housing and Urban Development.

Americans can celebrate Homeownership Month by using #CreatingHome in their social media channels. But the best way to celebrate is to actually become a homeowner.

© 2020 Florida Realtors®

Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com

Your Essential Spring Lawn Care Guide

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Tired of looking out the window at your dull, dormant lawn? A little prep now will give you a green lawn all summer long.

garden grass meadow green

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Rake
First things first, gently rake leaves, twigs, and dead grass off your lawn, and remove snow mold if you live in colder climates. This allows air and sunlight to reach down to the grass roots. Avoid power-raking, as hacking away at the ground can damage shallow grasses and good soil.

Weed
Weeds like dandelions, hairy bittercress, common chickweed, and henbit go dormant in winter and re-emerge in the spring. For best results, pull as many weeds as possible by hand or use a hoe. Be sure to get the entire plant, roots and all. If you use a pre-emergent weed killer, make sure it’s a calm day. Wind can spread the chemicals onto plants you don’t want to kill and into waterways you don’t want to pollute.

Aerate
Aerating — making small holes in your soil — lets air, water and nutrients reach the roots of your lawn, encouraging healthy growth. On newer lawns (1-3 years old), aeration is encouraged twice a year, in the spring and fall. After that, you can switch to once a year in the spring. Don’t rake the plugs; leave them on the lawn as topsoil. Mow over them, and they will decompose naturally.

Overseed
Overseeding is the practice of spreading grass seed over your existing lawn. Cover bare and thinning patches of grass using a mix of seed that includes slow-growing and low-growing grasses — fine fescue or centipede grass, for example. Cool-season grasses such as bluegrass and annual ryegrass benefit the most from overseeding.

Water
Watering early in the morning prevents wasteful water evaporation and lets the grass blades dry before evening, which helps prevent insect and disease issues. Watering deeply and less frequently makes the roots stronger and deeper. Soil should be moistened to a depth of 6 inches a couple of times a week. Avoid overwatering, as soggy roots will rot and attract disease and insects. As a test, take an 8-inch screwdriver and push it into the lawn. If it goes in easily, your lawn is moist enough.

Fertilize
Fertilizer helps keep your lawn healthy, so it can resist disease and weeds. Grass often needs more nitrogen, phosphorus, and potassium than the soil naturally provides. Use fertilizer before the heat of summer but avoid fertilizing when the ground is wet, or you risk fertilizer burn.

Mow
When the grass is growing well, it’s time to mow. The proper mowing height will depend on your type of grass, but for good lawn health, follow the “one-third” rule: Never cut off more than one-third of the length of the grass. Mow more often when growth is peaking and back off when grass growth slows. It’s also best to “grasscycle” by leaving the grass clippings on the lawn. They return moisture and nutrients to the soil, so you’ll need less fertilizer.

Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com