Homeowner Headquarters

How to's and money-saving tips from resident homeowner and mortgage professional, Cathy West

Category Archives: kb1

How to avoid purchasing a home with declining value

How to avoid purchasing a home with declining value

While the housing market today is more or less guaranteed to keep home values rising for potentially years to come, there are certain things that would-be buyers will be wise to watch out for. Over a long enough time period, issues can arise that hinder a home's value, or at least slow the rate at which it rises relative to the properties around it, so knowing what to look for is vital.

For instance, if homes are relatively close to high-tension power lines, they are less likely to see their value increase at the same rate as similar homes in their areas, according to Max Real Estate Exposure. While there is no definitive link between proximity to power lines and any negative health consequences, the perception that there might be can pose real problems for homeowners where property values are concerned.

Other issues
However, there is a clearer hurdle when it comes to properties that are relatively close to train tracks or highways, the report said. These issues can arise simply because of the potential for noise pollution and perhaps even physical risk, particularly when trying to sell to certain buyers, such as those with children. Even something as unexpected as proximity to billboards can have a negative impact on a property's value growth going forward, especially if located near busy thoroughfares in a city or town.

In addition, it's wise for buyers to ask about their potential new neighbors, according to Investopedia. If they find that some people living on their street might be at risk of foreclosure, that can have a significant negative impact on their property's value. But this is also true if neighbors are noisy, don't tend to take good care of their yards as well as they probably should, allow the houses themselves to fall into disrepair, and so on. Furthermore, if those neighbors are older, that might be a turn-off for families with young kids who might be moving into the neighborhood.

Of course, buyers and sellers alike don't get to choose their neighbors, but it's nonetheless an issue to be cognizant of throughout the shopping process, the report said.

Appraisal considerations
At the same time, it's also important for would-be buyers to get the properties appraised before they sign on the dotted line, according to Bankrate. The reason doing so is a good idea is relatively simple: This will not only help shoppers more ably determine the right price to pay for the property, but also aid them in identifying potential issues that could negatively impact the property's value potentially years down the line. Moreover, shoppers should ensure that whatever appraiser gets hired is from their community, or at least county, so they know what the local housing market is truly like.

There is so much to consider when looking at a home, but for some shoppers, the long-term prospects of price appreciation may be particularly difficult to ignore. Talking with a real estate agent about the issue is vital to understanding what market forces might impact the home for potentially decades to come.

For more information about this article, call 866-614-5959.

Patience is key when purchasing your first home

Patience is key when purchasing your first home

Many first-time homebuyers are going to have a lot of questions about the process as they enter and move through it, and because of the level of competition now present in just about every local market, they may have to wait for some time before their bids are finally accepted. With that in mind, one adage shoppers might be particularly wise to keep in mind when they enter the market is that patience is a virtue.

One of the first things any first-time buyers will want to do is talk to a local real estate professional about the current conditions in the market because that step will help them craft reasonable expectations for how quickly they are likely to find a suitable property and have their bids accepted, according to Inman. After all, agents know their markets inside and out and will be able to give people a clear idea of what to expect from the shopping and sales processes.

A better understanding
When people have open lines of communication with their agents, they're far more likely to feel good about how bidding or potential sales are going. That assertion may be especially true even after their bids are accepted, the report said. After all, there's often at least a few weeks between when a purchase price is agreed upon and when the sale closes, and this delay, too, can sometimes leave first-time buyers anxious. However, it's often wise to trust that everything will work out, and agents will be able to provide critical advice if snags arise.

In general, shoppers can expect their house hunts to last at least a month but usually no longer than three, according to Bill Ness, a member of the Forbes Real Estate Council. To help expedite that process, taking steps such as preparing all financial data and documentation in advance as a means of getting preapproval on a mortgage, can go a long way. That effort, in turn, can give buyers more confidence when it comes to making a bid and getting the sales process expedited.

Simply put, having realistic expectations for how long this process can take will help shoppers feel good about their prospects even if they're not sure they can get a sale completed within just a few weeks, the report said.

Don't go overboard
Experts stress that it's also important for buyers not to "fall in love" with a home they may try to buy, especially those they find when searching for properties online, because that emotional investment can only lead to additional frustration and anxiousness about the bidding and sales processes, according to Magnify Money. Houses found online, in particular, may not always be what they seem, so tempering expectations is another great way to practice patience throughout the home search.

Again, seeking the advice of a seasoned real estate pro is likely to help shoppers stay realistic about their prospects for finding the right home based on their personal and financial needs and wants.

For more information about this article, call 866-614-5959.

How hard is it to find a starter home?

How hard is it to find a starter home?

One of the big trends in the housing market over the past few years is that, as more millennials try to buy homes, they are scooping up lower-priced properties in mass quantities. Coupled with the fact that relatively few homeowners are selling these kinds of starter homes, and construction companies can't put up new houses fast enough, this is creating an incredibly tight market at the lower end of the housing sector, and it's not likely to change any time soon.

Starter homes – those priced in the bottom one-third of home values in the market – still make up a relatively small share of all houses being put up for sale these days, coming in at just 22.4 percent of all properties on the market in the first quarter of the year, according to new research from Trulia. That was down from 22.8 percent on both a quarterly and annual basis.

At the same time, premium-priced homes – those valued in the top third of the market – made up 52.5 percent of all listings, the report said. That left mid-priced properties making up a mere 25.1 percent of all homes on the market.

Why is that a problem?
Obviously, not all would-be homeowners are trying to purchase properties priced in the top third of the market, so there is a bit of a disconnect between what shoppers may be able to afford (or at least what they want to buy) and what's actually available, the report said. That gap is shrinking these days, but nearly 29 percent of all home listing searches are focused on starter homes, and about 30 percent are looking for mid-priced homes.

What's happening?
Many experts believe young shoppers are not just bailing on the housing market when they can't find a starter home, but rather putting in the legwork to be able to boost their buying power into the mid-range "trade-up" houses, according to USA Today. Many young adults have spent so long renting and saving up for a down payment that the additional several thousand dollars they need may not be all that difficult to put together. This might be particularly true thanks to the improving economy and rising pay.

Meanwhile, many millennials could now also be thinking of themselves staying in their homes for longer than they might have expected, given the tightness of the market. Starter homes are usually just that: A place for new buyers to spend a few years, build equity, then "trade up" for a higher-priced home, according to Nerdwallet. That might not be in as many young shoppers' plans because of current conditions and long-term economic forecasts.

With these issues in mind, it's worth noting that prices (particularly for starter homes) and mortgage rates are only expected to keep rising. As such, shoppers would be wise to get into the market sooner rather than later to lock in the best possible deals.

For more information about this article, call 866-614-5959.

Finding the right property

Finding the right property

When first-time buyers are starting the process of searching for the right home to bid on, they may not know exactly what they're looking for. However, experts in the real estate industry typically note that this is one of those things shoppers just "know" when the moment is right and they visit a home for the first time.

Certainly, shopping online or in person with an agent for houses that carry many of the features they're looking for – whether it's a spacious back yard, the right number of bathrooms or bedrooms, modern amenities, etc. – will help buyers whittle down the number of open houses they need to attend, but they usually won't know a home is just right for them until they visit it themselves, according to The Balance. One of the best indicators of this "something special" quality is when shoppers quickly start to envision themselves in the home and feel great about those images.

All about excitement
Indeed, when people get enthusiastic about a home, even if it's just the first one they've visited, it might be wise to consider placing a bid sooner than later, the report said. If they can see themselves repainting the various rooms to their favorite colors, arranging furniture in the living room just so, or simply feel "at home" in it, getting involved in the bidding process is vital in today's hyper-competitive market. 

However, there are more things to consider than that first feeling, especially for people who plan to stay in their homes for some time to come, according to Home Finder. For instance, if young married couples without children are planning to have kids in the near future, it might be wise to consider whether the house that feels right for two people will be big enough to comfortably fit three or more. Moreover, it's important for buyers to think about the location of the home in proximity to their offices, various attractions or supermarkets and other stores. While a 40-minute commute or 20-minute drive to the grocery store, for instance, may not sound like much now, it's vital to think about what that will feel like almost every day for years.

Even if a home meets all current needs, or potential concerns can be brushed aside initially, it might be important for shoppers to take a more holistic look at their situations, the report said.

Missteps to avoid
Meanwhile, consumers also need to make sure they don't get wowed by homes they might not be able to afford, while also being realistic about being able to find something that's going to be absolutely perfect at the exact price they're able to pay, according to Investopedia. Again, this is a competitive market for buyers – homes typically receive multiple bids – so while it's not necessarily wise to "settle" it's still vital to be pragmatic about what's going to be available.

Typically, working closely with a real estate agent will help would-be buyers come to the right decision about the homes available to them, and find a property that reasonably balances their wants with their needs.

For more information about this article, call 866-614-5959.

Navigating a bidding war

Navigating a bidding war

Anyone who has been thinking of getting into the housing market in the past several months probably knows full well how much competition there is from other would-be buyers. To that end, it's probably wise for shoppers to at least approach a potential purchase with the idea that they're likely to face some sort of bidding war. If they don't end up having to outbid someone else, that's great, but if they do, there are certainly some things to keep in mind.

Perhaps the smartest move any potential buyer can make when they try to get into the housing market is to work with a realtor or other type of real estate pros who can advise them adequately, according to U.S. News and World Report. Typically, these professionals have been through countless bidding wars in the past – and certainly that number would have been on the rise in recent months – and can help prepare clients for any potential issues they might encounter, and better understand how to deal with them.

Where to begin
Generally speaking, real estate agents will be able to advise clients that bidding wars are likely before they even happen, and that may allow them to start the bidding process with a strong offer that's more likely to be accepted, the report said. Moreover, other aspects of the bidding process can be streamlined so that sellers are more likely to accept a bid.

This can include ensuring all paperwork and associated data is ready to go and clearly organized and, more important, that they have preapproval on the mortgage, the report said. Having to wait even a little while could lead sellers to look elsewhere.

Other things to keep in mind
It's also possible to build what is known as an "escalation clause" into a bid, meaning that if there are other bidders, sellers would be authorized to simply bump up the number without having to check with the buyer, up to a certain amount, according to Florida real estate expert Ron Goldstein. That kind of flexibility could really pay off, especially if other contingencies are kept at a minimum. It's important to remember that sellers are people, too, and they're likely just as anxious to get a home sale closed quickly, so working with them a little more cooperatively could go a long way.

Some experts even recommend that hopeful homeowners should write a "love letter" to sellers, explaining just what moving into a home would mean for them, according to the New York Post. While this obviously has no financial impact on a sale, it may give particularly articulate shoppers an edge when it comes to humanizing their desire to own a home.

With all this in mind, a little research online about the state of the local market and what more can be done to boost a bid's likelihood of being accepted can go a long way toward ensuring buyers can get through the process as quickly – and smoothly – as possible.

For more information about this article, call 866-614-5959.