Is is now the best time to buy your first home? a look at today's housing market and my prediction for a bottom in the market.
If you listen to all the hype from NAR and those who make their living selling houses, today's buyers market is the best in history. Is it really the best buyers market in history? Well, maybe; but is it the best time to buy? This is a different question and may have a different answer.
The real question is, can you get the best possible deal if you buy now? Realty trac the primary tracking agency of the real estate market, predicts that the already devastated US housing market will see another 1.2 million foreclosures in 2011. This would indicate that home prices in most of the country are not yet at the long anticipated bottom.
Does this mean that the first time home buyer should wait for at least another year to buy? maybe, but not necessarily. There is another factor that could play into the decision. Mortgage rates could possibly rise offsetting the difference in the price you pay for your home now verses how much prices may fall before we reach a bottom in the market.
According to the top analyst at Bankrate.com the current average 30 yr fixed rate mortgage stands at 4.81% and If the economy continues to improve, we will likely see rates rise to the mid 5% mark in the next year.
So how does all this add up to a decision for a possible buyer? The general concensess is that the economy will continue to improve. I personally agree with that mindset and believe that mortgage rates will rise but for a different reason. Its a fact of history that during times of inflation which de-values the dollar, rates do rise. And I believe we will see inflation.
However with 1.2 million foreclosures looming for this year adding even more inventory to the already flooded market, I believe that home prices in most area's will fall as much as another 10%. Of course you will need to make any decision on buying a home based on the facts in your particular market, But it is my opinion that as long as rates stay below 6% you will get the best deal by waiting until the market stabilizes, which should be in late 2012.
Why I believe the market will bottom in 2012.
I've come to the conclusion that mid 2012 will see the bottom of home prices in most of the US through a simple observation of 2 factors. Those factors are the outlook for the economy as a whole and the inventory of homes on the market.
Even though employment numbers haven't been very promising as of yet. Most indicators point toward a recovery in process. The state of the economy and the housing market for the last three years has kept a huge number of investors and would be repeat home buyers on the side lines and during that three years over 6 million marriages took place. Which ads millions more first time buyers to the already backed up demand for housing.
While the unsold home inventory is at an all time high, so is the backed up demand. I believe the recovering economy will soon cause a freeing up of the mortgage market. Coupled with the lowest prices in many many years, this will send buyers pouring into the market at record levels and shrink unsold inventory faster than most people think.
While most area's may not see appreciation for another 3 years I believe home prices will stabilize in mid 2012. This will be the ultimate time to buy a home.
Monday, January 31, 2011
Tuesday, January 18, 2011
Buying Your First Home Step by Step - Step 4 closing
Buying and closing the deal on your first home
Congratulations, if you've made it to this step you're truly a first time home buyer. You've successfully found a home, made an offer and negotiated the sale. All that's left is closing the deal. However, closing is the point where things often go wrong and all the hard work by you, your agent and everyone involved can go down the drain. But if every one does their job, crosses all the T's and dots all the I's your closing should go smoothly and you'll be a home owner.
What happens at a real estate closing
The closing is the point in the transaction where the money is exchanged and title of the home will be transferred from the seller to you. The attorney or title company will create an escrow. Your down payment, a check from your lender and all other funds which were agreed to be payed at closing goes into the escrow account. The attorney will then cut checks to the seller, the sellers lender and to all parties who are due cash at the closing. Hence the term "closing escrow"
By the time you get to the closing, every detail in the contract should be worked out, agreed upon and accepted by both you and the seller. Your agent should be well experienced in closings and will take care of most of the leg work. Your job will be simply to read and sign the required documents.
What you can do to make sure your closing go's smoothly
Snags at closing usually occur when one party misunderstands one or more parts of the contract agreement, misunderstands how much of the closing cost he or she is supposed to pay, Or one party doesn't bring the cash or required documents to the table. As a buyer you cannot control what the other side of the transaction does. But you can control what you as the buyer does to make the closing go smoothly.
As your representative, your agent will work with the sellers, or sellers agent, the lender and the attorney or title company to make sure all the required closing documents are in order and copies are received by all parties involved.
Your job is to be sure that you thoroughly understand the agreement and you're obligations before you get to the closing table. The law requires that the attorney supply all parties involved with a copy of the HUD statement at least 24 hrs before closing. The settlement or HUD statement is an itemized list of all the costs and the amount of funds that will be paid to every party at closing.
It's a good idea to be proactive. Contact your agent and the lender once every day to make sure they have everything they need from you right up until the closing date.
Tips for closing on your first home
Before the closing you should inspect the home again thoroughly. If there were repair or improvement contingencies in your sales contract that were agreed upon, you should be sure that they are made and the work was done correctly.
This should be done just after or before the signing of the purchase agreement. But If you haven't already done so. Its a good idea to have a professional home inspector inspect the home before the closing.
Ask your agent and your lender for a list of any and all documents or other items that you will be required of you to bring to closing.
If you're currently renting a home or apartment be sure that the landlord is aware of your situation and that you will be closing on your new home and moving soon. You should also contact any utility companies and let them know that you will be moving soon. If your new home is serviced by the same companies they may be able to change the address and leave your account open.
Once the closing is completed. Make reservations at a nice restaurant, go out and celebrate a smooth closing and your new status as a first time home owner! congratulations.
Congratulations, if you've made it to this step you're truly a first time home buyer. You've successfully found a home, made an offer and negotiated the sale. All that's left is closing the deal. However, closing is the point where things often go wrong and all the hard work by you, your agent and everyone involved can go down the drain. But if every one does their job, crosses all the T's and dots all the I's your closing should go smoothly and you'll be a home owner.
What happens at a real estate closing
The closing is the point in the transaction where the money is exchanged and title of the home will be transferred from the seller to you. The attorney or title company will create an escrow. Your down payment, a check from your lender and all other funds which were agreed to be payed at closing goes into the escrow account. The attorney will then cut checks to the seller, the sellers lender and to all parties who are due cash at the closing. Hence the term "closing escrow"
By the time you get to the closing, every detail in the contract should be worked out, agreed upon and accepted by both you and the seller. Your agent should be well experienced in closings and will take care of most of the leg work. Your job will be simply to read and sign the required documents.
What you can do to make sure your closing go's smoothly
Snags at closing usually occur when one party misunderstands one or more parts of the contract agreement, misunderstands how much of the closing cost he or she is supposed to pay, Or one party doesn't bring the cash or required documents to the table. As a buyer you cannot control what the other side of the transaction does. But you can control what you as the buyer does to make the closing go smoothly.
As your representative, your agent will work with the sellers, or sellers agent, the lender and the attorney or title company to make sure all the required closing documents are in order and copies are received by all parties involved.
Your job is to be sure that you thoroughly understand the agreement and you're obligations before you get to the closing table. The law requires that the attorney supply all parties involved with a copy of the HUD statement at least 24 hrs before closing. The settlement or HUD statement is an itemized list of all the costs and the amount of funds that will be paid to every party at closing.
It's a good idea to be proactive. Contact your agent and the lender once every day to make sure they have everything they need from you right up until the closing date.
Tips for closing on your first home
Before the closing you should inspect the home again thoroughly. If there were repair or improvement contingencies in your sales contract that were agreed upon, you should be sure that they are made and the work was done correctly.
This should be done just after or before the signing of the purchase agreement. But If you haven't already done so. Its a good idea to have a professional home inspector inspect the home before the closing.
Ask your agent and your lender for a list of any and all documents or other items that you will be required of you to bring to closing.
If you're currently renting a home or apartment be sure that the landlord is aware of your situation and that you will be closing on your new home and moving soon. You should also contact any utility companies and let them know that you will be moving soon. If your new home is serviced by the same companies they may be able to change the address and leave your account open.
Once the closing is completed. Make reservations at a nice restaurant, go out and celebrate a smooth closing and your new status as a first time home owner! congratulations.
Thursday, January 13, 2011
Buying Your First Home Step by Step - Step 3 Making an Offer
Making an offer on your first home
By the time you're at this 3rd step in buying your first home you should be comfortable working with the agent you chose to help you with the process of buying your home. If you've found the home that you want to buy, and worked with you're agent through all the due diligence, then you're ready to make the offer.
Ultimately the decision on the price that you offer is yours; however your agent will play a huge role in helping you decide how much the offer should be.
Your agent should supply a comparable sales analysis of the home. This analysis will tell you how much the home is worth in the current market. However, of course your goal should be to get the home for a price that's lower than market value. The big question is, how low will the seller be willing to sell?
Deciding how much to offer
Your goal in making your first offer should be to make the offer just low enough to entice the seller to counter your offer but high enough not to insult the sellers and get a total rejection. The question of how low an offer the seller would be willing to accept depends on a number of factors. First of which is his or her motivation to sell. Before making your offer you should have your agent help you get answers to these questions.
1. Why is the seller selling the home? Are they selling because they have to? or just because they want to? If the seller is motivated to sell because of transfer or some other need to re-locate immediately they may be willing to accept a much lower offer than a seller who just wants to upgrade or downsize to a smaller home.
2. How much equity does the seller have in the home? You may not be able to get an exact answer to this question. However your agent can help you make an educated guess through financial information contained in tax records, deeds and other public records. If the sellers equity is little, or if they have no equity, then they may not be able to accept an offer lower than the asking price.
3. Is the seller current on the payments? The answer to this question may tell you the true motivation of the seller to sell. If the seller is having financial problems and unable to make the payments, You can most likely buy this home for the amount of the pay off on the mortgage. Or in some cases you may even be able to get it for less than the pay off; if the lender is willing to consider a short sale.
4. How long has the home been on the market? Your agent can normally get this information from the mls listing. This is another good clue as to just how motivated the seller may be to sell. If they need to sell soon, the longer the home has sat on the market unsold the less the seller will be willing to take.
Once you have answers to these questions, you can use the information to make an informed decision on how much you should offer for your first home.
Offer contingencies
Contingencies are requirements that you may want to make of the seller; or circumstances in which the contract / offers validity will be dependent upon. For example, if your getting financing for your home, the offer will be contingent upon the homes appraisal and your loan being approved. You may want to ad other contingencies as well. Such as, you could require the seller to make repairs or improvements to the home or you could make your offer contingent on the seller paying all or a percentage of the closing cost or any other cost involved in the purchase of the home. Your agent should help you decide what contingencies you should require and whether or not they are reasonable.
The negotiation process in buying your first home
Negotiation is actually a step within this step. Once you've made your offer, If your offer is not accepted and the seller answers with a counter offer the negotiation process begins. Since your agent is representing you in the transaction, this is where he or she needs very good negotiating skills. Your agents negotiating skills can literally save you thousands. By the time you get to this point in the process, you should have a good idea of how motivated the seller is, and just how low they may be willing to go on price. So you may be able to use contingencies in the offer as a bargaining chip.
Ultimately the decisions will be your responsibility. But if you follow these steps and If you've chosen a good agent, you'll get a good deal on your first home.
By the time you're at this 3rd step in buying your first home you should be comfortable working with the agent you chose to help you with the process of buying your home. If you've found the home that you want to buy, and worked with you're agent through all the due diligence, then you're ready to make the offer.
Ultimately the decision on the price that you offer is yours; however your agent will play a huge role in helping you decide how much the offer should be.
Your agent should supply a comparable sales analysis of the home. This analysis will tell you how much the home is worth in the current market. However, of course your goal should be to get the home for a price that's lower than market value. The big question is, how low will the seller be willing to sell?
Deciding how much to offer
Your goal in making your first offer should be to make the offer just low enough to entice the seller to counter your offer but high enough not to insult the sellers and get a total rejection. The question of how low an offer the seller would be willing to accept depends on a number of factors. First of which is his or her motivation to sell. Before making your offer you should have your agent help you get answers to these questions.
1. Why is the seller selling the home? Are they selling because they have to? or just because they want to? If the seller is motivated to sell because of transfer or some other need to re-locate immediately they may be willing to accept a much lower offer than a seller who just wants to upgrade or downsize to a smaller home.
2. How much equity does the seller have in the home? You may not be able to get an exact answer to this question. However your agent can help you make an educated guess through financial information contained in tax records, deeds and other public records. If the sellers equity is little, or if they have no equity, then they may not be able to accept an offer lower than the asking price.
3. Is the seller current on the payments? The answer to this question may tell you the true motivation of the seller to sell. If the seller is having financial problems and unable to make the payments, You can most likely buy this home for the amount of the pay off on the mortgage. Or in some cases you may even be able to get it for less than the pay off; if the lender is willing to consider a short sale.
4. How long has the home been on the market? Your agent can normally get this information from the mls listing. This is another good clue as to just how motivated the seller may be to sell. If they need to sell soon, the longer the home has sat on the market unsold the less the seller will be willing to take.
Once you have answers to these questions, you can use the information to make an informed decision on how much you should offer for your first home.
Offer contingencies
Contingencies are requirements that you may want to make of the seller; or circumstances in which the contract / offers validity will be dependent upon. For example, if your getting financing for your home, the offer will be contingent upon the homes appraisal and your loan being approved. You may want to ad other contingencies as well. Such as, you could require the seller to make repairs or improvements to the home or you could make your offer contingent on the seller paying all or a percentage of the closing cost or any other cost involved in the purchase of the home. Your agent should help you decide what contingencies you should require and whether or not they are reasonable.
The negotiation process in buying your first home
Negotiation is actually a step within this step. Once you've made your offer, If your offer is not accepted and the seller answers with a counter offer the negotiation process begins. Since your agent is representing you in the transaction, this is where he or she needs very good negotiating skills. Your agents negotiating skills can literally save you thousands. By the time you get to this point in the process, you should have a good idea of how motivated the seller is, and just how low they may be willing to go on price. So you may be able to use contingencies in the offer as a bargaining chip.
Ultimately the decisions will be your responsibility. But if you follow these steps and If you've chosen a good agent, you'll get a good deal on your first home.
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