Buyer’s Heaven: Great Rates, Lower Prices, Great Selection

While career renters may call this post self-serving, I am going to give you a few reasons why this may be the best time to be buying a home in the last dozen years or so.

1. Prices have come down, in most local cases.

2. Rates remain great, approximately 6 3/4 % for a 30 yr fixed.

3. There is more inventory to choose from now than in the past 10+ years.  More selection means you don’t have to “settle” for a home you really don’t love. In Hamilton Twp. today, there are over 600 properties for sale, including MLS and private for sale by owners.

4. More inventory also means you’re probably not going to get into the emotional turmoil of being involved in a multiple offer situation.

5. A couple years ago when a buyer had a home inspection and it revealed a couple thousand dollars worth of issues, buyers were saying, “No problem, I don’t want to upset the sellers.”  Now they are saying, “Please fix this before closing.”

If you are a long time renter, I suggest you take a look into the current housing market, consider the tax advantages of homeownership, and the equity you will build up in your long term investment.  Over the long haul, real estate investment never dissapoints.

Get a 15 Year Mortgage Instead of 30

While I admit I am no financial whiz, one of the smartest things I ever did was get a 15 year mortgage instead of a 30 year. With my payoff clearly in my sites, I can’t fathom the idea of having an extra 15 years to pay that thing off. Some food for thought…

A $250,000, 15 year mortgage at 6.75% is $2,212 monthly.

A $250,000, 30 year mortgage at 6.75% is $1,622 monthly. Or, $590 less monthly.

The difference (savings!) between these two loans is $185,000+, assuming you had the mortgage for the full term. While $590 per month might be too much for some families to manage, I suggest you cut up your credit cards, pay them off, and go without the new BMW before you take on any mortgage. Take a look at your budget, there is always some place where you can save a couple hundred monthly. Once you figure that out, get the 15 yr. mortgage.  Another idea is to spend less on your purchase. A $20,000 difference in mortgage amount can save you another $177 monthly. (15 yr, 6.75%)  After a few payments, you will realize you can do without the non essentials.

At the end of your 15 year loan, you’ll think you’re a financial genius!

Beware of Hidden Fees at Closing

A title clerk recently told me about a large real estate company who, at closing, tried to sneak in a $199 fee to their buyer for “processing” fees.  The buyer’s attorney refused to have it paid, and had the charge removed from the buyer’s expenses. I have been told of other similar stories where buyers get surprised at closing with a similar nominal processing fee, and it goes rather unnoticed, especially when compared to the size of other closing fees. Why would a real estate company do this?  Heck, $199 doesn’t seem like alot. But when you multiply 5,000 annual buyer closings x $199, it’s a million dollars to their bottom line, potentially all “new found” profit. Wow. That’s why they do it.

My suggestion for all buyers and sellers is:

1. Ask your agent to disclose all fees, in writing. Email is great for this!

2. Get a copy of the settlement statement the day before closing. This statement outlines all charges.

3. Re-examine the statement at closing, as sometimes adjustments are made just before closing. This statement is also referred to as the HUD-1 Statement.

Other fees to look for are mortgage company fees. I have personally witnessed unscrupulous mortgage companies sneak in extra fees. Question everything you do not understand. Closing day can be overwhelming on many levels, but watch your expense ledger!

Emails and Real Estate

 

I love email. It’s fast, free, and simple and can be very informative. Even my Mom can do it. But I hate it in dealing with problems. I have never seen email fix a real estate problem. Never.  When there is a problem, nothing beats face to face. People who insist on using email when dealing with problems usually want to have a casual fight. They would rather be angry than take 20 minutes to meet and fix the issue. In person, people are more respectful, they understand your body language and it’s intent, and there is a higher level of trust and understanding. It’s also easier to explain things visually, and as we know, a picture is worth lots of words.  If you have lost trust in the other person, it’ s easier to detect their b.s. in person.

When buying or selling an item of hundreds of thousands of dollars in value, take the time to meet with your agent, attorney or lender face to face.  Dozens of hurdles must be overcome in every transaction in order to get to the settlement table happily, which means dozens of opportunities for miscommunication or misunderstandings. Almost every transaction has 1 moment where people get flustered or upset or confused. When that moment comes, get face to face.

Overheard at Seller’s Kitchen Table

Agent:  How much do you want for your home?

Seller: You tell me, that’s why I have you here.

Agent: But you must have some idea what you want, all sellers do.

Seller: You first.

Agent: $350,000.

Seller: Ha! It’s worth much more than that!

Why Agents and Sellers Fail at Real Estate

After reading Greg’s post at Blueroof yesterday, I got to thinking that agents and sellers who fail share many common traits. Here are some.

1. They enter the market with unrealistic expectations. Most have no idea as to what is actually involved, or how long it will take to achieve success.

2. They are not mentally prepared to hang in there for the long haul. They quit.

3. They give up too easily.

4. They don’t follow expert’s advice. And if they do, it’s for too brief a sampling.

5. They develop a bad attitude as their friends, family, neighbors and co-workers constantly ask them, “How’s it going in real estate / selling your home.”  Then they listen to too many people giving advice.

My advice is to watch what successful people do, agents and sellers alike, and copy them. As for the guy down the street on the market for 9 mos., or the agent with the bad attitude who likes to gossip about how bad the company is, avoid them, and do not mimic them. Success leaves clues.

How is Help-U-Sell Different?

Thankfully, every day someone asks me that question, and I always welcome the opportunity to answer it. 

1. Savings.  At Help-U-Sell Harbinger Realty, we charge a set fee instead of a percentage commission. For example, for a $280,000 home, our fee would be about $6,495. Compared to a 6% fee (commissions are negotiable and not set by law) this would save the seller $10,305.  To date, my office has saved sellers over $2,600,000 (compared to 6%).

2. Owners can be as involved as they choose, and have more control over the process  if they choose. Owners can show their own home, interact with the buyer, and some owners even like to negotiate their own sales price.  However, some sellers don’t do anything except sign contracts and show up at closing, and that is ok too. It’s your choice. Any way, you save.

3. Most Help-U-Sell agents have more experience than traditional agents. Our business model allows us to sell more homes, giving us more experience and know-how.  This cannot be overlooked, especially in this market when a great agent is needed.

4. When our owners do open houses, they increase their chances of selling. Instead of waiting for the agent to make time to service your property, you can take the bull by the horns and hold your own house open. It’s not rocket science, and chances are about 100% that you know your house better than any agent.

5. Information without Obligation. We provide buyers with the address of the property, unlike most companies who force the buyer to call in. We tell you what all fees are, upfront, unlike most who hide that until you give them an appointment.  It’s more upfront.

6. How are we the same?  We are locally owned and operated, we have MLS, virtual tours, gorgeous property flyers, fabulous internet exposure and full service. There is nothing a traditional agent does which I cannot. In most cases, we do much more.

5 Biggest Mistakes Made By 1st Time Buyers

Buying your first home should be a fun and exciting process. However, all too often buyers are not properly prepared to deal with the challenges and stress which homeownership brings. Avoid these 5 mistakes when buying your first home.

1. Don’t listen to too many people. Everyone who has ever owned a home seems to be the expert. They are not. They mean well, but are giving you advice based on their home buying experiences. I made some money on Walmart stock once, but trust me, you don’t want to get advice from me about buying stock. I suggest having 1 trusted advisor, preferably someone who sells homes for a living, who your trust. A good agent will take you under their wing and protect you. Do not commit to an agent until you know you can trust them.

2. Get pre-approved for your loan before you shop. Make sure to compare the APR on loans to know what your true rate is. Work with a reputable lender, someone who you were referred to.  The loan approval process can be one of the more stressful parts of the process, so getting most of this out of the way will alleviate some pressure.

3. Don’t over buy, don’t underbuy. Many first time buyers want to buy a home like what they grew up in, but cannot afford it. My suggestion is buy an ok home in a nice area which you can fix up and turn into a good investment. Others are so concerned about taking on too much debt that they buy a home too small, then end up moving in 2 years. That isn’t good either, because you end up paying for 3 settlements (buy, sell, buy) instead of 1.

4. Get your finances in order. If possible, pay off all credit cards before buying. Give up some of life’s pleasures which have been wasting your hard earned money, and put it into your new mortgage payment. Brown bag your lunch. Make sacrifices.

5. Know the neighborhood. Drive around the area in the a.m., the p.m., weekends, etc. before making a purchase. Ask the neighbors what they like or dislike about the community. Visit the local elementary school. Check out the local grocery store. If you’re spending two hundred thousand dollars, this may be time well spent. I’ve seen buyers do more homework on the computer they are buying.

First Half Local Market Data: Sold Properties

	1st Half 2007	1st Half 2006	1st Half 2005	% Diff. ’05-‘07
Hamilton	535	548	591	-9.5%
Trenton	350	493	562	-37.5%
Washington	118	104	118	EVEN
Bordentown	60	93	81	-25%
Burlington Co.	2814	3375	3699	-24%
Mercer Co.	2053	2251	2521	-18.5%

In my opinion, Washington is “even” with 2005 do to the appeal of their beautiful new Robbinsville High School, while Trenton is so far below the norm due to the investors/ speculators leaving the market. They left the Trenton market when the city reinstated their C.O. policy, which had been missing for a couple years, making life easier for investors when they flipped property.  Hamilton is outperforming the market due to affordability and desirability factors.

10 Things I Hated About Managing Big Offices

For fourteen years, I managed some of the largest real estate offices in Mercer County. While managing provided a good living and many good times and some nice friendships, there are many things, especially when I look back, which I do not miss.  Here they are, in no cetain order:

1. Agent gossiping and jealousy. The constant chatter about who got what leads, referrals, or why someone got a special desk. On occasion, it could get so bad that people would just make up stories and spread rumors about others. Not very nice stories, either. Lots of jealousy.

2. Fighting over leads.  On the surface it seems pretty simple. The client should know who they choose to work with. But sometimes an agent would believe that just because they knew someone, that meant they had “ownership” of that client. Many times agents would fight privately, then gossip about the other for months or years. Nice.

3. The Parent Company Agenda. As a manager, your job is to recruit, supervise, coach, lead and get sales #’s up.  But at some companies, all they did was talk about how to get their agents to use their mortgage and title companies. Let me be specific. In managers meetings, we would spend 90% of our time brainstorming this. Less than 10% was about real estate, or how to manage an office.

4. Crummy In-House Services. So, back in the trenches, I am to the point of begging my agents to give the mortgage lead to the “in-house” company guy. Who on most occasions was really lame by the way. Then the mortgage company would screw the loan up, and then I’d be begging again. Then more meetings about how to get more mortgage business. An endless cycle.

5. Red Tape.  We all have had to deal with a certain amount of red tape, but our old dinosaur industry is always so slow to change. After several years of managing, I had proven myself to be responsible and more than capable. But certain regional folks liked to puppeteer me. And micromanage me,  while my numbers were skyrocketing. I needed support, not management. I rarely received support, just red tape, lies and excuses.

6. Agent Bitching. With few exceptions, this is a non stop issue in every office. Agents bitch about every possible thing under the sun. Not enough this. Too much that. Not fair. They would always focus on what the company took away, and never on what the company provided. Boy, I really hated that.

7. Unprofessional Attire. What part of “No leather pants” , “No jeans”, and “No shorts” did you not understand?  And by the way, your T-shirt with the foul language isn’t cool, either.

8. Cliques.  In my last managing position, one of the office, ahem, “leaders” said, “We’re taking Mary out for lunch for her birthday next week, do you want to go?”   I quickly learned that only a select few were invited, and I instructed this “leader” that I would only attend if the entire office was asked to participate. I soon learned that this had been an office practice for quite some time, with all social events. Not everyone’s birthday was celebrated. Just the cool ones.  Just like high school.

9. Agent maturity.  I admit, I have been guilty here as well. Sometimes agents who have been in the business for 2-3 years with success become know it alls, and become a pain in the ass to deal with. All of a sudden, you think we were the ones who invented this business. But when you have 6 or 7 at the same time, it can certainly be a challenge.

10. There is always 1 person thinking of quitting, and going to the competition. If you have 40-50 agents, this is always the case. It’s not fun. Good managers know who the unhappy people are, and they try their best to repair the issues, which can be multi-faceted. On occasion, I would walk in my building every day around 7am and see if that person had emptied their desk in the middle of the night. That’s usually how they do it.

I really appreciate the “smallness” of my office, which allows me to avoid these issues, but still enjoy what I do best, which is list and sell real estate.