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Will you be homeless if you sell your home?
It may seem like an odd question to ask your real estate agent when you plan to sell your home and upgrade. You may be surprised, but Leah and I have been asked this multiple times during this strange and unexpected housing market. The past two years have been difficult for buyers. First-time homebuyers may find it hard to win an offer and not feel like they are giving away their life savings. When you decide it’s time to move and hear the rumors of how hard it is to buy, you may start to question, worry, and think, “maybe I’ll stay in my home.”
So why do sellers feel they will be homeless if they sell their homes? Well, let’s look at what we have personally seen as Real Estate agents working with our clients:
- Low inventory: Buyers are having a hard time because Sellers are deciding to wait (precisely what we are talking about here)
- Contingencies: As a Buyer and Seller simultaneously, you are having a hard time having your offer accepted because there has been no action on selling your property.
- Cash is King: We have seen many cash buyers during the pandemic and investors during this interest rate hike giving them an advantage in competing offers
- High sales price: Many houses are selling above asking, multiple offers, waived contingencies.
You list your home to sell and get multiple offers in the first couple of days. The problem is that you haven’t even found a house you like to purchase yet. You start to worry that once you accept an offer, you’ll have to rush and pick a home for yourself that you aren’t too sure you love. Even worse, you’ll sell your home and be back in your parent’s basement! You may feel like you won’t be able to win an offer if you find your dream home. It takes a heavy toll mentally and emotionally. As the seller, in a way, you have more leverage than a buyer, simply by stating in your agreement, “contingent on Seller finding suitable housing.” That, right there, is your safety net. With that phrase, every party knows we cannot move forward until you find the house that works for you!
For example, a client recently had a hiccup at the tail end of their transaction. A minor, easy fix could have delayed us another week in purchasing their new home. The problem was that they were scheduled to close their current home in two hours! Would they end up homeless? No. “Contingent on seller finding suitable housing” was the saving grace. Don’t get me wrong, it would have been very upsetting to all parties involved, but no one would be homeless. Thankfully, we have a fantastic team that cleared that issue in a snap and was able to close on time!
Cash is King:
Every agent will tell you we love a client that can purchase a home with cash. Cash is King. The past two years have seen a strong seller’s market and increased cash buyers. We have certainly felt the disappointment in losing to a cash buyer because – did we say this already? – Cash is King.
A few months before the interest rate spike, clients of SSRG put offers on over 15 properties in just a few short months. All the offers were above asking, with excellent terms, and yet did not win. Things are starting to change, however! The end of this year is not the same as how it started. Our past sales have seen offers accepted. Any homes sold above asking have come back with an appraisal supporting it with no need to use the “appraisal gap contingency.” Gone are the days of a home with 50-80 offers, but you may still experience a bidding war on a smaller scale.
People need to realize that we saw unprecedented high sale prices and historically low rates in the last two years. With the interest rates rising, we are seeing the real estate market finally stabilize.
High Sales Price
Sellers during the past two years could take advantage of making a large profit selling their homes. However, buyers had a hard time battling with the decision not to pay more than the home was worth or miss out on the perfect home. Especially with the words “Market Crash” looming in the media.
Our final thoughts: Everyone’s situation is unique. Find an agent who makes you feel comfortable and protected. One that communicates with you and makes sure you know every fact and detail of the sale and purchase of your home. We are in the market to find people’s homes, not make them homeless. If you think you are ready to sell or purchase a home, call Leah and me. We can go over the next steps or answer any questions you may have in detail over coffee!
Ben
Review of NAR’s 2022 Home Buyers and Sellers Generational Trends Report
Here are 9 insights from NAR’s 2022 Home Buyer and Seller Generational Trend report that we wanted to share with you:
- First-time buyers made up 34% of all home buyers, up from 31% last year
- 60% percent of buyers were married, 19% were single females, 9% were single males, and 9% were unmarried couples
- 31% percent of buyers had children under 18 living at home
- 11% of buyers purchased a multigenerational home to care for & spend time with aging parents
- Baby Boomers make up the largest share of sellers at 42%
- 7% of buyers financed their home purchase
- 45% of Younger Millennials (ages 23-31) reported having student loans with a median loan balance of $28,000
- Gen Xers (ages 42-56) were the most racially diverse buyers in 2021 — 23% identified as Hispanic, Black, or Asian/Pacific Islander
Will the Market Crash?
If you’ve been paying attention to the to the housing market, I’m sure you’ve heard people’s fears of being “in a bubble” again or fearing the market will crash. Here is how we are calming our client’s nerves.
Housing experts predict the market will remain strong for several reasons:
- Ample Home Buyers: With most first-time buyers under 40 and the U.S. population nearing 170 million, there’s no shortage of buyers
- Low Inventory: Too many buyers. Too few homes. Experts say it will take at least several years to inject enough supply to balance out the market.
- Healthier Mortgages: Unlike the 2008 housing crash, tougher lending standards and modern mortgage regulations mean today’s homeowners are less likely to default than those who were approved in the pre-crisis lending period.
Wondering what the housing market will do this summer?
Here’s what experts are predicting:
- Inventory: Inventory is likely to peak in late summer or early fall. About 64% of prospective home sellers plan to list their properties by the end of August.
- Interest Rates: All signs point to interest rates growing further in 2022, with the Fed planning hikes after each of its remaining 2022 meetings.
Our Advice?
Don’t give up now, get paperwork ready, and stay positive.
Your home is out there, just waiting for you to discover it!
The Final Walk-though
The final walk-through on your new home is an exciting event.
It means you have successfully maneuvered through negotiations, inspections, and financing approval, and are on the verge of signing your closing papers. (pffew!)
Most buyers attend the final walk-through with thoughts of furniture placement and paint colors in their heads. But the walk-through is about more than just making sure your favorite chair will fit by the fireplace. Be sure to do your due diligence to make sure there are no issues that should be resolved before you reach the closing table.
The purpose of the final walk-through is to ascertain that the home is being conveyed to you in the same condition it was when you agreed to purchase it.
Here are a few of the things you should check:
1) Make sure no damage has occurred to the home that the sellers are responsible for repairing. Weather conditions or careless movers can cause accidental damage, and old and forgotten damage may be uncovered when the sellers’ belongings are removed.
2) Check that appliances are still in working order and no new plumbing or electrical issues have popped up. While you aren’t doing a complete home inspection, you can visually check for obvious problems that should be repaired before you move in.
3) Confirm that items contractually conveying are present. If the sellers agreed to leave particular furniture, décor, or equipment, see that it has not been removed.
4) Make certain the sellers have removed all their belongings. You don’t want to arrive with the moving truck only to find out that the sellers left behind an assortment of unwanted furniture or trash. The sellers should be held responsible for removing everything that doesn’t convey with the sale.
A great agent will have a well throughout checklist for you to make sure you don’t miss a thing. Now you’re ready to head to the closing table with peace of mind. Who doesn’t love that?
Get your Home Ready to Sell for Top Dollar
A common mistake people make is to spend a lot of money – renovations, new roof, remodeling. While buyers will be impressed with these things, spending $5000 on remodeling will not add $5000 to your sale. Spend as little money as possible, and spend it on cosmetic, readily seen features like interior painting. The time to remodel is when you plan to stay in the house, not when you’re going to sell.
If you think about everything that needs to be done to sell your house, you might throw your hands up in despair, or at least feel some anxiety. Take one step at a time, one small task at a time. Break it down to manageable-sized chores and you’ll have better results.
First things first – have a garage sale. Whatever doesn’t sell can be set out for Green Drop. Once the clutter is cleared away, it will be easier to see what needs to be done.
This is your first impression, so it had better be a good one.
Edge, mow and fertilize the lawn regularly. Make sure it’s well watered and reseed any sparse areas.
Trim hedges, weed lawns and flowerbeds, and prune trees regularly. Cut back overgrown shrubbery that looks scraggly or keeps light out of the house.
Buy a new welcome mat.
Check the foundation, steps, walkways, walls and patios for cracks and crumbling, and reseal if possible.
If you have siding or brick, power-wash it. If you have a painted exterior, consider repainting in a neutral shade. This is especially important if there is any peeling.
Make sure the porch light works.
Clean and align gutters and downspouts.
Inspect and clean the chimney.
If the doorbell doesn’t work, repair or replace it.
Repair and replace loose or damaged roof shingles.
Repair and repaint loose siding and caulking.
Remove oil stains from driveway and garage.
If you’re selling in the winter, keep walks neatly cleared of snow and ice. Otherwise, keep the walks and driveway swept.
Repair broken outdoor steps.
Spring for some brightly colored potted outdoor flower arrangements for the front yard near the entrance. It really helps the curb appeal!
Keep your garage door closed.
Wash the windows inside and out.
Store RVs, boats and extra vehicles (anything that can’t be parked in the garage) elsewhere while the house is on the market.
Paint the front door.
If prospective buyers walk into your house greeted by the smell of cat litter, cigarette smoke, mildew or pet accidents, there is little chance that even a reduced sales price will persuade them to buy. So the first thing to do:
Clean, clean, clean. This includes walls, floors, inside closets and cabinets – everything. Consider even hiring a cleaning service to come in and do the job.
Get rid of clutter. Put away appliances you normally leave on countertops. This alone will make your house appear bigger and brighter. Clean out your closets, garage, basement and attic.
Paint the walls and ceilings a neutral color – off white or beige.
Repair cracks, holes and damage to plaster, wallboard, wallpaper, paint, and tiles.
Replace broken or cracked windowpanes, moldings and other woodwork.
Repair dripping faucets and showerheads.
Buy new cabinet knobs and curtains for the kitchen.
Shampoo all carpets, scrub and wax linoleum, wash and wax wood floors.
Unclog slowly draining sinks and tubs.
Clean out the fireplace and lay some logs in it.
Mend torn screens. Clean out all window tracks.
Check to see that all windows will open and close.
Replace burned-out light bulbs. Use brighter light bulbs.
Make sure every light switch works.
Nail down any creaking boards or stair treads (drive two long finishing nails at opposing angles through the floor and sub-floor into the joist).
Oil any squeaking doors
Remove excess, worn or unattractive furniture.
Thoroughly clean all appliances (especially refrigerator and oven).
Replace old toilet seats and shower curtains.
Clear all cobwebs from corners and doorways.
Wash all light switches, handrails and doorknobs.
On Showing Days
Keep draperies and shades open to let in the light.
Place fresh flowers throughout the house.
Have your home well-lit during showing.
At night, turn on porch light and outdoor lighting in back if you have it.
Set out colorful, clean towels in the bathroom.
Avoid having dirty dishes in the sink or on counters.
Keep any toys in the children’s rooms, bikes, wagons and skateboards in the garage.
Play pleasant music at low volume.
Spend the day of an open house away from home.
Leave pets locked in a secure cage or remove them with you for showings.
Unless you’re selling it yourself, let the agent show your house, and don’t tag along.
This can all seem very overwhelming when you’re first getting started. Remember to tackle the job in small chunks for the best results!
Leasing a Home with the Option to Buy
Of all the many ways of selling and buying real estate, leasing with an option to buy is one of the most creative home finance alternatives if you have bad or no credit. Tenants who want to buy but are not currently in a position to buy use it to lock in a price against future appreciation. It is also a tool used by owners and property managers to attract good tenants. And it is used by owners with property that, for whatever reason, is not renting or selling at the price they want.
Leasing with an option to buy is exactly what it sounds like – a renting tenant signs an agreement with a landlord stating that the tenant can buy the property at the end of a prearranged time period. The owner is obligated to sell at the option price, but the tenant is not obligated to buy. But when a lease-purchase exercised, the buyer is obligated to purchase at the end of the rental period.
A common misconception is that once a landlord signs this type of agreement, he has to sell the property to the tenant, or that the tenant has an absolute right to the property. Not so – the tenant can buy the property only if the landlord exercises the option to sell.
There are pros and cons on both sides – property owners are in a more secure position with a lease with option to buy contract than if they held a mortgage, because they still own the property. Sellers also receive rental income and get income tax deductions. For buyers, the biggest draw is the fact that they get more time to qualify for mortgage financing.
Before entering into such an agreement, a written document must be drawn up which spells out the terms of the contract before tenants move in. Because the tenant and the seller are entering into two separate legal situations – a rental agreement and a contract to purchase – it’s a good idea to get an attorney involved to be sure all bases are covered. But the purchase agreement should state the price and clearly define the terms. It’s not a bad idea to add a condition section that includes a monthly option fee and the portion of rent that will be applied toward the purchase, if the option is exercised.
The option should be recorded with the county clerk to put others on notice of the tenant’s rights, thus preventing the seller from selling to another buyer. However, a seller that has financial problems during the lease term may not be able to give the tenant good title when the option is exercised.
The lease agreement should have a clause that terminates the option to buy if the tenant in any way violates the lease or gets evicted before closing the agreement to purchase. Some issues that should be addressed in your contract should include the following:
Down payment: Within your lease agreement, there should be a security deposit required. Since many states do not allow these deposits to surpass one month’s rent, there may be an earnest money deposit requested to be kept in escrow until such time as the option is exercised.
Purchase price: Usually, this is set out in the original lease-option agreement – in other words, the purchase price is set according to today’s market, not in the future when the option may be exercised. This is the good news/bad news, depending on whether real estate prices increase or decline during the lease. Another option is the “right of first refusal,” which means that the tenants will have the option to purchase the property at a price determined by the landlord at the time of sale as opposed to the time of the agreement. The tenant may also have the right to purchase the property at the price offered to the landlord by another prospective buyer.
Legal title: An option to buy doesn’t give the tenant legal title to the real estate. The tenant becomes a purchaser only upon exercise of the option, at which time the landlord-tenant relationship ceases and the option becomes an absolute and binding contract of sale.
Rent credit: This is a unique lease-option feature. The tenant usually pays above-market rent for the property, but a portion is credited toward the purchase price if the buyer decides to exercise the purchase option. For example, on a house that rents for $1,500 per month with a 33 percent rent credit, $500 per month goes toward the down payment when the option is exercised. If the tenant decides not to buy, they don’t get the rent credit money back. This is one of the biggest incentives for a tenant to buy.
Due-on-sale clause: A due-on-sale clause can prevent the buyer from assuming the current mortgage by permitting the bank to call the mortgage due when the property is sold. The terms of the seller’s mortgage and the lease agreement determine whether the due-on-sale clause will be triggered by the lease with an option to buy. However, the lease with an option to buy may be a way of avoiding the due-on-sale clause, at least until the tenant exercises the option to purchase.
Smith and Smith Realty Group
It’s with incredible excitement that I announce
Smith and Smith Realty Group!
My husband Ben and I have created our team with Coldwell Banker Realty Moorestown and we are so excited to move forward in our real estate career, together.
We look forward to working with you!
Let’s meet Ben
Ben has joined his wife Leah at Coldwell Banker Realty to create Smith and Smith Realty Group. Before real estate, Ben was a Director of Rehab in sub acute facilities. Leading a team of rehab therapists through the pandemic, Ben knows his way around difficult situations, negotiations, and stress. A perfect mix for a career in real estate 😉
Ben lives in Merchantville with his family. He loves to play hockey and is a devout tortured Philadelphia sports fan. He shares his wife’s addiction to coffee and good food.
Reach out to Ben to start discussing your next steps in selling your home!
(609) 634-5205
Ben.Smith@cbrealty.com
Pre-Approval vs Pre-qualification… what’s the difference?
I’m so glad you asked – because it’s crucial.
Pre-Qualification vs. Pre-Approval
Meet Luke.
Luke immediately fell in love with the two-story with a brick patio and big backyard for BBQs. He quickly made an offer and began looking for lenders. Unfortunately, he soon discovered that he couldn’t qualify for the home. He tried to find something else in their price range, but other houses paled in comparison. If only they had shopped for loans before looking at houses…
An expert Realtor would have made sure Luke was pre-approved way before he saw the home!
One surefire way to reduce stress during the process of home buying is to seek pre-approval, actually applying for a loan before finding a house.
The loan agent asks for a few bits of information:
-A loan application
-Credit Report
-Income and asset information with supporting documentation.
These documents are then submitted to prospective lenders who underwrite the file, issuing credit approval or denial.
Buyers who are pre-approved are taken more seriously than their pre-qualified counterparts. Pre-qualification is not a loan commitment from a lending institution; it is only a loan agent’s opinion that you will be able to obtain financing. Verifications are not usually made, so formal approval is not issued. These days, virtually anyone can achieve pre-qual status.
Pre-approval, on the other hand, signifies that the lender has taken the application through a rigorous procedure. So buyers with pre-approval status can basically write their own ticket.
Check out these benefits of a pre-approval:
1. If you make an offer on a home and then apply for a loan, you are at the lender’s mercy. He sets the interest rate and points, aware that you do not have time to shop around.
2. Understanding the breadth of your financial reach will save the time spent looking at houses you can’t afford.
3. Shopping for a loan allows you to settle on a house payment that fits your lifestyle. If you rely on your lender to tell you what you can afford, you may end up with a high mortgage payment. Most people can qualify for more than they would feel comfortable paying.
4. Having a pre-approval letter from a lender gives you an edge in a situation where multiple offers have been made on a house.
5. Pre-approved buyers can generally close escrow more quickly. Once you submit your credit package, most of the legwork has already been done.
Remember, neither pre-approval nor pre-qualification are absolute loan commitments. Lenders must still assess property appraisals, verify information, and, in many cases, verify credit before funding the loan.
If you ever have any questions about pre-approvals, contact me! I’d be more than happy to walk you through it and get you in touch with one of my recommended Loan Officers.
What exactly is a Home Inspection?
Home Inspections
Atop the long list of items to do when buying or selling a house is the home inspection. But what is involved? How much does it cost? Why is it done in the first place? It’s important to understand what a home inspection entails and how it affects the sale of your home or the purchase of a new one. The more you know, the less likely you are to get ripped off or taken by surprise.
What is a Home Inspection?
First of all, let’s clear up a commonly misunderstood point: a home inspection is not the same as an appraisal. An appraisal is an estimate of a property’s overall market value. A home inspection is much more detailed and practical. It is also not a code inspection and therefore does not report on building code compliance or give a “passing” or “failing” grade. It is defined as an objective visual examination of the structure and systems of a home by an impartial, neutral third party not related to the buyer or seller. In layman’s terms, it shows you what’s wrong with the property you want to buy or sell and if it is serious enough to prevent a sale.
The three main points of the inspection are to evaluate the physical condition of the home, including structure, construction and mechanical systems; identify items that need to be repaired or replaced; and estimate the remaining useful life of the major systems, equipment, structure, and finishes. Bottom line: a home inspection is to inform the buyer of any readily visible major defects in the mechanical and structural components, and to disclose any significant health or safety issues.
What Does a Home Inspection Cover?
A home inspection includes a visual examination of the house from top to bottom. There are hundred of items a home inspection covers, including general structure, flashings, basement or lower level, framing, central cooling and heating, chimneys, plumbing and electrical systems, drainage, bathrooms and laundry facilities, foundation, common safety devices, fireplaces and wood stoves, kitchen and kitchen appliances, general interior, attic, insulation. ventilation, roof, and exterior.
An inspector cannot report on defects that are not visible. For instance, defects hidden behind finished walls, beneath carpeting, behind storage items and in inaccessible areas, and even those that have been intentionally concealed. Systems that are seasonally inoperable (swamp coolers, air conditioning, furnaces) will not be turned on during the inspection.
How Do I Find an Inspector?
I can always help you find a trusted Home Inspector that I have worked with in the past. You can also get recommendations from your friends and family. If you don’t know anyone who has hired a home inspector, you can find home inspectors by google-ing “Home Inspection Services.” When interviewing inspectors, be sure to ask for references and any memberships in professional associations. Find out about the inspector’s professional training, length of time in the business, and experience.
It’s a good idea to be present during the inspection for a couple of reasons: First, you can ask the inspector questions during the inspection. Also, the inspector will have the opportunity to point out areas of potential trouble, which will mean more to you if you see it with your own eyes than read it in the inspector’s report later. Many inspectors also will offer maintenance tips as the inspection progresses.
Is the Seller Obligated to Make Suggested Repairs?
The seller is not required to make any repairs, replacements or maintenance since this is not a code inspection. However, the buyer can use the inspection report as a negotiating tool. For instance, if certain repairs or replacements are made, the buyer might offer to pay more, or if they’re not, the buyer can bid lower.
Also, never allow an inspector to contract with you to make repairs he/she has suggested — this is a major conflict of interest, not to mention unethical. However, some inspectors do offer a guarantee or warranty on their service for an additional fee, although it is not a standard practice and not required.
How Much Does it Cost and How Long Will it Take?
Remember that a thorough, accurate home inspection takes time. The last thing you want to do is to try to hurry the inspector along. The inspector’s most important priority is accuracy, and accuracy takes time. The chances of mistakes and missed conditions are much more likely the more the inspector rushes through. Expect your home inspection to take anywhere between two and five hours (allowing about one hour for each 1,500 square feet of living space over 3,500 square feet). Of course, older homes will take longer than newer ones.
Expect your inspection to cost anywhere from $200-$500 depending on size. The cost is worth it and may be one of the most important investments you make when buying a home.
I highly encourage all of my clients to perform a home inspection! If you have questions about the home inspection process, please feel free to reach out to me at any time!
UNDER CONTRACT – Cinnaminson, New Jersey
It has been a long, stressful, and down right HARD journey for these particular buyers. We’ve been working together since December. Seeing homes on beautiful days, rainy days, hot and cold days, snow storms and hail storms — we’ve trecked through it all…
Just to see…
- The good one (32x)
- the badly flipped one
- the awesome flipped one!
- the open house one
- the “why did we see this” one (hi, mayo jar!)
- the maybeeee one
- the office exclusive one
Which lead us to write up 16 offers… and win
JUST ONE
But when the Buyers Momma gives it a 9.5/10 you know it’s the BEST ONE.
Their journey isn’t over yet, and I can’t wait to tell you even more, but we’re almost there!
I’m pretty sure we’ll all be in tears at that signing table. For now, it’s time to put in the work to get them there.
Cheers to you M&R!
