Move-Up vs. Second Home: Which One Is Right For You?

The pandemic has changed the way many of us live, work, and attend school—and those changes have impacted our priorities when it comes to choosing a home.

According to a recent survey by The Harris Poll, 75% of respondents who have begun working remotely would like to continue doing so—and 66% would consider moving if they no longer had to commute as often. Some of the top reasons were to gain a dedicated office space (31%), a larger home (30%), and more rooms overall (29%).1 

And now that virtual school has become a reality for many families, that need for additional space has only intensified. A growing number of buyers are choosing homes further from town as they seek out more room and less congestion. In fact, a recent survey found that nearly 40% of urban dwellers had considered leaving the city because of the COVID-19 outbreak.2

But not everyone is permanently sold on suburban or rural life. Instead, some are choosing to purchase a second home as a co-primary residence or frequent getaway. Without the requirements of a five-day commute, many homeowners feel less tethered to their primary residence and are eager for a change of scenery after spending so much time at home.

If you’re feeling cramped in your current space, you’ve probably considered a move. But what type of home would suit you best: a move-up home or a second home? Let’s explore each option to help you determine which one is right for you.

WHY CHOOSE A MOVE-UP HOME?

A move-up home is typically a larger or nicer home. It’s a great choice for families or individuals who simply need more space, a better location, or want features their current home doesn’t offer—like an inground pool, a different floor plan, or a dedicated home office. 

Most move-up buyers choose to sell their current home and use the proceeds as a downpayment on their next one. If you’re struggling with a lack of functional or outdoor space in your current home, a move-up home can greatly improve your everyday life. And with mortgage rates at their lowest level in history, you may be surprised how much home you can afford to buy without increasing your monthly payment.3,4

To learn more about mortgage rates, contact us for a free copy of our recent report!
“Lowest Mortgage Rates in History: What It Means for Homeowners and Buyers”

One major benefit of choosing a move-up home is that you can typically afford a nicer place if you spend your entire budget on one property. However, if you’re longing for that vacation vibe, a second home may be a better choice for you.

WHY CHOOSE A SECOND HOME?

Once reserved for the ultra-wealthy, second homes have become more mainstream. Home sales are surging in many resort and bedroom communities as city dwellers search for a place to escape the crowds and quarantine in comfort.5 And with air travel on hold for many families, some are channeling their vacation budgets into vacation homes that can be utilized throughout the year. 

A second home can also be a good option if you’re preparing for retirement. By purchasing your retirement home now, you can lock in a low interest rate, start paying down the mortgage, and begin enjoying the perks of retirement living while you’re still fit and active. Plus, it’s easier to qualify for a mortgage while you’re employed, although you may be charged a slightly higher interest rate than on a primary home loan.6

One advantage of choosing a second home is that you can offset a portion of the costs—and in some cases turn a profit—by renting it out on a platform like Airbnb or Vrbo. However, be sure to consult with a real estate professional or rental management company to get a realistic sense of the property’s true income potential.

WHICH ONE IS RIGHT FOR ME?

You may read this and think: I’d really like both a move-up home AND a second home! But if you’re dealing with a limited budget (aren’t we all?), you’ll probably need to make a choice.  These three tactics can help you decide which option is right for you.

1. Determine Your Time and Financial Budget


You may meet the bank’s qualifications to purchase a home, but do you have the time, energy, and financial resources to maintain it? This is an important question to ask yourself, no matter what type of home you choose.
Most buyers realize that a second home will mean double mortgages, utilities, taxes, and insurance. But consider all the extra time and expense that goes into maintaining two properties. Two lawns to mow. Two houses to clean. Two sets of systems and appliances that can malfunction. Second homes aren’t always a vacation. Make sure you’re prepared for the labor and carrying costs that go into maintaining another residence.
Of course, some move-up homes require more work than a second home. For example, if your move-up option is a major fixer-upper, you’ll probably invest more energy and capital than you would on a small vacation condo by the beach. Have an honest discussion about how much time and money you want to spend on your new property. Would a move-up home or a second home be a better fit given your parameters?

2.Rank Your Priorities

If you’re still undecided, make a wish list of the characteristics you’d like in your new home. Then rank each item from most to least important. This exercise can help you determine your “must-have” features—and which ones you may need to sacrifice or delay. Here’s a sample to help you get started:

FEATURE
Dedicated home office
Extra bedroom
Pool
Walk to the beach
Big backyard
Close to friends and family
Short commute to the office
Investment potential

3.Explore Your Options

Once you’ve determined your parameters and priorities, it’s time to begin your home search. 

If you’re still not sure whether a move-up home or a second home is right for you, we can help.

Contact us to schedule a free consultation. We’ll discuss your options and help you assess the pros and cons of each, given your unique circumstances. 

We can also send you property listings for both move-up homes and second homes within your budget so you can better envision each scenario. Sometimes, viewing listings of homes that meet your criteria can make the decision clear.

LET’S GET MOVING

Whether you’re ready to make a move or need help weighing your options, we’d love to help. We can determine your current home’s value and show you local properties that fit within your budget. Or, if your heart is set on a second home in another market, we can refer you to an agent in your dream locale. Contact us today to schedule a free, no-obligation consultation!

Sources:

  1. Zillow –
    https://www.zillow.com/research/coronavirus-remote-work-suburbs-27046/ 
  2. The Harris Poll –
    https://theharrispoll.com/should-you-flee-your-city-almost-40-have-considered-it-during-the-pandemic/
  3. MarketWatch –
    https://www.marketwatch.com/story/mortgage-rates-keeping-falling-so-will-they-finally-drop-to-0-2020-08-13
  4. Toronto Star –
    https://www.thestar.com/business/2020/08/07/you-can-get-a-fixed-rate-as-low-as-184-per-cent-which-is-unbelievable-low-mortgage-rates-driving-up-home-prices.html
  5. Kiplinger –
    https://www.kiplinger.com/real-estate/buying-a-home/601091/timely-reasons-to-buy-a-vacation-home
  6. The Press-Enterprise –
    https://www.pe.com/2018/11/17/5-tips-on-when-should-you-buy-a-retirement-house-hint-before-you-quit-work/

Is It Better to Rent or Buy Right Now?

Key Takeaways:

  • Homeownership remains one of the best ways to build long-term wealth
  • The cooling housing market is causing bidding wars for rental units
  • Our experienced team of dedicated agents will help you secure a home!

The Cost of Rent Is Rising

Recent reports on current conditions in the real estate market have highlighted a new trend developing in today’s heated market: rising rents. In addition to increasing rental costs, bidding wars within the apartment and housing rental market are increasingly becoming commonplace, with some offering hundreds of dollars more than the asking price. 

If you’ve been renting and wondering if buying a home instead of renting would be a better use of your money, the good news is that, yes, buying a house is still a better use of your money. So let’s take a closer look at what’s happening in today’s market and why buying a home remains the better option for building your wealth versus renting. 

Why is rent increasing?

According to real-estate company Redfin, the median U.S. asking rent passed $2,000 for the first time in May, and it has risen 15% over the past 12 months. While bidding wars have long been a staple of hot housing markets, where buyers compete with offers above the seller’s listing price, these contests are now becoming more commonplace in the rental market. 

Historically, rents have risen in step with home prices. As home values rise, renters become more likely to stick to renting, taking pressure off home prices and demands on the housing supply. The push and pull between these two facets of the housing market keep the two markets roughly in balance.

However, an increasing number of white-collar professionals are reluctant to buy because of record-high home prices, rising mortgage rates, and the limited supply of housing that is continuing to haunt the global housing market. As a result, many have said they are renting instead, helping drive a frenzy for leased properties of all kinds and helping fuel the trend of offering above asking rents, which isn’t helping anyone. Real-estate agents from New York to Chicago and Atlanta say they see more people making offers above asking to lease homes and apartments they will never own.

To rent or to buy? It’s not that complicated!

Happy family with daughter holding keys from their new home, selective focus on hands, closeup.

As anyone who has ever rented will tell you, when it’s time to renew your lease, there is an expectation that the cost of rent will increase. Usually, the new monthly rental price will rise nominally, and it’s not that big of a deal for renters to absorb the increase. However, in today’s market, nearly every usual trend has been upended, and renting is no exception. Yet as more individuals experience sticker shock as they renew their rental agreements, with some increases being several hundred dollars more a month, many have begun to question the efficacy of renting for their future. 

So as more frustrated buyers retreat from the market and steer toward renting, the savvy move to be made right now is buying a home. Homeownership remains a stable long-term investment despite the higher mortgage interest rates, because owning a home comes with certain tax benefits that renting does not, helping your money go further. Benefits such as deductions on mortgage interest, discount points, mortgage insurance, and property taxes will reduce your taxable income and help you keep more of your hard-earned money.

Another factor to keep in mind is that as the housing market cools off and bidding wars in the rental market increase, the price of homes is beginning to see price reductions from the seller’s side of the market, which indicates that now is a terrific time to consider becoming a homeowner. 

Secure Your Future

Serious buyers understand that waiting will cost them more later. They should approach today’s competitive market of rising rates and low inventory as a motivating factor to buy sooner, not a reason to wait. Let’s connect today to see what homes are in your budget, prepare you to become a homeowner, and start building your wealth sooner rather than later.

Home Equity Is Up – What’s Your Next Move?

Key Takeaways:

  • With home values continuing to rise, what are the best options to maximize your equity gains?
  • Now might be the perfect time to tap into your equity for a vacation home or investment property.
  • Don’t delay—contact us and put your home equity gains to work for you!

Homeowners Have Historic Equity Gains

It’s no secret that home equity values are at historic highs right now. Surging home prices have caused tappable equity to set a record in 2021, hitting $9.9 trillion, mortgage technology and data firm Black Knight Inc reports. The firm also noted that the average mortgage holder has $185,000 in tappable equity. 

For current homeowners, these recent gains are tremendous and mean all your hard work has paid off. Of course, the big question in many homeowners’ minds now is: what should I do with the equity I’ve gained? So if you’ve been calculating your equity gains and wondering what the best thing to do with them is, let’s explore some ways you could maximize your equity growth.

Renovations, Repairs, and Restoration

Happy smiling woman in goggles with saw sawing wooden board

With the current equity built up in your home, you can borrow against it by taking out a home equity loan or line of credit (HELOC) and using that money for whatever you want. While homeowners commonly borrow against their equity to fund renovations or repairs, you can take out a home equity loan to use for any goal you have in mind. But if your home desperately needs a new roof, windows, newer energy-efficient appliances, or even an addition, tapping into your equity to make that happen is warranted. And with recent drops in lumber costs, this may be an ideal time to get that extra space you’ve been dreaming of.

There’s also the option to do a cash-out refinance. With a regular refinance, you typically borrow the exact amount you owe on your mortgage. However, with a cash-out refinance, you borrow more than your remaining mortgage balance and receive a check for the difference. And as with a home equity loan or HELOC, you can use that money for any purpose you choose.

Purchase a Second Property

Senior couple standing outside log cabin in countryside

According to CoreLogic, nationally, home prices increased 19.1% between January 2021 and January 2022, which has been fantastic news for current homeowners. Equity gains don’t just benefit those looking to sell their homes to walk away with a substantial profit. If you don’t have plans to sell your home in the near term, having a lot of equity in it affords you plenty of different options to put that money to good use. 

Consider using your existing equity to buy the vacation home you’ve been dreaming of, or to purchase income-producing real estate that may generate passive income and possibly lower your monthly costs, or other investment assets. Until recently, financing a vacation home was the same as financing a primary residence. But the Federal Housing Finance Agency recently announced increases to upfront fees for second-home loans that took effect on April 1, 2022. As a result, homeowners have been encouraged to tap equity from their primary residence to pay for their secondary property.

Make a Smart Move

Your decision on what to do with your equity gains depends upon your financial situation and long-term real estate goals. So as you’re watching your equity grow and wondering how to put that money to good use, having a trusted, experienced real estate team behind you is your best first step to figuring that out. You’ll rest easy knowing that we’ve seen the ups and downs of the market over the years, so contact us today to discuss your options!

Now Could Be the Best Time to Sell Your Home

Key Takeaways:

  • Shifting buyer demand creates lucrative opportunities for decisive sellers
  • Higher mortgage rates have set fire to this already hot housing market
  • Don’t delay—now is the time to contact us and get your home on the market!

The current housing market

With a sudden jump in home listings recently, today’s hot housing market has many homeowners wondering if now is the best time to sell. Of course, trying to time the market perfectly is challenging, though if there ever was a time to sell, this is absolutely a great one. 

Everyone’s situation is different, but if you’ve been thinking about selling your home lately, contact us today to begin the process and maximize your success. 

The supply of homes for sale, explained 

Saleswoman giving home keys to new property owner.

Compared with last year, the supply of homes for sale jumped 9% in May, which is striking considering the historically low supply of home inventory that has defined the US housing market this year. 

As sellers rushed to put their properties onto the market and cash in their equity gains, new home listings rose nearly twice as fast as a year ago in May, while pending home sales fell by almost 4% in April. And with sales of newly built homes dropping by a much broader 16% compared with March, this marked the sixth straight month of sales declines. 

To fully appreciate this drop-off, consider that this softening in demand for housing marks the greatest slowdown on record in nearly a decade. 

Home sales are slowing because mortgage rates have risen sharply since the start of the year, with the most significant gains coming in April and early May. The average rate on the 30-year fixed mortgage started the year close to 3% and is now well over 5%, causing new home buyers to slow down a bit.

The reality of rising mortgage rates

Businessperson's Hand Protecting Balance Between Percentage Red Cubic Block And House Model On Wooden Seesaw

While homeowners and homebuyers certainly enjoyed locking in 30-year fixed mortgages at the historic low of 2.68% in December 2020, this is far from the norm. It was only a few years ago, during the decade of the 2010’s, that mortgage rates averaged between 3.45% to 4.87%—not that far off from today’s average of just over 5%. 

If you step back even further in time, the absolute highest mortgage rate was a whopping 18.45% in 1981! Like today, that was due to the Federal Reserve raising the federal funds rate to combat inflation, causing mortgage rates to spike. But unlike potential homebuyers in 1981, we have good news on the horizon, as we’re seeing mortgage and refinance rates start to decline for the first time in weeks and the economy showing signs of stabilizing. 

An overdue housing market correction

Chart showing home values changing over time.

If you’re still worried about the housing market, you don’t need to. The good news in these reports is that homes are still selling, and in many cases, they’re still selling above their asking price. The housing market is cooling down due to a lull in buyer demand. However, this cooldown is a much-needed correction to what has been a short-term housing market fueled by the pandemic. 

The critical difference in the market now is that with fewer buyers competing with one another over available housing, home prices rose another 21% in May, meaning equity gains are still there for homeowners. And if you’re looking to sell to downsize and lower your monthly expenses, you’ll be perfectly positioned to find your ideal home with fewer buyers competing with you in the market.

Sell Now for Your Best Return

If you’re considering selling your home, this may be the best possible time to list. With a trusted, experienced real estate team behind you, you can rest easy knowing that we’ve seen the ups and downs of the market over the years. You can always make a smart move, so contact us today to discuss your options!

Inflation – and Home Values – Are Up. Should You Sell?

Key Takeaways:

  • Home values are rising faster than inflation, making homes a prized asset
  • This housing market offers unique opportunities for buyers and sellers
  • Contact us today to secure your assets and safeguard your future!

The state of real estate and inflation

As inflation soars to near 40-year highs and raises the cost of everything, many are looking for innovative ways to secure their assets against inflationary losses. Additionally, given the housing market’s recent volatility (primarily driven by historic low levels of housing inventory that have caused an imbalance between supply and demand), it’s understandable that many might consider real estate to be a wrong or risky move right now. But the great news is that nothing could be further from the truth. Let’s explore how and why buying or selling a home can safeguard you against inflation. 

The housing market can protect you from inflation

Image of homes and a graph representing housing market and inflation.

Real estate remains a stable area for investment and profit realization because a home’s value does not increase in relation to currency; it increases based on demand. So if you’ve been holding back from buying because of today’s market pressures, consider that inflation is up even more than mortgage interest rates, making it a smart move. Similarly, if you’re considering selling, the demand for housing has never been greater, which is terrific news for anyone looking to cash out their equity to hedge against inflation. 

Buying a home: by the numbers

Couple showing keys to new home.

Let’s take a look at some numbers. Experts estimate that Americans face an annualized inflation rate of around 15%. Considering that, the current 5% mortgage rate is a bargain for homebuyers in the short term. Moreover, you’re securing an asset that, over time, will increase. And, as you pay down your mortgage, even at 5%, your equity will continue to grow. 

Selling a home: by the numbers

Senior Adult Couple in Front of Sold Home For Sale Real Estate Sign and Beautiful House.

It’s no secret to homeowners that their home equity values have grown over the last couple of years. According to research firm Black Knight, at the end of 2021, Americans were sitting on record-high home equity levels of approximately $9.9 million. So if you’ve noticed homes in your neighborhood selling above their listing price and you’ve been on the fence about selling yourself, now may be a good time to cash in on this opportunity.

Both buyers and sellers can make tremendous gains

Happy family with children moving with boxes in a new house.

In a hot housing market where home inventory is low, competition is fierce, and home equity values are at all-time highs, buyers and sellers can start to feel overwhelmed. But don’t despair: an increase in mortgage rates isn’t stopping homes from selling quickly, nor is it preventing home equities from appreciating. For example, according to the National Association of Realtors (NAR), properties remained on the market for just 17 days in March, with many going for over the asking price!

With more buyers than sellers today, current homeowners looking to sell to fight inflation have the advantage of likely bidding wars, resulting in greater profits and fast-moving homes that don’t stay on the market for very long. For those looking towards homeownership to protect their assets against inflation, reassurance comes from knowing that demand is expected to outpace supply for the foreseeable future, meaning that home equities will continue to rise. And if inflation continues, fixed-rate interest rates will drop again, creating the perfect opportunity to refinance your loan. 

Get Ready to Make Your Move

The first step to buying and selling is crunching the numbers. Our team will help you find the real, up-to-the-minute value of your home using the latest microdata and neighborhood trends. Then, we’ll work with you to figure out the best strategy to shelter your investments and assets from inflation. Contact us today!

5 Easy Mortgage Repayment Options After COVID-19 Forbearance

Key Takeaways:

  • The CARES Act kept homeowners in their homes with mortgage forbearance
  • There’s plenty of options to help homeowners transition to repayment
  • No one needs to face foreclosure – contact us today to discuss your options!

Mortgage forbearance helped homeowners

With the dust of COVID-19 settled, that means the resumption of mortgage payments for many Americans. And in a post-forbearance real estate market, it may be challenging to know the correct next step after the last couple of years. But the good news is that there’s no bad news! The CARES Act enacted by Congress allowed homeowners to postpone their monthly mortgage payments. This policy worked, because evictions have not been as severe as many feared, and the calamity of the 2008 housing market is not going to repeat itself in 2022.

The Mortgage Bankers Association estimates that approximately 525,000 homeowners are still in forbearance plans. If you are one of those homeowners moving into a post-forbearance future, there’s no reason to panic: plenty of help is available. Let’s look at the different post-forbearance options and determine which one best suits your needs.

The CARES Act changed the mortgage landscape

Meeting with real state agent signing mortgage loan at bank

When the pandemic struck in early 2020, rumors of the 2008 housing crisis repeating itself soon infused nearly every real estate conversation. Understandably, homeowners have been nervous about repeating history, with fears of eviction and potential homelessness genuinely gripping many Americans. However, contrary to the Great Recession, homeowners have been better protected against the uncertainties of the Covid-19 pandemic.

When Congress declared that homeowners could postpone their mortgage payments for 18 months with no penalty (known as forbearance), this singular act of Congress truly benefited the American homeowner. Additionally, many servicers of mortgages not backed by the federal government voluntarily did the same. And with substantially more equity in their homes than they had at the start of the Great Recession, plus the ability to refinance at historic lows during the pandemic, homeowners were in better financial shape to weather the storm.

Understanding your mortgage forbearance repayment options

mortgage calculator with model house on desk.

Thankfully you’ve got plenty of helpful options as you move out of forbearance and resume your monthly mortgage payments. Here are five options to restart your mortgage payments:

  1. A Reinstatement means paying the total forbearance amount all at once. Remember, this is only one option to discuss with your mortgage lender. You do not have to take this option.
  2. A Repayment Plan allows you to bring your mortgage current over some time (up to 12 months). A repayment plan is an agreement that will enable you to repay the forbearance amount on your mortgage by making additional monthly payments and your regular monthly mortgage payments.
  3. A COVID-19 Payment Deferral allows you to bring your mortgage current by delaying repayment of forbearance amounts without changing other mortgage terms. This option may be available if you cannot afford a reinstatement or repayment plan. You will not be charged interest on the forbearance amounts. However, all sums will be due if and when the property sells.
  4. A Loan Modification permanently changes the terms of your actual loan. Some common examples are changes to your interest rate or loan term. But, surprisingly, and in another historic move to ensure the stabilization of the housing market, the Federal Housing Administration (FHA) announced in April of 2022 that homebuyers would be able to select a 40-year mortgage for the first time.
  5. A Loan Refinance is perhaps one of the more traditional options, and even if you have resolved or are resolving your forbearance plan, you may be eligible to refinance your loan. 

Forbearance doesn’t stop you from selling your home

smiling couple holding sold red card at home with cardboard boxes

The COVID-19 pandemic produced challenges that impacted homeowners’ ability to make timely mortgage payments. Thankfully, taking advantage of the forbearance doesn’t stop you from selling your home, even if you haven’t restarted payments yet. If you can no longer afford your mortgage, but you’ve built up enough equity in your home, one option is to sell it and use the proceeds to help pay off your mortgage and any missed payments during forbearance.

Make an Informed Decision

With more financing options available today than ever before, there’s no reason to worry about mortgage repayment. Contact us today to find out the true value of your home. Then, you’ll be informed and can make a sound financial decision about what type of mortgage is right for you.

Should You Be Worried About a Housing Bubble?

Key Takeaways:

  • Real Estate Bubbles: what are they, are we in one now, and why there’s no cause for alarm.
  • It’s natural to compare today to 2008, but this housing market is vastly different.
  • You can lean on our expertise! We’ve seen all types of markets, so reach out with questions.

With home prices soaring to levels never before seen, it is undeniable that the U.S. housing market is in uncharted territory, with many industry experts speculating that we’re in the midst of yet another housing bubble. However, like snowflakes, every bubble is created differently and is unique. 

As mortgage rates rise and rumors of another crash in the housing market fill the news cycle, it may be tempting to get cold feet and postpone your homeownership dreams. But as we’ll explore below, it’s essential to understand the anatomy of housing bubbles, what causes them and why it’s a term you needn’t fear.

What exactly is a bubble within the housing market?

house property prices bubble of the investment loan interest rate on mortgage

In basic terms, a real-estate bubble is a temporary economic event that occurs periodically and refers to an increase in the overall value of the housing market. When a bubble grows, home values increase; when a bubble pops, property values decrease.

Simple enough, but, what causes the housing market to experience bubbles?

Traditionally, the Law of Supply and Demand dictate a property’s market value. For example, when the demand for housing is high, and supply is low, home prices often rise, typically resulting in a seller’s market. Conversely, when housing supply is high but demand is low, market values fall, resulting in a buyer’s market. However, additional factors such as speculative investing, FOMO (Fear Of Missing Out) panic buying, and risky lending (such as occurred in the 2008 Housing Crash) are all elements that influence the growth and burst of housing market bubbles.  

Why you don’t need to fear housing bubbles

Loving young couple looking at dream house.

We can always count on the old axiom in real estate: “You can never enter the same river twice.” (Fun fact: Greek philosopher Heraclitus came up with that lasting gem!)

What is meant by this is that history does not strictly repeat itself, and for us today in the real estate market, that means that it’s not 2008. As mentioned above, though the market moves in cyclical fashions, most experts do not believe that The Great Recession is repeating itself in today’s market.   

2022 is not 2008 repeating itself

Young woman holding home keys while hugging boyfriend in their new apartment after buying real estate.

The infamous U.S. housing bubble of the mid-2000s had its origins in the unprecedented growth of the subprime mortgage market. Additionally, U.S. government-sponsored mortgage lenders Fannie Mae and Freddie Mac made home loans accessible to borrowers with low credit scores and a higher risk of defaulting on those loans. 

None of this is happening today. 

The current market demand is not the result of easy lending. Instead, today’s rising property values result from the natural market forces of a low supply in housing inventory meeting high demand. But with new home construction expected to surge in the second half of the year, this will help ease demand in the future and stabilize the market overall.

Regardless of whether you’re selling your home or are a first-time homebuyer, the key takeaway for you is this: today’s high home values are not likely to crash any time soon, so it is as good a time as any to enter the market.

You Can Count on Us in Uncertain Times

If you’re feeling unsure about whether to buy or sell a home right now, reach out and rely on our expertise to guide you to make a sound financial decision. Our team has the experience and knows our local market, so contact us today and we’ll work with you to find the right strategy for your situation.

The Top 5 Things You Shouldn’t Do When Buying a Home

Key Takeaways:

  • In a competitive market, you want to make sure you’re doing everything right when it’s time to buy a new home.
  • Stability with your employment and finances is super important, so don’t make any sudden changes.
  • Don’t skip out on working with a buyer’s agent—an experienced real estate agent is an invaluable partner. 

Buying a home is an exciting and sometimes nerve-wracking experience. In addition to finding the right place, you also have to find the right mortgage, and with low inventory in many markets and rising home prices nationwide, securing your dream home can be a challenge if you don’t make the right decisions when preparing to buy. Here are five of the most common mistakes you should avoid when buying a home.

1. Don’t open or close credit accounts

Closeup image of a woman holding and choosing credit card to use

Because mortgage lenders check your credit multiple times throughout the homebuying process, it is crucial that you do not open any new lines of credit or close any existing lines of credit. Doing so can lower your credit score and increase your debt-to-income ratio, both of which are reasons for a lender to deny approval.

It is always a good idea to pay off an existing line of credit, but closing the account removes that credit history from your report. Credit reporting bureaus use your length of available credit to generate your score, so leave your account open and active, but don’t use it until after closing.

2. Don’t switch jobs

Young woman waiting for interview indoors

The most important thing that mortgage lenders look at when considering pre-approval is an applicant’s employment stability. Typically, they want to see two consecutive years of uninterrupted income for approval. Any changes to employment status can signal that the loan may not be repaid—it can be a significant red flag that can derail or delay your closing. Make sure to tell your lender right away if a career change is unavoidable or if you do not have two consecutive years of verifiable income.

3. Don’t shop for homes you can’t afford

For Sale and Coming Soon realtor sign in front of large brick single family house in expansive grass yard for real estate opportunity

Typically, most prospective homeowners can afford a mortgage between two and two-and-a-half times their gross annual income. An easy way to think of this is not exceeding more than 30% of your income.So, if a lender tells you that you can borrow a lot more than that, you should probably find a new lender because your monthly payments may not be manageable if you max out your loan. Use a mortgage calculator before you visit with a lender to help you estimate monthly payments. 

Also, consider that homeownership comes with additional expenses you will need to save for, like maintenance, repairs, insurance, property taxes, homeowner’s association fees (if applicable), and other unforeseen costs. The last thing you want to do is stretch your monthly budget to cover your mortgage, which will eliminate your liquid cash flow for your other financial obligations, like car payments, student loans, and your savings goals.

4. Don’t skip the inspection

Inspector work home building before complete project

Waiving a home inspection can be a costly mistake, and unless you have extra cash to fix up a home, you are gambling with the cost of unforeseen repairs. Home inspections find potential critical issues with the structure and integrity of a house, such as cracked pipes and water damage. They are built into the home buying process to protect the buyer’s investment.

Paid by the buyer and non-refundable, the home inspection fee is a small price to pay when considering today’s costs to replace a furnace, water heater, roof or other costly items. 

Without an inspection, you will have no recourse if a significant issue surfaces after you close on your home. So when you make an offer on a home, include a home inspection contingency that gives you a penalty-free exit from the deal if a major issue is unresolvable before closing.

5. Don’t forget to hire an agent!

Portrait of happy real estate agent looking at the camera while her clients are standing in the background.

Searching for a home on your own is both time-consuming and complicated. That’s why the help of a professional, experienced real estate agent who knows how to navigate the market will guide you to make the best investment of your money. 

Also, if you go to showings without a real estate agent, a seller’s agent may offer to represent you. This can be risky because that agent’s goal is to get as much money for their client as possible from you, the buyer. In addition to helping you negotiate, a qualified real estate agent will have access to home listings before the general public becomes aware of them.  

Best of all, the cost of enlisting an agent won’t come directly out of your pocket. Instead, the seller typically pays it to the seller’s agent, who splits the commission with the buyer’s agent!

Do Find Your Real Estate Team Today!

When it comes to buying a home, there’s a million little details to keep track of. Work with an experienced real estate agent to help you navigate the entire process, avoid pitfalls, and get you the home you’ve been dreaming of. Contact us today to get started!

Oil and Gas Prices on the Rise: How It Changes Real Estate

Key Takeaways:

  1. Oil and gas prices are the highest in United States history!
  2. Individuals and families are shifting how they think about housing, from suburban versus urban to downsizing or going multigenerational.
  3. It’s critical to work with an agent who understands the right fit for you and your family.

Record-high oil and gas prices are changing home buying and selling

It’s difficult to escape the news: gas prices are surging across the nation, with the increase averaging $1 per gallon. With costs at historical highs, the ripple effect changes how we think about everything. That includes the largest line item on any household’s budget: their home. How will this new reality change how people buy and sell real estate? Let’s take a look at some of the main considerations. 

Urban Versus Suburban

Person filling car with gasoline and check balance at the gas pump.

Traditional wisdom says that the suburbs are more affordable with their long commutes, while cities are expensive due to more amenities and desirability. But when the daily commute costs more than it ever has in the history of the country, the conventional advice isn’t necessarily the right move for everyone.

To judge whether relocating from the suburban to the urban is right for you, take a look at the commute time, proximity of local amenities, and public transportation. Some urban centers offer more robust and reliable options for getting around, while others are still heavily car-dependent. If moving into the city won’t get you out of your car, the suburbs are still a good choice. But big city living is an attractive option if you can reduce how often your family drives—or even go from a multi-car family to a single vehicle. 

Reconsider Your Housing Footprint 

Portrait of happy extended multigenerational family all together on sofa at home.

The size of a home is always a big consideration when you’re looking at your next place. Right now, there’s the added pressure of the costs of heating and cooling a home to consider when you think about total square footage. On average, the cost of natural gas is up 24% in February 2022 compared to the previous year, and electricity is up 9%. 

Downsizing can be a smart reason to sell your home and buy a new one, especially if your family situation has changed and you don’t need as much space. With less to heat, cool, and maintain, finding a home that’s just the right size for the stage of life you’re in is something your agent can help you with. 

During the COVID-19 pandemic, families started moving back in together at rising rates. Now, more than 40% of homebuyers consider multigenerational living in their purchasing decision.  New developments are dedicated to building homes and communities that accommodate people at different stages of their lives. And, if the family situation changes, being able to rent out a dedicated space is an excellent source of passive income. 

Whether you’re looking to go small by yourself or go big and share the costs, homes that are renovated with energy-efficient appliances, or new construction with the latest smart home technologies, are especially attractive. These are smart decisions to make now that will also save you costs in the long run, even when oil and gas prices stabilize. 

Act Fast to Lock in Interest Rates

House Model Near Percentage Sign With Keypad Lock Over Wooden Desk

Gas prices are tied closely to mortgage rates. Yep, it really does affect everything! Mortgage lenders want to have an extra cushion over inflation when they set rates, and with the rise of oil and gas prices, interest rates will get pushed up too. If you’re buying a home, it’s time to get serious about making offers. Higher mortgage rates will impact what you can afford. 

For sellers, this can impact the white-hot housing market streak that was the dominant theme for the last few years. With interest rates set to rise, home sellers may want to be flexible about offers, in case the market shifts dramatically as interest rates go up throughout the remainder of the year. Of course, this varies widely by market, and you’ll want to consult your agent before making any decisions on offers on your home. 

Make Your Move

There’s no time to wait—with the market changing this rapidly, you’ll want to leave yourself enough time to have options and make a well-informed decision. That’s why you need to work with an agent that understands the ups and downs of this historic market and considers the needs of you and your family. Contact us today to get started!

Home Sellers: When Should You Reduce Your Listing Price?

Key Takeaways

  • Even in a seller’s market, you may still need to reduce your price
  • Consider if you’ve tried everything else before a price reduction
  • Make sure to seek the advice of your trusted realtor–we’ve seen it all before!

Even in a competitive seller’s market like the one we’re in right now, listing your home for the right price is key. Don’t count on a bidding war happening to get the price you want! Let’s take a look at what you should do before listing your home, indicators that your home is priced too high, and the strategies you can use to make the price right. 

How Do I Figure Out the Right Price?

Image of a family selling a home.

When home prices are rising quickly, low appraisals can affect your listing price. With year-over-year home prices up 17% on average nationwide in 2021—with some markets seeing as much as 35% increases—the appraisal you receive may not reflect other recent asking prices in your area. 

Your experienced real estate agent will use data from the local MLS and consider other homes in your neighborhood and what they sold for recently. They’ll also consider tax data, your property’s previous sale price, and even micro market trends. Working with an agent in such a fluid, dynamic market is essential to getting the price right. 

Since your largest pool of buyers often finds your home within the first 21 days of listing, try to list your home at the right price from the start. If you’re not seeing the offers you thought you would, make an adjustment quickly before the initial interest fades away. 

If the first week of listing your home isn’t resulting in offers, especially in a market this hot, that’s a red flag your home is overpriced. However, if you’re getting offers, and they just aren’t meeting your listing price, it’s a good sign you’re in line with the market and may need a small decrease. 

How Do I Know When to Lower the Price?

Image of a couple working with a real estate agent.

It’s exciting to list your home in such a historic market, but moving too fast and forgetting the basics can hurt your chances of success. Work with your real estate agent to market your home. This includes cleaning and decluttering your home, staging rooms, taking attractive photos, and communicating the value of the property in the listing. 

Rely on the most recent data to find the sweet spot for price. You’ll want to consider homes recently sold within a mile or two of your home, especially ones with the same number of bedrooms and bathrooms and square footage within 20% of your home that closed within the last 90 days.

If all of that is said and done and you’re not receiving any offers, you may need to lower the price. Even in a seller’s market, selling over asking or enjoying a bidding war for a higher price is not guaranteed. Make sure you know the lowest price you’re willing to accept before you list your home, so making a change won’t feel like taking a loss. 

When it comes to finding the new price, there are a few things to consider. While the general advice is to lower anywhere from 0.5% to upwards of 3%, you also want to pay attention to your price bracket and what buyers are searching for. If lowering your price brings you down from $410,000 to $398,000, that will open up your home to a new pool of buyers searching for homes under $400,000. 

Price Your Home Right from the Start

Real estate is a continual learning process, and it takes effort to figure out the right price. That’s why you should work with our experienced, trusted team to get started out right! Contact us today to find the true value of your home based on the most recent, up-to-date, micro-economic data available. Our team is here to help you sell your home for top dollar. 

Top 3 First-Time Home Seller Questions & Answers

Key Takeaways

  • First-time home-sellers need an accurate value before listing.
  • Sellers need to make smart choices on repairs and staging.
  • Offers are evaluated on multiple factors, not just price.

The three most common questions first-time sellers ask our real estate team.

It’s common to be overwhelmed by the number of questions you inevitably run into when you’re selling your home. Does the doorbell work? Are the exterior colors suitable for today’s market? Am I getting what my home is worth? From marketing the house to negotiating a fair market price and making repairs, here are some of the most common questions sellers ask us and some helpful strategies you can utilize when selling your home.

Question 1: How do I know what my home is worth?

Image of a wooden home and a stack of cash representing home value.

Ultimately, a home is worth what someone will pay for it. However, there are three values attributed to any home currently on the market:

  • What the seller thinks it’s worth.
  • What the buyer assumes it’s worth.
  • What a professional appraiser will think it’s worth.

One of the most critical aspects of selling your home is quickly getting those three numbers to align. Most real estate agents freely perform a comparative market analysis of home values to establish a property’s value to determine a selling price. They look at factors such as square footage, construction quality, condition of the home and neighborhood, design, and floor plan, plus all of the neighborhood’s features, like transportation availability, nearby shopping, and area schools. 

Question 2: How do I get my home ready to sell? 

Image of a couple painting the walls in their home.

Nearly all home purchase contracts include an inspection clause. This term is a buyer contingency that allows buyers to back out of the deal if numerous defects present themselves or negotiate their repair. 

The trick to getting your home ready for the market is not to overspend on pre-sale improvements, especially if few houses are on the market with many buyers willing to pay almost any price. On the other hand, making such investments is the only way to stage and sell your house, even in a market that favors sellers.

Here are some quick highlights of expected home improvements and staging tips that every homeowner should have on their checklist going into negotiations:

  • Make sure that your roof is up-to-date; this will get you the highest return on your investment.
  • Fix any maintenance issues, such as leaks, plumbing problems, drafts, rusty areas, squeaky floorboards, mold, or mildew well before buyers can find them.
  • Applying a fresh coat of paint will make rooms look brand-new! 
  • Polishing lighting fixtures and upgrading light bulbs is an inexpensive way to make a home look newer and brighter. 
  • Less clutter helps a home look larger inside, so remove extra objects or furniture to give your home a more spacious feel.

Question 3: How do I pick the right offer on my home?

Image of a woman considering her home selling options with an agent.

While seeing a bid over-asking price will make your heart race, it’s best to take a deep breath and consider the whole picture. Buyers include contingencies, like inspection, financing, and appraisal, in their offers. The fewer contingencies, the better it is for the seller.

You can consider an all-cash offer to eliminate the risk of contingencies. Anywhere from a quarter to a third of home sales now are cash offers, depending on the market, so this is more common than you may think!

What’s your next step after your home sells? The closing timeline can influence choosing your best offer—perhaps you’re in a hurry to move into your new place, or you need some extra time to finish packing. There’s always a lot to consider, and each seller’s needs are different.

The ultimate question: what are my net proceeds?

Because the real estate market is continually changing, and market fluctuations affect property values, your list price, sale price, and closing costs must be based on the most recent comparable sales in your neighborhood. To find out the current value of your home, contact our team today! Selling your home is a team effort that yields more success with the help of the most qualified and skilled realtors.