10 Reasons to Work with a Local Realtor

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1-Local Realtors will know why some homes on the same street are worth more than others.

2-They can determine accurate prices on specific homes in the neighborhood.

3-They may know who previously owned homes in the neighborhood, and why they sold them.

4-They know which streets in a neighborhood are more desirable than others.

5-They know the listing agents in the area and can negotiate with them and get the inside information.

6-They can advise you on which agents take overpriced listings and which take listings at market value.

7-They can refer you to local home inspectors, and they know if there are any inspections that should be performed that are specific to the area.

8-They know about homeowners associations that may be in the neighborhood, and what their rules and regulations are.

9-They know what attributes a buyer in that neighborhood should be seeking.

10-They know what you need to know before you even have to ask!

From June Gloom to June Bloom

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Last year, 2020 – the ultimate “June Gloom”. This year, 2021 is bringing us “June Bloom”! See the red demand line in the chart coming down? How about the blue supply line that has just begun to sideways?

Historically speaking, summer is a busy season for real estate as families prefer to move when the kids are out of school, yet 2020 was an anomaly. Covid-19 test results were peaking last summer, so most of us stayed home to self-quarantine in an effort to keep our families healthy. The real estate market dramatically changed because homeowners took down their for-sale signs because they did not want people (and germs!) entering their homes. This led to even lower supply numbers than we previously had seen.

Demand remained constant because of lower interest rates. As demand remained strong and supply fell we saw prices rise. Supply fell because of a few factors:

  1. Record low building across the country as home builders were still gun shy from the last boom/bust.
  2. Sellers are pulling homes off the market because they didn’t want to invite covid into their home.
  3. Sellers started to see the value of their homes go and it’s hard to sell an appreciating asset.

Multiple offers became the norm. Buyers had to come out of pocket to cover the difference between appraised values and purchase price. Let me say that in a different way. Buyers had to have more cash to buy a house than the norm because when they were under contract for $315,000 or $3,500,000 and the home would only appraise for $300,000 or $3,000,000 it meant they had to negotiate down the seller or come out of pocket to cover the price above appraised value.

Look at these Cromford Market Index numbers  – Cromford Market Index is how balanced the market is between buyers and sellers. 100 is balanced. We’ve been at record highs, but all cities except for Surprise has turned back towards balanced.

Why June Bloom?

Today, as we prepare to turn the calendar to June and summer 2021 is upon us, the real estate market is slowly turning back to normal. Mask mandates are being lifted and for sale signs are going back up – even though we’re still severely under average supply levels.

Because the higher-priced houses have closed and can now be used for appraisals, it’s easier and requires less cash to buy a house today than in February. Appraisals catching up to values means less cash needed to buy a house at the agreed-upon contract price. We actually had a contract for a buyer at $315,000 this week that appraised for $330,000!! Woo-hoo!! Instead of coming to the table with $15k cash, they came to the table with $15,000 of equity.

In the chart below you can see the Cromford Market Index turned 3 months ago! That’s a good thing. Another reason why I love this chart is because the CMI is overlaid on average appreciation levels. You can see the last time the CMI dipped below balanced, it took almost a year for prices to stop appreciating.

Supply has started to creep up.

Demand is starting to creep down.

We’re by no means back to a “buyer’s market” but at least we’re done going to an ultra extreme “seller’s market”.

If you are a buyer and were worn out by the craziness and cash reserve requirements, the good news is it’s getting a little easier. Yes, prices are higher than a year ago, but at least the difference in purchase price can be financed.

2021: The Year to Save THOUSANDS on Commissions

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2021

Supply & Demand
Active listing count in ARMLS is the lowest ever, with only 4364 properties for sale. The average number of active listings for this millennium is 28,539!

Last year finished as the 2nd highest number of sales through MLS; 105,368. The record in 2005 was 106,810. We have 40% more people in Metro-Phoenix in 2021 vs 2005 but we haven’t seen the number of sales exceed that record year.

When Will This Market Stop?
Two most important watch items – declining stock market will hurt the luxury momentum and/or interest rates rising at a quick pace. In 2013 interest rates rose by 1% and inventory rose by 11,000 homes immediately following.

Lower Commissions
One of our new tools in 2021 allows the seller to pay half of the traditional fees to sell. We’re excited to talk with you about it!

Last but not least, THANK YOU!
We’ve helped more clients this past year than ever. We appreciate your continued support and love bringing commission savings tools to you.

Call or Text me at 602-329-7782!

www.GoodGlendaleHomesForSale.com

Understanding Title Insurance

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Title insurance is a mortgage term we’ve all heard when buying real a house, but what exactly is it?  Why is it necessary?

Simply explained, title insurance is another form of insurance for your home.  Just as flood insurance and homeowner’s insurance protects against loss from theft or fire or floods, title insurance protects the title to your home from financial hazards.  When you purchase a home, you’re not purchasing the actual land or the building, you are actually purchasing the title to the property (i.e., the right to use and occupy the property).

The title to the property you intend to purchase may already be affected by claims or rights filed by others, and these claims may limit your use of the property and may even cause financial loss.   Therefore, by purchasing title insurance you are authorizing a search of public land records surrounding the property you intend to purchase.  A title agency typically will conduct this search and will look for any evidence of issues surrounding the title.  For example, there may be a lien against the property due to the seller’s unpaid taxes, pending legal action against the property, or an unknown heir of a previous owner who claims ownership of the property.   Being aware of these issues will enable you to require these issues to be addressed before you take title to the property.

Purchasing title insurance will protect against these hazards and defects that may exist in the title and is purchased at one time, instead of annually.   Even though this is a short summary of title insurance, we hope this has shed some light on a common part of a real estate transaction.

Every transaction is different, and while I’m unable to give legal, tax, or accounting advice, I look forward to helping you navigate your own process with ease and clarity.

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How Changing Jobs Affects Buying a Home

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For most people, changing employers will not really affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money. However, for some homebuyers, the effects of changing jobs can be disastrous to your loan application.

How Changing Jobs Affects Buying a Home

Salaried Employees

If you are a salaried employee who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem. Just make sure to remain in the same line of work. Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.

Hourly Employees

If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems.

Commissioned Employees

If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home. This has to do with how mortgage lenders calculate your income. They average your commissions over the last two years. Changing employers creates uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings. Changing jobs would negatively impact your ability to buy a home.

Bonuses

If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income. Changing employers means that you do not have the two-year track record necessary to count bonuses as income.

Part-Time Employees

If you earn an hourly income but rarely work forty hours a week, you should not change jobs. There would be no way to tell how many hours you will work each week on the new job, so no way to accurately calculate your income. If you remain on the old job, the lender can just average your earnings.

Overtime

Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job, your lender will give you credit for overtime income. They will determine your overtime earnings over the last two years, then calculate a monthly average.

Self-Employment

If you are considering a change to self-employment before buying a new home, don’t do it. Buy the home first.
Lenders like to see a two-year track record of self-employment income when approving a loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan. If you are considering changing your business from a sole proprietorship to a partnership or corporation, you should also delay that until you purchase your new home.

Closing Costs: A Crash Course

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green backyard photoUnless you’ve been involved in several real estate transactions, or you work in the field of real estate, you may not understand exactly what closing costs entail. You’re not alone, as these costs can be confusing to those not in the know. Here’s a crash course of these omnipresent real estate transaction fees:

To state it simply, closing costs are the additional fees associated with processing the mortgage.  These fees, however, are not paid to the mortgage company. The bulk of closing costs is comprised of the lender’s fees. These fees include the appraisal fee, which is an independent assessment of the value of the property being purchased, as well as the credit report and any property taxes. Lender’s fees also include mortgage and homeowner’s insurance, as well as any flood certification and pre-paid interest charges. These fees may also include origination and discount points depending on your lender, as well as loan application and loan processing fees. As a general rule, closing costs are assumed by the buyer of the property (VA mortgages are one exception to this rule) and are paid at the time of closing of escrow.

HOA transfer fees and HOA dues are typically also included within closing costs.  Title fees are also part of closing costs. These fees include the title service fee, which covers the handling of title documents and funds, as well as half of the settlement and escrow fees, which cover the fees for the title search and examination. Finally, title fees also include any title insurance. Recording fees are another part of closing costs and include recording fees, transfer taxes, and an affidavit of property value.

While this is by no means an exhaustive list of the transaction fees considered to be closing costs, I hope this has shed some light on this part of real estate transactions. While every transaction is different, I look forward to helping you navigate your own real estate transaction as easily and simply as possible. Call or text me at 602-329-7782 with your questions.

Record Low Interest Rates

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If you’re thinking of buying a house, now is a great time to take advantage of the affordability that comes with low mortgage rates. This is especially great news for many buyers who were unable to purchase last year, or earlier this year due to the coronavirus pandemic.

With rates reaching all-time lows, it’s now less expensive to borrow money. According to Freddie Mac, mortgage interest rates are currently hovering near a five-decade low. As a result, buyers can afford 10% more home than they could a year ago, all while keeping the same monthly mortgage payment. Subsequently making homes more affordable over the lifetime of the loan. The impact your interest rate has on your monthly mortgage payment is significant. For example, an increase of just $250 in your monthly payment can add up to $3000 per year or $90,000 over the life of your loan.

Whether you’re thinking of buying or selling a home this year, there are advantages today that are rarely available. When you’re ready to learn more about how record low-interest rates can help you buy your dream home, call me for recommendations of mortgage experts to find the best home loan for you. 602-329-7782

Click HERE to begin your new home search!

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Questions to Ask Before Buying a Home

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With mortgage interest rates at an all-time low, many first-time homebuyers are ready to buy. But are you really ready?

Why Do I Want to Buy a House?

Before you start house shopping, ask yourself why you want to buy a house. Many first-time homebuyers are pressured into buying because family and friends push them. They convince first-time buyers that mortgage interest rates are so low that now is the right to buy. While it’s true interest rates are at an all-time low, buying a home for the wrong reasons often results in disaster. Instead, buy a house because you want a stable place to live or a place to call “home”.

Can I Really Afford It?

Do you feel safe enough in your job to commit to a 30-year mortgage? Do you have enough stashed away in savings to cover your mortgage for six months? Being able to answer “yes” to these two questions is important for your financial security when buying a house. It’s important that your monthly mortgage payment be affordable. Some lenders may approve you for a loan that is more than you can comfortably afford. Plus don’t forget that your monthly mortgage payment is only the beginning. You still have to pay homeowners insurance, property taxes, as well as pay for maintenance, repairs, and the inevitable home improvement projects.

Will I Want to Live Here in 5 Years?

As you’re searching for neighborhoods and homes, imagine staying there for five years. Do the homes, neighborhoods, and cities have everything you need to be happy? Is the house big enough to accommodate a growing family (if you decide to have one)?

Without a doubt, now is a great time to buy a home. Just make sure you’re buying for the right reasons. When you’re confidently ready, give me a call, I’d love to help you buy your first home! 602-329-7782

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Advantages of Buying a Home

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Buying a home is often referred to as the “American Dream.”  While there are many obvious benefits of owning a home, there are also some that are not so obvious.

1-Stable Monthly Payments

If you choose a fixed-rate mortgage, then your monthly payments will remain mostly the same, which is one of the best benefits of owning a home. When renting a property, there is always the unknown if the monthly payments will increase each year when you renew your lease. Consistent monthly payments that come with owning a home can provide some peace of mind when it comes to creating a monthly budget. Of course, monthly payments can change when owning a home if property taxes or homeowners insurance change, but the amount of change in property taxes is typically a very small amount.

2-Opportunity to Build Equity

The longer that you own a home, the more you pay towards the principle balance of your mortgage.  As the balance of the mortgage lowers, and hopefully the value of the property increases, the larger the equity!

3-Cheaper Than Renting Overtime

Undoubtedly, there are many associated when buying a home, such as the down payment, appraisal fee, and homeowners’ insurance.  The upfront cost to buy a home is substantially more than just paying monthly rent to a landlord. Yet, over time, owning a home is cheaper than renting which is a great benefit. In Arizona, if you compare a rental property and the monthly mortgage of a comparable home, the cost of ownership is typically much less.

4-Owning a Home Provides Tax Advantages

Paying taxes is a necessary evil, but a great benefit of owning a home is

the tax advantages that it provides.  Arguably the biggest tax advantage of owning a home is the option to deduct paid monthly interest from your tax returns. If you’re unsure how owning a home will impact your taxes, it’s recommended that you discuss it with your accountant so you fully understand how owning real estate will impact you come tax season.

5-Build Your Credit

There are many factors that impact a person’s credit score, one of the most important being the length of credit history.  Since the length of a mortgage is typically 15 or 30 years, having a mortgage on your credit history is a great way to lengthen the average of your credit accounts.  In addition to improving the average length of credit accounts, each and every month that a mortgage is paid on-time it shows that you’re a responsible borrower which not only can improve a credit score but also improves the chance of approval for future credit accounts.

Owning a home is much more than just having a place to live. Give me a call when you’re ready to become a homeowner! 602-329-7782

buying a home

Homebuying During the Coronavirus

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house for saleWith mortgage rates at all-time lows and an uncertain future due to the current Covid-19 pandemic, is now a good time to buy a home? It may feel contradictory to purchase a home at this time, however, for people who feel confident about their job security and finances, this might be the perfect time to buy.

Why Making the Move Now May Be Right for You

House hunting during the coronavirus can have its benefits. There may be less competition for the houses in the areas where you might be planning to move, and sellers may be more motivated to sell or more flexible on price. Once the crisis passes, there may be more house hunters back on the market and prices may escalate due to a more competitive market that benefits sellers rather than buyers, so taking a few steps forward now will put you ahead of the game.

Use This Time to Research the Market

Despite the decrease in the number of newly-listed homes, there are still excellent options in property listings. This is a time to research the market and find your preferred property in a community you like. Take this time to expand your search to other surrounding neighborhoods that might have homes with excellent value for money, amenities, and facilities.

As you spend more time at home, it’s an opportunity to assess your current home and determine the level of functionality and comfort it offers you. That helps in knowing your priorities when searching and, consequently buying a home.

Get Preapproved for a Mortgage

When you do find the home of your dreams, being preapproved for a mortgage proves to the seller you are serious. It’s possible to get preapproved online through some banks. Mortgage preapproval is a letter from a lender that indicates how much you are qualified to borrow from the lender, at a specific interest rate.

Virtual Home Viewing

Many real estate agents post virtual tours of properties for sale on their websites. When you take a virtual tour or attend a virtual open house, you can get a realistic view of the property. Then, with a click of the mouse, you can see all the details that are important to you. In addition, by touring homes virtually, you can see many more than would be possible in a single day with your real estate agent.

Prepare Your Home For Sale

While entertainment, sports, and other social events are canceled, take advantage of this while to prep your current home for the market. Preparation may include anything from mowing the lawn, exterior repairs, tidying the gutters, and decluttering the interior.

Start with a DIY approach to reduce expenses before calling the professionals. Do an online home improvement search to note the additional décor that can enhance the visual appeal of the home.

Do you have questions if now is the right time for you to buy? Call me today, I’d love to help answer all your questions and find your new home when the time is right for you! 602-329-7782