December 6, 2019

THE 14 QUESTIONS YOU SHOULD ASK A LENDER

. . . Before you sign anything!

Mortgage lending in Washington State is not a regulated industry.  There are hundreds of lenders in our area.  Choosing the right lender for your real estate needs can be confusing.  It is especially difficult when you speak with several different lenders and they seem so convincing.  There is a way to determine who is the most likely to succeed in getting you the loan package best suited for your needs. The key is knowing the right questions to ask.

This list provides you with questions to ask your prospective lender.  The list will not only help you select the right lender, but will also get you the very best from the one you choose.
          Click here to order “The 14 Questions.”

YOUR BUYER’S “LOVE IT OR LEAVE IT!” GUARANTEE

When you purchase your next home with me, move in, and find that you do not absolutely love it, I will resell it for free (for up to six months after the close of escrow).

Why do I make such an offer?  I am confident in my ability to listen to you and in my dedication to finding the “perfect home” for you.  I am willing to offer my services for FREE if your new home is not everything you expected it to be.
          Click here to order a complete copy of my written guarantee.

SAY ‘YES’ TO CRS . . . Certified Residential Specialist

Buying or selling a home can seem like an overwhelming task. But the right REALTOR® can make the process easier — and more profitable.  A Certified Residential Specialist (CRS), with years of experience and success, will help you make smart decisions in a fast-paced, complex and competitive market.

To receive the CRS Designation, REALTORS® must demonstrate outstanding professional achievements — including high-volume sales — and pursue advanced training in areas such as finance, marketing and technology. We must also maintain membership in the NATIONAL ASSOCIATION OF REALTORS® and abide by its Code of Ethics.

When the time is right for your move please contact me . . . I have earned the CRS designation!

4 Questions You Need to Answer Today

1. Why are the prices of homes dropping substantially in today’s market?
Prices are dropping because of the anomaly that occurred during the market boom. Professor Karl Case of Wellesley College and contributing author of the Case-Schiller Home Prices Indices, a quarterly nominal housing price report, looked closely at the appreciation of median home value over five-year increments dating back to 1980 (see chart: “Appreciation Went Into Overdrive” http://tinyurl.com/yay4xaj). His research shows that home values appreciated 26.5 percent on average for the 20-year period from 1980 through 2000. 

In the six years that followed, average appreciation was 89 percent. Prices are now adjusting to the inconsistent and unsustainable growth that occurred during the first six years of this decade. In other words, the market is not on the decline. Rather, it is moving toward stability, which will mean healthier markets in the future. 

2. How do I determine the direction of prices in my market?
Although there are no steadfast rules to determine future pricing, months’ supply of inventory (total inventory divided by the number of houses sold per month) is a great guideline. Review the STATISTICS link on the blog. A normalized or balanced market has five to six months of inventory. If 100 houses sell a month, there should be 500 to 600 houses in active inventory.  

Based on this principle, if you have one to two months of inventory, double-digit appreciation is likely to occur. Lack of supply will cause potential buyers to clamor over the few homes that are for sale, which in turn drives prices higher. On the other end of the spectrum—where many markets are right now—there is a seven- to eight-month inventory. With this abundance of supply, there simply aren’t enough buyers to support the number of homes for sale.

Current economic conditions will also have an effect on the direction of pricing, as pricing is directly connected to average income. Traditionally, the national average sales price of a home is two-and-a-half times the average household income. Through the boom years of 2004, 2005, and even into 2006, that ratio was distorted, reaching up to four times the average income. We’re now getting much closer to the 2.5 ratio. However, with unemployment rising, prices may have to drop further to stay in line with the average American family income.

3. Why should I buy now?
Any investment consideration, whether it be real estate, gold, or fine art, follows a predictable cycle with nine stages (see chart: “The Stages of a Market Cycle” http://tinyurl.com/yay4xaj). Let’s start with optimism, the period in which many people are excited about buying a home. When the market is strong, people’s purchases quickly increase in value, which leads to euphoria, which can lead to rash decision making. 

 From euphoria starts a downward cycle. As prices start to fall, buyers go into denial, with statements such as “I’ll be in the house a few years, so this won’t be a challenge.” After denial comes fear, as prices continue to fall, followed by panic, despondency, and depression. After depression comes hope and then optimism (back to stage one).

The point of maximum risk for any investment is during the euphoria stage. The point of maximum opportunity is at the lowest point, between despondency and depression. That’s exactly where we are in many real estate markets today. Clients who are motivated and qualified to buy will be able to look at the market cycle chart and understand why now is the best time to invest in real estate.

4. Is homeownership really a good way to build wealth?
According to NAR, home values appreciate 4.5 percent annually on average. That’s a great return; however, very few buyers pay in cash. Most try to put as little cash down as possible. The amount of cash buyers put into their home determines their return on equity, which is the total return on the cash they initially invested. So the return on equity can be astronomical. It’s easy to see that real estate isn’t just a good investment; it’s a great investment.

RESOLUTION TO GOOD HEALTH . . . FOR YOUR HOUSE

Resolve to keep your home healthier each with this seasonal checklist.
SPRING

  • Clean your gutters.  Backed up gutters can wreak havoc on the siding and cause flooding.  Scoop out leaves and debris with a trowel or hire professionals to do it.
  • Check your roof.  Wintry weather may have damaged the surface and the first big rainstorm, left unchecked, could cause significant problems.  Replace shingles as needed.
  • If your fireplace got a workout during the winder months, give it a clean sweep.  Call in the experts to inspect and clean creosote buildup.

SUMMER

  • Walk around your house to check for unsealed spots where squirrels or mice could sneak in.  Look carefully for termites or ants too.  Inside check your attic and make sure egress points are sealed tightly.
  • Get ready for the warm season by giving any outdoor equipment (pools, swing sets, deck furniture, etc.) a thorough, top-to-bottom cleaning.

FALL

  • Ensure your furnace is in prime shape for the fold months ahead and change all of the air filters in your home.
  • Make sure your house is adequately sealed.  Apply weather stripping (such as tape, felt, foam or vinyl tubing) around doors and windows.
  • Trim branches near your home or roof to prevent damage when the wintry weather hits.

WINTER

  • Drain and insulate outdoor pipes to prevent freezing.
  • Check for damaged sidewalk, driveway or stairs and repair them before the first snow or freezing rain to avoid dangerous mishaps.

What is happening with interest rates?

Mortgage rates are near historic lows, BUT the Federal Reserve Board’s mortgage backed securities purchase program is set to expire. The Fed has already scaled back its purchases over the last few months, allowing rates to rise on mortgages. Once the Fed stops the purchases entirely at the end of the first quarter, rates are expected to rise a half per cent or more.

The deadline for the Home Buyer Tax Credit is for contracts written on or before April 30th (and set to close no later than June 30th).
 

All of this adds up to a big “don’t wait!” If you or someone important to you is thinking about buying a home, please have them call or email me today.

HOME BUYERS’ CREDITS . . . OLD AND NEW

The $8,000 first time home buyer tax credit has been extended.  Not only was the first time home buyer tax credit extended, a NEW $6,500 tax credit for existing homeowners who have lived in their homes for at least five of the last eight years was added to the legislation.   

The move-up market has been stalled and even though the first time home buyer market was helped along with the initial tax credit it was not enough to move the “middle” market.  This “middle” market desperately needed this new jump start. 

These tax credits will be available through June 30, 2010; however, Buyers who qualify for either of these credits MUST enter a binding contract before April 30, 2010.   The bill also increases the income cap to $125,000 for a single person and $250,000 for a couple.  And the credit is available for all homes purchased for $800,000 or less.

2010 New Appliance Credits . . .