Buyers Purchasing Before Homes On Sale

If you have any doubts that the current housing market is in an upswing, just refer to a recent article published by RisMedia. According to the popular Real Estate website, house hunters who are disappointed by the current housing selection have begun to contact homeowners whose houses are not even on the market. In most cases, these buyers work with a Realtor who has access to the database of houses in their desired area that were previously listed and did not sell as well as upcoming listings that have not yet hit the market. Many Realtors, myself included, will also contact the homeowners of a house that my client really loves simply to discover whether selling is something that may interest them. 

According to Joe Grunnet, a Minneapolis broker, a shadow market exists that includes many potential sellers who would like to sell their homes, but have chosen to rent them out or wait for a turn in the market. They are unaware that many people are currently buying and that right now is a prime opportunity to find buyers willing to pay full or close to full asking prices. Grunnet's firm specializes in the sale and rental of downtown condos and lately, as the number of available units has dwindled, he has begun to contact condo owners who rent their properties to see if they are willing to sell. It appears to be working since he has sold more off-market condos in the first four months of 2012 than in the previous three years combined. 

The important thing to remember when pursuing a home that is not on the market is that the owner's may not want to sell. Flexibility and an open mind are important. Fortunately, there are may homeowners who are ready to sell, but are unaware of the recent influx of home buyers and the shortage of viable properties on the market. 

How To Access the Shadow Housing Market:

1. Find a good realtor: Get connected with someone who specializes in the location that you desire to own a home. The more people they've worked with, the more connections they will have to potential sellers. 
2. Figure out exactly what you want: Narrow down what you want from number of bedrooms to a basement rec room. This will help your realtor when searching the MLS for previously listed properties. 
3. Drive around: If you're bent set on a specific area, spend some time driving around the neighborhood. Let your realtor know about any homes that you would love to make an offer on, listed or not. 
4. Get in contact: As the buyer, you can leave this task to your realtor, but make sure to follow up with them. Some realtors will contact potential sellers with a quick note in the mail explaining that they have a party interested in their home. Other options include calling the owner directly or stopping by their house to inquire about the possibility of a sale. 
5. Get comfortable: Home selling takes time even when a homeowner has listed their property and is ready to move elsewhere. When you're purchasing a home from someone whose property was not listed, you can expect it to take time for that person to settle on an asking price, find a new house and prepare for the actual move. If you've found the home of your dreams, it's worth waiting for so allow the process to unfold naturally. 

As an East Lansing Realtor, I am happy to assist you with all of your real estate needs. If you're a buyer looking to tap into the shadow housing market or a seller ready to take advantage of the current surplus of home buyers, contact me at MyRealtorRob. 

Buying a Rental Property

Rental properties are appealing because they offer an investment with a tangible product attached: i.e. a house or building. Unlike stocks, investment properties will not miraculously plummet one morning while you're drinking coffee and watching the Nasdaq. However, owning rental property is not for everyone. It may seem like a solid move picking up the duplex down the street, but when your new renter is knocking on your day at 3 am because their basement is flooded, you may second guess your original enthusiasm over a new rental property. Not to deter you from buying rental property because this article is actually in support of putting your money behind real estate, in part because investment properties can be had for a fraction of their costs from just a couple of years ago and the market is currently flooded with people looking to rent.

So how do you prepare yourself for life as a landlord?

First figure out what your expectations are and then forget them. Rental property is not all positive cash flow all of the time. Some months you will have to make major or minor repairs and your rental income might go right back into mending a fence or repairing a leaky roof. Regardless, your renters (if you've found a solid deal) should be covering the cost of your mortgage so you're purchasing a piece of property without paying for it and hopefully making some extra money as well.

But I'm getting ahead of myself here. The first thing you need to do is start looking for the deals. Consider more than price here (though that's important too). You need to take into account the location, the nearby amenities, the rental population in the area and the features of the rental. Are you looking at a 4-Unit apartment building with only one parking space in a town where everyone drives? This might not be the best deal. Is the rental home perfect except it's located next to a water treatment plant? The devil is in the details with any real estate investment because you're banking on someone else choosing to live and pay for the apartment or house. If it's not a desirable place to live, the amount of rent that you can charge will probably dive and you may find yourself paying out of pocket to cover your monthly expenses.

You should also consider your capabilities as a handy-man. If you can't fix even basic problems, you may want to consider a property management company that covers repairs, takes care of rental applications and collects a fee for their services. Again this depends on how much rental income you're collecting each month because the point of your purchase is investment, not expense. Management companies also deal with renters, which can save you a lot of time and energy.

Once you start hunting for a great investment, find a good Realtor that specializes in rental properties so that you have access to investment homes and buildings as soon as they hit the market. In real estate, good deals go fast. You should also spend some time figuring out what kind of financing is available or if you have the option of paying cash. Start by pulling your credit report and considering how much you can put up as a down payment.

Rental properties located near Universities and cities are often ideal options because you always have a large pool of potential renters. Avoid rural spaces or properties located far away from major amenities like grocery stores, bus lines and schools.

If you're looking for a rental property in East Lansing or the Greater Lansing areas, please contact me at MyRealtorRob. Investment properties are popular right now; in fact, I just listed four in Mason over the previous week. I also specialize in East Lansing rental properties and I'm more than happy to answer all of your real estate related questions.

First Time Home Buyer Tips

One of the great things about being a first time home buyer is that there are many who have come before you and their trials and tribulations help guide the path to buying your first home. Follow these guidelines to make buying your first home simple and successful.

1. Know Your Credit: Unless you have been saving since grade school for your first home, you probably don't have enough cash handy to buy your first home outright, which means you will need to qualify for a mortgage. Your credit will be a major deciding factor in what type of mortgage you qualify, if any at all. According to Rod Griffin, director of Public Education at Experian, in a recent article on AOL Real Estate, new home buyers should check their credit three to six months before applying for a mortgage. Getting your report in advance gives you time to pay down debts, fix any reporting errors and begin action towards any credit repairs that me be necessary. 
2. Gauge Your Down Payment and Start Saving: This amount will largely depend on the type of loan that you qualify for and the cost of the home that your purchase. Larger down payments often reduce or negate PMI and they also lower the total interest that you will pay over the life your mortgage loan. However, many loan programs offer down payment options at less than 5%. Start meeting with lenders to find out what you qualify for and then begin to investigate how you will cover your down payment.
3. Find a Realtor: You can hunt for houses without a realtor; however, in most cases you're going to be working with a realtor because the house seller will be represented by one. Choosing a buyer's agent allows you to have someone searching for houses in your price range and location, filing the necessary paperwork when you make offers and providing you with in-depth market information about the area that intend to buy in.  
4. Choose the Right House: Obviously "right" is a strange word because when it comes to homes, there are a lot that can seem "right." Ultimately finding the "right" home means figuring out what you want and then choosing a house that meets all of most of your needs. It's also important to make sure the home is priced appropriately for the area and features, in addition to knowing if it's within your price range.
5. Make an Offer: Work with your realtor to find out if the home is a value or if you should offer less. Home prices are the perceived value by the seller and often have more to do with their desired selling price than the worth of the home in the current market. Don't be afraid to make an offer, it's just a starting point.
6. Take Your Time: Buying your first home is exciting and after a few months it can start to get frustrating, but don't make rush decisions. View a lot of properties and consider where you're finding the greatest value that meet your needs. 

If you're a first time home buyer in East Lansing or the Greater Lansing areas of Michigan, feel free to contact me at MyRealtorRob. As a realtor in East Lansing for more than 7 years, I can help you find your new home or simply get an idea of homes currently for sale in your desired area. 

Buying a Home? Improve Your Credit Score

You've been house hunting for months and have finally, after much driving, arguing and threatening divorce, found your perfect home. You dive right in and make an offer, but then - ugh - you discover that your credit score is too low to secure the mortgage. Excluding a wealthy family member who swoops in to save the day or a big lottery win, how can you equip yourself to avoid this disheartening experience?

There are, in fact, a variety of options here, but we're going to focus on one today: improving your credit score. The reason that this is such a valuable choice is because your credit influences everything from insurance rates to home loans so taking steps to increase yours will improve your financial experiences in a myriad of ways. Not only are you more likely to get approved for a loan, your interest rates will be lower and you will have more loan options to choose from.

How Can I Increase My Credit Score?

1. Know Your Score: You can't start improving until you know where you're at. Run a free credit report and find exactly where your credit lies. According to BankRate.com, any score above 760 is excellent and no improvement is necessary. However, if you're on the cusp of 700, say at 698, those points might dramatically influence the interest rate on your loan depending on the borrower's "break points."
2. Look for Errors: Check your report thoroughly looking for errors, such as bills reported late that you know you paid on time or debts that should have been removed after the 7 year mark that still appear on your report. Take the time to fix any errors by contacting the debt-holding company and presenting your case.
3. Start Paying: It's important to reduce your debt to income ratio, which means getting some of those credit cards and other debts paid down or off completely.
4. Distribute Your Debt Across Accounts: It might make you feel good to have one credit card paid off while several others are near their max, but you're better off spreading your debt across your accounts. Accounts that are nearly maxed out can reduce your total score so you're better off having several cards at 40% than one paid off completely.
5. Pay on Time: Whether you've been late in the past or not, paying your bills on time every month can help improve your score. Make a spreadsheet, mark it on your calendar or set alarm reminders on your phone to make sure that you send payments in on time.
6. Don't Close Accounts: It's tempting when you finally get that credit card paid off to close the account, cut up the card and do a little dance in your front yard, but don't! Well you can cut up the card and do the dance, but don't close the account. This lowers your total available credit, which hinders your utilization ratio (your debt divided by your available credit).
7. Contact Your Creditors: If you have outstanding debts, get in contact with your creditors and try to work out a deal. Ultimately, they want their money, but many will settle for less if it increases the likelihood that they will get paid at some point. You can ask for lower interest rates or to be relieved of a portion of the debt completely.
8. Consider Rapid Rescoring: This will not help correct actual negatives on your report such as late payments or unpaid debts, but it can quickly correct reporting errors and show balances that you pay off. This service is not free and generally costs around $50 for every account that has to be rescored.

I work closely with a lot of buyers and lenders and it's always disappointing to see clients miss out on their dream home over a poor credit score. If you're thinking about buying a home, start improving your score right now. If you're interested in buying or selling a home in the East Lansing or Greater Lansing areas in Michigan, feel free to get in contact with me at MyRealtorRob. As an East Lansing Realtor, I can assist you in securing a pre-approval and answer questions you might have about home financing.



You Can Cut'Em, but Don't Close'Em!



It's Getting Cheaper to Buy than Rent

For the last several years, renting has been the primary choice for many U.S. residents. Between the volatile housing market and challenges getting financing, many people turned to renting homes or apartments. However, a recent CNN Money article cites rising rental costs while housing prices remain steady.

According to the article, rents have risen approximately 5% while housing prices have declined .7% in the last 12 months. In fact, Trulia economist Jed Kolko says that buying has now become more affordable then renting in nearly every part of the U.S. The cities that have seen the largest rent increases include Sarasota, FL; Miami, FL; San Francisco, CA; Middlesex County, MA; and Edison, NJ. The average home rented for $1285 monthly one year ago and these days costs nearly $100 more at $1350 a month. Some areas have seen nearly double digit rent increases such as Indianapolis where rents rose 9.7% and Columbus, Ohio where they increased 9.3%.

Fortunately, federally-backed programs, record low interest rates and a housing market flooded with motivated sellers offers buyers an ideal opportunity to segue into home ownership. In the Lansing area alone, we have witnessed a noteworthy bounce-back as houses sell faster than we can list them. In the past week, I have twice contacted real estate agents for showings only to discover that the homes were already under contract.

I was so curious about these perceived increases that I asked a fellow Tomie Raines staff member to run a report  comparing our sales in March 2012 to 2011. Sure enough the market activity in the Greater Lansing area reveals a 3.2 increase in sales and a whopping 17% increase in average home sale price for 2012.

I personally am working with a lot of current buyers who are searching for everything from homes with acreage to modern condominiums. If you're thinking about selling and would information about your home's market value or the sales activity in your area, please contact me at MyRealtorRob or through email.

How to Sell A House

There are thousands, maybe millions, of articles that give you tips on how to sell a house. It's a popular topic because most of us, at some point in our lives, will be selling a house. Maybe we're selling our own home, selling an investment property, or perhaps you're like me, a realtor, who sells other people's houses. In my case, I'm fortunate to have the desire to continually learn and evolve my career as an East Lansing Realtor. This means, I read a lot, take classes and pay close attention to what properties I'm selling and why. Below I've compiled a few tips to streamline your home's sale.

Network A Lot: If you're similar to most people you have a job, engage in activities such as Zumba classes or bowling leagues and attend your kids' functions like Ice Cream Socials and soccer practice. Every one of these activities offers you dozens of people who may want to buy your home. Engage in conversation and casually mention that you're selling your house...to everyone. You will be amazed at how many people are either looking to buy a new home or know someone that is. Be ready with some listing information or your Realtor's card and pass them out liberally. This also goes for your social network sites like Facebook, Twitter and Linked In - let your friends know where they can find out more about your home.

Choose the Right Realtor: I cannot stress this one enough. Don't google "realtor" and pick the first one on the list. Instead, do some research and find out which Realtors are successfully selling homes in your area. Talk to your neighbors and get their recommendations. Then sit down with some prospective agents and see if you click. Find out what the agent does to attract buyers to your home. Do they market online? Are they clocking out after 5 pm and on the weekends or are they available when you need them?

Seek Help from a High Power: Okay so this may seem a bit strange, what higher power after all has time to worry about the successful sale of your home, but ultimately that's not the point. Believing that something is going to happen is half the battle and for some people, it's easier to believe when a little magic gets involved. According to a 2012 article in the Wall Street Journal,  Cindy Lin, general manager of Staged4more Home Staging and Redesigns, adds oranges to home showings because they are associated with good fortune in Chinese Culture. Other home sellers are known for burying statues of St. Joseph in their yards or sprinkling salt over their doorways.

Make a Video: More and more people are finding their future homes online. Get a step ahead by creating a video, According to a Reader's Digest article, one effective way to market your property is through YouTube. Specifically they recommend creating a "love letter" video which highlights all of the things that you and your family loved about your home as you walk through. Also include your favorite nearby bakery and the park where you walk your dog to help prospective buyers understand the benefits of living in your area.

Cover the Basics: The basics are many when it's time to sell your home, but knowing them isn't the same as doing them. Clean well before every showing. De-clutter and depersonalize the space so that buyers can imagine their family in the home, not yours. Touch up peeling paint, weed the garden and fix any faulty areas. Buyers aren't interested in purchasing a job, they want a house. Be open to every offer and consider offering creative financing such as land contracts to attract more potential buyers.

If you live in the East Lansing or Lansing areas of Michigan and would like more information about selling your property, feel free to get in touch with me at MyRealtorRob. As a realtor with Tomie Raines, I can extend a variety of resources to help you sell your home faster for more money.

Types of Home Mortgage Loans

So you've found the perfect home. Your family is excited, you can't stop daydreaming about that three car garage and your dog is already salivating over that gleaming red fire hydrant at the curb. Unfortunately, you haven't quite made it to the closing table because you still need...financing. Financing can seem quite complicated, but with a bit of research into the types of home mortgages available, you can quickly assess the best loan for you and get around to the fun stuff - packing.

Conventional vs. Non-Conventional

A conventional loan is not insured by the government and is provided by a private lender. A government backed loan, on the other hand, includes such options as FHA, VA and USDA loans.

FHA Loans: These popular mortgage loans are insured by the Federal Housing Administration, therefore, if a homeowner defaults, the lender can collect their repayment through the FHA. These loans are especially appealing to individuals with less than stellar credit because they often cannot qualify for a conventional mortgage. FHA Loans also require much smaller down payments than typical loans, sometimes as low as 3.5%. One disadvantage to the FHA loan is that a premium must be paid for government mortgage insurance, which helps the FHA recoup their losses if you default on the loan.

VA Loans: This type of loan is less popular because it is only available to military service members and their families. One great perk to the VA Loan is that it can be used to finance the total purchase price so a down payment is not necessary.

USDA Rural Development Loans: There are a couple of options for USDA loans, which include direct and guaranteed loans. Direct Rural Development Loans are generally intended to assist low income individuals in purchasing homes in rural areas. The house must be considered modest in size, design and cost. Rural Development Guaranteed Housing Loans allow the purchaser to have a higher income, but they must be in need of adequate housing and capable of paying the mortgage payments including taxes and insurance.

How to Choose the Right Home Mortgage Loan

1. Consider your credit score: To qualify for a conventional mortgage, you will generally need to have a FICO credit score of 640 and higher. If your score is significantly below this, a government loan may be the only option available.
2. What can you afford for a down payment? Conventional mortgages generally require anywhere from 5% to 10% for a down payment. Therefore, if you're looking at a $100,000 home, you need $5,000 to $10,000 down just to qualify.
3. ARM vs. Fixed-Rate Mortgage: An Adjustable Rate Mortgage has a mortgage rate that will change over time, which may increase or decrease your mortgage payment; however, this generally happens after a fixed rate period. These loans are ideal if you plan to pay off your mortgage in a short period of time, don't intend to stay in the house over the long term or feel confidant that you can afford the payment when the rate adjusts. Fixed Rate Mortgages keep the same interest rate for the life of the loan so you don't have to worry about a payment adjustment based on a changing mortgage rate.

As a realtor in East Lansing, I've worked with buyers who have used all of the above mortgages and more. Whether you're searching for a new home or would just like to find out more about mortgages that you qualify for, please get in touch with me at MyRealtorRob. You can also visit my website for other buyer resources including a mortgage calculator.