How are home sales?
Unit sales in greater Lansing were up 15.5% in 2012 and more
units were sold this year than any year in the last seven years. Average prices
were up by 3.8% which was the highest since 2007 but almost 31% lower than
2006.
The absorption rate dropped to 4.9 months last year which is
the first finish below 6 months in many years.
We have seen three straight years of unit growth.
If I have a less-than-perfect credit score, how hard is it to get a mortgage?
Lenders reserve the best rates for borrowers with at least a 720 FICO score, but that doesn't mean anyone else will be denied. You can still get a mortgage with a lower credit score as long as everything else is solid financially. With a lower score, you may be paying higher interest rates as well. Your best bet is to look for homes in a location with stable pricing. This will look more appealing to banks than a location that can fluctuate in value.
What’s going to happen to home sales this year?
Inventory of existing homes is dropping and affordability is
still good. Mortgage rates are at historical lows and expected to stay close to
this level for the foreseeable future. Lending standards are high but
comparable to pre-bubble underwriting standards which were not insane. The
local economy is strong and employment is growing. All of these factors lead us
to believe the sales of homes will be strong and that prices will rise as a
seller’s market develops.
Which is a better investment, a new home or an existing one?
Builders have discounted prices so much that the premium for a new home
in some markets has nearly disappeared. New homes that went up during
the housing boom were large and packed with amenities that are rarely
found in older homes. Assuming a new home and a used home are about the
same size and are in the same location, a new home is probably the
better investment (assuming that it's well built). Also, with some new builds, you can add details to meet your needs, making it more personalized.
I am underwater with my mortgage. How long is it going to
take for the market to recover to the peak?
Even though average selling prices have improved, no area
markets are even approaching the pre-bubble average prices. At a “normal” price
appreciation of 3.8% it could take 8-10 more years for a complete recovery.
Government supported programs to encourage lenders to
negotiate short sales are kicking in and the process though still time
consuming appear to be getting better. The amount of mortgage forgiveness will
still not be taxable at least through 2013.
What is a good rule of thumb for how much to spend on a home?
There is a general rule of thumb that says to stay close to within 2.5 times your annual income. This leaves breathing room so that if something came up, you shouldn't be stretched too thin. This rule, of course doesn't apply to every circumstance, and you should consider your personal situation carefully as well.
I want to sell my home but I need to get a higher price than
my agent says its worth. Should I just test the market and list at a higher
price?
What will determine the value of your home is what a willing
and able buyer is willing to pay and what a professional appraisal says its
worth. The appraisal will be based upon what comparable properties sold for in
the recent past, adjusted for condition, features, and location. What does not
affect the value of your home is what you paid for it, what you owe on the
home, what you need to net from the sale, the cost to build today, or what an
agent says without substantiation.
Overpricing at the outset of a listing will reduce showings
and reduce the number of potential buyers. Even if a buyer was willing to pay
an inflated price a lender will not provide financing for more than the
appraised price and cash buyers often make their offer contingent on appraisal.
Your overpriced listing will just make comparable listings look more
attractive.
I’m thinking about buying a foreclosed property because the
lenders are discounting them to get them off their books. What are the risks?
Some foreclosures can be a good value but all foreclosures
are not. These types of properties are called distressed because of the
circumstances of sale but in fact the condition of the properties are often
distressed as well. Many times homes, which are often vacant, have missing
appliances, HVAC, pipes, mold contamination, and a variety of other damages.
Buyers must be careful to fully understand what it will take to get the
property to a livable state and properties should be inspected at the last
moment to see if conditions have changed. Often times, negotiating a fair price
for a “normal” listing may have a better outcome for a buyer.
I have considered buying a home that was a short sale. Are
there risks?
Although short sale prices can often be negotiated at less
than a normal market price there are caveats. The time it will take to conclude
a transaction varies from lender to lender and the process is often protracted
and unpredictable. Just being able
to close a transaction successfully is not assured.
Patience and flexibility are required of potential short
sale buyers. Careful inspection of property condition is advised as well.
Make certain the agent you are working with is experienced
in short sale transactions or has professional assistance.
What improvements should I make to help sell my home?
Great kitchens and bathrooms can help sell homes quickly. Keep a budget in mind, and take personal taste out of it, since this is a house you will be leaving anyway. Also think about repainting, cleaning the inside and yard, and making any necessary repairs to the house.
I would be happy to answer more questions, or to help you find or sell your home. Contact me at lansingarearealestate.com
