Well There May Be Something Not to Like

Here’s the catch.  A lot of home owners —even responsible home owners who are current with their mortgage — may actually need to sell their home in order to qualify for a  mortgage to buy the next home.  As you may remember, a big reason we’re in the trouble we’re in now is because people bought homes with 100% financing or interest only financing or 100% interest only financing.  Back in the day even FHA (which was rarely used) only required a 3% down payment and Sellers could provide even that through Down Payment Assistance programs which are no longer allowed.

If you combine the lack of equity in a house with the lack of savings someone will need to buy another house it’s a sure fire recipe for the home sale contingency.  Simply put, the buyer of a house will make the contract of sale contingent upon the sale of their existing home. This used to be pretty commonplace but it has fallen out of favor for a number of reasons:

• it takes a long time to sell a house and Home Sellers may not want to wait the long time a Home Buyer may need to sell their existing home
• there are extremely strict guidelines and verification procedures for Home Sellers that rent their home rather than sell in order to buy another home
• the Home Seller may not be able to price their existing home low enough to attract a Home Buyer fast enough to “move up”

What Should I Do?

It’s a real quandary.

On the one hand home sellers want to be able to sell their home and if it’s been sitting on the market for awhile without any takers, the home sale contingency might look attractive.  Another good reason to accept the home sale contingency is that the home seller may be able to command a higher price.  Maybe something closer to the list price of the house.  After all, if they need to take the risk of taking their home off the market to wait for the home buyer’s house to sell, they need something in return.

On the other hand, it may take a long time for the home buyer to sell his house and, in the end, may have to back out of the contract anyway.  Meanwhile, the home seller’s house is essentially “off the market”.

Tread Carefully

There are protections for both the home seller and home buyer. So it’s important to consult with your Realtor® about the pros and cons.  You may find that it’s a good deal.  As I said, there was a time when the home sale contingency was common.

In the meantime, I’m not sure $6,500 is enough of an incentive to get lots of people out into the real estate market looking to “move up”.  But, if you’re planning to move anyway this will be a nice perk and a reason to do it now rather than later.  There’s still time — you don’t have to be under contract until April 30th — but you may want to think about it.  Especially if you think you may have to make your purchase of your next home contingent upon the sale of your current home.

Check out the Market Trends for up to 10 zip codes in the MD Suburbs of DC by simply filling in the form over to the right or click here. You will get a totally FREE report e-mailed to you. No phone calls, no spam. I promise.

Both houses of Congress have passed the extension for the $8,000 first time home buyer tax credit and have expanded the credit to include current home owners that have lived in their home for five consecutive years out of the past eight years.  They have also raised the income limits for those who are leigible for the credit.  This is a huge plus for people currently in the process of buying a home and for those who have been “on the fence.”

The catch is that you must be under contract by April 30th and settled by July 1st.  This gives some breathing room to a lot of people to get their ducks in a row and take advanatge of a credit I am sure will not last forever.

• Here is a link to a podcast by the President of the National Association of Realtors explaing the details of the tax credit – Click Here.

• Here is a document that shows you — side-by-side — the differences between the existing program and the new program. - Click Here

President Obama is expected to sign the legislation into law tomorrow.

I can understand why.  It’s cold.  It’s either rainy or snowy or sleety.  It gets dark way early. It’s also the holidays when people are thinking about Thanksgiving dinner, visiting relatives, throwing parties or just plain hunkering down.

How A Little Money Helps

This year was a little different.  Thanks to Uncle Sam and the $8,000 first time home owner tax credit, there has been lots of activity in the real estate market with lots of first time home buyers scurrying around to get to settlement before November 30th — the deadline for being able to claim the tax credit. Now the time has passed if you wanted to try and grab the $8,000.  It’s just too late in the game to find a house, get a mortgage and get to settlement. Contrary to popular belief (especially among first time home buyers) buying a home is not like going through the check out line at Wal-Mart.  It takes time, it takes mortgage companies forever to complete the verifications of employment and assets and credit history.  There is always something that gums up the works.

Will Congress Come Through For People Who Want To Buy Homes?

However, there is some movement in Congress to extend and, possibly, expand the home buyer tax credit.  I’m really not sure this is a good thing but I’m not going to look a gift horse in the mouth.  My guess, though, is that even if they do extend (and expand) the home buyer tax credit it won’t really do that much good.  You see, winter is still winter in the MD Suburbs of DC and it still gets dark way early.  It still gets cold and rainy or snowy or sleety.  And the holidays don’t disappear.

Maybe the extension of the home buyer tax credit will keep home sales from falling off the face of a cliff but I wouldn’t count on it.

Check out the Market Trends for up to 10 zip codes in the MD Suburbs of DC by simply filling in the form over to the right or click here. You will get a totally FREE report e-mailed to you. No phone calls, no spam. I promise.

If you have equity in your house and you have a desire to sell it, you are in the catbird seat.

There.  I said it.

Why is this true?  Well, as we all know this is a strong buyer’s market. What we don’t all realize is that a lot of these buyers are first time home buyers or real estate investors looking for “deals” or “bargains”.  In other words, they are looking for distressed properties that they can pick up for a song and fix up.  The real challenge with this scenario, especially for first time home buyers is that the repair costs may be daunting.  I have been with lots  and lots of home buyers that want to look at the “short sales” and foreclosures because they think it’ll be a great deal only to buy a “normal” home that needs little or no updates or repairs.

“I Just Want To Move In”

Real estate investors are a whole different breed so I won’t go into that in this blog post.  First time buyers, however, really just want a place they can move into and live.  They are already scraping every nickle they can find in order to meet the down payment requirements.  They have jumped through more hoops than a NBA tournament in order to get a mortgage. First time home buyers and even some “move up” buyers don’t want to bother with “fixer uppers”.

This is why a home seller with equity in their home is at such a great advantage in today’s market.  There is no “third party approval” that will take months and months (did you know that less than 5% of “short sales” actually make it to settlement?). The home seller with equity can spend a few dollars on repairs and staging. The home seller with equity can actually price their home competitively to the market.  This is a huge advantage.

Think about it.  John and Jane Homebuyer have been out looking and looking at homes in the price range they can afford.  They’ve looked at short sales and foreclosures and they’re feeling pretty discouraged.  All of a sudden they visit a home that is nicely staged so it looks warm and inviting. The home is competitively priced against the other homes in the neighborhood. The home seller can make a decision about whether to take an offer or not or maybe counter offer.  The process takes days and not months. A home inspection takes place and the home seller either makes the repairs or maybe offers up a credit to the buyer’s closing costs.  Again, quick decisions.

Everybody’s Happy

Believe it or not, this is a win-win.  The home seller is happy to sell his home at a good price in a short amount of time with the least amount of stress.  The home buyer is thrilled to buy a home that doesn’t need a complete rehab in a neighborhood they’ll enjoy at a price they can afford.

Bottom line: if you are a home seller and you have equity in your home you will be able to sell your home in pretty short order.  Yes, you’ll need to put out a little money to get it ready and you may have to negotiate a little (this is one of the things your Realtor does best, by the way).  The end result will be that your objective will be met — your house will sell!

Check out the Market Trends for up to 10 zip codes in the MD Suburbs of DC by simply filling in the form over to the right or click here. You will get a totally FREE report e-mailed to you. No phone calls, no spam. I promise.

• “I’m in no hurry to sell.”
• “I don’t really need to sell right now.”
• “I need [x] dollars to be able to sell.”
• “I’ve made [x] home improvements and that makes my house worth more.”
• “The neighbor’s house sold for [x] dollars and my house is nicer.”
• “The neighbor’s house was under priced and sold too fast.”
• “I hear the market is improving.”
• “This will be a great house for [fill in the blank for the type of buyer you think will buy your house].”

There’s lots and lots of ways that home sellers try to justify why they want the price they want.  It doesn’t seem to matter how much data a Realtor® may bring to the table.

It always amazes me, too, that the home sellers coming up with all these various justifications are talking to a Realtor® who is not going to buy there house.  Sometimes, I can’t tell if home sellers are trying to convince the Realtor® or convince themselves.

Here’s the bottom line:  if you have equity in your home you are at a distinct advantage.  Short sales are a waste of time and home buyers will eventually figure that out.  Bank owned foreclosures are a little better but they’re still trashed and sold in “as is” condition. So, if you have the ability to sell your home at a competitive price, do it. Don’t dither over a few thousand dollars that will only cause your house to sit on the market longer than you really want.

You don’t need to convince me your house is wonderful.  I know it.  I also know the market and what a home buyer may want to pay for your house. If your house is priced competitively for the neighborhood and it’s in great condition, it will sell…and sell in a reasonable amount of time.

Do yourself a favor.  If you don’t want to sell, have plenty of time to sell or don’t need to sell.  Don’t do it.

Check out the Market Trends for up to 10 zip codes in the MD Suburbs of DC by simply filling in the form over to the right or click here. You will get a totally FREE report e-mailed to you. No phone calls, no spam. I promise.

• the current $8,000 tax credit for first time home buyers will be extended. This includes people who have not owned a home within the last three years.
• “move up” home buyers — home buyers that have lived in their current home for five consecutive years out of the last eight years — will get a $6,500 tax credit
• the home must be under contract by April 30th and close by July 1st
• as a side note, FHA loan limits that were increased last year will be extended at their higher limits through next year.

If this actually makes it through the House and Senate and is signed by the President the housing market has a prayer of continuing it’s ever so slight rebound.

Keep your fingers crossed.

Check out the Market Trends for up to 10 zip codes in the MD Suburbs of DC by simply filling in the form over to the right or click here. You will get a totally FREE report e-mailed to you. No phone calls, no spam. I promise.

Times have changed.

Nowadays, even (maybe, especially) Boomer are wired into the Web and Social Media.  Sure. They may pretend it’s just to keep an eye on the kids but it doesn’t take much to become enthralled with ways to connect with lots of different people in all parts of the world.  Of course, it goes without saying that anyone under the age of 35 is already wired into the Web 2.0.

That’s where the Real Estate REBAR Camp movement comes in. This “un-conference” pops up in different cities, small and large, wherever organizers have the energy to put on together.  Recently, we had one right across the river in beautiful Herndon, VA at the offices of the Northern Virginia Association of Realtors®.  It was a great venue — lots of room to spread out with you laptop, lots of goodies to eat (tons of Halloween candy) and lots of Realtors® and other real estate professionals and people who knew the Web and Social Media and how to use it.

The beauty of the DC area REBAR Camp (#rebcdc) was that it gave me the chance to get face-to-face with lots of other people who are using Social Media and the Web to connect with clients and prospective clients.  Whether is was developing Facebook Fan Pages as a way to enable my Facebook friends search for homes and market trends or using video to enhance my listing presentations or creating an authentic online presence that attracts people to my blog and website…it was there and it was being shared by people who are using it in their own business every day.  These folks were not “gurus’ who haven’t sold real esttae in twenty years but can still pack an auditorium.

I also got to meet — face-to-face — people I read on their own blogs, see their tweets on Twitter and friend on Facebook.  That, in and of itself, makes the experience something not to be missed. The people that attended are the givers in the real estate profession. I’m just plain glad I went!

Now, I’m a big fan of self help and have been reading on the subject for years from numerous “gurus” and I’ve even attended a retreat or two or three in search of self actualization or, at least, a path to a happy and fulfilled life.  I don’t think I’m alone on this quest. I see hundreds of others at these retreats and I see hundreds of books in the aisles of bookstores that promise everything from untold riches and personal wealth to unlimited robust health.

Many of the gurus are charming, charismatic and seem to make sense.  What I am coming to understand is that what a lot of these folks are selling is hope — the hope that we can break out of our humdrum, everyday existence of working at a job we’re not thrilled with, coming home to stress and worry and bills, grabbing some sleep after vegging in front of the TV for awhile….rinse and repeat.  In the meantime, we fill their financial coffers with our own money in the hope that their success will rub off on us.

Personal Responsibility vs Peer Pressure

What really struck me about this article was that James Arthur Ray posted himself by the only exit from the sweat lodge where people died.  There were others in the sweat lodge going through the same process.  The goal was to come out after the sweat lodge process cleansed and renewed and, possibly, empowered with a new paradigm that you can withstand great challenges.

But what about our personal responsibility to ourselves and to our family to survive and live? Or to suggest to the guru that, perhaps, he has a responsibility to those who have placed their trust and physical well being with him.

My guess is that peer pressure trumped personal responsibility and good sense. Most of us don’t like to stand against our peers.  We especially don’t like to stand against gurus or leaders in the presence of our peers who may take a dim view of our position. It is the rare individual who will forge their own path and make choices that, on the face of it, go against the grain.  Yet, isn’t that a bit what personal responsibility is all about?

I don’t have the answers. I wish I did.  I have some thoughts about stuff like this.  After all, I’ve been looking at it and reading about it for a long time.  Been there, done that, got the CDs, DVDs, workbooks and retreat tickets.  Yep. Thoughts but no answers.

It’s just a damn shame people have to die in the search.

Luckily, Anthony and Alison came along and looked at the house.  They had been looking at lots of houses and lots of foreclosures.  They really liked this one so it just became a matter of getting Doug and Mary to agree to a price they cold afford.

That’s where I came in. We went back and forth for awhile and Doug and Mary had to really think about it for awhile.  In the end, though, they decided they really wanted to sell the house, they had the equity to be able to do it (a huge plus in today’s market!) so we moved forward with the sale.

Anthony and Alison were thrilled.  They were getting a great house with plenty of room for their two sons to play and for the family to grow.  It was a win-win, as we like to say in the profession.  Everyone went to settlement a few days ago and the keys were passed from Seller to Buyer and everyone is living happily ever after.

I just love stories with a happy ending…and a new beginning.

• median sales prices continue to fall
• Days on Market have been increasing but look like they may have leveled off
• Inventory (homes on the market) has steadily decreased. This means less people are putting their home on the market for sale.  This may be a good thing for prices in the intermediate term since less “supply” relative to “demand” may stabilize prices.  However, if short sales and foreclosures continue to  be the bulk of available homes on the market you can expect that prices will continue to fall as the banks eventually allow these homes to be sold off.

This is definitely not the sign of an upturn in the market — at least, not in College Park, MD.

Check out the Market Trends for up to 10 zip codes in the MD Suburbs of DC by simply filling in the form over to the right or click here. You will get a totally FREE report e-mailed to you. No phone calls, no spam. I promise.