In today’s market, as home prices rise and a lack of inventory continues, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for most sellers. Here are the top five reasons: 1. Exposure to Prospective Buyers According to NAR’s 2018 Profile of Home Buyers and Sellers, 95% of buyers searched online for a home last year. That is in comparison to only 13% of buyers looking at print newspaper ads. Most real estate agents have an Internet strategy to promote the sale of your home, do you? 2. Results Come from the Internet Where did buyers find the homes they actually purchased?
50% on the Internet
28% from a real estate agent
7% from a yard sign
1% from newspapers
The days of selling your house by putting out a lawn sign or putting an ad in the paper are long gone. Having a strong Internet strategy is crucial. 3. There Are Too Many People to Negotiate With Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale by Owner:
The buyer who wants the best deal possible
The buyer’s agent who solely represents the best interests of the buyer
The buyer’s attorney (in some parts of the country)
The home inspection companies, which work for the buyer and will almost always find some problems with the house
The appraiser if there is a question of value
4. FSBOing Has Become More And More Difficult The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 7% over the last 20+ years. 5. You Net More Money When Using an Agent Many homeowners believe that they can save on the real estate commission by selling on their own, but they don’t realize that the main reason buyers look at FSBOs is because they also believe that they can save on the real estate agent’s commission. The seller and buyer can’t both save the commission. A study by Collateral Analytics revealed that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent. One of the main reasons for the price difference at the time of sale is that, “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property. The study showed that the difference in price between comparable homes of size and location is currently at an average of 6% this year. Why would you choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more? Bottom Line Before you decide to take on the challenges of selling your house on your own, get together with The McLeod Group Network to discuss your needs. 971.208.5093 or admin@mgnrealtors.com. By: KCM Crew
We won't sugarcoat it: The thought of doing home maintenance right now is pretty blah—especially with the holidays looming and weeks of gloomy winter days on the horizon. Who wants to do housework when you can curl up and binge-watch "The Marvelous Mrs. Maisel" instead?
So you're forgiven if this is one article you don't want to read. But before you take up permanent residence on the couch, you should at least skim it. That's because winter chills bring a number of home-related ills—and if you don't keep up with a little maintenance now, you could be in for catastrophic repair costs later.
So pull yourself out of hibernation mode and get started. The good news? We've done the heavy lifting for you, identifying the top tasks to tackle—and what professional help will cost you if you find yourself in over your head.
Give your gutters one last scrub
Hopefully, you've been clearing out your gutters on the regular. But once every tree is bare, it's time for one final cleaning session to "avoid moisture building up against your house—and ice dams," says Derek Christian, the owner of Handyman Connection in Blue Ash, OH.
Ah, ice dams: winter's favorite boogeyman. These troublemakers happen when warm air meets a cold, wet roof, creating supersized icicles. Eventually, that ice and moisture can find their way underneath your shingles, rotting your roof, and leaking into the living spaces below.
But ice dams are easily avoided—as long as you do a little prep.
DIY: Cleaning out your gutters is simple enough to do yourself. For extra protection, Jason Metzger, the head of risk management for PURE Insurance, recommends installing heat strips on your gutter or roof edges to keep frozen precipitation from building up.
Call in the pros: Have you been really lackadaisical with your gutter cleanings? An expert can scoop out all the gunk. Expect to pay $100 to $250.
Turn on your humidifier
Holiday humidifier. istock/Qwart
Is your furnace prepped for winter? While this might vary based on your specific model, Christian advises homeowners to check their furnace for a "winter" and a "summer" switch, which controls your humidifier.
"In the summer, the airflow to the humidifier needs to be cut off; but in the winter, you want air going through it," he says.
That keeps your skin from drying out, your eyes from itching, and your floorboards from creaking.
DIY: Switching your humidifier on is an easy task. If your furnace lacks this feature, a stand-alone humidifier, like this Honeywell model, will do the job.
Call in the pros: Adding a humidifier to your furnace is simple. Costs start at about $370.
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Insulate (and inspect) the attic
House always feel drafty? Your attic could be to blame. Check to make sure this space is sufficiently insulated. And while you're up there, make sure no rodents can shimmy in and create their own winter retreat. (Eek!)
"Make sure any gaps and holes into your attic are sealed tight," Christian says. "As winter approaches, critters will be looking for somewhere to spend it."
DIY: Stuff gaps with insulation, and fill cracks with caulk to keep the critters—and the cold—out.
Call in the pros: If you're noticing a severe lack of insulation (or you require six blankets just to keep your body temperature normal), hiring a pro to add insulation will be worth the cost. The national average to install blown-in insulation is $1,400.
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Create a cleaning schedule for the new year
Seasonal cleaning calendar. istock/ RapidEye
With 2019 rapidly approaching, now's the time to institute good home habits that will keep your space clean and organized year-round. And what better time to tackle the mountain of grime that's accumulated over the year than the frigid winter months when you can't go outside?
DIY: Creating a regular cleaning schedule makes a huge difference in keeping your home tidy and organized.
"Hang a calendar in your kitchen where your whole household can see it," and assign tasks to the household, says professional organizer Kacy Burns.
Take it one step further with weekly, monthly, and quarterly reminders.
Call in the pros: Just can't bear the thought of starting a new year with chores? If you've ever considered a cleaning crew, now’s the time. Figure on paying $200 to $300 for a one-time cleaning, but you may be able to negotiate that price down with a regular cleaning schedule.
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Fireproof your home
With temps plummeting, you've probably already switched on your heat a few times, gathered around the fireplace, or lugged out a portable heater to warm your feet on chilly nights.
"With all these heat sources in use, homeowners must take precautions to protect themselves from house fires and carbon monoxide poisoning," says Sophie Kaemmerle, a home improvement expert with NeighborWho, a property information website.
DIY: If you haven't done so recently, replace those smoke detector batteries.
Call in the pros: If you smell gas or your carbon monoxide detector starts beeping, leave the house and call 911, followed by your utility company, which will send out a team to investigate the problem. Still feeling wary? Most fire departments will do a home safety check if you request one.
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Maintain a smart temperature
Consider installing a smart thermostat to keep your home's temperature even. Today's models —like the über-popular Nest—will alert you if the temperature inside your home suddenly falls. That can be a lifesaver when you're on vacation, preventing frozen pipes and other winter disasters.
DIY: If you're not ready to upgrade your thermostat, you can do your part to maintain an even temperature.
"Leave interior doors, cabinets, and vanities open to keep the whole home heated," Metzger says.
Call in thepros: Is your thermostat struggling to keep temperatures even? Are cold spots in your living room bugging you on snow days? A whole-home energy audit, which costs about $400, can identify the cause.
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Hunker down for winter storms
Ice storm
istock/DenisTangneyJr
In most parts of the nation, the first snow has already fallen—and more is surely on the way. Before the next bomb cyclone/polar vortex/sharknado blizzard (hey, it could happen), make sure you're prepared for the worst-case scenario.
"Heavy snows and ice can take down power lines and leave you in the cold and dark," says Krystal Rogers-Nelson of home safety and security company SafeWise.
DIY: Make sure you have a (working) generator, and stock up on batteries for flashlights and lanterns. Invest in a solar-powered or battery-operated radio to stay up to date with news in case you lose cellphone reception. Store wintry weather supplies—such as snow shovels and window scrapers—somewhere you can access them easily.
If you live in an area particularly prone to snow, mark the sides of your driveway and other key places with reflective poles to help snow plowers see where to go, suggests home maintenance expert Laura Gaskill.
And remember: A buildup of heavy snow on tree limbs can make them more prone to breaking, Gaskill notes, so brush snow off tree limbs after each big snowfall, using a broom to extend your reach.
Unless you’re sitting on a ton of cold, hard cash, you’re going to need a mortgage to buy a home.
Unfortunately, you can’t just show up at a bank with a checkbook and a smile and get approved for a home loan—you need to qualify for a mortgage, which requires some careful planning.
So, how do you please the lending gods? It starts with arming yourself with the right knowledge about the home loan application process.
Here are three things you need to know before applying for a mortgage.
1. What is a good credit score
Ah, the all-mighty credit score. This powerful three-digit number is a key factor in whether you get approved for a mortgage. When you apply for a loan, lenders will check your score to assess whether you’re a low- or high-risk borrower. The higher your score, the better you look on paper—and the better your odds of landing a great loan. If you have a low credit score, though, you may have difficulty getting a mortgage.
So, what’s considered a good credit score in the mortgage realm? While a number of credit scores exist, the most widely used credit score is the FICO score. A perfect score is 850. However, generally a score of 760 or higher is considered excellent, meaning it will help you qualify for the best interest rate and loan terms, says Richard Redmond, mortgage broker at All California Mortgage in Larkspur and author of “Mortgages: The Insider’s Guide.”
A good credit score is 700 to 759; a fair score is 650 to 699. If you have multiple blemishes on your credit history (e.g., late credit card payments, unpaid medical bills), your score could fall below 650, in which case you’ll likely get turned down for a conventional home loan—and will need to mend your credit in order to get approved (unless you qualify for a Federal Housing Administration loan, which requires only a 580 minimum credit score).
Before meeting with a mortgage lender, Beverly Harzog, consumer credit expert and author of “The Debt Escape Plan,” recommends obtaining your credit report. You’re entitled to a free copy of your full report at AnnualCreditReport.com. Though the report does not include your score—for that, you’ll have to pay a small fee—just perusing your report will give you a ballpark idea of how you're doing by laying out any problems such as late or missing payments.
2. What down payment you need
What’s an acceptable down payment on a house? In a recent NerdWallet study, 44% of respondents said they believe you need to put 20% (or more) down to buy a home. So, if you do the math, you'd have to plunk down $50,000 on a $250,000 house. Of course, that’s a big chunk of change for many home buyers.
The good news? That 20% figure is common, but it's not set in stone. It’s the gold standard because when you put 20% down, you won't have to pay private mortgage insurance, which can add several hundred dollars a month to your house payments. Another advantage of putting down 20% upfront is that that's often the magic number you need to get a more favorable interest rate.
But, if you’re unable to make a 20% down payment, there are many lenders that will allow you to put down less cash. And there are a number of loan products that you might qualify for that require less money down. FHA loans require as little as 3.5% down. The U.S. Department of Veterans Affairs loan program gives active or retired military personnel the opportunity to purchase a home with a $0 down payment and no mortgage insurance premium. Same with USDA loans (federally backed by the U.S. Department of Agriculture Rural Development).
Another option worth pursuing is qualifying for down payment assistance. There are 2,290 programs across the country that offer financial assistance, kicking in an average of $17,766, according to one study. (You can find programs in your area on the National Council of State Housing Agencies website.)
There are some cases, though, where you’ll have to put more than 20% down to qualify for a mortgage. A jumbo loan is a mortgage that's above the limits for government-sponsored loans. In most parts of the country, that means loans over $417,000; in areas where the cost of living is extremely high (e.g., Manhattan and San Francisco), the threshold jumps to $625,000. Since larger loans require the lender to take on more risk, jumbo loans typically require home buyers to make a bigger down payment—up to 30% for some lenders.
3. What is your DTI ratio
To get approved for a mortgage, you need a solid debt-to-income ratio. This DTI figure compares your outstanding debts (on student loans, credit cards, car loans, and more) with your income.
For example, if you make $6,000 a month but pay $500 to debts, you’d divide $500 by $6,000 to get a DTI ratio of 0.083, or 8.3%. However, that's your DTI ratio without a monthly mortgage payment. If you factor in a monthly mortgage payment of, say, $1,000 per month, your DTI ratio increases to 25%.
Lenders like this number to be low, because evidence from studies of mortgage loans shows that borrowers with a higher DTI ratio are more likely to run into trouble making monthly payments, according to the Consumer Financial Protection Bureau.
For a conventional loan, most mortgage lenders require a borrower’s DTI to be no more than 36% (although some lenders will accept up to 43%), says Ray Rodriguez, regional mortgage sales manager at TD Bank.
The good news? If you’re above the 36% ceiling, there are ways that you can lower your DTI. The easiest would be to apply for a smaller mortgage—meaning you’ll have to lower your price range. Or, if you’re not willing to budge on price, you can lower your DTI by paying off a large chunk of your debts in a lump sum.
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search. Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily throughout 2019. How Will This Impact Your Mortgage Payment? Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly. But don’t let the prediction that rates will increase stop you from purchasing your dream home this year! Let’s take a look at a historical view of interest rates over the last 45 years. Bottom Line Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago. Let The McLeod Group Network assist with ALL your Real Estate needs! 971.208.5093 or admin@mgnrealtors.com. By: KCM Crew
