Patty O'Brian Real Estate Blog

Phew! After four years of declining home sales, the numbers appear to be finally turning back upward, with closed sales and pending contracts at above-normal increases. In particular, first-time buyers helped buoy the market by taking advantage of low prices and interest rates, as well as the $8,000 tax credit offered by the federal government.

At least for now, home prices remain attractively low, and mortgage payments as they relate to income are very comfortable. All the information seems to point to the fact that home prices have actually overcorrected downward. What does that mean? It indicates that many markets may experience a price “snap back,” with values increasing a lot more than the historical average of 4% appreciation per year.

Some factors may continue to make buyers cautious, mostly declines in retirement savings and a lukewarm economic recovery with unemployment hovering around 10% nationally. Now is not the time to hesitate, however, as mortgage interest rates are expected to rise in 2010.

We can expect the momentum of home sales to continue, especially with the extension of the tax credit through April and the fact that qualification is no longer limited to just first-time buyers. Prices and interest rates will rise this year, so buyer confidence should be at an all-time high. The pressure cooker of pent-up demand is about to blow its top!

Selling your home in anything other than an active market can seem challenging, but what do you do when yours is only one of many homes in your neighborhood with For Sale signs? Surprisingly, there are actually some advantages to marketing your home in this situation.

More buyers are drawn to neighborhoods where they can preview more homes at once. More buyers means more opportunities for your home to be seen and to attract an offer, so make your listing stand out against your competition.

Price your home aggressively after reviewing the comparable sales figures provided by your real estate representative. Don’t give your neighbors the advantage of looking like a bargain compared to your listing – take it yourself and show buyers what a great value you’re offering. If you’re competing against foreclosure listings, having your home in “move in” condition helps, because foreclosures often need lots of repairs.

With this much activity in the neighborhood, make sure that your home is available for showing on literally a moment’s notice. Buyers who come to look at other listings may spot yours and want to see it right away to make comparisons. Be prepared for “impulse” prospects with good housekeeping and an escape plan for unexpected showings.

Finally, don’t worry if your neighbor sells first – that just makes for less competition in your market!

It’s the best news in real estate since last year’s First Time Home Buyers Tax Credit: an estimated $22 billion will pump into our economy as a result of the government not only extending the tax credit, but including current homeowners, too.

The existing $8,000 maximum credit stays in place for first-time buyers. A “first-time” buyer is one who has not owned a home during the three years prior to the purchase. However, repeat buyers who have lived in their home for five of the past eight years may also qualify for up to a $6,500 tax credit on their purchase.

Unlike before, as long as the property is under contract by April 30, 2010, buyers will have an additional 60 days to close by July 1, 2010. The credit applies to single-family homes, condominiums, townhomes and co-ops.

The qualifying income limits have been increased as well, up to $125,000 for individuals and $225,000 for couples filing jointly. If an individual makes up to $145,000 or a couple up to $245,000, the credit can still be claimed, but at a reduced percentage. Any incomes over those amounts won’t qualify.

If your tax credit totals more than your tax bill, you’ll receive a refund! Approximately 2 million people are expected to take advantage of this buying opportunity, so jump to action before the April 30 deadline!

With markets so rapidly changing, it’s easy to imagine how property appraisers might sit in a darkened room, waving their hands over a crystal ball, and producing the mysterious and all-powerful document of a home’s value. Let’s dispel the notion of magical figures and look more carefully at the process.

When comparing against similar properties, it’s not just the final price that counts. Appraisers also factor in any “incentives” offered, such as sellers who pay closing costs or remodeling allowances.

Perhaps the most important factor that lenders review in an appraisal is the closing dates of the “comparables” (other homes by which yours is measured). Unfortunately, with today’s stricter lending requirements, most “comps” must have sold within the last 60 or even 45 days to carry weight. Markets change so quickly that any sale price over two months old may be completely irrelevant.

Now a few words about how foreclosures in a neighborhood affect determination of value. Technically, appraisers shouldn’t consider them, because they don’t fit the Appraisal Institute’s definition of “a property reasonably exposed in a competitive market.” However, if several area homes have been abandoned, we know the negative effect that can have on a home’s “perceived” value.

If you’re planning to sell, express your concerns about the appraisal process to your representative, who will offer explanations and suggestions for improving your report’s results.

You don’t need a crystal ball to try to predict the future of the real estate market. Every time there is a downturn, an upwad trend always follows. The best course of action is to look at the causes, and make decisions based on unbiased facts and incontestable history.

As the choice of loan options grew these last few years, consumers could buya home more easily. Wall Street took notice of all the hot action in real estate and investment firms were able to shift the ownership of mortgages to their managers and clients.

While there is no such thin as a national real estate market, we should be seeing improvement across the board as 2009 draws to a close. If you can, it’s wise to buy now- before the ball lands back in the sellers’ court.
Then about four years ago, the market began cooling, as incomes did not increase at the frantic pace that home prices did. Investors created an atmosphere of unrealisitically high appreciation. The perfect storm was brewing.

This cycle of up and down seems more drastic now because we enjoyed a longer than usual boom of activity, a full decaded between 1995 and 2005. But demand still remains high and although rising slightly, our historically low interest rates also help to fuel property purchases.

An article appeared recently in the New York Times that beautifully illustrates the opportunities today’s real estate market offers. A mother working two jobs saved up for a downpayment and managed to buy a large home with a pool for $187,000. Three years ago, that same home had sold for $370,000!

While sellers are still feeling pressure, buyers with stable incomes and good credit histories are beginning to spread a “feel good” vibe throughout the industry. Conditions have literally never been better for first-time buyers. Affordability has seldom been higher and interest rates have hardly been lower. Selection of inventory is vast, and sellers are highly motivated.

As more buyers enter the marketplace, the ripple effect will be felt far and wide. When they purchase a highly affordable foreclosure or “short sale,” they have removed a distressed property from the listings, improving values for other homes in the area. When they buy a “traditional” listing, that in turn sets off a chain reaction whereby the sellers in turn will purchase another home, from sellers who will in turn buy another home, and so on and so on.

You probably get the picture now. As we approach some stability in real estate, all indications are that prices will begin rising again. As the market approaches recovery, don’t miss your opportunity for the buy of a lifetime.

If you’re under pressure to sell your home quickly in a challenging market, you may have to swallow a large dose of reality and take some radical steps to increase your home’s visibility.  While making concessions can seem difficult, please consider the following proven suggestions to produce a quick sale.

Remember that there are myriad possibilities for exposure in today’s internet-driven society.  In addition to your agent’s traditional print and online marketing tools, use social networking sites like facebook and Twitter to promote your listing to younger first-time buyers.

When setting your price, place it ten to fifteen percent below your competition.  All other things being equal, your home will readily appear as the best value.

Also consider the price “range” your home will fall into, and make sure you’re on the lower end of that range.  For example, a $199,000 home falls into the upper end of the $150,000 to $200,000 range, but that same home priced at $201,000 is in the lower end of the $200,000 to $250,000 range.  Buyers tend to look in ranges of prices, so again, make yours look like the best value.

Finally, talk with your agent about incentives you can offer, like paying buyer closing costs or a decorating allowance.  If you have a strong need to sell quickly, any or all of these suggestions should produce results.

A recent profile of buyers and sellers compiled by the National Association of REALTORS® has revealed promising, if not surprising statistics about the changing face of the marketplace.  The percentage of first-time buyers is on the rise, and they are making their purchases for the long term.

This makes sense, as first-time buyers aren’t struggling with the sale of an existing home.  Combine that advantage with low home prices, large inventories, and low interest rates, and the result is a positive trend for both buyers and sellers.

More buyers entering the Columbia, MO marketplace means more sales, reduced inventories, and increasing home values. The First time homebuyer tax credit has also made a great impact.  This tax credit is available for principal residences only purchased on or after Jan. 1, 2009 and before December 1, 2009. You may also qualify if you and your spouse have not owned a home within the past three years. The tax credit does not have to be repaid, but homebuyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount.  The credit equals 10% of the home’s purchase price, up to a maximum, of $8,000, whichever is less.

The profile of sellers shows that over 90% used a real estate brokerage to market and sell their property.  Buyers profiled listed the most important agent services as helping to find the right home and negotiate satisfactory terms and price.

Buyers needing funds for a down payment, mostly use savings or a gift from family, and most often use a fixed-rate 30 year mortgage.  Columbia, Missouri has some incredible opportunities for today’s homebuyer.

As I watch the stats come in daily from our MLS  it is  apparent there are many buyers in the marketplace.   One of our companies had a bank foreclosure and in one day there were 13 appointments to show the property and 12 offers submitted I was told.  Yes, that property is under contract.  The potential buyers were investors as well as buyers wanting to owner occupy the property.  I was told the buyer who wanted to occupy the home, received the accepted contract.   Foreclosed properties are not the only ones hot on the market.

There are some really, really good values for today’s homebuyer.  When you have a pre-approval letter in hand from your lender, you will be in a much better position to have your offer seriously considered.   And, first time homebuyers, do not forget about the $8,000 tax credit available to you if you close by December 1, of this year.  Time is running and interest rates are very low.  What a deal!