Patty O'Brian Real Estate Blog

Markets go up, markets go down. Sometimes we see it coming, sometimes we don’t. It all depends on what both consumers and businesses are buying, and when. How can we tell if and when real estate will recover?

We need to ignore short-term fluctuations, like the spike in home sales last November, when buyers thought the first-time tax credit would expire. Then sales rates dropped significantly when Congress extended the tax credit and removed that original sense of urgency.

We need to pay attention to long-term forecasts instead. Consider that homeownership increases by roughly 1 million each year. There are 4 million births, 2 million deaths, 1 million new immigrants, 2 million weddings and 1 million divorces each year. All of those events spur people to buy and/or sell a home.

Crunch the numbers, and you’ll see that we can expect roughly 60 million home sales, in our nation within the next decade. Regardless of the subprime mortgage debacle, and the ensuing foreclosure crisis, real estate will remain on the rails, an unstoppable freight train barreling towards homeownership.

In looking over the statistics provided by the Columbia Board of REALTORS®
I began comparing the 1st six months of 2009 with the 1st six months of 2010. It appears the total number of new listings during that six month time period saw an increase of 1% in 2010 and a 17% increase for Sales (closed properties). Again, this spike in homes sales was probably caused by the June 30th 2010 expiration of the tax credit. Prices of homes rose 2% compared to June sales figures of last year. These numbers reflect only single family homes, in the Columbia, MO. school district.
Just my 2 cents worth. Would love to hear your words of wisdom.

First time buyers! Are you excited to find a good deal? Or are you afraid of overextending yourself, and or confused by all the conflicting reports about real estate? Well, that might describe any or all of our buyers right now, but those making their very first purchase may feel elevated levels of all these emotions. It helps to have someone offer you some guidance.

Don’t be afraid to make your move now, regardless of what you’ve been hearing about the market. In Columbia, Missouri, with affordability so high, you’ll find a flurry of activity in our market place, and with me as your agent you will not be alone in making the right decision to begin your home search.

Just try not to exercise excessive caution, or you may suffer what has been termed “paralysis by analysis.” As your real estate representative I will present you with all the facts and figures you need, and help you to interpret the data so that you can make a sound choice.

Now is not the time to vacillate about whether prices or interest rates will still drop. There is nowhere to go now but up. If rates rise to 7.5% (still historically low), the home’s price would have to be reduced nearly 20% to offset the difference in monthly payments.

Set aside your uncertainties. Contact me and I will help you determine your financial footing, and show you an inventory of well-suited homes matched to your particular goals.

Hope you are having a great summer and staying cool in this sweltering heat.

There are two apparently attractive options for buyers scoping out a deal. One type is the “short sale,” where sellers have made an agreement with their lender to sell the home for less than they still owe on the mortgage. The second type is the REO (bank-owned) home, which has fallen back into the hands of the lender after the sellers defaulted.

While these properties may be appealingly priced, buyers need stomach and smarts to take proper advantage. If you’re considering a short sale purchase, focus only on those with a price pre-approved by the lender. Otherwise, you may be wasting precious time in negotiations that may still ultimately fail.

Also seek out foreclosures that are protected by the Cash For Keys program, which offers the current (or former) owners a cash incentive to prevent them from neglecting the property before vacating it. Either way, inspections are crucial, especially if the house has been vacant for some time. Talk to your agent about having the utilities temporarily reconnected for the inspection, so you’re sure all is in working order.

And finally, don’t focus on the asking price alone. Location in a declining neighborhood or extreme maintenance and repair issues will eclipse any perceived value in a low price. Great homes are here in Columbia, MO. and at bargain prices, but let an agent guide you through potential pitfalls.

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.