J. Kent Erickson, Broker Associate
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How to Get the Most Money From the Sale of Your Home

Posted by on Sep 25, 2017 in Uncategorized | 0 comments

How to Get the Most Money from the Sale of Your Home Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensure that you get the highest price possible. 1. Price it a LITTLE LOW  This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below). Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house. Realtor.com gives this advice: “Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.” 2. Use a Real Estate Professional This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional. A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent. In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that: “FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties. Bottom Line Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your...

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Homeowner’s Net Worth Is Still Greater Than a Renter’s

Posted by on Sep 17, 2017 in Uncategorized | 0 comments

Homeowner’s Net Worth Is Still Greater Than a Renter’s Every three years, the Federal Reserve conducts their Survey of Consumer Financesin which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).  The latest survey data, covering 2014-2016 will be released later this year. In the meantime, Lawrence Yun, the National Association of Realtors’ Chief Economistestimates that the gap has widened even further, to 45 times greater ($225,000 vs. $5,000)!  Put Your Housing Cost to Work for You As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth. The latest National Housing Pulse Survey from NAR reveals that 84% of consumers believe that purchasing a home is a good financial decision. William E. Brown comments: “Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own. Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home.”  Bottom Line If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy...

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Sellers: Your Home is an Oasis in an Inventory Desert

Posted by on Sep 15, 2017 in Uncategorized | 0 comments

Sellers: Your Home is an Oasis in an Inventory Desert First-time homebuyers are flocking to the real estate market by the thousands to find their dream homes in order to make their dreams of homeownership a reality. Unfortunately for many, the inventory of starter and trade-up homes in the US has struggled to keep up with demand! According to the National Association of Realtors (NAR), the inventory of homes for sale dropped 7.1% year-over-year to a 4.3-month supply and is down for the 25thconsecutive month. Some homeowners may be hesitant to list their homes for sale because they are worried that they will also have a problem finding a home to buy and move in to. This is a legitimate concern; no one wants to sell their home quickly and not have anywhere to live. But there is good news! If you are thinking of moving up to a luxury or premium home, there is more inventory available in these markets and you may even get a great deal on a home that has been on the market for a while. If you are the owner of a starter home and you are looking to move into a trade-up home, or if you are just looking to relocate to a new area in a home of the same size, there is still hope! In many markets, homeowners are building contingency plans into their contracts. This means that the homeowner builds in extra time before they close in order to find their dream home and they are upfront about the contingency with any buyers who come to see the house. Your home is an oasis to buyers who are searching for homes in today’s market. The right buyers will sympathize and wait for you and your family to find your next home. Bottom Line Don’t let the fear of not finding a home to move in to stop you from moving on with your life. Let’s get together to discuss ways to set expectations with potential buyers from the...

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Want to Keep up with the Joneses? Now’s the Time

Posted by on Sep 13, 2017 in Uncategorized | 0 comments

Want to Keep up with the Joneses? Now’s the Time Does your current house fit your needs? Does it seem like everyone else is moving up and moving on to more luxurious surroundings? Are you wondering what it would take to start living your dream life? Market conditions around the country have presented an opportunity like no other for those who are looking to make the jump to a premium or luxury home. The National Association of Realtors reports that national inventory levels are now at a 4.3-month supply. A normal market, where prices appreciate with inflation, has 6-7-months inventory. The national market has echoed the conditions felt in the starter and trade-up markets as inventory has declined year-over-year for 25 consecutive months. The chart below shows the relationship between the inventory of homes for sale and prices. According to Trulia’s latest Inventory Report, the inventory of homes for sale in the two lower priced markets has dropped by double digit percentages over the last 12 months (16% for starter and 13% for trade-up homes). While the inventory of homes in the premium home category has dropped by only 4%. This has created a seller’s market in the lower-priced markets, as 54% of homes were on the market for less than a month in the last Realtors Confidence Index, and a buyer’s market in the luxury market, where homes were on the market for an average of 160 days according to the Institute for Luxury Home Marketing. Bottom Line If you are even thinking of listing your home and moving up to a luxury home, let’s get together to evaluate your ability to do so. Homeowners across the country are upgrading their homes, why can’t you? Your dream home is...

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Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750

Posted by on Sep 11, 2017 in Uncategorized | 0 comments

Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750 The results of countless studies have shown that potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market. One such study by the Wharton School of Business at the University of Pennsylvaniarevealed that many millennials have not yet considered purchasing homes simply because they don’t believe they can qualify for a mortgage. A recent article about millennials by Realtor.com explained that: “About 72% of aspiring millennial buyers said they’re waiting because they can’t afford to buy…” The article also explained that 29% of millennials believe their credit scores are too low to buy.The problem here is the fact that they think they will be denied a mortgage is keeping them from even attempting to apply. Ellie Mae’s Vice President Jonas Moe encouraged buyers to know their options before assuming that they won’t qualify for a mortgage: “Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO® Score and a 20% down payment to buy.” So, what credit score is necessary? Below is a breakdown of the FICO® Score distribution of all closed (approved) loans in July from Ellie Mae’s latest Origination Report. Over 52% of all approved loans had a FICO® Score under 750. Many potential home buyers believe that they need a score over 780 to qualify. Bottom Line If owning a home of your own has always been your dream and you are ready and willing to buy, or if you are a homeowner who wants to move up, find out if you are able to! Let’s get together to determine if your dreams can become a reality sooner than you...

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Where are Home Prices Heading in the Next 5 Years?

Posted by on Sep 9, 2017 in Uncategorized | 0 comments

Where Are Home Prices Heading in The Next 5 Years? Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number. The results of their latest survey: Home values will appreciate by 5.0% over the course of 2017, 4.0% in 2018, 3.2% in 2019, 3.0% in 2020, and 3.0% in 2021. That means the average annual appreciation will be 3.64% over the next 5 years. The prediction for cumulative appreciation increased from 17.8% to 18.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative appreciation of 6.7%. Bottom Line Individual opinions make headlines. We believe this survey is a fairer depiction of future...

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Number of Buyers Putting Down Less Than 10% Hits 7-Year High

Posted by on Sep 7, 2017 in Uncategorized | 0 comments

Number of Buyers Putting Down Less Than 10% Hits 7-Year High According to Black Knight Financial Service’s Mortgage Monitor Report, 1.5 million Americans have purchased a home with down payments under than 10% over the last 12 months. This is great news for buyers as this marks a 7-year high. Many mortgage programs offered by agencies like Freddie Mac and Fannie Maeallow buyers to put down as low as 3% to purchase their dream homes. The strength of the housing market has aided buyers who used low-down-payment programs to buy. As a recent CNBC article points out, “Defaults on recent low down payment loans, so far, are slow, but that is as much a factor of the good credit quality as it is the strength of the housing market. Home prices are rising incredibly fast, meaning those borrowers are gaining equity in their homes quickly.” Low down payments aren’t just great for first-time homebuyers. These programs have allowed homeowners who want to capitalize on the equity they have in their homes to use the profit from their sale to pay off high-interest credit cards, fund education or even start a business. According to a new Census Report, the Annual Survey of Entrepreneurs, home equity was used to start 7.3% of all businesses in the United States, which equates to over 284,000! The industries that saw the most growth from home equity are accommodation & food services, manufacturing and, retail trade. Bottom Line Gone are the days of ‘20% down or no mortgage.’ What could you build with the equity in your house? Let’s get together today to evaluate your ability to achieve your dreams...

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Empty Nesters: Best to Remodel or Time to Sell?

Posted by on Sep 5, 2017 in Uncategorized | 0 comments

Empty Nesters: Best to Remodel or Time to Sell? Your children have finally moved out and you and your spouse now live alone in a four-bedroom colonial (or a similar type of house). You have two choices to make: Remodel your house to fit your current lifestyle and needs Sell your house and purchase the perfect home Based on the record of dollars spent on remodeling and renovations, it appears that many homeowners are deciding on number one. But, is that the best long-term solution? If you currently live in a 3-4-bedroom home, you probably bought it at a time when your children were the major consideration in determining family housing needs. Along with a large home, you more than likely also considered school district, the size of the property and the makeup of other families living in the neighborhood (example: you wanted a block with other kids your children could play with and a backyard large enough to accommodate that). Remodeling your home to meet your current needs might mean combining two bedrooms to make one beautiful master suite and changing another bedroom into the massive walk-in closet you always wanted. However, if you live in a neighborhood that historically attracts young families, you may be dramatically undermining the value of your house by cutting down the number of bedrooms and making it less desirable to the typical family moving onto your block. And, according to a recent study, you will recoup only 64.4% of a remodeling project’s investment dollars if you sell in the future. Your home is probably at its highest value as it stands right now. Instead of remodeling your house, it may make better financial sense to sell your current home and purchase a home that was built specifically to meet your current lifestyle and desires. In many cases, this well-designed home will give you exactly what you want in less square footage (read less real estate taxes!) than your current home. Bottom Line If you are living in a house that no longer fits your needs, at least consider checking out other homes in your area that would meet your lifestyle needs before taking on the cost and hassle of remodeling your current...

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What’s Happening in the Real Estate Market?

Posted by on Sep 3, 2017 in Uncategorized | 0 comments

What’s Happening in the Real Estate Market? This is a pretty common question that a potential home buyer or seller may be asking themselves. Leading economists in real estate converged in New Orleans this past week as they presented their answer to this question at the 50th Annual Real Estate Journalism Conference for the National Association of Real Estate Editors. Here are the top takeaways from the week of presentations: Many of the conversations at the conference came back to the impact that Millennials and first-time home buyers will have on the market in the future. Jonathan Smoke, Chief Economist for realtor.com had this to say:  “At any given time in our history, demographics would explain 60-80% of what’s happening [in the market], and we are in a period of time where Millennials make up a largest demographic group according to the Census, at 84 million.” According to the National Association of Realtors (NAR), the median first-time home buyer age is 30 and many millennials are entering a prime age to drive the housing market into the future. Lawrence Yun, Chief Economist for NAR shared that myths and affordability may be holding back potential buyers: “84% of current renters have the desire to own. While 36% believe they cannot afford a home and 60% of renters believe it would be ‘difficult’ to qualify for a mortgage. Ellie Mae’s Vice President, Jonas Moe encouraged buyers to know their options before assuming that they do not qualify for a mortgage:  “Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO Score and a 20% down payment to buy.” The National Multifamily Housing Council (NMHC) revealed that Millennials and Baby Boomers are often competing for the same housing inventory, causing a challenge as these two groups are the largest generations by population. Both groups are looking for affordable, convenient homes close to city centers and ‘what’s happening.’ Bottom Line The experts agree that homeownership is still desirable across all demographic groups, with Millennials and Baby Boomers having a great impact on available supply. If your dreams include owning your own home, let’s get together and evaluate your ability to buy...

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2 Myths About Mortgages That May be Holding Back Buyers

Posted by on Sep 1, 2017 in Uncategorized | 0 comments

2 Myths About Mortgages That May Be Holding Back Buyers Fannie Mae’s “What do consumers know about the Mortgage Qualification Criteria?” Study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home. Myth #1: “I Need a 20% Down Payment” Fannie Mae’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either don’t know (40%) or are misinformed (36%) about the minimum down payment required. Many believe that they need at least 20% down to buy their dream home. New programs actually let buyers put down as little as 3%. Below are the results of a Digital Risk survey of Millennials who recently purchased a home. As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%! Myth #2: “I need a 780 FICO Score or Higher to Buy” The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary to qualify. Many Americans believe a ‘good’ credit score is 780 or higher. To help debunk this myth, let’s take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.1% of approved mortgages had a credit score of 600-749. Bottom Line Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your...

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