NAR released its latest pending home sales index figure last week and for the second month in a row the index is up. But more than that, the index has broken 100. This is significant because the only time since the housing boom collapsed that the index has broken 100 is when the home owner tax credit was in effect. The fact that the index has returned to that level a year since the credit has been in effect means the housing market is strengthening completely on its own, without any stimulus.
NAR Chief Economist Lawrence Yun is upbeat about 2012 because in a number of areas indicators are pointing upward. Not only are home sales up but housing starts are up and home prices are stabilizing in many markets and heading up in some. In areas where they’re still down, the declines aren’t that great. More fundamentally, broader U.S. economic signs are looking positive, including the all-important jobs picture. About 100,000 job are being created a month, and that could rise to 150,000—still not a quick enough pace to get us back to where we were before the downturn but the headwinds are in the right direction.
So, what does this all mean to our market of Franklin County, Ohio and the contiguous counties? To buy or sell in 2012? What a year a year we have coming up—from the big US political election year to the the Ancient Mayan Armageddon coming and all? Well without the benefit of any ancient Mayan wisdom on real estate strategies, let's just hope the real cataclysmic event in the real estate market already has passed, and let's work on cleaning up the mess left from the bubble bursting.
Having households with loans higher than their value will keep prices down while creating major obstacles for sellers in 2012. So my prediction (yes, sans crystal ball I don't think I'm going out on a limb!) is that 2012 is going to be another homebuyer's market. In fact, recent studies indicate that more than 20 percent of all residential properties that have a mortgage lean are still underwater, leading us to believe that many foreclosures and short sales are still to come.
On a more positive note, even the most conservative forecasts are calling for growth in home sales in 2012, and more than one-third of home resales were made to first-time buyers in 2011 -- another good sign. So, as I like to point out, there will always be a need for homes. People still need to make changes based on their careers, lifestyle, and family needs. It is just simply that the intense demand created by the inexpensive loan rates combined with the easy availability of loan money, made a demand for housing that wasn't sustainable. As we move forward, we all need to work on being more focussed on long-term needs and gains. Credible and Sustainable is what I believe is the future for all of us. I feel we've all had enough of greed and short-term gain, which is not working out so well for America overall.
In the meantime, here are some tips for selling your home or buying one in 2012.
Price it right from the start, period.
This is imperative if you want to sell your home and obtain the most money possible in the current climate. Many real estate sellers will not be happy to hear this and right now are crossing their arms and thinking that holding out for a better offer is just what they'll do. But beware, your home will be brushed off by most homebuyers. Buyers are not easily fooled with the information age. And, even the lease internet savvy buyers are capable of viewing a few homes and then knowing if your home is a good value or not. So, if you price your home competitively in the your neighborhood, you'll be the one to receive the best offer possible and save yourself the additional mortgage payments, taxes, insurance, and utilities. If you price high and must lower to sell, statistics show you'll get lower offers than if originally priced correctly and you still have all of the carrying costs of your home while you were stubborn. Consider this from the National Association of Realtors that of homes that took four months or more to sell in the past year, almost half of their owners accepted less than 90 percent of the final asking price. I sit down with my clients and we review the latest comparable sales including short sales and foreclosures, as well as a recent summary of sales prices versus original list prices, and homes that didn't sell. The homes actual market value is usually quite apparent and difficult to argue over.
Make the best first impression
De-clutter, paint, stage, scrub, improve, repeat. Efforts can include caulking, plastering, painting, planting flowers, adding potted plants, making the windows spotless, pressure washing decks and driveways, edging the walks, trimming the bushes and trees, and mending the fences. None of these is excessively capital-intensive, but when applied en masse, they say "I'm well cared for" and "buy me."
Be flexible
Be prepared for demanding buyers. It is after all a buyers' market. Be ready to negotiate and offer extras such as closing costs, repairs (or a cash credit), updating appliances, or pre-paying condo association/homeowner association dues for a brief period. If all of this is disconcerting to you and your response is "no way," then you don't really have a "need" or a " pressing reason" to sell, and maybe you should wait on making a housing change.
Look marvelous online
I use a professional photographer to present my listings online. Buyers begin looking online, and the photos matter. Sellers and buyers are routinely using online selling websites, as well as Facebook and other social media to explore the communities where they want to live.
Don't fall prey
Fraudsters are targeting distressed homeowners with "deals" that can sound perfectly legit. Some offer loan modifications for upfront fees while others offer fee-based "help" in navigating government housing assistance programs, sometimes claiming they're attorneys.
There are also con-artist "investors" compelling desperate owners to sign over their homes with quitclaim deeds in return for a typically empty promise to remain there indefinitely. Others are telling former owners they can get their homes back for a lump sum. Be forewarned: Never sign blank documents or documents with blank lines.
If you're unsure of an offer, have an attorney or other trusted adviser look it over. Keep in mind that a law barring firms -- except attorneys -- from charging upfront fees for mortgage relief or mortgage modification took effect in 2011. It's called the Mortgage Assistance Relief Services Rule.
Financing-for sellers
Realize it's harder for buyers to qualify for loans these days. Credit records are under greater scrutiny, and lenders are often demanding a 20 percent down payment and some pricing flexibility from the sellers, especially if the lender's appraisal doesn't reach the asking price. Even though you don't like the buyers' offer, it they are a qualified buyer take them seriously and negotiate. They can and will move on to another very nice home to make an offer on.
Consider cash offers, even if they're not the highest. If you must reject an offer from homebuyers, do so gently and with encouragement, telling them they're oh-so-close. You don't want to give away your home, but you don't want to give it back to the bank either. These days, meeting halfway usually means meeting buyers on their half.
Financing-for buyers
Realize it's harder for you to qualify for loans these days. Credit records are under greater scrutiny, and lenders are often demanding a 20 percent down payment. If you really want to buy a home andyour credit is dinged up, do some upfront work. Meet with a reputable lender and real estate agent to develop a plan to get your credit in order and be ready to buy your home in 2012. If your credit is good, still, work with a reputable lender and real estate agent to get the best loan and the best buy on your dream home. (I know a great agent and a few really honest and hardworking lenders too!)
Choose your area
Are you worried about sustaining value? Review your current needs and the needs you'll likely have for your home's features and your communities' amenities (such as restaurants, community arts, movies, museums, groceries, retail, schools, walking/biking paths, parks, senior centers, etc) over the next 8-10 years. Consider buying near a prestigious hospital, university, large government employer or newly vibrant central business district. These entities typically aren't going away, and the demand for good housing around them won't either.
'Site unseen' equals shortsightedness
Are you perplexed by the home valuation you did on your place on the website of a large, seemingly reputable real estate organization? Puzzled how that valuation can be 25 percent or more above or below a firsthand appraisal you've had done? Well, value estimates on these sites can vary widely, sometimes by hundreds of thousands of dollars, even by the admission of the companies themselves. There are way too many variables in the valuation game to give too much credence to blind, algorithm-based estimates that are impersonally calculated. Nothing beats a nuanced firsthand professional appraisal.
Buyer's due diligence
As your agent, I'll assist you with all of the details...from working with your lender, preparing a solid contract and disclosures and the following protections:
Hire a title company to check the house for liens and tax arrearages.
Hire you own inspector. Don't use the seller's!
Have the inspector check for unpermitted work such as illegal room additions and garage conversions.
You may want to consider the overall energy efficiency of the home with an energy audit.
Be sure property lines are accurate. If there's any question, hire a land surveyor to research the original deed and to stake out the property's lines and your neighbors' property lines to avoid future disputes.
Make a quality-of-life due-diligence checklist
As your agent, I'll assist you with as much of the following as possible to make sure you find the best fit on a home and community. Like recommending that you do some of the following:
Go to the National Sex Offender Public Website at Nsopw.gov to search for neighborhood predators.
Spend some time around the neighborhood and briefly interview neighbors. Determine if there are noisy neighbors, signs of gang activity, nocturnal barking dogs, indigent lingerers, frequent loud parties and/or suspicious nighttime visits. Are there lots of rental homes? Is the block a cut-through point during rush hour? Does the school bus go past the block? Is there a restrictive homeowners association?
Determine what types of buildings can be constructed on vacant lots adjacent to the neighborhood. This helps avoid unpleasant future surprises. Is there constant noise from a nearby highway or busy street? But don't worry, I am very vocal on what makes for a poor investment when we are looking at the homes!
IF YOU HAVE QUESTIONS ABOUT SELLING YOUR HOME OR BUYING A NEW ONE, please DON'T HESITATE TO CALL, TEXT OR EMAIL ME. 614-657-2005 or abumpus@insight.rr.com
My promise to my clients:I try to always remember what it is like to walk into this incredibly complex world of buying and selling with little or no knowledge of how the process works. I know that behind the door of your home and in your life there is much more going on than just your real estate transaction. I work with each person, not the house, and with the whole person, not just the issues surrounding the transaction. When I attempt to put myself in your shoes and contemplate what you are dealing with I am most effective.
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