February 27, 2008

For Sale by Owner: Not a Good Idea


 I recently purchased the annual report, “National Association of REALTORS® Profile of Home Buyers and Sellers 2007″.  This has been a very interesting book for me and well worth the investment.   The National Association of REALTORS® (NAR) conducts research and surveys every year to compile information that is beneficial for REALTORS® as well as the public.  The statistics listed in this book are national and it is to be expected that there will be variations from these reports in our local real estate market, but I think that overall, the information reflects trends that are accurate for our area. 

 One topic covered in the book is the Median Selling prices of  For Sale by Owners compared to  REALTORS®. 

The Median Selling Price if Listed with a REALTOR® is  $240,000vs.

The Median Selling Price if sold FSBO is   $180,000

That is a $60,000 difference.  These numbers are very interesting and I have known about this for some time.   The next number, however, is new to me:

The Median Selling Price if Started as FSBO & Then Later Listed with REALTOR® is  $190,000

Wow!  This research from the NAR shows that if a home is listed as a For Sale By Owner (FSBO) first, and then later listed with a REALTOR®, the Median Selling price was still $50,000 less than those who listed with a REALTOR® from the start.  

 It is interesting to to have actual research to show why using a REALTOR® is the best option.  I have been talking to FSBOs for years and I always get the same response.  “We want to try it on our own for a while and if that does not work, then we will list with an agent.” 

The information I have been talking about shows why that is not a good strategy.   Keeping in mind that this is the national average; so not every FSBO is losing $50,000 on the sale of their home.  However,  it is such a large amount that I think we can safely assume that FSBOs, on average, lose money.  When the most common reason stated for wanting to sell FSBO is “to save money”,  I think that this strategy should be reconsidered. 

If you are considering selling your home in the near future, it may be well worth your time and money to talk to me first.  Read some of my “Letters from Clients” and see what several of my sellers have said about saving money, my professionalism, and service.  I would be happy to talk to you about what I can do to get your home sold. 

Filed under: Blogroll,Buying,Real Estate,Selling — Susan @ 4:46 pm

February 23, 2008

The Price is Right


My daughter showed me an interesting article the other day. A research team at Cornell University found that people will pay more for a home if the listing price does not end in zeros. I find that curious. When I first started in this business, I actually thought it was cool to price my listings with an 821 at the end instead of just 999 or 900. It was cool to me because it not only ended with 21…like CENTURY 21, but 821 plus 4 is the end of my phone number. I thought I was so clever. However, when buyers called and asked the price of my listings, I started to feel kind of silly having to tell them, “$2-4-5-,8-2-1. I even had several buyers laugh at me for that. I stopped that practise.
Now, after reading this article, I wonder if I should start it up again.
What do you think I should do?

Filed under: Blogroll,Buying — Susan @ 10:16 am

February 16, 2008

Control What You Can Control


It is  undeniable that the real estate market is experiencing some irregularities.  Up until mid-summer of 2007, we, in Utah County were experiencing quite a hectic, stimulating market which some would call a ‘seller’s market.”  As is often the case, Utah was a little behind the rest of the country in this experience.  While Florida, California, and Arizona were experiencing 125% appreciation rates,  Utah was still at a slower but dependable 2-3%.   Just as these other areas started to feel what has been termed “crash,”  Utah’s real estate appreciation rates were reaching averages from about 18-26%.  There were many that predicted that Utah would be right behind Florida, California, and Arizona in the devastion.  That just has not held true. 

Yes, Utah’s market has slowed down a bit, but we have not experienced the devastating results that these other states have.  First, our appreciation rates were never as high as in other areas, with the exception of maybe St. George.  Second, our economy has not taken the same hits that some of these other areas have.  Utah’s ecomomy is still strong.  Our employment rate is still one of the best in the nation.  Utah cities have repeatedly been ranked high as the best place to live, work and even… invest in real estate. 

Our economy is strong, we have jobs.  People are moving in looking to benefit from our strong ecomomy.  Rents have increased because demand for rentals is higher now than it was.  Another reason for the rental demand right now may be the mortgage loan crunch.  Because of sub-prime lending practises in recent years, the mortgage compainies started to feel the bite from those practises in the summer of 2007, the same time our local market started to notice a change.  Mortgage companies were filing bankruptcy or going out of business all together. 

I believe that these mortgage companies are still working hard to recover some of their loss.  It seems as though they have tightened up their requirements to get a mortgage loan and are turning away potential clients that actually would be a good risk, but maybe not the “best”.  My opinion is that the mortgage companies are trying to strengthen their good to bad debt ratio.  They have record numbers of bad or potentially bad loans right now so they are only taking the best new mortgages at the moment until they can return to a more comfortable ratio. 

As a buyer, this can be frustrating.  I have had a couple of buyers recently get turned down for a loan even though intially they were “pre-qualilfied” as a good risk.  There are a couple of things you should do if you are planning to buy a home soon. 

First, save some money.  It is best to have some money you can use toward a down payment.  Most lenders prefer that you put down at least 20%.  If it is less than 20%, you will be required to pay for mortgage insurance.  Any amount you can put down will make you look like a better risk to a lender.  Some lenders may even overlook things on your credit history if you have a good down payment. 

Next, guard your credit history.  Check it periodically to make sure that it is correct.  Take the necessary steps to clean up any unwanted reports that can make you look like a bad risk.  Control your spending; you are either spending your down payment or your credit score.  Either way, the more you spend on unnecessary frills, the harder you make it to get a mortgage loan.  

The tighter the mortgage companies get on their loans, the better your FICO score needs to be.  Before, if you had a FICO score of 620, you could most likely get a loan.  Recently, changes were made that require a FICO score of 680 to get a loan at the current rate.  In order to get the current rate with a score less than 680, you may have to pay points at closing.  I have not seen or heard of anyone paying “points” in 5 years.  (I have written another post on improving your FICO scores.)
Click here to read more

This is a good time to buy.  There is a good inventory of homes to choose from, and interest rates are very low.  The easy loans may be gone for those that should not be buying a home anyway, meaning those that already have financial troubles, but for the buyer that works hard and uses common sense on financial matters, this is the time to invest in the American Dream. 

Filed under: Real Estate — Susan @ 9:41 am

February 12, 2008

A New Way to Clean your Computer Screen


I found this screen cleaner and thought I would share.  It may take a minute but it is worth it.
Click Here


Filed under: Blogroll,Humor,Personal — Susan @ 4:39 pm

February 3, 2008

Let it snow…


 I have always loved snow and lots of it.  I spent some of my younger years living in Huntsville, UT and one year there was a storm that hit which dumped snow as deep as I was tall.  School was cancelled which caused my siblings and I utter joy.  We played in the snow all day, tunneling through the yard.  It has been a good memory.  It snowed often and very deep in Huntsville, but that was the only time school was cancelled during my residence there. 

When I was a little older, we moved to Haines, Oregon along with 2 other families from Hunstville.   We, the Huntsvillite immigrants, thought it hilarious that they sent us home from school early one day because there was about 3 inches of snow on the ground.  Now that I am older, I realize that the threat was from the predicted, still-to-come storm, not the current one in progress.  They had sent us home before the storm hit, but it never snowed in Haines as much we were used to. 

I loved the way the wind would blow during the night on our ranch which would blow the snow around and cause deep drifts. The drifts made it exciting to get to school in the mornings.  I thought it very exciting as the driver would step on the gas and yell, “hold on” as we rammed through each drift, not knowing if we would make it through, get stuck or end up in the barrow-pit on each side of the road.  I loved the thrill but, of course, I never did have to be the driver in such situations.    The drifts also made play more fun as the snow would be deep enough to tunnel through in the big ditch we had running through one of the pastures next to my home.  

I guess it is these types of fond memories that make me love the snow…until this year.  I live on the NE bench of Orem and it snows here a little harder than I have experienced in other parts of Provo and Orem.   Also, there are hills to navigate here, lots of them.  In December, we were driving down Skyline Drive in my car and even though we were barely traveling at a crawl, we could not stop at the bottom intersection of 1600 North.  There was already a wreck at the intersection that was only minutes old but was making travelers on 1600 drive by slowly and look.  Our car slid helplessly into one of the “lookers.”  I think the accident could have been avoided if that driver had been paying attention to the conditions around him instead of the cars being put onto tow trucks, but that does not change what really did happen.

I know how carefully we descended the hill.  I know the efforts we made to stay in control, and how slow we were driving in my all-wheel drive “cross-over” car with the “snow” feature locked on.  In spite of all our efforts, I felt sick, helpless, and scared to death as we slid down the hill that last 15 feet, knowing what was inevitable.  Luckily, no one was hurt.  We weren’t going fast enough to really do much damage, but that helpless feeling has remained with me.  Every snow storm we have survived since has caused me much anxiety when I, or especially, my loved ones need to travel in it.   I silently feel kind of sick inside each time I hear the forecast that more snow is on the way.   I am weary of it now.  I have never been able to understand when I hear someone say how they wish the snow would stay in the mountains.   Maybe I am still just feeling a little “shell-shocked” and hopefully will be back to my normal self by next year, but at least for this year, I am ready for it to stop snowing. 

Filed under: Community,Personal — Susan @ 8:27 pm

February 1, 2008

FHA Loan Limits

 The House of Representatives voted Wednesday, January 30, 2008, to temporarily boost the FHA maximum limits to 125 percent of a local areas median price, to a maximum limit of $729,750.   In Utah, that is projected to boost the FHA loan limits from $232,000 to possibly as much as $650,000.

Currently in Utah, to qualify for an FHA loan of $232,000, the maximum purchase price of a home could not be more than $239,000.  That has been a hard limit for our area which experienced high appreciation rates the past few years.  In many areas of Utah County, even some of the most basic homes were selling for more than the maximum limit that FHA allowed.  Adjusting the limits, could be just the right answer to the mortgage industry woes. 

The FHA basically guarantees to lenders that if the borrower should default, the loan will be repaid.  The Federal Housing Administration, FHA, was established during the depression in 1934 to help lower income people purchase homes.  At that time, the country was experiencing a very high rate of foreclosures.  (History repeats itself)  FHA has survived all these years filling a needed role, helping lower income people and first time homebuyers purchase a home.   People today are still using FHA loans however, the loan limits established by FHA have not kept up with the recent appreciation rates making it hard to find homes that first time home buyers can afford and still be within the purchase price limits allowed.    

The idea that the FHA loan limits may be raised is exciting news.  I think it would be very instrumental in raising the consumer confidence levels in our area and get the mortgage industry back on it’s feet after the troubles so many of them experienced mid 2007.  However, I am left wondering if it is necessary to raise them to $650,000 for Utah.   Luxury homes are defined as “the top 10%” of a housing market and never less than $500,000.  In our area, the top 10% is around $470,000 and above.  So, in Utah County, if you want to buy a home with a purchase price of $500,000, it is considered a luxury home.  With the proposed changes in FHA limits, high income people could use an FHA loan to purchase a luxury home.   I am not sure how I feel about that yet.  I will need to think about it for a while.  I am certain that the FHA loan limits do need to be adjusted to fit the current market but do they need to adjusted as high as proposed?