FHA has made changes to how Collections, Charge Offs, Judgments and Disputed Accounts are handled. These changes are effective as of October 15th, 2013. Please see below a summary of the FHA Mortgagee letters 2013-24 and 2013-25 and if you have any questions please contact us. Thank you.
EFFECTIVE DATE • These new rules are applicable for FHA case numbers issued on and after October 15, 2013
COLLECTIONS AND/OR CHARGE OFF ACCOUNTS • Medical collections and/or charge offs are excluded from this guidance. • A letter of explanation from the borrower(s) is:
- Not required for loans receiving an approved/eligible from FHA Total Scorecard (DU). - Is required for all manually underwritten loans. In addition to the letter of explanation, the borrower(s) must provide supporting documentation that provides the DE underwriter with evidence that the collection account was not the result of the borrower’s disregard for financial obligation and/or inability to manage debt.
• Payment plan
- Must be considered if the aggregate balance of all outstanding collections is equal to or greater than $2000. - Considered for both manual underwrites and loans receiving a FHA Total Scorecard (DU) A/E decision.
o Medical collections are EXCLUDED from this aggregate. o Unless excluded by State law, the collection accounts of a non-purchasing spouse in a community property State are INCLUDED in this aggregate.
- One of the following actions MUST be taken if the aggregate from all borrowers is $2000 or higher. (Note: If borrower A total is $1500 and borrower B total is $600 the sum is over $2000 and therefore the guidance applies.)
o Payment in full at or prior to closing (with the source of funds properly verified) o If a payment plan has been made with creditor, include the agreed upon amount in the DTI. o If a payment plan has not been made, 5% of the balance must be included in DTI.
JUDGMENTS • Applies to all loans, whether approved by Total Scorecard (DU) or manually underwritten. • All judgments (including medical) must be paid in full at or prior to closing.
- An exception may be given if the borrower has entered into an agreement with the creditor. Full documentation of the payment agreement required AND a minimum of 3 months of scheduled payments have been made. Borrowers may NOT prepay the scheduled payments in order to satisfy the 3 month requirement.
• Payments must be included in the DTI. • Unless exempt by State law, the judgments of a non-purchasing spouse, in a community property State, included in this guidance.
DISPUTED ACCOUNTS - DEROGATORY INFORMATION ON THE REPORT • This category is used to determine if a manual downgrade to a loan is required, if the loan is approved by Total Scorecard (DU) and there are derogatory disputed items on the borrower’s credit report. • Derogatory disputed information is defined as:
- Disputed collection accounts - OR - Disputed charge off accounts - OR - Disputed accounts with late payments in the last 24 months
• Excluded from the calculation are:
- Disputed medical accounts. - Accounts that are the result of identity theft; credit card theft and/or unauthorized use. However, there must be appropriate documentation, such as a police report, to substantiate the theft and/or unauthorized use claim. If proper documentation cannot be obtained, then the accounts are included in the calculation.
• Cumulative outstanding balances from all borrowers are $1,000 or higher the file must be downgraded to a “Refer”. (Note: If borrower A total is $500 and borrower B total is $600 the sum is over $1000 and therefore the guidance applies.)
- The DE underwriter will then consider this derogatory disputed information in the credit analysis as a manual underwrite. - If the disputed information is isolated and the overall credit profile of the borrower is acceptable, the DE underwriter may leave the file with an open dispute. - If the disputed information is not isolated and/or the overall credit profile of the borrower is not acceptable, the DE underwrite may require that the dispute be satisfactorily resolved before the loan can be closed.
• Cumulative outstanding balances from all borrowers are $999 or less, a downgrade is NOT required.
DISPUTED ACCOUNTS - NON DEROGATORY INFORMATION ON THE REPORT • Non-Derogatory disputed information is defined as:
- Disputed accounts with zero balance - Disputed accounts that are current and paid as agreed - Disputed accounts with late payments aged 24 months or longer
• Non-derogatory disputed accounts do NOT require a manual downgrade. • The DE underwriter IS required to consider the disputed accounts and the potential impact to the borrower’s ability to repay the loan, including the impact to the DTI.
The government shutdown is here. Whether it’s not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there’s one bright spot of the economy that stands to be affected as well: housing.
One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers’ access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.
Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.
Mortgages purchased and securitized by Fannie MaeFannie Mae and Freddie MacFreddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.
But if the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. “Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed,” the VA warned in its September 25th contingency plan.
Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.
That prospect would be somewhat worrisome – if it were actually true. The FHA’s Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans,” the report now states. In other words, other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.
The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development’s contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.
The FHA’s single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government’s standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency’s Multifamily Housing Office, which is funded through yearly appropriations.
“Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief,” continues the HUD report. “If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.”
One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause “a setback in construction start-up,” and if the shutdown lasts for an extended period, “a substantial reduction in housing available in rural areas relative to population.”
“The government doesn’t generally approve loans, they basically just insure them,” says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. “For the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time.”
If it does stretch on, he adds, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes.
When it comes to credit, sometimes the largest challenge is the most difficult to surmount: we simply don’t know what we don’t know, so our assumptions and inaccurate beliefs run wild and free through our mental real estate. Most of the time, there’s no harm; following finance fundamentals like paying every bill on time, every time, keep us out of credit danger zones.
But when it’s approaching the time to buy, refi or even rent a home, relatively small credit score differences can stop you from getting your dream home, and can cost (or save) you thousands of dollars in interest over the life of your loan.
If you’re at a time in your life where it makes sense to invest some time and effort into optimizing your credit score, here are five common credit myths we’d like to help you bust without further ado: Myth #1: Having lots of cash, a great income, or tons of equity, makes your FICO score less relevant.
Fact: No matter how much cash you have, if you want a mortgage, you must meet the lender’s FICO score guidelines. Of course, if you’re flush with cash, it should be relatively easy to make your monthly payments on time. But if you have come into cash relatively recently or you’re coming off a rough financial patch, lenders don’t not look at your credit score on the theory that your other assets diminish your credit riskiness. Most lenders want nothing more than to avoid having to foreclose on a home, even if the homeowner has other assets.
And the best predictor of whether you’ll default on a loan in the future is how you’ve handled your credit in the past, so your credit score will drive whether you qualify for a home loan and what interest rate you’re charged, no matter how much you make. Two exceptions: if you buy a home with all cash, or take a hard money loan, which usually requires a much larger-than-average down payment and interest rate, you might be able to bypass credit score scrutiny, but you’ll pay for it.
Myth #2: Having no debt or no late payments means you have great credit. Fact: Financial responsibility and good credit are two different things. Your FICO score is meant to be a measure of your responsibility when it comes to managing debt, as proven by the fact that you have credit accounts, use them regularly and don’t abuse them.
Having no credit accounts or debts doesn’t give you good credit - it gives you no credit. And on the other end of the credit usage spectrum, being maxed out on various credit accounts all the time, submitting lots of credit applications and other credit moves that indicate you may abuse your credit can actually depress your score. Best practice is to have several credit accounts (student and car loans count!) that you actively and responsibly use on a monthly basis.
Tip: FICO gives a top score to accounts with balances that are 30 percent of the credit limit, so if you can keep your credit card or loan account balances at or around that mark, even better.
Myth #3: Checking your own credit score in advance prevents surprises when you apply for a mortgage. Fact: Your mortgage originator (broker or banker) must pull their own version of your report from their own provider, and it might have a very different score, rating scale or even different line items than the free or paid report you pulled online. This is why it’s imperative to start working with a mortgage professional as early as possible - a year in advance is not overkill - so you can detect any errors or issues and get their recommended fix in the works with plenty of lead time.
Myth #4: If you’ve had a foreclosure or short sale, your credit report will be damaged for 7 years. Fact: Derogatory credit items, like late mortgage payments, foreclosures and short sales, appear on your credit report for 7 years, but your credit score can be rehabilitated enough to buy a home or obtain other credit in less time, depending on your circumstances. Your post-short sale or foreclosure waiting period depends on a number of things, including what type of loan you’ll be seeking to buy your next home with, how much cash you’ll have to put down and whether there were any extenuating circumstances involved in losing your home in the first place; some loans allow for an immediate purchase, others require a waiting period of 2, 4 5 or even 7 years after the loss of a home.
Of course, your FICO score is also a key criteria in a post-home loss “buy,” but interestingly enough, the length of time it takes to get your FICO score back up depends on how high it was beforehand. Earlier this year, the New York Times reported that it would take a consumer with a 680 FICO score three years after a foreclosure to bring their score back to that level, while it might take someone with a 780 FICO score (near-perfect) seven years for full score recovery.
And keep in mind that as your foreclosure or short sale ages, its impact on your score will decrease, too.
Myth #5: Short sales have much less impact on your credit score than foreclosures. Fact: Hear ye, hear ye - short sales and foreclosures have the same impact on your credit score, according to the FICO folks themselves. (The only exceptions are for short sales or deeds-in-lieu of foreclosure where the property was not upside down, which are few and far between, if they’re not just a real estate urban legend!)
However, the number of missed payments you had before your home was lost to foreclosure or short sale might weigh on how gravely injured your FICO score is in the process. At the going rate at which banks are foreclosing on homes - clocking roughly 2 years of missed payments before a home is repossessed - your FICO score could take an even greater hit than if you were able to divest of it via a short sale in 1 year’s time.
As you might have heard by now, multiple offers are the new black. Well - kind of; if your own home is on the market or soon to be, it can seem like you break your back to prepare your home and it lags and lags on the market while all the cool kids houses and their sellers sit idly by, making champagne toasts while they are inundated with more offers than they can shake a stick at.
Let’s bust one myth: getting multiple offers rarely happens by luck alone. That’s good news for you, as it means that generating multiple offers is more of a science than an art. And that, in turn, means there’s a whole lot you can do to replicate these results with your own home’s listing.
Here are five elements I nearly always see in listings that get multiple offers:
#1. Listed low. As I alluded to last week, homes that get multiple offers are often sold in what industry insiders call an auction atmosphere. If you think back to the last auction you saw on TV or participated in online, you’ll remember this basic element of Auctions 101: the starting price is lower - sometimes quite a bit lower - than the final sale price.
In fact, it’s the low list or starting price that gets people excited about the possibility of scoring a great value, whether they’re bidding on an antique Chinese pug figurine on eBay or on your home. And when it comes to your home, it’s that same, low-price-seeking excitement that will cause many more buyers to show up and view your home than would have come at a higher price point.
In real estate, more showings are an inescapable prerequisite to more offers.
Now - I’m not at all suggesting you give away the farm, just that you price your home from a retailer or auctioneer’s perspective, rather than the all-too-common backwards reasoning to which home sellers so often fall prey. Work with your agent through the comparable sales data - as recent and as comparable as possible - and then do your best to list your home as a slight discount, not at a slight premium, compared to the recent neighborhood sales. That will get buyers’ attention.
#2. Easy to show. Walk a mile with me, if you will, in the shoes of the average home buyer or their agent. Let’s say there are 50 homes on the market which meet your rough specifications in terms of bedrooms, bathrooms, square footage, price range and location. You can narrow it down to your 30 top priorities to see. But you only have time to see 8 today. Now, of those 30 top priority properties, about 15 are short sales or foreclosures and you can get into them anytime you want. And the other 15 are split down the middle - half of them are available to be seen with nothing more than a single phone call. The other half require you to hurdle an arcane obstacle course of phone calls, 24 hour notice requirements, strange hours of availability and more phone calls to get an appointment to see the place. Which would you go see, and which would get ruled out?
I am not exaggerating one iota when I tell you that your home could be priced well and marketed well, but if you make it too difficult for buyers to get in to see it, the statistical probability is that they will (a) find and choose another home from those that are more easily accessible to view, and/or (b) assume you are not motivated to sell, get irritated and pass on your home as a result.
Want multiple offers? Make sure your home is available to be shown on demand, or as close as possible to that. Inconvenient? Yes. Frustrating? Sometimes. A challenge to keep the place clean at all times? Assuredly. But, my dear reader, no one ever promised you a rose garden; decide what your priorities are and, if you decide that getting top dollar for your home is at the top of that priority list, then also decide to be willing to deal with the inconvenience involved in churning up multiple offers and getting your home sold.
#3: Immaculate look and function.The homes that get multiple offers (outside of the foreclosure arena, anyway), are those with look, feel and function that can be described in one word: covetable. You’re not trying to create a situation in which your home barely edges out the listing down the street in the hearts and minds of your target buyer. If you want multiple offers, what needs to happen is for multiple buyers to fall deeply in love with your home - enough to brave the competition and put their best foot (and top dollar) forward.
Today’s buyers are no dummies. They’ve just lived through the worst real estate recession anyone can remember, and they’re much more frugal that buyers were at the last peak of the market. To boot, mortgage and appraisal guidelines and their own smart sense of frugality prevents them from just hurling dollars at any old place. Accordingly, they are not easily tricked into competing for a home by a slipshod paint job and a few pieces of Pottery Barn furniture.
To generate multiple offers, prepare your home by ensuring it is: *immaculate from the inside out - basements, garages and crawl spaces included *decluttered and staged to the nines - including fresh paint, carpet and other things that need replacing *in fine mettle - make sure things like doors, windows and systems buyers test (e.g., stoves, faucets, heating and air conditioning) are not creaky, wonky, leaky or otherwise dysfunctional - and if you’ve done any major home improvements or replaced any appliances or systems lately, market that fact to show off the move-in readiness of the place.
#4: Just enough market exposure. If you’re home is so lucky as to get an offer the first day or so on the market, count your blessings. But also calculate your opportunity costs: many buyers can’t get out to see homes that quickly - some are unable to house hunt except on the weekends! In my local markets, I’ve seen time and time again that listing agents who are skilled in cultivating multiple offers often plan from the jump to allow the home to be exposed to the market long enough for all qualified and interested buyers to see it and get their offers on the table.
And what’s more, they expressly message the calendar for market exposure, Open Houses and even the offer date and review timeline in the listing, from the very beginning. Here, it’s very common to see a listing come on the market with a calendar of 1-2 Open Houses and an offer date sometime early in the week following the second one. Ask your agent to brief you on the standard practices for market exposure in your local area.
Allowing for ample market exposure - and including the timeline in the listing - lets buyers know that they will be able to get to the property and get their offers considered, and creates some urgency, as well. Smart buyers interested in properties like this will take care to have their agents contact the listing agent as soon as they think they may want to submit an offer, though; this way, if someone makes a so-called ‘pre-emptive’ offer, you’ll get a call from the listing agent and a chance to compete.
#5: Sellers who are willing to revise. f you think most of the tips here are not for you because you’ve already blown your chance to sell for more than asking - think again! A number of times, I’ve witnessed what I call the Sweet Spot Phenomenon, where an overpriced home sits on the market for months with no bites, sometimes even through multiple price reductions. Finally, the seller lowers the price to the ‘sweet spot,’ and it generates multiple offers and sells for more than the final list price.
There are definitely homes whose sellers net more than they expected because they were willing to revise the list price downward in response to market feedback (i.e., no showings, no offers or lowball offers).
If your home’s been lagging on the market, talk with your listing agent about what sort of price reduction strategy is likely to maximize your net sale price. Hint: many more buyers are attracted by chunky reductions or reductions below a common online search price point limit than by tiny, incremental reductions. For example, you might draw more flies buyers, and ultimately more money, with the honey of a price reduction from $499,000 to $474,000 than with a series of small reductions from $499,000 to $479,000, because there is a set of buyers who may be cutting their search off at $475,000 - so a price cut below that point will expose your home to a whole new group of prospects.
To get a second opinion on the marketing and/or price strategy on your home, Call Erik Collier at 913-481-1987. Erik will be happy to speak with your situation and see if there is an opportunity for him and his team to add value.
In 1750, Samuel Johnson wrote that “to be happy at home is the ultimate result of all ambition.” And there’s truth to this; for most Americans, our homes are our launch pads for being and doing our best in the world, and the places where we live out our most precious, private moments. So, if you follow our most important dreams to their logical conclusions, they almost all boil down to having a happy home, where we and our families can thrive and enjoy happy, secure lives.
Fortunately, dreams do come true - and dream homes can become reality. Here is a short list of musts for developing the vision, strategy, commitment and effort it will take to make your dream home your actual home.
1. Know what a dream home is - and is not. Like anything else in life, you can’t realize your dream home if you don’t know what it is - and isn’t, definitionally. For purposes of this conversation, our definition of a dream home is closely related to our aspirations and our visions in a couple of key ways. Aspirationally, dream homes take some work and effort to achieve - they aren’t usually handed to us on a silver platter.
And our dream homes are related to our holistic visions for our lives, as well. By that I just mean that our dreams of home are less about owning a particular building, and more about creating a vision for our whole life as it will be impacted by our choice of home. We want a home that will allow our children to flourish, that is safely located, that allows us to personalize it and either does or doesn’t require much work, depending on our personal preferences. By the same token, our dream home is also one that doesn’t create problems for our lives or prevent us from doing the things we want and need to do.
If a given home is beautiful, but owning it requires us to work overtime at a job we hate, causes relationship problems, or simply requires too much repair or work for the time and resources we have, then that home is - by definition - not our dream home.
Here are some other concepts of home that are often confused for dream homes, but don’ fit the bill. Your dream home should not be defined by:
the over-the-top fantasy mansion you saw on TV (if it’s bizarrely unattainable, in other words, it’s a fantasy home - not a dream home)
some antiquated notion of the biggest, flashiest home with the most amenities
the most expensive home you can afford
your mother’s, sister’s or best friend’s dream home.
Understanding what makes for a dream home - and what doesn’t - can help you avoid the common pitfalls of being upset when your dollar doesn’t stretch to get you a home like the one you saw on Million Dollar Listing, overextending yourself, or assuming that the types of homes your friends and relatives think are ideal for you are the same as your dream home. While they might overlap, they don’t always - and trying to fulfill someone else’s idea of what your dream home should be is the fastest way to create a nightmare home buying experience.
2. Get and stay clear on your personal vision. There are various tools you can use to create a clear vision of your dream home, to avoid the above pitfalls. The most important of these is to sit in a still and quiet place and literally start writing down what you want your life to look like after you’re in the home of your dreams.
Don’t start with the technical characteristics of the building: you’ll get theresoon enough, and the reality is that your co-buyer’s wants and needs, your budgetary limitations and the inventory available on your local market at the time will all impact the granular details of the property you end up with.
Instead, start with big picture life objectives, like who lives with you; what activities everyone does in the home that may require dedicated nooks, crannies, whole rooms or outbuildings; where and how much you work (at home? 3 towns away? around the clock?); how you get there and home every day; and what you do in your down time - be it hiking, home fixing, entertaining or strolling to the corner cafe.
3. “Be stubborn on the vision and flexible on the details.” Amazon founder Jeff Bezos delivered this one-liner in explaining his philosophy of creative problem-solving. And it applies just as powerfully to the creativity that is essential when hunting for your dream home. Compromise is unavoidable. Whether you’re spending $25,000 or $2.5 million on your next home, you will be required to compromise in order to reconcile your dream with your financials, the dreams of any co-buyers you have and realities of the real estate market, the inventory of available homes and geographic and other realities.
You may want a water view, but your wife wants to walk to the shops - and no home exists with both of those things. Or maybe you want to keep your payment below $2,500 per month, but you also want to buy a move-in ready home in The Best School District Ever. And all of those things are simply not possible with the down payment money you have in hand.
Bottom line: you’ll need to be somewhat flexible on the precise specs of the home you end up in as your ‘dream’ home - and the only way to do this is to ensure that you know what your whole-life vision is. Once you have your vision of life/home document ready, then you can get granular about the number of bedrooms, bathrooms and square feet you need, as well as location specifics, brushing your absolute must-haves and absolute deal-breakers in the most minimalistic of strokes.
Adopting this Amazon-style ‘flexibility on the details’ empowers your experienced local agent/partner to suggest creative solutions for homes that will allow you to create the happy home life you’re trying to achieve, despite the circumstantial limitations.
In any event, hold onto your vision of life vis-a-vis your home journaling document for later. If you end up in contract on a home and have second thoughts, it’s a powerful document to revisit before you finalize the deal, to make sure the inevitable compromises haven’t completely wiped out all traces of the life you hoped to create in this dream home.
4. Communicate your dream vividly to those who need to know. A frequently expressed dilemma of wanna-be dream home buyers is that their agent is not showing them homes that fit the bill. In my experience, this issue often arises when buyers’ champagne tastes and beer budgets don’t align, and their agent is trying hard to show them the best they can afford, but it still disappoints.
To make sure that you are communicating your vision and dream to your agent with crystal clarity, consider doing some or all of the following:
Send your agent the listings for homes that reflect features of your dream home - or the whole enchilada, if you can find it.
Attend Open Houses and save flyers of homes months, even years, before you start house hunting in earnest, to share what you loved about them with your agent when the time is right.
Ask your agent to show you at least one home that reflects what they *think* you want in your dream home - regardless of price. You might be stunned and astonished at what your dream home really costs, but the experience can help you manage your own mindset, and expectations, back into the realm of reality.
5. Mind your business. Dreams may seem fluffy and soft, but the dream of a home is one which requires you to click into hard-core numbers mode in order to make things happen. Don’t fall into the trap of fixating on images of wainscoting and tree-lined streets until your money matters have been fully handled. I’m often surprised at how many buyers believe their dream home is just out of their financial reach, but have so much fat that can still be cut from their monthly budgets: money they spend on things they would say are much lower than their home on their priority list.
Sit down and comb through your existing spending patterns with a fine-tooth comb and ask yourself whether your fantasy football habit is truly more or less important than getting closer to affording the home of your dreams. Talk with a financial planner and your mortgage broker about putting an action plan in place to eliminate bills that are impacting your ability to afford and/or qualify for your target type of home. Get clear, in your own household and spending plan, on what you can truly afford to spend on housing every month, versus looking to your mortgage broker to tell you what you can afford.
Making your dream home come true involves some heavy duty bookkeeping and an intense commitment to managing your finances in a way that lines up with your values.
6. Get uncomfortable. Being a grown-up is full of paradoxes, isn’t it? A few of my faves:
Living an easy life takes a lot of hard work.
With fashion and food, often less really is more.
I get younger and younger with every day that passes. (Humor me, please.)
Here’s one more to keep in mind as you pursue your dream home: creating a comfortable home might require you to do some uncomfortable things. Writing - and sticking to - a spending plan, is one. Reading eye-glazing contracts and hundreds of pages of uber-boring HOA disclosures is another. Having frank conversations with your partner, negotiating, managing your emotions around affordability and the like - there are loads of uncomfortable moments that take place in and around the process of buying your home.
These discomforts are temporary. But avoiding these uncomfortable moments can get you into some long-term un-dreamy drama: surprise HOA special assessments, a decade of living in a home you (or your partner) truly despises and years of living paycheck-to-paycheck from having overextended yourself are a few that come to mind.
So, dive on into being uncomfortable for this short period of time, with the knowledge that doing so will set you up for long-term success in your dream home.
7. Know the difference between your vision for “this” dream home, and your long-term vision. The home you buy now might not be your forever home. It’s essential that you feel comfortable with the prospect of staying put for at least 5-7 years before you buy, in most areas. But don’t feel like this home must have every feature you’ll ever want to have in a home. Especially if you’re buying your first home, the reality is that you’ll likely move up several times in your future, as your career, earnings and savings grow over time.
Also, if your ‘dream’ home features list is particularly aggressive and/or your budget is particularly tight for your area, you might have to exercise serious visionary powers to visualize how you can develop the home you can currently afford into your dream home over time. Focus on location, expandability, and these other characteristics of a hidden gem of a home, and find someplace that is livable right now, but has the potential, with your hard work, to become the home of your dreams down the road.
So tell us, have you scored your dream home? If you're still on the hunt, what's on your short list of features that makes a home your family's ideal?
Email or call Erik. He has the experience to assist you in scoring your dream home.
The Kansas City Metropolitan Area is a fifteen-county area that is anchored by Kansas City, Missouri and is bisected by the border between the states of Missouri and Kansas. As of the 2010 Census, the metropolitan area has a population of 2,035,334.
Kansas City is experiencing renewed market conditions with an average sale price increase of 7% increase from last year. Residential inventory levels (new and existing homes) represent a 16% decrease from June 2011. Monthly supply of homes (6.9 months) represents a nearly balanced market for combined new and existing homes. Unemployment rates have declined from 6.7% to 6.1%.
Markets priced below $250000 show increased average sale price of 2% (June 2011-$112,185 and June 2012-$113,931) but is below the June 2010 average sale price of $120,297. Real estate markets from $250,000 to $500,000 have increased average sale price of 4% (June 2011-$332,227 and June 2012-$333,516) and sales activity has increased by 13% for the past six months. The markets above $500,000 had increasing sales activity of 9% along with an increasing sale price of 12%r (June 2011-$716,765 and June 2012-$725,313). New construction sales activity increased 21% and average sales price declined only 4% (June 2011-$321,432 and June 2012-$320,139).
The historically low mortgage rate, have created a favorable buying environment for those with a job and good credit. Consumer confidence and job security are gradually increasing but remain cautious.
Today One year ago Change
Unemployment (KCSMSA) 7.2 8.9 - 20.8%
Months of Supply 6.9 8.9 -33.7%
1st Half Sales Volume 4804 3944 +21.8%
Average Sales Price $152863 $146084 +0.04%
Average Days on Market 106 106 0.00%
MARKET AT A GLANCE
Economic Climate Average-Improving
New Construction Low-Increasing
REO Activity High-Improving
Market Direction Improving
Market Mood Improving
It is anticipated that Kansas City will remain a buyer’s market for the foreseeable future. The low prices are attracting more buyers and this includes investors. The key ingredient to this market recovery will be job growth. Metro Kansas City is a diversified economy including trade, transportation, utilities, education and health services.
In addition, sellers are experiencing a shorter than normal days on market (DOM), leading to higher percentages of list to sales price. Shawnee and Lenexa both average 96.2-99.5% respectfully.
Did you know that the internet has replaced the first showing? In the past, consumers visited a list of homes that met their criteria, and often times, that was the first time they saw the home.
Today. 96% of buyers use the internet to seach for a home and sellers have a mere 5 seconds to either reel them in or lose them. So how as as seller can you increase the traffic to your home? Professional, quality photos.
Case studies prove that the number and quality of photos have a dramatic impact on number of showings as well as a higher sales price. So if you want to sell for top dollar and shorten your days on market, spend the money to showcase your home in the best possible way.
Here is a photo that is taken with a normal camera using point and shoot techniques. This photo actually looks pretty good!
This photo was taken by a professional and using highly specialized techniques to make the picture come alive!
As a rule of thumb, I hire a professional to shoot all of my listings. I have found that quality photos cost alot, but the return on investment is undeniable. My clients are happy that I go above and beyond to market the home and I benefit when it sells faster and for more money.
Why buyers do not make offers on over-priced listings
When sellers wonder why they have not received an offer on their home, they should first look at the asking price - it's probably too high. But, "buyers can always make an offer, right?" Of course they can, but serious buyers usually don't make an offer on a home that's priced too high. When the inventory of homes for sale is high, it's easy to understand why buyers do not waste their time on a property that is priced above the competition. However, an over-priced listing may not attract an offer even in a low-inventory market - how come? The answer is that buying and selling a home is an emotional experience and psychology comes into play. Some buyers shy away from making a low offer on a listing because they don't want to offend the sellers. This is particularly true if the buyers have a serious interest in the property. They often prefer to wait for a price reduction before making an offer on an over-priced listing. Sellers often think that if buyers like their home enough, they'll pay more for it. The truth is that a home is worth a certain price, which may not necessarily be the price the sellers want. Buyers know the market value better than sellers. While sellers may look at a few houses before putting theirs on the market, buyers look at dozens of homes. By the time they decide to make an offer on one, they have a good idea about housing prices. It's almost impossible to convince today's cost-conscious, consumer-savvy buyers to pay more than the fair market price for a home. Sellers who put an unrealistic price on their home send a message to real estate agents and to prospective buyers: Here are impractical sellers who may be hard to work with. Like all of us today, home buyers are busy people who don't want to waste time with unreasonable sellers. Most would rather wait for a price reduction before starting to negotiate on a home they really love. MORE HINTS: When sellers discover their home is priced too high, they should reduce the price immediately. A home is most marketable when it is new on the market. If it doesn't sell within the first month or so, agents and buyers lose interest. Sellers may be reluctant to drop their asking price. But, keeping it on the market at an unrealistic price can result in a lower selling price when it ultimately does sell. If sellers lower the price when the listing is relatively new, they have a good chance to keep the marketing momentum going. New listings stay fresh in real estate agents' minds for only the first few weeks they're on the market. That's why it makes sense to lower the price on an over-priced listing early in the marketing period. After a listing has been around for a few months, a price reduction will not have the same impact because many agents have already forgotten about the property. Buyers don't like to make an offer on an over-priced listing and real estate agents don't like to show them. Put yourself in the agent's shoes. If you're working with well-qualified, motivated buyers who only want to see well-priced homes that suit their needs, why would you risk losing credibility by taking them to see an over-priced property?
Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 04/16/2014. The listing information on this page last changed on 04/16/2014. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of Heartland MLS (last updated Wed 04/16/2014 7:32:47 PM EST). Real estate listings held by brokerage firms other than Kansas City Regional Homes may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. -- In addition, portions of the information displayed on this page may be confidential, proprietary, and copyrighted information of Heartland Multiple Listing Service, Inc. ("Heartland MLS"). Copyright 2014, Heartland Multiple Listing Service, Inc. Heartland MLS does not make any warranty or representation concerning the timeliness or accuracy of the information displayed herein. In consideration for the receipt of the information on this page, the recipient agrees to use the information solely for private non-commercial purpose of identifying a property in which the recipient has a good faith interest in acquiring.