Seize the Opportunity! It's One of the GREATEST Times in History to Upgrade Homes

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We have all seen the media reports of how the real estate market has been down in the dumps for years now.  But at the same time, we also see reports of how this is an excellent time to buy a house, whether as a first-time buyer or an existing homeowner looking to upgrade into a newer, bigger or better place.  To help illustrate how this can be true, despite the unstable real estate market, here is a simple equation with three parts:

SALE OF THE EXISTING HOME, PURCHASE OF A NEW HOME, INTEREST RATES

Selling The Home You Are Living In Now
Basically, you have two choices if you are thinking of selling your property – either do it now or do it later.  Selling it now would mean that you would suffer the loss of the last ten years’ worth of value downgrade.  For the last decade or so, home values have steadily dropped, to an average of about 10% less than what they were before.  So assuming a $200,000 home in this equation, consider the next level.

Buying A Bigger and Better Home

A reasonable upgrade to a home that, say, has a list price of $350,000 is an exciting prospect especially since its value just five years ago would be about $420,000.  Not only would you be buying more house, with the average square foot costing far less than it would have just a few years ago, but a few years down the line when the real estate doom starts to rebound, you will be sitting in a house that is worth much more than you purchased it for.  How is that possible?  The third part of our equation is how that is possible.

Financing On Super Low Interest Rates
There is hype all over the place about the historically low interest rates we have been seeing on the market for quite some time now.  This will not last – but while it does, the 30-year fixed rate mortgages that are available these days [to qualified buyers] are as low as 4.5%.  This is almost unprecedented and coupled with the buyers’ market that it is with the inventory levels we are seeing, this is quite simply the best time to buy and at the best rates.

Why Buy Now Instead of Waiting For Later?
Given the three parts to our equation, the question many homeowners ask is now or later.  To answer this, here is a simple chart that demonstrates what would happen if you sold your home now vs. later and if you bought a new upgraded home now or later – both scenarios taking into consideration the changing values of property.

Existing Home New Home Interest Rate Difference Saved
Upgrade Now $200,000 $350,000 4.5% $15,000
Upgrade Later $220,000 $385,000 6.5% -

To explain this further, 

Assume your home value goes up 10%, from $200,000 to $220,000.
But the new home you purchase would also increase in value, putting the original value of $350,000 at $385,000 in just a few years.  An important consideration is that the higher the mortgage, the higher your interest rate, (in other words loan amount conforming to conventional rates has gone down) which will affect you as time goes by and the current opportunities will no longer be there to avail.  The new interest rate that would go along with inflation would be an expected 6.5%, meaning that money for your mortgage would cost you more.

Keeping all these factors in mind, it is clear why now is the best time ever to be selling your home and upgrading into a new home.  The money saved is a sizable chunk of a down payment for many homebuyers. In this example, about $15,000 is the amount saved and the best part is that the super low mortgage rate gets locked in for thirty years.  

When you work out the numbers in the long run it is clear that availing the opportunity out there now is the perfect solution to owing the best possible home in the future.

Ten Questions Every Homeowner Should Ask an Agent

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As you embark upon what will be one of the most important transactions of your life – whether buying or selling a home – you should be absolutely certain that you are happy with the real estate agent you have hired to help you manage it. 

To help you with this all-important hiring process, here are ten important questions to ask an agent before you decide on whether or not to hire them:

Question #1

How Close Do You Get in Sale Price Related to Asking Price?

It is important to ask for this information as it relates to the past 60 days.  Given that many agents are not that active in the market, you would be best served to obtain the most recent information possible.  As a seller, your agent’s ability to come close to the asking price is a strong attribute and can mean a difference of thousands of dollars in your transaction.

Question #2

How Many Days on Average Does It Take You To Sell a Home?

What’s the average number of days on the market for properties listed by your prospective agent? Since this statistic can reach as high as six to nine months and in some cases and as much as a year, it is important to ask how your prospective agent ranks on the scale.

Question #3

What is the Rate of Homes Sold on a Monthly Basis?

Knowing the absorption rate of homes similar to yours that are on the market allows valuable insight as to how the market is performing for your particular needs.  Not only does it give sellers a glimpse into the system and how it would translate to their own sale but it also presents a broader view of the entire market in general.

Question #4

What Do You Do Differently To Get Homes Sold?

Especially with the current trying economic times, many agents have been faced with adversities trying to sell the homes on their list.  One of the best ways to learn whether your agent is a self-starter is to find out what they have done in the past when they were unable to successfully sell homes.  Ask why the agent feels the home(s) did not sell and then find out what they are doing differently to get them sold.

Question #5

What Percentage of Deals Do You Represent the Buyer Versus Seller? 

Some agents work primarily with sellers while others work mostly with buyers and still others are experienced with dual-agency deals.  Depending on your needs, you will benefit from an agent that specializes in one of the two.  It is important to ask which side of the fence your prospective agent tends to represent. 

Questions #6

How Many Homes Did You Sell Last Year?

Nothing speaks louder than numbers.  A very important statistic, ask what the total number of homes sold last year was and if possible try to get a more long-term picture of the agent’s performance in this regard. You can also ask for a month-to-month breakdown to see if there are certain stronger months.

Questions #7

Can You Provide a List of the Ten Most Current Clients You Have Worked With?

Rather than rely on the given list of referrals that many agents have handpicked, it’s a good idea to obtain a list of clients that are currently working with this Realtor.  It will provide a much-needed glimpse into the agent’s performance on various stages of real estate transactions.

Question #8

How Much of Your Work Day Do You Dedicate to the Real Estate Industry?

You want an agent that is 100% committed to their  job and if they are focusing more on a day job with real estate being a secondary thing, you run the risk of inaccessibility, lack of knowledge and experience plus lackluster motivation.  Find out how they feel about the real estate industry and whether they are passionate about their work.

Question #9

What is Your Style of Marketing – Proactive or Reactive?

What is your potential agent’s style of working?  Does he or she speak to a large number of people each day? Are they proactive or reactive in nature when it comes to marketing? See how this lines up with your real estate needs.  Are you in a hurry to buy or sell?  Does a laid back agent hinder your efforts? Or does slow and steady work better for you?

Question #10

What Does Your Daily Schedule Look Like?

The typical schedule of a real estate professional can be very telling.  By asking for a copy or general idea of how they conduct their day in terms of their work, you can get a good idea of how much time is devoted to the profession and what kind of business they are running.