Month: May 2016

Homes are selling pretty quickly these days—at least when you look at the nation as a whole. According to the National Association of Realtors, properties are typically staying on the market for 59 days this spring, with about 35 percent on the market for less than a month.  But real estate is local, and national averages may not accurately reflect market conditions in your area.  Whether you live in a city where homes aren’t selling quickly or you’re planning to sell during the slow season, consider these homebuyer incentives to speed up the process.

1. Offer buyer’s agents a larger commission

If your property has been sitting on the market for a while, buyer’s agents (real estate professionals who work on behalf of homebuyers to help them find and buy a property) may not bother to show it to their clients. Offering an additional percentage as a commission bonus may stimulate their interest.

2. Pay their discount points

When a homebuyer applies for a mortgage, lenders generally offer an interest rate based on the current market as well as the option to lock in a lower rate by paying a portion of the interest upfront in the form of discount points. Each point is equal to 1 percent of the mortgage amount.

Most buyers will find an offer to pay their points more attractive than a discounted purchase price. Why? Because a rate reduction—even a small one—can save a homeowner tens of thousands of dollars over the life of the loan. Knocking a few thousand dollars off your home’s selling price will not.

3. Pay their HOA dues

Whether you’re selling a condo, townhome or single-family property in a neighborhood with a Homeowners Association, offering to pay your buyer’s HOA dues (for a few months, a quarter or a year) can be an attractive incentive. Many buyers are making big dents in their savings in order to pay closing costs on their mortgage, and HOA fees may be expenses they forgot when budgeting.

4. Pay their utilities

This incentive may be particularly attractive to young, first-time homebuyers who previously split the cost of gas, electricity, water, cable and Internet services with roommates. An offer to pre-pay their utilities—or a portion of these expenses—for several months while they adjust to their new mortgage payment could be just the incentive they need to get off the fence and make an offer on your property.

5. Give them a credit for closing by a specific date

Once you’ve received an offer, your home is as good as sold, right? Wrong. The process can take a significant amount of time—especially if the buyers need to sell their home, ask for dozens of repairs, or are having difficulty with financing. If you want to move the closing along quickly, consider offering a credit to the buyer for closing by a specific date.

If you’re like most Americans who want to buy a home, you’re going to need a mortgage. In fact, according to CoreLogic, a real estate data company, homebuyers making cash purchases accounted for a mere 34 percent of total transactions in 2015—the lowest percentage since 2008. It’s easy to see why: the median existing-home price for all housing types nationwide is currently $210,800. And 62 percent of Americans have less than $1,000 in savings.

Of course, whether to obtain a loan or empty your savings account isn’t the only decision you’ll need to make when purchasing real estate. Should you go the mortgage route, you’ll need to calculate costs carefully in order to determine how much property you can afford and how high a mortgage payment you can comfortably take on. For the most accurate calculation, avoid making these mistakes.

1. Ignoring your credit score

Before you start plugging today’s low interest rates into a mortgage calculator to estimate your potential monthly payment, take time to check your credit score. It plays an enormous home financing role. Lenders will factor it into their calculations before extending any loan offer to you. The lower your score, the higher the interest rate you’ll have to pay on the loan. The higher—or better—your score, the lower the interest rate they offer you will be. The difference in money spent or saved or the life of your mortgage can be significant.

Federal law allows you to request a free credit report from all three credit-reporting agencies every 12 months. You can also purchase your credit report—complete with credit score—directly from Equifax, Experian or TransUnion.  If you find any mistakes (i.e. debts that don’t belong to you, misreported late payments or judgements, etc.) correct them before you apply for a mortgage.

2. Ignoring other homeownership costs

Mortgage calculators, while useful, only help you estimate your monthly mortgage payment. But as any homeowner can tell you, buying—and owning—a home comes with additional expenses. From homeowner’s insurance (which your mortgage lender will require) and property taxes (which you much pay by law) to routine maintenance, these costs quickly add up. And don’t forget the closing costs and fees required just to process and close your loan.

3. Not understanding the homebuying process

If you want to be a savvy homebuyer, take some time to learn about the process before you start searching for properties.  Doing so will help you avoid time-consuming and costly surprises down the road. If you’re not much for research, your mortgage professional can help. Gather your financials and request a mortgage pre-qualification to help you determine how much you’re likely to be able to borrow and the types of loan products for which you qualify. Don’t hesitate to ask questions and request further clarification.

Are you ready to get started? We’re here to help. Give us a call to schedule your free mortgage pre-qualification today.