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23
MAR
2017

The Time to List Your Home: Special Real Estate Report

Ready to Jump Back In

Spring is Here

Those wanting to sell their home during the spring season shouldn’t be too quick off the mark to list, as waiting could mean a faster sale and a higher price. According to analysis from Zillow, waiting until late spring may be a better strategy…along with listing on a Saturday. It found that those homes listed in the first two weeks of May sold around 9 days faster and for almost 1 per cent more.

“With 3 percent fewer homes on the market than last year, 2017 is shaping up to be another competitive buying season,” said Zillow Chief Economist Dr. Svenja Gudell. “Many home buyers who started looking for homes in the early spring will still be searching for their dream home months later. By May, some buyers may be anxious to get settled into a new home— and will be more willing to pay a premium to close the deal.”

The study also found that homes first listed on a Saturday averaged 20 per cent more viewings than those on other days.

Source: Zillow

23
MAR
2017

5 Ways to Sell a Home Faster, for More Money

5 Ways to Sell a Home Faster, for More Money

5 Ways to Sell a Home Faster, for More Money

24/7 Wall St. recently asked real estate experts and several real estate organizations to weigh in on how sellers can get their house sold at the best price and in the shortest amount of time.

Here’s what they had to say as some of the best ways to get the “sold” sign out:

1. Pay attention to “curb appeal”: First impressions are critical, and homes with inviting landscapes and exteriors tend to sell better, agents say. Pay attention that the driveway is in good condition, lawn well-kept, and the house looks freshly painted.

2. Set the right price: Real estate professionals know how to set the price and prepare a home for sale. Agents use comparable sales of homes sold in the last 60 days to help set the most realistic price for the sales price of a home. By setting a realistic price from the beginning, sellers should be reminded that this will prevent having to drop the price of the home several times before getting it sold and having it linger on the market. If no recent comps are available, some experts recommend sellers get an appraisal, which will also offer a realistic price that the bank may be willing to take when a buyer tries to qualify for financing the home.

3. Talk about energy efficiency: Many buyers don’t fully understand “green” homes but they understand savings. Sellers should point out any features in their homes – such as energy-efficient windows or appliances – that could save buyers money with utility costs.

4. Give the home Web appeal: Good photographs make a home stand-out online and help lure more potential buyers to the front door. Realtor.com® says that more than 6,300 photos are viewed per minute on listings posted on its site.

5. Make it move-in ready: Fix any needed repairs, such as water stains, creaky doors, and windows that don’t shut. Flaws in the home – even if relatively minor – can distract buyers, and should be fixed before the home is even listed. Some agents recommend that sellers get a home inspection prior to putting the home up for sale, which can help sellers be proactive in identifying any potential problems that could potentially derail a sale later on. Once a problem is uncovered, sellers are obligated to disclose it or fix it.

Source: 24/7 Wall St.

 

22
MAR
2017

Growing Popularity of 20-Year Loans

Growing Popularity of 20-Year Loans

Another Alternative For Homeowners

Twenty-year mortgages are making a comeback. As the economic recovery has progressed, more consumers are looking at ways to improve their long-term financial situation. The real estate boom of a decade ago was all about putting as little money down as possible and staying highly leveraged.

Today, Americans recognize the benefits of a home loan being a forced savings plan that builds up equity each month. That is why home loans with a 15-year schedule have been so popular in the past five years. However, many cannot afford the higher payment of a 15-year loan. The 20-year mortgage provides a great alternative for those who can’t qualify or afford a 15-year payment schedule.

The 20-year pays off the loan 10 years early, which is only five years less than a 15-year, but does not have as high a payment. Plus, some 20-year loans are priced less than 30-year alternatives and mortgage insurance costs may be reduced as well. It is no wonder this option is becoming more popular.

Want a free article which compares these three options for home loans, including a comparison of costs and benefits? Contact us.

20
MAR
2017

Rate Increase No Surprise: The Weekly Market Update

The Fed Has Spoken

The Fed Has Spoken

Since we spent the past several weeks explaining why the Federal Reserve Board was likely to raise rates last week, we can definitely say that the Fed’s decision was not a surprise — especially since the increase was limited to .25%, which was also expected. A disappointing jobs report could have caused the Fed to hold back, but that did not happen. Now, the most important question is, where do we go from here?

In this regard, the tone of the Fed statement is just as important as their decision to raise rates. While much more information will come out when they release the minutes of the meeting in a few weeks, their statement after the meeting gives us plenty to go on. It is also not a surprise that their statement confirmed that the Fed is satisfied with the direction of the economy at the present time and that they feel that the economy can “withstand” higher rates. It is also not a surprise that they feel that more rate increases are possible in 2017.

This brings up an important question. The economy can withstand a few rate increases, especially because rates were so artificially low. But how many increases can be absorbed before the economy starts to respond negatively? Though we can’t answer this question, we do remind our readers that the Federal Reserve Board’s move directly affects short-term interest rates, and only indirectly affects long-term rates. If the markets feel that the Fed is being aggressive to stave off the threat of inflation, then longer-term rates, such as rates on home loans and even cars, may not move as fast. Of course, if the economy keeps humming, then long-term rates are more likely to be affected at the same time.

The Weekly Market Update

Rates matched their highest level in more than a year as the specter of a Fed rate increase approached, but the numbers did not reflect a move down after the rate increase was announced. For the week ending March 16, Freddie Mac announced that 30-year fixed rates rose to 4.30% from 4.21% the week before. The average for 15-year loans increased to 3.50%, and the average for five-year adjustables moved up to 3.28%. A year ago, 30-year fixed rates averaged 3.73%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “As expected, the FOMC announced its first rate hike of 2017 and hinted at additional increases throughout the remainder of the year. Although our survey was conducted prior to the Fed’s decision, the release of the February jobs report all but guaranteed a rate hike and boosted the 30-year fixed rate 9 basis points to 4.30 percent this week. Increasing inflation, continued gains in the labor market and the Fed’s intentions for further rate increases — all three will keep pushing rates up this year.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

16
MAR
2017

Tens of Millions Would Like to Buy: Special Real Estate Report

Ready to Jump Back In

Ready to Jump Back In

One in four U.S. adults say they are considering buying a home this year, which extrapolates to a whopping 59 million people, according to a recent survey by Bankrate.com. Minorities are expected to be big buyers this year. More than two in five black survey respondents said they were considering buying a home. That is more than double the percentage of potential white buyers. “Black homeowners were harmed in greater numbers by the housing crash and the foreclosure crisis,” says Holden Lewis, a Bankrate.com mortgage analyst. “Now that the economy has improved and time has passed, maybe they’re ready to jump back in and own a home again.”

Also, older millennials and Generation X – which encompasses the ages of 27 to 52 – are showing more willingness to either become homeowners or trade up to a new home, the survey showed.  Lewis notes, however, what many people say is not always what they’ll be able to do.

Rising rates and an uptick in home prices could prevent some would-be homebuyers from saving enough for a down payment and limited inventories could delay their efforts in finding a suitable home to buy. About 6 million new and existing homes were sold last year, according to the National Association of Realtors® and U.S. Census data.

Source: Realtor® Magazine Online

14
MAR
2017

Should You Consider an Adjustable Rate Mortgage (ARM)?

Should You Consider an Adjustable Rate Mortgage (ARM)

Should You Consider an Adjustable Rate Mortgage (ARM)?

The popularity of adjustable rate mortgages (ARMs) rises and falls depending upon the overall direction of interest rates, as well as the spread between fixed rate mortgages and adjustables. There are many reasons why one might opt for an adjustable rate mortgage. In analyzing whether you might be a viable candidate for an adjustable, there are many facets you may want to consider before making a decision:

What is the current interest rate spread between a fixed rate and an adjustable? Fixed mortgage rates are based upon long-term interest rates while most adjustables are based upon short-term rates. For example, a one-year adjustable will typically be priced off current one year T bills. Short-term rates are typically lower than long-term rates, which is why adjustables will have starting rates below fixed rate loans. The difference between the two, the spread, is not always the same. If fixed rates are at 5.0% and a one-year adjustable starts at 2.0%, the benefit is clearly seen. If the adjustable starts at 4.5%, the choice is not so clear.

How long are you going to keep the mortgage? Note that the question here is not how long you live in the house. If you convert the home to rental property sometime in the future, you will still be making payments on the mortgage. Also, you may refinance the mortgage in the future and remain in the property. Factors that might affect your long-term use of the mortgage might be your job stability, mobility and the current interest rate of the mortgage. For example, if you purchase a home and obtain a mortgage during a period of relatively high mortgage rates, a refinance is more likely in the future. The average life of a mortgage in the United States ranges from five to seven years depending upon the economic and interest rate environment.

Which direction do you think mortgage rates will move? If you feel that the present level of rates is high and the movement is likely to be down, you are more likely to benefit from an ARM. Note that an opinion of the future of interest rates is just that — an opinion. Yet, if rates have recently moved up, they are more likely to move lower in the future.

What is the life cap of the adjustable as compared to the present level of fixed rates? The major advantage of fixed rates over adjustables concerns the issue of security. With a fixed rate mortgage one will be secure in having the knowledge of their payment over the life of the loan. With an adjustable, long term security comes in the form of a cap on the mortgage rate. This cap is the maximum rate over the life of the loan. If this maximum is close to the present level of fixed rates, then we can say that the worst case is palatable. If fixed rates are presently 6.0% and the life cap of an adjustable is 7.0%, the risk is minimal.

How fast do you expect your income to rise in the future? If you expect your income growth to be strong, it may make sense to opt for an ARM. Your payment will be lower in the short run when your financial plan most needs the assistance.

As you make your decision, it is important to also consider the fact that all adjustables are not alike. Some may have interest and payment changes each year, while others may be fixed for the first ten years of the mortgage. A seven-year ARM provides security and will typically offer a lower rate than fixed rates. The more frequent the changes, the lower the starting rate of the ARM. In addition, most ARMs have caps that limit the amount of change per each adjustment. For example, most one-year adjustables have annual caps ranging from 1.0% to 2.0%.

Another difference between adjustables concerns the index upon which future rate changes are based. Some indices may have a history of being more stable in times of market volatility. In particular, the Monthly Treasury Average (MTA) tends to change more slowly (lagging) than indices directly based upon Treasury Bills or the LIBOR. This would make MTA based adjustables better performers during periods of rising rates, but disadvantageous when rates are falling.

When making your decision concerning a mortgage, be sure to keep an open mind. The right mortgage product today just might become the wrong choice tomorrow. Your economic circumstances may change which would alter your choice. It seems that the external economic environment is forever changing.

Surely, if we could predict the future of interest rates the decision would be easy. Since we can’t make such a prediction, the choice of a mortgage might be best considered one of luck and timing. Yet, with careful planning and knowledge of alternatives we can improve the chances!

13
MAR
2017

The Jobs Report and Fed Meeting: The Weekly Market Update

Jobs, Stocks and More

Jobs, Stocks and More

The data is in. The jobs report has been released and the Federal Reserve Board’s Open Market Committee is meeting as we release this publication. Keep in mind that the employment numbers are a major factor in affecting the Fed’s decision — but they are not the only factor. The stock market rally, which indicates confidence, as well as inflationary indicators, are also watched closely. As a matter of fact, the numbers on wage growth might be almost as important as the jobs numbers themselves. Last month, wage growth came in 2.8% on an annual basis and this is seen as good news for workers but bad news on the inflation front.

Add a strong stock market and rising wage growth to the fact that the economy added 235,000 jobs last month and the unemployment rate ticked down to 4.7%, and you can see why the markets are predicting a rate increase. You might ask why a rising stock market would affect the Fed’s thinking. We have already spoken about the stock market’s indirect influence upon the economy. Certainly, the growth of equity will make those who own stocks more confident in making large purchases, and this has the potential to boast the economy.

However, there is a more direct link between the Fed and the rise in the stock market. The last thing the Fed wants to do is raise rates and stifle the economy. With the stock market so strong right now, the Fed is much more likely to conclude that the economy can withstand the news of higher rates. If consumers are uncertain, piling on a rate increase just makes things worse. If consumers are hopeful, they are much less likely to envision higher rates as a roadblock to success. Of course, this is all speculation, and by the time you read this commentary, you are likely to know what the Fed was really thinking.

The Weekly Market Update

Rates moved to their highest level of 2017 last week, as the jobs report approached. For the week ending March 9, Freddie Mac announced that 30-year fixed rates rose to 4.21% from 4.10% the week before. The average for 15-year loans increased to 3.42%, and the average for five-year adjustables moved up to 3.23%. A year ago, 30-year fixed rates averaged 3.68%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “The 10-year Treasury yield rose about 10 basis points this week. For the first time in weeks, the rate on 30-year fixed home loans moved with Treasury yields and jumped 11 basis points to 4.21 percent. The strength of Friday’s employment report and the outcome of next week’s FOMC meeting are likely to set the direction of next week’s survey rate.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

09
MAR
2017

Existing Home Sales Rise: Special Real Estate Report

Homes Sales Robust

Homes Sales Robust

Existing-home sales in January reached their fastest pace in nearly a decade, the National Association of Realtors® reports. Total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—rose 3.3 percent to a seasonally adjusted annual rate of 5.69 million in January. That’s 3.8 percent higher than a year ago and marks the strongest month since February 2007, according to the NAR.

“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” says NAR chief economist Lawrence Yun. “Market challenges remain, but the housing market is off to a prosperous start as home buyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.”

Additional data from the report:

  • The median existing-home price for all housing types in January was $228,900—a 7.1 percent increase from a year ago.
  • Total housing inventories at the end of the month increased 2.4 percent to 1.69 million existing homes available for sale. That is still 7.1 percent lower than a year ago.
  • All-cash transactions comprised 23 percent of transactions in January, down from 26 percent a year ago.

Source: NAR

08
MAR
2017

Adding Value To Your Sphere

Adding Value To Your Sphere

Adding Value To Your Sphere

Marketing plan and sphere of influence. These terms are referred to much of the time when one is talking about marketing. But there seems to be no clear definition of these terms. Everyone agrees that they are all very important. But no one agrees what exactly they are. Therefore, we will give you our definition.

Sphere of influence. A sphere of influence is comprised of two main components.

1. Those who know you and you know them. This component of personal relationships is the most important of the entire sphere.

2. Those you have something in common with. Though less important than the other component, this part of the sphere can be very significant when formulating a marketing plan. Of course how much you have in common is imperative. If you are over six feet tall, you have something in common with other tall people. But this is not important to your sphere. If you have attended a particular church for 20 years, this is something that may be very important in regard to your sphere. In regard to attending a church or a school, there will be those at the institution that you know and others with which you just have this membership in common.

The sphere itself is comprised of seven main categories. It is the organization of these categories that can be helpful when developing a marketing plan–

  • Personal: friends, family and neighbors.
  • Previous customers: from your present business and previous businesses.
  • Previous prospects: those who decided to purchase from someone else or those you could not serve or chose not to serve.
  • Previous employees: those you have worked with.
  • Vendors: those from which you purchase goods and services and those who sell the same to your targets.
  • Associations: academic, religious, business, civic, hobbies, interests, sports and more.
  • Professionals: doctors, lawyers, accountants, financial planners, etc.

So you know what your sphere is comprised of. How does that help you devise a marketing plan? In simple terms–a marketing plan is the process of delivering value to your sphere. A marketing plan should be focusing on doing four things–

  • Determining what is the highest value to deliver to certain segments of your sphere and how to deliver this value.
  • Prioritizing the contacts within the sphere–from highest to lowest.
  • Moving people and businesses into the sphere.
  • Moving contacts up in priority within the sphere.

In essence, the sphere should resemble a pyramid. At the top of the pyramid will reside the most important contacts within your sphere (and there will be less of them, of course). At the bottom are the less important contacts (perhaps alumni members you don’t know). You can see how this process of prioritization can direct your marketing activities.

You may be calling and/or having business meetings with those on top of the pyramid. On the bottom of the pyramid, you may be mailing or advertising to these people. If you must advertise, doesn’t it make sense to advertise to people with whom you have more in common?

Sphere segmentation and prioritization also helps immensely with the value proposition. Now you can determine how best to deliver value. For example, with vendors you should be focusing upon helping them build their business. Why should they help you if you are not helping them?

One last question focuses on the term prioritization. Simply, a high priority target contains the potential for a high concentration of business to refer. You also should have a close relationship with that target and should be able to deliver value to that target. For example, if your spouse had the potential for referring a lot of business, shouldn’t that be your top priority? Focus on what is important and you will have a better chance at improving your results.

 

06
MAR
2017

Existing Home Sales React: The Weekly Market Update

Jobs and Confidence

Jobs and Confidence

In the past few weeks we have spoken a lot about confidence. Certainly, confidence has been the major influence behind the recent stock rally. It has also influenced the recent movements in rates and oil prices. If this confidence spills over to a hiring spree, then the chances of another rate increase by the Federal Reserve Board’s Open Market Committee likely comes sooner than later.

In other words, confidence begets confidence. For example, a bigger stock portfolio can move someone to purchase a home. Home purchases also can be spurred by fear. Existing home sales were up to start the year and one factor cited was the fear that rates could rise even further. For years, we have indicated that the time may come when the sale on money may be over. Keep in mind that we are not declaring this sale over, but certainly the recent confidence could help influence its demise.

It is interesting to note that interest rates spiked just after the election, along with the stock market rally. But since the first of the year, stocks have continued to shine, as rates have been fairly stable. Of course, the jobs report released this week could go a long way towards determining if this trend continues. A strong report which influences the Fed to act quickly, could create volatility. If the report is moderate, rates could remain calm. In a couple of days, we will know for sure.

The Weekly Market Update

Rates moved lower last week, but the survey was issued as the stock market rally of Wednesday saw an uptick in rates by mid-week. For the week ending March 1, Freddie Mac announced that 30-year fixed rates fell to 4.10% from 4.16% the week before. The average for 15-year loans decreased to 3.32%, and the average for five-year adjustables moved down to 3.14%. A year ago, 30-year fixed rates averaged 3.64%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “The 10-year Treasury yield remained relatively flat this week, while the rate on 30-year fixed home loans fell 6 basis points to 4.1 percent. Since the beginning of the year, the 10-year Treasury yield has covered a 22-basis point range. The range of movement for the 30-year has been half that, just 11 basis points.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.