Tuesday, July 30, 2013

Relocating? Rent for a few months first?

Many people find themselves involved in a real estate relocation. Perhaps a job change, promotion, or family related issues. In these situations there are times when the relocation is to an area that is unfamiliar and far away. It can be very difficult to gauge neighborhoods and services in the short visits as buyers look for a new home.

It may serve buyers well to rent a home or apartment for six months to a year keeping the bulk of their items in storage while they learn the area. An advantage to renting is mobility. Once you are ready to move, you give notice, pack up, and leave. Selling a home however is a more enduring process. I believe that it is wise to carefully evaluate the schools, shopping, proximity to work, neighborhood condition and lifestyle, before buying a home. This may take several months to really understand.

Many people however, may be like me. I hate moving. If this is the case, then it becomes paramount for the buyer to consult a true buyer's agent. Many real estate agents don't like showing homes and dealing with the buyer's side of a real estate transaction. Ironically, they are often the first type of agent a prospective buyer meets. The buyer is sitting out in front of a house with the 'Acme Real Estate' company sign and the call the number. That agent may be the classic 'listing' agent.

If buyers are relocating to a 'strange new world' it is advised that they interview a few agents and find one that is willing to spend some time working with them, showing multiple homes in a variety of neighborhoods best suited to their needs. In the end this helps to ensure that best possible purchase and the highest chance of many happy years in their new home.

Saturday, July 20, 2013

How is the Rental Market?

There seems to be a solid demand for rental housing. I placed an add for a rental unit and have been flooded with inquiries.

According the the federal Housing and Urban Development, rents continue to rise.

Below is the HUD Fair Market Value chart for 2012 followed by 2013...

These charts are for Clark County at large and are used for HUD's various programs to evaluate rents for a variety of things such as subsidized housing, rents used as income for mortgage loans, etc. These values tend to be conservative in nature. Although it is only a guideline we see a upward trend that does not appear to be slowing down. Some of Clark County's hottest neighborhoods have seen rent increases of 20% over the last year which is far greater than the roughly 5% indicated on this chart.

For prospective home buyers this means you can lock in a 30 year fixed payment now rather than face increasing rents over the next few years. Home prices are on the rise but rents are too. Jump in while mortgage rates remain low or continue to hand your landlord more and more of your hard earned cash.

Friday, July 12, 2013

If it is priced right it is GONE!

The local real estate market has a glaring deficiency. There is a serious shortage of inventory. This lack of available homes to buy has created the illusion of a wild market. We have moved from a buyer's market to a seller's market. Typically this transition is caused by a wave a buyer's coming into the market. At this time it is all about a lack of new inventory. The problem may lie in the scarcity of new development. Builders are stepping back into the market, but noticeably and understandably they remain cautiously optimistic.

The problem with existing homes is that many sellers are either underwater or too close to close. They are holding out for the market value to reach a point that they can sell and walk with enough cash to move up or move on. Until new inventory arrives the buyer's will be faced with few choices. This allows seller's to control the terms. All that said, the buyers are still looking for value. Most buyers in the market are struggling to justify the run up in price. I have found that overpriced listings will still sit in the market for extended periods. The action is in the well priced listings. Although the market is showing warm signs of a new lease on life, buyers also remain cautious as well. The 2009 crash is still fresh in their minds.

There is not a deep enough demand for sellers to run up their price. The market has a solid ceiling. If you price it right you will see it sell in less than 30 days. Sometimes a seller may list their home on the high side of the price range because they are trying to sell at a price that will clear all liens. Buyers should be aware of the market conditions and the reason one house may be "worth" more than another similar house. A traditional sale of a move in ready house will typically fetch more money than the identical house being sold as a short sale or even bank owned. Bank owned properties generally result in smooth transactions but often the bank behind the scene is very strict on terms. Short sales can be like a trip down the rabbit hole. I am finding that well priced move in ready homes with traditional terms are receiving multiple offers and well above asking price. Short sales and beat up bank owned properties continue to require longer marketing times.

Potential sellers that have been waiting for the market to come to them, may need to evaluate their situation now. Those who would choose to move "up" to a larger house may want to consider selling sooner, rather than later. The rising price allows for more equity to build in their current home but also leads to higher prices on the next house. If that house is a move up house, it is likely more expensive than the current house and will rise also. A ten percent market shift will net you $20,000 more on a current $200,000 home but the price of the next house that is $300,000 will rise by $30,000. That is the classic case of stepping over a quarter to pick up a dime.

Buyers need to pull the trigger. Prices are edging up and the longer a buyer procrastinates, the "smaller" their next house becomes. This is a great time to buy or sell a house. Jump in, the water is fine.


Friday, July 5, 2013

Learn to look past little flaws

There is one thing I can not over-emphasize to buyers looking at homes. That is to look past imperfections that are easily remedied. Too many buyers will eliminate a house because the carpet is ugly or the paint scheme is funky, or maybe it is kind of dirty. These are easy fixes and the things that really matter are those that are irreparable. The neighborhood, the busy street, the nearby airport, structural damage, etc. These are things that a difficult or impossible to repair.

When looking at homes this summer, buyers should try to ignore the ugly carpet or the weird paint scheme in the bathroom. Buyers should look for things like the flow of the floor plan. The kitchen layout. The functionality of the space for the buyer's specific needs. These are things that need to be just right. An interior repaint or replacement of carpet is a relatively inexpensive thing when considering the price of the home.

Many great values can be found in real estate during a rising market. Many sellers jump into the market thinking they can get their price without repainting, carpeting, etc. Their house will not be as competitive with the house that is fixed up. This can result in savings to the buyer in purchase price that is much more than the cost to remedy.

Buyers that buy these very light fixer homes also benefit from the opportunity to use materials and design themes that suit them. In a market with tight inventory like we have right now buyers can not be too picky or they will simply not find a house. The is some urgency as prices rise purchasing power drops. Holding out for a move in ready perfect house might cost a buyer $20,000 more than buying that slightly more used house today.

In conclusion buyers should consider the essential functions and flow of a house as priority over the surface condition. As long as the home has solid bones, is located right and suits the buyer's needs, the superficial stuff is just that, superficial.