5 Reasons to Hire a Real Estate Professional

5 Reasons to Hire a Real Estate Professional | Keeping Current Matters

Whether you are buying or selling a home, it can be quite an adventurous journey. You need an experienced Real Estate Professional to lead you to your ultimate goal. In this world of instant gratification and internet searches, many sellers think that they can For Sale by Owner or FSBO. The 5 Reasons You NEED a Real Estate Professional in your corner haven’t changed, but have rather been strengthened in recent months due to the projections of higher mortgage interest rates & home prices as the market continues to recover.

1. What do you do with all this paperwork?

Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true Real Estate Professional is an expert in their market and can guide you through the stacks of paperwork necessary to make your dream a reality.

2. Ok, so you found your dream house, now what?

According to the Orlando Regional REALTOR Association, there are over 230 possible actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, who knows what these actions are to make sure that you acquire your dream?

3. Are you a good negotiator?

So maybe you’re not convinced that you need an agent to sell your home. However, after looking at the list of parties that you need to be prepared to negotiate with, you’ll realize the value in selecting a Real Estate Professional. From the buyer (who wants the best deal possible), to the home inspection companies, to the appraiser, there are at least 11 different people that you will have to be knowledgeable with and answer to, during the process.

4. What is the home you’re buying/selling really worth?

It is important for your home to be priced correctly from the start to attract the right buyers and shorten the time that it’s on the market. You need someone who is not emotionally connected to your home to give you the truth as to your home’s value. According to the National Association of REALTORS, “the typical FSBO home sold for $184,000 compared to $230,000 among agent-assisted home sales.” Get the most out of your transaction by hiring a professional.

5. Do you know what’s really going on in the market?

There is so much information out there on the news and the internet about home sales, prices, mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively price your home correctly at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a low-ball offer?

Dave Ramsey, the financial guru advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

Hiring an agent who has their finger on the pulse of the market will make your buying/selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line:

You wouldn’t hike up Mt. Everest without a Sherpa, or replace the engine in your car without a trusted mechanic. Why would you make one of your most important financial decisions of your life without hiring a Real Estate Professional?

Harvard’s 5 Financial Reasons to Buy a Home

Harvard’s 5 Financial Reasons to Buy a Home | Keeping Current Matters

Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year, he released a paper on homeownership – The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home.

Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You’re paying for housing whether you own or rent. 

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially.

Either Way, You’re Still Paying a Mortgage

Either Way, You're Still Paying A Mortgage | Keeping Current Matters

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either your mortgage or your landlord’s. As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

And, as an owner, the mortgage payment is a ‘forced savings’ which will allow you to have equity in your home you can tap into later in your life. As a renter, you guarantee the landlord is the person with that equity.

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are still at bargain prices.

You’ve Played the Housing Market Perfectly. Don’t Blow it Now!

You've Played the Real Estate Market Perfectly! Don't Blow It Now! | Keeping Current Matters

Many people suffered through the housing crisis. We realize that most of the heartache was the result of a housing and mortgage market gone wild. Many consumers were swept away by the waters of a frenzied real estate market that resulted in a crisis even the experts didn’t see coming.

However, some of the suffering was caused by home buyers and home owners simply making bad decisions. NOT YOU! You didn’t buy that house that stretched your family finances past the point of sustainability. You didn’t take out a home equity loan and buy new water skis. You didn’t do a cash-out refinance for the maximum amount possible.

Instead, you bought a home your family could enjoy – and afford! You waited for interest rates to drop to historic lows and then refinanced your mortgage; not for the sake of taking cash out but instead to lower your monthly payment.

You have equity in your house and a nice, low mortgage payment. You played the housing market perfectly.

Don’t Miss the Last Move

Yet, there is one more move many should consider. With interest rates still at historic lows, and prices projected to increase by almost 20% over the next four and a half years, this may be time to buy a new home.

Whether, you are a growing family ready to move-up to that waterfront home you always wanted or an empty nester downsizing to a home that makes more sense, now may be the time to buy. If you have considered buying a vacation/retirement home, there may never be a better time to move forward with that plan.

You have been fiscally astute enough to navigate the treacherous waters of a housing market that sank many a homeowner. Now, that the seas have settled, don’t think there aren’t even greater opportunities on the horizon.

Homeownership’s Impact on Net Worth

Homeownership's Impact on Net Worth | Keeping Current Matters

Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth. A study by the Federal Reserve formally answered this question.

Some of the findings revealed in their report:

  • The average American family has a net worth of $77,300
  • Of that net worth, 61.4% ($47,500) of it is in home equity
  • A homeowner’s net worth is over thirty times greater than that of a renter
  • The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100

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Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

Home Prices…Where are They Headed?

Home Prices... Where are they Headed? | Keeping Current Matters

Today, many real estate conversations center on housing prices and where they may be headed. That is why the Home Price Expectation Survey is seen to be a reliable source. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number. 

The results of their latest survey

  • Home values will appreciate by 4.6% in 2014.
  • The cumulative appreciation will be 19.5% by 2018.
  • That means the average annual appreciation will be 3.6% over the next 5 years.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 11.2% by 2018.

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

Bigger Ads Don’t Make Dumber Buyers

Bigger Ads Don't Make Dumber Buyers | Keeping Current Matters

Being ‘in and around’ the real estate business for over 30 years, we are still confused about the importance both sellers and real estate agents put on advertising.  Decades ago, advertising a home was important to attract a buyer because there was no other way for an individual real estate office to announce to the world that a house was now on the market.

But times have changed.  With the development of the Multiple Listing Systems (MLS), as soon as a listing is taken the entire agent population of that area or region is informed. Instantly! Every agent working every buyer is put on notice that a new opportunity to sell a home is here. In many cases, through new technologies, the buyers are directly informed of the new listing before the agent can even reach out to them. Buyers already in the market will know the home is up for sale immediately. No ad is required to do this.

You may ask – what about the buyer who is not yet actively engaging an agent in search of a home? Those future buyers are searching the internet months before they are ready to commit. In most areas, once a home is placed on the MLS system, the listing populates a plethora of real estate internet sites where a buyer can easily find it.

Why are no buyers looking at the house? I will argue that it is probably not because they are unaware of the listing. In 99% of the cases, it is about pricing. They know of it and, for some reason, have decided it is not worth seeing. The value was not there for them.

Look at the Price

You may think there are just no buyers in the market for your type of home at the present time. Well, let’s take a step back and ask a question. Would someone buy it at $1? How about $100?  $1,000?  $10,000?  $100,000? Of course!! But, that proves our point. There is a price that buyers will pay for each and every home that is for sale today. You must decide if you are willing to take what the current value of your property is. That is entirely your decision.

But, let’s not believe the house hasn’t sold because it wasn’t advertised more aggressively. You could put it on the front page of your large, regional paper for the next 365 straight days. If it is not priced right, a buyer will not buy it.

Does that mean that you don’t need an agent to sell your home? Actually, we are saying the exact opposite. You need a well-informed real estate professional who knows the proper price for your house and has the courage to tell you the truth. It was great to see that a recent survey by the National Association of Realtors revealed that the number one benefit a seller wants from their agent is assistance in setting a competitive price. That truly is the most important thing an agent can deliver to a seller in this market.

Bottom Line

Get a great agent. Price your home appropriately. And don’t believe that running more ads will create a group of buyers that don’t understand value!!