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5 Tips for Making Your Best Offer

5 Tips for Making Your Best Offer

In today’s sellers’ market, standing out as a buyer is critical. Multi-offer scenarios and bidding wars are the norm due to the low supply of houses for sale and high buyer demand. If you’re buying this fall, you’ll want every advantage, especially when you’ve found the home of your dreams.

Below are five things to keep in mind when it’s time to make an offer.

1. Know Your Budget

Knowing your budget and what you can afford is critical to your success as a homebuyer. The best way to understand your numbers is to work with a lender so you can get pre-approved for a loan. As Freddie Mac puts it:

“This pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer.

Showing sellers you’re serious can give you a competitive edge. It enables you to act quickly when you’ve found your perfect home.

2. Be Prepared To Move Fast

Speed and the pace of sales are contributing factors to today’s competitive housing market. According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the average home is on the market for just 17 days. As the report notes:

“Eighty-nine percent of homes sold in July 2021 were on the market for less than a month.”

When homes are selling fast, staying on top of the market and moving quickly are key. After you’ve worked with your agent to find the home that suits your needs, they’ll help you put together and submit your best offer as soon as possible.

3. A Real Estate Professional Can Lead You to Victory

No matter what the housing market looks like, rely on a trusted real estate advisor. As Freddie Mac says:

“The success of your homebuying journey largely depends on the company you keep. . . . be sure to select experienced, trusted professionals who will help you make informed decisions and avoid any pitfalls.

Agents are experts in the local real estate market. They have insight into what’s worked for other buyers in your area and what sellers may be looking for in an offer. It may seem simple, but catering to what a seller may need can help your offer stand out.

4. Craft a Strong, Fair Offer

In the past, offering at or near the asking price was enough to make your offer appealing to sellers. In today’s market, that’s often not the case. According to the latest Realtors Confidence Index from NAR, 50% of offers are above the list price.

In such a competitive market, emotions and prices can run high. Having an agent to help craft a strong, fair offer is critical in these situations. Your agent can help you understand:

  • The market value of the home
  • Recent sales trends in the area
  • Current buyer demand

5. Understand the Seller’s Needs, but Resist Waiving Certain Contingencies

When crafting an offer, you’ll want to keep both your best interest and the interest of the seller in mind. Your trusted real estate advisor will help you consider which levers you could pull, including contract contingencies (conditions you set that the seller must meet for the purchase to be finalized). Of course, there are certain contingencies you don’t want to give up, like the home inspection.

Freddie Mac explains:

“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”

Bottom Line

Today’s competitive housing market makes it more important than ever to make a strong offer on a home. Let’s connect to make sure your offer rises to the top.

Reasons You Should Consider Selling This Fall

Reasons You Should Consider Selling This Fall

If you’re trying to decide when to sell your house, there may not be a better time to list than right now. The ultimate sellers’ market we’re in today won’t last forever. If you’re thinking of making a move, here are four reasons to put your house up for sale sooner rather than later.

1. Your House Will Likely Sell Quickly

According to the Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly – on average, they’re selling in just 17 days. As a seller, that’s great news for you.

Average days on market is a strong indicator of buyer demand. And if homes are selling quickly, buyers have to be more decisive and act fast to submit their offer before other buyers swoop in.

2. Buyers Are Willing To Compete for Your House

In addition to selling quickly, homes are receiving multiple offers. That same survey shows sellers are seeing an average of 4.5 offers, and they’re competitive ones. The graph below shows how the average number of offers right now compares to previous years:Reasons You Should Consider Selling This Fall | MyKCMhttps://files.mykcm.com/2021/08/31113814/20210907-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/08/31113814/20210907-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/08/31113814/20210907-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">Buyers today know bidding wars are a likely outcome, and they’re coming prepared with their best offer in hand. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.

3. When Supply Is Low, Your House Is in the Spotlight

One of the most significant challenges for motivated buyers is the current inventory of homes for sale. Though it’s improving, it remains at near-record lows. The chart below shows how today’s low inventory stacks up against recent years. The lighter the blue is in the chart, the lower the housing supply.Reasons You Should Consider Selling This Fall | MyKCMhttps://files.mykcm.com/2021/08/31113816/20210907-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/08/31113816/20210907-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/08/31113816/20210907-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">If you’re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.

4. If You’re Thinking of Moving Up, Now May Be the Time

If your current home no longer meets your needs, it may be the perfect time to make a move. Today, homeowners are gaining a significant amount of wealth through growing equity. You can leverage that equity, plus current low mortgage rates, to power your move now. But these near-historic low rates won’t last forever.

Experts forecast interest rates will rise. In their forecast, Freddie Mac says:

“While we forecast rates to increase gradually later in the year, we don’t expect to see a rapid increase. At the end of the year, we forecast 30-year rates will be around 3.4%, rising to 3.8% by the fourth quarter of 2022.”

When rates rise, even modestly, it’ll impact your monthly payment and by extension your purchasing power.

Bottom Line

Don’t delay. The combination of housing supply challenges, low mortgage rates, and extremely motivated buyers gives sellers a unique opportunity this season. If you’re thinking about making a move, let’s chat about why it makes sense to list your house now.

The Difference in Net Worth Between Homeowners and Renters Is Widening

Becoming financially secure is an important goal for many people today, but some don’t realize just how much homeownership can help them achieve that dream. A recent report, The Journey Toward Financial Freedom, surveys Americans about their perspective on financial wellness and their goals. It shows there may be a significant misconception about the role owning a home plays in building wealth:

“Home ownership is one of the indicators Americans say is least connected to financial health.”

Two major personal wealth goals – homeownership and net worth – work hand-in-hand. Below are just a few reasons why, if you’re looking for financial security, homeownership should be a top priority.

Homeownership Is an Important Cornerstone of Building Wealth

Every three years, the Federal Reserve releases the Survey of Consumer Finances which highlights the difference in wealth between homeowners and renters. The graph below shows the findings across the previous surveys including the latest data (2019), and the results are staggering:The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCMhttps://files.mykcm.com/2021/08/25162108/20210830-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/08/25162108/20210830-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/08/25162108/20210830-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">As the graph illustrates, the gap between homeowners and renters continues to widen. That’s because homeownership contributes massively to an individual’s overall net worth. Odeta Kushi, Deputy Chief Economist at First Americanhighlights this idea:

“. . . between 2016 and 2019, housing wealth was the single biggest contributor to the increase in net worth across all income groups . . . .”

When we look even closer at the most recent data from 2019, the average homeowner’s net worth is more than 40 times greater than that of the average renter (see graph below):The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCMhttps://files.mykcm.com/2021/08/25162105/20210830-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/08/25162105/20210830-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/08/25162105/20210830-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">The gap exists in large part because homeowners build equity as their home appreciates in value and they pay off a portion of their mortgage each month. When you own your home, your monthly mortgage payment is, in essence, forced savings that come back to you when you sell your home or refinance. As a renter, you’ll never see a return on the money you pay out in rent every month.

If you’re ready to start building your net worth, the current real estate market offers several opportunities you should consider. For example, with today’s low mortgage rates, your purchasing power may be higher now than it has been in some time. That means there may be no better time than now to start working towards your homeownership goals – especially since rates are anticipated to rise in the coming months.

Bottom Line

Owning a home provides one of the strongest foundations for building individual wealth and lasting financial security. If you’re ready to start your path towards homeownership, let’s connect today.

 Real Estate: It’s Still a Lack of Supply, Not a Lack of Demand

Real Estate: It’s Still a Lack of Supply, Not a Lack of Demand

One of the major questions real estate experts are asking today is whether prospective homebuyers still believe purchasing a home makes sense. Some claim rapidly rising home prices are impacting demand and, by extension, leading to the recent slowdown in sales activity.

However, demand isn’t the real issue. Instead, it’s the lack of supply (homes available for sale). An article from the Wall Street Journal shows this is true for new home construction:

Home builders have sold more homes than they can build. Now they are limiting their sales in an effort to catch up.”

The article quotes David Auld, CEO of D.R. Horton Inc. (the largest homebuilder by volume in the United States since 2002), explaining how they don’t have enough homes for the number of buyers coming into their models:

“Through our history, to have somebody walk into our models and to tell them, ‘We don’t have a house for you to buy today’, is something that is foreign to us.”

Danielle Hale, Chief Economist for realtor.com, also explains that, in the existing home sale market, the slowdown in sales was a supply challenge, not a lack of demand. Responding to a recent uptick in listings coming to market, she notes:

“. . . if these changing inventory dynamics continue, we could see a wave of real estate activity heading into the latter part of the year.” 

Again, the buyers are there. We just need houses to sell to them.

If the slowdown in sales was the result of demand waning, we would start to see home prices beginning to moderate – but this isn’t the case. As Mark Fleming, Chief Economist for First Americanexplains:

“There’s a lot of conversation around rising prices and falling quantity in the housing market, and there’s this concept, or this idea, that it’s a demand-side problem . . . . But, if demand were falling dramatically, we would actually see less price pressure, less home price growth.”

Instead, we’re seeing price appreciation accelerate throughout this year, as evidenced by the year-over-year percentage increases reported by CoreLogic:

  • January: 10%
  • February: 10.4%
  • March: 11.3%
  • April: 13%
  • May: 15.4%
  • June: 17.2%

(July numbers are not yet available)

There’s a shortage of listings, not buyers, and there are three very good reasons for purchasers to still be interested in buying a home this year.

1. Affordability isn’t the challenge some are claiming it to be.

Though home prices have risen dramatically over the last 18 months, mortgage rates remain near historic lows. Because of these near-record rates, monthly mortgage payments are affordable for most buyers.

While homes are less affordable than they were last year, when we adjust for inflation, we can see they’re also more affordable than they were in the 1970s, 1980s, 1990s, and much of the 2000s.

2. Owning is a better long-term decision than renting.

recent study shows renting a home takes up a higher percentage of a household’s income than owning one. According to the analysis, here’s the percentage of income homebuyers and renters should expect to pay now versus at the end of the year.Real Estate: It’s Still a Lack of Supply, Not a Lack of Demand | MyKCMhttps://files.mykcm.com/2021/08/17115400/20210818-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/08/17115400/20210818-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/08/17115400/20210818-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">While the principal and interest of a monthly mortgage payment remain the same over the lifetime of the loan, rents increase almost every year.

3. Owners build their wealth. Renters build their landlord’s wealth.

Whether you’re a homeowner or an investor, real estate builds wealth through growing equity year-over-year. If you own, your household is gaining the benefit of that wealth accumulation. Fleming says:

The major financial advantage of homeownership is the accumulation of equity in the form of house price appreciation . . . . We have to take into account the fact that the shelter that you’re owning is an equity-generating or wealth-generating asset.”

Odeta Kushi, Deputy Chief Economist at First American, elaborates in a recent article:

“. . . once the home is purchased, appreciation helps build equity in the home, and becomes a benefit rather than a cost. When accounting for the appreciation benefit in our rent versus own analysis, it was cheaper to own in every one of the top 50 markets, including the two most expensive rental markets, San Francisco and San Jose, Calif.”

Today, that equity buildup is substantial. The National Association of Realtors (NAR) reports:

“The median sales price of single-family existing homes rose in 99% of measured metro areas in the second quarter of 2021 compared to one year ago, with double-digit price gains in 94% of markets.”

In 94% of markets, there was a greater than 10% increase in median price. That means if you bought a $400,000 home in one of those markets, your net worth increased by at least $40,000. If you rented, the landlord was the recipient of the wealth increase.

Bottom Line

For many reasons, housing demand is still extremely strong. What we need is more supply (house listings) to meet that demand.

 Real Estate: It’s Still a Lack of Supply, Not a Lack of Demand

Real Estate: It’s Still a Lack of Supply, Not a Lack of Demand

One of the major questions real estate experts are asking today is whether prospective homebuyers still believe purchasing a home makes sense. Some claim rapidly rising home prices are impacting demand and, by extension, leading to the recent slowdown in sales activity.

However, demand isn’t the real issue. Instead, it’s the lack of supply (homes available for sale). An article from the Wall Street Journal shows this is true for new home construction:

Home builders have sold more homes than they can build. Now they are limiting their sales in an effort to catch up.”

The article quotes David Auld, CEO of D.R. Horton Inc. (the largest homebuilder by volume in the United States since 2002), explaining how they don’t have enough homes for the number of buyers coming into their models:

“Through our history, to have somebody walk into our models and to tell them, ‘We don’t have a house for you to buy today’, is something that is foreign to us.”

Danielle Hale, Chief Economist for realtor.com, also explains that, in the existing home sale market, the slowdown in sales was a supply challenge, not a lack of demand. Responding to a recent uptick in listings coming to market, she notes:

“. . . if these changing inventory dynamics continue, we could see a wave of real estate activity heading into the latter part of the year.” 

Again, the buyers are there. We just need houses to sell to them.

If the slowdown in sales was the result of demand waning, we would start to see home prices beginning to moderate – but this isn’t the case. As Mark Fleming, Chief Economist for First Americanexplains:

“There’s a lot of conversation around rising prices and falling quantity in the housing market, and there’s this concept, or this idea, that it’s a demand-side problem . . . . But, if demand were falling dramatically, we would actually see less price pressure, less home price growth.”

Instead, we’re seeing price appreciation accelerate throughout this year, as evidenced by the year-over-year percentage increases reported by CoreLogic:

  • January: 10%
  • February: 10.4%
  • March: 11.3%
  • April: 13%
  • May: 15.4%
  • June: 17.2%

(July numbers are not yet available)

There’s a shortage of listings, not buyers, and there are three very good reasons for purchasers to still be interested in buying a home this year.

1. Affordability isn’t the challenge some are claiming it to be.

Though home prices have risen dramatically over the last 18 months, mortgage rates remain near historic lows. Because of these near-record rates, monthly mortgage payments are affordable for most buyers.

While homes are less affordable than they were last year, when we adjust for inflation, we can see they’re also more affordable than they were in the 1970s, 1980s, 1990s, and much of the 2000s.

2. Owning is a better long-term decision than renting.

recent study shows renting a home takes up a higher percentage of a household’s income than owning one. According to the analysis, here’s the percentage of income homebuyers and renters should expect to pay now versus at the end of the year.Real Estate: It’s Still a Lack of Supply, Not a Lack of Demand | MyKCMhttps://files.mykcm.com/2021/08/17115400/20210818-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/08/17115400/20210818-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/08/17115400/20210818-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">While the principal and interest of a monthly mortgage payment remain the same over the lifetime of the loan, rents increase almost every year.

3. Owners build their wealth. Renters build their landlord’s wealth.

Whether you’re a homeowner or an investor, real estate builds wealth through growing equity year-over-year. If you own, your household is gaining the benefit of that wealth accumulation. Fleming says:

The major financial advantage of homeownership is the accumulation of equity in the form of house price appreciation . . . . We have to take into account the fact that the shelter that you’re owning is an equity-generating or wealth-generating asset.”

Odeta Kushi, Deputy Chief Economist at First American, elaborates in a recent article:

“. . . once the home is purchased, appreciation helps build equity in the home, and becomes a benefit rather than a cost. When accounting for the appreciation benefit in our rent versus own analysis, it was cheaper to own in every one of the top 50 markets, including the two most expensive rental markets, San Francisco and San Jose, Calif.”

Today, that equity buildup is substantial. The National Association of Realtors (NAR) reports:

“The median sales price of single-family existing homes rose in 99% of measured metro areas in the second quarter of 2021 compared to one year ago, with double-digit price gains in 94% of markets.”

In 94% of markets, there was a greater than 10% increase in median price. That means if you bought a $400,000 home in one of those markets, your net worth increased by at least $40,000. If you rented, the landlord was the recipient of the wealth increase.

Bottom Line

For many reasons, housing demand is still extremely strong. What we need is more supply (house listings) to meet that demand.

Sellers: Make Today’s Home Price Appreciation Work for You

Sellers: Make Today’s Home Price Appreciation Work for You

Home prices continue to rise as we move through the summer, and that’s good news for sellers who are looking to maximize their home’s potential. If you’re on the fence about whether to list your house now or later, the question you should really ask is: will this price appreciation last?

Here’s what three leading industry experts have to say about what lies ahead:

Lawrence Yun, Chief Economist, National Association of Realtors (NAR):

“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year.”

Selma Hepp, Deputy Chief Economist, CoreLogic:

“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months . . . . Nevertheless, with more new listings and new home construction, home price acceleration that has built momentum, and continues to reach new highs, will likely slow later this summer but remain in double digits.”

George Ratiu, Chief Economist, realtor.com:

Many sellers are going to take advantage of higher prices. This summer is going to signal the move to the next chapter, and this will very much be the year they’re going to put their home on the market.”

What It Means for You:

The experts agree that the summer months give sellers a great opportunity to capitalize on today’s home prices. And while prices aren’t expected to depreciate, the rise in prices is forecast to moderate over the next few years. That means selling your house today could set you up for a bigger win.

Bottom Line

Listen to the experts. If you’re ready to make a move, let’s connect to discuss selling your house sooner rather than later so you can take advantage of today’s home price appreciation before it moderates.

4 Major Incentives To Sell This Summer

4 Major Incentives To Sell This Summer

While the housing market forecast for the second half of the year remains positive, there may not be a better time to sell than right now. Here are four things to consider if you’re trying to decide if now’s the right time to make a move.

1. Your House Will Likely Sell Quickly 

According to the most recent Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly. The report notes homes are selling in an average of just 17 days.

Average days on market is a strong indicator of buyer competition, and homes selling quickly is a great sign for sellers. It’s one of several factors that indicate buyers are motivated to do what it takes to purchase the home of their dreams.

2. Buyers Are Willing To Compete for Your House 

In addition to selling fast, homes are receiving multiple offers. NAR reports sellers are seeing an average of 5 offers, and these offers are competitive ones. Shawn Telford, Chief Appraiser at CoreLogicsaid in a recent interview:

The frequency of buyers being willing to pay more than the market data supports is increasing.” 

This confirms buyers are ready and willing to enter bidding wars for your home. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.

3. When Supply Is Low, Your House Is in the Spotlight

One of the most significant challenges for motivated buyers is the current inventory of homes for sale, which while improving, remains at near-record lows. As NAR details:

“Total housing inventory at the end of May amounted to 1.23 million units, up 7.0% from April’s inventory and down 20.6% from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April’s 2.4-month supply but down from 4.6-months in May 2020.”

There are signs, however, that more homes are coming to market. Odeta Kushi, Deputy Chief Economist at First Americannotes:

“It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.

If you’re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.

4. If You’re Thinking of Moving Up, Now May Be the Time

Over the past 12 months, homeowners have gained a significant amount of wealth through growing equity. In that same period, homeowners have also spent a considerable amount of time in their homes, and many have decided their house doesn’t meet their needs.

If you’re not happy with your current home, you can leverage that equity to power your move now. Your equity, plus current low mortgage rates, can help you maximize your purchasing power.

But these near-historic low rates won’t last forever. Experts forecast interest rates will increase in the coming months. Nadia Evangelou, Senior Economist and Director of Forecasting at NARsays:

“Nevertheless, as the economic outlook for the United States looks brighter for the rest of the year, mortgage rates are expected to rise in the following months.”

As interest rates rise, even modestly, it could influence buyer demand and your purchasing power. If you’ve been waiting for the best time to sell to fuel your move up, you likely won’t find more favorable conditions than those we’re seeing today. 

Bottom Line

With supply challenges, low mortgage rates, and extremely motivated buyers, sellers are well-positioned to take advantage of current market conditions right now. If you’re thinking about selling, let’s connect today to discuss why it makes sense to list your home sooner rather than later.

What To Expect as Appraisal Gaps Grow

What To Expect as Appraisal Gaps Grow

In today’s real estate market, low inventory and high demand are driving up home prices. As many as 54% of homes are getting offers over the listing price, based on the latest Realtors Confidence Index from the National Association of Realtors (NAR). Shawn Telford, Chief Appraiser at CoreLogicelaborates:

“The frequency of buyers being willing to pay more than the market data supports is increasing.”

While this is great news for today’s sellers, it can be tricky to navigate if the price of your contract doesn’t match up with the appraisal for the house. It’s called an appraisal gap, and it’s happening more in today’s market than the norm.

According to recent data from CoreLogic19% of homes had their appraised value come in below the contract price in April of this year. That’s more than double the percentage in each of the two previous Aprils.

The chart below uses the latest insights from NAR’s Realtors Confidence Index to showcase how often an issue with an appraisal slowed or stalled the momentum of a house sale in May of this year compared to May of last year.What To Expect as Appraisal Gaps Grow | MyKCMhttps://files.mykcm.com/2021/06/28172021/20210629-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/06/28172021/20210629-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/06/28172021/20210629-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">If an appraisal comes in below the contract price, the buyer’s lender won’t loan them more than the house’s appraised value. That means there’s going to be a gap between the amount of loan the buyer can secure and the contract price on the house.

In this situation, both the buyer and seller have a vested interest in making sure the sale moves forward with little to no delay. The seller will want to make sure the deal closes, and the buyer won’t want to risk losing the home. That’s why it’s common for sellers to ask the buyer to make up the difference themselves in today’s competitive market.

Bottom Line

Whether you’re buying or selling, let’s connect so you have an ally throughout the process to help you navigate the unexpected, including appraisal gaps.

 Homeowner Wealth Increases Through Growing Equity This Year

Homeowner Wealth Increases Through Growing Equity This Year

Building financial wealth and stability remains one of the top reasons Americans choose to own a home, and as a homeowner, your wealth often grows without you even realizing it. In a recent paper published by the Urban Institute, Home Ownership is Affordable Housing, author Mike Loftin illustrates how homeowners increase their equity and their wealth simply by making monthly mortgage payments:

“The principal portion that reduces the loan balance builds the homeowner’s equity. In doing so, the principal payments behave like an automatic savings account. The principal payment is not money going out; it is money staying in.”

But home equity – the difference between the value of your home and what you currently owe – isn’t just built through your monthly principal payments. Home price appreciation plays a vital role in growing your equity and, ultimately, your wealth.

As Freddie Mac explains:

“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

Homeowners Continue To See Equity Increase 

CoreLogic recently published their latest Homeowner Equity Insights Report, and it shows continued growth in equity amidst record home price appreciation. The report provides several key takeaways, all of which point to rising wealth for homeowners:

  1. The average equity gain of mortgaged homes during the past year was $33,400
  2. The current average equity of mortgaged homes is greater than $216,000
  3. There was a 6% increase in total homeowner equity over the past year
  4. Total U.S. homeowner equity has reached nearly $1.9 trillion

Here, you can see the equity gains by state:Homeowner Wealth Increases Through Growing Equity This Year | MyKCMhttps://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" style="box-sizing: border-box; outline: none !important; max-width: 700px; height: auto; vertical-align: middle; border: 0px; display: block; margin: 0px auto 1.5em; width: 700px;">

Equity Provides Homeowners with Flexibility

In addition to being a critical tool in building wealth, a homeowner’s equity also provides significant flexibility. When you sell your house, the accumulated equity comes back to you in the sale. Recent increases in home equity coupled with record-low mortgage rates mean it could be the perfect time for homeowners looking to make a move.

Mark Fleming, Chief Economist at First Americannotes:

“Existing homeowners today are sitting on record amounts of equity. As homeowners gain equity in their homes, the temptation grows to list their current home for sale and use the equity to purchase a larger or more attractive home.”

Increasing equity also helps families facing challenges brought on by the pandemic. Frank Martell, President and CEO of CoreLogic, explains in the recent Homeowner Equity Insights Report:

“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”

Bottom Line

Home equity has always been a powerful wealth-building tool, and homeowners continue to see their financial stability increase. Let’s connect today so you can better understand how much equity you have in your current home or if you’re ready to take the next step in building your savings as a homeowner.

5 Things Homebuyers Need To Know When Making an Offer

5 Things Homebuyers Need To Know When Making an Offer

When it comes to buying a house, you’re looking for the perfect place to call home. The problem is, in today’s market there just aren’t that many homes available to purchase. With inventory hovering near record lows and sky-high buyer demand, a multi-offer scenario is the new normal. Here are five things to keep in mind when you’re ready to make an offer.

1. Know Your Numbers

Having a complete understanding of your budget and how much house you can afford is essential. That’s why you should connect with a lender to get pre-approved for a loan early in the homebuying process. Taking this step shows sellers you’re a serious, qualified buyer and can give you a competitive edge in a bidding war.

2. Brace for a Fast Pace

Today’s market is dynamic and fast-paced. According to the Realtors Confidence Index from the National Association of Realtors (NAR), the average home is on the market for just 17 days– that means from start to finish, a house for sale in today’s climate is active for roughly 2.5 weeks. A skilled agent will do everything they can to help you stay on top of every possible opportunity. And, as soon as you find the right home for your needs, that agent will help you draft and submit your best offer as quickly as possible.

3. Lean on a Real Estate Professional

While homebuying may seem like a whirlwind process to you, local real estate agents do this every day, and we know what works. That expertise can be used to give you a significant leg up on your competition. An agent can help you consider what levers you can pull that might be enticing to a seller, like:

  • Offering flexible rent-back options to give the seller more time to move out
  • Your ability to do a quick close or make an offer that’s not contingent on the sale of your current home

It may seem simple, but catering to what a seller may need can help your offer stand out.

4. Make a Strong, but Fair Offer

Let’s face it – we all love a good deal. In the past, offering at or near the asking price was enough to make your offer appealing to sellers. In today’s market, that’s often not the case. According to Lawrence YunChief Economist at NAR:

“For every listing there are 5.1 offers. Half of the homes are being sold above list price.”

In such a competitive market, emotions and prices can run high. Use an agent as your trusted advisor to make a strong, but fair offer based on market value, recent sales, and demand.

5. Be a Flexible Negotiator

If you followed tip #3, you drafted the offer with the seller’s needs in mind. That said, the seller may still counter with their own changes. Be prepared to amend your offer to include flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Just remember, there are certain contingencies you don’t want to forego. Freddie Mac explains:

Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”

Bottom Line

When it’s time to make an offer, it’s important to consider not just what you need, but what the seller may need too. Let’s connect so you have expert advice on this step in the homebuying process to put your best offer on the table.

WE COVER ALL ASPECTS OF THE REAL ESTATE MARKET
ADDITIONAL SERVICES
PROPERTY MANAGEMENT

Freedom First Properties navigates and simplifies the property management process for our landlords with a comprehensive offering of services.

Our full-service property management division focuses on properties in Orange county and portions of Riverside, San Bernardino, Los Angeles and San Diego counties.

APPRAISAL SERVICES

If you are a Freedom First Properties client who is buying, selling or investing, property valuation is an integral part of what we provide during a real estate transaction.

Clients get a realistic picture of the property’s value and an accurate assessment of market conditions in order to make better decisions.

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FREEDOM FIRST PROPERTIES

         
130 Imperial Highway Anaheim Hills . Ca . 92807
(714) 941-9669    info@ffp-us.com

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