3 Strategies for the Move-Up Buyer

Moving up to your “forever home” is exciting. When you bought your first place, chances are you were young, strapped for cash and prepared – if not warned – to make some concessions. The move-up buyer typically has some savings and home equity to work with, making this next move feel less like a compromise and more a thoughtful selection.

But move-up buyers face their own set of challenges that call for a carefully considered strategy. Here are three options for the smart move-up buyer with a plan!

The “Sell First” strategy is ideal for the move-up buyer who can’t afford to pay two mortgages simultaneously. Selling your property first eliminates the risk of having to carry two mortgages if you don’t sell your existing home in time. It also reduces the chances of having to reduce your asking price in the interest of speeding up the sale. This is a good option for move-up buyers who are banking on the proceeds of their sale to fund their new (and likely more expensive) property. By selling first, you’ll know exactly how much money you have to purchase your next home.

If homes in your area of choice are selling faster than the ‘For Sale’ signs can hit the front lawn, the “buy first” strategy might be the way to go. By buying your new home before selling your old one, you won’t feel rushed into settling for a sub-par property, or having to seek alternative temporary housing options while you shop the market. This move-up buyer still lives in his or her existing home, allowing them time to shop around, and continue looking until they find that perfect place. This move-up buyer typically requires a bridge mortgage.

When all is said and done, this move-up buyer approach is the most ideal, but getting there is another story. Aligning your purchase and sale closing dates can be tricky. Remember that there are three dancers in this tango – you, the person you’re buying from, and the person you’re selling to. You’ll also have to move out and move in on the same day. In this scenario, time is your best friend and flexibility your savor. This means you’ve planned ahead – you’re researched neighborhoods, gotten pre-approved for a mortgage, and you’ve started the organizing and de-cluttering process before the big move.

The right move-up buyer strategy depends on a number of factors, such as your financial situation, current housing market conditions, your personal comfort level and your personality. Consider all these when making your decision. Plan ahead and work with a pro to ensure a smooth transaction on both sides of the bargaining table.

During my 17 years in the business, I’ve helped many move-up buyers and will be happy to help you and those you know!

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Outdated Advice Buyers Should Ignore

People who have gone through the homebuying process are often eager to give advice. But too often, these so-called insider tips may very well be outdated.

Realtor.com® recently highlighted some of the most common advice home buyers may hear from their peers that no longer applies in the current housing market, including:

“Wait for spring.”

Buyers shouldn’t feel like they’ll be at an advantage if they wait for the busiest season in real estate—it may be the opposite, real estate pros say. “Yes, there’s more inventory [in the spring], but there’s more competition for it, and sellers are more optimistic about getting a higher price then and so less willing to negotiate,” Sebastian “Seb” Frey, a real estate broker in the Silicon Valley area, told realtor.com®. “Buy when you find the right property that will meet your needs for today—and the next five to 10 years.”

“Wait for home prices to come down.”

Some aspiring buyers may be told to wait until home prices settle some before they jump in. But they can’t forget that rents are likely also high.

“Paying high rent now and hoping that you’ll find a better deal two or three years down the road [won’t work],” Frey says. “The better advice is to make a smart buy today for a property that will appreciate over the longer term.”

“Make a lower offer so you have room to negotiate.”

Some buyers may be told by their peers to make an offer that’s less than what they’re actually willing to pay for a home. Then they’ll have room to negotiate.

“The housing market in 2019 will be slightly different from what we experienced in 2018 when it comes to pricing and negotiations,” Howard Margolis, an associate real estate broker with Douglas Elliman in New York, told realtor.com®. “In regards to negotiations, what was once the premise of offering 10 percent to 15 percent below asking is not necessarily the case anymore, and it’s a strategy I would not recommend. In today’s market, a truly motivated seller is less inclined to engage in the back-and-forth of a real estate transaction, and listings are priced closer to the final sales price.”

Instead, home buyers are urged to base their offer on sales of similar sales in the area.

Millennial Monopoly: 4 Real Estate Trends in 2019

What’s behind the rise in homeownership? Growing interest from millennials. Here are the 2019 millennial real estate trends you need to know about this year.

Empowered with Knowledge 
First-time, homebuying millennials are much more informed when it comes to renovations, repairs and real estate process than other generations. Growing up during the development of the internet has made them very tech and research savvy and able to find ways to access important information such as listings, neighborhood reports, HGTV home renovation videos and other types of industry information on their own. In 2019, they will rely on real estate agents to share information that they can’t find online such as neighborhood developments, local market forecasts, local housing regulations and more.

Buying homes – despite rising rates
Millennials continue to make up the largest segment of buyers, accounting for 45 percent of mortgages, compared to 17 percent of baby boomers and 37 percent of Generation Xers. While first-time buyers will struggle, older millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up most of the millennials who close in 2019. As their housing needs adjust over time, millennials are on track to make up the largest share of homebuyers for the next decade.

Sweat Equity
Many millennials grew up watching renovations and makeovers on HGTV, which means many of them are ready to invest sweat equity in their new home. Millennial homebuyers, overall, are more aware of the costs, work and implications of renovations than the previous generations. This is good news as interest rates rise and buyers should be prepared to settle for homes in need of TLC.

New Buying Strategies
Social media continues to impact millennial homebuying habits. They rely on online reviews to make purchasing decisions, and a strong online reputation for real estate professionals is a must in catering to this market. In fact, a recent study showed that millennials would prefer to buy a house from a real estate agent influencer over a traditional real estate agent. Showcasing a home on social media, especially on visual-heavy platforms like Instagram, is essential for appealing to millennial buyers.

Research your way to the right real estate agent who can make all the difference. RE/MAX agents are more recommended because they recommend what’s right for you and your future. Contact Jennifer today!

5 Millennial Real Estate Trends in 2019

More millennials are pursuing homeownership now than ever before. The national homeownership rate rose to 64.4 percent in the third quarter this year—an increase of half a percentage point over a year ago, according to the U.S. Census Bureau. That’s largely attributed to the rise in new, first-time home buyers.

As 2018 comes to a close, Dana Bull, an agent with Sagan Harborside Sotheby’s International Realty who has significant experience working with millennial clients, shares five trends to expect from this generation of buyers in the coming year.

1. Rising Interest Rates Will Prompt Buyers to Change Strategy
Just last week, mortgage rates rose to a seven-year high, with 30-year fixed-rate mortgages averaging 4.94 percent. It’s more than likely that rates will climb over 5 percent in the new year. This will cause many buyers to pause and reevaluate their purchasing power and strategy, Bull says. “Even a quarter point has a real impact on housing affordability,” she says. This means you’ll need to take more time to help clients analyze deals and understand what their money can buy in this shifting market.

2. Increased Competition From Baby Boomers for Properties
As millennials age and grow in their careers, they are acquiring more purchase power. According to the 2018 National Association of REALTORS® Home Buyer and Seller Generational Trends Report, 30 percent of millennials purchased homes for $300,000 and higher in the past year, up from 14 percent in 2013. That means millennials and boomers are going head-to-head for the same homes today. That trend is only going to continue to grow in 2019, Bull predicts. Both groups also seek similar amenities, including walkable neighborhoods and smaller home sizes with more upgrades, she points out. “Buyers in different generations—with wildly different points of view—are competing for the same homes,” she says. “For sellers and agents, catering to two different generations in marketing homes will also be a challenge.”

3. Willing to Put In Sweat Equity
Millennials are becoming more savvy to renovations and repairs, and they may have HGTV to thank for that, Bull says. “Millennial buyers are still far more aware of the work, costs, and implications of a renovation than their parents would have been,” she says. “Popular TV shows mean a more educated millennial buyer who knows what to look for in terms of red flags. But also has more confidence around renovating a home to make it their own and the ability to see past outdated wallpaper or a wall that can be easily removed.” Keep this in mind as interest rates continue to rise in 2019 (re: trend number one) and you’re helping clients who want to get creative while staying in their price range.

4. Clients Who are Well-Researched and Prepared 
Millennial buyers are doing their online research and are entering the market well-prepared. Show your value as a REALTOR® in other ways, Bull recommends. “They are relying on real estate professionals not to introduce them to homes, most of which they can find online, but to show them what can’t be researched: neighborhoods that are up and coming, which properties stand to gain value in the coming years, and guidance when it comes to negotiations and inspections.”

5. Social Media’s Continued Impact
Social media will continue to influence millennials’ homebuying habits, Bull says. This generation relies heavily on online reviews and social media presence to make purchasing decisions. A strong online reputation for real estate professionals is a must in catering to this market, she adds. Showcasing homes on social media—particularly Instagram—is essential for appealing to millennial clients.

Source: REALTOR® Magazine

Why Buying a Home Is Becoming More Urgent

If your clients are wavering on whether to buy a home, there are several reasons they may want to get more serious about their real estate search, according to MagnifyMoney, a personal finance website. Most importantly, mortgage rates remain historically low—but that isn’t expected to last. They’ve been rising steadily, but rates for the current 30-year fixed-rate mortgage are still well below 5 percent, compared to nearly 19 percent In 1981. “The housing market has been on pretty solid footing now for a number of years, and a lot of that is due to pretty affordable mortgage rates,” says Stijn Van Nieuwerburgh, a real estate professor at Columbia Business School. In a recent Reuters poll, 45 housing analysts predict that by the end of 2019, the average rate for the 30-year fixed-rate mortgage likely will be above 5 percent. So buyers who lock in a rate this year likely will have lower borrowing costs.

Also, escalating home prices aren’t expected to let up anytime soon. According to the Reuters poll, home values in the 20 largest metro areas are expected to increase by another 5.7 percent before the end of the year. The National Association of REALTORS® predicts growth in home prices to continue in the coming years, but year-over-year growth likely will slow to 3 percent or 5 percent. “Homeownership is long-term prospect,” says Paul Bishop, NAR’s vice president of research. “So as long as prices continue to increase at even a modest pace over the next four, five, eight, 10 years, then that equity does build up, in some cases, to quite a substantial part of someone’s net worth.”

Home shoppers who are holding out for more inventory may need to accept that the waiting game likely won’t be successful. At the end of May, there were 1.85 million existing homes for sale, including single-family homes, condos, townhomes, and co-ops. That is 6.1 percent lower than a year ago, according to NAR. Construction is on the rise but new developments are only accounting for about 2 percent of the market, says Van Nieuwerburgh, adding that “we’re not building enough to alleviate those shortages.”

While there are plenty of reasons why buying makes sense now, housing analysts are quick to point out that consumers shouldn’t take the plunge if they’re not ready financially or personally for the commitment. Prospective buyers need to consider financial security, their location, and their job situation, says Bishop. “Ultimately, you need to ask yourself: Are you likely to be in a particular location long enough that homeownership makes sense?” he says.

Source: MagnifyMoney

3 Pros, 3 Cons of Buying New Construction

Many house hunters are under the mistaken impression that new construction is flawless, a perception that may be challenging to wrestle with if a seller’s home is surrounded by brand-new development. In reality, there can be just as many inspection issues with new builds as there are with resale properties. For buyers who are interested in purchasing new, it’s important to manage expectations and know that no home—no matter what age—is perfect. On the other hand, new homes do have some advantages because they’re not worn. Here are three pros and three cons of new construction.

4 Potential Surprises When Buying a Home

No. 1: Low inventory means you have to act fast …

In many cities around the U.S., inventories are tight, meaning there are too few homes on the market for potential homebuyers. Homes in good condition that are priced appropriately sell fast. The competitive market means buyers may find a home and make a serious offer in just a few days (sometimes 24 hours!). In extremely low inventory markets like Denver, Seattle and San Francisco, buyers may end up in bidding wars, paying more than the home’s asking price.

Professional real estate agents understand the unique trends in your market and can help buyers zero in on the right house and act quickly.

No. 2: … But closing takes longer than you think

According to Realtor.com, the average home sale takes approximately 50 days from the moment your offer is accepted to the time you move in, but this is contingent on a variety of things. As the days tick by during this comprehensive process of inspections and appraisals, you may find yourself impatient to move in and add Pinterest-worthy decor.

The good news? Advanced technology has helped streamline the exchange of a vast amount of paperwork. And, an experienced real estate agent will be able to set expectations and keep you informed every step of the way.

While you anxiously await the keys to your new place, you can occupy yourself by preparing your things for the move and planning an epic housewarming party.

No. 3: Home inspections leave nothing uncovered

For the benefit and protection of a new buyer, most home inspectors conduct a very thorough inspection of your new home, leaving a detailed and often intimidating list of recommended repairs and improvements. Remember, not every item on the list may need to be repaired for the home to be safe or for you to take possession. Yet again, your real estate agent will be able to walk you through this lengthy report, advising you on what you can and should ask the sellers to consider fixing.

No. 4: Closing costs may leave you asking: “I owe WHAT?”

Just when you think you know the bottom line, some additional closing costs can sneak up on you. Things like loan origination fees, prepaid property taxes, title insurance and more can add up at the end of the process. In fact, on average, closing costs can range from 2% to 5% of your home’s purchase price.

Now that you know, you can ask your agent for more details and factor this in when you prepare to buy. If you or someone you know is considering a purchase or sale, I’ll be happy to help; contact me today!