More Expensive Than Expected

The 3.5% down payment on FHA loans could be more expensive for buyers than expected. Beginning April 1, 2013, the mortgage insurance premium will go up by .1% to 1.35% which may not even be noticeable to most would-be homeowners.

The staggering increase will occur on 6/3/2013 when FHA's policy on the duration of the required mortgage insurance will be increased for the life of the mortgage. It basically doubles the amount of total MIP if the loan is paid to term.

Example: Purchase Price $175,000 with 3.5% down payment at 4% mortgage rate on 30 year term
	Current	After 6/3/13
MIP duration	78% of original loan	Life of mortgage
Cumulative premium	$20,838.24	$42,447.93

Currently, the MIP is required for approximately 9 years 9 months with normal amortization. The new program would require the MIP for the life of the loan. In this example, the initial monthly MIP is $196.88 which decreases based on amortization.

There are buyers that qualify on income and credit who may not have the necessary additional down payment required for 80% and 90% conventional loans. The 3.5% FHA program has provided a great vehicle to get into a home with a minimum amount of cash.

For homeowners that expect to stay in their home for ten years or less, the new changes might not have much financial impact. Homeowners who expect to be in their home long term can refinance with a conventional loan without mortgage insurance once the equity has increased due to amortization and appreciation.

For buyers to avoid these increases, they will need to act now to get the FHA commitment issued prior to these change dates.

Before You Leave Home...

The last thing you want to do while you're on a trip is to worry about someone burglarizing your home. Use this checklist to add some peace of mind to your travel plans.

• Ask a trusted friend - to pick up your mail and newspaper and keep the yard free of trash and advertisements.
• Stop your mail but maybe not your newspaper - you can easily handle this online by going to the US Postal Service's Hold Mail Service. A recent story implicated an employee from a major newspaper who was passing customer hold requests to burglars.
• Don't post about your trip on Facebook and Twitter until you return - some burglars actually look for this type of announcement to schedule their activities.
• Do notify police and/or neighborhood watch - especially if you're going to be gone for more than just a few days. Let your monitoring service know when you'll be gone and if someone will be checking on your home for you.
• Light timers make it look like someone is home - use several set for different times to better simulate someone at home.
• Do unplug certain appliances - TVs, computers, toaster ovens that use electricity even when they're off and to protect them from power surges.
• Don't hide a key - burglars know exactly where to look for your key and it only takes them a moment to check under the mat, above the door, in the flower pot or in a fake rock.

These easy-to-handle suggestions may protect your belongings while you’re gone while adding a level of serenity to your trip.

What's It Going to Take?

How much evidence is needed to make a decision to get out of the rent race and become a homeowner?

Compare your rent with a mortgage payment on a similar size property. If you want a larger home than your current one, use the rent that property would require instead of what you're currently paying. If it's considerably cheaper, you may not need any further encouragement.

By the time you consider the principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you're paying.

The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation. The equity is part of your net worth and an investment in your family's future.

The income tax savings can be an additional financial consideration if the combined interest and property taxes exceed the allowable standard deduction.

Trends are showing that both tenants and homeowners are staying in their homes longer. It's been said that whether you rent or own, you're paying for the home. Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own.

Selecting the Right Color

Have you ever picked a color from the myriad of paint samples available, put it on the wall and decided that it was all wrong? It shouldn't have to be that difficult but trying to pick the perfect color from those little swatches is just not that easy.

Painters and decorators suggest you buy a small amount of the colors you're considering. Your paint store should be able to mix them in any brand and any color. Once it's on the wall, it will be easy to determine if it needs to be lighter or darker or if it's completely wrong.

Take them home and paint a 2' x 2' area on the wall. If you're concerned about testing the colors on your wall, you can paint some sample boards that can be easily moved around to see how they'll look with the furniture, floors and other items in the room.

Instead of guessing what it's going to look like, you'll actually see how it looks during different times of the day, in natural and artificial light.

While $30 to $40 a gallon for paint may seem like a lot of money, the cost in time and labor to put it on the wall is even more. It's worth taking the time to test the color on the wall before you buy all the paint needed

Sooner is Better than Later

Buyers who have delayed purchasing a home due to concerns about what might happen to the tax laws affecting home ownership should feel comfortable about getting back in the market. The recent legislation passed by Congress and signed by the President continues to value homes as a favored investment.

For a summary of specific real estate provisions in the "Fiscal Cliff" bill, click here.

Whether the delayed purchase is for a home to live in as your principal residence or to use as rental property, taking action sooner is better than later.

Reasons to buy now:

1. The house payment with taxes and insurance is probably cheaper than the rent.
2. Rents will continue to rise making the difference even greater in the future.
3. Lock-in the principal & interest payment with a fixed-rate mortgage.
4. 30 year mortgage terms are available to most borrowers.
5. The mortgage interest deduction is intact for the majority of taxpayers.
6. The capital gain exclusion for principal residences up to $500,000 remains in place.
7. Prices are going up due to lower inventories and several years of low housing starts.

Contact me about any specific questions you have or information you need.

Get Your Offer Accepted

As the market shifts from a buyer's market, it's good to know how to improve your chances to have the seller accept your offer.

Once you decide on a home, don't waste time; write an offer and submit it as soon as possible. Competing with another buyer happens more frequently than you'd expect. Multiple offers are a seller's advantage but here are some tips to level the playing field:

• Realistic offer - don't give the impression you're trying to "steal" the property. Submit comparable sales that justify your offer.
• Pre-approval letter - this satisfies seller's biggest concern that an unqualified buyer will unnecessarily take the home off the market and the seller will lose other opportunities.
• More earnest money - it shows you're serious and makes the seller feel like the contract will actually close.
• Minimize contingencies - from a seller's standpoint, each contingency is one more reason why the sale won't go through. They feel the home is "off the market" and they're in limbo.
• Shorten inspection period - your agent can help you set a reasonable date but let the seller know you're willing to close prior to that if possible.
• Write a personal letter to the seller telling them why you want their home - this can be the emotional connection to the seller that makes the difference in you getting the home.

A seller wants to feel confident that the offer they accept will actually close so they can plan for their next move. Following tips like these can definitely affect negotiations and help put together an offer that is more likely to be accepted.

Resolutions

After spending the holidays with family and friends, this is a time of the year to start thinking about changes to make in our lives, both personal and in business.  We wanted to share one of ours with you.

Our goal is to become your REALTOR® for life.  We want you to think of us first when you need to buy or sell and that you’ll recommend us to your friends too.  That kind of trust has to be earned and we’re committed to helping you be a better homeowner even when you’re not buying or selling.

The strategy is simple.  A well-informed homeowner will make better decisions.  We’ll periodically offer information through articles and social media on a wide variety of home-related topics like maintenance tips, tax law changes, financing suggestions, insurance, equity building strategies, and rental property investments. 

Please contact us if you need a recommendation on a service provider.  Our experience has built a list of reputable and reasonable contractors that you can rely upon.  When you have any kind of home-related questions, I hope you’ll have the confidence to call us.

Happy New Year.  We sincerely look forward to helping you or your friends.

E=MC Sold: The Physics of the St. Louis Home Market

The housing market has been improving and St. Louis is on the rise. The average time for selling a home in the St. Louis area has dropped by a significant margin: 98 days to 68 days,  and Webster Groves, Kirkwood, Affton, and Rock Hill have made it to the top 25 neighborhoods with the fastest selling homes. What does this mean for you as a home buyer or seller?

It means that it is time to act fast. The physics of supply and demand are working their way around town and unfortunately we don't have the Delorean at our disposal to travel back in time to make the most of our investments. (Or, at least that I know of...)

As a home seller, this means that you don't have to take a hit like you may have had to if you were trying to sell about a year or two ago. It means that you can get back more of the money of your hard earned investment because there is a stronger demand for buying now. It has predominately been a buyer's market in recent years and although it is still a good time to buy, there is a direct positive correlation between the time it takes to sell a home and the economic value of it. Each home that sells quickly in a neighborhood subtracts availability from the supply and adds to a higher demand. 

As a home buyer, this means that prices are going to continue to increase, so you have to act fast. In a stable market, waiting a day, week, or even a couple weeks, could have had no impact on your investment. While, a market on the rise has two faces to the coin and brings us back to our physics conversation: time and matter. Your investment is time sensitive, the pressure of price increase and availability dwindle on a day to day basis. With that pressure comes the tangibility of your investment; there will be exponential growth because the demand is on the rise.

So, with the market on the rise and St. Louis County doing better that the national averages on home sales, it's time to be efficient with your real estate endeavors. It doesn't take Einstein to help with those choices, but it does take a good agent to help move along the process efficiently.

Written by Ciara Brewer on behalf of Monica Brewer

Bike Friendly, St. Louis!

With gas prices the way they are, cities around the country have been improving their public transportation systems. Although St. Louis has attempted to hop on board with the Metro Link and bus system, the city and county are still largely inaccessible through public transit. But, don’t give up just yet: bicycles to the rescue!  

Great Rivers Greenway is an organization who has taken the initiative since 2004 to build bike trails through St. Louis, and its neighboring cities, to facilitate alternative transportation that encourages positive health and promotes local economy. The project is a sect of Americorps and mainly run through volunteer and community efforts. Most of us are familiar with one of their most famous outcomes from the project: Grant’s Trail. Extending 8 miles across southwest St. Louis County, it is an easy trail that houses many St. Louisan’s sunny afternoons. Although the bike trails are great as an afternoon destination, the goal is to extend the trails throughout St. Louis and its surrounding areas as a means of transport.

On the macro level, the project will help to promote health and wellness, community cohesion, and affordable transportation for our progressive city. Over the past 7 years, the organization has developed over 80 miles of on-street bike lanes throughout St. Louis City, Kirkwood, Clayton and Maplewood. Street bicycling can be intimidating, especially to newly procured cyclists. Adequate bike lanes provide a safety zone for your commute as well as cautioning neighborhood traffic in the area to be more aware of cyclists and share the road.

Bike safe and have fun St. Louis!

Written by Ciara Brewer on behalf of Monica Brewer

Selling Luxury Homes Today

If You’re In The Market To Sell Your Saint Louis Luxury Home , You Probably Feel You Can’t Catch A Break.
Nearly Five Years Into The Housing Bust, When Many Experts Thought The Real Estate Market Would At Least Have Stabilized, Sales And Prices Are Still Dropping In Most Of The Country. You Can’t Count On Things Turning Around Soon, Either. It Would Take 8.6 Months To Clear Out The 3.5 Million Existing Homes Listed Today.

Put Part Of The Blame On Stiff Competition: Foreclosures And Short Sales, “It’s Dreadful Out There For Sellers,” Says Patrick Newport, A U.S. Economist At Forecasting Firm IHS Global Insight. It’s Not Enough To Show Buyers Your House Is A Deal: You Have To Convince Them It’s A Total Steal. That Means Slashing Your Price, Bringing In A Pro To Pretty It Up, And Creating A Killer Website For Your Home.

Here’s How To Do It Right. Slash Your Price, Big Time
 Sellers Are Still Loath To Accept The Extent Of The Toll The Bust Took On Their Homes’ Value, Says Tara-Nicholle Nelson, Consumer Educator For The Housing Website Trulia.Com. Many Also Give In To The Temptation To List The Property Above Fair Market Value To See What Happens. Big Mistake. About A Quarter Of Sellers In The Past Year Initially Listed Too High And Were Forced To Knock The Price Lower, According To Trulia.Com. Even In Cities That Have Held Up Well, Such As Charlotte, 25% Of Sellers Resort To At Least One Price Cut, And Often Two. Think You Can Always Drop The Price If Your Home Doesn’t Sell? Bigger Mistake.

The First 30 Days On The Market Are The Most Important. 
That’s When Your Place Attracts The Most Attention And Gets The Most Showings. The Result: You Often End Up With Less Than You Would Have If You Priced It Right To Begin With, So Get Aggressive Right Out Of The Gate.

Undercut Your Competition.
In Normal Times Listings Of Similar Properties In Your Area Would Give You A Good Sense Of What Your Home Might Sell For. Today There’s A Big Gap Between What Sellers Want And What Buyers Are Willing To Pay. Instead, Figure Out What You Can Realistically Expect To Get By Asking Your Realtor To Show You What Houses Similar To Yours Have Sold For In The Past Three To Six Months. If More Than A Couple Of The Comparable Properties Were Foreclosures Or Short Sales, Look Closely At The Photos And Descriptions Of Those Former Listings. Distressed Homes Should Be Included In Your Comps If They Are In Move-In Condition, Once You Have A Handle On Your Likely Sale Price, List Your Home A Bit Beneath That. You Don’t Have To Undercut By Much To Attract Attention, Because That Price Will Probably Still Be About 10% Or 15% Below What Other Homes Are Listed For. Even If You’re Competing With Lots Of Foreclosures And Short Sales, Your Price Should Generate Enough Interest To Attract More Than One Bidder, Pushing Up The Final Price To Where It Should Be. Take Out The Ax. No Bites Within 30 Days? Make A Big Move.

When A Property Sits, People Start Thinking It Must Be Listed Too High.
To Stimulate Interest, Make A Giant Cut — As Much As 10% Of The Asking Price, And Even More In An Area Where Prices Are Still Falling. That Should Be Enough To Warrant A Second Look From Buyers Who Passed The First Time, And To Bring In A New Pool Of Potentials Who Are Hunting For The Right Home. Play Hardball. It’s Okay To Reject Low-Ball Offers If A Buyer Won’t Budge. But If A Buyer Is Willing To Negotiate, Push Aside Feelings Of Anger Or Insult And Start Counter Offering Ideally You’ll Be Able To Negotiate Within $10,000 To A Couple Hundred Thousand And Even A Million Of An Acceptable Offer. Then,

Using Incentives Can Make It Easier To Reach An Agreement
For Example, If Your Buyer Refuses To Dicker, You Might Offer To Leave The Furniture, Tv‘s, Appliances, Even A Car Behind. Or Maybe You’d Rather Take The Reduced Price But Have The Buyer Agree That You Take 60 Days, Not 30, To Move Out. Remember This Is Something That Should Be Negotiated Once The Initial Offer Is On The Table Not Before. Always Be Open To Negotiation And Counters Because Without A Counter The Deal Will Never Get Done. Also When Someone Makes An Offer They Want The Home And Are Already Emotionally Attached To The Property – Make It Happen. Hire A Stager, Hire A Cleanup Crew, Trim The Hedges, Cut The Grass There Are People Who Want To Sell, And There Are People Who Have To Sell.

Veteran Real Estate Brokers Interviewed Say That Proper Staging Can Speed The Sale And Often Increase The Price Too. The Key Is To Get It Done Right.
Start With An Open Mind. Staging Demands A Psychological Shift That Many Homeowners Find Challenging: Thinking Of Your House Not As Your Home But As A Set. That Means Scrubbing Away Evidence That You Actually Live There. Your Goal: The Homey Yet Impersonal Look Of A Pottery Barn Catalogue. Find The Right Stager. Get Names From Realtors Or At Realestatestagingassociation.Com, And Then Review The Stager’s Online Portfolio Of Before-And-After Photos. Next, Call Homeowner References And Ask How Fast Their Homes Sold After Staging And Whether They Think The Work Helped. Establish A Budget And Ask The Stager To Work Within It. Stagers Typically Charge $150 To $400 To Walk Through Your Home And Give Recommendations For Each Room. You Can Then Execute The Plan Yourself Or Hire The Stager To Do It For An Hourly Fee, Usually $100 Or So, Plus The Cost Of Any New Paint Or Furnishings. If You Make Big Changes, Costs Can Add Up — But Can Often Make A Huge Difference Using What Homeowners Already Have These Days It’s Going To Take Far More Than A FOR SALE Sign In The Front Yard And A Spot On The Multiple-Listing Service To Get Potential Buyers In The Door. That Means Getting The Word Out In A Creative Fashion — And Finding A Realtor  Who Is Willing To Do The Same.

 “The More Eyeballs That Get On The Listing, The Better,” Says Katie Curnutte Of The Real Estate Information Website Zillow.Com. To Do That, You Need A Multipronged Marketing Plan Of Attack. Create A Great Site . About 90% Of Buyers Begin Their Search On The Internet, According To The National Association Of Realtors. Make Sure Your Home’s Online Presence Has A Dozen Or Two Photos: Having 20 Instead Of Five PhotosWill Almost Double The Number Of Hits You’ll Get, According To Zillow.Com. And Have Professional Pictures And Virtual Tours On Every Site. Pictures Will Get The Buyers Through The Door. Throw Money At Them. Incentives Can Perk Buyers’ Interest Just As Much As Price Cuts, Says Matt Brown, Director Of Business Development At ForSaleByOwner.Com. In Fact, Many Buyers Will Agree To A Higher Price If Their Upfront Costs Are Lowered, Since They Often Run Short On Cash. If You Can Afford It, Offer To Cover The Buyer’s Closing Costs Or Pay The First Year’s Property Taxes Or Condo Or Homeowner Association Dues. However, Those Freebies May Be Practically Standard, Particularly In Areas Rife With Distressed Properties. Be Aware, Though, That You Must Disclose Any Such Gifts Or Payments When The Offer Is Agreed On, And Some Lenders Will Not Approve Them. If So, You Might Have To Find Another Incentive That The Bank Doesn’t Object To. Showcase Super Condition. Yes, Some Buyers Are Hunting For Foreclosures In Rough Shape That They Can Nab For A Song. Yet Just As Many Shoppers Don’t Want — Or Don’t Know How — To Put In That Sweat Equity.

So Hire An Inspector To Identify Every Problem With The Home, Even Seemingly Minor Issues Such As Dripping Faucets, And Fix Them. “If An Outlet Doesn’t Work, Why Get The Buyer Wondering What Else Is Broken. Tell Your Realtor To Give Anyone Who Tours Your Home A Copy Of The Inspection Report And Your List Of Fixes. Spread The Word Online. Having Your Home Listed On A Major Website Like Realtor.Com Isn’t Enough. Ask Your Realtor If You’ll Get An “Enhanced” Listing On The Site, Where Your Home Gets Top Promotional Billing. Many Realtors Will Create A Website Just For Your Home. You Also Want To Get Your Listing On Alternative Sites Like Craigslist, Facebook, Backpage, Trulia, Postlets, LuxuryHomes.Com, And Any And Every Site Offering Real Estate.  Print ads such as Ladue News, Town & Style, STL Today will reach more buyers.

Stay Away — Far Away
In Better Times You May Not Feel Obliged To Drop Everything To Accommodate Prospective Buyers’ Schedules. Today, If Buyers Can’t Get In On Their Time, They’ll Skip It. So Be Prepared To Show A Perfectly Clean Home At A Moment’s Notice. And Disappear (Along With Your Dog, If Possible) For All Showings And Open Houses So That Prospects Can Imagine Themselves In Your House — An Impossible Task When Your Family Is Vegging On The Couch.

Keep A List Of Must-Do Chores
Including Emptying Wastebaskets, Filling The Dishwasher, And Making The Bed And Walked Out Every Morning With The Place Spotless. On The Weekend She Holed Up At A Local Mall. “Every Time I Thought I Could Go Home, A New Person Wanted To See The House,” Recalls McCoy. But A Few Extra Hours At The Mall Paid Off In Spades. In Just A Few Days McCoy Had An Offer For Her Home — For The Full Listing Price.

Spring 2012 Came Very Early!

 

The rates are starting to rise along with the flowers and for sale signs. Sellers must be committed to selling in this market. Inflated inventories, short sales, foreclosures...lots of competition out there. Time is of the essence. Your first buyer may be your only buyer for a long time. In the long run, a lower initial price may net the seller more money.