**Update: As of Thursday, May 7th, 2020 real estate is back to work with new safety restrictions**
Since the governor extended the stay at home order, it will be a while before we get back to functioning normally. If you were planning to buy or sell soon, you are probably curious about how the Coronavirus pandemic has affected real estate.
Real estate agents are not allowed to travel for work and can only work remotely. Buyers looking at homes is considered non-essential travel. This means no meeting clients in person and no looking at houses. The good news is that inspectors, lenders, and title companies are still functioning normally, aside from modifications for proper social distancing. Transactions in process had minimal interruptions as long as buyers were still working. Layoffs have caused some problems though.
Location is usually the most important thing to someone looking for a home. So how do you know whether a particular location is a good place to live? Can I just ask my Realtor?
Due to fair housing laws, there are a lot of questions Realtors cannot answer. The answer is subjective to each person's own experiences and expectations. Anything referring to the ages of people, racial make up, or safety of a neighborhood is off limits. Although we may not be able to answer a specific question, we can help guide buyers to information to form their own conclusions.
The first thing I recommend to buyers is to go through a neighborhood at different times of the day to get a feel for it. The most important time is during rush hour to see traffic at its worst. The evening hours are great for catching neighbors out and about. I encourage buyers to talk to neighbors and ask questions.
It has been a whole year since I wrote a real estate market update for the greater Grand Rapids area. Why? It has been the same story for the last two years straight. How many different ways can you say "we have extremely low inventory!"?
As a refresher, inventory is measured by months of supply. Months of supply is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. Months of supply is a good indicator of whether a particular real estate market is favoring buyers or sellers. Our local market has strongly favored sellers the last few years. Although the market has been great for sellers, it has been extremely difficult for buyers trying to purchase, especially first-time buyers who generally have lower down payments.
The article "I Bought a Condo and it Ruined My Life" was posted on Vice recently. It was shared on Facebook with the suggestion that "this is why millenials don't buy homes." Reading through this I couldn't help but notice the similarities of my own housing situation. I also purchased in 2006 at practically the same age, before the housing market crash. However, my outcome was extremely different than Mike Tunison. My house has been a wonderful financial investment.
Zillow has a reputation for not being accurate and their "pre-foreclosures" are part of the problem. I get asked about these all the time by buyers. This home is not for sale. It is labeled as being in the process of foreclosure, but it is not a foreclosed property yet.
When someone stops paying their mortgage, the bank usually will threaten foreclosure after about 3 or 4 missed payments. Once this happens they schedule the property to go to auction at the courthouse. This auction is called the "sheriff's sale". Once the auction is scheduled, it must be printed in financial reports that are public record. Zillow claims they get this information from these financial reports.
There are a lot of factors that are important to a seller when considering whether to accept a buyer's offer, especially when there are multiple offers to choose from. Here is a list of some of the most important factors a seller will look at:
1) Price- this is likely the first thing the seller will consider. Most people want the highest price possible for their home. If the buyer is asking for closing costs, the seller will subtract this amount from the offer price to figure what the net amount is. For example, let's say two buyers write offers for the same price of $150,000. However, one buyer is asking for the seller to pay $4,000 towards their closing costs, and the other is not asking for any. One offer is a net of $150k while the other is only a net of $146k. Obviously the higher net offer is usually more desirable to a seller.
Many people enjoy the idea of becoming a real estate investor. An abundance of infomercials and HGTV programming make it seem so easy and glamorous. The reality is that it is not always easy. Real estate can be a great investment, but educate yourself and understand what you are getting into before you make the plunge.
BUYING THE PROPERTY
When purchasing a property, the first step is to get pre-approved for a home loan. Be sure to specify whether you want to purchase a single family or multi-unit residence, and whether you plan to occupy it. Based on this information, there are different types of loans available, and different requirements for each loan type such as down payment amount, interest rate, and other costs. Typically when purchasing investment property, larger down payments are required. When house hunting, you will want to consider a number of factors that make a rental desirable. Location is first and foremost. Size, condition, and neighborhood amenities are other important factors.
If you’re going into the home purchase process well armed with information, you already know how important it is to use your own real estate agent and not the seller’s. If this is news to you, read on.
Real estate agents owe their clients what is known as a “fiduciary duty.” Although it sounds like legal jargon, it simply means that the agent is obligated to act in the best interests of his or her client. What are these interests? At their most basic, the seller’s interest is to sell the home for the most money possible while the buyer is interested in purchasing the home for the least amount of money possible. Of course, both parties have ancillary interests such as the protection of their privacy. The fact is, a seller’s interests and a buyer’s interests are completely different and, in fact, conflict with one another. Let’s take a look at some of the specific interests that a real estate agent’s fiduciary duty includes.
It is tough to be a home buyer right now in the greater Grand Rapids area. Why...? INVENTORY. Inventory is pretty much all we have been talking about for the last 2 years. The lack of inventory of homes available.
Inventory of homes for sale is measured by determining how long it would take to sell all current homes for sale if no new listings came to the market, based on the current rate of how many people are buying. A normal market is considered to be an inventory of 6-6.5 months. Back in 2008, we had a whopping 13-14 months, a market that strongly favored buyers. In 2012, the inventory started dropping and has not stopped. The strong buyers' market is a thing of the past and has been replaced by a market extremely weighted in a seller's favor.
If one of your future goals is to purchase a home, it’s never too early to start preparing yourself financially. One of the major factors that goes into getting approved for a home mortgage is your credit score and credit history. All lenders will look at your credit worthiness to determine how much they will lend to you. The following are steps you can start taking now to prepare your credit for buying a home in the future.
1. Check and update your credit report: Consumers are guaranteed at least one free credit report a year; get a copy of yours to see where you stand. If you find errors, you can contact the creditor or the bureaus to address any invalid information.
Great info on everything real estate.