Is A Fixer-Upper For You?

Fixer-upper” is one real estate term that needs no explanation. While many homebuyers are in the market for a home in move-in condition, others are willing to take their chances on fixer-up homes that need some work. Fixer-uppers can range from homes requiring relatively small cosmetic updates (new paint and carpets, for example), to those requiring major repairs, such as a new roof or complete re-wiring.

The Advantages of Buying Fixer-Up Homes

Fixer-upper homes can be an excellent choice for some homebuyers, especially those purchasing a starter home. Some of the advantages of buying fixer-up homes include:

• House prices: Houses that need significant repair work or require major renovation are often much cheaper than homes of a similar size or in a similar location. There may also be more room for price negotiation with these properties.

• Location: Purchasing a home in less-than-perfect condition can be a great way to buy into a neighborhood that would otherwise be unaffordable.

• Creativity: Everyone has her own idea of what makes the perfect house. A fixer-upper allows you to bring your vision for your home to life.

What to Look For in a Fixer-Upper Home

Before signing on the dotted line, you’ll want to arrange for a home inspection, which can identify potentially serious problems that aren’t readily apparent. Depending on the scope of the problem, anything found during the home inspection may help you negotiate a further reduction in price. When viewing the fixer-upper, keep your eye out for the following:

• Rodent and insect infestation: Look for mice droppings, roaches, mud emerging from cracks (a sign of termites), and other signs of infestation. Firewood piles stacked against a house can also present a haven for termites.

• Structural problems: Sloped floors, leaning walls, or cracks in a home’s foundation can all be signs of serious structural problems that can be quite expensive to fix.

• Wiring: Old wiring may need to be replaced, a potentially costly repair.

• Drainage problems: Ideally, the ground on the property should slope away from the house. Poor drainage can cause dampness in basements, flooding and other issues.

After the house is professionally inspected, call a licensed contractor out to the house to get a realistic bid on how much the repairs will cost. Then, have your real estate agent perform a market analysis to determine how much the house will be worth after the repairs are made.

Wondering How to Finance a Fixer Upper Home?

So, after laying out the money for the down payment and then the closing costs, how to finance the repairs or renovation on a fixer-upper home? Fixer buyers use many creative ways to finance the work, from credit cards to borrowing against their 401k plans.
You may be able to get a home equity line of credit (HELOC) based on the future equity you’ll have once the house is repaired. Talk you your accountant or attorney about the pros and cons of HELOCs.
The U.S. Department of Housing and Urban Development (HUD) offers a program for the purchase of fixer-uppers that includes the repair costs in the mortgage loan. Known as the FHA 203(k) program, it’s only available from certain, HUD-approved lenders and to borrowers who intend to live in the home.
Buying a fixer-upper is not for everyone, but for those with the patience to deal with renovating, it can be an economical way to purchase a home. For help findig your dream home at the lae, plct the Spouses Selling Houses team. Until next time. Ebbie :)

Is Now A Good Time to Buy?

Wondering if it’s a good time to buy real estate? The answer isn’t ever a straight yes or no, but often, "Yes, but it depends.” In order to answer this question for you, we first must understand the three most important words in real estate: Long-term ownership.

When we buy property, whether as a personal residence or for investment, we do it in hopes that we are financially better off down the road than we are today. The chance of that occurring is very low if one does not own real estate for at least five or more years. The reason is that transaction costs, repairs, monthly ownership costs higher than comparable rent, and ownership hassles, all dictate that it is better to invest your money elsewhere and stay as a renter if you are not sure you will own long term.

Since you are going to be a long-term holder (and the longer the better) you really should not be that concerned with short-term current market price fluctuations because ten years from now the home’s value will be more than it is today. You should be concerned about is finding a house that you “love"—one that fits all the right reasons you want to own that particular property for a long time!

This could almost be the end of this blog…but there are a few more issues to consider to make sure it is a good time for you to buy property. If you fail any of the below tests, you should think hard about whether or not it really is a good time for you personally to buy.
1. You are planning to be a long-term holder.
2. Payments are affordable and you have a steady job
3. It isn’t significantly more expensive to own over renting – this very important.
4. For investors, if it makes cash flow sense.
5. It is the right property for you for all the right reasons; i.e. you “love” it!
6. It is fairly priced relative to the recent comparable market sales in the immediate area for similar properties.
7. You plan to own it for a long time!
8. There aren’t too many foreclosures or vacant homes in the area. This is very important whether you are an owner occupant or investor. Empty unstable neighborhoods or communities have a higher risk of vandalism and risk downward price spirals.
9. It is in decent shape and doesn’t need much fixing-up. Skip the junkers, the ones with foundation issues, or anything labeled as “needs a little TLC” in the listing, as that means it is a wreck. Leave the fixers for the contractors. Doing it yourself doesn’t usually save you much money.
10. The home isn’t near a big vacant parcel, non-residential zoned parcel, empty or retail/industrial/religious site where you are not 100 percent sure what is going to be built or in use there. A new use of that land could impact your “quiet enjoyment” of your residential unit.
11. You complete the proper due diligence steps to reduce your risk as much as possible. Mind your contract terms and contingencies, pencil out your deal, get a couple of bids on financing and dissect your GFE, review the HOA condition, review the property condition, make sure you have the right type and amount of property insurance in place, make sure you adequately review the title abstract and title policy and everything else you need to do to lower your risk.
12. And you plan to own it a long long time!

I laughed when someone once said “location, location, location” were the three most important words in real estate. Not only is that actually only one word but we pay a handsome premium for “location” and is that premium worth it? It may or may not be, but the phrase “long-term ownership” is by far and away the three most important words in real estate.

To summarize: Subject to the above issues, it is always a great time to buy real estate but:

• Not for everyone
• Not at any price
• Not just any property

Find a house you love or rental property that makes sense, something you will own for a long time, is in decent shape, lock in a long-term mortgage and sleep well. Please let us be your Realltors at the lake. Call the Spouses Selling Houses today and lets get moving. Until next time. Ebbie :)

How's The Market?

This is our newest feature on Ebbie's Blog from lake of the Ozarks. It's called "How's The Market" with Ebbie Bogema. A short glimpse into the monthly state of the Real Estate market here at the Lake of the Ozarks.

 

Ebbie will be keeping you updated on all of the current statistics on a monthly basis. We hope you enjoy this new feature and really welcome your feedback.

 

If you are looking for Real Estate at the Lake of the Ozarks please call the Spouses Selling Houses team. Until next time. Ebbie :)

We Want To Buy A Home... Where Do We Start?

1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months.

10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

Of course buying a home is an exciting time. Please let us help you through the entire process. Call the Spouses Selling Houses team. Until next time. Ebbie :)

101 Ways To Praise Your Child Bookmarks

I don’t know about you, but I find myself praising my children and grandchildren by saying “good” about 2 million times a day. It is just an automatic response. But I am so tired of saying “good” when they get something right!

I recently ran across 101 Ways to Praise a Child. It is a list that was generated by a MOM years ago. Moms always know what you need, even before you need it! So I tweaked it a little bit and wanted to share it with you!

We have also just received our new "101 Ways to Praise A Child" bookmarks so that you will vere ever be left speechless when it comes to telling the kiddos what a great job they did. If you would like one of these bookmarks, we would be more than happy to send you one absolutely free.

Just email me at ebbie@lakeozarkforsale.com and give me your mailing address and we will get it right out to you.

We feel it's important to be able to praise our
children and grandchildren in many different ways... and often. Please
accept this free gift from us so that you too will have "101 Ways to
Praise Your Child" always at your fingertips. As always, if we can be of
assistance in your Real Estate needs at the lake, do not hesitate to call.

The Spouses Selling Houses team is here working for you. Until next time! Ebbie :) 

6 Good Reasons to Buy Now!

1. Prices have nearly hit bottom.

In most areas, most of the excess has finally been wrung out of the market. But if you’re buying a first home or looking to trade up, there’s no need to rush. Although prices may fall some more -- blame foreclosures still working their way through the system and tighter credit -- they won’t fall by much.

In most of the cities where home values experienced a double dip after the expiration of the home buyer’s tax credit in mid 2010, median prices won’t fall below their 2009 or 2010 lows, says David Stiff, Fiserv’s chief economist. These cities include San Francisco, San Jose, San Diego and Washington, D.C. But in cities with lingering oversupply of homes for sale, Fiserv forecasts a decline of 10% or more in the median home price (for the year ending March 31, 2012). These cities include Riverside–San Bernardino, Cal.; Las Vegas; and Miami.

2. Houses are affordable again.

Homes haven’t been this affordable since 1991. Economists often define affordability as the ratio of median home price to median family income. According to Fiserv Case-Shiller, the U.S. ratio now stands at 2.6 -- down from a peak of 4.1 in mid 2005 and just under the long-term average of 2.8. Of course, some areas continue to defy affordability. In California’s coastal cities and the New York metro area, the ratio is 5 or more. Average mortgage payments are another way to look at affordability. Since the housing market’s peak in 2006, the average principal-and-interest payment in the U.S. has fallen from $1,063 to $645.

Renters considering the jump to homeownership may be encouraged by the price-rent ratio, or the median home price divided by the median annual rent. In 2005, the national median home price had inflated to nearly 21 times the median annual rent, according to Marcus & Millichap, a commercial real estate brokerage company in Encino, Cal. Since the bust, the ratio has deflated to 14, less than the historical average of 15. During the same period, the difference between the median monthly mortgage payment and median monthly rent fell from $745 nationally to $102. 

3. Mortgage rates won't go any lower.

For the past couple of years, interest rates have hovered at levels last seen when the veterans came home from the Korean War. At the beginning of August the national average 30-year fixed rate was 4.5%. FHA loans, which require only a 3.5% down payment, had a 4.3% rate. Adjustable-rate mortgages are even cheaper, and even rates for jumbo mortgages have hit lows not seen since the 1980s.

Freddie Mac forecasts a 30-year fixed rate 6% by late 2012.

4. It's a buyer's market.

Demand is low; supply is high. In early summer, the National Association of Realtors reported that sales of existing homes (single-family houses and condos) fell by 9% from the year before. NAR also reported 9.5 months’ supply of homes. That’s how long it would take to sell all the homes on the market at the current pace of sales, and it strongly favors buyers.

With so much selection, you’ll find more properties in good school districts or near your job, or homes that offer added value, such as a mother-in-law suite, says Thomas Popik, research director with the Campbell surveys of real estate professionals. You’ll spend less time shopping and competing against other bidders. And you don’t have to waste time with sellers who set unrealistic prices (although they’re still out there).

One caveat: If you’re searching among entry-level homes, which had more extreme price declines than upper-end houses did over the past year, you may face stiff competition from investors. They typically pay cash, which makes them attractive to sellers who want to close the deal fast. However, says Popik, you may find opportunities in homes that were bought and fixed up by investors, who intended to flip them but have had difficulty making a sale.

5. You may find a distressed property.

Bank-owned foreclosures (or REOs, for “real estate owned” properties) sell for an average discount of 35% off the per-square-foot price of conventional homes for sale, according to RealtyTrac. In the first half of 2011, lenders owned about 870,000 REOs but listed only about one-fifth of them for sale, concentrated in such high-foreclosure states as Arizona, California, Florida, Michigan, Nevada and Ohio; even with the slowdown in the foreclosure pipeline due to legal-processing issues and new supply exceeds sales.

Short sales, or homes sold with lenders’ permission for less than their owners owe on their mortgages, have also grown in number. Lenders have become more amenable to them as they seek to avoid the often huge losses associated with foreclosures, says Rick Sharga, of RealtyTrac. Short sales offer buyers less of a bargain than REOs, but the homes tend to be in better condition. Banks may still take two to six months to sign off on a short sale, so patience is imperative.

6. Homeownership is still attractive.

A home is the biggest purchase most people ever make. But deciding whether and what to buy isn’t purely a financial decision, says Chris Herbert, research director at Harvard’s Joint Center for Housing Studies. When you own a home, you can control your living environment and security, upgrade and change your home as you see fit, and create a sense of rootedness in your community.

You can offset some of the cost of homeownership by deducting mortgage interest. But don’t mistake a home for an investment, at least not in the short run. “If your goal is to jump in and get a return of 6% annually, that’s a bad idea,” says Fiserv’s Stiff, given the forecast for weak price appreciation. Instead, you need to commit to owning the home for at least five to seven years to ride out any further price declines and recoup your down payment and transaction costs. If you think that you might need a bigger home before that time to accommodate a growing family or that you might have to move to another area for your job, don’t buy unless you’re willing to become a long-distance landlord.

Shop carefully, and be patient. If we can help you find the perfect home at the lake, please contact us. The Spouses Selling Houses team at RE/MAX lake of the Ozarks. Until next time. Ebbie :)

Mortgage Interest Rate Report

Long-term interest rates made a significant rise in March, according to data from mortgage finance company Freddie Mac, reaching above the 4 percent mark for the first time in about 5 months.

March 1

Rates fell during the first two weeks of the month, with the 30-year fixed-rate mortgage (FRM) dropping to 3.90 percent, excluding fees during the first week, down from 3.95 percent during the ending week of February. The average rate on a 15-year FRM slipped to 3.17 percent from 3.19 percent and the one-year adjustable rate mortgage (ARM) average was barely changed at 2.72 percent from 2.73 percent the week before.

March 8

During the next week, rates again moved back into record-low territory, with the 30-year FRM average falling to 3.88 percent just shy of the all-time low of 3.87 percent in February. The 15-year FRM did, however, hit a new low, sinking to 3.13 percent. The one-year ARM moved back up to 2.73 percent.

March 15

Positive news from the jobs market helped interest rates move upward the next week, with the 30-year FRM averaging 3.92 percent. The 15-FRM grew to 3.16 percent and the one-year ARM carried an average rate of 2.79 percent.
"An upbeat employment report for February caused U.S. Treasury bond yields to increase over the week and mortgage rates followed," said Freddie Mac vice president and chief economist Frank Nothaft. "The economy gained 7,000 jobs, above the market consensus forecast, and revisions added another 61,000 to January and December. Job growth over the last six months was the strongest since 2006."

March 22

Rates then took another leap upward, as the average interest rate on a 30-year FRM rose above 4 percent to 4.08 percent, and the 15-year FRM jumped to 3.30 percent. The one-year ARM grew to 2.84 percent.
"Mortgage rates are catching up with increases in U.S. Treasury bond yields placing the average 30-year fixed mortgage rate above 4 percent for the first time since the end of October 2011," Nothaft commented. "Bond yields rose over the past two weeks in part due to an improving assessment of the state of the economy by the Federal Reserve, better than expected results of commercial bank stress tests and the likelihood of a second bailout for Greece."

Analysts believe the next month will likely produce slightly better economic news, as things have been trending, which could result in mortgage rates hovering right around or above 4 percent in April.

If we can help you with your Real Estate needs at the Lake, we would love to do so. Please call the Spouses Selling Houses. Until next time. Ebbie :)