Are You Thinking of Buying Directly from a For-Sale-By-Owner?

Provided by Tom McChesney of Keller Williams Realty Key Partners LLC. 

Call 913-908-2453 or email me if you would like professional representation in purchasing your next home.

Find out what your home in the Greater Kansas City area, including Johnson County, KS is worth.

Whether you made a conscious decision to purchase a home For Sale By Owner, or happened to find the home of your dreams through a FSBO, you should weigh the financial and emotional risks associated with dealing directly with a FSBO.

First and primary: Do you know what constitutes a valid contract? Are you absolutely certain the seller knows? Where will you obtain current, legally approved, valid residential real estate sale documents for your State? Laws vary from State to State and legal contracts undergo frequent revisions. Real estate documents are lengthy and filled with language difficult to comprehend. Waiting until the highly emotional period of contract negotiation (perhaps in the presence of multiple offers) could mean you may not have the time or inclination to thoroughly review a lengthy sales contract. You may not have the time to consult with an attorney either! Take some time before you begin looking at homes to obtain and familiarize yourself with current real estate documents in your State. If you don't understand the contract in its entirety, consult with a real estate attorney. (Don't depend on or trust the seller to "take care of everything" or advise you.)

A real estate transaction often starts out well, with both parties believing they understand the terms and conditions agreed to. Buyer and seller may even feel an affinity towards one another, but that can change quickly. A house isn't just a house, it's been "home" to the seller. That alone implies emotional ties. The seller may not be thrilled about the move and conflict among family members over the move may also create tension in your dealings with the seller. Realize that even in the best situation you are in conflict with the seller. What do I mean? Well, you (the buyer) want to purchase at the lowest price possible in terms favorable to the you. The seller wants to sell at the highest price possible in terms favorable to the him/her. Both buyer and seller are looking out for their own best interests and those interests conflict with one another. Add emotions into the mix and the whole tone of the transaction can change in a heartbeat. 

One of the most sensitive parts of a real estate sale is the inspection period. There are several ways that inspections can complicate the process.  While not comprehensive, they include:

·         inspections are not completed within the prescribed time frame in the contract

·         the inspection reveals serious issues that are costly to address

·         the credentials of the inspector may be called into question

·         the seller refuses any or all of the requested repairs or to make financial concessions for the buyer to correct after closing

·         parties are unable to reach an agreement during the prescribed time frame in the contract, voiding the agreement

·         agreed-upon repairs are not completed

Get the idea? The inspection can reveal multiple issues so it's important to recognize and differentiate between a serious issue and a minor issue and then weigh appropriately items worthy of negotiating. Upon making that determination, it takes skillful negotiation and tact to present these to the seller and obtain agreement. Consider also: if you are working directly with the seller, your access to the house for inspections and the appraisal is dependent entirely upon the seller's availability and cooperation. In spite of all this, inspections are a great idea. Why? Homes are not self-maintaining. If maintenance has been deferred, the home will have varying degrees of deterioration or neglect. It's in the buyer's best interest to know of any issues before closing.  

Employing the right timing for various aspects to the sale may be a factor few buyers consider. For instance, a buyer may think it best to order an appraisal right away - as soon as the contract is signed. Since the inspection period can be one of the "make or break" parts of the sale, it's generally best to wait until the inspection period is over before ordering the appraisal. An exception would be when there is too little time between the effective date of the contract and the closing date. 

Any of the situations described above can be serious enough to cause the sale to fall apart. Many things can trigger collapse of the sale and both buyer and seller can experience financial and emotional losses when a sale falls apart.

While there's never a guarantee of a trouble-free transaction in transferring real estate, a professional real estate agent has the knowledge and experience to help buyers (and sellers) navigate through the process and come out of difficult situations with a happy result for both buyer and seller. Take advantage of my experience and professionalism to represent and advise you in your real estate purchase.  

Provided by Tom McChesney of Keller Williams Realty Key Partners LLC. 

Call 913-908-2453 or email me if you would like professional representation in purchasing your next home..

Find out what your home in the Greater Kansas City area, including Johnson County, KS is worth on my website.

How is The Current Real Estate Market Impacting Buyers and Sellers?

Real estate market data for the Greater Kansas City area, including Johnson County, KS obtained from the Kansas City Regional Association of Realtors and provided by Tom McChesney of Keller Williams Realty Key Partners LLC.

Call 913-908-2453 or email me if you would like more detailed market information specific to your neighborhood.

Find out what your home in the Greater Kansas City area, including Johnson County, KS is worth on my website.

This is the time of year when the real estate market starts heating up. Historically June and July are the biggest months based on number of real estate transactions. The difference so far this year is that the market is heating up much earlier than it has in previous years. Let’s look at how the supply of inventory, interest rates, new construction, and student loan debt are impacting the real estate market right now.

INVENTORY IS LOW!

Inventory tightened in 2015 due to increased demand from lower interest rates and continued sluggishness in new home construction.

For the Greater Kansas City Heartland MLS areas, Months Supply of Inventory numbers are even more dramatic:

Buyers:

Buyers are having a hard time finding the home they want because the selection of available homes is very limited. When they find the home they want, more often than not they find themselves competing against other offers. If you think the easy solution is to just make sure you submit the highest bid: It’s not always the highest offer that wins the home. In some cases, other terms of the contract or a personal letter written by the buyer to the seller makes more of a difference than price.  Right now, multiple offers are common and this high demand, low inventory market is driving prices up.  Listings can sell for as much as 5% over list price. This is a Seller’s Market; the seller has the advantage.

While this can be a frustrating market for buyers, I encourage buyers to enter the market now before projected rate increases occur. Why? Because a 1% increase in interest rates equals a 10% decrease in what you can afford to buy. Get more house for the money while rates are low!

A professional real estate agent has the ability to find the unlisted homes before they hit the market and can set you up to receive an alert as soon as a home is listed in the MLS. If you consent to a Buyer Agency agreement, then your real estate agent is representing your interests in any negotiation with a seller or a seller’s agent. Contact me if you have any questions about a Buyer Agency Agreement.

Sellers:

Sellers with homes in good condition who price their home in the market are likely to find the house sells very quickly. Right now, many homes are sold before they hit the market or within a few days of posting to MLS, often – but not always – with multiple offers.  This can be a shock to the home owner and may cause concern that the house was priced incorrectly.  Not necessarily: high demand, low inventory has created this situation, and the need for the house to appraise still exists.  

While a bidding war among buyers can drive the sale price up, an appraiser will analyze recent sales and if the value cannot be substantiated, the home will not appraise. Focus on all points of an offer, not just the price.

With demand for homes so high, you might think you don’t need professional representation. In 2015, 87% of buyers had professional representation. That means, agents working for the buyer negotiating for the buyer’s interests, not yours! Less than 2% of buyers worked directly with the seller in 2015. Contact me if I can answer any questions about professionally marketing your home.

Did you know? The median sales price in 2015 was $222,400.6.8% more than in 2014.

INTEREST RATES ARE LOW!

Interest rates average 3.85% in 2015, down 0.32 percentage points from 2014’s average. Interest rates in 2015 were below 4% for almost all of 2015 and helped drive demand.

The general consensus for 2016 is that interest rates are going to begin increasing sometime this year. While slight increases in interest rates may not alarm you, consider this:

In the example above, the $222,400 house with a monthly principal and interest payment of $1,044.00 would change with an interest rate increase to 4.86% to a monthly principal and interest payment of $1,148.40.

Buyers: 

Lower interest rates decrease your monthly house payment so you devote a smaller percentage of your income to a house payment. You can qualify for a larger loan amount which enables you to look at nicer homes in a higher price bracket. My free home search tool can help you find the home for you and it also can put you in touch with a lender to learn how much home you can qualify for at today’s interest rates. No one knows how much rates will increase so exactly how much of an effect interest rate increases will have cannot be predicted. 

Sellers: 

Low interest rates put more buyers for your home in the market. As demand increases, prices increase. Higher interest rates take some buyers out of the market for your home, lowering demand. As demand falls, prices also fall.  Sell while demand is high! Contact me to find out how much your home could sell for in this market. No one knows how much rates will increase so exactly how much of an effect interest rate increases will have cannot be predicted. 

Did you know? A 1% increase in the interest rate equals a 10% increase in the monthly cost of a house.  (Or, it decreases 10% the amount of house that can be purchased with the same budget.)

NEW CONSTRUCTION STARTS REMAIN SLUGGISH

New home construction continues to improve but is still well below the historical average.

Buyers: 

In this market buyers don’t have as many choices. Buyers may not be able to find new homes and may have to purchase resale homes. Since there’s also a shortage in resale, buyers are competing with other buyers for the nicest homes. Some buyers may be forced to buy older homes in need of work. 

Even with a shortage of inventory, it’s still a good time to buy a home because interest rates are low and affordability is at an all-time high.

Sellers: 

This is a good time to sell your home since you don’t have to compete with as many new homes. You may be able to sell your home at a higher price without new homes in the same price range competing against you for buyers.

Did you know? Below average new home starts contributes to a shortage of inventory. 

STUDENT LOAN DEBT INCREASING

Between 20013 and 2015, the total amount of student loan debt nearly quintupled, going from $241 billion to $1.2 trillion. A 398% increase.

As a market segment, the number of first-time homebuyers is dwindling. This correlates to increasing student loan debt and high unemployment or underemployment among recent college graduates. These factors are forcing young people to delay homeownership.  First-time homebuyers are usually 40% of the market so a significant portion of the market is missing.

Buyers: 

Avoid going into debt as much as possible. Pay off existing debt as quickly as possible and don’t allow yourself to be late or fall behind on payments as this will affect your credit rating and impact your ability to purchase a home. If your debt-to-income ratio is too high, you may not qualify for a home loan, or at least not for the home you might want to buy. Visit my website if you would like more information on qualifying for or purchasing a home.

Sellers: 

With a large segment of buyers missing from the market, the best advice is to work with a professional who is able to properly position your house in the marketplace to maximize the number of prospective buyers and get you the most that you are able to get from the sale of your house. Visit my website to learn more about selling your home or contact me to learn how much your home your home could sell for in today’s market.

A 398% increase in student debt between 2003 and 2015 is staggering. Has income gone up 398% in the last 12 years to compensate? (No.)

THE ECONOMY – AN OVERVIEW

Real estate experiences highs and lows in varying degrees. Is it worth it?

Ultimately that’s a question you have to answer for yourself.  Like anything else, there are pros and cons to owning real estate.  As you can see from the data above comparing homeownership to renting, median net worth is substantially greater for homeowners. Over the long term, real estate has been and continues to be one of the best investments you can make as homes tend to appreciate over time. Whether you rent or own, you are making a house payment and the economy has an effect on both segments of the housing market.

My free home search tool can help you find your next home and alert you when new homes are placed on the market. It can also put you in touch with a lender to learn how much home you can qualify for at today’s interest rates.

Find out what your home in the Greater Kansas City area, including Johnson County, KS is worth or call me at 913-908-2453.

The best advice you can receive about real estate you own or wish to purchase will come from your local real estate professional who monitors local trends and can advise you accordingly.  Contact me if I can help you with your real estate needs! 

Real estate market data for the Greater Kansas City area, including Johnson County, KS obtained from the KCRAR and provided by Tom McChesney of Keller Williams Realty Key Partners LLC.