Imagine finding your dream home, then, a week before closing the deal, losing your jobâand the house. House hunting during the coronavirus pandemic is no picnic.
COVID-19 has caused seismic changes not only to real estate markets, but also to the lives of home buyers hit with layoffs, furloughs, and other financial challenges. Just ask Katerina Rieckel, a digital strategist, knitwear designer, and first-time home buyer who, with her husband, was set to close on a glorious farmhouse in upstate New York in March.
But about a week before sealing the deal, Rieckel was laid off, which meant that she and her husband, a claims adjuster, could no longer afford the place.
As a part of our new series, “First-Time Home Buyer Confessions,” we asked Rieckel to share her story, and the hard-won lessons she wants to share with other first-timers.
Let her experiences show that even unemployment doesn’t need to spell the end of a house huntâalthough it may require you to dust yourself off after a loss and try, try again.
Location: Troy, NY
House specs: 1,544 square feet, 3 bedrooms, 2 bathrooms
List price: $249,900
Price paid: $245,500
2020 has been a wild one. How did you end up buying a home in the middle of a pandemic?
We started looking for a house a year ago, about halfway through the summer. At the time, both my husband and I had recently got new jobs, so the first issue we ran into was getting pre-qualified for the mortgage without a long track record at those companies. We also both felt pressure, as our jobs were very new.
What were you looking for in a house, and what was your budget?
We were looking for a house in the country that was move-in ready, private with at least 5 acres. We started off with a small budget, max $200,000, which made our choices more narrow.
Our search continued well into the winter, and around January 2020, we finally saw a house that was all we ever dreamed of and more. It was over our budget, at $229,000, but it had been listed for over a year, so we felt there was a good chance we could get it for less than the asking price.
What did you love about this house?
It was a beautiful, slate-blue farmhouse sitting on top of a hill, surrounded by woods. The house was warm and inviting, with chickens running around, as well as a big diving pool, and a workshop in the basement connected with a two-car garage. We got along with the owners really well, and we were going to keep the chickens. Everything went very smoothly, until just over a week before closing.
So what went wrong?
It was March, and COVID-19 hit hard. The digital marketing agency I worked for had clients pause their work for unknown time. I was laid off, which meant we couldn’t afford the house anymore, and had to back out of the deal.
I was crushed. We didn’t know what was going to happen, and the country was under a lockdown. We had plans for my parents to come visit us in our new house, but instead, I ended up with no job, no house, and I couldn’t see my family, since they live in Europe.
In the summer, I was very fortunate to get my job back. So we resumed our house hunt and began to search for a new contender.
When you started the search again, how had COVID-19 changed the market?
The housing market in upstate New York got totally crazy. I heard there were houses being sold within hours. The market was just incredibly competitive, and not many houses were being listed, as a lot of people didn’t want to let strangers in their house during the pandemic.
We saw about seven to 10 houses in person, but they usually ended up disappointing us, with some strange arrangements. For example, one house had around 25 acres, but half of that acreage was on the other side of the road, behind other people’s houses, which made it almost impossible to use.
With such a competitive market, how did you end up finding the right house?
Finally, around halfway through the summer, I saw a house listed that I hadn’t noticed before. I called on it right away and set up a showing that evening.
The real estate agent told me we were really fast, as he had just relisted this house. Someone had been buying it, but backed out of the process because of personal reasons.
How did you know this house was the one?
The house had over 10 acres, it was in the country, and about 35 minutes to Troy. It was move-in ready, but definitely needed upgrades, as it looked like it got stuck in the ’80s.
Even though we didn’t like the style that much, we felt instantly comfortable and decided to put in an offer that same evening. It was partly due to the pressure of the market, but in the end, we are really happy we made this decision.
What surprised you most about the home-buying process?
Nothing prepares you for the amount of aggravation you have to go through. Buying a house is like getting a second job for about three months.
What’s your advice for aspiring first-time home buyers?
Don’t trust the photos! The photos got me a few times. For example, a lot of times, the photos of the house are taken so that you can’t see the neighboring houses.
You think, “Wow, that looks so private!” Then you drive there, and you realize there’s a house sitting right next to it. Since privacy was very important to us, we got disappointed a few times by this. We started doing drive-bys first, before going in with a real estate agent, whenever possible.
Anything else home buyers should look out for?
Call the real estate agent and ask a lot of questions before you even go see the house, like what the property and school taxes areâvery important around here.
You also want to know what kind of heating the house has, as electric bills can really add up over the winter.
The driveway can also be a huge issue, which is why I think the first house we were buying was for sale for such a long time. It had a pretty steep driveway, which was definitely an all-wheel drive kind of thing in the winter.
We also changed who we were financing with while we were going through closing. We needed someone well-informed about the economy, who knew what they were doing and was ready to act fast.
Our first mortgage broker didn’t tell us as soon as interest rates started to go upâand basically sat on the information for a while. This is when we stopped trusting this person and went to work with a bank instead.
Maybe the best advice is not to fall in love with a house too quickly, since there can be so many setbacks that you will not see coming.
The post ‘I Lost My Jobâand My Dream House’: How This First-Time Home Buyer Bounced Back appeared first on Real Estate News & Insights | realtor.comÂ®.
The real estate market is getting hotter and hotter. The local Boise market is no exception. Hereâs your monthly update on whatâs happening.
Data from Intermountain MLS from December 1, 2020 to December 31, 2020.
According to data from the Intermountain MLS, Boise home sales are dipping monthly but higher year-over-year. At 1,245 units sold, there were 91 fewer monthly sales in December than in November, a 6.8% decrease. This follows seasonal real estate trends. Looking at yearly changes, there were 28 more homes sold in December 2020 than in December 2019. Thatâs an increase of 2.3% from last year.
At $452K, Idahoâs average sale prices continued to rise last year. The average home price in December 2020 was $87K, or 23.7%, higher than in December 2019. The monthly trend follows the yearly move upward. Average home sale prices were up by $3.7K, or .8%, from November 2020.
Days on Market (DOM)
Homes in Boise are going off the market faster than ever. Decemberâs average number of Days on the Market was 18. The previous monthâs average DOM was 17, so the average DOM has stayed steady with a one day, 5.5% increase. The average DOM in December of 2019 was 48. That means a 30-day (a whole month!) decrease year-over-year–a staggering drop of 61.9%. Homebuyers will need to jump to make an offer quickly when they find a home they like.
Analysis from Max Coursey, Homie Head of Idaho Real Estate
âBoise is one of the fastest growing cities in the country. Since COVID-19, this trend has only accelerated. There are roughly 2,000 (79%) fewer houses on the Boise market now than there were last year, and we already had a housing shortage a year ago. I have personally never seen numbers this low in my 18-year career in the Treasure Valley. This lack of homes for sale and tremendous population growth has led to a very strong seller’s market. It’s not unusual to hear of a seller receiving 20 offers on a property.
Because of the fierce competition and lack of inventory, many homes are selling significantly above the asking price. To sweeten the pot further, buyers often waive inspections and appraisals and offer generous seller leasebacks and other concessions. Sales price data typically lags, as it usually takes 30 days for a home to close after listing, and reports come out monthly. I believe Boiseâs median average home prices are actually higher than the numbers stated in the reports.
The good news for buyers is that interest rates are at or near their lowest levels in the last 40 years. This has made home buying more affordable. Buyers can procure a strong hedge against future inflation by securing low interest rates that are fixed for 30 years. If inflation ever comes back, these buyers will be repaying depreciating dollars. In other words, they get more bang for their buck.â
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The post Homieâs Boise, Idaho Housing Market Update December 2020 appeared first on Homie Blog.
Is 2021 the year you’re going to buy a real estate investment property? If you have your sights set on flipping a house for a big profit, you likely know how much work is involved. Sure, popular real estate reality shows like “Flip or Flop” and “Flipping Across America” make fix-and-flip investing look like a feasible endeavor, but you’re wise to the magic of TV, right?
The truth is that flipping a house is rife with challenges, from financial setbacks to breakdowns in communication with your construction crew. Plus, low interest rates mean properties are flying off the market, especially in up-and-coming neighborhoods.
So how can house-flipping newbies compete today? By learning from those with more experience. We spoke to successful home flippers about what they wish they had known when starting out. Hopefully their tips below will help you minimize pain and maximize profits.
1. Stick to your maximum allowable offer
Our experts all agree that buying a fix-and-flip investment should not be an emotional decision. There are certain formulas that every house flipper needs to calculate in order to make a profit.
“Real estate investing is a numbers business, and if the deal doesn’t make sense when you crunch the numbers, you should be able to walk away,â says Hayden Lyon of Cowtown Home Buyers, a real estate investment firm in Fort Worth, TX.
âStick to your maximum allowable offer. Going above your MAO is just asking for trouble,” says Ryne Lambert, co-founder of Sell My House, a real estate investment firm in Green Bay, WI.
The general rule when determining your MAO is not to pay more than 70% of the property’s after-repair value, or ARV, minus repair estimates. For example, if the property’s ARV will be $150,000, you would subtract the costs to flip (including the cost of a loan, repairs, and other fees) and then multiply that number by 70%. That will give you the MAO you should make on the property.
However, Lambert recommends a more exact formula: âWe calculate MAO as ARV minus rehab estimates, selling costs, and minimum gross profit,â he says. âOur detailed formula makes our offer more competitive for sellers while still providing us a nice profit.â
2. Build a buffer into your renovation budget
Anyone whoâs undertaken repairs on their house or an investment property knows things rarely go as planned. Permit delays, bad weather, and unforeseen expenses can all throw a wrench in the worksâand revise your bottom line.
That’s why Lambert advises new investors to build a buffer of up to 25% into their rehab estimate.
3. Donât always go with the cheapest contractor
Finding the right contractor can help keep renovation costs in checkâbut right does not always mean the least expensive.
âWhen I was new, I thought in order to keep as much profit margin in the flip as I could, I needed to choose the lowest contractor bid,â says Jonathan Faccone of Halo Homebuyers, a real estate consultant in Bridgewater Township, NJ.
âYou do have to manage costs prudently, but going with the lowest contractor bids usually end up costing you more in the long run,” says Faccone. “Be cautious about choosing the cheap price and, instead, go with the contractor who offers the best quality and most professional work for your money.â
4. Make sure the contractors have a clear scope of work
You may be able to head off issues with contractorsâincluding plumbers, electricians, and general contractorsâby ensuring they present a clear scope of work for the project, experts advise.
âThe scope of work usually includes working with the city to obtain permits, ordering materials and equipment, and confirming the house plans. This section will save you a lot of time and money on the back end of the project,â says Shawn Breyer of Breyer Home Buyers, a real estate investing firm in Atlanta.
Most importantly, start building relationships with contractors in the areas where you invest, so you know whom you can trust for any project.
5. Provide a quality product
As fast as homes are selling today, the market is filled with many discerning buyers.
âOften, the ultimate buyer of a flip expects the home to compare with existing homesâor even new constructionâin quality and value,â says Greg Kurzner, a Realtor Â® for ERA Atlantic Reality in Alpharetta, GA.
Lyon agrees: âFocus on value-add renovations and amenities. Research shows buyers want a nice kitchen and bathrooms. Of course, everything should be functional and up to code, but you want to create an instant emotional connection for potential buyers.â
6. Get your own finances in order before you start
Several investors pointed out the importance of running your blossoming home-flipping company as a businessâbecause it is. That means tracking all of your expenses so you can make better decisions for greater profits. Be extremely organized, and document every purchase order, utility bill, and closing fee that’s involved in the project.
Itâs also important to have your own financial house in order before you start.
âIf all goes well, youâre about to start making money in large chunks. If you lack proper discipline, youâll wind up worse than when you started,â says Billy Ross, CEO at RFTA Properties, a residential real estate investment company in Winter Park, FL.
7. Expect to put time and money into marketing
James Fitzgibbons of Ledge Real Estate Solutions, in Windermere, FL, says he wishes he had spent more time in his early years learning how to market homes efficiently.
âWe have a wrapped car that we drive around town,â he says. âWeâve driven for dollars, and weâve used direct mail marketing. Today, we advertise online through Google and Facebook. All of these methods have potential if done right.”
The post 7 Insider Secrets About House Flipping To Put You on the Path to Profitability appeared first on Real Estate News & Insights | realtor.comÂ®.
Buying a home is one of the biggest decisions a person can make. Itâs the culmination of years of intense saving and budgeting, months of open houses, and weeks of late-night strategizing and offer planning.
In 2020, buying a home has gotten even harder as the COVID-19 pandemic has swept across the United States. Shopping for real estate during a crisis has always been difficult, but necessary safety measures taken to stop the spread of the virus have had a noticeable impact on how most people shop for homes.
One silver lining of this unfortunate situation is that many people in the real estate industry are finally seeing how technology makes the home buying process easier on both buyers and sellers. At Homie, we understand how technology like ours can help buyers and sellers save time and money. Letâs explore how you can leverage technology and other strategies to save money when you buy a home.
Get Your Finances in Order
If youâre thinking of buying a home, the first thing you should do is take a long, hard look at your finances. The two most important financial factors are the amount you have saved for a down payment and your debt-to-income ratio.
The down payment amount is simple. Most of us grew up thinking that 20% was standard, but that isnât the case anymore. According to a 2017 industry survey, most homeowners only pay 7% down. Letâs all breathe a collective sigh of relief! With the average home value in Idaho rising every year, itâs a huge relief to know that you donât have to save the full 20% down payment.
While youâre saving for the down payment, you also need to think about your debt-to-income ratio (DTI). This value compares what you make each month to what you owe. You can still buy a house if you have debt from student loans or another source, but you need to ensure your DTI is as low as possible, preferably at or below the 28% standard.
Get a Great Deal on a Loan
Once youâve gotten your finances in order, you can start exploring mortgage rates and loans. Most people start with their bank. Thatâs a good start. However, they often make a critical mistake: they donât shop around for a good rate. If you only check at your bank, youâre missing great deals from companies like Homie Loans. Theyâre so confident no one else can beat their locked loan rate that theyâll give you $500 cash if you find a better deal.
Homie Loans doesnât just give you a good rate, the entire application online, so you donât even have to leave the house to get approved.
Explore Federal Loan Programs
In addition to shopping around for a great mortgage rate at private companies and commercial banks, you can save tons of money by checking out your options for federal home buyer programs.
These programs are designed by the government and government agencies to ease the burden of homeownership. Each program is different: some require applicants to fall into certain income thresholds, while others are designed to assist veterans or individuals looking to buy homes in rural areas.
Idaho-Specific Programs for Down Payment and Cost Assistance
In addition to exploring federal home loan programs, many state agencies in Idaho have these programs available to residents. The Department of Housing and Urban Development has state-by-state guides for homeownership assistance programs, and lists many area-specific programs throughout Idaho.
Depending on where you live, you may be able to find specific assistance for homeowners in your region. These programs may be smaller, but since theyâre regional, itâs usually easier to talk to a person on the phone and get practical advice for getting started on your journey to homeownership.
Look Outside Your Area
If youâve started your search and all of the suitable homes in your area are out of your price range, you may want to expand your search. The switch to remote work has affected many of us, making cities and other centers of work less reliably desirable. If youâre currently working remotely or have the opportunity to do so in the future, you may be able to expand your search to include larger homes in less urban areas.
Buying in a more urban location like Boise might also get easier with the rise of remote work. Since Boise is such a student-heavy town, classes and work going virtual have opened up real estate in the city. If youâre looking for a good deal on a smaller urban home or condo, this may be a good time to invest.
Leverage Technology by Buying a Home With Homie
Another great way to save money when youâre buying a home in Idaho is to use a service like Homie. Instead of paying a high percentage of the final costs, youâll pay your Homie agent a low flat fee.
Homie also leverages technology to make the home buying process easier. The Homie family of companies makes everything that much smoother. Weâve brought everything from the mortgage to insurance under one roof, ensuring you donât have to run all over town to get papers signed and contracts approved. It all happens through Homie.
The best part of working with a Homie agent while buying a house is the refund of up to $2,500 we send you at the end of the process. The Homie team is always here to help buyers in Idaho save money. Get in touch with us today to start your journey towards homeownership.
Get more homebuying tips!
4 Ways to Outsmart the Competition When Buying a Home
5 Tips to Help You Afford Your First Home
Common Home Buying Fears and How To Overcome Them
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The post How to Save Money When You Buy a Home in Idaho appeared first on Homie Blog.
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Making the leap from being a renter to becoming a homeowner is a process that includes taking stock of your financial situation and determining whether you’re ready for such a massive responsibility. For most people, the primary question is affordability. Do you have enough cash in the bank to fund a down payment, or do you have a credit score high enough to qualify you for a home loan? But there are other considerations, tooâand plenty of misconceptions and myths that could keep you from making that first step.
Below, our experts weigh in on why some situations that may seem like roadblocks are actually not as daunting as they appear.
1. Buying a home means heavy debt
Some may argue that continuing to rent can spare you from taking on heavy debt. But owning a house offers advantages.
âBuying a home and using a typical loan would be spread out over 20 to 30 years. But if you can make one extra payment a year or make bimonthly payments instead, you can shed up to seven years from that long-term loan,â says Jesse McManus, a real estate agent for Big Block Realty in San Diego, CA.
Plus, as you pay your mortgage, you gain equity in the home and create an asset that can be used when needed, such as paying off debt or even buying a second home.
âCurrently, mortgage interests rates are at their lowest point in history, so … it’s a great time to borrow money,â McManus says.
2. At least a 20% down payment is needed to buy a home
âContrary to popular belief, a 20% down payment is not required to purchase a home,” says Natalie Klinefelter, broker/owner of the Legacy Real Estate Co. in San Diego, CA. “There are several low down payment options available to all types of buyers.â
These are as low as 0% down for Veterans Affairs loans to 5% for conventional loans.
One of the main reasons buyers assume they must put down 20% is that without a 20% down payment, buyers typically face private mortgage insuranceÂ payments that add to the monthly loan payment.
âThe good news is once 20% equity is reached in a home, the buyer can eliminate PMI. This is usually accomplished by refinancing their loan, ultimately lowering their original payment that included PMI,â says Klinefelter. âSelecting the right loan type for a buyerâs needs and the property condition is essential before purchasing a home.â
Watch: 5 Things First-Time Home Buyers Must Know
3. Your credit score needs to be perfect
Having a credit score at or above 660 looks great to mortgage lenders, but if yours is lagging, thereâs still hope.
âCredit score and history play a significant role in a buyerâs ability to obtain a home loan, but it doesn’t mean a buyer needs squeaky-clean credit. There are many loan solutions for buyers who have a lower than the ideal credit score,â says Klinefelter.
She says government-backed loans insured by the Federal Housing AdministrationÂ have lower credit and income requirements than most conventional loans.
âA lower down payment is also a benefit of FHA loans. Lenders often work with home buyers upfront to discuss how to improve their credit to obtain a loan most suitable for their needs and financial situation,â says Klinefelter.
McManus says buyers building credit can also use a home loan to bolster their scores and create a foundation for future borrowing and creditworthiness.
4. Now is a bad time to buy
Buying a home at the right timeâduring a buyer’s market or when interest rates are lowâis considered a smart money move. But don’t let the fear of buying at the “wrong time” stop you from moving forward. If you feel like you’ve found a good deal, experts say there is truly no bad time to buy a home.
âThe famous saying in real estate is ‘I donât have a crystal ball,’ meaning no one can predict exactly where the market will be at a given time. If a buyer stays within their means and has a financial contingency plan in place if the market adjusts over time, it is the right time to buy,â says Klinefelter.
5. Youâll be stuck and canât relocate
Some people may be hesitant to buy because it means staying put in the same location.
âI always advise my clients that they should plan to stay in a newly purchased home for a minimum of three years,” says McManus. “You can ride out most market swings if they happen, and it also gives you a sense of connection to your new space.”
In a healthy market, McManus says homeowners will likely be able to sell the home within a year or two if they need to move, or they can consider renting out the property.
âThere is always a way out of a real estate asset; knowing how and when to exit is the key,â says Klinefelter.
The post 5 Myths About Transitioning From Renter to Homeowner appeared first on Real Estate News & Insights | realtor.comÂ®.
As the Las Vegas fall season comes around, the Las Vegas market keeps on going up. Read below for Homieâs update.
In October, the real estate market saw growth on most fronts including the number of listings, number of units sold, and in terms of median listing price and sales price. However, units available and availability went down year-over-year. With that said, weâre still seeing the market continue to grow month-over-month which might indicate that buyers and sellers are becoming more comfortable in the existing real estate market.
Hereâs the full breakdown:
According to the data from the GLVARÂ® from October 2020, Las Vegas real estate realized a 6.8% increase in the number of single-family units sold compared to 2019.Â
Average new list prices stay strong year over year as October records a 9% increase in new listing prices for single-family units and 8.8% increase for condo/townhouse units.Â
*Data from the GLVARÂ® from October 2020 and October 2019
Property prices continued to grow as this seller market keeps on strong. We saw an 8.8% increase in year-over-year median price for single family units, and also a 14.3% increase in year-over-year median price for condos and townhouses.
*Data from the GLVARÂ® from October 2020 and October 2019
Days on Market (DOM)
We saw the Average Cumulative Days on Market continue to decrease in October 2020, as demand for this market continues to go strong. Now averaging an insanely brief 33 days on market versus 81 Average Cumulative Days on Market in 2019. This is a strong indicator that the real estate market will continue to remain strong.Â
*Data from the GLVARÂ® from October 2020 and October 2019
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The post Homieâs Las Vegas, Nevada Housing Market Update October 2020 appeared first on Homie Blog.