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Your “Starter Home” Might Last Longer than You Think

New homebuyers often tell their agents that they are looking for their “starter home.” Several factors go into this approach. These are typically younger buyers, often without children. They may be looking for a maintenance-free home, like a condo, or they might assume that starter homes are more budget-friendly. There are plenty of good reasons to buy a home with the assumption that it’s only for a few years, but it’s usually wise to consider the fact that it might be for much longer.

As 2020 demonstrated so clearly, things can change without warning. Homebuyers choosing a small condo with the intention of living in it for only a few years might later find themselves trying to carve out space for children due to employment challenges or market changes. The good news is that many times—once you add in association fees, taxes, and other costs—an older home that needs updating could be just as economical as a brand-new condo with all the latest design features.

When buying your first home, it’s important to consider how you would manage if you needed to stay longer than expected. An older home might offer a yard where you could expand, or extra rooms which can become bedrooms. These options can give you flexibility as your lifestyle changes over the years.

If you buy your first home with the future in mind, you can protect yourself from the unexpected income changes, real estate price booms, or any other outside influence. Don’t discount the older fixer-upper simply because you plan to move in a few years—plans change, and giving this some prior thought can help you adjust more painlessly in the future.

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Market Signal to Watch For in Real Estate

The housing market has been crazy over the past few years. While there
have always been periods of ups and downs, buyer’s markets and seller’s
markets, yet the frenetic pace and swings since the start of the pandemic
has had everyone on edge. Now that interest rates have climbed back to
more “normal” levels, those in the market are wondering, “what’s next”?
For anyone interested in buying or selling real estate, it can feel like a
guessing game. Is it the right time to sell? Can I get the best price? Should
I buy a home this spring? Will interest rates go up, or down? It can feel
overwhelming.

Yet, there are signs that can help consumers make the right decision for
themselves and their families. As spring season starts, there are signs that
indicate a strong real estate market. New mortgage applications are rising
again. Indicating buyers are starting to look at their options.

After a long period of rising home mortgage rates, the last few weeks have
seen a small downturn, and buyers are moving to lock in these lower rates.
This is also good news for sellers. With more buyers on in the market, they
can expect better activity and higher home prices.

The key for both buyers and sellers is to keep their expectations
reasonable. Experts do not expect a large rush of either buyers or sellers
flooding the market, so this sprint looks like an opportunity to slow down a
bit, weigh options, and make a solid transaction, without the pressure.

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Basics of a Successful 1031 Exchange

A 1031 Exchange is a potential option for investors who may be interested
in deferring taxes when selling an investment property. By reinvesting the
proceeds into another investment property, investors have the opportunity
to take advantage of real estate market opportunities without having to pay
taxes on their profits immediately. It is important to note, however, that this
strategy comes with strict rules that must be followed carefully in order to
ensure a successful exchange.

In order to be considered for a 1031 Exchange, the properties involved may
need to be investments and not for personal use. Additionally, it is generally
required that the properties be like-kind, although they do not have to be
exactly identical.

There are many different types of investments that could potentially qualify
for a 1031 Exchange. For instance, an investor may choose to exchange a
multi-family apartment complex for a shopping center, or a commercial
office building for a rental property. Ultimately, the specific circumstances of
each investor’s situation will determine whether or not a 1031 Exchange is
the right choice.

The timing of a 1031 Exchange is crucial, and investors should aim to
identify a replacement property within 45 days of selling the original
property, with the exchange being completed within 180 days of the sale.

Working with experienced real estate professionals who have knowledge
and expertise in 1031 Exchange transactions can be helpful, as mistakes
can be costly if the rules are not followed precisely.

While a 1031 Exchange can be a valuable strategy for investors, it is important to keep in mind that
individual circumstances can vary, and it may be wise to seek personalized
tax advice from a Certified Public Accountant (CPA) or tax advisor to
determine if this strategy is suitable for a particular investor.

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Market Outlook

There’s been some concern lately about another housing market crash.
Maybe you’ve read articles linking today’s environment with the Market
Meltdown of 2008. Even with the talk of recession, this real estate market is
very different and that means that most experts do not expect a crash, just
a normal ebb-and-flow slowdown. There are some significant differences in
today’s situation:

Loan Qualifying
Heading into the 2008 crash, loans were very easy to find. Almost anyone
could qualify for a loan with zero down payment and lower FICO scores.
The lending industry was taking huge risks, and this pushed home prices
higher, artificially. With stricter lending policies in place, not only do
borrowers need to qualify properly, but appraisals are based on true value,
avoiding over-inflated prices.

Housing Supply
Another difference is the housing supply. As home prices soared, so did the
number of homes for sale. Currently, there is still a shortage of available
inventory for the buyers still looking for a new home.

Equity Levels
Another huge difference is near record equity for most homeowners. The
strong housing market during the pandemic pushed home values higher
than ever before. Contrast this to the Market Meltdown era of short sales
and foreclosures, and it’s clear that most sellers can still afford to negotiate
and reap a healthy gain in the process.

What this means to you
The bottom line is that if you are a buyer looking to purchase or a seller
ready to move, there is no reason to wait or worry that there is a crash on
the horizon. The frantic pace of the market has slowed, interest rates have
risen, but opportunities are still available in this market.

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Tips for Buying a Home Unseen

It may come as a shock that many people purchase a home before ever setting foot inside. These buyers may be moving to a new country or city far away, or they may not have the time or resources to visit for a home search before the big move. Not everyone has the option (or the desire) to rent for a few months while they find a permanent home in their new location. Most homebuyers would prefer to purchase a house before they arrive, so they can move their belongings and quickly get settled into their home.

There are a few things you can do to make the process more manageable if you’ve considered buying a house unseen. The first step is to find a realtor in the area that you can trust. Let them know your circumstances and that you’ll need them to help vet potential properties for you. They’ll be able to provide you with a link to a virtual tour if it’s offered, or schedule a meeting where they can walk you through the house via FaceTime or another video-based app. This will help you feel like you’re there in person and give you the chance to ask your realtor about any potential issues that may pose a problem in the future. You’ll also be able to see any features that you love, which will help you make your final decision.

Another great option is to have a family member or friend who lives in the area stop by a few open houses or take a tour with your realtor of any homes that you’re interested in. It’s a great idea to involve someone that you know and trust, to help spot any red flags or deal-breakers you should be made aware of before signing on the dotted line.

When the time comes for you to move in, be prepared for the unexpected. There will always be a few things that you didn’t expect when you’ve purchased a home unseen. However, make the best out of the situation and stay positive. It really is possible to find your dream home, even if you can’t see it before closing.

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Rising Interest Rates – Should I Lock in the Mortgage Rate?

One of the most important financial considerations of buying a new home is
the interest rate paid on the mortgage. Over time, a higher interest rate can
add thousands of dollars to the true cost of buying the home. When interest
rates are low or steady buyers have greater confidence that they will get a
favorable rate when they go to secure the loan, but in our current
environment of rising interest rates, many lenders are suggesting a rate
lock at the time of pre-approval.

What is a Mortgage Rate Lock?

A rate lock freezes the interest rate on a mortgage for a period of time
before the close of the loan. Typically lasting for 30-60 days, the lender
guarantees the rate will not change during this period for a fee that is paid
when you agree to the loan terms.
A mortgage lock protects the borrower from rising interest rates while the
loan is processed and approved.

When should you lock in a Mortgage Rate?

Lenders will offer to lock in the rate at the time of loan approval. With
escrow periods of 30-60 days, the lock assures the buyer that their rate will
not increase during the time it takes to complete the loan process.
In a period of rising interest rates, as we see today, locking the rate may be
a smart idea. The borrower will pay a higher fee for the lock, as the lender
is also taking a risk, but it could be worth thousands of saved dollars over
the life of the loan. Even a small increase in the interest rate can have a
huge financial impact.

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Great Time to Sell

Sellers all over the country are confused and worried they may have
missed the best time to sell their home. Prices are dropping, mortgage
rates are rising, and the pace has slowed but the impact on any individual
seller is unclear.

While the days of any home selling for any price are behind us, the current
housing market is still strong. The biggest hurdle for sellers is to avoid the
feeling that they missed their chance to get top dollar. Yet, many times the
seller intends to buy again also; so while they may sell their home a little
lower, they will also buy the new home a little lower as well.

ABCs of Success

The ABCs to a successful sale are not complicated. They are the basics of
home selling, but if followed, it will ensure a timely and profitable home
sale.

A) Appreciation

When sellers hear this term, they normally think of the value of the home.

During a challenging market, this kind of appreciation is to appreciate every buyer who wants to come by.
Appreciate  every offer you receive; take them seriously.

B) Give in, Don’t Dig in

Along with appreciation for offers, view all the terms in the light of where you can give in or compromise.

Be easy to work with and be reasonable.

C) Stop Comparing the House Next Door

Try not to be discouraged or angry if other homes are selling faster. You don’t really know the reason;
try to stay patient.

Buyers are excited about the slower market. This means that buyers are
still buying. Sellers who get back to the basic ABCs can be successful and
achieve their selling goals

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2023 Market Predictions

The real estate industry is in for a wild ride over the next year, according to the
Realtor.com’s 2023 Housing Market Predictions Report. This forecast predicts an
overall positive outlook with ongoing growth, but it also acknowledges that several
regional markets are more volatile than others and may not experience consistent
gains.

The report notes that there are some headwinds to sustained growth, particularly in
regions affected by the pandemic and its economic fallout. Tightening credit conditions,
an already low inventory of homes for sale, and historically high lumber costs may all
put pressure on affordability and slow the housing market’s progress.

Good News

The good news is that many markets have been resilient and there are signs of
optimism as the economy recovers. Realtor.com expects that home prices and sales
activity will continue to rise in most markets, albeit at a slower pace. Affordability is
projected to remain a challenge for some buyers, however, as potential buyers may
have difficulty securing financing.

The report also predicts an increase in rental activity over the next year as renters take
advantage of more affordable housing options and the flexibility that comes with not
having to commit to a longer-term mortgage agreement. This could spell good news for
investors looking to capitalize on these shifting trends.

Overall, the 2023 National Housing Forecast predicts a continued rise in housing prices,
though certain regional markets may be more volatile than others. It also forecasts an
increase in rental activity as renters take advantage of the flexibility that comes with
renting. All of this suggests a vibrant and dynamic real estate market going into 2023,
so it’s important to stay informed and up-to-date with the latest trends.

Decision Making

No matter where you are in your real estate journey, it’s important to stay abreast of the
fluctuating market conditions. By doing so, you can ensure that you’re making informed
decisions and leveraging the best opportunities available to you. With a comprehensive
understanding of the current market conditions and the changing trends, you can be
sure that you’re making the most of your investments and positioning yourself for
success.

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Considering a Distressed Property?

Homebuyers are always looking for that special bargain. The old saying, “buy the worst home on the best street,” insinuates that buying a “fixer-upper” home can be a great investment. While it’s always important to get the most for your money, what about distressed properties? Are they really the best value?

Before you decide to buy, it’s important to understand what is considered a distressed property. While a distressed home might need significant repairs, the term “distressed” is actually referring to the financial situation of the seller (foreclosures and short sales) rather than the condition of the home.

The home itself might also have material issues. Everything from deferred maintenance to major system problems may be present, and a distressed homeowner will not be in a position to make repairs. Selling a home “as is” does not, however, eliminate their responsibility for disclosures and these must be carefully reviewed.

There are advantages to buying a distressed property. Often these homes are listed lower than market value to encourage a quick sale. If the home is considered a fixer-upper, the homebuyer might save thousands of dollars compared to other homes in the area. If you are handy or willing to tackle this kind of project, then buying a distressed property might be a great solution for you; just ensure you get a comprehensive home inspection so you are fully aware of the condition of the home.

If you find that the projects are beyond your skills, or the cost of the repairs would outweigh the savings, consider buying a more expensive home that is move-in ready instead. You’ll want to make sure you’re not getting in over your head…or your budget. In this way, the property will be the bargain you hoped it would be.

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Motivated Seller – Make Me an Offer!

Even in a strong seller’s market, a homebuyer might hear the words, “Make me an offer.” For a nicely appointed home that is well priced, this can be a surprise. Being invited to write an offer can often give the buyer pause. Most buyers will immediately wonder if something is wrong with the home. Did they miss something that is causing the home to take longer to sell?

While it could be that something is wrong with the home, it most likely just demonstrates the seller’s readiness to move. It could be that they have found another home or are motivated by a relocation, but it might also be that they are tired of keeping the home show-ready and are just anxious to be done with it.

In this situation, it’s important for the homebuyer to listen to their agent. A buyer who hears, “Make me an offer,” often assumes this is an invitation to write a low-ball offer. The assumption is that the seller will take any offer just to get the home sold. The buyer thinks they’ve probably got this one in the bag!

The buyer’s agent will be able to add context to the situation and provide reasonable suggestions for price and terms. Even when invited to write an offer, home sellers will not discount their home if there is no need to do so, and sending an offer below market value might insult the seller and prevent a counter-offer or acceptance—causing the buyer to miss out on a desirable home.

Buying and selling real estate is emotional on both sides. Serious buyers and sellers are both eager to find the right deal, but foolish bargains are rare. When hearing, “Make me an offer,” the best move is to consider the home and then rely on the advice of the buyer’s agent about the next steps.