Your Home: What costs are involved in buying a home?

February 20th, 2017

What costs are involved in buying a home? It’s a question we get all the time.

Let’s answer this question in chronological order. A buyer’s first out of pocket expense will be an earnest money deposit (or EMD). This represents some “skin in the game” from the buyer to the seller. Usually we are talking 0.5 percent to 1 percent of the sales price. The check is not given directly to the seller. It is either held by the seller’s title company or the real estate brokerage representing the seller. The EMD will be credited back to the buyer at closing and applied to closing costs and pre-paid expenses that are due. We will get to those in a minute.

Second, a buyer will need to pay for a series of home inspections, which can cost up to $1,000. For $1,000, a buyer will get to know their future home intimately. Inspections may include a whole house inspection, a termite inspection, a chimney inspection, a radon test — and, last but not least — a waste line inspection. In our experience, buyers who see inspections as an investment rather than an expense always get more value out of them. Our philosophy is that the more informed buyers are, the more comfortable they are with their purchase.

Once inspections are completed and both buyer and seller have agreed on the list of repair items, we arrive at step three: the appraisal. To arrange financing for a purchase, the lender will require an appraisal to make sure that the house is worth what a buyer is willing to pay for it. The buyer pays for the appraisal at the time that it is ordered (typically using a credit card). Most appraisals run about $400.

We are getting towards the end — just two steps to go.

Next, let’s talk about down payments. I know this feels like it should be at the beginning, but a buyer’s down payment is not collected until closing. Some of you may have heard about 100 percent financing options that are available. Sounds tempting, right? Well, those days are pretty much gone with two exceptions: VA loans (for those who have served in active military duty) and USDA loans (for rural purchases). That said, there are still great financing options available. The two most popular are FHA loans (which require a 3.5 percent minimum down payment) and Conventional loans (which require a 5 percent minimum down payment). Consult a competent loan officer on which product is best for your financial situation.

And, finally, a buyer will have closing costs and pre-paid expenses (taxes and insurance) due at closing. As an example, a buyer purchasing a $200,000 home would pay $4,000 to $4,500 in closing costs and pre-paid expenses. In our market, however, it is not atypical for a seller to cover some or even all of a buyer’s closing costs depending on the price range.

Curious to find out how much your home is worth? Click here

Your Home: Why hire a buyer agent?

February 13th, 2017

Honestly, the title of this column could be, “Why not hire a buyer agent?”

That’s because the benefits of hiring a buyer agent are tremendous. The gift of buyer agency has only existed since the early 1990s. Until that point, all buyers worked through the listing agent when purchasing a home. The challenge with that scenario is that the listing agent represents and works for the seller exclusively. Therefore, they were only assisting the buyer, not representing them. This would be like hiring your spouses’s lawyer to represent you in your divorce. Doesn’t make much sense does it?

Yet I see buyers in today’s market doing exactly that: reaching out to the listing agent directly to purchase a home rather than obtaining their own representation. This rogue method could cost you tremendously in the long run. How will you know what a fair price might be for the home? What inspections are most common in our market and who can you trust as an inspector? What can I ask the seller to repair from inspections? I could go on and on.

Here are some common myths about a buyer agent:

The buyer pays the agent’s commission. False. In our market, the seller is contractually obligated to the listing agent to pay a listing commission. The listing commission is made up of the buyer agent commission and the listing agent commission. It is not always a 50/50 split, but in most cases it is. Therefore, the seller actually pays the buyer agent commission.

If I don’t have a buyer agent, I can get a better deal. False. Oftentimes, buyers might think that if they don’t have a buyer agent they can get a better price on the home because the seller is not paying a buyer agent commission. In truth, the listing commission is a prearranged agreement between the seller and the listing agent and is not negotiable by the buyer. So, in essence, an unrepresented buyer is simply giving up his or her right to representation while at the same time paying the same price for a home.

I don’t have to sign a buyer agency agreement until I find a home. False. For a Realtor to represent you and coach you through the home-buying process, he or she must have a signed buyer agency agreement. Not only does this document allow for the Realtor to provide you with the representation you seek, it also lines out the buyer’s responsibilities to the agent. For example, the buyer should not call other agents to see properties or provide personal/financial information to any other agent. Even if a buyer thinks that she is saving her agent’s time, the aforementioned scenarios can seriously affect your leverage as a buyer. In essence, a signed buyer agency agreement clearly defines what each party can expect from the other and shows loyalty to one another.

All buyer agents are the same. False. This could not be further from the truth. It astounds me that sellers often interview more than one listing agent for the job, but buyers will often hire the first nice Realtor that they meet at an open house. I am not saying that open houses aren’t a great way to meet agents, but it is only the first step. A buyer should interview all candidates to see about their track record in real estate. How many clients have they assisted in their career? How many homes have they sold in your desired area? Are they a full-time Realtor? Do they perform a detailed buyer consultation to ensure that they understand your goals and must-haves?

To me, part of the value of great buyer agents is that they are in the market every day. They know what a great value looks like and they are confident enough to tell you when it is time to make an offer on a home. A great buyer agent should also be a hunter. They don’t wait for the market to bring them your home, they proactively network with other Realtors, their clients, and their social network to see who might be thinking of selling. This is crucial in today’s low inventory market.

In most cases, buyers should be prepared to compete with other buyers when their home comes on the market. Therefore, you need a buyer agent who will alert you, not the other way around, when a great home hits the market. And then you need a bulldog who can fight to get you the home and negotiate on your behalf.

Curious to find out how much your home is worth? Click here

Your Home: Can Zillow or Trulia really tell me how much my home is worth?

February 6th, 2017

Question: How do I know how much my home is worth? Can Zillow, Trulia, or the county tax assessment give me an idea of value?

I have answered this question numerous times over the last few weeks. As the real estate market is gearing up, it seems that sellers fear under-pricing their home and buyers don’t want to overpay. It is like a dance between the two sides, with both parties focused on the same thing: sales price. Sellers and buyers alike seek out as much information as possible when they begin the process of either selling or purchasing a home. And all of them start their research online.

Now for those two dirty “six letter words”: Trulia and Zillow. As a Realtor, I love the syndication (online exposure) that our listings receive on websites such as Trulia and Zillow. The more exposure our sellers receive the better in my book. However, the valuation models on Trulia and the “Zestimates” on Zillow are HIGHLY inaccurate. Kansas and Missouri operate as “closed record” states, meaning data on sold properties is not shared with the open market. That data is only shared with the Realtor community and tax entities. In some parts of the country, Trulia and Zillow are highly accurate — but those are areas with “open record” laws. In closed record states, Trulia and Zillow use tax appraisals for valuation. Again, in our market, the tax appraisals are inaccurate. Some are higher than market value, some are lower.

Think about it this way: When was the last time a Johnson County or Jackson County tax official was actually in your home? NEVER. The counties do their best to keep up with the market, but the market is a moving target.

When you think of Trulia and Zillow in our market, I want you to think of them like Web MD. If you are a bit of a hypochondriac, like me, or if you have kids then you have more than likely “Googled” a symptom or two. And like Trulia or Zillow, you can get some good information from Web MD. But in most cases, even the slightest of symptoms, can quickly lead to a terminal illness on Web MD because they are covering all of their bases and working with the limited information that you provided them. In this comparison, Zillow and Trulia are doing the same. They are working with very limited information and although some of the info, like neighborhood stats, can be useful, the overall diagnosis (fair market value, or Zestimate, or whatever goofy name they choose) can easily lead to an extreme outcome. And the extreme outcome could be grossly mispricing your home.

Regardless of whether we are in a seller’s market or a buyer’s market, the same real estate rules still (and always) apply. A home is only worth what a buyer will pay for it and what a seller is willing to sell it for. After that, if a mortgage is being obtained, the buyer’s lender will then appraise the home to ensure that it is worth the purchase price. In this appraisal, the appraiser will use comparable closed sales (from the last six months) and pending sales in the immediate area to establish a fair market value for the home. That value must be equal to or greater than the sales price. These closed and pending sales are the most accurate system for establishing “fair market value.”

In a lot of ways, the real estate market is like the stock market. Just as a stock can be worth a certain value one day and a different value the next, a home’s value can do the same. Sold comparables around your home can bring the value up in an inclining market, and distressed properties (short sales and foreclosures) can bring it down. It takes a full-time professional Realtor to confidently interpret market value. You just can’t beat the first-hand experience of being in and out of homes all day.

Curious to find out how much your home is worth? Click here

Your Home: A new year is here. How is the market?

January 30th, 2017

“How is the market?” and “How’s business?” are usually the second or third sentence in most of my conversations these days.

And I love it! I love the fact that the real estate business touches everyone that I come into contact with on a daily basis. Even people who do not own a home are interested in the real estate market. And rightly so. They may one day own a home, and if not, their parents probably still do. Or perhaps their significant other. And the list goes on and on. One way or another, the real estate market is a part of their life.

This year, after a polarizing presidential election, the question has carried a little more weight and for some because of the uncertainty. And although most of my research has shown that presidential elections do not have a significant impact on the real estate market, I would bet that when the numbers come out, this year will be different. The silence was almost deafening on the days before and after the election. Buyer sentiment is a big factor in our business and during that period buyers were hesitant, to say the least.

But now that the calendar has flipped to a new year, how is the market performing?

Let’s get to the answer. Overall the answer is that the market is good. Yet the true answer really does depend on your perspective. Are you a potential buyer or a potential seller? Here are a few observations to keep in mind:

Buyers: The biggest story for potential buyers out there is that interest rates are up and have jumped up significantly post-election. Home values appear to be holding steady for the moment. Depending upon the level of demand in the coming weeks, we could see a slight increase in home values heading into the spring months. If values rise and rates continue to go up, buyers could find themselves priced out of the market. The Fed, according to their December minutes, is still expecting a gradual normalization of rates as they look ahead to the coming months. But even a quarter or half point increase in a buyer’s interest rate will have an effect on overall affordability. Therefore, if a home purchase is on the horizon for 2017, I would strongly suggest that you speak with a mortgage lender at your first opportunity. Mike Miles of Fountain Mortgage, who also happens to be a columnist here on the Post, would be an excellent resource.

The other benefit for potential buyers currently is that in most parts of town we have more housing inventory than we have seen in years. Don’t get me wrong, overall inventory levels are still pretty low. But compared to the scarcity of housing that we have seen over the last couple of years, today’s inventory levels present a buyer with more options. Keep in mind that each price range performs independently of another, therefore it is important to know the level of demand in the price range that you will be purchasing. But overall more housing options for buyers is a good thing.

Sellers: Potential home sellers out there should be on alert. And I am not trying to be dramatic. The overall housing market is shifting and based on today’s numbers, the strong seller’s market that we have enjoyed for three years is on its last leg. As I said earlier we are still in a seller’s market at this time, but compared to what we have experienced in the last couple of years, we are now shifting towards a more balanced market. This shift towards a balanced market means more competition for sellers out there. More competition means a higher standard of condition and potentially a more competitive price. Therefore, sellers could find themselves investing more money into updating their current home (which they intend to sell) while at the same time selling it for a lower price.

Supply and demand will dictate how the market trends in the coming months. And as with most things these days, it seems that the market shifts and changes much more quickly than it did in the past. If you have additional questions about the current market conditions, please email me directly.

Curious to find out how much your home is worth? Click here

Your Home: The most common (and avoidable) home inspection dings

January 23rd, 2017

After 13 years in the wonderful business of real estate sales, I have seen my fair share of inspection reports. I remember early in my career as a Realtor feeling the shudder of fear when I received the inspection results on one of my earlier listings. Inspections can make or break a real estate sale — especially when you specialize in the resale of homes built in the mid-1950s.

Fast forward to today, and I welcome inspections on our listings. One of the reasons is that we perform pre-inspections on all of our listings and have done so for about two years now. Over the years, I have come to realize that one of my jobs as a listing specialist is set the stage for the entire selling process from day one. Part of setting the stage and clear expectations is to help the seller see their home as the buyer will see it. For most of my clients, the sale of their home is very personal for them. And in some cases they may wear “rose colored glasses” when they look at their current home. Said glasses prevent them from seeing some of the deficiencies that need to be addressed.

A pre-inspection is one of the first steps toward separating yourself emotionally from your current home which then allows a seller to see the repairs that need to be done to prepare for the open market. When selling a home I have found that the best offense is a good defense.

This week, I thought it might be useful to discuss some of the observations that come up consistently on most home inspections. I reached out to my good friend and trusted partner, Mike Faulconer with The Home Team. Our team has worked with Mike and his team for years. Many of our buyers utilize The Home Team for their whole house inspection when they purchase a home. In addition, Mike’s team performs all of our pre-inspections on our listings. Last year alone, The Home Team performed more than sixty pre-inspections for us so they are quite proficient at what they do.

I asked Mike to share with me some of the “usual suspects” from our pre-inspections and here they are:

Grading and drainage. Good ol’ grading and drainage. We see this come up on almost every inspection. And it does not matter how old the home is for it to be an issue. Properly maintained grading (slope) of the soil away from a home’s foundation and downspout extenders are easy to address and easy to overlook. Yet these two water maintenance items can make or break the life and stability of a home’s foundation. A good rule of thumb is to have an inch of elevation decline every foot for at least six feet or more from the foundation walls. And then make sure that your downspouts aren’t just dumping right next to your home. Even if you have splash blocks receiving the water, get the water far away from your home.

Wood decay on exterior trim. Depending upon your home’s exposure to the sun and how much shade that you have, this one can be a small or big issue. And in most cases, a homeowner does not know the extent of the decay until an inspection is completed. In short, simply call someone who specializes in wood rot and have them evaluate your home prior to selling. Wood rot is not only unattractive, it can allow water to penetrate your exterior which can cause much more serious problems so it is better to catch it early.

Minor electrical repairs. These are pretty easy to address and do not always require an electrician. In most cases these repairs could be installing a cover plate on a junction box or an electrical outlet. Some homeowners and most handymen would be completely comfortable with this repair. Other common electrical issues are electrical splices that are not in a junction box or wires that should be run through conduit for safety reasons. Another common issue is the absence of GFCI outlets, you know the ones with the little buttons in the middle of them. These are required within 6 feet of any water source and are also suggested for any exterior outlet. When in doubt, and for safety and liability reasons, it is always smart to consult a licensed electrician.

Insufficient or missing attic insulation. This one is self explanatory and most prevalent in older homes. Lack of insulation is not a safety issue, but can be a hot button for certain buyers.

Chimney issues. Oh boy! This one can be a big one. If you have a chimney and have not had it inspected recently, I would strongly suggest that you do so. I have written about chimney safety before, therefore I won’t spend too much time on this topic. At a minimum, a seller should have a visual inspection of their chimney completed by an inspector or a licensed chimney sweep to ensure  water is not penetrating the exterior of the chimney anywhere. This can happen in many cases without the seller knowing and can then cause other problems. Depending upon how a seller uses the chimney and fireplace, it would be a good idea to consult a Realtor on the potential issues that could come up when selling a home.

Ok, so I have to throw one last item in from my own list. And it makes me laugh almost every time that it comes up: loose toilets. Thats right. Loose toilets. Either the toilet tank is loosely mounted to the base, or the base is loosely mounted to the floor. It is an easy repair and for some reason most sellers never realize that their toilet has a little wobble.

Your Home: Following up on 2016 predictions

January 2nd, 2017

Well, here we are at the end of another banner post-recession year in real estate. It has been a wild ride this year with historically low inventory coupled with unbridled buyer demand. Home values, in most areas, are currently higher than the peak (2006) that was reached prior to the recession.

2016 has been so fast-paced that it has been challenging to predict where things might be headed. Therefore, I thought it would be fun to re-visit some of our columns from earlier this year to see how we did.

Let’s begin with our column from March 4, 2016 entitled “Are today’s home values sustainable?” In it, we discussed the fact that home appreciation in Kansas City for 2015 was 6.1 percent. A sustainable level of appreciation is considered to be between 4 and 6 percent annually. Appreciation higher than that is considered unsustainable and will require a market correction to prevent buyers from being priced out of the market.

So where are values as of today? In the Shawnee Mission School District, median home prices are up 6.9 percent as of the end of November when compared to values at the end of November 2015. Now let’s look at the Blue Valley School District where median home prices are up 13.9 percent during that same time period. Both markets are clearly out of the sustainable range, though Blue Valley has certainly seen much more rapid appreciation.

But are the values sustainable? That depends on what happens to inventory after the first of the year. Currently the supply of homes for sale has nearly doubled since its lowest point this year in March in the BVSD. Much of that increase is being caused by the rapid increase in home prices. If inventory stays up, then inevitably home prices will have to come down in order for a seller to compete. The SMSD has seen almost exactly the same trend. Inventory has nearly doubled there as well. Therefore, we will know soon if today’s prices have a limited shelf life.

Now, let’s jump to May 20, 2016, when our headline was “60 percent chance of rate hike in June or July.” Wah, wah! That one did not come true. The Fed did not increase the Federal Funds rate in June or July. Instead they waited until about two weeks ago. The inarguable strengthening of the economy gave the Fed all the justification that they needed to increase the benchmark rate for only the second time in a decade. Interestingly, the market seemed to have already built in the rate increase because post-election rates have been rising steadily. I cannot tell you how thrilled I am to finally not be crying wolf about interest rates. No one every expected rates to stay so low for so long. But those days are now gone. Now our job is to wait and see if the Fed follows the current plan of three more increases in 2017. And the question becomes, how much of an increase? With inflation on the horizon, unemployment at 4.6 percent, and 73 months of consecutive job growth, the sky is the limit!

On May 6, 2016 I wrote, “Shift is here?” I know, I know. I have been talking about a shift a lot lately. And that is because it is a big deal because it affects both buyers and sellers. I can talk numbers all day long, and the numbers do support that we are seeing signs of a market shift or correction from such a strong seller’s market to more of a balanced market. But much of my talk of the shift is being driven by buyer sentiment. For the first time post-recession, we are seeing buyers making low ball offers. We are seeing buyers walk away from a purchase if they don’t get what they want when it comes to inspection related repairs. We are seeing feedback from showings that seem very “nit picky.” These are the first signs of a market shift. I say that because buyers are saying enough is enough. They are tired of paying top market value for a home and having no leverage during the process as well. If this sentiment continues, then we will see a correction in the market. And as rates continue to go up, buyers will question the price they are paying for a home because the cost to borrow is higher.

I have never claimed to have a real estate crystal ball. However, I do my best to keep our readers ahead of the market trends and will continue to do so in the new year. I trust that our column brings value to you, and please know that we welcome your thoughts and suggestions as to how we can bring even more value to our readers.

Happy New Year to you and yours and as always, thank you for reading our column and for supporting the Shawnee Mission Post.

Your Home: Tips on the holiday real estate market

December 28th, 2016

Even though the temps should approach the 50s this weekend, it may be a great time to tap into the holiday market. Yes, there is a holiday market in the real estate world. It may not have the frenzied feel of Black Friday, but it can still be a great time to get a good value.

Right now in our area, the inventory levels are still showing a seller’s market. However, we have seen the numbers of contracts received on homes decline and those inventory numbers are up from just a few short months ago. On our own listings, we are seeing homes that would have sold day one with multiple offers in the summer now taking a week or so to sell. They are still selling for top dollar, however, buyers are now enjoying a more calm home buying environment where they can make a calculated decision instead of a rushed one.

So maybe it is time to call your favorite Realtor, run through the Starbucks line and hit the streets. Home prices have been on the rise for the last three years and affordability is slipping away, especially with interest rates going up.

Clearly the message to potential home buyers is that you should add a home to your holiday list of things to get. Don’t mentally check out until spring. You don’t want to search for a home when you have a ton of competition (other buyers). You need to buy now. Additionally, and most importantly, interest rates will be higher next year. And not at the end of next year, at the beginning. I know, I know…I don’t have a real estate crystal ball. But the feds position is clearly to raise the benchmark federal funds rate three more times in 2017.

Sellers out there, if you were going to buy a lottery ticket to win $1 million, would you rather buy a ticket if your odds were one in a million or one in fifty? Of course, one in fifty right? Isn’t selling your home in the winter kind of like the one in fifty lottery ticket? As a seller today, you not only get to compete in the market with little competition, you also get to benefit from the fact that typically people don’t go look at houses when it is 20 degrees outside just for fun. They are out because they need or desire to buy a home. You see, mother nature filters out the looky loos for you in the winter. Therefore, if you are going to keep your home show ready for each and every buyer, wouldn’t you rather each and every buyer be highly motivated to buy? Of course you would.

I thought it might be valuable to offer some tips out there for you sellers during the holiday season. Here you go:

  • 1. Make sure that your photos in MLS are shot on a sunny day. You want to be sure to show the full potential and beauty of the home and most of the other homes in MLS will look grey and gloomy. This will help you stand out on line.
  • 2. Create a virtual video tour of the home. In areas where the weather can get be especially stormy, offering potential buyers the opportunity to first see the home from the comfort of their own computer is helpful.
  • 3. Be sure to keep driveways, walkways, and sidewalks clean during inclimate weather. You don’t want any potential buyers to slip and fall on their way inside the home. And you want them to feel welcomed.
  • 4. Keep the house warm. A warmer inside temperature will keep potential buyers inside longer and allow themselves to feel more at home.
  • 5. Keep window curtains and blinds open to let in as much light as possible.
  • 6. Create an atmosphere. Put on some holiday music. Leave out some sweet treats or even some warm apple cider. Pull out all the stops. Remember that a home purchase is very emotional for most people. Bring back some great holiday feelings for your potential buyer by creating a holiday setting and hopefully next holiday season they will be celebrating in your current home and you will be celebrating in your new home.

Your Home: How today’s higher rates will affect you

December 19th, 2016

Well, today’s historically low interest rates are going, going, almost gone. Post election, interest rates had already jumped up a bit. Add to that Wednesday’s announcement from the Fed that they were raising their benchmark (federal funds) rate for only the second time in a decade and the combination equals higher interest rates for a borrower. The last time the fed increased the federal funds rate was December of last year.

Interest rates rising is not all bad, right? If you have money in a savings account you may actually be able to make a little money on it now. Also, the Fed has justified their recent move to raise the benchmark rate by acknowledging the strength of the overall US economy. Unemployment is at 4.6 percent as of the end of November which is the lowest unemployment that we have seen since 2007. Although we are not seeing the 2 percent inflation target that the Fed has set yet, indications are that the economy is headed in that direction. So overall this is good news for America.

The biggest news from Wednesday’s announcement was the change in the Fed’s plan to raise rates three times in 2017 versus the previous plan of only two rate increases. This may cause rates to increase at a slightly higher rate than was first anticipated by the markets.

So how will the higher rates affect you? That depends. Are you thinking of selling a home, or buying a home, or both?

Let’s start with selling.

Higher rates=lower home values. Please know that I have over-simplified this statement for dramatic purposes, however, there is a lot of truth to this statement as well. As the cost of borrowing money goes up, historically, values can adjust down to offset the additional cost to the buyer. Just how strongly values respond to higher interest rates is also dependent upon supply and demand at the time. If you have been following my recent columns, you then know inventory has been on the rise since the summer months. Therefore, I will be watching median sales prices very closely to see how they react in the coming days to higher interest rates

Higher rates=smaller buyer pool. Not only do higher interest rates reduce a potential home buyer’s budget, but in some cases the higher costs of borrowing can take someone out of the market altogether. It is all about dollars and cents. As rates continue to rise, some buyers will be forced out of the market to purchase a home. This trend tends to start at the first-time home buyer price range and then has a domino effect moving up from starter home, to second home, and so on. If starter homes have a challenge selling, then those sellers cannot by the move up home. Then that move-up homeowner cannot purchase their next home. Well, you get the picture.

Now to the buyers out there.

Higher rates=less home for the same price. That’s right. The rule of thumb is that for every 1 percent that your mortgage interest rate increases, you must purchase a home for 10 percent less in price to keep the same monthly mortgage payment. So if you are currently looking at $350,000 homes with an interest rate of 4 percent to stay within your budget and rates go up to 5 percent, you would then need to look at no more than a $315,000 home to keep your payment around the same amount. That $35,000 drop in purchase price can make a big difference in the quality, size, or location of the home that you would like to purchase.

Higher rates=less affordability. Housing affordability has been at an all-time high for years now due to historically low interest rates. To put that number in perspective, historically it has taken 21.6 percent of an American family’s household income to pay their home mortgage each month. In 2014, that number was 15.2 percent and then it dropped slightly to 15 percent in 2015. Essentially, low interest rates have given the American family an additional 6 percent of their household income to invest elsewhere. As rates go up, that luxury will slowly slip away.

Overall, the Fed’s move this week is an endorsement of the American economy. And rising rates are a natural part of our economic cycle. I spoke the the Post’s own Mike Miles with Fountain Mortgage this week and he felt that the market will settle down a bit in the coming weeks. However, he did say that the days of a 30 year mortgage at less than a 4 percent interest rate are a thing of the past. At lease for the foreseeable future.

If you have real estate plans for the new year, call or email us today to discuss how there recent changes in the market may affect your timeline. If a purchase is on the horizon for 2017, I would certainly recommend that you reach out to a trusted lender, such as Mike Miles from Fountain Mortgage, sooner rather than later.

Your Home: Timing the spring market

December 12th, 2016

As the cold weather sets in and Thanksgiving has passed, potential home sellers seem to be postponing their upcoming move until 2017. And in most cases, they are planning on spring when the market is hot and the weather begins to warm. You know, April or May when things begin to bloom, and buyers hit the streets.

That is the best time to sell a home, right?


The best time to sell a home is when you have the least amount of competition. The month on the calendar has nothing to do with it. Yes, our market follows a seasonal cycle. However, the Spring market in 2011 was awful. Even with the flowers blooming and birds singing, sellers were begging to get their homes sold. The strongest market for a seller is all about supply and demand. A seller with the goal of netting the highest sales price that the market will bear should sell when supply (the number of homes for sale) is at its lowest point compared to the current demand.

In 2016, that market was in March. And I would suggest that it really kicked in to high gear as early as February, but for today’s purposes, the fact remains that March was when the highest percentage of active homes for sale were going under contract in all of 2016. Timing this sweet spot in the market, which is not easy, can have a dramatic effect on the ultimate sales price of a home. For example, in February 2016, 41.8 percent of the active homes (in the Shawnee Mission School District) were going under contract. By March, that number increased by 18.7 percent (from February 1) to 49.6 percent of the homes receiving and accepting offers. Higher demand+lower supply= higher sales prices.

So let’s pretend for a moment that one of your goals for 2017 is to sell your current home and you would like to net as much equity from the sale as possible. Using March 1 as a target date for going under contract, let’s back into the calendar and establish when the selling process should begin for you and your family.

If a seller intends to be under contract by March 1, 2017, then they should consider the following:

Days on market. Currently Taylor-Made Team listings are on the market an average of eight days before receiving an offer. Conservatively, let’s use 14 days to be safe. If your home will take 14 days to receive and accept an offer, then that means you would need to be on the market no later than February 15, 2017, to be under contract by March 1, 2017.

Conditioning and staging. We have found that the average seller takes two weeks to prepare their home for sale. Prior to going live on the market, our sellers complete a staging consultation and a pre-inspection to ensure a quick sale for top dollar. The length of the staging report and the findings from the pre-inspection may dictate if the prep time is two weeks or a month. Either way, our goal is to give our sellers as much prep time as possible to still hit their target “go live” date in MLS. Therefore, if your home takes the average two weeks to condition, then that means that you would need to begin the conditioning and staging no later than February 1, 2017.

In a nutshell, if your goal is to sell for top dollar in 2017, then we should meet between now and the end of January to put together a plan to get you the top dollar that you deserve. My experience has taught me that most sellers would like as much prep time as possible, so I am currently meeting with sellers this month to give them a jump start on their new year’s home prep.

If you would like meet in the near future to discuss your plans for a move in 2017, feel free to email or call me directly at 913-825-7540.

Your Home: Median home prices up in November

December 6th, 2016

Median home prices have seen a slow and steady decline since the peak value point of $212,000 at the end of July. That is until November. As of the end of October, the median home price for the Shawnee Mission area was at $197,000. November’s numbers, fresh off the presses, show that although demand is down, median home prices have seen an uptick. The latest numbers reveal that the current median home price as of the end of November is $205,000 which is up 4.1 percent from the previous month.

How is this possible with lessening demand? Most likely, there have been some homes selling in higher price ranges, which has brought the median number up. Nevertheless, it is good news for sellers out there that the market is fighting to hold on to today’s record high values.

The real test for how resilient today’s values truly are will come when we see a noticeable increase in mortgage interest rates. The only reason today’s values, which in many cases are higher than the peak values in 2006, have been tolerated by buyers out there is because the cost of money (interest rate) has remained so low.

The Fed’s next meeting to discuss raising the federal funds rate is scheduled for December 13-14, 2016. US News and World Reports recently wrote that “Fed Chair Janet Yellen and several of her colleagues have indicated as much in recent days, with Yellen saying during congressional testimony last week that an increase to the central bank’s benchmark interest rate “could well become appropriate relatively soon.” It is stated in the article that the fed spoke of the domestic economy saying it has “expanded at a faster pace in the third quarter than in the first half of the year,” including a labor market that had “continued to strengthen” and inflation that managed to “increase somewhat since earlier this year.”

A second contributing factor to pricing will be the current pattern of lessening demand. As you can see from the graph, the percentage of homes each month that are going under contract has been dropping steadily since the peak in April of 51.3 percent. The absorption rate for November ended at 18.3 percent, which compared to November 2015 is down 35.6 percent. To give that number some life, of the 774 homes that were for sale at the end of the month in the Shawnee Mission School District footprint, only 142 of them went under contract. The absorption rate in December of 2015 was higher at 23.5 percent.

As a potential seller, if the amount of equity that you receive is important to you, time is of the essence. Although we have seen a temporary increase in the median sales price, it is most likely just that…temporary. Call us or email us today to discuss how we can create a strategy to ensure that you maximize your equity potential.