Finance Hacks to Help You Buy the Right Home Without Going Broke

Meet Our Anonymous Guest Writer

We were contacted by someone who has valuable information on home buying to share with some of our clients. Enjoy!

Few things are more exciting than purchasing a new home. Finding and closing on the home that will facilitate the next phase in your life is a significant step, and it’s as complex as it is thrilling. There are a lot of moving parts, and it’s important to understand the process so that you can make good decisions along the way. 

Fortunately, there are some finance hacks that you can use to put yourself in the best financial position before, during, and after the homebuying process. Here are a few examples:

Know your down payment options. 

Your first order of business will be to research down payments for homes in the area you’re considering. For years, most homes required a 20 percent down payment, but now CNBC says it’s considerably lower in many places. What’s more, many loans don’t require a hefty down payment.  

If you don’t think you can meet the required down payment for homes in your area, don’t count yourself out; there are options. For instance, if you’re a veteran, you could get a mortgage through the Veterans Administration (VA) without making a down payment. The Department of Agriculture (USDA) also offers mortgages like these. 

If your credit score is 500 or higher and you’re a first-time buyer, you might qualify for a Federal Housing Administration (FHA) loan. With an FHA loan, you may be able to purchase a home with as little as 3.5 percent down. While government-secured loans like these can feel complicated, you can work with a lender like PennyMac to ease you through the process.  

Look at HUD homes.

Another option for saving money is purchasing a home through the Department of Housing and Urban Development (HUD). HomeAdvisor explains you can find HUD homes in good condition in basically any location in the country by speaking with a real estate agent or authorized broker. 

Along with saving on the sale price of a home, you can get free services from real estate brokers (e.g., offer and deposit submission), and you might qualify for repair loans and a 3 percent down payment. Plus HUD often pays 5 percent of the closing costs, which can total thousands of dollars. 

Mend your credit. 

The better your credit score, the better loan you can typically get when buying a home. If your credit isn’t very good, you can improve it by paying off any missed payments, staying up-to-date on payments going forth, and chipping away at any outstanding debt. Also, don’t open any more accounts while you’re trying to build your credit because it can negatively affect your score. 

Go with less than you can afford.

As tempting as it is to purchase a home that’s right at your budget’s limit, it’s probably not wise. Homeownership usually costs more than you expect, so go with a home with a mortgage you can comfortably afford, and be sure to leave room for unexpected expenses like maintenance, repairs, and/or job loss. 

Additional costs to consider when buying a home might include: 

  • Property taxes
  • Closing costs
  • Security and other tech upgrades
  • Inspection and appraisal fees
  • Mortgage insurance
  • Homeowners insurance

Save on homeowners insurance.

This type of insurance can be quite expensive, but fortunately there are ways to reduce the amount you have to pay each month. For example, installing a quality home security system will reduce the likelihood that your insurance provider will need to pay out due to property crime or other incidents, which means they will typically lower your premium. 

Other ways to save on your homeowners insurance include installing new electrical wiring, replacing the smoke/carbon monoxide alarms, and weatherproofing the home.

As exciting as purchasing a new home can be, it’s important to understand the process so that you can come out in a good financial position. Explore options that will ensure you aren’t stretched too much, and consider less traditional funding options. Hacks like these can help you land the perfect home while maintaining your financial security for the future.

Historical Stats and the Housing Crisis

I was just going back through  my files, and have statistics from 2003.  The format was not nearly as good as they were after I got involved with SOMLS and created a better format in 2008.  

So I find it hard to compare what is going on prior to 2008.

But I did find a 10 year comparison done in 2007.  

In 1998 the median sales price in Ashland was $166,000.  In 2007 it was $426,000.  That is a 250% increase in 10 years. INSANE!  25% increase per year. 

The Median last month in Ashland was $435,000. So now for the last 20 years, the increase is only 12.5% a year. 

So let’s compare that to the median income in Oregon. 

In 1998 the median income in Oregon was $39,000. That was up all the way to $60,000 by 2017. That is a 65% increase over 12 years, or 5.4% a year. 

So home prices increased at 25% a year while income increased at 5.4% a year.  There is no wonder that there is a housing crisis. 

2020 – What’s in Store

Ten Logo

It is clear that 2019, one of the priorities of TEN Realty Group was NOT to add new entries into our blog…or really pay much attention to our website at all.

That was due in large part to a record breaking year. We were fortunate to donate more money to our charities than any other year to date.

So 2020, we are gearing up with added staff to be able to not only help all of our current valuable clients, but to also keep up with our whole real estate family of past clients.

With the help of all of our friends, clients and family and some added hands on deck, we are planning to break our 2019 record, and have a goal to donate $20,000 back to local charities in 2020.

Check this site later, to see how we are doing.

A Warm Welcome to Jinnee Joos!

Jinnee and I met up at the Roasting Company where I learned that she has often been drawn to homes and realty long before actually pursuing it as a career. She admitted to looking up listings online and checking out homes for sale long before being in touch with Adam. Her interest lies in what makes a house a home, the personal touch that each person brings to their new home, and how transformative it is to become a homeowner, whether it’s the first or fiftieth time. The relationship built with each person is key, which is a piece of why she chose TEN as her home in the realty world. Although we are founded in charitable donation and giving back to the community, it is what Adam brings to the table that helped her decide to come aboard. There were offers for Jinnee to join other teams in the valley, but it was Adam’s comprehensive knowledge, experience and dedication to every single client in every avenue of realty that caught Jinnee’s attention. So, about two years ago began her adventure in real estate, first as Adam’s assistant learning the in’s and out’s of every aspect, then becoming lisenced as a realtor herself roughly one year ago.
One of the things you will likely notice if you have the chance to meet Jinnee is that she is genuinely kind and caring. She offers a calm, selfless nature of true warmth and connection, while also being perfectly task oriented and driven to help pretty much anyone. In our conversation there was a running theme of her view of life, family and career being well-rounded and whole. She is patient, thoughtful, funny, and focused on uplifting and supporting anyone she encounters, which of course lends her to being a fantastic wife, mom, friend, daughter, and realtor. When working on your properties she sees the whole house right down to the finest details and wants nothing more than to help each client find the most perfect fit to transition into a beautiful new chapter of their own lives. If I was in a position to buy or sell my home, I’d definitely want someone like Jinnee who cares and invests herself so completely in making dreams come true.
Jinnee and her husband, Peter, enjoy many of the family-oriented activities  the Rogue Valley has to offer with their daughter, such as hiking, the Britt Festival, eating sushi, attending outdoor music, local restaurants, and seasonal festivals. With so many varied activities you might run into her at any number of events around the valley, like the upcoming Talent Harvest Festival where our current charity of the month, Scienceworks, will be sharing some science fun with the community, as well as live music, arts and crafts, parade, and more! When there is time and music is involved, there’s a chance you will find Jinnee, as she has been connected to all things musical for the majority of her life, being an avid vocalist and learning various instruments, the favorite being the harmonium.
We are excited to be moving forward with Jinnee joining the TEN Realty Group as a licensed real estate agent and look forward to continue connecting friends and families to their dream of homeownership! Please join me in welcoming her to the TEN Realty Group brokered by eXp Realty Group LLC.

Charity of the Month

After much deliberation and consideration, we have compiled our beneficiaries for Charity of the Month comprised of 6 local non-profit businesses for the next twelve months! In order to be more effective and impactful with each of the chosen recipients, we have also decided to move to a two month timeframe in order to include a greater amount donated, but also to provide more time to focus on getting to know our chosen charity.

We are excited to announce that Tilly at F.O.T.A.S. (Friends of the Animal Shelter) received the first check reflecting two months of our 10% gross sales donation. Here’s our post on Instagram, check it out and like us here. We are currently partnering with Rogue Valley Mentoring for the months of July/August and coming soon is Scienceworks for the months of Sept/Oct. If you aren’t already familiar with these fantastic community resources, please take a minute to check them out here, and if you are so inclined and able, join us in donating: Rogue Valley Mentoring and Scienceworks

 

Contingent Offers. Do they Work? Part 1

So you are thinking you want a new house, but you have to sell your place first. What can you do?

First, give up on getting a great deal. I’m sorry to be so blunt, but a contingent offer is a sure fire way to NOT get a good deal. Why you might ask?

Because good deals just don’t last on the market for very long. There are multiple buyers out there competing against each other at any given time. While not all places get multiple offers, it is only because they are not priced below the market.

Houses priced considerably below the market value will almost ALWAYS get multiple offers. And if you are a seller, would you rather take an offer contingent upon someone selling their house, or not. The contingent offer will pretty much always lose. The amount one would have to offer over asking price would take the good deal…and make it not a good deal anymore. And there is still no guarantee that a seller would accept it.

Best way to get a contingent offer accepted is to look for a house that has been on the market for a LONG time. Something that is definitely priced above the market, and put an offer on that one. The seller might be motivated enough to get their price that they are willing to take the gamble.

But again…there goes the great deal.

There are ways to get contingent offers accepted….even when competing. Look for part 2 of this post.

Inventory Up Stats

Very interesting stats just came out about available homes on the market per buyer. Which could speak to what will be happening in 2019.  Whether it is attributed to the general economy, or the fallout of 2 straight seasons of smoke in the valley remains to be seen. It is most likely a combination of both.

Ashland has seen a 30% increase in the total available homes on the market, and a 20% decrease in the number of buyers over the year. This has resulted in a jump in the available homes per buyer from 2.6 a year ago, to 11.7 at the end of January 2019.

Nine of the reports MLS areas saw an increase in the available homes per buyer, while 4 areas saw a decrease. Overall across Jackson County there has be a 50% increase in the number of homes available per buyer over last year. The current numbers show a fairly stable market. So at this time it is neither a buyers’ or a sellers’ market.  But if the trend continues, we could be headed into a buyers’ market.

Graph and diagram, chart for data illustration

The 6th month trend of sales price to original listing price has been decreasing. This will be seen by an increase in the number of price reductions that are happening in the market. We are seeing that pricing homes trying to lead an appreciating market is no longer a workable strategy.

At this time there has not been a noticeable decline in average sales prices. But we are also keeping our eye out for that.

On the up side, there has been a small increase in the number of pending sales. And a decrease in the number of days on the market.

2019 will prove to be an interesting year.

 

Sellers Home During Showings

I have been showing houses for years, and have shown hundreds of people thousands of house. And in that time, I have learned and observed many things.

There are a number of things a seller can do to make their house show better, and just as many they can do to make it show worse.

In my opinion, the worst thing a seller can do is be home during a showing.  I have seen over and over sellers getting in their own way with all the best of intentions. I get it too. Who knows more about the house than the seller. Who better can point out the little details that make this home special.  It is a huge investment for the seller, and they are definitely invested in the process. It is just important to know when the best thing they can do is to step out for a walk at just the right moment.

Here’s the biggest reason why. Buyer’s are uncomfortable when the seller’s are there. They already feel a little weird about walking through someone else’s house, opening their cupboards, flushing their toilets, etc….  So when the seller is lurking, 95 times out of 100, they will try to get out of the house as fast as possible without being rude. And the other 5 times, they feel overly trapped by politeness listening to the seller regale stories of how the grandkids used to play in the creek, etc…  But even when they make the connection with the seller, the house gets blurred in the background.  And that isn’t what a seller truly wants. Unless they have listed the house  as a ploy to make new friends. lol

I understand that some houses are complicated. Unique features that might be missed by a prospective buyer. Or complicated rural property with questions about property boundaries, well production, etc…  Instances like those, I have seen how having the seller’s around is beneficial. ON THE 2ND SHOWING. Buyer’s need to be able to feel themselves in a place, and that is a personal space equation most of the time. And if they don’t have a chance to do that during their 1st impression, they won’t be back for a 2nd one.

via GIFER

A good buyer’s agent knows how to give the buyer’s the appropriate amount of space, while pointing out things that might be less than obvious. (And of course keeping track of the seller’s personal property). I personally know a buyer is serious about a house when they sit down on the couch and view the home from there.  This will NEVER happen when the seller is home.

Worse yet, I’ve actually heard stories of sellers being at open houses, or showings, pretending to be other buyers of the home. They walk through talking the place up…what a great value it is…and how they are going to try to go put an offer in on it right away.  Thank goodness I don’t think this has ever happened to me. And I know my sellers would never do this.

I believe this is part of the reason I have been so successful over the years. I try to never rush anyone. These are huge decisions, and everybody has their own pace at going through them. I’ve seen people make the decision in 5 minutes, and others that take months.

So please…if you are selling your home..give the buyer and their broker the courtesy of being able to take their time, and progress at their pace. Even if you are the kind of person who wishes the seller was their to hear their stories, and answer their questions, most buyers aren’t. Go with the odds.

 

Statistic Geeking – How Low is Too Low

Every once in a while, I fall down a statistical rabbit hole. And today was one of those days.

I had another agent who was trying to figure out how to explain to their client about why the low offer they wanted to submit was not really a good use of anyone’s time. As a buyer’s agent, I am always wanting to get the best deal I can for my clients…and will negotiate my tuckus off to do the best I can for them.

However, after years of experience and a knowledge of statistics, I know that some offers are just too low to even get a response. So the buyer wastes time, their agent wastes time, the seller’s agent wastes time, and the seller is insulted and has their time wasted.

So today I ran some actual statistical probabilities on what the chances are a low offer will be accepted. Using mean, standard deviation, T-tables and the internets….this was my conclusion.  Of course this can change as the market changes…so this is for Josephine County for July of 2018. Sample size of 119 sales…so significant.

Sellers mindset in our market is they have to decide to lower the price, they don’t accept low offers.

So the average sales price to list price was 96.98%. However the sales price to original list price was 94.61%.

There is a 33% chance that an offer at 96.98% will be accepted, but only a 9% chance that an offer of 94.61% would be accepted. Even though that is the average overall from the original listing price.

So deeper down the hole.  Here are the probabilities.

At 92% of asking price the odds of acceptance are 4.5%

At 87% of asking price the odds of acceptance are .27%

at 82% of asking price the odds of acceptance are .006%

at 78% of asking price the odds of acceptance are .0001%

So when looking to make an offer anywhere below 90% of asking price, the odds are so long!!!!!

As I council my clients….I want them to know that it isn’t me who wants them to pay more for the house. The best deal I can get them is what I want. But when I say an offer is too low to be considered, I now have some statistical background and facts to back that up.

Thanks for falling down my rabbit hole if you got this far.

Talent, Oregon- Not So Hidden Gem Anymore

Used to be that when one couldn’t afford Ashland, that they went to Talent…so they were close to Ashland. While it is cheaper, it is hard to find a house there. And anymore, it just isn’t that much cheaper.

Looking at statistics in Talent, Oregon. There are currently 13 houses for sale with a median asking price of $335,000. 19 houses are under contract with a median price of $298,500. And in the last year, 76 houses have sold with a median sales price of $289,000.

My interpretation of those number is a market that is rapidly appreciating. Or that sellers are feeling the market is hot, and testing the prices.  When you have a day on market of less than one month, and only 2 months worth of housing stock available, it is the logical conclusion to see what the market will really bear.

Those ratios show a market that is short on listings.

Of the 13 houses on the market, over half of them have been on less than a month. So it is a little early to tell if the sellers will be getting their increased asking prices or not.

This is just one of the many micro-economic areas in the Rogue Valley.

I specialize in analyzing property values.

So right now if you are looking to sell a home, if it is priced right we should be able to sell it pretty quickly for a fair market price.

Anywhere in Jackson County, send me your address and I will get back to you and help you determine the value of your home.