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Nov. 11, 2019

Home Programs Vets Should Know About

Today we honor the veterans that have sacrificed for this country. To help honor these sacrifices, special programs were put in place to aid vets in getting and keeping a home. Unfortunately, not all veterans know these programs exist. Even for those who do, it can be confusing to determine which option matches their situation.  

To help sort out some of the confusion, here are a few of the most common home programs that vets might be interested in. As requirements and availability can change over time, be sure to find out more before attempting to apply for any specific program. (We have awesome lenders we regularly work with that specialize in working with Veterans, just ask us).

 

VA Home Loans

One of the most well-known and commonly used home programs for vets are VA home loans. These loans are subsidized by the Veterans Administration itself, similar to HUD home loans or rural loans subsidized by the Department of Agriculture. Thanks to the VA subsidy, vets can qualify for better-than-average interest rates and may be able to reduce or eliminate down payments or closing costs as well. Houses must meet the livability requirements of the VA to be purchased with a VA home loan, so make sure you use an agent (hi there!) and lender (got that too) that are familiar with some of the not so obvious requirements to keep things from going sideways.

 

Loan Forbearance

One problem that vets sometimes face is getting behind on mortgage payments and running the risk of losing their home. The VA offers loan forbearance programs that can help with this. While this doesn’t serve as loan forgiveness, the forbearance does temporarily stop repayments to give veterans more time to catch up. There are no penalties accrued during the forbearance period – and pending foreclosures won’t move forward while the loan is in forbearance. Once the forbearance period ends, the vet can begin making payments again at their normal rate.

 

Loan Modifications

VA-backed loan modifications are another option for vets that are struggling with their mortgage payment. These modifications can make changes to the interest rate, interest type or even the repayment period of the loan to reduce the amount of the monthly payment. There are a few different types of loan modifications available for vets ranging from basic loan refinancing to specialized repayment plans designed to keep vets in their homes when times are tough. The specific terms of the modification will depend on the specific program or plan that the veteran uses to modify their loan.

 

In-Home Care Programs

For veterans who were injured in service or who experience other chronic health issues, the VA offers programs to aid in getting in-home care. These programs pay out directly to the care provider and may also cover the cost of specialized care equipment or home modifications that are necessary to help the vets get through their day. These programs may be a good option for injured vets who need minor remodeling for medical reasons but who are unable to get it done on a fixed income.

 

VA Disability Status

It is important to point out that some VA programs require a veteran to have disability status before they can qualify. Disability through the VA can take a while to certify, so vets who have ongoing mobility or health issues should apply early before applying for other programs. Some programs may have options available while a disability decision is still pending, but there are at least a few VA programs that can’t do anything for you unless you’re already certified as disabled by the VA.

 

Finding the Right Program

If you’re struggling to navigate the complexities of some of these programs, we'd be happy to connect you to local mortgage and loan experts out there who can help you. We are ready to help!

 

Nov. 2, 2019

5 Steps To Finding Your Next Home

 

Whether you’re a first-time buyer or a seasoned homeowner, shopping for a new home can feel daunting. In fact, 56% of buyers said that “finding the right property” was the most difficult step in the home buying process.1

 

Buying a home is a significant commitment of both time and money. And a home purchase has the power to improve both your current quality of life and your future financial security, so the stakes are high.

 

Follow these five steps—and complete the corresponding worksheet offered below—to assess your priorities, streamline your search, and choose your next home with confidence.

 

STEP 1: Set Your Goals and Priorities

This seems obvious, but in my experience I've found this step is often overlooked.  Many people jump in with a very loose list of what they want, figuring the right house will appear and all answers will immediately become clear.  Take a minute (or a few) and consider WHY you want to move. Do you need more space? Access to better schools? Less maintenance? Or are you tired of throwing money away on rent when you could be building equity? Pinpointing the reasons why you want to move can help you assess your priorities for your home search.  Your agent can then translate that information and integrate it into the process so it's more efficient.

Don’t forget to think about how your circumstances might change over the next few years. Do you expect to switch jobs? Have more children? Get a pet? A good rule of thumb is to choose a house that will meet your needs for at least the next five to seven years.2  

 

STEP 2: Determine Your Budget

 

Many financial professionals recommend following the “28/36 Rule” to determine how much you can afford to spend on a home. It sounds complicated, but it's actually quite simple.  The rule states that you should spend no more than 28% of your gross monthly income on housing expenses (e.g., mortgage, taxes, insurance) and a maximum of 36% of your gross monthly income on your total debt obligations (i.e., housing expenses PLUS any other debt obligations, like car loans, student loans, credit card debt, etc.).3

 

Of course, the 28/36 rule only provides a rough guideline. It varies depending on projected income and where you live.  Getting pre-qualified or pre-approved for a mortgage BEFORE you begin shopping for homes is a non-negotiable for getting a true and accurate idea of how much you can borrow. Add your pre-approved mortgage amount to your downpayment to find out your maximum purchasing potential.

 

 

STEP 3: Choose a Location

 

When it comes to real estate, WHERE you choose to buy is just as important as WHAT you choose to buy.  Do you prefer a rural, urban, or suburban setting? How long of a commute are you willing to make? Which neighborhoods feed into your favorite schools? These decisions will impact your day-to-day life while you live in the home.  Drive through these neighborhoods, or better yet bike or walk them at different times of day to get a feel for noise levels and traffic.

Another important factor to consider is how the area is likely to appreciate over time. Choosing the right neighborhood can raise the profit potential of your home when it comes time to sell. 4

 

STEP 4: Decide Which Features You Need (and Want) in a Home

Start with the basics, like your ideal number of bedrooms, bathrooms, and square footage. Do you prefer a one-story or two-story layout? Do you want a big yard, or is a smaller outdoor space OK for now in exchange for a better location.

Keep in mind, you may not find a home with all of your “wants,” or even all of your “needs” … at least not at a price you can afford. The reality is, most of us have to make a few compromises when it comes to buying a home.  It's important to acknowledge that the price is NOT a feature.  For example, you can't say I want to be close to coffee shops and shopping, have a garage and large yard, four bedrooms and stay in X price range.  The other items are features and factors, not the price, since it becomes impossible to obtain unless you prioritize your list.

Some buyers will opt for a longer commute to get a larger, newer home with the big yard. Others will sacrifice hardwood floors or an updated kitchen so that their kids can attend their desired school and they can be near amenities. 

 

If you’re faced with a tough choice about how or what to compromise in your home search, return to STEP 1. What were your original goals and motivations for moving? Reminding yourself of your true priorities can often provide the clarity that you need.

 

STEP 5: Meet with a Real Estate Agent (insert friendly MT Good Life face here 😊)

A good real estate agent can remove much of the stress and uncertainty from the home search process. From setting goals to finding the right lender fit to selecting the best neighborhood to meet your needs, we will be there to assist you every step of the way.  Having an honest devil's advocate on your side will help protect you through the process.

After meeting, we can set up a customized search that alerts you as soon as a new listing you might like goes live. Better yet, we get notified about many of the hottest homes even BEFORE they hit the market.  Zillow can't do that, and neither can that part-time agent that sells a house or two on the side after hours.

 

Although we’ve listed it here as STEP 5, the reality is, it’s never too early (or too late) to contact an agent about buying a home. Whether you plan to buy today, next month, or next year, there are steps you can (and should) be taking to prepare for your purchase.  We just closed with a client we've been working with for two years.  We' re not going anywhere, so let's talk now so you can plan for later, whenever that is for you!

Call us today to schedule a free consultation!

 

 

 

The above references an opinion and is for informational purposes only.  It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

 

 

 

Sources:

 

NAR 2019 Home Buyers & Sellers Generational Trends Report – https://www.nar.realtor/sites/default/files/documents/2019-home-buyers-and-sellers-generational-trends-report-08-16-2019.pdf

Architectural Digest – https://www.architecturaldigest.com/story/this-is-how-long-you-should-live-in-your-house-before-selling-it

Investopedia – https://www.investopedia.com/terms/t/twenty-eight-thirty-six-rule.asp

Money Talks News – https://www.moneytalksnews.com/20-clues-youre-buying-home-the-right-neighborhood/

 

 

 

Sept. 16, 2019

Things to Avoid *AFTER* Applying for a Mortgage

Congratulations! You’ve found a home to buy and have applied for a mortgage! You’re undoubtedly excited about the opportunity to decorate your new home, but before you make any large purchases, move your money around, or make any big-time life changes, consult your loan officer – someone who will be able to tell you how your decisions will impact your home loan.

 

Below is a list of Things You Shouldn’t Do After Applying for a Mortgage. Some may seem obvious, but some may not.

 

1. Don’t Change Jobs or the Way You Are Paid at Your Job. Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

 

2. Don’t Deposit Cash into Your Bank Accounts. Lenders need to source your money, and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

 

3. Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios…higher ratios make for riskier loans…and sometimes qualified borrowers no longer qualify.

 

4. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payments against you.

 

5. Don’t Change Bank Accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to your loan officer.

 

6. Don’t Apply for New Credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

 

7. Don’t Close Any Credit Accounts. Many clients erroneously believe that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those determinants in your score.

 

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

 

Related posts on our blog:

Our Buyers Guide to Mortgage Pre-approval

Top 12 Apps for Homeowners & Renters

Understanding Residential Appraisals

Sept. 14, 2019

What Is the Probability That Home Values Sink?

With the current uncertainty about the economy triggered by a potential trade war, some people are telling themselves to wait to purchase their first home or move-up to their dream house because they think or hope home prices will drop over the next few years. However, the experts disagree with this perspective.

So do I.  And there lies the rub.  How to tell you, without sounding like a pushy, anxious real estate agent, that NOW is always a better time to buy.  Let me try to explain myself.  First with a chart!

Here is a table showing the predicted levels of appreciation from six major housing sources:

As you see, every source believes home prices will continue to appreciate (albeit at lower levels than we have seen over the last several years). But, not one source is calling for residential real estate values to depreciate. Hello there answers!

So there you are.  Waiting for prices to fall before purchasing a home needs to account for the probability of that happening anytime soon to be very low. With mortgage rates still at near historic lows, even with the most recent blips, now is very much the time to act.  If you are using random advice cobbled from conversations about spooked friends who are upset they missed out, take care to acknowledge your sources.  Don't just take our word for it, look at even more data, to make a truly informed decision.

Want more of the goodness?  Sign up to receive our regular market reports, or if you would like to sell and change your lifestyle (downsize, upsize, move out to the mountains, whatevs), just shoot us a quick note and we'll get you set up.

More on this topic:

What's Your Homebuying Power?

The Compound Effect:  Building Your Household Wealth

The Impact of Homeownership on Civic Involvement

Aug. 13, 2019

5 Real Estate Reality TV Myths Explained

Have you ever found yourself flipping through channels, only to find yourself suddenly glued to the couch in the middle of an HGTV binge session? Watching entire seasons of shows like “Property Brothers,” “Fixer Upper,” and “Love It or List It,” all in one sitting.  Time wasted?  Read on...

When you’re in the middle of your next real estate-themed TV show marathon, you might be inclined to start to think everything you see on the screen must be how it works in real life. However, you may need a reality check. I know this is an unpopular opinion, but hear me out for just a moment.

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and decide to purchase one of them.

Truth: There may be buyers who fall in love and buy the first home they see, and that's OK when you're working with a skilled agent who can advise you and be the devil's advocate if needed, but according to the National Association of Realtors, the average homebuyer tours 10 homes as a part of their search.  

 

Myth #2: The houses the buyers are touring are still for sale.

Truth: Everything is staged for TV. Many of the homes shown are already sold and are off the market. 

 

Myth #3: The buyers haven’t made a purchase decision yet.

Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy. This is the confusing part where you may think that making decisions happens must faster than it actually does.

 

Myth #4: If you list your home for sale, it will ALWAYS sell at the open house.

Truth: Of course, this would be great! Open houses can be an important tool to provide exposure to buyers in your area, but they are only one piece of the overall marketing of your home. Keep in mind, most serious buyers schedule appointments through their agents, with most homes being sold during regular showing appointments.

 

Myth #5: Homeowners decide to sell their homes after a 5-minute conversation.

Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours or even months deliberating the decision to list their homes and move on with their lives and goals.

 

Bottom Line

Having an experienced agent on your side while navigating the real estate market is the best way to guarantee you can make the home of your dreams a true reality with realistic expectations.  Let's meet up!

Contact us to schedule some coffee or tea at our office near downtown Bozeman!

 

Related:

Look at your home through buyer's eyes

Staging case study

 

 

June 3, 2019

Staging Case Study: Tri-Level Country Home

Location:  Bozeman Montana

Beds/Baths: 4 bedroom 2 bath

Square Footage:  3,124

Project Description:  Young, active family with three dogs and two cats that have 24-hour indoor/outdoor access to home.  This property has stunning views, lots of sunlight and multiple levels.  Some rooms have been updated, new paint throughout makes it feel comfortable and welcoming.

Goal:  Create an upscale, livable country home that feels move-in ready for our target demographic, while utilizing sturdy staging furniture and accessories that can tolerate pets between showings.

Living Room:

Before:  Comfortable for people and pets!

After: Open and spacious

 

Kitchen and Dining Rooms:

Before: Your basic kitchen/dining combo room

After: Angles and professional staging and photos make all the difference

Before:  Everyday kitchen living looks just like this in most homes

After:  What a buyer wants to see online

 

Mudroom:

Before: Typical family mud room

After:  Easy to visualize living here and using this space

 

Empty Spare Bedroom:

Before: Unused spare bedroom

 Before: Instant bed gives the room a use and feeling of comfort

 

Master Bath:

Before: Master bath

After: Lighter shower curtain, fresh towels and a pop of color

 

Family Room/Den:

Before: Basement family room

After: Moving furniture and changing the angle puts you right inside the space

 

Same house, staged.  Big difference right?  Staging is different from interior design.  Stagers and interior designers follow similar design principles, but their goals are completely different. The interior decorator works to make a home reflect the taste and lifestyle of the current owner, but a stagers primary purpose is to quickly transform a home so it appeals to potential buyers online.  Two different goals. 

 

From one of our recent clients:

“My idea of “staging” a house by a realtor was simple:  The realtor suggests, “Your place looks like crap, and I’m here to fix it up with my superior taste”.  Then along came Page Huyette whose first step in HER idea of staging was, “I won’t do anything you are not comfortable with.”  This suited me fine because I wasn’t comfortable with any of it.  

Soon, however, I realized that Page and I were operating at cross purposes.  She was trying to sell my large house, while I was trying to get ready to move into a house half its size.  I had been assiduously emptying whole rooms of furniture in my zeal to downsize.  Page pointed out the empty, forlorn rooms and suggested that it might be hard for a potential buyer to “see themselves” in such a setting.  Ok, ok! Go ahead and “stage”, Page!  Within hours, Page had supplied a minimum number of domestic items to create inviting spaces where there had been emptiness.  

Further, I had a bedroom where I was loathe to change ANYTHING because my son, as a child, had “decorated” the room.  Now this was a delicate problem for Page: what to do in a room the seller was treating, irrationally, as sacrosanct. Here’s what she did: she threw a wildly handsome bedspread over the bed which caused the room to POP!  Even the girl who vacuumed the house was heard to say, “Wow!” upon entering the room.  

To say that I now have a very different idea of what it means to “stage" is an understatement.  Page can “upstage" me any time.  And...I have ordered for our new, much smaller house, that very same handsome bedspread for the guest room!”

--Sarah Leinen, Bozeman MT

 

Learn more about our staging services offered exclusively for our clients.

 

April 2, 2019

Early Spring Real Estate Update

Back in November, which means before the extreme cold snap and mountains of snow descended on us, I wrote a post explaining what was going on in the market.  There was a strange doomsday rumor circulating, that everything was going to crash, and there would be deals galore.  

The concerns continue.  Just last week, Realtor.com shared a survey they performed with active home shoppers (those who plan to purchase their next home in 1 year or less). The survey asked their opinion on an impending recession and its possible impact on the housing market.  Here are two of the answers:

  42% believe a recession will occur this year or next (another 16% said 2021)

  59% believe the housing market would fare the same or worse than it did in 2008 (1)

This attitude mirrors what I was hearing last fall. Some conversations hinted that people were even secretly (and not so secretly) wishing for this to happen, so they could grab some deals.  It's OK, it's human nature to approach scary things from a self-preservation standpoint. 

Point is, it didn't happen.  I was pretty certain it wouldn't, and now here we are in a busy market again.  This year is shaping up to be just as busy and competitive as last year, with one exception:

Even lower interest rates.

Say what?  

It's also important to remember that a recession doesn't always coincide with falling home prices.  According to research done by CoreLogic, home values weren’t negatively impacted as they were in 2008 during the previous four recessions.  Here's a handy chart for you(2):

 

Yeah, 2008 was ugh-lee!  We were all there, we remember. But look at the chart, three of the last four recessions show appreciating home values.  The other MAJOR factor:  Lending is a completely different animal than it was in 2008, everything about it has changed.  Specifically to prevent another occurence like we saw then.

From the trenches, I can share that the market is active, it started out earlier and faster for our office than it did last year, and while some properties are sitting on market longer, I still believe that's due to poor pricing out of the gate, or an inherent flaw in the property as well (busy street, needs updating, etc) so rest assured, with these insanely low mortgage rates we are seeing, real estate remains a solid value.

We always run a comparative pricing analysis for our buyers before we write an offer, so you know how the house you want is positioned against similar properties in terms of list price.  This helps prevent problems with appraisals, and gives you peace of mind that your offer is backed up by data and not just emotions.

Whadda ya say, shall we get started?  

 

 

 

 

 

 

 

 

 

_____

(1)Content excerpted from https://www.simplifyingthemarket.com/en/2019/04/02/homebuyers-shouldnt-worry-about-2008-all-over-again/?a=477236-2ea95c3ebc35ccb0fd9e54b6ab2c103f

(2) Corelogic Nat'l Home Pricing index

Dec. 12, 2018

Our Buyers Guide to Mortgage Pre-Approval

Picture this:  You are sitting in a hallway, waiting for a stranger in a suit to size you up and decide if you’re worthy as a potential homeowner.  Your palms sweat and your breath gets a little quicker. You’re one step closer to owning your own home, but this one is a doozy --  you are waiting for your appointment for your mortgage pre-approval. 

Stop!  It doesn't have to be scary.  Let’s quickly talk abouat the  mortgage pre-approval process, step-by-step.

 

Step One: Mortgage Pre-Qualification Versus Pre-Approval

You may already have a pre-qualification letter saying that you can probably buy a house in a particular price range, so why isn’t this enough? (Don't have that, we definitely need to talk) A lot of homebuyers find this next part of the process confusing, and frankly, it can be. We've got your back on this one.

Your pre-qualification was probably done over the phone, through an internet application or during a meeting with a lender. Many people start with where they bank.  This may or may not be the right place to end up. 

They asked you a bunch of questions about your income, your job and maybe even pulled a “soft” credit report to get some idea about your debts.

Based on this information, they gave you the details on the kinds of programs you’re eligible for and how much you can expect in buying power. You probably got a letter that you could show your Realtor to help guide the buying process.

The difference between the pre-qualification and the pre-approval is simple: a pre-qualification is based largely on your word. If you give the lender incorrect information, they’ll give you a pre-qualification letter that’s not right.

A pre-approval, on the other hand, takes a harder look at your background, work history and requires a full credit report and FICO score to ensure that you can, in fact, pay back a note.

 

Step Two: Documentation

Your next meetup with the nice lender is going to be to deliver (or email) documents, provide consent to pull a full credit report and, if you’ve already found one, give them the information on the home you’ve put under contract.  Make sure you have your signed agreement with your chosen agent as part of this process also.  It's a team approach that will get you through this.

Documentation you’ll be asked to bring will include pay stubs, bank statements and tax returns, along with other information that may be needed to verify your income source or sources. Self-employed people, for example, are sometimes required to prepare profit and loss statements (or just pony up more tax returns). If you have assets like a 401(k) or even a CD, you’ll want to bring the details on these, too.

 

Step Three: The Loan Estimate Form

You’re going to get a copy of something called the Loan Estimate Form (names may vary by lender), probably at the same meeting where your lender pulls that full credit report and takes all your papers away. This form explains exactly how much they expect you’ll need to bring to closing, along with itemized estimated fees to plan for at closing. If you’re shopping your loan, collect these and compare them side by side before you make your final choice.

If you haven't found a home to purchase yet, this will be general.  Ask your lender to contact your agent (hoping it's us here) and share details about how much you qualify for and other details that will help us to write the contract in the most competitive way.

But don’t spend too much time crunching the numbers. Just like your contract will say, “Time is of the Essence.”

 

Step Four: Acceptance

Once you’ve had a few minutes to review the paperwork and you’ve made your final pass through the numbers, all that’s left is to call the lender you’ve chosen and let them know you need that pre-approval letter sent over to your Realtor (hello again!) We will note this is the contract and attach it to your offer to show the seller of the property you want to buy that you have done your homework and are indeed a qualified buyer.

Understand that a pre-approval is not a guarantee that you’re going to get the money you need to close. Several things can go wrong along the way through underwriting, including, but not limited to:

– Unverifiable income (this is often due to issues with overtime)

– A change to your credit score.

– An increase in your debt to income ratio (don't buy anything!)

– An undocumented change in employment

– Assets that are unverifiable

etc...

The best plan is be totally honest with your lender when you get your pre-approval so that you don’t get a last minute call telling you that your loan has been denied (this actually happens, so pay everything on time and don’t take out new credit lines or add to old ones until you’ve got the keys in your hand). It can be daunting to share personal information with someone new, especially if your facts are, um...less than stellar.  Remember, there is no judgement here, by either us or your lender.  We are all working together towards a common goal.

 

When is the Best Time to Make an Offer?

Ideally, you should have a pre-approval letter in hand before you so much as set foot into the first house you’re considering for purchase. In fact, we require our buyers to complete that step first.  After all, the seller isn’t going to think you’re all that serious without one, nor will they be keen to want to negotiate under these circumstances.  If you have an agent showing you houses without one, they aren't doing their best job for you.

Help your lender help you get the best deal on the house of your dreams, save everybody a lot of headaches and get that pre-approval first. Knowing how much your closing costs are going to be will also help your Realtor write your contract accordingly if they should need to be wrapped into your mortgage.  We can help you with this also, during the househunting process.

Basically, that document is the key to everything. So, no pressure.

 

When You Need a Loan for Your Home…

Finding a banker you can trust these days couldn’t be easier.  The first and best stop is to ask us.  We have a list of vetted lenders and brokers we have worked with, and can help match make you with the one that suits your situation best. 

Check out your current bank, and at least one or two others.  Some homework up front will make sure you don’t get a big surprise a few days before closing.

We are here for you!  Here's what some of our clients say about working with us.

 

Nov. 15, 2018

Wondering whats going on in the market?

You have probably been noticing more price reductions, and more properties coming on market lately.  Many people have been waiting for a change, a shift from the crazy lack of inventory and bidding wars that we witnessed earlier in the year.

Some of you (hello buyers!) are hoping for a crash in prices like we saw in the middle of the recession.  This is not going to happen, peeps.  Sorry to burst that bubble.

Why?  Today's market is very, very different from what we had back then.  Lending has changed, different buyers are bringing money to the market.  Heck, even how appraisals are done is completely different.  Still with me, or are your eyes glazing over?

What we are more likely to see coming up in the next fiew months is a slight slow down rather than a crash, a leveling off if you will.  Let me explain...

Ways for Buyers to Capitalize 

Are you looking for houses every day (c'mon you can tell me) and hoping the rates will stay low through spring so you can get serious?  Those price reductions you have been seeing pop up everywhere do not mean the market is coming down.  Rather, it means sellers (and the agents working with them) are finally adjusting their expectatations for those particular homes.  This is good for you -- this grounding means more reasonable prices.   But, it also means more buyers will come out of hibernation earlier in the spring.  Heck, it's hard to wait that long after you've been looking.

The average square foot pricing of sold homes (not active) has stayed pretty steady lately.

Hidden Listings

Contrary to popular thought, buyers can't always see everything that's out there for sale.  Case in point:  A condo coming on market at a great price was just shared to me by another broker.  We talk to each other...a lot.  We know what's coming on market, what just fell out of contract, and what price adjustments are likely to happen soon.  Try getting Zillow to share that info with you.

Back on Market Listings

This, my friend, can be a secret weapon.  The websites that churn out those new listings and spit them out into your inbox each morning do not show you the ones that went under contract the day after going on market, and then, very quietly, came back on.  The older a listing is, even if it showed it face very briefly, makes it old news in the web world eyes.  I can find that gem for you.

Get comfortable visualizing

Step away from the HGTV.  I know Joanna and Chip or the brothers told you your new home should have everything done/easy/glowing so all you need to do is change the color of an accent wall and add a doggy door for your pooch. 

Real life is quite different, so work with an agent (hello there handsome!) that can visualize what really needs to be done, what costs bucks and what is easy.  Don't underestimate the ugly duckling property that's waiting for a bit of elbow grease.  Not handy you say?  All fixer-uppers are not created equally.  Let's go find the one that fits your style and budget.

 

How Sellers Can Benefit

Did you grit your teeth and hunker down in your chair a bit when you came to this part of the story? Are you thinking that some parts of our market are slowing, but yours is bulletproof?  You've got that house that everyone wants, at least that's what all your friends and the agent friend that wants your listing told you.  

Here's the thing, no one knows where our market will shift, or when it will happen.  By placing your home in front of the right eyes (targeted marketing) and thoroughly analyzing trends in your specific neighborhood (custom analysis) and staging your property for photos (pack up those doilies and family photos) you will position your home properly right out of the gate. 

There's no time for testing the market with a price that's too high.  Nail it early, and you avoid the extra months of mortgage payments and overhead.  Then you can move on with your life.

Get Real

One of the best things you can do as a seller is to choose an agent that's going to be upfront and honest with you.  It may seem tempting to choose the one with the lowest commission and highest promised price, but this can be costly.

At the end of the day, you want to net the most money for you home possible.  That cut rate brokerage won't have the marketing prowess to put your home in front of the right buyer eyes, and won't take the time to constantly update their research to make sure their marketing is getting hits on the internet.  And most of all, the agent that promised you a couple percentage points less for their commission -- how are their negotiation skills?  You don't want to be left high and dry making all of the little nuanced decisions because they are inexperienced, or really just want their check. 

Choosing the wrong agent (Aunt Tammy, Cousin Jack) may feel right when you are talking turkey at the holiday table, but let's think about that stomachache you'll be fighting two months out when your listing is collecting dust and Jack is on the slopes or thinking about giving up on real estate because he can't make a go of it. 

Get in touch with us, and we'll share our book Preparing for a Successful Sale with you. 

 

 

Oct. 25, 2018

5 Things to Keep in Mind When Buying a Vacation Home

Picture this:  waking to the sound of live water flowing right outside your very own home. Jumping into your ski boots and hitting the slope you can see from your living room window.  You don’t have to call ahead for reservations, you don’t need to ask anyone for a key or have a check-out time. It’s all yours to do with as you will, and you’re going take advantage of it constantly because now you own your very own vacation home.

Not to burst any vacation home-shaped bubbles💥🤯, but before you get too lost in the fantasy, let's consider some of the many pros and cons of owning a home away from home.

 

Vacation Homes Aren’t For Everybody

As the real estate market begins to respond to financial pressures from higher interest rates that are likely to increase further, as well as trade wars and tariffs with some of the country’s best trading partners, more people are just waiting for their favorite vacation spot to experience a market correction. If you’re one of them, don’t jump into the vacation home market without seriously considering what you’re doing.  Plan your plan, so to speak.

It can be great to have a vacation home. It can be the very best thing. But if you never use it or you never go anywhere else, it might be the wrong call. Consider these five points when buying a vacation home today or tomorrow:

 

1. What can you afford on your own?

It’s no secret that many vacation homes will go for several times what your personal home may be worth. Because of this, buyers like to try to pool their assets to pull off a vacation home purchase with friends or family. Don’t let your vacation home become a cautionary tale: buying a vacation home with anyone that you’re not married to could become a long term problem.

What if you and the friend or relative don’t like the same ski resort, or prefer fishing the Gallatin over the Yellowstone? What if you can’t agree on the property to purchase? Will you be resentful the rest of your life? Most importantly, perhaps, is what to do if your co-borrower has poor credit, can’t come up with their part of the downpayment or is otherwise creating a giant problem for your mortgage?

After you’ve actually bought the property, who pays for what repairs? Don’t buy with friends or family, but if you do, get a lawyer to draw up a maintenance and payment agreement that you both sign to get everything on paper and make it official.  Sounds harsh, but remember, this is an investment.

 

2. Even if you do buy a vacation home on your own, it will be complicated.

This isn’t your momma’s FHA loan. When you buy a vacation home, you’re almost always going to use a conventional mortgage. You’ll need stellar credit, an excellent debt to income ratio and, most importantly, a lot of cash. Unlike primary homes, which rarely require reserves, being the lender on a secondary home feels awfully risky to the bank.

They may still lend to you, and there are some loan options that allow really low down payments for second homes (ask us for referrals) but they’ll want to see that you have anywhere from two to 12 months of reserves on hand. If you’ve not heard the term before, “reserves” are funds already in an account somewhere that are equal to a certain number of months’ worth of payments for both of your homes. This also includes anything wrapped into your payment due to escrow, like homeowners’ insurance and taxes.

3. Do you have a plan for off-season care and maintenance?

If a friend or relative lives nearby, you probably are set for someone to look in on your place, but if not, you’ve got to get this part figured out before you sign on the line. Just like an occupied home, your vacation home will develop problems over time. Wear and tear happens even when you’re not home and pipes love to freeze and burst when no one’s looking. You have to have a plan.  We work with vacation suppport companies that will check your property regularly, prepare it for your arrival, and clean up after you leave if you'd like.

 

You should really hire a handyman, property manager or support person to keep an eye out and call in help when necessary. That’s a cost you’ll have all year, so make sure you figure it into your budget. Since your property is a vacation home, it will also require more expensive insurance coverage, as well as specialty insurance if it’s in an area where floods, hurricanes or earthquakes are common.

4. Renting it out when you’re not using it makes your vacation home a rental, not a vacation home.  This one is important!

You absolutely can rent your vacation home from day one, provided that you purchased it as an investment home. This is a lending distinction to think about.  Some buyers think this will save them a bunch of money, since someone else will take care of it part of the year, at least. The truth, as usual, lies somewhere in between a glorious rental partnership and a home that’s been burned to the ground. If your neighborhood, for example, won’t allow AirBnBs and their ilk, or has strict rules about maintenance, you are responsible for the rebound from missteps there, no matter how good your renters.

 

You will have to find the guy to mow the lawn, you’re paying for clean up every time renters move out, you’re paying for repairs and so forth. Did you want to be a long-distance landlord? A property manager can help ease the pain, but it will still cost plenty. If you do decide to proceed with a rental situation for your vacation home, make sure the house you buy is in a location that’s really hot, otherwise you may not be able to get enough rent to cover all the expenses.  

This is all do-able, but don't gloss over the setup time and costs that go into this approach.  That's often where people forget to allot resources

5. Oh, hey, and selling can be difficult and costly.

For every one of the real estate experts who claim that buying a vacation home is a great way to make money, there are experts who realize that the market is unpredictable and you may find that you don’t love that vacation home as much as you thought in a few years.

After spending two years dealing with short term renters, you may decide it’s easier for you to go back to renting a nice hotel for your vacation stay, rather than owning a headache of a property. That’s all fine and good, until you find out that not only has the market bottomed out, you can’t even get enough money out of the place to cover the mortgage and your closing costs.

Remember, when you sell, you may also be on the hook for capital gains taxes, and you can’t take a capital loss if the property in question is classified as a second home.

 

If you still have the stomach for a second home after running through this list of things to consider, then proceed with caution and let us help you find that property match. Don’t buy a project house unless you have someone else to do the work and even then, make sure that the only thing you do at that vacation home is relax. Going on vacation just to stress out about the lawn isn’t a fun kind of vacation, you know?

 

Montana Good Life Properties:  Your Vacation Home Support Team

Wondering where you’ll find all the people you need to help keep your vacation home in good shape, whether you’re renting it out or just visiting on the weekends? Ask us, we have resources from the best handyman around to a vacation property support company who can keep your property in great shape.