Frustration for today’s home buyers could not be more higher with home prices increasing and record low inventory to choose from in all of Oakland County and the metro Detroit area as a whole. The number of buyers that have expanded their search to find affordable homes outside the normal suburbs have increased substantially in the new quarter of 2018. Although the average buyer would find a new home close to work and family, this has become daunting and unattainable for many. Home buyers have had to expand the search for affordable homes to the suburbs and beyond in attempts to find an affordable home that they love and that fits within their budget.
Being a home buyer in today’s market it’s no secret that home prices have been increasing lately, and especially in the nation’s most populous metropolitan areas including Metro Detroit. So what are home buyers doing to ensure they find – not only a house they love – but one that fits well into their budget? Well one strategy is to expand the search from the priciest locations for a more affordable neighborhood in the surrounding area. In other words, home buyers are getting creative in their search for a great home at a great price. And while this usually means moving to the suburbs, in some cases potential buyers are moving even further out.
“Buyers have traditionally sought refuge in the suburbs during times of high home prices,” Javier Vivas, director of economic research for the National Association of Realtors’ consumer website. “But with today’s record highs even the suburbs have gotten pricey, which has demand flooding outward as options disappear and prices move further out of reach in top job hubs.” In short, expand your search radius which may be a good way to find a home that’s within reach of both your budget and your job. More here.
Are you thinking about buying a home in 2018? Are you on the fence about entering the real estate market? If so, you might want to consider buying sooner rather than later. Mortgage rates just rose again, and economists from Freddie Mac and other groups are predicting that they could rise gradually throughout 2018.
Mortgage Rates Hit Highest Level Since December 2016
During the week of February 8, 2018, the average rate for a 30-year fixed home loan rose to 4.32%. Rates haven’t been that high since December 2016. This is based on the weekly mortgage industry survey conducted by Freddie Mac. The average rates for 15-year fixed mortgages and 5/1 ARM loans rose as well. Those are the three categories tracked by this survey.
According to the Freddie Mac report:
“The U.S. weekly average 30-year fixed mortgage rate rocketed up 10 basis points to 4.32 percent this week. Following a turbulent Monday, financial markets settled down with the 10-year Treasury yield resuming its upward march. Mortgage rates have followed. The 30-year fixed mortgage rate is up 33 basis points since the start of the year.”
This is actually the continuation of a trend that began a few weeks ago. For a while now, mortgage rates have been following a steady upward path. You can see that clearly in the chart below. During the latter half of 2017, and into the beginning of 2018, the average rate for a 30-year mortgage hovered below 4%. Then it crossed that threshold and shot up by 25 basis points (0.25%), which brings us up to the latest reading.
Chart: 30-Year Loan Rates Over the Last Year
The chart below, courtesy of Freddie Mac, shows average rates for a 30-year fixed home loan going back one year. As you can see, rates are higher now (on the right side of the chart) than they’ve been all year.
Chart: Average mortgage rates over the last year | Source: Freddie Mac PMMS
This is not surprising to industry watchers and analysts. Last year, economists from the Mortgage Bankers Association and Freddie Mac were predicting that rates would rise gradually throughout 2018. Some forecasts suggested that the average rate for a 30-year mortgage would reach 5% by the end of this year. And that’s entirely plausible, given this recent uptick in lending rates.
So what’s causing this recent rise in borrowing costs? Several things. Over the last year, the Federal Reserve has been gradually increasing the short-term federal funds rate. This can have an indirect affect on consumer borrowing costs. The Fed’s policy changes, along with general economic improvements, are partly what’s driving the rise in interest rates — including those used for mortgage loans.
And some economists are predicting that we will see a continued yet gradual rise in rates throughout 2018.
All of this makes a good argument for buying a home sooner rather than later. Home buyers who postpone their purchases until later in the year could encounter higher mortgage rates. And when you consider the fact that home prices are still rising in most parts of the country, there’s even more urgency.
Granted, you should never make a home purchase until you are 100% ready to do so, financially and emotionally. It has to be the right move for you, one that will improve your qualify of life in some way. With that being said, it might make sense to buy sooner rather than later to avoid possible rate hikes and home-price increases.
Note: Mortgage rates can vary from one borrower to the next due to a number of factors, including credit history and the type of loan being used. The numbers presented above are based on averages reported by Freddie Mac.
When you’re looking to buy a house, you might think it makes sense to go directly to the listing agent who’s listed the property for sale.
Some of the more common reasons people give for doing so are:
- Why not? Doesn’t it just make sense… The agent listed the property and is the one selling it. They know all about the house.
- They know all about the owner, so maybe you can get some inside scoop and a better deal than if you had your own buyer’s agent in the mix.
- Isn’t it like buying a car? You have to go to the dealer selling the car, so don’t you go to the agent who’s selling the house?
- Some people say they just didn’t know any better.
- It’s just easier than finding and working with a buyer’s agent.
- It’ll be easier to deal with owner.
- And, last but not least, if the agent is representing both the buyer and the seller, people feel like the agent will get them a lower price. Either because the agent is getting “both ends of the deal”, and therefore making more money, so the agent has more incentive to get you the better deal… Or, since there’s no other agent involved, people feel that the price can be reduced by the amount of commission saved.
Some of the above is true to some degree. But, much of it is wishful thinking…or a complete misunderstanding of how things work.
So, let’s get into a few thoughts to help you decide if it truly makes sense for you to go directly to the listing agent when you’re buying a house.
The listing agent represents the seller.
Stop! Listing Agent Represents The Seller
OK, in most areas the listing agent can represent both the seller, and the buyer. As long as it’s disclosed that he or she is representing both parties, and both parties agree.
That doesn’t mean it’s the best thing for you…or the seller.
Think about it for a minute. It’s pretty hard for someone to represent the best interest of both parties entirely. It isn’t impossible. But it’s tough.
And the first person the agent represented in the scenario is the seller. So it’s safe to assume that the agent probably has more allegiance to the seller. And if the listing agent doesn’t…if the listing agent helps you, the buyer, get an upperhand, well, that just doesn’t feel or sound right.
But, if that sounds good and right to you, and you find a listing agent who’s cool being in cahoots with you, then more power to you. The thing is, most real estate agents don’t play that way.
So, at best, you are “hiring” someone to represent your interest and the interests of your opponent. Think of it this way, would you hire the same lawyer to represent you and the person you’re fighting in court?
No, buying a home isn’t always that kind of battle, but the transaction is certainly large enough that it makes sense for you to have your own representation.
You should have someone representing you as the buyer. Hire your own buyer’s agent. Hire someone who’s going to help you get the best house, at the best price and terms.
If a listing agent pushes you to work with them…
Sometimes a listing agent will either hint at, or outright say that if you want to get the home for a better price, or get the home at all, you need to work directly with them.
The minute you hear that, run for the hills. Go find another agent. Work with the other agent to buy the house. And consider reporting the listing agent who said that. That is a huge red flag.
You have every right and option to choose your own agent to work with. No incentive or fear of loss should be implied for you to work directly with the listing agent.
This is especially concerning if you are already working with your own agent, and the listing agent knows that, and suggests or pressures you to not work with the agent you are already working with. If that happens, make sure to tell your agent. Let your agent take it from there…and don’t worry about it losing you the house or a better deal. It probably won’t.
Buying is a process.
At least buying should be a process.
Haphazardly looking at homes you come across online, or by driving by can cause you to miss homes that agents are seeing come on the market. Or ones that you may have overlooked, that they may point out to you as a great option, once they get to know you and your wants and needs.
When you work with one agent for the whole process, (at least a good buyer’s agent), you’re more likely to find, and not miss the best house for your needs. As much as the Internet allows you a lot more access to the inventory nowadays, it can be hard not to miss something, or overlook a great option on your own.
And when you work with an agent from start to finish, you build considerable trust. And that trust translates into getting yourself a better home, at the best price possible.
But when you’re just out there on your own, going to see every house you look at with a different agent, with no intention of working with that agent if you don’t buy that one house they are showing you…that spells disaster. If the agent only has that one shot with you, there’s a higher chance of an agent pushing you or selling you on doing something.
A great buyer’s agent who you have a committed relationship will look out for you and your best interests. So, before you even get serious about looking at homes to buy, do yourself a favor and find a great buyer’s agent and hire him or her.
Going directly to the listing agent has less upshots than it does potential downsides.
Buying a home is the biggest investment you’ll likely ever make, and it has all sorts of implications for your personal and financial future. This is why it’s so important to work with the right agent and not the wrong agent.
Too many people don’t realize just how much can go wrong if they make the wrong hire. There are some very serious problems that can arise if you accidentally work with the wrong person to buy or sell a home. Here are some of them:
1. The wrong agent is not listening
A professional real estate agent (or any other professional for that matter) will take the time to listen and understand their client and the client’s needs. The wrong one, however, isn’t going to listen to what you have to say, and will instead focus on what they want for themselves.
This will set the precedent for the rest of the process and make any real estate transaction a miserable experience. An agent who doesn’t take the time to know your wants and needs will cause you stress, confusion and heartache.
2. Bad advice
If there’s one thing you need a competent agent for, it’s the advice they’re able to provide. A good agent will serve as your trusted advisor, guiding you through the myriad of decisions you’ll make when buying or selling a home.
A bad agent, however, will either give you advice that’s not based on any experience or research, or is just plain self-serving. This can cost you financially or prevent you from accomplishing your goals altogether.
3. Failed negotiations
Lots of people consider themselves good negotiators, but very few actually are. While negotiating might be just one part of real estate, it’s an important one. You need someone on your side who’s working in your best interests in a competent and effective way.
A bad agent will either negotiate in such a way that attainable deals fall through, or will simply negotiate in their own best-interests rather than the interest of their clients (you).
4. Lack of responsiveness
This may or may not be one of your pet-peeves, but unresponsiveness in something as complex as a real estate transaction can be an absolute nightmare for the person whose money, home, and future are on the line.
A great agent and is available most any time you need them (within reason). The wrong one, however, will let your calls, messages, and emails go unanswered while you worry yourself sick about what’s happening (or not happening).
5. Missed opportunities
Real estate is a business that moves quickly, especially when the market is hot. Even when there’s high demand, there are still opportunities for buyers, and a good agent will know how to spot them and take advantage quickly.
The wrong agent will miss good opportunities because they’re unable to recognize them, will move too slowly and miss them, or just generally not care.
6. Legal pitfalls
Real estate is complex by nature, and legal questions arise on a frequent basis. Thankfully, good agents have the knowledge and resourcefulness to help you navigate them and can find solutions even if they’re not immediately apparent.
Hiring the wrong agent will mean that when the inevitable problems creep up during the transaction, they’ll either give you the wrong advice on what to do, or will simply look at you and shrug their shoulders.
7. The process won’t be enjoyable
There’s no rule that says a real estate transaction has to unpleasant. Yes, it’s a lengthy process that has lots of implications. But if you take a step back and think about it, buying or selling a home is usually a positive thing—whether it’s an upgrade, a money-saving downgrade, or a general lifestyle change. You should work with someone who can at least make it a pleasant experience.
And that’s the thing about hiring the wrong agent. They’re all but guaranteed to make the process one that you won’t enjoy.
So choose your next real estate agent wisely; your happiness—and the height of your high five when it’s over—will likely depend on it.
Farmington Hills as with a lot of markets throughout the country, there is a Farmington Hills Michigan Housing shortage of real estate inventory. There are basically more potential buyers than there are suitable properties listed for sale. Buyers and sellers have unique experiences under these circumstances. Here is how the Farmington Hills Michigan housing shortage impacts buyers and sellers.
More Home Buyer Competition
Insufficient inventory generates a competitive market for potential home buyers. Properties new to the market will normally generate lots of interest. Properties will often receive more than one offer and sell fast. Under these conditions, anticipate properties to demand above list price. What should buyers know?
Buyers must be in a position to act. A pre-approval is normally required to do so. After seeing a listing, buyers must make decisions very quickly. Even just one day may make a difference. Finally, offers should be clean and simple. You may have just that one chance. Negotiating a reduced price is usually only effective if the property has been marketed for an extended period of time and with no competing bids.
An Ideal Time to Sell
Sellers thrive in this market. It is stressful preparing a home for showings, so quick sales make the process easier. In bidding situations, they are also in a position of strength and can accept the buyer of their choosing.
Sellers must be cautious not to overprice in this market. Maximum sales prices are generally procured by correctly pricing to begin with. Overpricing can backfire in this, and in fact any, market.
Buying and selling concurrently will be a struggle in this market. Although you might be able to promptly secure a buyer for your existing house, it may require more time to find a new house to purchase given the low inventory. Finding a buyer with a fluid time frame will make a big difference. You may also want to use temporary housing to give you more time to locate a new home.
How The Farmington Hills Michigan Housing Shortage Impacts Buyers And Sellers
In general, how the Farmington Hills Michigan housing shortage impacts buyers and sellers is the typically shorter selling time but a potentially extended buying one. Sale prices will also be higher. It is important to understand the condition of the Farmington Hills Michigan market if you are attempting to buy or sell. Set reasonable expectations for both price and time frame. Connecting with an experienced agent like myself will help you through the process. Tom Gilliam-RE/MAX Classic 248-790-5594
Property inspections can be a confusing step in the real estate buying process. Home buyer emotions tend to be high and there is a lot of information to process. Understanding how inspections function may make it less difficult to deal with when the time comes. The following is advice on interpreting Farmington Hills Michigan inspection reports.
Inspections afford buyers the chance to scrutinize the major systems in a home, analyze more closely the property features, and understand how everything in the property functions. Buyers should select a certified inspector to perform this task. They typically inspect the hardware, utilities, and structure of a home. Inspectors take varying techniques, but most will check the exterior and interior and provide a comprehensive report. Home buyers should stay with the inspector and see as much as possible about the home. If any problems are identified, buyers should view the area in question personally and get a complete understanding of it. Remember that even though inspectors attempt to complete a complete inspection of each area of a property, they cannot view into walls and other unreachable areas, so there are limitations.
When home buyers see a home, they understandably only notice the most visible defects. An experienced inspector will uncover issues that may not be obvious or disclosed and write those problems in a report. Buyers must then form an opinion about the details of the issues. Attending the inspection will, again, help with this.
Suggestions for Renovations
Also included in inspections are basic suggestions for home owners. These are not necessarily critical items, but rather ways to protect against future ones or to improve the benefits of a home. For instance, an inspector may suggest that the grading around the foundation be increased to diminish the likelihood of water entering the foundation.
Interpreting The Report
Buyers must interpret inspection details and distinguish defects from suggestions. They can try to negotiate issues, but it is not prudent to ask sellers to perform upgrades. Properties are generally priced based on age and condition. If upgraded throughout, it would be priced higher than the existing price. For things that are in fact issues, a negotiation process must be completed.
Advice On Interpreting Farmington Hills Michigan Inspection Reports
Speak with your real estate broker for suggestions on how you should proceed. Remember that inspections cover both defects and general tips, and that attempting to demand upgrades can compromise the deal. Inspections are not an opportunity to renegotiate price but rather a chance to resolve serious problems that were not predictable. Consider different strategies and potential results with your real estate agent. This advice on interpreting Farmington Hills Michigan inspection reports was provided by Tom Gilliam at RE/MAX Classic. Contact Tom for more assistance on home inspections and other procedures related to the home buying process.