Let’s face it. It’s intimidating to be a buyer on the housing market these days. 

There is historically low inventory, as construction has lagged behind demand. Continued low interest rates have enticed an influx of first-time millennial buyers, and soaring home prices have kept would-be sellers on the sidelines as they ride the wave. For the homes that are available, there are often frantic bidding wars with sales well above listing price to buyers with cash on-hand. 

These trends are particularly pronounced in the Triangle area of North Carolina, with the average home price rising by 17% through the first half of 2021, and LendingTree ranking the Raleigh metro area as the third-most competitive market for buyers in the country. 

While it is more important than ever to stay calm and level-headed as a potential homebuyer, there are steps you can take to ensure you are prepared to put your best foot forward when you are able to find an available home. 

Following these 10 tips will give you the best chance of making a winning home offer in a fast-paced, competitive market, even if sometimes the best move is to walk away. 

1. Get Pre-Approved — Not Just Pre-Qualified — from a Local Lender

Don’t confuse a pre-qualification letter with a pre-approval letter. A pre-approval is a more in-depth analysis of your financial stability. Rather than simply checking your credit score and quickly running a calculation of your income vs. assets ratio, a solid pre-approval letter should state that your file has been thoroughly vetted. Your goal is to prove to the seller that there will be no skeletons in your financial closet once you are under contract. Using a local lender will increase the seller’s confidence that the process will go smoothly.

2. Strategize with a Full-Time Real Estate Agent Who Knows Your Current Market

Making a home offer in a seller’s market is not a good time to give your newly licensed aunt or uncle a shot at breaking into the business. Find an experienced Triangle real estate agent who knows the current market and can confidently explain how they can help you navigate the real estate landscape. A full-time agent who responds to emails and texts during off-hours is always a wise choice.

3. Don’t Be Greedy

When buyers are in control of the market, it’s easy to ask the seller to pay for some of your closing costs, a home warranty or personal property like the refrigerator, washer and dryer. But when the seller is in control, you want to make the offer as clean as possible. Don’t be greedy and ask for seller concessions, especially in a market where some sellers are even waiving contractual contingencies. This will only reduce the seller’s bottom line and will make your offer weaker than the rest.

4. Go All-In with Your ‘Best and Highest’

Since many properties receive multiple offers within the first couple of days — or even hours — on the market, you may never get a chance to negotiate with the seller. It is not wise to start with a low offer. In fact, in a highly competitive market, you may never get a chance to modify your original offer. If this house is ‘the one,’ make sure you give your best and only offer.

5. Include a Healthy Due Diligence Fee

The seller wants to know that you have ‘skin in the game.’ Not only does your due diligence fee indicate you are serious, but it also gives the seller peace of mind knowing that if something happens and you cannot close, they will not be left holding the bag. Local market conditions vary, so be sure to depend upon your experienced real estate agent to advise you on an amount that might make the seller take notice. 

6. Tighten Up the Inspection Period

The longer of a time frame you ask the seller to allow you to complete inspections, the longer they will be biting their nails. Try to assure the seller that you do not intend to leave them in limbo for an extended period of time. Since you may be at the mercy of the home inspector’s schedule, your experienced agent might be able to draw from their recommended list of contractors. Always ask for referrals.

7. Consider Waiving Inspections on Newer Homes

Older homes might leave you with some uncertainty as to what may lie beneath the surface. But if you find a newer home that looks and feels nearly perfect, you might win the offer on a gamble that a home inspection may not reveal any deal-breakers. If this is the case, consider waiving your right to a home inspection. While it may not be wise to go in with your eyes completely shut, you could gain some leverage by communicating to the seller that you accept the home in its current, as-is condition and that you will not ask for any repairs.

8. Pay Cash and Waive the Appraisal

You’ve probably heard the old phrase that ‘cash is king.’ This certainly holds true when a seller receives multiple offers that include financing contingencies. If you are fortunate enough to be in such a position, a cash offer will keep the seller encouraged that the purchase won’t be killed by an underwriter a few hundred miles away. Your cash offer will rise to the top of the list. And since there is no underwriting involved in a cash offer, you have the option to waive your right to an appraisal.

9. Write a Personal Note To The Seller

Including a personal letter with your home offer can be a little risky, not to mention that it is sometimes discouraged by some real estate commissions. A letter describing you and your family with terms prohibited by fair housing laws is not advised. Instead, consider letting the seller know how you felt when you first entered their home or toured the community. You may also want to compliment them on how well they prepared their home for sale. Try using words that let the seller know they would be selling their home to someone who will love it as much as they do. You can make it personal, but be sure you are not violating any fair housing laws. 

10. Be Flexible on the Closing Date

Each seller will have different needs affecting their ability to coordinate their move with your move. Being flexible on the closing day and time will give the seller some comfort and breathing room as things progress. You might also want to consider including an option for the seller to ‘lease-back’ for a short period of time once escrow closes.  

It can be a stressful market for homebuyers, but considering and preparing for these steps in advance will focus your energy toward getting in front of the seller when the time comes. Just as importantly, you’ll be less likely to overpay for a home in the mad scramble and will feel more comfortable walking away when necessary. 

About Drew Ludlow:

With nearly two decades of real estate experience, Drew Ludlow is the Broker-in-Charge at Ludlow Real Estate Group, a real estate firm in Apex, North Carolina. He specializes in residential sales, first-time homebuyers, repeat homebuyers, short sales, and foreclosures. Drew is a licensed broker and a member of both the National Association of Realtors® and the North Carolina Association of Realtors®. He is a multi-million-dollar producer in residential and investment real estate sales, and considered to be a top producer among Realtors® nationwide.

The following is a guest post by the good folks at Bellhops, a modern moving company serving the Chicago and Raleigh areas. 

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Moving to a brand-new place is both an exciting and nerve-wracking experience. While there’s the thrill of starting a new adventure, you’ll also need to get used to a different dynamic in a place with a unique culture and background.

Before you buy your home in Raleigh, it’s worth getting to know the city and how it would differ from your life in Chicago. Let’s take a look at some of the things you’ll need to expect when moving from Chicago to Raleigh.

1. Less Cold and Snow

Though you’ll experience hot and humid summer days in both locations, you will be much less likely to experience frigid temperatures or significant snowfall in Raleigh.

Chicago’s average high temperature varies by 50 degrees throughout the year, from a high of 32 degrees in January to high of 82 degrees in July. Raleigh is typically a bit hotter in July, with an average high of 89 degrees, but its lowest high temperature in a given month is a moderate 50 degrees in January.

2. From a Blues and Jazz Hub to a Tranquil City

While Chicago is known for its 1920s gangster scene, its famous architecture, and of course, its blues and jazz music, Raleigh is more a place of tranquility.

If you’re looking for somewhere relaxed to settle down with the family, then Raleigh, the City of Oaks, could be the perfect place. The streets of Raleigh are often lined with trees; there are more than 100 miles of greenway trails; and the entire location has its own small(ish)-town Southern charm.

3. Comparable Cost of Living

Raleigh has become a hot real estate market in recent years because of the appealing high-tech R&D jobs available in Research Triangle Park. Because of this, homes in Raleigh have become a little more expensive on average than those in metro Chicago. That said, you will often get more for your money when buying family friendly homes in Raleigh, as four-bedroom homes cost about 16 percent less than those in Chicago at the time of this post.

If you’re looking to sell your house and move on to another mortgage, then you won’t see too much of a difference. Additionally, the sales tax costs in Raleigh are around 7 percent lower than the national average. Gas prices are also lower than the average.

4. The Family Friendly Vibe

Chicago, the Windy City, has a huge number of museums to explore, as well as Willis Tower, Millennium Park, and Navy Pier. On the other hand, when you move to Raleigh, you’ll find a selection of friendly and diverse residents ready to help you explore the city before you even unpack. While Raleigh has a more subdued nightlife than Chicago, there are excellent music venues for the occasional concert, tons of microbreweries, and plenty of museums to explore with the family as well.

5. The Food

If you’ve been a Chicago resident for a while, there’s a good chance that you have a strong relationship with food. After all, there are so many delicious things to eat in Chicago, from pizza and hot dogs, to more unique meals, like a Jibarito sandwich. Raleigh also has a fantastic scene for food, whether you’re in the mood for fine dining or lunch.

Raleigh residents can of course enjoy Carolina staples like sweet tea, pit-smoked pork, delightful southern-style brisket, and home-style vegetables, but the diverse community has also introduced mouth-watering international cuisines, from dim sum to Laotian dishes.

You’re sure to make plenty of great meals when you’re settling into your new home, but if you want to avoid the cleaning and go out to eat, there are countless restaurants to explore.

6. Shopping and Culture

Finally, if you’ve grown accustomed to the plentiful shopping in Chicago, you’ll still be set when you move to Raleigh. There are three major shopping malls in the area, as well as countless boutiques and stores to explore too. Check out the Triangle Town Center when you’re looking for new clothes or gifts, as well as the Crabtree Valley Mall for extra options.

Are you sold yet on a move from Chicago to Raleigh? Search the current Raleigh homes for sale to find your ideal place.

In news that comes as no surprise to me, my home base of Apex, North Carolina has been named the fastest-growing suburb in America by Realtor.com.

As an Apex REALTOR®, I have seen this growth first-hand. Great jobs in the Research Triangle have led young families to chose Apex for its close commute, historic downtown, fun festivals and events, and up-and-coming restaurants. I had the pleasure of speaking with Realtor.com for their story, as well as with the Triangle Business Journal and The News & Observer for their coverage.

Realtor.com compiled their 10 fastest-growing suburbs list by analyzing more than 7,000 zip codes outside of cities that were still within an hour’s rush-hour commute to the nearest urban center. Apex topped the list because of its large increases in home appreciation and listings during the past three years, as well as its population growth and share of new construction in Wake County.

The new construction in Apex, NC is booming to keep up with this country-leading growth. If you’re interested in learning more about the appeal of living here, check out my Apex homes for sale page.

 

 

 

 

Calm Down! The Real Estate Market is NOT Falling Apart

There has been tremendous volatility in certain markets over the last few weeks (for example, the stock and currency markets). When this happens, some tend to lump all of their investments together and create an almost ‘Armageddon’ scenario where everything loses value quickly and dramatically. Real estate is an investment that can get caught up in this hysteria. Does the concern about the current housing market have merit?

Financial advisors have been warning us for months that the stock market was ripe for a “correction.”

Experts have been questioning the value of alternative currencies for over a year.

In contrast, here are the opinions of three major players in the residential housing market:

Ralph DeFranco, Chief Economist, Arch Capital Services Inc.

“It’s premature to worry about a housing bubble. The typical warning signs – excessive debt levels, poor quality loans, exponentially increasing home prices, rising vacancy rates and/or poor affordability compared to the past, and a high number of internet searches on house flipping – are not present.”

Liu-Down, Genworth Chief Economist

“My thoughts on many recent discussions of ‘housing bubble’ – the bar for a housing bubble is higher than just prices being above some fundamental value. There must be widespread behavior change as well such as higher levels of fraud and speculation.”

Fitch Report

“US home prices are on track for a 5% nominal gain for the 4th consecutive year, returning national prices to their highest level since 2007. The growth has been driven by historically low mortgage rates and unemployment plus solid population and personal income growth rates…a meaningful correction should only be triggered by an unexpected economic shock.”

Bottom Line

Speculation has driven certain markets over the last year. However, it has not been speculation, but instead people’s desire for homeownership, that has driven the real estate market.

The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next 12 months.

 

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 7.0% from this time last year and are predicted to be 4.2% higher next year.

If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream home.

The housing crisis is finally in the rearview mirror as the real estate market moves down the road to a complete recovery. Home values are up, home sales are up, and distressed sales (foreclosures and short sales) have fallen to their lowest points in years. It seems that the market will continue to strengthen in 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

Here are the thoughts of a few industry experts on the subject:

National Association of Realtors

“Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.”

Joseph Kirchner, Senior Economist for Realtor.com

“The increases in single-family permits and starts show that builders are planning and starting new construction projects, that’s a good thing because it will help to relieve the shortage of homes on the market.”

Sam Khater, Deputy Chief Economist at CoreLogic

“Inventory is tighter than it appears. It’s much lower for entry-level buyers.”

Bottom Line

If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.

« 712,000 Homes in the US Regained Equity in the Past 12 Months!

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

We believe every family should feel confident when buying and selling a home.

What truly causes a housing bubble and the inevitable crash? For the best explanation, let’s go to a person who correctly called the last housing bubble – a year before it happened.

“A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation…Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the ‘bubble’ bursts.

I have taken to calling the housing market a ‘bubble’.”

– Bill McBride of Calculated Risk calling the bubble back in April 2005

Where do we stand today regarding speculation?

There are two measurements that are used to determine the speculation in a housing market:

1. The number of homes purchased by an investor and
2. The number of homes being flipped (resold within a twelve-month period)

As compared to 2005, investor purchases are down dramatically (from 23% to 13%) and so is flipping (from 8.2% to 5.7%). McBride explains:

“There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell). Back in 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation.”

What are the experts saying about speculation in today’s market?

DSNews recently ran an article which asked two economists to compare the speculation in today’s market to that in 2005-2007. Here is what they said:

Dr. Eddie Seiler, Chief Housing Economist at Summit Consulting:

“The speculative ‘flipping mania’ of 2006 is absent from most metro areas.”

Tian Liu, Chief Economist of Genworth Mortgage Insurance:

“The nature of housing demand is different as well, with more potential homeowners and far fewer speculators in the housing market compared to the 2005-2007 period.”

And what does McBride, who called the last housing bubble, think about today’s real estate market?

Sixty days ago, he explained:

“In 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation. And even more dangerous during the bubble was the excessive use of leverage (all those poor-quality loans). Currently lending standards are decent, and loan quality is excellent…

I wouldn’t call house prices a bubble – and I don’t expect house prices to decline nationally like during the bust.”

Bottom Line

Speculation is a major element of the housing bubble formula. Right now, there are not elevated percentages of investors and house flippers. Therefore, there is not an elevated rate of speculation.