Are they thinking about the season finale of  “30 Rock”?

Have they taken some Smiley-Grinny pills?

Did someone just tickle them?

No. They all just bought their first home. That’s right. They purchased real estate.

“But that can’t be”, you might say. “Don’t they know that it’s a BAD IDEA to buy real estate these days? Don’t they read the papers?! Someone should have stopped them!!”

But just look at Mindy…

And Ken….

And Karen….

And Feliz and Maria…

So, why ARE they smiling? Because, frightening press stories nothwithstanding, they know that owning your own home is a good thing. They are all first time buyers and were able to get good interest rates. They worked with a reputable lender, looked at homes that met their needs and their budgets, asked good questions and are all now enjoying the personal and financial rewards of investing in their futures.

Mind you, not one of them is looking at their houses as if they’re slot machines, spewing cash. Again, here in the Greensboro NC area, we’ve never looked for double digit appreciation. Steady, sustainable growth. That’s us.

And that’s why they’re smiling.

Now, drop me a note and let’s see if we can get grin out of you.

Tags: 1st time buyer, buyer's market, Greensboro real estate, home buyers

Well, lots of reasons, actually.

Granted, if you’ve always wanted to be featured on an episode of “Flip That House” or “Property Ladder” or the lesser known “Watch Me Get In Way Over My Head About Something I Know Very Little About”, the ship may have sailed on you. But that’s not necessarily a bad thing.

The truth is, buying a house makes sense now just as it has for generations and for the same reasons: stability, pride of ownership, security.

Yes, security.

“Crack Kills”, you may be thinking to yourself. But no. I’m not high. There is security in owning your own home. As much security as in anything. Where things have gotten of track in some markets is that some folks started thinking of their houses as slot machines wired to come up a winner on a regular basis instead of thinking of them as….houses.

Buy a home, stay in it for an extended period of time, expect a modest increase in value, and when you sell you should have built equity and walk away with cash in your hand.

But even if you break even after selling, you are still a winner. You will have enjoyed the impressive tax benefits of deducting mortgage interest and property taxes. And, unless you are living in your parents’ basement rent free, you have to pay to live somewhere, right? Better to pay your own mortgage than pay your landlord’s mortgage.

Talk to a good lender, borrow within your means, look at homes you can afford, pay your bills and start relaxing about whether it’s time to buy a house. Because, if you qualify for a mortgage that is comfortable for you and you will be in the same place for a few years, it’s time to buy.

Really.

Tags: Greensboro, Real estate market, realtor

A while ago I wrote about the difference between two very important components of the home buying process: the appraisal and the inspection. I covered a bit about the appraisal in the previous post.

The inspection is key to making an informed decision. After all, it’s one thing to buy a pair of shoes that pinch your feet and another all together to buy a house and find there are too few piers holding up the joists that it up.

A home inspection is not required by anyone. The bank will not require one. The insurance company won’t. And the seller certainly won’t. But it is always a good idea.

What will the inspection show? Well, a general home inspection is just that - general. In North Carolina home inspectors must be licensed by the state. But they do not need to be structural engineers, electrical engineers, licensed plumbers or have x-ray vision to see behind walls. They will check those parts of the house to which they have access without moving furniture or lighting pilot lights that are out. They won’t fix issues that they find. That’s not their place or job. You hire them to note their findings. Its between you and the sellers as to what, if anything, needs to be corrected.

And keep in mind that when you’re buying a “used house” - as opposed to new construction - you shouldn’t expect to get a place where every floor is squeak-free and all cabinet doors hang plumb. What you want is to make sure that all major systems and components are in good repair and performing the function for which intended. For example, a roof may be 17 years old, and it could be guessed that it’s closer to the end of its useful life than the beginning. But a roof has pretty much one function: keep rain out of the house. So, if the shingles are all where they’re supposed to be and there isn’t evidence of leaks or rotten wood, an old roof is not really a repair issue. It’s a “heads up” issue and you should keep your eye on things and prepare to eventually have to put on a roof.

On the other hand, if the hall bath sink is leaking, it’s perfectly reasonable to ask the sellers to have the issue corrected.

And if you find that the floor joists are rotten and were installed incorrectly in the first place - ouch. That is a time when you’ll be so glad you spent the money on an inspection.

There’s much more to the what’s, when’s, how much’s, and how’s, but keep in mind that an inspection is performed for you to be able to move ahead with your purchase as well informed as possible. It shouldn’t be seen as a way to ‘get out of a contract’, as one shouldn’t enter into a contract for a property unless you actually want to buy it.

And it shouldn’t be feared. Contact a good home inspector, ask about cost and what’s covered.

In some parts of the country, it is becoming more and more difficult to say what a property is “worth” when talking in comparison to closed properties in the neighborhood. And looking at recent sales, or “comps”, is what an appraisal is all about.

But as some neighborhoods are more and more impacted by foreclosures or otherwise distressed sellers just trying to get out from under their mortgages, those comps may pull the values of surrounding homes down - on paper, anyway. And paper is where the loans are made.

In my area, Greensboro, NC and the towns around, this has not been so much of an issue. But what if you’re under contract to buy, which means you and the seller have agreed to the purchase price and other terms and the appraiser comes back with a number that is lower than that agreed upon price?

First of all, NO ONE likes it when this happens. Not the lender, the agents involved and certainly not the seller. But what to do? The findings can be challenged. Appraising is part art and part science. So, if there are good comps which may have been overlooked that justify the price, then a good appraiser can take those into consideration. Talk with your lender about what to do.

The seller can agree to take the lower price. Ouch. But if they don’t, you’re not obligated to purchase the property. Even if you are willing to proceed, the lender will have something to say about it.

The bottom line is that - emotional distress aside - you as a buyer are not at much risk by a low appraisal. And in the Greensboro area, it is not a common occurrence.

So, if it happens, breath deeply, talk to your lender and your agent, and move forward.

I leave town and go to the beach for a little break and what happens? Everything goes to the proverbial devil. When I left town, the financial markets were feeling queezy. By the time I returned it seems that everyone was positioned in front of the porcelain god with a wrenching case of the dry heaves.

Holy Moly.

Bear Stearns, the investment bank that’s been around since my grandfather was a young man had what amounted to a run on the bank. (You know, like in “It’s A Wonderful Life” when Jimmy Stewart had to interrupt his honeymoon to keep nervous depositors from taking out all their cash, leaving the bank with no funds but managed to calm everyone down and save the day..)

Well, where is Jimmy Stewart when you need him?

I guess JPMorgan and the Federal Reserve will have to do.

What does all this have to do with the price of houses in Greensboro? So far, not much. What does it have to do with people’s attitudes about buying - and I mean buying ANYTHING, from cars to houses to imported cheese?

Plenty. And it does reflect that credit is getting tighter and tighter. And what that means is that a buyer needs to have all their ducks in a row, keep their credit score up (pay your bills on time…pay your bills on time….pay your bills on time) and have a bit of money to put down towards the purchase.

I’m not going to say that all is rosy, even in our corner of the world where things have percolated right along during these weird economic times. But around here things are better than in most places. And for those who manage their finances, work with a good lender and want to buy, give it a try. Call or write me.

Let’s put ourselves in a Jimmy Stewart frame of mind. After all, this really is a wonderful life.

When a house for sale has an offer to purchase made and the seller and buyer come to an agreement on all the terms, sign and initial where appropriate and delivery of the contract is completed, that property is said to be “Pending” or “Under Contract” or “In Escrow”, depending on where you are. That means that - if all the parties follow through with their obligations - the property will close and change hands.

Pretty straight forward, right?

I get asked on a regular basis - usually by a client who is the buyer - whether someone else can buy the house ‘ out from under them’. They want to make sure that all the stress they’re going through will pay off with a new house.

The answer is that, while the contract between the parties is binding on all, it ain’t sold until it’s closed and the deed recorded. For that reason, offers can continue to be presented to the seller up to the last minute. The very last. As in, until the register of deeds at the county courthouse has stamped the paperwork, reflecting the new owner’s information. Further, not only can offers be presented, they must be, by NC real estate licensing law.

But a presented offer cannot override a contract. So, if you’re worried about being bumped out of position on a house which you’re buying, relax. If you’re hoping to buy a house that someone else beat you to - sorry. Unless the original contract falls through for some reason, you’ll need to start looking at other houses.

The good news is, I can recommend a really good agent!

I can clearly remember the moment when I thought my new, young husband had lost his mind and that I had married someone who must have bumped his head as a child. It was when, as we sat in a Chinese restaurant on the town square in Chelsea, Massachusetts that Cute Husband said, “We need to buy a house”.

I blew noodles and soy sauce all over him laughing.

I was only 23. He was only 21. Yes. I was a child and he was virtually a toddler. And we had a new born - the wonderful Lindsay - to boot.

Buying a house was something I associated with magic. Or at least with adults. Who were we to think about doing such a thing?

But the truth is, it ain’t magic. Or brain surgery. Or impossible.

And even in these weird real estate times when the sky seems to be falling, buying a house is pretty straight forward. What it takes is determining your price with a good lender, getting associated with a good Realtor (hmmmm… To whom could I link you on that score?…) and jumping in.

It’s all about the numbers. If you pay your bills on time, have a job and want to join the ranks of those who get to itemize deductions on tax returns, then start the process. I am happy to answer any questions you have, whether you live in my area or not. I believe in homeownership.

After I stopped laughing at Cute Husband for having the nerve to think we could buy a house, we started looking and - wonder of wonders - we bought a house. He, Lindsay and I moved our little selves in and never looked back. Since then it’s been two more children, a few more houses and and plenty of admitting that if all had been left to me, we’d still be living in a 3rd floor walk up with bad heat, paying too much in rent.

So, don’t be like me. Be smart. Be brave. You won’t regret it.

When the Federal Reserve members got together really, really early on Tuesday morning - or late, late Monday night - of this week and did what they did, true financial news was made.

And what they did was drop the overnight funds rate (what banks charge each other as they make use of your money and mine) an incredible 3/4 of a point. A “point” is 1% interest rate. You may here about mortgage lenders charging a “1 point loan origination fee”. That means they’ll charge 1 percent of the loan amount to make the loan. More about that later…

So, back to the Feds. The reason they made this dramatic move was that international stock markets were in what can only be described as a melt down on Monday. In one of the few lucky breaks our economy has had in recent months, our stock market was closed for the MLK holiday so was not melting down. And the Feds wanted to make sure the heat was off when the opening bell sounded on Tuesday. A broad stroke was required to calm nerves. And stroke they did. And while the market dropped a bit down on that day, it was nothing like the 5%, 7%, 10% losses the other markets had experienced on Monday. And the market was up for the week by Friday. First time in 2008 that’s happened.

What does all this mean to you? It means that interest rates on mortgages are as low now as they’ve ever been. My favorite lender was quoting 4.875% on 15 year loans for a short while this week.

4.875%!!!!

So, if you are even thinking about buying a house, particularly in my neck of the universe here in Greensboro, NC, and if you have decent credit, the TIME IS NOW. Again - and I am running the risk of being the online version of a broken record (for those of you old enough to know about vinyl records) property values in Greensboro are not in the boat some other areas are. We aren’t seeing values drop. So buying is a good idea.

It’s a buyer’s market. This doesn’t happen often.

Plenty of inventory.

Crazy low interest rates.

And me!

What more could you ask?

I get this question often from both first-time buyers and those who have purchased property before. It’s a good question. And at some point a buyer will often wonder whether the appraiser, home inspector, Realtor, lender and all other parties involved in the transaction are happily colluding in order to close a deal, whether or not it’s in the best interest of the buyer.

There’s no doubt that there have been unscrupulous “professionals” who have engaged in a wink-wink/nudge-nudge mentality or turned a blind eye to issues that should actually raise red flags and perhaps stall or tank the deal. But those parties have always been in the minority and now that a bright light is being shown on real estate loans, they’re running back under their rocks. They’ll most likely turn up in another industry but, thankfully, they’re going to find it more difficult to jack things up in real estate.

But back to the main topic: The difference between an appraisal and a home inspection is that the appraisal determines the dollar value of a property. A home inspection checks out the soundness of the main systems of a property to see if things are working as they should.

The appraisal is required by the bank to verify the house is worth what they’re lending.

The home inspection is not required by anyone but is always a good idea.

You as a buyer will generally be expected to pay for both the appraisal and the home inspection, and usually “up front”. That’s a good thing.

Why?

Because it should give comfort to know that the appraiser and the home inspector won’t have a vested interest in whether the transaction goes through or not. They’ve performed the service and been paid. If the deal falls apart, it won’t impact them. So you as a buyer don’t have to worry that people who are supposed to being verifying that you’re buying a good house aren’t setting you up for failure.

I’ve also been asked how it is that the appraisal can come in exactly where the contract price is. That has made more than one of my buying clients scratch their heads. And I understand how it can look fishy. “How can the appraisal come in EXACTLY at $219,900 when that just happens to be the purchase price? What’s up with that??”

The reason is that the appraiser knows the contract price as soon as they get the order. They are hired by the bank - although the buyer pays for it - in order to verify the value. The bank wants to make sure that they are making a good loan. The appraiser’s job is to support the price.

But if they can’t, they won’t.

I’ve had lenders advise me that an appraisal has come in lower than the contract price on a pending sale. Fortunately, very often the seller will just adjust the price and the buyer comes out even better. At the very least, the standard “Offer to Purchase And Contract” that is used by Realtors here in North Carolina protects buyers from having to close on a property when the appraised price is not at or above the contract purchase price.

In short, if the appraisal comes in lower than the contract price, the buyer is not obligated to close.

The home inspection is a whole different story and will be for another day. Or three. (Inspections are where transactions can get REALLY interesting!!)

The press is consumed with a short list of topics: the presidential race, Brittany’s level of psychosis, and the state of real estate. And it’s a toss up as to which of the last two are the most screwed up.

No doubt that the real estate market in many areas is struggling. And in some places prices are dropping precipitously. But not everywhere. Not here in Greensboro, NC.

As I’ve written several times, our market has generally enjoyed steady but modest increases in prices over the years. It has been good, sustainable growth. Since we didn’t see double-digit jumps in values as did some markets (California, Florida, Nevada) we aren’t going through a “correction”. Our prices, for the most part, have continued to increase, even midst the dire reports in the news.

Of course, there are - and always have been - exceptions. For those properties that are in foreclosure, the price may be lower than others in the neighborhood. But not always. And some large volume builders have started offering incentives to lower their inventory. But not all builders.

In general, homes in the Greensboro area continue to sell at about 95%-97% of their asking price. This can difficult for buyers coming in from other parts of the country to accept. And really hard for those who have bought into the idea that all sellers are ready to get rid of their homes at fire sale prices. It just ain’t happening.

All that having been said, it is certainly a Buyer’s Market. What that means in this area is that there is more inventory on the market than there was 18 months ago and that homes are remaining on the market longer. And interest rates are great.

Does this mean that the seller whose property is listed at $245K will knock $15K off the price, pay $5K towards your closing costs, throw in a fridge and baby-sitting for year? Well, you can try. But be prepared to so irritate the seller that they refuse to negotiate with you. You may end up paying more for the house than you would if you had made a reasonable offer in the first place.

Best advice is to connect yourself with an experienced Realtor who can provide you with some guidance, comps, etc., and then listen to that person!

If your goal is to get someone to come off their price by 15% or 20%, then just look at overpriced houses. If you want to buy a house that you’ll be happy to come home to every day and that’s worth what you’re paying, look at the properties that meet your criteria, take advantage of the low interest rates, and be happy that you can take advantage of having so many good choices.

There. I feel much better.

Now, will somebody please help Brittany get herself together!?