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4 INCENTIVES TO CLOSE DEALS WITH HOMEBUYERS

Almost a third of sales representatives say the hardest part of closing a deal is competing against lower-priced competitors, a Richardson survey found. Home sellers and real estate agents expect to face this challenge over the next few years, especially if Bank of America’s predictions about falling home prices starting in 2017 happen. Analyst Chris Flanagan, who correctly predicted bleak conditions in the subprime mortgage market in 2007, projects that the rise in housing prices will slow to 0.8 percent in 2016 before sliding into a modest decline of 1.7 percent in 2017, 2.1 percent in 2018 and 0.8 percent in 2019.

In a market with falling home values, sellers need to work harder to differentiate their property from other lower-priced competitors on the market. Here are some ways they can distinguish their properties with a unique selling proposition that doesn’t cut into their profit margin.

Financing

Affordability will be the biggest hindrance to homebuyers in 2016 due to rising interest rates, RealtyTrac predicts. A Trulia survey illustrates prospective homebuyers’ concerns with affordability. When renters were asked what would make them more likely to buy a home than rent in 2016, 50 percent of 18- to 34-year-olds and 40 percent of 34- to 55-year-olds answered being able to save for a down payment. Approximately equal amounts replied getting a promotion or raise. The next most popular answers were improved credit history and the fall of home prices. All these answers show that financial concerns stand at the forefront of prospective homebuyers’ concerns, and financing incentives can be the most compelling motivation home sellers can offer.

There are several ways home sellers and real estate agents can offer financing incentives to homebuyers. There are 2,290 down payment programs around the nation that offer an average assistance package of $11,565 per buyer, according to a report by RealtyTrac and Down Payment Resource. In addition, 87 percent of single-family homes and condos qualify for down payment assistance. Other programs provide below-market interest rate loans or 100 percent financing, mortgage credit certificates providing annual tax credits for the duration of a loan, and neighborhood stabilization program loans and grants. Other financing incentives include covering closing costs, providing funds to temporarily buy down interest rates and carrying back a second mortgage to help the buyer purchase the home.

Rebates

Another financial incentive real estate agents can offer homebuyers is rebates. Brokers can compete on price by refunding a percentage of their commission, which is usually half of a 5 percent commission. For instance, a 1 percent rebate on a median-priced home would save a home buyer $1,843. Ten states have laws restricting brokers from offering refunds, according to the Department of Justice , so agents need to check their state laws first.

Goods and Services Incentives for Buyers

Real estate agents and homeowners can offer buyers goods and services as incentives. For instance, a home warranty that covers the expenses of repairing or replacing home appliances can make a home sell 11 days faster for $2,300 higher on average, according to a Service Contract Industry Council study. Other possible incentives include gift certificates for a home inspection, hardware store merchandise or moving services.

Closing Bonuses

Offering a selling bonus to the buyer’s agent can also help a home sell faster, especially during a slow market. Helping Home Sellers recommends a few best practices when offering bonuses. Home sellers should offer the incentive to the buyers’ agents rather than their own agent. Real estate agents whose main concern is making a sale rather than maximizing profit should subtract the bonus from the bottom-line price they’re willing to accept. They also should let the buyer know how they came up with this price, so buyers know what a deal they’re getting.

Position Realty
Office: 480-213-5251

8 TIPS FOR GETTING THE NEW HOME YOU WANT IN A COMPETITIVE MARKET

Line up, and you only have to worry about the people in front of you, unlike the increasingly hostile environment of existing home purchases in popular areas – especially when all-cash buyers are shutting out those who have the nerve to need a 30-year mortgage. So how do you make sure you get the new home you want?

1. Be informed

If you have specific neighborhoods, communities, or builders you’re interested in, start researching and following them on social media, and set up Google alerts. The first line of defense is to know what’s going on so you can act fast to get the home you want.

2. Register your name on the interest list

Communities and builders reach out to those on their interest lists with news about model homes, property releases, new phases, and other updates. If you want to be among the first to know, make sure the community/builder knows about you. You also want to be aware that many new-home communities have a policy regarding real estate agent representation; you typically have to tour the community with your real estate agent on your first visit in order for your agent to receive a commission when you purchase. Which brings us to our next tip…

3. Work with a REALTOR®

REALTORS® have the inside track on new releases and in many cases will be able to alert you to important news before the public has been made aware.

4. Make a friend

It doesn’t hurt to makes friends with the sales agents in the community. They’re great resources for neighborhood details others might not be aware of.

5. Get preapproved

If you’re not preapproved for a loan when you go to buy a new home, you could lose it to someone who is.

6. Check for financing options through the builder

Using a builder’s in-house mortgage option won’t move you up an interest list, but it can provide other benefits. Depending on the builder, there may be incentives like closing cost help or upgrades for financing your home with their mortgage partner.

7. Talk to your REALTOR® about options and upgrades

This is important when securing your financing. The model home, if there is one, will likely be significantly upgraded and full of options that raise the price well beyond the base price. Having an idea of the options and upgrades you want, and the cost involved, is an important step in the process because it helps ensure you are approved for the correct amount. Finding out after the fact that you can’t qualify for the home you want because the decked-out kitchen you’re coveting has pushed the sales price out of reach would be a drag.

8. Familiarize yourself with the community and the properties

Intense community interest – the kind that incites campouts – can breed a frenzied energy and cloud judgment. And, you never know which homesites the people in front of you in line will choose. It could be that the one you were dreaming of is gone by the time you get to the front. Knowing the community well and having notes outlining which sites meet your needs will help you make an informed choice when it’s your turn.

Position Realty
Office: 480-213-5251

CREATE A BEAUTIFUL OUTDOOR SPACE ON A BUDGET

The lawn and landscape outside your home can be your own personalized creation, and it does not have to be expensive. It is through the effort of creating what you want within your limitations – both financial and physical – that you come to love the space you craft. By learning frugal methods to care for your lawn and landscape, you can have the lawn you want within the budget you can afford.

Xeriscaping

By installing native plants, mulching appropriately and minimizing the size of your actual lawn, you can save a lot of money on maintenance and watering. Your local Master Gardener group, or the local city government, will likely have information on xeriscaping for your area. Lush green lawns are certainly beautiful and pleasant to play on, but they are also resource intensive. Unless you are one of the lucky few that live in an area with heavy rainfall, you will spend large amounts of money keeping a large lawn alive. According to Bankrate.com, a 4,000 square foot lawn takes an average of 2,500 gallons of water a week to stay green, or about $400 a year in water costs.

Cost Effective Lawn Care Tools

Once you have minimized your lawn space, you can determine exactly what tools you need to care for your landscape. If the lawn is small enough, a push reel mower may be enough. Push mowers can be hard to use if you have physical limitations, though. Electric push mowers are also another excellent option. Older models used to require an extension cord, but newer models are often cord-free, according to Nature’s Finest Seed. Other accessories, like leaf blowers, can also ease your cleanup and make for a nicer looking landscape. Electric models are not terribly expensive, and can offer a quick solution to sidewalk clutter.

Compost Organic Waste

Composting is a wonderful way to recycle your food scraps into valuable fertilizer or top soil. Small bags of compost can be expensive and it seems silly to pay so much when you can just make your own. Pre-made compost containers are always an option, but you do not have to spend a lot of money if you have a little out-of-the-way space to make a pile. Chicken wire and wood scraps are enough to cordon off a small area for dumping your organic waste, including lawn clippings, food scraps, leaves and anything else the naturally decays. Remember to turn the pile every month or so, and eventually you will have your own fertilizer.

Outdoor Living

Be Water Wise

Water is one of the greatest expenses for the home gardener. Water conservation is in everyone’s best interest, and local city governments will often have information on how to conserve water across your entire home. Take the time to learn about minimizing the water use in your lawn, and it will save you money for the foreseeable future.

Add Value

Going green with your yard is great, but if done well it can also add to the value of your home. SFGate.com notes that good landscaping with a coherent layout and plan can add from 5.5 percent to 12.7 percent to the value of your home. On a $300,000 home, that can add up to $38,100 in value.

Beautiful lawns and landscapes do not have to be expensive. By adopting the above practices, you can begin creating the landscape you want within your budget. Not only will you save money, you will also do the environment a favor as well.

Position Realty
Office: 480-213-5251

7 Things To Consider Before Buying A Fix and Flip

Turn on HGTV or any number of other channels almost anytime during the day or night and you’re bound to find at least a couple of shows about flipping houses. Some provide a cautionary tale about overextending yourself financially or making other rookie flipping mistakes, but the vast majority end up with a profit of $30,000, $60,000, or $100,000+ in profit for a couple of months (or a couple of days, in the case of one new flipping show).

Enticing, right? If you’re getting ready to plunk down cash for your own flip, here are a few things you need to think about.

1. Make sure you’ve got the money

Sounds obvious, but…do you really know the financial stakes involved? “The first expense is the property acquisition cost. While low/no money down financing claims abound, finding these deals from a legitimate vendor is easier said than done. Also, if you’re financing the acquisition, that means you’re paying interest,” said Investopedia. “Every dollar spent on interest adds to the amount you will need to earn on the sale just to break even.”

If you’re planning to pay cash, you won’t have to worry about interest, but you will have carrying costs including utilities, property taxes, and HOA fees where applicable.

Here are a few other options for buying property to flip, courtesy of Auction.com: “If you don’t have enough cash to purchase a home, the next cheapest source is a home equity line of Credit (HELOC). These are low-interest, variable-rate lines of credit that are secured by either your primary residence or an investment property. Typically, the HELOC rate is set about 1–2% above the prime rate. You need to put the HELOC in place before you bid on any homes; then you can bid on the home as a ‘cash deal,’ rather than as a ‘financing deal.’ Many investors use hard money loans or other conventional mortgages to finance their flips. Because of the higher interest rates and points paid at closing, both will reduce your net profit considerably, and are not recommended for flips unless absolutely necessary.”

2. Buy in the best location you can

“Expert house flippers can’t stress this enough,” said MoneyCrashers. “Find a home in a desirable neighborhood, or in a city where people want to live.” And keep in mind the convenience factor—for the potential buyers, certainly, but also for you. “You will work on this house daily in the weeks and months to come. Do you really want to work all day, and then drive an hour to get home? Don’t invest in a house too far away from where you live; you will spend more money on gas, and it will take longer to fix up the house.”

3. Work with a realtor…or become one

Tying to maximize profit by selling a flip yourself rarely works out well if you don’t know what you’re doing. If you think trying to figure out if the wall you want to take down is load bearing is complicated, just try to figure out disclosures and conditions without going to real estate school. The money you spend on a Realtor commission can be well worth it for the ability to concentrate on other things and know the sale is in good hands.

Beyond getting the home sold, good real estate agents can be helpful in other important ways when it comes to flipping. “They can help you find great deals, get you comps, help you connect with lenders or contractors, and a lot more,” said BiggerPockets. “Don’t settle for an average agent though—find a great investor friendly agent.”

4. Check the comps. And check them again

Speaking of comps…you can’t make a smart decision on buying, fixing up, and flipping a house if you aren’t aware of the prices in the neighborhood. And that might be easier said than done. In states like Texas, home sales are not reported and are not public record like they are in states like California. Do your research so you know what you’re up against.

5. Make smart updates

Knowing where to spend your money is key to a successful flip. You don’t want to leave key areas untouched but you also don’t want to over-improve for the neighborhood. “Home improvements that increase the value of a home might include upgrading kitchen appliances, repainting the home’s exteriors, installing additional closet storage space, upgrading the deck, and adding green energy technologies,” said MoneyCrashers. “On the other hand, avoid home improvements that won’t increase the selling price, like installing a pool, installing a whirlpool bath, or adding a sunroom to the house.”

This is another good reason to use a Realtor who is a local expert: they’ll be knowledgeable about specific updates that are important in your market.

6. Use good products

Scrimping on construction costs may seem like a good idea if it means your financial commitment is lower, but low-end materials might not get the home sold or fetch the sales price you want.

7. Work with good people

Everyone you work with has the ability to make your flip a success or derail it. Partner with those you can trust, and don’t forget to make sure they’re qualified for their role. A bargain basement subcontractor that does a shoddy job on your floors can end up costing you thousands when you have to have it redone by a professional.

On the flip side, “The real money in house flipping comes from sweat equity, said Investopedia. “If you’re handy with a hammer, enjoy laying carpet, can hang drywall, roof a house and install a kitchen sink, you’ve got the skills to flip a house. On the other hand, if you’ve got to pay a professional to do all of this work, the odds of making a profit on your investment will be dramatically reduced.”

Position Realty
Office: 480-213-5251

Phoenix Residential Market ~ February 2016

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Average Sold Price_Monthly

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Active vs Sold Transactions

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Short Sales_Monthly

The current real time market profile (properties for sale) shows there were approximately 10,648 new listings (up 94 listings from last month) on the market in February 2016 and 5,833 sold transactions. Since the beginning of the year the number of new listings has exceeded the number of sold transactions which the recent interest rate increase by the Fed may entice property owners to sell and tighter mortgage underwriting guidelines for borrowers are preventing new purchases.

Since March 2015 (12 months ago), the average sold price has increased approximately +5.9% (up from last month), the average days on market have decreased approximately -9.8% (up from last month) and the number of sold transactions have decreased approximately -25.5% (up from last month). Since the month of September 2015 the average sold price has formed a new upward trend where each month the average sold price has gradually increased. Last year’s summer buying season was weak where we saw price decreases from June to September. If the number of new listings continues to increase and the number of sold transactions decreases, then prices in the summer may start to decrease again in 2016. Let’s hope this summer’s buying season is better than last year.

The volume of foreclosure purchases since March 2015 (12 months ago) has decreased approximately -38.8% and the volume of short sales decreased of approximately -28.6%. Since November 2014 the volume of foreclosure purchases went up and now the trend is back down once again. Also, since August 2013 the volume of short sale purchases have consistently decreased because the inventory of homes “up-side-down” have been exhausted and values have risen to a point where consumers can break-even or sell with some equity but some homeowners are still up-side-down depending if they purchased their homes between 2005 and 2007.

Since March 2015 (12 months ago), the number of homes for sale on the market have decreased approximately -1.4% or 25,745 homes for sale on the market to a gradually decrease of 25,221 homes. The total number of listings is still low as compared to 29,308 listings in April 2014. This decrease in the number of homes for sale indicates we are currently in a seller’s market (low supply and increased demand).

Real estate prices are still relatively low (near 2008 prices), mortgage rates are still at a historical low and the macroeconomic market is improving both in terms of prices and the overall economy. Give us a call to discuss your best investment strategy, TODAY!!

Position Realty
Office: 480-213-5251

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