Top Ten Reasons to Own a Home

“Real Estate segment with our Residential Expert Cheryl Marlow, at Keller Williams Realty!”

Good morning, Cheryl! So today you want to give us some great reasons to own a home, is that right?

Good morning, Bob! Yes, I do! Let me start off by saying that home ownership is an intrinsic part of the American Dream, and it is an amazing feeling to walk through the front door of a home, and know that it’s yours. Not only does owning your own home give you a reason to be proud, but it’s also a great financial move. Purchasing a house is probably one of the largest investments you’ll ever put so much effort and fiscal responsibility into; with time and patience, it reaps great rewards!

What are some of these great rewards?

In my opinion, the top ten reasons to own a home are:

1.   Real estate appreciates in the long term, giving you a good return on your investment.

2.   The alternative is to pay rent, which benefits your landlord and does nothing to improve your finances!

3.   The interest on your mortgage is tax deductible!

4.   In an emergency, you can borrow against your home equity.

5.   A home is a leveraged investment using the bank’s money if you’re financing a mortgage. Who wouldn’t be excited about that?

6.   A home purchased with a fixed rate mortgage has a stable payment schedule that becomes easier to pay over time because of inflation.

7.   Owning a home is a good way to diversify your assets.

8.   Home ownership clear of debt will help you retire comfortably.

9.   Owning a home is still one of the most important steps towards financial success and security!

10. And, of course, you can always change your home by painting, remodeling, landscaping, etc., and the only person that benefits is you!

Great reasons! Is there anything else you’d like to touch on?

Bob, when the real estate market changes, concerns rise about whether or not it makes sense to purchase a home in a particular market environment. With today’s affordable home prices and low interest rates now is a great time to buy your first home or to sell your current home and purchase your dream home!

Home Inspections & Warranties

This morning we have a guest speaker with us today, Mr. Scott Herrmann of ABQ House Detectives and Assurance Home Warranty, filling in for Cheryl Marlow. Good morning, Scott. Can you give us some information on home warranties and how they work?

Good morning, Bob. We have had great success working with many of Cheryl’s clients for several years. As a licensed home inspector, I would advise obtaining a home inspection and warranty, and here’s why. A home inspection is vital to the process of purchasing a home, negotiating repairs, and fully understanding how to take care of your new home.  A home inspection should reveal potential repair items, which, in turn, can save both buyers and sellers thousands of dollars.

Tell me about home warranties.

A home warranty is a one-time annual premium that is renewable, and covers either the repair or replacement of these home system components that often breakdown. It’s simple: when it comes to home warranties, we PREACH. Plumbing, roofs, electrical, appliances, cooling, and heating.

So what kinds of problems do warranty companies run into?

The most common issue is when people assume certain things are covered, when, in fact, they aren’t; or they fail to contact their home warranty company before making repairs. So the lesson to be learned here is that it’s important to read and understand the warranty contract thoroughly in order to ensure that you’re covering all of the bases. You can also contact me directly with any questions!

It certainly sounds like home warranties are important!

They most certainly are! Warranties protect all parties involved in a home sale transaction. They protect buyers and sellers from unexpected expenses that can end up burning holes in their pocket. Because buying a home is such a big investment, and probably one of the most important purchases you’ll ever make, it’s imperative to work with professionals, from your Realtor, to the inspector, to the home warranty company.

Scott, you had mentioned roof coverage.

Well, yes, Bob. Let me forewarn you that I have found home warranty companies out there that provide limited or no roof coverage, but at Assurance Home Warranty, we do cover roofs. At Assurance Home Warranty, we have the highest available coverage, which is just one of the many reasons that, as an inspector, I feel confident they offer our clients the best warranty value. 

Showing Feedback

I wanted to ask you about showing feedback. One of my friends has their townhouse for sale and their agent told them that feedback was not important. They’re in another state, or of course I would have had them list with you! You’re the expert, is feedback important or not? 

This is something that I’ve been discussing with our clients. The answer is both, it is and it isn’t important. Let me explain what I mean. The obvious feedback is that if that particular buyer didn’t make an offer on your house, then you didn’t win the price war and beauty contest in their mind. They found something else that they felt was a better value, and they bought a different home. It could have been many reasons, your floor plan, your neighbourhood, your price compared to the competition. The reasons are as varied as the buyers. At the end of the day, if you aren’t the best priced for the best home, you won’t win that price war and beauty contest.

It sounds like you’re saying no offer is the actual feedback and it doesn’t really matter what they thought of the house if they didn’t buy it.

That may sound harsh, but it’s reality. It’s a challenging situation as Realtors often don’t respond to feedback requests, and yet sellers want to know what they thought. As part of our customer service, we attempt to obtain feedback from every showing. We email the other agent three times and often try to chase them down by phone. In real estate, as in other businesses, 5-10% of the agents are doing 95% of the sales. I’m going to try to get that feedback from the other top agents because they are busy in the field every day and know what the competition is, and my clients appreciate it. If the agent doesn’t respond to three emails, it’s a safe bet their client has no interest.

So I’m officially telling my friends and everyone else that no offer is feedback! Ha ha :)

And I’m officially telling you and everyone else that getting feedback never sold a house! Ha ha :) 

Forecast for 2014

I know everyone is wondering about how the real estate market is going to perform in 2014. Can you give us your predicted forecast?

My real estate crystal ball remains cautiously optimistic for 2014! I predict that we will see the Greater Albuquerque areas continue to slowly stabilize. We will continue to be in a price war and a beauty contest with realistically priced homes selling well. I expect inventory will increase dramatically in the first and second quarters, which may create downward pressure on pricing as supply and demand drives home values either up or down. Overall, 2014 should see a higher number of sales than the previous year. I predicted 2013 to increase over 2012, and the final yearend figures should show an increase of over 1,000 sales. I’m optimistic that we may even experience home value appreciation.

Stabilizing sounds good. What about all of these foreclosures we’re hearing about?

As part of the market stabilization, we expect to see a continued decrease in bank controlled sales in 2014. A bank controlled sale is a home that either is bank owned through a foreclosure action or bank controlled through their willingness to accept a short sale whereby they’re accepting less than the homeowner owes on the property. In 2012, 30-35% of sales were bank controlled. As I predicted last January, the 2013 bank controlled sales dropped to approximately 25% of all sales.

Your crystal ball tends to be really clear! Cheryl, tell us a bit about mortgages and interest rates in 2014.

When historically low interest rates are enjoyed for an extended period of time, the only way to go is up. Interest rates will continue to slowly increase. This is a great motivator to buy now, instead of paying more later! Momentum continues to build in the housing market and there are still many opportunities to take advantage of the past few years of lower home prices and unbelievably affordable interest rates. These favourable conditions will not last.

Overall, you’re prediction is positive?    

                     

Again, I’m cautiously optimistic about the Albuquerque real estate market for 2014. For many reasons, New Mexico is a great place to live and own real estate. Whether you are a seller, a first-time buyer, or a move-up buyer, there are great opportunities in this market to take advantage of. Call me today and let’s get started. 

Potent Pricing

It seems like, for the most part, our market seems to be improving, so how important is pricing? 

You know, pricing is one of the hardest issues to deal with as a Realtor, because, quite frankly, every seller feels like their home is better than the competition, and that it’s worth more. Many potential sellers want to believe that their home is an exception to the real estate market downturn we have experienced since 2008. And I hate to be the bearer of bad news, but the reality is that we are still very much in a “price war” and “beauty contest!” Your home has to be priced extremely well in today’s market conditions in order to be the one to have that SOLD sign put in front of your house.

How many homes are currently available?

There are currently almost 5,000 homes available in the greater Albuquerque area. The absorption rate can vary month to month from 10-20%. In other words, 10-20 homes sell per month of the 100 homes available. This means that 80-90 people out of every 100 who would like to sell their home this month are not going to. Supply and demand drive value and I am encouraged by the improvements in our market. Understanding these numbers clearly these indicates that pricing is still critical! I am here to help sellers protect their equity; I’m not trying to beat them up about their price. At the same time, it is my duty to tell my clients the truth, because in pricing the home accurately, it will sell at a higher price in a reasonable amount of time.

It seems like buyers are still being picky about homes to purchase?

Yes! To see that sold sign in today’s market, you really need to be number one, two, or three in the market in terms of your pricing, as well as how well your home shows. You absolutely have to be the best all-around deal! Buyers are far less emotional in today’s market. For years, a buyer would fall in love with a house that they had to have, and then pay a reasonable price for it. Today’s buyers make a value-based business decision when purchasing a home. An agent like myself, with 27 years of experience and over 3,700 home sales has a different level of insight in understanding both buyers and sellers in today’s market. This is critical in negotiating a win-win home purchase.

Why A Buyer Chooses A Home

I would like to visit with the listeners about why a buyer makes the decision to purchase their next home, the things they desire and missteps by sellers. I think this can be helpful information for both buyers and sellers. If you’re like most people, you probably think that practical issues such as the number of bedrooms or kitchen amenities control the home buying process, correct?

That would make sense, yes!

Nevertheless, this is not the case.  Financial and emotional considerations have taken the lead when buyers view homes. Over 60% of homebuyers say the “feel” of a home is important and 78% place more emphasis on quality rather than square footage. We are seeing that buyers will no longer tolerate purchases of “as-is” properties. In our marketplace, we have recently seen multiple offers  for nice properties simply because buyers don’t want to deal with a lot of “projects.” Remember, we are still in a price war and a beauty contest! Buyers want the best deal on the best house! This doesn’t mean that sellers need to spend a lot to sell their home; there are some tricks to get that necessary first impression on good standing.

What are a few things sellers can do to help showcase their home and make a good first impression?

Every home is unique and with 26 years of experience, I can easily point out the key elements to draw buyers’ attention to the best features of your home. Overall, however, sellers should keep up on curb appeal, even in the winter time. Your yards and driveway free are the first impression they will see upon arrival. De-cluttering your home so that buyers can picture their own belongings in the floorplan as well as keeping dirty laundry and dishes away is definite bonus! If you have time, boiling some cinnamon before a showing is a welcoming scent, and fresh cookies are always appreciated! And last but not least, sellers staying for the showing is a no-no; buyers want to tour the homes with freedom of discussing their options. 

Market Familiarization

What are ways our listeners can familiarize themselves with our current real estate market?

Depending upon your motivation to move, that will change the various ways that you could select how to keep an eye on the market. For example, if you’re looking to move within the next year or two, I offer free monthly market reports delivered straight to your inbox. These will touch base on statistics such as price points and areas selling the best, indicating the strength of the market. You can then make decisions with knowledge of how the market has been and is predicted to be.

What if someone wants to buy within the next couple of months?

Now is the perfect time to buy! Last week I spoke about interest rates, and their potential and likelihood to reach 6% interest. This goes back to your motivation to move or buy a home. For those buyers that have a higher motivation level, we also offer a free, personalized, up-to-the-minute search that you can interact with. This is called a portal, and you can view a slideshow of property pictures, rate how you like properties, and save homes that you’d like to visit within the system. This system will notify you of price improvements/reductions on homes you’re keeping an eye on, and when new listings come on the market. This information is valuable because, as I’ve previously reported on, sites such as Zillow and Trulia are often inaccurate.

After someone has found a home, how is the offer price determined?

A Realtor with experience is extremely valuable in such an important transaction in your life. Part of the reason why that is the case, is that with my 4,000 homes sold, I am an expert on determining the value of a property. Knowledge of the areas in town, which affect value from one street to the next, comparing condition and upgrades, projecting resale potential, and many other factors are taken into consideration when analyzing the value of a home.