There are some homeowners that would like to have a larger or nicer home or some that would like move down, move on or simply make a life-change, but are patiently waiting for the market to improve. A frequently heard objection is that sellers can’t sell their home for what they believe they need.

Buying up in a down market can be advantageous because while you might get less for the home you’re selling, you’re also getting the larger home for less. For instance, if you had to sell a $200,000 home for a 10% discount, you might feel that you left $20,000 on the table. However, buying a $300,000 for the same 10% discount would put you $10,000 ahead on the sale and purchase.

The other component to factor in is that when the mortgage rates could increase while you’re waiting for the market to improve, it dramatically increases your cost of housing with higher payments. The cost of housing is affected by price and mortgage rates.

To accurately evaluate your current options, you need facts and assessment tools that will provide you the information to make an informed decision. Don’t be afraid to brainstorm with seasoned and trusted real estate brokers, mortgage brokers and your CPA or tax accountant. Combine all that with your own research. Waiting might be the right option….but, it could be a long wait (with a lot of unknown financial variables). There’s no right or wrong answer, simply evaluate your and your family’s personal situation to make the best move!

]]> http://fabulousportland.com/2011/07/28/i-want-to-make-a-housing-change-but/feed/ 0 http://fabulousportland.com/2011/06/21/last-chance-for-romancing-low-mortgage-interest-rates/ http://fabulousportland.com/2011/06/21/last-chance-for-romancing-low-mortgage-interest-rates/#comments Tue, 21 Jun 2011 17:35:51 +0000 Janeese Jackson http://fabulousportland.com/?p=2478
“Last Dance”…Donna Summer

Last Chance….for Low Mortgage Rates?

Hey, I’m like the “rest of you”, I keep hearing that interest rates must rise (and, actually do really believe it).  All the same, that threat is reminding me of the story of the boy that cried “wolf”!??  That being said, fixed rate mortgages ARE at their lowest level for 2011 as reported in the current Freddie Mac weekly Primary Mortgage Market Survey. Buyers may have missed the opportunity last fall in October and November to purchase and many homeowners missed the chance to refinance at the record low rates. This may give buyers and homeowners another chance to buy or refinance and save money on their payments.  And, I can’t stress enough how interest rates trump price.

An important thing to keep in mind is that points paid in connection for refinancing a home are generally not considered prepaid interest and must be spread over the life of the mortgage. Some financial advisers suggest that you have the lender quote a “par value” loan to eliminate the points which will lower refinancing costs even though the mortgage rate will be slightly higher.  Just something to factor in while “running the numbers”.

Additional income tax information is available in IRS Publication 936.

Buy Now or Wait, How Interest Rates Trump Price!!

Uncertainty as to whether prices will continue to fall has to be one of the most common causes of buyer procrastination.  Paying too much wouldn’t be a smart thing but price isn’t the only factor to consider.  Interest rates have as much effect on housing costs as price.

A small increase in mortgage interest rates can offset a significant drop in home prices.  If the price of the home were to come down by 5% but the interest rates were to go up by .5%, the payments might be close to the same.

In the example below, if the price of $175,000 home went down 5% but the interest rate went from 4.75% to 5.25%, the payments would actually be $4.98 more at the cheaper price.  If while the buyer was waiting for the home to decrease 5% and the interest rate increased by 1%, the payments would actually go up by $55.30.

Then, of course, there is always the possibility that the price of the home doesn’t go down but the rate does go up by 1%.  The payments would be $104.58 more per month, each and every month for as long as you have the mortgage on the home.

You, of course, should consult with a mortgage professional and be comfortable with your ability to get financing and comfortable with all the numbers.  I can suggest several very professional and reliable mortgage brokers to interview.

As a Residential Finance Consultant, I will brainstorm with you to help you make better buying decisions and help you run the numbers.  A home is a place to feel safe and secure, to raise your family, share with your friends and an investment.  It’s an investment in your family and your future.  You owe it to yourself to check out the real numbers in your market because every market is different.  In the Portland area, even every neighborhood is different!

APRIL 2011 PORTLAND METRO REAL ESTATE UPDATE!!

And, so we hobble into Springtime in the greater Portland area, knowing full-well that we will quickly forget how tentative our Spring season is here in Portlandia once our awesome Summertime arrives (or at least that’s how I survive)!!  So, how is our real estate market surviving?  Well, I guess we’ll have to pull out that word “tentative” again.  However, we are experiencing continued activity with well-priced properties.  I was just involved in two multiple offer/over asking price situations on an investment property and a single family property, that completely took me by surprise.  But, of course, with the low interest rates and low pricing investors are anxiously trying to buy properties with the potential for cash-flow and home buyers are trying not to miss the low interest rates.  Recently there has been some talk suggesting the elimination of our mortgage tax deduction.  I think we all need to be very vocal about the repercussions of this on the housing market and our pocketbooks.  Overall, our local real estate market recovery is bumpy but trending upwards. Our stats are down from this time last year (we had the home-buyer tax credits artificially supporting the real estate market at that time).  We now have 7.1 months of inventory, which is comparable/close to the 7 to 7.3 months of inventory we had in April, May and June of 2010 with the tax credits!!  On the national level, Lawrence Yun (National Association of Realtors’ chief economist) says “Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20 percent above the low point immediately following expiration of the home buyer tax credit.”

BUYERS:  What does this mean for buyers?  It’s really a “more of the same” buyer’s market with the potential for an increase in interest rates.  And, I realize that the industry has been predicting that for quite awhile.  However, as the market continues to slowly (operative word: slowly) recover there will be a time that mortgage interest rates will have to reflect that recovery.  I have seen it before where interest rates suddenly start to rise and it can happen quickly and I can’t stress enough how interest rates trump price again and again and again!  There is a now again a conventional loan with many of the same features as an FHA loan but cheaper!  With only 3% down and a 680 minimum credit score, you can get into a home!  There are a few other factors that affect this loan, but discuss your options with a trusted mortgage broker (call or write if you need a referral).

SELLERS:  What does this mean for sellers?  It’s really “more of the same” in the seller market as well, with price and condition holding court!  You can’t get complacent about condition if you want to garner the most that you can in a down market.  You also cannot overprice and you might have to trust someone else’s assessment of how your home fits into the continuum (our homes are like our babies; always the prettiest, the best, etc).  Preparing your home for market, making it available for potential buyers and keeping it “fit for public consumption” is not for “wussies”, so  get serious about what it might take to actually sell your house, not just list it!  Buyers are looking for aggressively priced homes that make them feel safe in a real estate environment that has taken us all for a ride!

INVESTORS:  What does this mean for the investor?  I don’t blame the investor for wanting to be as involved as financially possible in this market!!  There is lots of competition for the smaller investment property (duplex to 4-plex) in popular neighborhoods, so you must be vigilant, pro-active and sometimes aggressive in your approach.  And, some very good news is that NAR (National Association of Realtors) was successful in getting the 1099 Landlord reporting law (enacted last year) repealed.  The provision required even the smallest property owners — those who might just be renting out a second home or other rental property — to track any work done for them that totaled $600 a year or more and to send any vendors whose work reaches that amount an IRS Form 1099, so they could report the income to the federal government.  Thankfully, that law has been repealed (what a paperwork nightmare)!!!

OCTOBER 2010 PORTLAND METRO REAL ESTATE UPDATE!

Ridiculously beeeeee-U-tiful Portland in October! And, ridiculously redundant real estate stats!  Remember:  please don’t shoot the messenger!  Our market is slow, slow, slow!  Not too much dramatic change from last’s month’s report.  Comparing September 2010 to September 2009, closed sales decreased by 22.3%.  Pending sales fell 30.7%. However, new listings/new inventory also dropped by 1.4%.  When you compare September 2010 with August 2010, shows closed sales rose by 1.3% (but, those were sales/escrows that started mid-summer and are just now closing).  Pending sales, or new activity, dropped by 6.2%.  We dropped from 11 months of available housing inventory last month to 10.5 months of inventory this month due to summertime absorption.  Again, in 2010 our highest was 12.6 months of inventory in January and our lowest was 7 months of inventory in May (a result of the home-buyer tax credits, I’m sure).  This time last year, we were at 7.6 months of inventory…just to give you some perspective.  Inventory in months is calculated by dividing the active listings at the end of the month by the number of closed sales for that month.  Time on the market has not changed since last year (an average of approximately 130 days).

BUYERS:  What does this mean for buyers?  Well, it is definitely still a buyer’s market.  So, despite the fact that you may not get as much for your home (IF you have a home to sell), you will most likely get a good buy on your purchase.  With interest rates hovering between below 4% to 5%, I have to say if you are or know a first-time buyer … just “do it”!  Here is a really good rent-vs.-buyer calculator.  Not to mention that interest rates will ultimately always trump sales price if you do the math.  If you have a house to sell, run the numbers and know if you can and will “price it to sell”, then you could get the buy of a lifetime (with the combination of available housing, great interest rates and decreased pricing). Okay, if you do this research you would have to ask yourself “why don’t more buyers participate in this real estate market”???  It’s really an easy answer:  fear and uncertainty!  However, if you compare rising rents to what a mortgage would cost in this marketplace minus mortgage tax write-offs, all I can say is “there is nothing to fear but fear itself”.  Choose trusted advisors; a Real Estate Broker that is on your side and a Mortgage Broker that is conservative and realistic and a CPA and/or financial planner that can help you navigate.  And, get a mortgage pre-approval (nothing lessens stress more than knowing what you can afford).

SELLERS:  What does this mean for sellers?  I know, I know…I feel your pain!  Remember, I have personally bought and sold in this market.  All I can say is “pricing, pricing, pricing is the new location, location, location”!  What I hear repeatedly is “I think I’ll wait out this market”.  I want to support you in this decision as long as you are doing a “reality check” on what that means.  Okay, let’s pretend we are truly “bouncing along the real estate bottom”, as many economists say.  And, that the “recession was over last year” and we are in a long, slow recovery!  Right now (see paragraph 1), we have 10.5 months of inventory at the present rate of absorption.  We are heading into the holiday season and even in the good markets, our absorption rate will definitely slow-down!  So, let’s say we start 2011 with 12 months of inventory (could easily happen).  In this very familiar scenario, we have one year of inventory to absorb plus the new foreclosures and short-sales that enter the market due to possibly more resets of adjustable rate mortgages and teaser-rate loans (old school loans made in the hey-day of mortgage delusion).  Ask yourself exactly how long you are willing to “wait out this market”?   In real estate, there are no right or wrong answers…just what works for you.  But, if you are “waiting out this market”, be prepared for an easy 3-5 years (if someone had a gun to my head and ask me would it be 3 or 5, I’d have to cave on the “5-side”).  Portland was late to the party and could be one of the last to leave (you know…that last guest that overstays their welcome?). That’s not to say that we might not see more movement in the marketplace, but the repair will most likely come in stages.  Starting with a loosening of the credit markets plus stabilization of existing housing prices (already happening at some price points and/or in some areas), followed by faith that the recovery will mean jobs and, finally, normal price appreciation.  Just saying….

INVESTORS:  What does this mean for investors?  Again, I’m surprised by the number of possibly qualified buyers who are renting.  My investment partner and I recently finished another duplex remodel.  We had over 75 inquiries on the duplex rental, with a zoo of people at the open house and 20 applications (all were young, many were new to the area, WITH jobs).  There was absolutely no one who put in an application to which I would not have rented!!!  Great time to buy and own rental properties, as interest rates are low (I got 5.25% on an investor loan with 30% down) and we did have to do some renovations, but the property will cash flow immediately!  I know that being a landlord is not for everyone, but it could be part of a diversified financial portfolio.  I have an income property analysis program (compliments of Hector Ariceaga of First American Title) that I would happily burn onto a CD and send to anyone interested in exploring possibilities!

Despite the less than stellar local stats…there are some encouraging signs in both the real estate and stock markets!  Home construction rose slightly nationwide last month on the strength of single-family homes (0.3% in September from a month earlier to a seasonally adjusted annual rate of 610,000, the strongest report since April ‘09).  Even though transactions dropped in the month of September, home prices remained relatively stable!  In the RIS Media monthly survey, 33 of the 54 metro areas surveyed showed a year-to-year increase in home sales prices. Prices are still higher than 2009 in some California cities and are up in some of the South and Midwest (remember some areas were feeling the pain earlier than we did).   And, always try to keep in mind your true wealth!

Though our economy is very soft, the local real estate market is very slow and consumer confidence is low, the National Association of Realtors (NAR) is always trying to find some “high” points. Their recent market research has ten positive indicators for encouraging signs for the future.  I am including those as well as my “two cents worth” in red after each comment.  A link to the full report is at the end of the article and has some very interesting graphs and some substantial confirmations from leading indicators.  For the most recent Portland Metro real estate stats and some opinions on the “state of the local real estate market”, CLICK HERE.

NAR’s “10 Market Facts for Uncertain Times”

1. The economy is growing, though slowly.  And, everything I’ve read indicates it will continue to be a slow road to total real estate housing recovery.  It could take five years to dig completely out of the hole.

2. The private sector is finally creating some jobs.  I know, from quizzing my client base, that many sectors are doing great, others are continuing to struggle.

3. Consumer confidence remains low, though clearly off bottom.  Not enough confidence to really move the local Portland Metro housing market yet.

4. The 30-year mortgage rate is at generational lows.  Absolutely!!  Interest rates are incredible.  I know the difference that interest rates can make.  Interest rates trump price and, as a buyer, you want to be careful to balance carefully so as not to be caught waiting for the absolutely lowest price while interest rates go up! Check out an interest rates vs price comparison!

5. The national median-home price is stabilizing.  All the data I read corroborates this.  Locally, some neighborhoods are and have been stabilized for awhile, some are still struggling with resistance to pricing correctly.

6. Other home-price measurements also are showing price stabilization.  Yes, there does seem to be price “stabilization” but not necessarily price “increases”.

7. Home price-to-income ratios have returned to fundamentally justifiable levels.  This is important!  This makes it easier for the first-time buyer to enter the marketplace for their first home and for all of us to purchase reasonable housing within our budgets.

8. Economists expect price increases in upcoming years.  Historically, there are always price increases.  The appreciation will just happen more judiciously.

9. Delinquencies are high but recent loan originations are performing well.  Mortgages guidelines are currently more strict and newer loans are fulfilling their obligations.  The delinquencies are the product of the older loans and the “loosey-goosey” loan requirements of yesteryear!  Of course, I believe that the mortgage industry is over-reacting a bit and often making obtaining a loan more difficult than it needs to be.  I believe this will adjust over time.

10. The long-term path to self reliance may be helped from long-term housing-wealth gains.  I believe that real estate should be part of any well-rounded financial portfolio,  But, note the operative word in this sentence is “long-term”.

To read the entire report, with accompanying graphs and from where the various information is derived, CLICK HERE!

Copyright National Association of Realtors.  Reprinted with permission.

AUGUST 2010 PORTLAND METRO REAL ESTATE UPDATE!

Well, it was a late summer to arrive but it’s definitely here!!!  August can traditionally be a slow real estate month in the Portland Metro market due to last minute summer vacations while the weather holds and prior to school starting!  However, the slowdown started earlier than usual this year and our market activity has been trending down.  When comparing sales activity in the Portland metro area in July 2010 to the same time last year, July 2009, closed sales declined 29%.  Pending sales also decreased 24.9% and new listings rose 3.1%.  Our average total market time has decreased from an average of 143 days on market in July ’09 to 121 DOM July ’10.  I believe that part of what is influencing DOM is that some sellers are finally seeing that this IS the new market and the new normal and getting their properties priced aggressively!  To date in 2010, according to the Realtor’s Multiple Listing Site, there have been 30,051 new listings, 12,733 pending sales and only 11,717 sales that actually closed.  It doesn’t take a math wizard to analyze these numbers.  We are currently back up to 10.8 months of available inventory (we started the year at 12.6 months, dropped to 7 months in May…probably mostly due to the tax credits).  It doesn’t matter what business you’re in, supply affects demand and demand affects pricing!!

Now, let’s talk about short-sales (attempting to negotiate with the bank to accept less than what is owed on the property) and foreclosures (already bank-owned properties).  In “short”… my most recent experience with short-sales is that many banks are not being cooperative.  They have always been and continue to be very time-consuming.  But, now it seems harder to get the SS negotiated and closed.  I have experienced ridiculous BPO’s (Broker Price Opinions) that have squelched deals and/or banks demanding that strapped sellers bring money to the table.  However, bank-owned homes where the lender has foreclosed and wants that real estate “off the books” tends to be a better buy and in my experience, an easier closing!  SS’s and foreclosures have definitely impacted the value and pricing of homes.  Unfortunately, none of us are immune to the ramifications simply because we don’t fall into either category. 

So, what does this mean to sellers?  It means you can’t price your home based on what you have invested in improvements.  It means you can’t price your home based on how much you need to get out of the sale.  It means you can’t price your home for what your neighbor’s sold (unless it just sold).  It means you can price your home to undercut the competition.  It means you can price your home to entice the reluctant buyer to take a chance.  Remember, there is a smaller pool of willing buyers (willing to venture out in a challenged market) and able buyers (able to secure necessary financing).  So, you must be at the top of your game.  If your home needs staging, do your best to get the proper advice.  If you home needs “reconstructive surgery”, do your best to price to reflect the work needed.  If your home is on the market and not getting shown, you are most likely overpriced.  If your home is on the market and getting lots of showings and no offers, you are most likely overpriced!!  The biggest challenge to homes that ARE priced correctly is that potential buyers must often sell another home in order to complete a transaction.  So, I’m seeing contingent offers (contingent upon the sell of another property), which sets up a whole other set of challenges!!  Contingent offers, of course, don’t affect homes that could meet the first-time buyer price point.

So, what does this mean to buyers?  It means you must get your finances in order.  It means you must get a pre-approval from the lender of your choice.  It means you must try not to get overwhelmed.  It means you must try not be too overly analytical (and I understand how hard this is).  It means you have historically low interest rates and interest rates often trump price!  It means you have lots of inventory from which to choose and choice is a good thing!  The challenge here is to use the present market conditions to your advantage without getting greedy and losing what you want (balance).  I’ve always believed a successful real estate transaction is when you get what you want!

So, what does this mean to the current property owner?  I guess we all just have to “breathe”!  Real estate is a long-term investment and one that can afford financial gain, tax advantages as well as personal satisfaction.  I, personally, appreciate having investment real estate to round out a financial portfolio.  It is work and not for everyone but offers financial rewards. 

Basically, this is “survival real estate”!  As someone recently stated:  “it takes a village to sell a house”.  Trust in your professional team of advisors is a must.  We are all in this together!  Sellers must embrace reality, buyers must “step up to the plate”, Real Estate Brokers must do what the situation demands, Mortgage Brokers must struggle with daily changes to their industry, Title & Escrow companies must “bite the bullet” and other subsidiary service industries must “feel the pinch”.  So, don’t feel alone in your struggle.  I’ve seen multiple markets “come and go” over my 25 years tenure and “this too will pass”!

It’s been a wild ride!  If you’ve just tuned in, I’ve been trying to buy a new investment property/duplex in the continually developing N Mississippi neighborhood of NoPo (North Portland).  I signed the paperwork Monday, after various obstacles, my new deal closed and recorded yesterday (I still have a cramp in my hand from the signing).  I’m simply “living on faith”.  I have faith that the real estate market will repair and eventually turn-around (although, I don’t believe it will happen quickly).  I have faith in the power of a low interest rate  (I got 5.135% on an investment property and owner-occupied have been hovering around and UNDER 4.5%!!!).  I have faith in my “real estate sense”.  And, I have faith in buying low and making the numbers work!  And, let me tell you….even for me, a lot of it is and always will be “faith”.  Two great quotes that come to mind:  “Too many of us are not living our dreams because we are living our fears” (author unknown) and “Courage is resistance to fear and/or mastery of fear, not absence of fear”  (Mark Twain).

JUNE 2010 PORTLAND REAL ESTATE UPDATE!

Once again, when comparing sales activity in the Portland metro area in May 2010 compared to the same time last year (May 2009) closed sales increased 43.7%.  Pending sales and new listings both decreased by 24.1% and 10.2% respectively.  HOWEVER (and it’s a big “however”) a lot of that is still the residue sales from the “First-Time Buyer Tax Credit” and a little from the “Repeat-Buyer Tax Credit”.  Those deals had to be accepted by April 30^th, 2010 and were supposed to be closed by June 30^th, 2010 (however, the Senate just voted to extend the required close date to September 30^th, 2010).  Altos Research (which updates weekly) shows that inventory and days-on-market are climbing, while the Market Action Index has been flat recently.  This trend points to a weakening market.  It is still a buyer’s market, yet we’ve seen some areas with pricing moving higher, but because of high inventory levels our price conditions are still very fragile and if the market cools off further that price trend is likely to reverse.  When comparing May 2010 to the month prior, the average sale price fell 2.3% ($275,500 v. $282,100) and the median sale price decreased slightly by 0.4%.  Total market time has decreased from this time last year from an average total market time of 147 in May 2009 to an average total market time of 123 days on market in May 2010!  We are down to 7 months of inventory.  Our inventory in months is calculated by dividing the Active Listings at the end of the month in question by the number of closed sales for that month.  It would take 7 months to absorb the current inventory if sales continued at the same pace.  All the research continues to indicate that we are in recovery (although, I’m not really “feeling the love”) but that it will be a slow process that could take 3-5 years.

My experience in the everyday Portland real estate market is that buyers are still looking for a “steal or a deal” and sellers are still not fully comprehending the competitive nature of the marketplace.  Buyers are reluctant to “step up to the bat” unless they feel the property is priced at or even slightly below what the current market dictates.  There is still increased inventory and a smaller pool of buyers.  Once a property gets correctly priced, I often see or hear of multiple offer situations (and experienced it myself recently), so there ARE buyers out there.  The credit markets are still very tight and appraisal standards are amplified.  I’ve experienced multiple problems with appraisals as the pendulum swings back from the era of “drive-by” appraisals to the reactionary “over-kill” now present in the lending environment.

Sellers, let’s pretend that someone drops in from outer space and does not know what has happened to our local, national….NO, world real estate market and they agree to pay full price on your property (even though it’s priced over recent “solds” in the area).  They don’t go see and compare other similar homes (because they’re from outer space).  Unless they just won the lottery or have a considerable cushion of cash (and are willing to use it all to buy this home), they must get a mortgage.  If they are one of the prudent ones with good credit, a saved downpayment and can overcome the new strenuous mortgage requirements, the house must still appraise.  The average buyer will balk at purchasing for more than the appraised value.  I paid over appraised value last year on an investment property, but you have to be pretty confident that you are making a good investment.  Generally, the only buyers willing to do so are investors (either the numbers work for a rental property or a 1031 exchange protects profits from the sale of another investment, etc).  You can consider the current active listings but just so you’ll know your competition.  The only properties that an appraiser will consider are recent, comparable “solds” (they prefer to only go back 3 months).  I recently completed an article on “Why Homes Don’t Sell”.  Remember:  it doesn’t matter what you paid for the home, how much you’ve spent on the home or how much you need out of the home, the only factor that determines what a home will sell for is how much an agreeable and able buyer is willing to pay (but, see “must appraise” above)!!

Buyers, let’s pretend you are waiting for the “bottom of the market”.  Some areas and neighborhoods appear to be already there and repairing, others could still be challenged due to “shadow inventory” of foreclosures and short sales.  Do keep in mind, that interest rates will trump price over the life of the loan.  Rates are holding between 4.5% and 5%.  But, as the economy improves, interest rates will most likely go up.  Most of the time, you will find ample inventory and have plenty of time to consider your decision.  However, occasionally when a property is priced right, savvy buyers will immediately jump on a “good buy”.  That could force a multiple-offer situation.  So, being prepared (which includes watching and comparing inventory, getting your mortgage pre-approval, as well as mental readiness) to make a decision could be paramount to success.  What is a good deal in real estate?  When you get what you want!

Okay, you’ve decide to sell your home in Portland Oregon, so you’ve walked through with your Realtor and you’ve:

• Made the entryway sparkle, which could include painting the front door, changing out hardware and placing color spots.
• Landscaped the lawn, cut back bushes, edged, swept and raked and suddenly you see why people live in condos.
• Cleared out as much extraneous stuff as you can possibly live without.  You’ve staged your home to the point that you often think you are in the wrong house.
• Cleaned, mopped, dusted, picked up your underwear.
• Touched up paint, power-washed and made minor and/or major repairs as needed and you’re suddenly wondering why you wanted to move in the first place.
• Looked over the comparable SOLD data plus checked out your active competition and priced accordingly.
• Agreed with your Realtor on the marketing strategy and have vowed to have no life other than keeping your house as it looks right this very moment.

Now, why hasn’t your house sold?  Well, if it’s being shown and is “always the bridesmaid, never the bride” but the feedback is positive, both on how the home shows as well as pricing, it may simply be a matter of patience.  It’s been awhile since we’ve been in such a challenged market.  There is a smaller pool of buyers and more inventory and buyers absolutely have choice.  If it’s not being shown, it may be over-priced as compared to other properties a potential buyer can choose to tour.

What’s more important?  Low rates or low price?  Well, both of course, but low rates will trump almost anything.  There’s a good reason!  For example, if you purchase a home for $300,000 and finance $270,000 and your interest rate for a 30-year fixed rate loan was 5.25% versus 4.75%, you would pay nearly $30,000 more over the term of the loan.  This is a significant amount of money.  If prospective home buyers are waiting for home prices to decline a bit more before purchasing a home, but interest rates push higher towards 6% in the meantime, waiting could well cost those home buyers more money in the long run.

So, here are a few enticements that you could consider:

• offer to pay the buyer’s mortgage closing costs as many buyers are struggling to get the cash necessary to go forward with their housing dreams.
• offer to pay upfront points for the buyer to “buy-down” the interest rate which will lessen the payment.

There is a double bonus for the buyer by having the seller pay to lower the interest rate on the mortgage.  The buyer will have lower total costs over the life of the mortgage.  But, also the IRS treats points paid up front to lower a mortgage interest rate as pre-paid interest, regardless of who pays the fees.  This means that when buyers negotiate to have the seller pay the costs to lower their interest rate, the receive the benefit of deducting them on their income taxes in the year the home is purchased!