Appealing to Buyers

2014-01-05T09:00:00Z Appealing to BuyersMichelle Krueger Times Correspondent
January 05, 2014 9:00 am  • 

Research indicates that potential homebuyers spend a great deal of time looking at properties online before actually touring houses. Then, when the times comes, they may look at a median of six houses before purchasing a new home - and 10 houses before buying an existing one.

When it comes to finding the best home to meet their needs, most buyers are focused on some very basic features – location, square footage, number of bedrooms, number of bathrooms and overall condition. The challenge for sellers, then, is to be the best possible option for buyers in their price range.

Ironically, following the recent ups and downs in the housing market, buyers are taking more of a “sellers” perspective when looking at the pros and cons of options they can afford.

With a affordability being the key to buyers being able to close a deal in today’s changing lending environment, those who are planning to buy this year should consult with a real estate agent and lender early in the process to learn how or if any of the latest changes could have any effect on timing for them.

“Some changes in lending and settlement for residential real estate transactions were implemented on January 1st which will require some additional planning,” Joe Grambril of the Brothers in Brokerage Team at Source One Real Estate in Crown Point and Schererville explained.

Called the qualified mortgage or ability-to-repay rule, the changes Gambril refers to will protect consumers from unscrupulous lending practice and provide creditworthy homebuyers with access to safe mortgage financing, according to the Consumer Financial Protection Bureau (CFPB).

“When consumers sit down at the closing table, they shouldn’t be set up to fail with mortgages they can’t afford,” CFPB Director Richard Cordray said. “This common-sense rule ensures responsible borrowers get responsible loans.”

To make a qualified mortgage, lenders have to follow very specific steps in order to verify the following for all borrowers:

1. Current income or assets.

2. Current employment status.

3. Credit history.

4. The monthly payment for the mortgage.

5. Any monthly payments on other mortgage loans.

6. Any monthly payments for other mortgage-related expenses, such as property taxes.

7. Other debts.

8. Monthly debt payments, including the mortgage, compared with your monthly income and how much money you have left over each month after paying your debts.

While the implementation of these new rules will cause compliance headaches for lenders, it’s anticipated that the average borrower will not notice much difference while borrowers at the higher and lower ends of the income scale could be affected. In fact, Cordray told members of the Mortgage Bankers Association that for now the qualified mortgage definition is broad enough that an estimated 95 percent of mortgage loans being made in the current market fit the criteria.

With so much focus on affordability, homebuyers are strongly considering their needs as well as those of prospective buyers in the future when choosing the houses they want to look at in today’s real estate market.

“New homes come as a very clean and fresh alternative to buying an existing home so long as it meets a buyer’s budget, and builders have been working hard to do that very thing,” Gambril explained. “Sellers of existing homes finding themselves in competition with new homes should make sure they provide a crisp, clean example of the unique benefits of their home. The trade off of buying new versus an existing single family home is weighted in the added amenities that can be quite costly to by after purchasing a new home. Those things include: finished basements, four season rooms, sheds, in-ground pools, hot tubs, landscape retaining walls, paver patios, home generators, home automation packages and home theaters. These are some of the trade offs that buyers will consider when buying an existing home versus a new home, however it is my experience that overall condition is the largest hindrance for existing home sellers.”

Here’s a rundown of a few other important features for buyers:

Location, location, location – yes, it’s repeated three times for a reason. Any home, no matter what the condition, that’s located on a great block, in a great school district will be coveted. Plus, the home’s position – how it’s located on the lot and/or in a development – is also important. Checking out natural light levels in the daytime and privacy at night may or may not reveal concerns. Visiting at different times, on different days will also reveal other key features about the neighborhood – and the neighbors, especially if you talk to them.

Walkability – more and more, people are placing a high value on the ability to walk to a store, school, work or public transportation.

Fixer-upper vs. the best house on the block - if the home needs work, make sure you understand what you’re getting into, and it’s also important to avoid buying the best house on the block since there may not be any room for your investment to grow. Either way, do your homework regarding long-term value.

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