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Owning Is More Affordable than Renting in the Majority of the Country

by | Jan 31, 2022 | Real Estate

Owning Is More Affordable than Renting in the Majority of the Country | Simplifying The Market

If you were thinking about buying a home this year, but already pressed pause on your plans due to rising home prices and increasing mortgage rates, there’s something you should consider. According to the latest report from ATTOM Data, owning a home is more affordable than renting in the majority of the country. The 2022 Rental Affordability Report says:

“. . . Owning a median-priced home is more affordable than the average rent on a three-bedroom property in 666, or 58 percent, of the 1,154 U.S. counties analyzed for the report. That means major home ownership expenses consume a smaller portion of average local wages than renting.”

Other experts in the industry offer additional perspectives on renting today. In the latest Single-Family Rent Index from CoreLogic, single-family rent saw the fastest year-over-year growth in over 16 years when comparing data for November each year (see graph below):

Owning Is More Affordable than Renting in the Majority of the Country | Simplifying The Market

Molly Boesel, Principal Economist at CoreLogic, stresses the importance of what the data shows:

“Single-family rent growth hit its sixth consecutive record high. . . . Annual rent growth . . . was more than three times that of a year earlier. Rent growth should continue to be robust in the near term, especially as the labor market continues to improve.”

What Does This Mean for You?

While it’s true home prices and mortgage rates are rising, so are monthly rents. As a prospective buyer, rising rates and prices shouldn’t be enough to keep you on the sideline, though. As the chart above shows, rents are skyrocketing. The big difference is, when you rent, that rising cost benefits your landlord’s investment strategy, but it doesn’t deliver any sort of return for you.

In contrast, when you buy a home, your monthly mortgage payment serves as a form of forced savings. Over time, as you pay down your loan and as home values rise, you’re building equity (and by extension, your own net worth). Not to mention, you’ll lock in your mortgage payment for the duration of your loan (typically 15 to 30 years) and give yourself a stable and reliable monthly payment.

When asking yourself if you should keep renting or if it’s time to buy, think about what Todd Teta, Chief Product Officer at ATTOM Data, says:

“. . . Home ownership still remains the more affordable option for average workers in a majority of the country because it still takes up a smaller portion of their pay.”  

If buying takes up a smaller portion of your pay and has benefits renting can’t provide, the question really becomes: is renting really worth it?

Bottom Line

If you’re weighing your options between renting and buying, it’s important to look at the full picture. While buying a home can feel like a daunting process, having a trusted advisor on your side is key. Work with an agent to explore your options so you can learn more about the benefits of homeownership today.

Why Your Home Inspection Matters [INFOGRAPHIC]

by | Jan 28, 2022 | Real Estate

Why Your Home Inspection Matters [INFOGRAPHIC] | Simplifying The Market

Why Your Home Inspection Matters [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • Buying a home and wondering if your inspection is necessary? While some buyers may decide to waive their inspection, it’s risky decision.
  • Your home inspection is a crucial step in the homebuying process. It assesses the condition of the home you plan to purchase, so you can avoid costly surprises down the road.
  • Let’s connect so you have expert advice and a trusted professional who will keep your interests top of mind.
The Cost of Waiting: The Impact of Interest Rates Increasing

The Cost of Waiting: The Impact of Interest Rates Increasing

by | Mar 19, 2018 | Buying, Cutler Bay, Home buying, Home Loans, Homeownership, Real Estate, Realtor, Uncategorized

Some Highlights

  • Interest rates are projected to increase steadily heading into 2019.

  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.

  • Rates are still low right now. Don’t wait until rates hit 5% to start searching for your dream home!

 

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6 Tips for Choosing the Best Offer for Your Home

6 Tips for Choosing the Best Offer for Your Home

by | Apr 25, 2017 | Real Estate, Selling, Uncategorized

  • By: G. M. Filisko

    Have a plan for reviewing purchase offers so you don’t let the best slip through your fingers.

    You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers.

    1. Understand the process.

    All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

    2. Set baselines.

    Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a prequalified or cash buyer.

    3. Create an offer review process.

    If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

    4. Don’t take offers personally.

    Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

    5. Review every term.

    Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures — such as appliances, furniture, or window treatments — to be included in the sale that you plan to take with you?

    Is the amount of earnest money the buyer proposes to deposit toward the downpayment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.

    Have the buyers attach a prequalification or pre-approval letter, which means they’ve already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can’t get a mortgage, and they’ll take their earnest money back, too. Are you comfortable with that uncertainty?

    Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?

    With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

    6. Be creative.

    If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.

    G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this.

Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®

Fielding a Lowball Purchase Offer on Your Home

Fielding a Lowball Purchase Offer on Your Home

by | Feb 15, 2016 | Cutler Bay, Real Estate, Selling

Fielding a Lowball Purchase Offer on Your Home

By: Marcie Geffner

Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.

You just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond? Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal.

Check your emotions.

A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer.

Counter the purchase offer.

Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits.

A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you.

Consider the terms.

Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work.

Review your comps.

Ask your real estate agent whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell.

Consider the buyer’s comps.

Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price.

If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps.

Get the agents together.

If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer.

Don’t signal desperation.

Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s listing describes you as a “motivated” seller, you’re signaling you’re open to a low offer.

If you can remedy the situation, maybe by renting furniture or asking your agent not to mention in your home listing that you’re motivated, the next purchase offer you get might be more to your liking.

More from HouseLogic

  • 6 Tips for Choosing the Best Purchase Offer for Your Home
  • 6 Reasons to Reduce Your Home Price

Marcie Geffner is a freelance reporter who has been writing about real estate, homeownership and mortgages for 20 years. She owns a ranch-style house built in 1941 and updated in the 1990s, in Los Angeles. 

Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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5 Things You Need to Ask Yourself Before Turning Down a Low-Ball Offer

5 Things You Need to Ask Yourself Before Turning Down a Low-Ball Offer

by | Nov 24, 2015 | Real Estate

A low-ball offer on your home feels insulting, but before you say ‘no,’ ask yourself these questions.

It’s the place you’ve lived for years — maybe even decades. The pencil marks measuring each kid’s height are still behind the pantry door, and the sapling you planted in the front yard is now a towering tree.

You’ve invested a great deal in this house. So when the time comes to put it on the market, you expect potential buyers to recognize its true value. But sometimes, you get an offer that’s so far below your asking price it feels like someone pitched a baseball straight at your stomach.

Should you simply walk away from such a number? Or does it make sense to pause and weigh your options? Here are some points to consider before you decide:

1.  Is It Really Low-Ball, or Just Lower Than I Wanted?

Some agents define a low-ball offer as 25% or more below list. In areas where there’s a shortage of available homes, that figure may drop to 20%.

“What defines low-ball varies from market to market and even submarket to submarket, but certainly from price range to price range,” says Steve McLinden of Bankrate.com. In other words, it’s likely that an offer of $80,000 on a $100,000 home will be more quickly dismissed than a $1.6 million offer on a $2 million home, he says.

2.  Should I Immediately Reject a Low-Ball Bid?

Although your feelings may be hurt, giving in to the drama monster won’t get your house sold. “When the low-ball offer comes in it can be upsetting, but it doesn’t have to be,” says Bill Gassett of RE/MAX Executive Realty in Hopkinton, Mass. “The fact that someone wants to buy your home is a good thing and you should deal with every offer — unless it’s just completely ridiculous.”

What constitutes a “ridiculous” offer? Anything significantly less than 25% below your list price should probably trigger warning bells. However, it pays to rely on your agent’s expertise to help you decide on the right response.

Countering, rather than ignoring, a low offer is often the smartest strategy. A low-ball offer “shows buyers you’re willing to work with them,” says Eric Snyder of Douglas Elliman in Boca Raton, Fla. After all, he reasons, “it’s not about where buyers start, it’s where they end up.”

And you’ll never have a chance of getting to that final number if you allow your emotions to cloud your judgment.

3.  Is My Price Too High?

Sometimes when a seller receives one — or more — low-ball bids, it may be because the asking price for the home is out of step with the market.

Before you set a price, your agent will provide you with comps – for-sale listings of similar properties in the area —  along with a pricing recommendation. Your best bet is pricing that reflects the comps. If you decide to “test” a higher price, you might have to tweak your price to invite more reasonable offers, which is just going to delay the sale.

4.  What Do I Really Need?

There may be factors involved in selling your home that are more important to you than price. Perhaps you need to sell quickly because you’re buying another home. Maybe an all-cash deal would make your life a lot easier. There are a number of potential deal sweeteners that a potential buyer could provide that may make a low offer more appealing. These include:

  • A preferred closing date
  • A solid mortgage pre-approval letter from the buyer (not just a pre-qualification)
  • A larger down payment
  • Fewer inspection contingencies

5.  Will I Look Too Desperate?

Don’t worry about how your willingness to entertain a low-ball offer is perceived. What matters most is the result, says McLinden.

“Some sellers get so wrapped up in righteous indignation following an ‘insulting’ offer that they tell their agent to refuse all further communication from the offender,” he says. And while that may soothe your wounded ego, it won’t help sell your house.

 

 

By: Lisa Kahn:© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

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