Jmellenwmbg’s Weblog

Williamsburg Virginia Real Estate Reality Check

Posted by: jmellenwmbg on: August 4, 2009

The Colonial Capital

The Colonial Capital

In today’s market, here in Williamsburg and James City County Virginia as well as the rest of the country there are many homes on the market. That is reality. However, many of those homes may not be what a buyer may be looking for. Homes are unique, every single one is unique. Even in identical units there are subtle differences in colors, materials, views etc. The trick is to have the most appealing home, with the best views, in the best condition for the best price. Hardly an easy task for a buyer or seller!

When I start my conversation with a buyer prior to getting in my car and driving all over town, I simply ask what a buyer wants in their next home-what are their expectations. I try not to let price enter too much in the decision until I find out their needs, then their wants, then their price. A buyer needing five bedrooms shouldn’t look at homes with three. A buyer needing three can certainly look at homes with five.

The list of things a buyer may actually NEED in a home are fairly limited. They might include:

  • Bedroom count
  • Proximity to public transportation
  • Bathroom count
  • Bedroom location,ie needs a 1st floor master bedroom
  • handicap accessibility-could be a need now or want available for later
  • Price limit

However the list of wants is almost endless. Wants are only limited by price and availability. I want a brand new 2010 cadillac CTS, but I only have $10,000 to spend. I can get the Cadillac CTS, but it might have to be a 2006 model with 50,000 miles on it! But, I don’t NEED a car, my old one is perfectly fine. Will the car dealer cave in and sell me a car at my unrealistic offer of $10,000 just because they have lots of cars to sell-hardly!

Going back to homes for sale-sorry…..when I look at over 1700 homes for sale in my local MLS, and start whittling it down to certain criteria:

  • Five Bedrooms
  • First floor master
  • Three bathrooms
  • 1/2 acre
  • no more than five years old
  • in the Jamestown high school district

Now I only have THREE homes to choose from. Now I can look at price to see where my options are. These 3 homes are $539,000, $579,000, and a whopping $2,250,000. A buyer limited by a $300,000 price range is completely out of luck. Now they have to work backwards on their criteria. Sacrificing their needs-we haven’t even touched on the wants at this point! So you can’t do less than 5 bedrooms-you’ve got 6 kids and two adults to hide in the house. You can live with an older house, in a different high school district so start there. Working your way back to your price limitation. Options do open up for you as long as you are realistic and understand your needs vs wants.

All too often, agents eagerly jump in their car to start showing buyer homes without ever having a ”reality check”. I don’t think I am doing a buyer any favors and possibly doing a disservice by not knowing what they need and what there threshold for disappointment will be. I hear agents showing buyers 50 and 60 homes. Only then to find out they can’t find what they are looking for and they. Not surprising, they never had the conversation first.

Going back to my reality check with my buyer scenario above, these are the buyers NEEDS and available options today (08/04/2009):

  • Five bedrooms
  • James City County somewhere
  • First floor master
  • three bathrooms
  • under $375,000

How many homes do we have available now? Do we have fewer choices or more? We have 0 homes now-back to the drawing board with criteria! 

The point is, this particular seller has little competition. So are they still in the same “buyers market”? Hardly-they are in a sellers market. Low supply, high demand. Do they have to negotiate the same as a seller that has 20 homes competing with them? Hardly. Are they motivated-most likely and they will negotiate. But don’t show them an offer $125,000 low thinking you have the upper hand because the market in general is a buyers market.

I hope this exercise in reality helps you in selecting an agent truly looking to save you time and aggravation, and best represent you as a true Buyers Agent!

For more about me visit www.JimMellen.com Licensed REATOR in Virginia 0225072298

Remax Peninsula at New Town 5388 Discovery Park Blvd Williamsburg VA 23188 757-345-6021 Each office independently owned and operated

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When should I lock in my mortgage rate

Posted by: jmellenwmbg on: November 10, 2008

One of the biggest dilemma’s a buyer may face is when to lock in the mortgage rate. In the current market, that has been a tough question to answer. Below is an article published by my website provider that might give you a good idea! www.JimMellen.com and click on the “Daily Lock Advisory” button for timely updates about financial issues affecting the mortgage market! Licensed in Virginia.

This week brings us the release of only three relevant economic reports with only one of them being considered highly important. It is a holiday shortened week with the bond market closing early Monday and remaining closed Tuesday in observance of the Veterans Day holiday.

The first data of the week is September’s Goods and Services Trade Balance report Thursday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

There are two reports scheduled for release Friday. October’s Retail Sales report is the first. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. If this report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. Current forecasts are calling for a drop in sales of approximately 1.2%.

The last of the week’s three reports comes late Friday morning when November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment will be released. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 57.0, down from October’s final reading of 57.6.

There are 10-year Note and 30-year Bond auctions this week, Wednesday and Thursday respectively. Strong or very weak results from these sales could affect the momentum in the bond market and lead to afternoon changes in mortgage rates. It i s common to see pressure in bonds ahead of these sales, but as long as interest from investors is decent we should see those pre-sale losses recovered during afternoon trading of the sale days.

Overall, look for a fairly quiet week in the mortgage market compared to previous weeks unless something totally unexpected transpires. As long as the stock markets remain fairly calm, I am expecting to see mortgage rates follow suit.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2008

 

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Do you or don’t you need a Realtor to help you sell your home?

Posted by: jmellenwmbg on: October 1, 2008

There is lot’s of interesting talk online from consumers and agents alike as to whether you need a REALTOR to assist you with the sale or purchase of REAL PROPERTY.

I may be one of the few REALTORS who will tell you no, you don’t! But be prepared. In most cases, the unrepresented seller is unaware of all the things a REALTOR actually does. It’s not as simple as placing a sign in your yard or holding an open house.  You actually have to comply with many of the same laws and disclosures I do. What you don’t have to be is ethical. But don’t expect the other side to be ethical either-unless you have a REALTOR bring you a prospect. If you’re fortunate they’ll also bring you an offer, but will ask you to pay their buyers agent fee so they can negotiate against you-and you’ll probably agree to pay it!

And there are costs. Call your local paper and ask what a display ad costs. Even the classifieds can be costly. And guess what? They want to get paid upfront! Design and print some nice flyers and brochures, maybe get a website, or pay an internet company to get it listed in the MLS-for a fee up front. Then if you’re lucky enough to get an offer, you might want to have a lawyer look over the contract before you sign it-that’s right-pay up front! Start adding up the costs. If you’re paying the buyers agent fee and some of the fees mentioned-you’re going to spend almost as much as if you had listed it in the first place-and you only found 10 percent of the buyers who might be in the market!

And there is safety. Go ahead, advertise your home for sale, let a stranger in. You can trust them.

And there is convenience. A buyer will want to see your home when it’s convenient for them. That may mean 10am or 7pm. Maybe Sunday morning, when you’re planning to go to church. Be prepared to sacrifice your schedule. And guess what? The buyer may call to rechedule or cancel after you’ve adjusted your schedule!

A buyer looking to buy without a REALTOR also has to be prepared. What you see online, even at REALTOR.COM may not be complete information. Are you going to only look at homes that are not listed with a REALTOR to save money? Guess what-those sellers have priced their homes usually higher than a REALTOR would list them. Sure you can negotiate closing costs, but will you really know if you are paying too much for the home? And did they disclose everything they know or should have known? Sure you can use a boiler plate contract-but does it have all the elements written in to protect you? And you’ll want a lawyer involved for sure to oversee everything-please pay prior to service rendered!

It’s all about compromise. You will in most cases get what you pay for or in all cases-won’t get what you don’t pay for!

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Looking at buying a short sale property?

Posted by: jmellenwmbg on: October 1, 2008

Savvy buyers and investors are always looking for “the deal”. They want to buy low and sell high.  Who doesn’t? A short sale, pre foreclosure is one way of getting a good deal on a house, most likely below market value.

A pre-foreclosure or short sale is one where the seller of a home is trying to get out from underneath a crushing mortgage, or unfortuante situation, prior to losing it in a foreclosure.  A foreclosure will have a far greater impact on your credit score than a short sale, so it is the best option for people heading for big financial trouble but not quite there yet. A short sale is one where the lien holder accepts less than what is owed to release the deed/deed of trust.

There are numerous things to consider when looking at these homes. More often than not, the process has been started long before you see the listing online. In order for a seller to seek short sale approval, the seller will need to get in touch with their lenders short sale or loss mitigation department and complete a “work around” or hardship package.  This will give the lender an idea of why the situation has developed. Included with the package is a request for a pretty in depth financial disclosure. Where does your money come from and where is it all going. You’ll also need to provide them with a hardship letter. It’s tough to concede you may not be a good saver and spender-especially having to document it for a stranger.

That’s the first part. Then you’ll need to provide them with an offer to buy the house, including a HUD1 statement detailing the closing costs for both the buyer and seller and a net amount to the lender.  This is a critical step in securing a short sale approval.  A lender will obviously want to break even, but may be willing to accept a loss. How much of a loss depends on a myriad of factors including the lenders tolerance for loss.  The lenders want to clear up any “bad debt” as quickly as they can so they can continue to receive “new” mortgage money.

For a buyer of short sale property, the two things you need are patience and patience!  Lenders are not a ready and willing seller in the traditional sense. There may be several departments and people involved in the approval process. Banks are different than Realtors.  They don’t like to negotiate, they may not be the best communicators, and the information they need and want sometimes requires a little mining!  Lenders are not emotionally connected to anyone involved or the outcome.  While you may think you are doing them a favor by taking the “bad debt” off their hands, the debt individually is not a significant factor in their portfolio.  They may have millions of dollars in bad debt they’re sitting on. Do you think the $10,000 or $20,000 the seller is behind really affects them? Not too much.

Buying a short sale is a great way to get a house below market value, but it’s not for everyone, and not every Realtor is adept at handling and negotiating the process on your behalf. Ask for referrals before spending a few months on the process with a Realtor who does not fully understand the process.  Like anything else, experience matters.

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