“I’m Thinking About Buying, So When Should I Speak With a Lender?”

home-investment-tipsGenerally in these articles, I will elude to a “grey area” since many topics pertaining to real estate can be complex and everyone’s situation is different. Thankfully, this topic is more cut and dry. When should you speak to a lender? The answer is: TODAY.  

While some heed my advice and pick up the phone right away, the more cautious buyers usually say, “I’m not ready to speak to a lender.” Here are a some reasons why that’s probably not true:

  1. Believe it or not, there is a misconception that if you speak to a lender, it will adversely affect your credit. A conversation does not do that and even if they ask your permission to check your credit, it only slightly affects your rating. (Usually 2-4 points).
  2. Even if you’re not ready to buy for some time (1+ years), speaking to a lender can help you prepare for when the time comes. I’ve seen too many instances where a buyer is personally & professionally ready only to find out that financially they are not. Almost always they waited too long to speak to a lender.
  3. Lenders have all types of loan options out there which can save you lots of money and increase the amount of home you can afford, but the only way to know is to ask. Also, if your credit rating is on the cusp of being in a higher tier, the lender can advise you how to boost it and you can save some serious dough!
  4. Speaking with a lender does not prevent you from shopping around; you’re not locked in.
  5. Just because you were denied or given an unfavorable rate by one lender does not mean every lender will. Not all lenders are created equal.
  6. You might be doing something that’s not helping your credit or worse yet, hurting your credit. This isn’t uncommon since there are countless websites out there giving bunk advice for managing your credit.
  7. No, your father, uncle & brother-in-law are (most likely) not suited to pre-qualify you for a loan. Much like the internet, there’s plenty of bad advice and preconceived notions being thrown about by family member’s these days. Don’t take their word for it… consult a professional who does this every day.
  8. People think that if they talk to a lender and are not ready, they are wasting their time. This couldn’t be further from the truth. Lenders will happily work through the process with you…no matter how long it takes.
  9. As they say, “The Truth Hurts”… Some people are embarrassed by their financial situation. Believe me when I say, lenders have seen worse, especially in the wake of the Great Recession. This is business, nothing more…they’re not there to judge… they’re there to help.

I’ve said time and time again that the real estate process doesn’t have to be some big complicated thing for most buyers. If you have a realtor and a lender who know what they’re doing and have the information they need, it can even be fun. The trick is to be sure you’re proactive about contacting a lender since if you have no one to lend you money, you have no way to buy the home.

I would be happy to showcase your question in my next installment. Go ahead…Ask me anything or leave a comment in the section below!

Seth Lejeune – 610.804.2104 – seth.lejeune@foxroach.com / Berkshire Hathaway – Fox & Roach

Seth is a licensed REALTOR and small business owner based in Philadelphia, Pennsylvania. 

 

 

“Can My Home Be an Investment?”

 

Thank you to Jeff Groon for the question on my Facebook page. Being the Director of Financial Aid at the Wharton School of Business, Jeff is a smart guy who knows the investment world and how to manage money, but even seasoned professionals need to be reminded of the perennial truths of homeownership. Never being at a loss for words, I’m happy to weigh in! LOL.

Going back as far as I can remember, there has been this image of a modest house in the post WW2 era. It shows a white picket fence, dog running in the yard, father washing the car, mother planting flowers and kids playing out back. But what was this image trying to convey? For me, it depicts the “American Dream” and represents freedom, accountability, discipline, and success. But what does that picture look like now? Has it changed?

Absolutely! Now, I will be the first to admit that our financial lives are more complicated these days. However, the idea of homeownership and its viability has not really changed, but what HAS changed is the way we approach it. Below I have outlined strategies that have worked for a very long time, but perhaps forgotten:

Additional Principal Payments

When you get a mortgage, the bank lays out a plan of repayment, but remember this: IT’S THEIR PLAN, NOT YOURS! Too many homeowners get their mortgage bill, write a check for the amount shown and go spend the rest somewhere else. (Target perhaps?) Do you make only the minimum payment on your credit card? If not, why only make the minimum payment on your mortgage? Banks make their money from people following their payment plans! I personally feel terrific when I add extra to my payment! Paying more than what you’re supposed to builds equity interest-free and shortens the life of your loan. Financial guru, Dave Ramsey, states that “your grass feels different under your feet when you’ve paid off your mortgage”. That feeling he’s talking about is FREEDOM and every additional dollar gets you that much closer! It also has an added benefit of saving you boatloads on interest! Go ahead…disappoint your bank every month by paying more than they ask!

Home Improvements

Many homeowners get what I call “Pinterested” or “HGTV’d”. Every Saturday morning, homeowners flock to their local Home Depot to reproduce what they’ve seen online or on TV. Once complete, they stand back and congratulate themselves for their DIY project and start calculating how much they’ve increased the value of their home. Here’s the thing though: Most improvements don’t add nearly as much value to the home as homeowners think. Yes, even kitchens and baths…. To be safe, one should talk to a professional real estate agent to find out what improvements have attracted top dollar in their neighborhood. Even then, you must complete these upgrades in a manner that are desirable to as many homebuyers as possible. (Note: You can actually reduce the value of your home by doing this wrong.) If you’re itching to put money back into your home, you might wanna simply send it to your bank in the form of an added principal payment that we talked about above. An over-improved home is one of the biggest problems I see in the marketplace and leads to some tense conversations between realtors and homeowners when they go to sell.

How Long?

If you decide to purchase, buyers should always think about whether their house will be attractive to a large swath of buyers in the future. Your home should appreciate in value regardless, but in a shorter term, this needs to be carefully considered. Pay special attention to this suggestion if your “thing” is high-end, exotic or specialty properties since they are the first to become undesirable in a soured market or fall out of favor with buyers in the long run. After all, if you buy a unique property, usually that means you will need a unique buyer and require patience. If the answer to this question is an educated “yes”, you are most likely on your way to making a solid real estate investment, especially if the goal is to stay put for a number of years.

Conclusion

KEEP IT SIMPLE. With homeownership, the “tried and true” methods of the past still work! Get in the house at a decent price, maintain it well & wisely, make necessary upgrades and pay it off early. It’s not super sexy and will require discipline, but hey…you can always rent and pay someone else’s mortgage for the rest of your life!

I would be happy to showcase your question in my next installment. Go ahead…Ask me anything or leave a comment in the section below!

Seth Lejeune – 610.804.2104 – seth.lejeune@foxroach.com / Berkshire Hathaway – Fox & Roach

Seth is a licensed REALTOR and small business owner based in Collegeville, Pennsylvania. 

 

 

 

Why Do Realtors Always Say “It’s a Good Time To Buy”?

From time to time, I open the floor to my friends on Facebook to answer their questions regarding real estate. I enjoy the real-time banter and often get direct responses and PMs asking me typical questions such as whether we are in “a bubble” or where do I see interest rates heading. (“What’s Going on With Interest Rates?”)

However this question from Conshohocken restaurateur, Brian Pieri, really stood out toPushy Salesman me and it’s a good one. Why do a lot of real estate agents reflexively tell you it’s a good time to buy?

My answer: You might be talking to the wrong real estate agents. As in any profession, there are good people and bad people. To be fair, most real estate agents I associate with have their client’s best interests at heart, but there are those who are focused on themselves and will try to get any business that comes their way regardless of whether it’s right for their client.

Personally, I didn’t get into this business for awards and sales volume recognition. I got into it to help people. That’s not just a sappy line, it’s the truth. So many buyers (especially my age & younger) really need the help of a licensed real estate agent to get themselves into the right situation or out of a terrible one. Perhaps they’ve made a bad investment in the past and need to get out from underneath a terrible mortgage. Perhaps a couple is going through a divorce and one of them needs to find a new home 3 towns over. Perhaps a young couple is expecting a new baby and needs more room. Sometimes, a buyer’s circumstances are independent of interest rates, housing inventory and other market conditions…. sometimes you just gotta move, much like you need a new car or a new job.

And sometimes, the best course of action is to stay put! 

For example, I had a client that I had been showing homes for almost a year and we finally decided that now wasn’t the best time. They simply had too much student loan debt and they were running the risk of being “house poor”. (I’ve been there…it sucks) Of course, any job has a profit motive attached, but I do need to look myself in the mirror too. I need to look my kids in the eye and know that what I do is making people’s lives better…not simply herding buyers & sellers to a settlement table.

It boils down to this: If a realtor out of hand says it’s a great time to buy and you feel like you’re being sold, you probably are. At that point, it’s time to walk away and find someone you can trust will give it to you straight. Fortunately, for you, I know just the guy! 😉

Have questions? Go ahead…ASK ME ANYTHING! Maybe I’ll use your question in my next installment.

Seth A. Lejeune, REALTOR – Berkshire Hathaway – Collegeville #RS331494

610.804.2104 / seth.lejeune@foxroach.com / http://www.yourpahomeworth.com

 

 

“Why Won’t My Home Sell?”

So this real estate question I don’t get very often, but it’s an important one. Of course, my first inclination is to say, “It’s because you didn’t list your home with me!” But in all seriousness, the truth is that there are many reasons a home won’t sell, but below are the biggest culprits:

Funky Smells – Pets, smoke, mold, exotic foods, rotting animals…you name it, I’ve smelt ashtrayit. Even before potential buyers and I take in what we’re seeing, that first whiff indicates safety or danger. I’ve shown multiple properties that were otherwise great, but the smell immediately turned off the buyer. If possible, take corrective measures to eliminate the odors such as removing pets, priming and painting walls, placing a dehumidifier or removing furniture which might contain the odor. (Caution: Most buyers get spooked by a lot of air fresheners. I was recently in a home where every room had one…the buyer mentioned it and we quickly moved onto the next property.)

Priced Too High – 2017 is shaping up to be a seller’s market for sure, but built into that reality is that some sellers get a little too ambitious. Sure, in some cases a home is priced perfectly and it is simply waiting for the right buyer to walk through the door (generally the case at higher price points). However, if your home is on the market anywhere from $400,000 or below, the property presents well, is properly marketed, and it’s still not getting offers or even showings, then you know that something is amiss. Even in a selling environment like we are seeing in the Philadelphia area, homeowners and their agents can price themselves out of the market. If you suspect this is the case, have your agent re-run comparables to make sure you’re in line with the market. Also, physically take a look at some comparable properties with your agent to see what else is out there.

Outdated/Exotic Finishes – This one is a little harder to remedy unless you wish to invest backplash asamoney in the property. I tell my clients to be smart and keep potential buyers in mind when choosing their finishes. That really cool backsplash you see on HGTV might otherwise make for some eye candy when seeing it on the television, but in real life is it going to be something most buyers find palatable? If you’re finishes are a little funky, they might be scaring away some buyers.

Poor Marketing – There are some agents who simply hammer a sign in the lawn, list the property on the internet and perhaps hold an open house. To be fair, sometimes that is enough to sell a home in certain price points and markets, but if your home is situated in a more challenging market, you should ask yourself whether your agent is doing everything they can to showcase it. In fact, you should never sign on with an agent unless they have outlined their marketing plan. I personally present a “multi-channel” approach to marketing in order to maximize your home’s exposure.

Again, there are other reasons homes sit on the market, but these are the places to start. Home selling can be a relatively stress-free experience for many, but only if you’re armed with the right people around you to get the job done.

If you’d like to ask me a question, please leave the comments in the section below, email me at seth.lejeune@foxroach.com or give me a call @ 610.804.2104

 

“What’s Going on With Interest Rates?”

Lots of people are asking me this question, but what they’re REALLY asking is: “Are interest rates finally going up?” The answer: Yup…and they’re not going back down anytime soon.

Shiny Percentage Up - Dollar Textured Front

Industry expert Mike Thompson from Envoy Mortgage agrees when he says, “the ultra low rate environment we’ve experienced over the past 5 years (3% range) is gone while a “historically”low range of 4 – 5% should remain thru 2017.”

To put the rise of rates in perspective, let me share the following example: On October 15th, my clients and I settled on a property with a 3.75% on a 30-year conventional mortgage. On January 30th, I submitted an offer on behalf of very similar clients on a similar property at a rate of 4.375% on a 30-year with the same lender. That’s over a half a percentage point in three months!

But if you go back and read what Mike said and you’re an optimist like me, you’ll notice he is suggesting a silver lining: while interest rates are on the move, they shouldn’t exceed 5% and even at that level, they are still at historic lows.

Translation: there is an opportunity here…

Quite simply, if you’re a buyer (especially a first timer) it’s a good idea to talk to a real estate agent (and a lender) to determine a path forward. Real estate is still a terrific investment with the guidance of competent professionals at your disposal.

I try to explain to people that even if your plan isn’t to move right away, getting a sense of what you can afford allows you to develop a strategy to achieve your goals. One of the worst things I see in this business is a couple coming to me and say, “We’re ready to buy!”

They’ve looked at homes on Zillow, they know what they are looking for and where they want to live. In some cases, they’ve even picked out their finishes for a bathroom or kitchen remodel…the problem arises when they finally talk to a lender and find out that their savings won’t get them there. Preparation is key.Savings Thermometer Measuring Money Nestegg Increase

Sellers should be paying attention too especially if they’ve been waiting out the market since rising interest rates will compel more buyers to enter the marketplace. When there are more buyers, home prices go up…simple economics. Also, sellers should consider the cost of waiting since they are subject to the increased rates if they are buying another home.

No matter your real estate goals, if you’re looking to do something in the next few years you should be talking to someone about this ever-changing real estate climate. If the last six months are any indication, those who have done their homework will be the ones who ultimately save some serious money. This is not a sales pitch…just a reality of the real estate market and a friendly (and professional) head’s up.

If you have any thoughts, questions or have a topic you’d like me to discuss in my next installment, please leave it in the comment section below.

Seth Lejeune, REALTOR, Berkshire Hathaway Home Services

610.804.2104 / seth.lejeune@foxroach.com

6 Things You Should Do to Prepare Yourself for the Real Estate Process

For the last several months, I have been telling you all to “ask me anything”. So it was no surprise that over the holidays one of my clients came up to me and asked, “WHERE DO I START WHEN IT COMES TO REAL ESTATE?” The funny thing was that he asked it as if he were embarrassed. Something I tell all my clients and repeat often: “There are no dumb questions in real estate.” To boot, this is an excellent question!

Whether you’re buying your first home, you’ve never sold a house before or you haven’t been part of a real estate transaction since the inception of the digital age, help is easy to find! As a helpful reference, I have outlined what I believe to be the “must dos” to get you started.

“Fortune favors the prepared mind.” ~ Louis Pasteur

Buying a Home?

  1. Talk to a REALTOR – Ask a qualified real estate professional about market conditions, trends, inventory levels, but most importantly about the process in general. Don’t be shy to ask for stuff in writing either as you are most likely to forget details.
  2. Talk to a lender – The mortgage is usually the bedrock of the home purchase. Without a lender, nothing else really matters. Lenders will ask for documents which show income such as bank statements or pay stubs and they will probably run a credit report. The goal here is to assess your viability as a borrower and once they do, you will be given a price range for what you may purchase. Your agent usually has a list of lenders you can call. coupleconfused
  3. Begin the search – Now that you know what you can afford, it allows you to talk location, property features, and school districts with your agent. Unless time is of the essence, I advise clients to keep their options open so no opportunities are missed.

Note: I do encourage an in-person meeting with your agent at some point during this process. There is something to be said about face-to-face contact which can’t be replaced by technology. Keep in mind that your agent will be with you from start to finish, so developing a close relationship is an advantage. 

Selling a Home?

  1. Talk to a REALTOR – Similar to buyers, one should inquire with their agent as to market conditions/trends, inventory levels and ask for comparables or “comps”. Comps are a report of past sales in the area which match the property features of your home. These give a good idea of how fast homes are selling, at what price and will be a strong factor in determining at what price you decide to list your property.
  2. Walkthrough – Next step is to invite your agent over for a quick tour. Your agent should know exactly what they’re working with and they can provide some valuable tips for any repairs or modification which need to take place before listing the property.
  3. Prepare to List – Once you’ve decided to sell your home and agreed upon a price, there are still things that need to be done that help sell your home. Main things are to generally clean and declutter. This includes getting rid of junk, smells and other things which make the place seem undesirable to buyers. Your agent (or their stager) can help in this regard. Some homes need a little more TLC.
  4. BONUS TIP – Pre-listing Inspection: Back in October, I wrote about how inspections in a real estate transaction were where the “Where the Rubber Meets the Road…“. A pre-listing inspection is performed before you put the home on the market and helps you get out ahead of any unforeseen issues.

I have found that a lot of people can be intimidated by the real estate process, but it is actually pretty straightforward. When one is armed with the knowledge and guidance of a good agent, there’s no reason it can’t be a very smooth (even fun) process.

Got questions? Please ask me anything by leaving a comment below!

Seth Lejeune is a licensed PA REALTOR.

610.804.2104 / seth.lejeune@foxroach.com

 

What Does a Trump Presidency Mean for the US Real Estate Market?

 

trump-1-0

I originally wrote this article last month, however, I decided to wait in hopes of providing you all with a little more insight into what a Trump administration will mean for real estate. It goes without saying, the implication of a Trump presidency is the most common inquiry I now receive and after speaking to several market professionals both inside and outside the real estate world, there IS a consensus on what the future will bring: UNCERTAINTY.

In terms of things likely to affect the real estate market, there are multiple factors. For example, while most agree Trump policies will lower taxes and bolster American’s ability to purchase property, there are also many predicting that interest rates will increase making the cost of homeownership rise. Of course, if the economy grows, then a rise in interest rates is not necessarily a bad thing. By the same token, some say the Republican’s plan to reform social programs might diminish the spending power of the middle class, or at the very least, affect consumer buying behavior. Diminished spending power means fewer home sales…

Furthermore, his potential changes to regulation & lending, Freddie Mac & Fannie Mae, zoning laws, the Consumer Protection Bureau etc should allow for a less regulated marketplace and free up institutions to conduct businesses at will. This will increase the number of qualified applicants for loans and allow a larger swath of Americans to purchase a home. On the other hand, some worry these changes will lead to another runaway lending situation that led to the economic collapse in 2008; or at least something on a smaller scale.

If you’re dizzy or confused at this point, that’s ok. The real estate market is like a big puzzle and if you add it all up, we come back to our original point: There is too much uncertainty to really know what is going to happen. 

What we do know is the real estate market is continuing to get stronger in most areas of the country. New construction startups are growing at a good clip and there are several metropolitan areas where home prices have rebounded quite nicely. Can the real estate market become even stronger under President Trump? Time will tell.

Not to avoid an answer here, but I would be lying if I told you I knew what was going to happen in the next 4 (or 8) years. A funny thing happens when someone begins to make predictions about big, complex industries; they tend to be more wrong than right. The best we can do is closely watch what’s going on in the market and attempt to anticipate any major changes. If I had to make a prediction, though, I would say the real estate market is going to get stronger in the short term. While Trump presents a certain amount of uncertainty (which markets generally dislike), indicators are pointing to their willingness to give the man a chance to see what he can do.

Got questions? Ask me anything!

Inspections are Where the Rubber Meets the Road…

 

With the help of a couple talented agents, getting a buyer and seller to agree on price can be a beautiful thing! It’s an exciting time for both parties and optimism is usually very high. Back in May, one of my clients thanked me at this point for my hard work and said, “It’s been a pleasure working with you!” Whoa!!! Not so fast! There’s still work to be done. Often times, inspections are where the rubber meets the road as it can take an emotional toll on both parties. In most cases, buyers want their new home to be “move-in ready” and sellers don’t wish to spend any more money than they need to.

Whether you have a buyer who is asking for unreasonable repairs or a seller who refuses to heed requests, inspections can very easily unravel a deal in a matter of hours. Perhaps at a later date, I will outline the entire inspection process, but for now….I have a few suggestions for both buyers and sellers. Every real estate transaction is unique, but these are general rules of thumb:

Buyers

  1. Always research your inspector or ask your real estate agent for a few recommendations. It can be beneficial when the agent and inspector have a prior working relationship.
  2. Be present for the inspection.
  3. If you aren’t buying new construction then assume that there will be small maintenance type things that come up at an inspection. A good inspector will point these out to you, but generally shouldn’t be asked of the seller.
  4. If there are large problems uncovered (roof, electrical, plumbing leaks, structural issues), then refrain from asking for minor fixes such as touching up paint, repairing nail pops, smoke detectors, etc. The sellers might think you’re “nickel and diming” them which is usually not received well.
  5. Remain calm and remember not to put too much emotion into this part of the transaction, even if the seller does. Deals can go off the rails in a hurry if both sides decide to take offense to the other side’s position.
  6. Ask yourself: “Would I find these repairs reasonable if I were the owner of the property?”
  7. Communicate via your agent.

Sellers

  1. Have your agent be present for the inspection if possible.
  2. Crunch numbers of all requested repairs before responding. Rely on data rather than your first impressions to guide your response.
  3. Ask yourself two things: “Will this problem come up in most inspection reports?” & “Is this something that I’d ask for if I were the buyer?” It is very important the seller answers these questions honestly. Getting upset and killing the deal only to have the next buyer ask for the exact same thing can be a very costly mistake.
  4. Consider getting an inspection done before you put your home on the market.
  5. Communicate via your agent.

Please send this along to anyone you think might benefit from this information. Of course, I’m only an email away and always happy to help!

seth.lejeune@foxroach.com