Buying
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Chickens and Eggs when Selling and Buying |
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 That age old question -- which came first, the chicken or the egg -- applies to our local real estate market more than ever this year. There will always be folks, perhaps such as yourself, who will want to buy a new home, but need to sell in order to buy. The ease of this transition depends largely on what type of market we're in....
And this, as outlined above, can make it quite difficult to buy and sell at the same time....
Generally speaking, my recommendation is always the second option above -- make an offer after your current house is under contract. And don't worry -- there are multiple ways to address the "I am only willing to sell if I can also buy" scenario with contract contingencies. But what does one do if there really (really!) isn't anything to buy after you have secured a buyer for your home?
These are not easy, or fun, decisions to make. I am working with multiple families right now stuck in the middle of this situation -- having an interested buyer for their home, but not knowing where they will go. Our best bet is to talk through the options for how to best handle this transition -- and determine how flexible you are willing to be, as it relates to what you buy, how soon you buy something, whether you move twice, etc. | |
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With low inventory levels, it is crucial that you know about new listings FAST! |
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 Most of my clients use NewListingsInHarrisonburg.com to keep track of new properties coming on the market in Harrisonburg and Rockingham County. You can quickly and easily scroll through the most recent residential listings in Harrisonburg and Rockingham County, view the pertinent details, all of the photographs of the home, an area map, and then quickly and easily share that new listing with a friend, your spouse, your Realtor, etc. You can also sign up to receive an email alert every time there is a new listing....  And, finally, you can add the website to the home screen if you'd like, for quick and easy access....  Check it out, at NewListingsInHarrisonburg.com. | |
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Sellers Paying More and More of Buyer Closing Costs |
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 Nearly half of sellers (46.6%) pay some portion of a buyer's closing costs in the form of a credit at closing. Over the past five years, the number of sellers providing a "concession" of this sort to buyers have stayed between 40% and 50%.  Here's the interesting one -- sellers have paid more and more of a buyer's closing costs over time. The average amount of seller concessions has increased steadily over the past five years. But why, you might ask? It's hard to say exactly -- buyers might be asking for more money, sellers might be agreeing to provide a larger credit, or perhaps the total amount of closing costs that a buyer has to pay is increasing as well?  If, as a seller, you are paying part of a buyer's closing costs, you are most likely to be paying between $4K and $6K --- or between $2K and $4K. And again, as a seller, if you pay part of the buyer's closing costs -- you are not alone -- 45% or so of sellers do so! | |
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Should you buy or rent a townhouse in Harrisonburg? |
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 Given continued low interest rates and some increase in home values, let's take a new look at the opportunities of buying versus renting. RENT = $1050/m. There are regularly options for renting a two-story townhouse in Harrisonburg for approximately $1050 / month in Avalon Woods, Beacon Hill, Stonewall Heights, Liberty Square, etc. BUY = $1012/m. With a 95% loan, buying such a townhouse apparently may cost as little as $1,012 per month assuming a $155K purchase price and a 4% interest rate per SunTrust Mortgage's payment calculator....  This shows a rather small, $38/month, cost savings of buying instead of renting. If we then look at the difference between renting and buying over a five year time period, the advantages start to pile up.  As you can see, this builds a rather compelling case for buying instead of renting if you are going to be living in this potential townhouse for the next five years. Two other factors to keep in mind....
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Fear Not, Mortgage Interest Rates Sticking Close to Four Percent |
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 Another month -- and still no meaningful changes in the 30 year mortgage interest rate. Since the beginning of the year, these rates have slowly edged downward, and have now been below four percent for most of the past three months. This continues to provide a great opportunity for home buyers -- likely spurring on continued buyer interest in our local market. As I commented to someone last week, I have been thinking mortgage interest rates were going to start increasing for at least five years now -- and I have been wrong for at least five years now. Will they ever increase? Possibly. When? How? By how much? It's anyone's guess at this point. I think there is probably a 75% chance (maybe a 90% chance?) we'll finish out this year at or below 4.5% -- which is hard to believe. | |
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Four Bedroom Home on 1.65 Acres Offers Views, Privacy in Fort Defiance |
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  You can't necessarily buy a recently built four bedroom house on 1+ acres for around $350K in Rockingham County -- but just a few minutes further south, in Augusta County, you can! This expansive home located at 134 Bailey Road with a two attached car garage on a 1.65 acre lot offers long views in a private setting. Enjoy upscale features such as hardwood floors, maple cabinets, granite countertops and ceramic tile in the bathrooms. The main level offers an office, formal dining room, living room, kitchen with breakfast nook plus a main level guest bedroom and full bathroom. Upstairs you will find a spacious master suite, and three additional rooms plus an unfinished bonus room for storage. Don't miss the covered front porch, two-story foyer, crown moulding, chair rail, large linen closet and much more! Visit 134BaileyRoad.com to find:
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Home Sales Steady in Harrisonburg, Rockingham County in First Half of 2017 |
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 Check out fantastic home for sale on Central Avenue! June 2017 flew by like a blur -- and although home sales were a bit slower than in May 2017 -- nearly all housing market indicators are still showing signs of a robust and active local real estate market. I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF, read the entire report online, or tune in to my monthly video overview of our local housing market...  OK -- now, back to a high level overview of where things are with the local real estate market....  As shown above, most market indicators are looking good....
 As you can see, above, home sales dropped from 148 in May to 134 in June this year -- but last year, they increased from 133 in May to 152 in June. It is hard to say why this trajectory is reversed this year -- it may have to do with when sellers happened to be ready to sell, and when buyers happened to be ready to buy this year as compared to last year. Regardless, the net change from last year to this year is a decline of only three home sales when combining May and June data. Looking forward, I believe we'll see a further decline in closings in July, or at least that is what has happened in most recent years. Unless contract activity convinces us otherwise....  Looking at when buyers are signing contracts, it is notable that we have seen a steady stream of buyers (132 - 140 per month) over the past four months. This is a total of 542 contracts signed in the past four months -- as compared to 560 last year during the same timeframe. As we move forward, we should have at least two more months of 100+ contracts before contract activity inevitably starts to slow in September and October. And what are all of these buyers choosing from when they contract on a home?  It seems that buyers are choosing from fewer and fewer homes these days! Inventory levels have been hovering around 400 homes for sale over the past six months -- and the normal influx of new listings in the Spring selling market has not been able to keep pace with a higher level of buyers buying homes. As such, we have not seen the typical increases in inventory levels between the Winter and Spring market -- there are actually FEWER homes on the market now than there were this past February! OK - now for a shocking statistic of the month....  Did you catch that, above, in yellow? When looking at the homes that sold in the City of Harrisonburg during June 2017 -- the median "days on market" for those home sales was 8 DAYS!?! So, half of the homes that sold went under contract within 8 days of being listed for sale. Wow! I guess that's what you get with increasing buyer demand and decreasing inventory levels. There are actually quite a few astonishing tidbits in this month's report, but I'll get into those in the coming days on my blog. Until then -- feel free to download and read my full market report as a PDF, or read the entire report online. And, my reminders for buyers and sellers last month still apply.... SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Do Sellers Typically Accept Contingent Contracts? |
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 Based on the analysis above, it would seem that sellers are not (in almost all cases) accepting home sale contingencies. Here's the logic....
Even though I have run this analysis before, I am still surprised to find this to be the case --- I thought more contracts might have kickout clauses (and thus home sale contingencies) because plenty of buyers have to sell before buying. It would seem that most buyers are likely waiting to make offers until they have their own properties under contract (thus eliminating the need for the kickout clause) AND/OR most sellers are not accepting offers with home sale contingencies unless the buyers' houses are already under contract (thus eliminating the need for the kickout clause). If you are a buyer, I would certainly suggest the strategy outlined above (and the only one that is apparently working with sellers right now) --- get a contract on your house and THEN make an offer on the property you would like to purchase! | |
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When to start working on securing your mortgage financing |
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 Here are the three sequences I see buyers follow most frequently.... As Late As Possible
Incredibly Proactive
A Reasonable Middle Ground
I try to encourage all of my clients to at least be in the "reasonable middle ground" sequence as outlined above. This gives them a firm idea of what they can afford and how a home price will compare to a loan payment. This also allows them to make a stronger offer, already having a pre-qualification letter in hand. I strongly discourage my clients from following the "as late as possible" sequence as outlined above. This doesn't help them make the best decisions about which houses to pursue, how far to negotiate, etc. This also doesn't allow us to make as strong of an offer on a house. Occasionally, one of my clients will fall into the "incredible proactive" sequence as outlined above, and wow, this makes the financing process a joy to work through! These buyers have already done so much of their work with the lender before even thinking about which house to buy -- which then allows them to focus on buying, negotiating, inspecting, etc., rather than be bogged down in the process of securing their mortgage. Let me know if you have questions about how I have described these sequences -- and let me know if you would like a few recommendations for lenders in the Harrisonburg area. | |
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Buying a home usually involves making some compromises |
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 The odds are, you'll have to compromise on SOMETHING when you are buying your next home. The question becomes -- what are you you willing to compromise on? The easiest (at first) sometimes seems to be price -- you still get everything you want, you just have to pay more for it. But if you're drawing a firm line on price, then likely some other need or want will have to be imagined differently. Here is what buyers tend to compromise on based on the the 2016 Profile of Home Buyers and Sellers from the National Association of Realtors....  | |
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The Danger of Focusing on Just One Comparable Sale |
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 It's easy to want to do this -- as either a buyer or a seller. The illustrations below are partially based on real experiences in the past few months, but have some fiction woven in to preserve anonymity. THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $350K, but this one other home a few streets over sold for $300K last month, and it was a larger, so I'm not paying any more than $300K for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($300K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $250K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $260K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. So -- as a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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Unique Opportunity in Preston Lake |
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 As shown above, this rowhouse in Preston Lake offers an AMAZING rooftop terrace -- and it will be hard to leave once you are up there, enjoying the space....   Care to check out this compelling property in person? Just drop me an email at scott@HarrisonburgHousingToday.com.. | |
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Will We Ever See Detached Homes Under $100K in the CIty of Harrisonburg Again? |
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 It remains difficult to buy a single family home in the City of Harrisonburg for less than $100K. While the 2017 data point (above) is based only on the first four-ish months of the year, it is clear that fewer and fewer detached homes are selling in Harrisonburg for less than $100K. These are the two homes that have sold for less than $100K thus far in 2017 -- one on Hawkins Street and the other on North Main Street....  AND -- there are currently zero (zip, zilch, nada) detached homes for sale under $100K in the City of Harrisonburg. | |
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More Homes Selling Faster in 2017 |
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 OK -- so -- a few things going on here. The graph above shows the percentage of homes that sold in the first four months of this year (and last year) that went under contract within 14 days. The "quick sales" if you will. As you can see, more homes (31%) are going under contract quickly this year as compared to last year (22%). Then, one thing this does mean and does not mean. This DOES mean that almost one-third of homes that sell go under contract within 14 days. So -- as a buyer, you need to be ready to act quickly. This DOES NOT mean that one-third of all homes that are listed go under contract within 14 days. Many homes sit on the market for some times, and some even never sell. It's a fast paced market thus far this Spring, and I expect that will continue through the Spring and into the Summer! | |
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Location, Setting and Context Matter |
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 Many houses are WONDERFUL -- but the location, setting and context of those homes is not just a small additional detail to note -- it is often central to a purchasing decision. Some examples....
So, as we consider houses you might purchase -- let's think about what location, setting or context will be the most meaningful and desirable for you, both in the short and long term. P.S. The home pictured above, on a large, private lot, is somehow still just moments from Sentara RMH Medical Center and everything Harrisonburg has to offer. This property will be hitting the market this week! | |
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Buyers have to be ready to act FAST these days! |
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 So many homes these days are going under contract QUICKLY and sometimes with MULTIPLE OFFERS! Depending on the house, and the location, and the condition, and the price, it may garner a lot of attention very quickly from buyers. This is mainly a result of the very low inventory levels we are seeing right now in many price ranges. So, what does it mean to be ready as a buyer?
The new listings are coming -- and one could be just what you are looking for -- will you be ready? | |
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How many homes will you really be choosing from? |
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 If you are entering the market to buy a home, the number of homes you will have to choose from will vary widely based on what you are looking for in a new home. Some buyers have a very narrow scope and find themselves on a prolonged hunt for what seems to be an elusive or mythical home. Some buyers find plenty of options, evaluate quite a few, make a decision and move forward with an offer. However -- keep in mind that as you consider the 403-ish homes currently on the market for sale, that some of them have been on the market for 3 months, 6 months, 9 months or even longer. The freshest of fresh listings are those that have come on in the past 30 days -- which (this time of year) is less than 100 of the 403-ish homes currently listed for sale. Depending on your time frame for buying, and the narrowness of your scope, sometimes it makes sense to quickly evaluate the current options -- and then to wait and see what new and exciting listings will be coming on the market in coming days and weeks. Steps to get started include talking to a lender to get a sense of your target price range, and then chatting with me (in person, by email, by phone) so that I can also be keeping an eye out for suitable properties for you. Learn more about the home buying process at....  | |
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The process for making an offer, when you are ready |
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 How, you might ask, do we go about getting from the point of wanting to make an offer --- to actually making the offer? Here's a brief overview....
When we get to step seven, above, we will be discussing and deciding on the terms of the offer. Below is a list of the main contract terms we will need to discuss in preparing to make an offer.
Before and after making an offer, there is a lot more to know about and think about regarding the home purchasing process. Read more at.... | |
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The layout, floor plan, flow of the house is often the MOST important aspect for buyers |
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 If a buyer is buying over $400K, or even over $300K, the layout of the home becomes very important to them. That is not to say that it is unimportant for a $200K buyer -- but someone buying a more expensive home oftentimes plans to stay in it for a longer time frame. If not the #1 feedback, the #2 feedback I receive from showings of homes priced over $400K is that the layout just didn't work for the buyers. They wanted another bedroom here, instead of there. They wanted a more open floor plan. They wanted a more formal dining room. They wanted a more spacious basement. Challengingly, the layout is something that is hard (nearly impossible) for a seller to change in order to appeal to a wider segment of buyers. Thus, if your home has a layout that continues to not work for buyer after buyer, you must either wait (and potentially wait and wait and wait) for the buyer who loves that layout -- or adjust the list price to make the house (even with its layout) more appealing to more buyers. | |
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If you will be both selling and then buying, how will your mortgage payment change? |
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 If you will be selling your home to buy another, there are a lot of numbers floating around....
Above you will see a spreadsheet I put together to help you think about some of these numbers as you are evaluating if and when you will make a move to a new house. In yellow, are all of the inputs you will need to provide, or that you and I can determine together, such as your current payment, your home's current value, your mortgage payoff, whether you will be putting any additional money into the transaction, etc. In green, I have identified your potential future mortgage payment and the net change in your monthly payment. All of the numbers without a background color will automatically calculate for you. Click here to download this worksheet as an editable Excel file. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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