Value vs. “Saleability”, part 2

So, if you read the previous post, the question was what is an appraiser looking for to help him/her determine the value of a home?  The appraiser looks at “the big picture”–how a home compares to others in the area that have recently sold.  It doesn’t matter what the guy down the street has listed his home for, or what you paid for the home 5 years ago–what matters is what other people have been willing to pay for a similar house in the last few months!  Appraisers consider recently sold properties and also the condition of your home relative to others around it.

Very often, a REALTOR® like me finds that a homeowner who wants to sell his home and an appraiser have a different idea of what’s valuable about a home.  There are many things that are “valuable” to a seller that don’t matter much to an appraiser!   These kinds of features may make a home more “sellable” but they don’t necessarily make it more “valuable”.  There’s a difference!  Here are a few areas where “saleability” may not add to “value” for an appraiser:

1.  A new roof.  No question that a new roof improves the “saleability” of a home.  It’s important to the function and it’s expensive to replace, so a home with a new roof adds appeal to a buyer, but to an appraiser, not so much.  Every home has to have one so the fact that yours is newer than the house next door doesn’t really matter.  However, if your roof  is older than what’s in the area and obviously in need of repair/replacement, that can definitely decrease the value for the appraiser.

2. The outside, i.e. curb appeal.  How does your home compare to the neighbors’?  If their homes and yards are nicely landscaped, well-maintained, and show no obvious signs of neglect (chipped paint,dead or overgrown plants and bushes, unkempt yard, etc.) and yours doesn’t, that can have a negative effect on the value for an appraiser.  Curb appeal is very important–it sets the expectation for the condition of the house as a whole.  If the yard looks neglected, that could indicate a lack of maintenance inside the home as well.

3. Remodeling projects, especially those that follow a current trend.   Those types of projects can actually decrease value.  What looks modern and stylish today will look dated and old in 5-10 years.  Think about your wardrobe–are you wearing what was “in” 5 years ago?  Probably not!  However, classic pieces never go out of style and can be updated with minor adjustments and accessories.  The same goes for your home.  Built-in entertainment centers were all the rage a few years ago–now, not so much.  Or what about cabinets?  What’s in, what’s out?  Dark wood, light wood, heavy carving, sleek and modern?  For permanent and expensive projects, stick with classic designs and save the trendy stuff for things that can be easily changed, like paint and accessories.

4. Swimming pool–this is a tricky one!  If most of the homes that the appraiser is comparing to yours have pools and pools are common in the area, then the fact that your home has one will not make it more valuable.  If pools are not common and  you have one, that also will not necessarily make your home more valuable.  Pools are not for everyone!  They increase your homeowners insurance premium because they’re considered an attractive nuisance.  They mean extra time and expense for ongoing maintenance.  They can definitely pose a safety risk for a family with children.  So a pool can (maybe) increase “saleability” for a seller, but not necessarily “value” for an appraiser.

There are many other considerations for an appraiser to weigh when determining the value of a particular home, but I hope this gives you some insight into the difference between what makes a home more “sellable” and what adds or takes away from its value.  If you have questions, by all means contact your REALTOR®, or me!

Buyers–How to Get Ready to Buy a Home!

Unless you’ve been under a rock or completely cut off from news media, you probably have heard that mortgage rates are at all-time lows.  Home prices are affordable (although some markets are now seeing prices start to rise), and everyone can agree on the value of owning a home.  Home ownership enhances our lives in so many ways, not the least of which is a sense of having roots in a community, providing a safe haven for your family, and building wealth through owning your own home.

But if you’re a first time buyer, or even if you’re not, navigating through the process can be challenging and sometimes a little tricky! That’s where the guidance and help of a professional REALTOR® can really help you.  But before you start down that path, here are some things you can do to “get your ducks in a row” and make the process as hassle- and stress-free as possible.

Understand and update your FICO score!  Your credit score makes a HUGE difference in what your mortgage interest rate will be, whether or not you can obtain homeowners insurance and what rates you’ll pay, and so many other things you do every day.  It’s critical that you know your score and be sure that all the information contained in your credit report is accurate.  All 3 major credit agencies are required to give you a free copy of your score every year, so if you have doubts about your score, contact Experian, TransUnion, and Equifax and ask for a copy of your credit report.   If your score is below 700, take corrective action to improve your score before you start house shopping.

Know what you can afford.  You should consider establishing a relationship with a trusted mortgage professional well in advance of when you’ll actually need his or her services.   A lender can help you identify your goals, evaluate your situation, and identify which kinds of loans you may qualify for, based on your current financial situation.  He or she can also help you determine what you can do to improve your credit and increase your options.

Boost your savings.   Time to get serious and start socking away money!  The days of being able to buy a house with hardly any cash on hand are over!  You’ll need enough money for at least a 3.5% down payment, closing costs, and several months worth of payments.  If you’re looking to buy an older home that may need repairs and/or updates, you’ll need money for that as well.  Don’t forget about moving costs, possibly new furniture and/or appliances, and other things you may want or need for your new home.  These all require money!

Do NOT make any major purchases or change jobs!  Your lender will want to see cash reserves on hand so that you can make payments.  Buying a car or new appliances, or that 50″ flat screen will drop those reserves and may make it harder or even impossible for you to qualify for a mortgage loan.  Put that money aside and wait until after you move to make those big buys.  And DO NOT change jobs!  Job history and income verification are part of the process–changing that can change your chances!

Understand your local market, and especially in the areas where you’ll be looking to buy.  Watch for trends so you can be ready when the time is right.

Consult a professional REALTOR®.  An experienced REALTOR® can be your best friend when it comes to helping you purchase a home.  Interview 2 or 3 and find someone who you trust and are comfortable with because you’ll be spending some quality time together!  A real estate professional will guide you through the process, help you with everything, and look out for your best interests all along the way.   If you’re in San Antonio, I’d love to be that person for you!  If not, I can help you find someone where you are who will take care of you!

Buying a home is a complex process, but when you get to the end, the rewards are so worth it!  Good luck on your journey, and please contact me if I can answer questions or help you along your path to home ownership!

Summer time = be-safe-time!

Welcome to good ol’ summertime!  Although it’s now “official” since we had our longest day of the year last week, it’s been summer in San Antonio for awhile now, and the dog days are just getting started!  We all like to relax and enjoy some leisure time, but this is not the time to be lax on safety!  Of course,  we all are on guard about water safety, sunscreen, staying hydrated, and all the other things concerning our physical safety and that of our families!  But have you considered your financial safety?

Summer time means vacation for many folks and that puts travelers at increased risk.  Traveling means shopping, eating out, checking into hotels, and these are the locations thieves frequent to steal your personal information!  Here are some tips to remember so you’ll stay safe as you vacation and relax this summer:

Before you go:  Don’t post your travel plans on Facebook and social media sites–no need to advertise to thieves that your home is unoccupied for days!  And stop mail and newspaper delivery or arrange for a friend or neighbor to pick up for you so it’s not obvious to casual observers that no one’s home!   You might want to consider notifying your bank and credit card companies about your plans or set up alerts for unusual or excessive charges.  Also arrange for yard maintenance while you’re gone, including watering if you don’t want to come home to a brown yard!

What to take/not to take:  Travel light!  Do not carry all your credit cards.  Leave your social security card at home (safe and secure of course!).  Make copies of your passport and other travel documents.  Store phone numbers for your credit/debit card companies on your smartphone in case your wallet or purse is stolen.

While you’re traveling:  Use only secure internet connections in hotels and other public places.  If you must use public Wi-Fi or computers, do not access financial information or other personal sites on these unsecured connections.   If you’re carrying valuables, lock them up in the hotel safe.  That includes your passport, jewelry, electronics, other important documents.   Keep all your receipts.

When you return:  Cross check your receipts against your bank and credit card statements.  Remember to start your mail and newspaper deliveries back up!   Enjoy the memories you made with your family and friends and start planning for next year!



Oh, If Only…..

We’ve probably all said or at least thought “if I knew then, what I know now, I would have done things differently.” We should have stayed in school longer. We should have listened to our parents. We should have bought Apple stock in 2002 for $8.50 or gold in 2000 for $300.

Years from now, if we look back at 2012, it may be clear that this was the best buyer’s market ever. The prices are down nationwide 35-40% from four years ago, mortgage rates have never been this low and rents are rising. Few homes have been built in recent years to keep up with a growing population. There may never be a better time to buy homes than now.

The housing affordability index which is considered to be good at 100 has increased to over 200 for several months. Shrinking inventories and rising prices in some markets are causing the index to fall for the first time in years.

This ‘buying” opportunity applies equally to acquiring a home to live in or to rent as income property. It is estimated that about one-third of the homes purchased last year were done by investors. It is reasonal because the positive cash flows far exceed most other investment alternatives.

The question we’re all faced with this year is whether we’ll be saying we seized or missed an opportunity of a lifetime.

Mortgages and Veterans

I recently attended an all-day seminar at the San Antonio Board of Realtors called Welcome Heroes Home.  I learned a lot about the challenges faced by our military heroes, especially those who have sustained life-altering injuries and how those injuries affect not only themselves but their families as well.  These brave young men and women have unique challenges to face and now, unique needs when it comes to housing.  It was an informative, enlightening, and inspiring day of learning from these heroes and the people who work with, love, and support them.  Would that we all could face what they do with as much courage and can-do attitude!

Because of their injuries and the alterations required, these veterans have some special needs in housing.  Some need ramps, wide halls, lower counters, and other universal design items for easier wheelchair access.  Some who have sustained severe burns need extra air conditioning units.  Some veterans may be able to modify their existing homes; others may need to build new.  Some are relocating to new areas to be close to medical facilities.  There are many new challenges for these heroes and their families, and there is help available for them.

If you are a veteran, or know one, please click on the link below.  It’s a link to another blog site that gives some information about some of the mortgage options available to veterans, wounded or not.  There are resources out there for you.  One thing I learned in that seminar is that many veterans don’t know about all these resources.  Again, if you’re a veteran or if you know someone who is, please know there are people who want to help.   Contact me if you’re in or around San Antonio and I’ll point you in the right direction.

Thank you for your service!

Mortgages and Veterans.                                            

Buyers, How to Turn Off a Seller!

My last post was all about how homesellers can turn off/turn away potential buyers.  Well, that street runs two ways!  Buyers, you can also do some things that turn off a seller and make that seller less willing to work with you.  Here are 3 things to keep in mind when you’re looking for a house and when you find “the one”:

1.  Extreme lowball offers.   Many (not all!) markets are still what we consider “buyers markets” these days–where available inventory is greater than the number of buyers actively looking to purchase a home.  This gives buyers a bit of an upper hand in negotiations, but let’s be reasonable and realistic here.  Buyers, you should consult your agent to find out what similar homes in the neighborhood have sold for recently.  While most sellers will likely be reasonable in considering a price lower than what they’re asking, they are probably not going to give away their home (and largest asset) for way less than current market value in the area.  And what’s worse–by making a lowball offer just to “see what they say”, you run a very big risk of turning them off so much that not only will they refuse your offer, they may refuse to counter and/or decide not to work with you at all!  So, you waste their time, your time, both realtors’ time, and in the end, everyone loses!  So make your offer based on the realities of the market in your area and in the neighborhood you’re interested in.  Forget the fantasy of  trying to score the “deal of a lifetime”–if you want the house, then be reasonable!

2. Mortgage “issues”.    Realtors are seeing this happen too often.  You find the house, you make an offer, negotiate the terms, get your offer accepted.  Yea, you think the hard part’s over!  It’s just beginning!  Now it’s time for you, the buyer, to put up or shut up–you have to apply and be approved for the mortgage loan you need to complete the transaction.  Things have changed a lot in the mortgage industry in the last few years!  Many buyers with jobs, good credit, and cash on hand are finding it difficult to obtain financing.  And if you have challenges with any of those things, it’s even more difficult, if not impossible!  So, buyers, what can you do?  Start the mortgage approval process before you ever go out looking for a house.  Get pre-approved for a loan and have that pre-approval ready to submit with your offer to purchase the home you want.  Know how much home you qualify for and stay in that price range.  Keep your financial affairs in order while all this is going on–don’t buy anything on credit, don’t open new credit cards, don’t fall behind in bill payments, and don’t change jobs until after you close on your new home!  Seller, be sure you ask for proof that your potential buyer can complete the transaction–get a copy of that pre-approval!

3. Trash-talking the seller’s home.   If you, the buyer, are trashing the seller’s home as a reason to offer less, you’re running the very big risk of making the seller mad and giving him reasons not to sell to you!  Plus, if you think it’s that bad, then why do you want to buy it in the first place??   If there are legitimate problems with the house that make you consider offering a much lower price than what the seller is asking,  then ask your agent to communicate your concerns in a professional and respectful way.  Chances are, the seller is aware of those issues already, and being respectful will keep communications open.  Remember, a seller has emotional ties to his home–many take your negative comments as a personal commentary on them, and may not be willing to work with someone they perceive as attacking them personally.

At the end of the day, everyone has the same goal–to sell or buy the house in question.  By putting yourself in the other party’s shoes, you can facilitate the transaction, communicate your position effectively and respectfully, and everyone ends up getting most of what they want!   Sellers sell, buyers buy, everyone wins!

Success to you!




2012 appears to be more encouraging on the home front!

If you recall, last year FHA, in all its wisdom, announced intentions to drastically reduce the maximum seller concessions from 6% to 3%. Not good news for buyers, sellers or the industry in general. So many transactions rely on FHA and seller contributions, and couldn’t happen without them.
Well the troops mobilized with voices from lenders, Realtors, builders and consumers, and HUD wants you to know they’re listening. The details haven’t been finalized, but word is out that there will be higher seller concessions allowed than originally proposed. They’re talking between 4 and 5% rather than 3%. Stay tuned for the formal announcement intended to offer a good compromise for continued recovery of our fragile economy, and protection for the FHA insurance fund.
More good news yesterday from the Federal Reserve. They plan on expanding the time frame to keep the prime rate very low, through at least the end of 2014!  (Thanks to my colleague, Joan Rogliano in Colorado for sharing this with me!)
What does this mean for you?  If you’re thinking about buying, rates are low, homes are available, and rents are probably going to increase, so it’s time to get serious!  If you’re going to put your home on the market, be prepared for the possibility that a buyer may request your help with closing costs.  Remember–your goal is to sell your home, and if this is what it takes, then get in the game!
In San Antonio, we are pretty evenly balanced between sellers and buyers with approximately 6.5 months of inventory; our market is stable, so don’t hesitate to jump in!

San Antonio Housing Forecast, 2012

I attended the San Antonio Board of Realtors’ annual Housing Forecast on Jan. 5 to hear what may be in store for us in the coming year.  We heard from County Judge Nelson Wolff and Mayor Julian Castro.  Both had lots of positive things to say about San Antonio and what’s happening in and around the city.  Mayor Castro called this the Decade of Downtown.  Lots of development happening in the downtown and surrounding areas, in residential and commercial.  San Antonio has a growing young urban population who want to live near the urban center of town and want to be able to work and play nearby.

We also heard from the current and immediate past Presidents of the Greater San Antonio Builders’ Association.  Both shared that they expect housing starts to tick upward in 2012, although not to the levels we saw in years past.  Builders are seeing a lot of activity in the higher-end price ranges and in areas farther out, since many of the neighborhoods closer in to 1604 are built out and fewer lots are available.   Their development costs to bring new lots online have increased also and some of those increases are being passed along in the price of houses.  They said that they were finding it a little easier to obtain financing for spec houses than they’ve seen in the last few years.

San Antonio’s number of sales and median price has seen a slight increase in 2011 and we expect that to continue into 2012.

There is one part of the residential market that has seen dramatic increases and those increases are expected to continue through 2012 and likely beyond–the rental market.  There are several reasons for that increase.  Mortgage lending requirements continue to be strict and are making it difficult for first-time buyers to qualify for the loan they need to purchase a home.  Uncertainty in the job market may also be keeping some folks from making the commitment to buy a home.  For these reasons and other personal considerations, many are choosing to rent for now.  So what does that mean?  It’s a great time to invest in rental housing!  If you are looking for a place to invest that provides tax advantages and where your money can grow and the value of your investment will appreciate, and the cost of acquisition (mortgage rates) is at historic lows, this is the time to buy!

Our other speaker, economist Dr. Jim Gaines from the Real Estate Center at Texas A&M, shared some stats with us and confirmed that Texas is the #1 state for job growth.  He also showed us some numbers and graphics that demonstrated the growth of urban areas in the state–the triangle that includes Dallas/Ft.Worth, Houston, Austin, and San Antonio.  That’s where the population is going and that’s where the growth is.  Texas has changed over the last 10-20 years from a rural state into a young urban state.  We have a large percentage of immigrant population, primarily Hispanic, who bring their own vibrancy to our cities.

One thing we hear about in the media is the looming “shadow inventory” of foreclosed homes that are poised to hit the market.  We are expecting some of that here and when those homes do come on the market, they will put downward pressure on home prices and home values in the neighborhoods they’re in.   Thankfully, we don’t have the volume to deal with that other areas do, and we hope those homes will sell quickly when they do enter the market, but sellers will have to deal with the effects for awhile.

Dr. Gaines did also point out that for all the job growth and other positive indicators in Texas and San Antonio, we are not immune to the national and international economic trends.  He also stated that many economic factors are going nowhere until after the Presidential elections.  Everyone is waiting to see what’s going to happen before they make major moves to expand, hire, move, etc.  So, expect 2012 to be mostly more of the same from 2011, with slight increases.  Texas and SanAntonio have been fortunate to not have experienced the high highs followed by the low lows that other areas of the country have seen.  We are slow and steady and we are doing fine!

Here’s to a great 2012!


San Antonio housing market–strong and steady!

San Antonio Board of Realtors released stats for October, 2011 recently.  Here’s part of the report:

“The average sales price for single-family residential homes
registered at $182,304 in October 2011, while the month’s
median price was $149,500. Both figures are a one percent
decrease from October 2010.
“This is the only decline we’ve seen in prices all year,” says Angela
Shields, President and Chief Executive Officer of SABOR. “Over the
course of the year, our prices have shown an increase and those
figures are more depictive of the big picture.”
Year-to-date, the average price ($186,815) and median price
($152,400) have seen a one and two percent increase
Forbes Magazine recently named San Antonio the best city in the
nation for jobs, citing strong employee bases in a diverse roster of

In summary, the housing market in San Antonio remains strong and steady.  We have jobs and job growth here, we have a healthy 7-month inventory of unsold homes, builders are being conservative and replacing sold homes but not flooding the market with spec homes.  Interest rates are low, and we just got news that Congress has restored the FHA loan limits to their higher amounts, which is great news for San Antonio home buyers since many of our sales are done with FHA financing!

As the figures above indicate, average and median prices are down 1% in October from a year ago, but that is reflective of an overall increase in the number of home sales, and in more modest price ranges than just the upper end of the scale.

What does this mean for San Antonio home buyers and sellers?  It means that now is the time to get serious!   Indications are that foreclosed properties may be hitting the market in 2012 in greater numbers.  San Antonio has not had the number of foreclosures that other markets have suffered, but we do have some, and when large numbers come on the market, they tend to drive down prices for other homes.  So, if you’re selling your home, you should not wait to put it out there!  People do buy homes during the holidays, and those that are looking now are serious!   Be sure yours is available to potential buyers!

For home buyers, although interest rates remain very low, qualification for loans continues to be a challenge as loan requirements have tightened.  Other loan fees have also been added and/or raised, so the cost of borrowing has increased and indications are that that trend will continue.  So, if you’re thinking of buying and plan to finance the purchase, start the process now!  Waiting may end up costing you more!

Hope you have a wonderful Thanksgiving!  I’m thankful for the opportunity to share my tips and ideas with you!

All the best,
Sue Trautner

Home Buyers–Read this!

Waiting Might Cost MORE!

The housing market has been in a downward trend for four years. There is some speculation that inventories will not reduce any time soon which will be necessary for prices to rise. However, there are other factors that can increase the cost of housing, specifically mortgages. FHA accounts for a large percentage of the current housing loans and is expected to be even more prominent when the Qualified Residential Mortgage Guidelines go into effect next year.

  1. Rising rates are almost certain, due to looming inflation fueled by higher gas and food prices and the enormous amount of deficit spending
  2. FHA loan limits have been reduced – they are lower than conventional limits in most markets and FHA has suggested that they might be reduced further.
  3. FHA might increase the down payment to 5% or higher in an effort to have a more secure loan that will have less likelihood of going to foreclosure.
  4. FHA might decrease the amount of seller contributions in a similar move to require the buyer to have a larger investment in the home and therefore be a more “qualified” borrower.
  5. Congress may decide to increase the up-front MIP to build up the FHA reserves. The annual MIP has been adjusted twice since October 2010 when the Up-Front MIP was actually reduced.
  6. Due to tougher conventional requirements, demand for FHA loans could exceed maximum annual insurable limits. If Congress is having a hard time raising the limit on national debt, they might not even consider raising the limits for FHA.

In an effort to solidify the lending industry, qualifying is becoming harder for the buyer and more expensive at the same time. Many of the rules changes could go into effect next year. In addition, market factors could easily play a role in increasing buyer’s costs. Waiting will very probably require a larger up-front investment for buyers in the future.