Don’t Let Buyer Competition Keep You from Purchasing a Home

This year’s record-low mortgage rates sparked high demand among homebuyers. Current homeowners, however, haven’t put their houses on the market so quickly. This makes finding a home to buy today challenging for many potential buyers. With an obstacle like this, those searching for their dream homes may be pressing pause on their searches as we approach the end of the year, but that could be a big mistake for many hopeful house hunters. Here’s why. 

According to the most recent Housing Trends Report from the National Association of Home Builders (NAHB):

“The length of time spent searching for a home continues to grow.”

The report indicates that 62% of buyers now spend 3 months or more looking for a home, an increase from 58% one year ago. A primary cause for the delay is the heavy competition today’s buyers face when making an offer on a home. Based on recent data from the National Association of Realtors (NAR), the average house in today’s market receives 3.4 offers before it’s sold. This means for every buyer who purchases a home, there are on average two or three buyers who have to begin their search all over again.

Compared to this time last year, the NAHB report shows that buyers are having more success finding homes in their price range. However, it also notes the percentage of buyers saying they’re getting outbid when they make an offer has jumped from 15% to 27%. Buyers are indicating that bidding wars are a major obstacle to finding their dream home (See graph below) 

If this is a challenge you’re up against in your home search, you’re not alone. Feeling stuck in the process can be frustrating, but if there’s ever been a year to power through, this is the one. NAHB noted:

“Difficulties finding a home to buy will likely lead 20% of active buyers to give up until next year or later. That share is up from 15% a year earlier.”

Experts anticipate home prices will continue to rise into 2021, and the incredibly low-interest rates we’ve seen this year are also forecasted to increase as the economy strengthens. Hopeful home buyers who decide to hold off on their search until there’s less competition run the risk of finding a more expensive housing market when they start looking again. If affordability is a key motivator behind your decision to buy a home, this winter is still the best time to make it happen.

Bottom Line

Bidding wars may be one of the greatest challenges buyers face in today’s housing market, but they shouldn’t be a deal-breaker. Having the right expert on your side throughout the buying process will give you the advantage you need when it comes to finding the right home and making a competitive offer. If you’re ready to buy this winter, contact a local real estate professional to discuss how to position yourself for success.

As always, if you have any questions about this blog post, please feel free to contact us at Bill-913-837-0760 or Danicia 913-837-0411.  We would love to hear from you!

 

 

WHY DO I NEED EARNEST MONEY?

When you’re shopping for a home, it can feel like you’re hemorrhaging money. You’ve got all sorts of things to pay for, from loan application fees to home inspections, so when the issue of earnest money comes up unexpectedly, it can be a “slam on the brakes” moment. Now that the days of low to no down payments are largely past and markets everywhere seem to be running thin on inventory, earnest money may well be the most important negotiating tool you’ve never heard of.

What Is Earnest Money?

When you make an offer on a home, part of that offer can include a little show of good faith on your part, in the form of cold, hard cash. Generally, one to three percent of the offer price is pretty normal for an earnest money deposit, but this can vary pretty widely based on market conditions. And the more you put up, the better. But what happens to that money?

Earnest money is literally just a show of faith. When you go to the closing table, it becomes part of your cash to close equation, which includes other line items like your down payment, your closing costs, and your prepaid items. It’s not a bribe or an extra fee to convince a seller to sell to you. It will simply be applied in full as a credit in your closing documents, reducing the amount of money you need to bring with you on the big day.

Here’s the one kicker. If you were to decide to back out of the contract with no real cause, the seller may be entitled to some or all of that earnest money. However, plenty of situations exist where you may not be able to close, but your earnest money will be refunded, such as:

• An unacceptable home inspection. This all has to be stipulated in your contract; there are no givens in a real estate transaction, but there are things that are pretty standard. Having an unacceptable home inspection, if the seller is not willing to make reasonable repairs, can be a cause for terminating the contract and getting your earnest money back.
• Your financing falls through. Again, you’ll need a financing clause or addendum to ensure you’re covered in this event, but because financing is so important to real estate transactions in general, they are pretty standard. If your financing falls through due to no fault of your own (you’ve been laid off, your bank closes, a co-borrower dies), you should generally be able to reclaim your earnest money. The specifics will be in your real estate sales contract, so pay close attention.
• The seller can’t close. There are a few rare situations where a seller can’t close the transaction. These are incredibly uncommon, but they do happen once in a while. For example, you might find out that the seller only believed they were the owners of the home. This can occur when a parent dies without a will, forcing the property into probate court even when it’s clear an only child will be the sole heir. And in the case that the seller can close, but chooses not to for whatever reason, you would also get your money back.

Bottom of Form

What Is an Earnest Money Note?

In some markets, you may have an additional option for earnest money, known as an earnest money promissory note. This is essentially an IOU that accompanies the offer. On the note, you’ll specify exactly when you’ll either turn the paper into actual cash or forfeit the offer entirely. Though these were once very common, they’re far less so today. If you choose to use an earnest money promissory note, be sure to describe in great detail why you’re not able to provide earnest money on the spot and how you will remedy this.

For example, if you have some stocks you were going to cash out for your down payment but didn’t want to touch until you were really ready, you may need time to sell enough to cover the earnest money. In that case, specify this as the reason and say that you’ll initiate a sale on a certain day, then convert the note on that day. Make sure to leave yourself a little leeway, because if you fail to perform, you can suffer serious consequences.

Generally speaking, earnest money promissory notes can be considered a sign of a weak offer, but this varies from offer to offer and market to market and you should inquire before taking that leap.

As always, if you have any questions or comments, please feel free to email either one of us at Bill@ruralkc.com or Danicia@ruralkc.com, or call us at Bill-913-837-0760 or Danicia-913-837-0411.  You can also check out our website at ruralkc.com.  We would love to help you with any of your real estate needs. 

 

Why does my realtor ask me for a pre-approval letter?

 Make sure you get a pre-approval for a mortgage, not a pre-qualification. A pre-qualification is where you give a mortgage broker a hypothetical set of credit scores, income, etc., and they give you back an interest rate and terms that the hypothetical borrower you've described would qualify for. A pre-approval is where the mortgage pro reviews your credit, income, and assets and conditionally offers you a particular mortgage (or several), putting that offer in writing in letter form. You must be pre-approved -- not pre-qualified -- before you get in the car to go house hunting with your Realtor because:

• You can make an offer as soon as you see "the one" - Most sellers won't even look at an offer to purchase their home that is not accompanied by a pre-approval letter. If you see it, then have to wait a day to get a pre-approval letter, you could very well end up losing your new home or wind up in a bidding war over it.
• You won't see homes way above your price range - Once you are pre-approved, your mortgage pro will give you a purchase price limit. DO NOT go looking at homes that are outside of your limit. I promise you that after you see the million-dollar house, the one that costs $300,000 doesn't look too good.
• You won't see homes that are way below your price range - People who erroneously assume they can only afford a $150,000 house might get really depressed, disgusted, and frustrated with what they can find in some markets.

Understand Your Big Number

Your pre-approval outcome will be a letter that states Your Big Number -- your maximum purchase price. You should make sure you are clear on your monthly payment at Your Big Number and on what sort of mortgage program (rate and terms) that monthly payment is based on. That number will drive your house hunt and subsequent decision making, so make sure you understand the underlying details -- you don't want to find a home priced at Your Big Number and then realize that the payment you were quoted was the minimum payment on an Option ARM with a five-year prepayment penalty, and not an interest-only payment on a hybrid 7/1 ARM with no prepay penalty.

If you are looking for a home in the country, please feel free to call the Rural KC Team at 913-837-0760 or 913-837-0411.  We can help you find a property, and we also have several lenders ready to help.

FINDING THE RIGHT SPACE FOR A HOME-BASED BUSINESS

3 Tips on Finding the Right Space
for a Home-Based Business

 By:  Tina Martin

Whether you’re starting a business from home for the first time or your small business is growing and you need a dedicated space in your home to meet your personal and professional needs, there are three options you’ll want to consider: converting unused space into an office, remodeling your home or buying a new house altogether. For some tips on choosing the best solution for your home-based business needs, read on!

1. Remodel Your Home

If you’ll need more room and privacy for your home-based business, you could renovate a basement or garage to create space for an office — or you could build an addition. The cost of building an office addition will depend on the size of the space and the specific types of renovations that need to be completed — such as adding or removing walls, installing new lighting, building cabinets, and upgrading electrical wiring. You may also need to obtain building permits from your local authorities, which would add to the cost of your home addition.

2. Buy a New House

If a home renovation isn’t feasible and you don’t have the space you need to convert a spare room or living area into an office, you could also choose to buy a new house that fits your personal and professional needs. To find a new house that can be used to operate your home-based business, you’ll want to consider the following:

●     The home’s proximity to your target audience, customers, and employees (if applicable)

●     How much you can afford to spend on the home purchase

●     How much space you’ll need to live comfortably while doing business from home

●     Whether the home and location will fit your industry and profession

If you’d like to buy a larger house in an in-demand location, you may want to consider purchasing a foreclosed home in your desired area. This will help you to find an appropriately sized house in the best possible location, while saving on your purchase and having some money leftover to invest in your business.

When buying a foreclosure, there are a few things you’ll need to consider. Real estate experts recommend getting pre-approved for financing before making an offer on a foreclosed home, taking the time to understand the benefits and limitations of purchasing a foreclosure, and getting a thorough home inspection so you know exactly what you’re getting into. Additionally, it’s important to work with an experienced real estate agent who specializes in buying foreclosed homes.

3. Convert an Unused Space

If you have a spare bedroom or another unused space in your house, you may be able to convert the area into an office for your home-based business. Forbes has some great tips on its website to help you find the right space for your business needs, whether you’re hoping to convert a bedroom, guest room, living room, playroom, or part of your kitchen into an office for your home-based business. If you’re short on space, however, you could even remove the doors from a spare closet and convert the space into a cozy office nook.

After you’ve created a space for your home-based business, decorate the office area with air-purifying plants such as a spider plant, snake plant, and philodendron. If you plant these great office plants yourself, you might even find that you feel happier and less stressed as you get your home-based business going. Candles, artwork, picture frames, and table lamps are other great accessories that can be used to decorate your office and boost productivity.

A Final Word

Whether you convert a spare room into an office for your home-based business, build an addition or buy a new house altogether, these three tips will help you to find the perfect space for your personal and professional needs. In most cases, the right office space for you and your business will depend on your occupation, how much room you need to live and work in, and whether you’ll need added privacy for seeing customers, clients, or patients in your home.

Author:  Tina Martin

How Dirt Makes You Happy

HOW DIRT MAKES YOU HAPPY

Prozac may not be the only way to get rid of your serious blues. Soil microbes have been found to have similar effects on the brain and are without side effects and chemical dependency potential. Learn how to harness the natural antidepressant in soil and make yourself happier and healthier. Read on to see how dirt makes you happy.

Natural remedies have been around for untold centuries. These natural remedies included cures for almost any physical ailment as well as mental and emotional afflictions. Ancient healers may not have known why something worked but simply that it did. Modern scientists have unraveled the why of many medicinal plants and practices but only recently are they finding remedies that were previously unknown and yet, still a part of the natural life cycle. Soil microbes and human health now have a positive link that has been studied and found to be verifiable.

SOIL MICROBES AND HUMAN HEALTH

Did you know that there’s a natural antidepressant in soil? It’s true. Mycobacterium vaccae is the substance under study and has indeed been found to mirror the effect on neurons that drugs like Prozac provide. The bacterium is found in soil and may stimulate serotonin production, which makes you relaxed and happier. Studies were conducted on cancer patients and they reported a better quality of life and less stress.

Lack of serotonin has been linked to depression, anxiety, obsessive-compulsive disorder and bipolar problems. The bacterium appears to be a natural antidepressant in soil and has no adverse health effects. These antidepressant microbes in soil may be as easy to use as just playing in the dirt.

Most avid gardeners will tell you that their landscape is their “happy place” and the actual physical act of gardening is a stress reducer and mood lifter. The fact that there is some science behind it adds additional credibility to these garden addicts’ claims. The presence of a soil bacteria antidepressant is not a surprise to many of us who have experienced the phenomenon ourselves. Backing it up with science is fascinating, but not shocking, to the happy gardener. Mycobacterium antidepressant microbes in the soil are also being investigated for improving cognitive function, Crohn’s disease, and even rheumatoid arthritis.

HOW DIRT MAKES YOU HAPPY

Antidepressant microbes in soil cause cytokine levels to rise, which results in the production of higher levels of serotonin. The bacterium was tested both by injection and ingestion on rats, and the results were increased cognitive ability, lower stress, and better concentration on tasks than a control group. Gardeners inhale the bacteria, have topical contact with it, and get it into their bloodstreams when there is a cut or other pathway for infection. The natural effects of the soil bacteria antidepressant can be felt for up to 3 weeks if the experiments with rats are any indication. So, get out and play in the dirt and improve your mood and your life.

THE RURAL KC TEAM

If you are ready to move to the country, we are ready to help.  Please give us a call at 913-837-0769 or 913-837-0411 for any questions you might have or help you might need.  

Resources: “Identification of an Immune-Responsive Mesolimbocortical Serotonergic System: Potential Role in Regulation of Emotional Behavior,” by Christopher Lowry et al., published online on March 28, 2007, in Neuroscience. http://www.sage.edu/newsevents/news/?story_id=240785 Mind & Brain/Depression and Happiness – Raw Data “Is Dirt the New Prozac?” by Josie Glausiusz, Discover Magazine, July 2007 Issue. https://discovermagazine.com/2007/jul/raw-data-is-dirt-the-new-prozac

Read more at Gardening Know How: Antidepressant Microbes In Soil: How Dirt Makes You Happy https://www.gardeningknowhow.com/garden-how-to/soil-fertilizers/antidepressant-microbes-soil.htm

Read more at Gardening Know How: Antidepressant Microbes In Soil: How Dirt Makes You Happy https://www.gardeningknowhow.com/garden-how-to/soil-fertilizers/antidepressant-microbes-soil.htm

 By:  Bonnie L. Grant

Metal Roofs vs. Asphalt Shingles

What’s the Difference? Metal Roofs vs. Asphalt Shingles

The older I’ve gotten the less interested I am in doing home maintenance, and the more I’m attracted to maintenance-free living. So I’ve been very intrigued by metal roofing. If it’s time to install a new roof the variety of options available can floor you. Asphalt shingles have long been known for their reliability, cost-effectiveness, and ease of maintenance, making them the most popular roofing material on the market today. But now there’s a variety of options that deserve consideration—especially metal, the second most popular roofing material thanks to its durability, longevity, and a wide selection of styles.

Though both materials are great options for residential roofing, one may be better suited to your needs. So we stacked them up against each other—metal roofs vs. shingles in asphalt—comparing everything from aesthetics to eco-friendliness to help you make the right decision for your roof. 

Both materials have finish options for every housing style.

While shingle roofs have a traditional look of their own, nowadays they’re being manufactured to mimic the look of slate, wood shakes, and tile. You can find them with scalloped edges perfect for Victorian homes or with a terra cotta look appropriate for a Mediterranean home. The color palette is wide-ranging and there’s a host of different finishes as well, from slightly weathered (to complement older homes) to subtly multicolored.

Traditionally, metal roofs were made of corrugated tin panels (called standing-seam metal) that evoke images of barns or sheds. But metal roofing—in zinc, aluminum, galvanized metals, and even copper in addition to tin—has come a long way from the farm. You’ll see metal roofing that suits less rustic, more refined structures, from California contemporaries to East Coast Victorians, in a spectrum of colors and finishes, and in shingle, slate, and shake styles. If you don’t like the shine of metal newer options include a low-cost coating of Linex that makes the roof look as if it’s made of asphalt. 

Metal roofs tend to be more durable.

Metal roofs can stand up to nearly anything Mother Nature throws at them, so you’ll find that they come with 30- to 50-year warranties, and often outlast that with lifespans of 40 to 70 years. Metal roofs are not without their weaknesses however: Extreme hail or falling branches could dent a metal roof, as could walking on it improperly. Discuss vulnerability concerns with the manufacturer. You’ll learn, for example, that steel is hardier than copper.

Shingles have a shorter lifespan due to their own unique set of weaknesses. Pooling water and chronically damp conditions can lead to algae and fungus growth, ice dams can create cracks, and temperature spikes between day and night can reduce the life of your shingle roof. Shingle roofs come with 15- to 30-year warranties, depending largely on the region, environment, and climate. 

Shingle roofs are cheaper upfront.

Though you’ll get more life out of a metal roof, you’ll pay the price at the time of installation. Metal roofs generally can run from $120 to $900 per 100 square feet (one 10-foot by 10-foot area or a “square” of material), while asphalt shingles will be between $100 and $200 per 100 square feet. Its installation will also run you more for metal since it’s a more specialized job.

You may recoup some of the costs of a metal roof down the road because you likely won’t ever have to replace it. Additionally, insurance companies may offer discounts to homes with metal roofs. You may even qualify for tax credits by installing a metal roof on your primary home. Finally, metal roofs are so energy-efficient they can save you money in monthly heating and cooling costs.

Metal roofs are more eco-friendly.

Because they’re largely made of recycled material and can be recycled, again and again, metal roofs are considered a more sustainable choice than asphalt shingles. Metal roofs are also more energy-efficient thanks to their reflective qualities, which can block heat transmission to the home’s interior. Specialized paint coatings can further reduce your cooling bills. Asphalt shingles, on the other hand, need to be replaced more frequently than metal roofs; it’s estimated that U.S. landfills receive nearly 20 billion pounds of old asphalt shingles annually. Also, asphalt shingles are a petroleum-based product, which increases dependency on fossil fuels.

Asphalt shingle roofs generally are easier to install and repair.For pros, the work requires little specialized knowledge and basic tools. Shingles can be installed in a day or two in some cases, sometimes right over the existing layer. Metal roofing installation typically requires a more skilled and specialized tradesman. The job is more precise, with less room for error, so it won’t move as quickly as a shingle installation. However, some lightweight metal products may be able to be installed right over an existing roof in good condition, simplifying installation overall and eliminating the cost of ripping the original roof out.

Likewise, repairs are easier for shingles than metal roofing. Though roofing manufacturers don’t recommend do-it-yourself jobs—you could likely void the warranty—asphalt sheets are easier to work with than metal ones since they can be cut down to size and retrofitted to the roof with little difficulty. Metal roofs are harder to replace individually, due to the way the metal panels are joined together, and typically require a retrofit of an entire panel.