Effect of the Homebuyer Tax Credit.

This morning the National Association of Realtors reported that existing home sales in July plunged 27.2%.

Not surprisingly, the end of the homebuyer tax credit caused these sales to fall off a cliff. People just didn't realize how high that cliff was.

In case there was any doubt that it made a difference, this chart from Waverly Advisors shades in the period of the tax credit. Home sales started rising immediately, and have fallen off immediately with the tax credit's expiration. The July numbers to the far right are the lowest in the last 10 years.

As we move away from the distortion that the tax credit caused, we expect sales to rebound to levels witnessed early in this decade, especially with mortgage rates at around 4%.

Getting the right selling strategy.

Metro Milwaukee home values appear to have stabilized despite a daunting inventory of homes for sale. Although this is certainly good news for anyone trying to sell their home, it can prove to be quite tricky when it comes to developing a pricing strategy.

If you are unsure about the changes in home values, and how this may affect your pricing strategy, you’re not alone. Most sellers want to price their homes aggressively, and also price them to reflect the changes in buyer habits; but they also don’t want to price themselves right out of the market.

How to Develop an Accurate Pricing Strategy:

• Hire a qualified, seasoned real estate agent – This is one area of selling your home that you don’t want to skimp on. Find a top-notch agent who understands the market and will advise you on how best to present your property to the buyers. Such an agent sells a lot of properties (far more than the average), works full time and is a veteran in real estate. As many of you know, all of Homeowners Concept agents fit these requirements.
  
• Price it right – Although this may seem like a no-brainer, many sellers, absolutely sure of their ability to sell their home at a higher rate than other comparables in the area, find themselves sitting on their property without an offer in sight. The bottom line is that your pricing strategy should accurately reflect neighborhood home values, not your idea of what you think your home is worth.
• Develop a realistic sales strategy – Decide upon your sales strategy beforehand so that your game plan is put in place. More importantly, however, make sure your sales strategy is flexible so that you can react according to the market and according to home values.
• Make it ready to sell – Most buyers of today are looking for turn-key properties, so make sure your home is in excellent condition before you list it for sale. It is important to realize that all the pricing strategizing in the world can’t make up for a home that doesn’t compare to other homes in the neighborhood. Clear out the clutter, stage it to sell, and perform any repairs or upgrades that will allow it to compete with other homes for sale in the neighborhood.

Rent With the Option to Buy

We closed on yet another home that was rented with the option to buy. The sale was completed in less time than was allotted in the contract, as the buyers were able to qualify sooner and get the low rates of today. During the time of the Rent to Own contract was in effect, the seller was able to cover the mortgage while the buyer worked on getting the downpayment and bringing the credit score to a level that they could qualify. Increasingly this is an option that sellers turn to to sell their property, especially if the property is vacant.

The way the Rent to Own program works is as follows: Buyer agrees to rent the property until such time (usually up to a year - but can be extended) that the buyer can get a loan. The buyer cannot qualify for a mortgage upfront due to credit, length of time on the job, sufficient downpayment or other reasons. Buyer would pay an upfront "option premium" which would not be refundable (usually around 1 to 2% of sales price ). In addition any amount above and beyond an average rent for a similar property can be credited toward the downpayment of the buyer.

From the standpoint of the seller, the Rent to Own provides a temporary tenant that could look after the property and help with the mortgage. The buyer on the other hand gets into a property they can call their future home. As a result they can make improvements with the blessing of the seller. Most times the sellers agree to the improvements/updates since it makes their property more valuable. At the point in time that the buyer can get a mortgage the property can go to closing and seller can transfer title. Homeowners Concept has done hundreds of Rent with the Option to Buy contracts since 1984, as a result we are very familiar on how to negotiate and structure the contract so that the property does eventually close.