Most Common Buyer Mistake

It makes sense. You see a house that you like in one of your favorite neighborhoods. There's a big FOR SALE sign in the yard. What could it hurt to call the phone number on the sign? Well, it could cost you thousands of dollars.

This is a very common mistake buyers make when they first start looking for a home. It is important to realize that, when you call the number on the sign in the yard, the person on the other end of the phone is working FOR THE SELLER. It is their job to get as much information from you as possible during that initial call and then they are required to pass all that information on to the seller. A simple conversation may appear to be unimportant to the buyer, but it could give the seller an unfair advantage should you enter into negotiation to purchase the house. 

Things to avoid in the conversation are - how much you want to pay; what kind of financing you will have; where in the financing process you are; your plans for the move; if you have a house to sell; when your lease is up; why that particular house appealed to you; and any other piece of information that gives the seller information about your motivation and qualification.

So, what to do? The best thing to do is to find a buyers agent even before you begin the searching process. A buyers agent works FOR YOU.  In my next blog I'll tell you the best ways to find a buyer's agent and in future  one I'll give you some questions to ask the agent so you can make sure they are a good fit.

That was Terrifying

My three month old grandsons got their first set of vaccinations last week. They live with me -- along with their dad (my son), mom and 3 year old sister. So, getting their first shots was a family affair.

What I didn't realize was how scary giving them fever reducing medicine was going to be. Because of the recent deaths from overdosing acetaminophen, there is a lot of confusion about what to give infants to reduce their fever or pain. It took several calls to the doctor's office and visits to the drugstore before we finally figured out what to give our poor screaming twins.

We discovered that the old "infant drops" is almost FIVE times more concentrated that the "suspension". That's why unfortunate parents have given too much medicine to their toddlers. It's counter-intuitive.

Imagine your toddler has a fever and the only acetaminophen you can find in your medicine cabinet is some "infant drops". I can certainly see how parents wouldn't even think twice about giving the toddler the infant medicine. It just wouldn't make sense that it would be FIVE times as strong!

It just brought home to me that sometimes what seems like the natural thing to do can be completely the wrong thing to do. Only working with a professional (like calling the doctor's office) clears up the confusion.

I talk to so many buyers and sellers that are taking actions that seem like the right thing to do only to find out that the choice they made wasn't in their best interest. So, over the course of the next few days I'll be writing a series of blogs about common mistakes I see buyers and sellers make on a regular basis. In the meantime, you can get some real estate tips on my website.

While real estate mistakes aren't quite as terrifying as potential dosage mistakes for your children, your home is quite possibly your largest financial asset and making mistakes can have far reaching and long term results. 

Reduce Your Monthly Payments

Q. Yvonne, my friend told me that he wished he had put more down on his house so he wouldn't have to pay as much in taxes. Do you think I'm putting down enough to lower my taxes when I buy?

A. I'm excited that we're going to find your first home together! I know when you start looking for a house everyone has an opinion and advice about what you should do - and that gets confusing sometimes. 

I assume what your friend is talking about is undoubtedly Mortgage Insurance not Property Taxes. The amount of your down payment does not effect the amount of your taxes. That is based on the purchase price.

When banks loan you money they are taking a risk. Naturally, they want to keep their risk as low as possible. They typically will risk 80% of the value of your new home. For example, if the price of your new home is $200,000 the bank is willing to risk $160,000. The other 20% ($40,000 in this case) is a much higher risk for them.

That's why there has been a lot of discussion whether banks should require all buyers to put down 20%. The way lenders have gotten around this challenge is to charge a higher rate of interest for the 20% or require the buyers to pay Mortgage Insurance for that portion of the loan. This "solution" can raise your monthly payments.

The bottom line is this... the more you "put down" on your new home, the less money you pay every month. Ask your lender for different scenarios if you were make different down payments. 

And It Would Cost Him

Last week I told you the story of a young family who recently lived through a short sale. Here are some surprising facts they learned about the process of short sales.

Any homeowner has the right to sell his property for less than owed. There is nothing illegal about that. HOWEVER, he must bring the difference to the closing table. So, if there was a difference of $5,000 and he can bring a check for $5,000 to closing, everything is fine. This is called a short sale. But this type of short sale doesn’t require any approval or participation by the homeowner’s mortgage company.

The trick is when the homeowner doesn’t have enough money to cover the difference. Then the mortgage company has to agree to allow the sale to continue even though there is a difference between what is owed and the amount of the sale price. This is the most common use of the term “Short Sale”.

Even if the lender agrees to a “Short Sale”, the homeowner may be left holding the bag! Just because the bank may agree to release the lien, so the sale can happen, that doesn’t mean they are automatically willing to write off the difference. It is imperative that the homeowner have someone to negotiate with the bank that the lien is “satisfied” at closing. Remember, this is NOT automatic!

Too many homeowners have walked away from their short sale closing with a debt of several thousand dollars owed to the bank, even though they no longer own the house. If you are a homeowner facing this situation – Be careful! Make sure you have someone in your corner helping you negotiate your short sale. Otherwise, you might end up holding a substantial debt.

In my next blog, I’ll show you other potential pitfalls – even if the difference has been forgiven.

It wasn't his fault

It wasn't his fault. He bought his house in 2008 and paid the going market value for the home. He was able to get 100% and the seller paid his closings costs which bumped up the price slightly. It was a beautiful house in a thriving neighborhood. Everything seemed just right for his family. And then it happened...

He got transferred. Moving to a new state. Starting a new life. How exciting! Except for one thing...

The market value of his house wouldn't cover the cost of his mortgage. He called the bank right away to ask them what to do. They didn't call him back. He hired a Realtor and learned the term "short sale". His agent began calling the bank. They didn't call her back. He agreed to put it on the market at the current market value. He was only about $10,000 short. Surely the bank would have a plan. But they seemed as confused as he was.

They got a buyer within a couple of weeks! That's what they needed to do, right? Find someone who would pay as close as possible to what was owed on the house. But the bank wouldn't negotiate with that buyer. So, the buyer walked away.

So, he got another buyer. Now the price was $25,000 below what he owed. Didn't the bank see what was happening? Why wouldn't they talk to him and negotiate with the buyer? When he called the bank, the person who answered the phone didn't seem to know how to say anything except "no" and "I don't know". There was no supervisor. No one to really talk to. So, that buyer walked away.

Finally, he found an investor who would hang on to the deal until the bank agreed to do a short sale. The house finally sold - after more than a year - for $65,000 less than what he owed on his mortgage. And it wasn't his fault.

If you have a friend who needs to move and finds themselves in this same situation, I have good news. The banks are more open to talk to professional negotiators and I have partnered with an attorney who is a professional short sale negotiator. Yes, there are still going to be hoops to jump through. But wouldn't you prefer to have someone who has closed multiple short sales at your side?

Look for my next blog to finish my true story about this homeowner's short sale.

I would love to buy a home! But can I afford it?

It is no secret that the housing market is in a slump from coast to coast. Even here, in Raleigh, we are seeing a slowdown in sales and some motivated sellers are dropping their prices. Professionals all across the nation agree on one course of action to bring about recovery: making homeownership available to those who have never owned a home before. Once the hesitant renters enter the market, homes will again begin to sell and the sellers will be freed up to move up, move down, or move out into other areas.



In order to persuade potential first-time homebuyers to take the plunge and buy a house, Congress is considering sweetening the existing tax benefits of home ownership by adding a $7,500 tax credit to those who buy their first home. This money would help pay for closing costs and fees, and would undoubtedly help many people afford their first homes. However, the measure is only a small part of a much larger bill that has become subject to serious political wrangling. It has yet to work its way through Congress and even faces a potential veto by the President in its current form.



The good news is that the state of North Carolina has already implemented a program that can work for you -- right now! The North Carolina Housing Finance Agency (NCHFA) authorizes loans with mortgage interest rates below the market rate and a down payment of only 3%. Now, I know that 3% of the purchase price might sound overwhelming to you but listen to this - the NCHFA also offers a 30-year no-interest $7,000 loan to pay for the closing costs and that down payment.



With tools like these, along with the discounted home prices and low mortgage interest rates, you are living in the best time EVER to buy your first home. I tell my clients that it's like the "Day After Thanksgiving Sale" - slashed prices, low interest rates, and now you know that there is even free money to help you buy! I would be happy to help you compare what you are now paying for rent with what you would pay for a mortgage payment. You will probably be surprised at how close your rent and your mortgage payments will be.



While you might not personally be looking to buy your first home, I'm sure you know several people who are - or who should be! Please pass on this article to them. They deserve to know that they can own their own home. Send them to my website to read the FREE report "How to Stop Paying Rent and Own Your Own Home".

Home Values Going Up in the Triangle

We can all be very grateful we live in the Triangle for lots of reasons. With the official release of the Triangle Area Residential Realty report, we have another reason to celebrate our good fortune. Wake County and the surrounding areas have shown a strong appreciation rate this first quarter of 2008.

Wake County 4.81%
Durham County 4.22%
Orange County 7.25%
Chatham County 4.82%

North Carolina as a state is also appreciating nicely (4.85%) compared to the first quarter of 2007. Despite the current national real estate market news, as a nation we still had an appreciation rate (0.84%)! As I said, we can count our blessings that we live in the Raleigh area.

Not all the news is good, however. While the average sales price was up 1.27% to $251,185 this quarter, the monthly sales were DOWN -30.21%. There is no question we have more homes on the market and less sales than in the past few years. In Cary, the number of sellers who reduced their prices in the first quarter rose from 172 in 2007 to 371 in 2008 -- making this an excellent time to buy! It’s like the day after Thanksgiving sale in the real estate market.

I currently have several investors actively looking to purchase investment properties. If you, or someone you know, has ever considered building wealth through real estate investing, please pass my information on to them. Now is a good time.

Of course, several specific neighborhoods continue to have a strong market. I took a listing last month and within 12 hours had 7 offers! The seller ended up getting thousands of dollars more than our asking price. There is no question that pricing strategies are the key to get homes sold right now. You can be confident that you will receive the best advice to get your home sold when you allow me to partner with you to sell your home for top market dollar.

The three top appreciating neighborhoods in Cary were Brier Creek, MacGregor Downs and Park Village. Five subdivisions in the Triangle topped the list in the number of sales this first quarter: Brier Creek, Hedingham, Cary Park, Wakefield and Kildaire Farms.

When you need someone with all the right tools and skills to buy, sell or invest in Triangle real estate, call me – your trusted real estate partner!

How's The Real Estate Market?

It's windy in Chicago, rainy in San Fransisco and snowing in New York. That weather report means nothing to us in Raleigh, North Carolina. However, when the media "reports" on the state of the real estate industry, that is exactly how they give you information - on a national level.

Here are the facts... locally:

The average appreciation rate in Wake County overall was 6.44% by November 2007. In 2006, the average appreciation rate was 6.34%. Compare that to 2005 with 4.66% and we look pretty rosy. No gloom and doom there.

Just for fun, try to guess the two towns that had the greatest appreciation rate. Go ahead and guess... Nope!

Fuquay Varina now 5.75% (1.58% change from 2006 to 2007). Knightdale now 6.60% (1.42% change from 2006 to 2007).

Now, let's look at the number of homes on the market ("inventory" in Realtor speak) and the specific price ranges that inventory increased in Raleigh and the surrounding area.

Cary/Apex/Morrisville: Biggest inventory increase was in Condo/Townhome inventory and $300,000-$399,999 single family homes. Just an interesting note here - Inventory of homes under $150,000 decreased by 60%!!

Inside the Beltline/Garner/East Wake: While there was also an increase of Condo/Townhome inventory here, the biggest gains were in single family homes priced between $300,000-$399,999 and $700,000-$799,999.

Wake Forest: Biggest increases in inventory was in homes priced between $500,000-$699,999 and $700,000-$799,999. There was also a significant increase in mid-range homes priced between $150,000-$299,999.

North Raleigh: No surprise here, North Raleigh's biggest increase in inventory was for homes priced from $700,000-$799,999.

Southwest Wake/South Cary/Fuquay/Holly Springs: Biggest increase, by far, was in the $700,000-$7999,999 price range.

Tivia Question: "Which town had the greatest overall increase in inventory?" I'd better tell you, because you will never guess - Garner wins the prize!! 511% increase in inventory!! Yes, you read that right.

Bottom line is this, the average number of deed transfers per month in 2006 was 2852. The average for 2007? Only a slight decrease to 2743. That means we had only a very small decrease in the number of homes sold each month.

So, it is sunny and warm in Raleigh, North Carolina. You won't rely on the weatherman in Chicago to give you the local Raleigh weather - don't rely on the national media to give you the real estate climate here.

I have a ton of other data that I won't bore you with. But I want to end on a very positive note here. While our market did have a softening towards the end of 2007 - due to the inability of people relocating to sell their homes in other markets; the national media hysteria; the mortgage shakedown; AND the holidays - every Realtor I've talked to in the past two weeks is seeing
a lot of activity start up again.

If you are looking to buy, now is a great time! There is a lot of inventory to choose from and interest rates are remaining low. And now is a great time to sell because the buyers who were "waiting for the market to settle" are now becoming active again. Who do you know that needs to buy or sell right now? Give me a call! I promise to give them such good service that you will look like a hero for introducing us.