Home features—particularly those that are technology-based—have a stronger pull on millennial home shoppers than the promotion of brand names, according to a new survey by John Burns Real Estate Consulting, conducted with 20,000 new home shoppers. Millennials tended to show a preference for tech-focused amenities that could make their lives simpler.
Young adults born in the 1980s and 1990s are half as likely as their parents’ generation to rank brand as the most important factor when selecting products in the home. They do check reviews online before buying, so the survey showed online reputation is also important to them.
The young adults born in the 1990s are more likely to pay an extra $3,500 for a smart-tech refrigerator than older adults. Younger adults may have less income to spend, but they showed a higher preference for technology, according to the survey.
“We believe that understanding your target buyer will help you make better business decisions,” notes Steve Basten, senior consultant, and Todd Tomalak, vice president of research, for John Burns Real Estate Consulting. “When marketing to older adults, focus on brand. When marketing to younger adults, focus more on features.”
Instead of popping the champagne after your clients officially become new homeowners, how about setting up a photo shoot to help them document the occasion?
First-time buyers are showing greater interest in sharing their status as new homeowners with their peers online, so many real estate pros are staging photo shoots to help them capture and share the moment on social media. The photos may include props such as a “First Home” sign, or the buyers may pose with their hands forming a heart shape around their newly obtained house keys. Other real estate pros have even captured a couple dancing in the bedroom.
For example, Joey and Morgan Cabibbo, a couple who bought a home in Boerne, Texas, hired a professional photographer a few days after they closed on the purchase. The photographer captured Joey Cabibbo giving his wife a piggyback ride in front of their wooden garage door and stone three-arch entryway. The couple eventually shared on Instagram one of the photos depicting them sitting on their new front lawn with a “sold” sign.
Another couple, Blair Pomeroy and her husband, Matt, did a photo shoot in their new home in Florence, Ky., after they bought it in 2015. One photo showed them testing a paint sample on the wall by drawing an outline of a house. Above the drawing, Blair wrote “home sweet home” and drew three hearts coming out of the chimney. The couple used the photo on invitations to their housewarming party.
Real estate professionals say such post-closing photo shoots are great for their business. “It creates kind of like a domino effect,” Corey Maurice Gilmore, an associate broker at Capstone Realty in Huntsville, Ala., told The Wall Street Journal. “I see a lot of people—a lot of circles of friends—buy houses around the same period of time because they are seeing their friends make home purchases.”
New England is full of remnants of America’s past. Whether they’re battlegrounds or historic monuments, there are stories around nearly every corner. And in a state full of history, this Massachusetts home just might be the oldest house currently on the market in the entire country.
Built in 1694, this Georgetown home is a classic example of First Period architecture. For the relatively modest price of $549,900, you can claim ownership of the three-bedroom, 2.5-bath property known as the Dickinson-Pillsbury-Witham House. It sits on an 8.5-acre lot, which also comes with an 18th-century barn and shed.
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Past owners expanded the home on two occasions. A chimney and rooms on one side, including a distinctive enclosed staircase, formed the original structure of the home. Rooms were added on the other side of the home in the years after it was built. In the 19th century, there was a second, larger addition.
A real yard. Closets bigger than your average microwave. The freedom to decorate however you darn well please! Making the switch from renting to owning is exhilarating, but many rookie homebuyers find the process trickier to navigate than they expected.
This is why we created our First-Time HomeBuyer Checklist. The 12-month timeline will help you sidestep common mistakes, like paying too much interest or getting stuck with the wrong house. (Yep, it happens!)
12 Months Out
Check your credit score.Get a copy of your credit report at annualcreditreport.com. The three credit bureaus (Equifax, Experian, and TransUnion) are each required to give you a free credit report once a year. A Federal Trade Commission study found one in four Americans identified errors on their credit report, and 5% had errors that could lead to higher rates on loans. Avoid last-minute bombshells by checking your score long before you’re ready to make an offer. And work diligently to correct any mistakes.
Determine how much you can afford. Figure out Lenders are happy to lend you as much as your debt load allows. But will that amount make you house poor? Ask yourself, how much house do I really want to afford?Read More In5 Surprising (and Useful!) Ways to Save for a Down Paymenthow much house you can afford and want to afford. Lenders look for a total debt load of no more than 43% of your gross monthly income (called the debt-to-income ratio). This figure includes your future mortgage and any other debts, such as a car loan, student loan, or revolving credit cards.
There are plenty of calculators on the web to help you determine what you can afford. If you’re pushing the limits, start reducing your debt-to-income ratio now. To get a reality check on what you may actually be spending every month, use this worksheet.
Make a down payment plan. Most conventional mortgages require a 20% down payment. If you can swing it, do it. Your loan costs will be much less, and you’ll get a better interest rate. If, however, you’re not quite able to save the full amount, there are many programs that can help. FHA offers loans with only a 3.5% down payment. But they require mortgage insurance premiums, which will drive up your monthly payments. The U.S. Department of Housing and Urban Development (HUD) provides a list of nonprofit homebuying programs by state. Also check with credit unions; and your employer might even have an assistance program.
As you’re planning your savings strategy, keep in mind that banks like you to “season” your money. That is, they like to see that you’ve had stable funds in your account for 60 to 90 days before applying for a loan. Don’t worry: You can still use a financial gift from a family member or bonus received near the time you buy.
9 Months Out
Prioritize what you most want in your new home. What’s most important in your new home? Proximity to work? A big backyard? An open floor plan? Being on a quiet street? You’ll make a much better decision on what home to buy if you focus on your priorities. If it’s a joint decision, now is the time to work out any differences to avoid frustration and wasted time. Perhaps most important: Know what trade-offs you’re willing to make.
Research neighborhoods and start visiting open houses. But now’s when the fun begins, too. Use property listing sites, such as realtor.com, to find out about neighborhoods, public transport, and cost of living.
Start visiting open houses to get an idea of what kind of homes are in your price range and what neighborhoods appeal the most. Seeing potential homes will also keep you motivated to continue reducing your debts and saving for your down payment.
Budget for miscellaneous homebuying expenses. Buying a home has some miscellaneous upfront costs. A home inspection, title search, propery survey, and home insurance are examples. Costs vary by locale, but expect to pay at least a few hundred dollars. If you don’t have the cash, start saving now.
Start a home maintenance account. Speaking of saving, start the good habit now of putting a little aside each month to fund maintenance, repairs, and home emergencies. It’s bad enough to have to call a plumber. It’s worse if you’re paying credit card interest on that plumbing bill.
6 Months Out
Collect your loan paperwork. Banks are very particular when it comes to mortgage loans. They demand a lot of paperwork. What they’ll want from you includes:
W-2 forms — or business tax return forms if you’re self-employed — for the last two to three years
Personal tax returns for the past two to three years
Your most recent pay stubs
Credit card and all loan statements
Your bank statements
Addresses for the past five to seven years
Brokerage account statements for the most recent two to four months
Most recent retirement account statements, such as 401(k)
If you start collecting these documents now, it’ll lessen the stress when it’s time to get your loan. Bonus: Looking closely at your loan documents each month will also help you stay focused on saving for your down payment and keeping your debt-to-income ratio low.
Research lenders and REALTORS®. Start interviewing REALTORS®, specifically buyers’ agents. A buyer’s agent will work in your best interest to find you the right property, negotiate with the seller’s agent, and shepherd you through the closing process. Your agent also can be instrumental in finding a lender who’s familiar with first-time home buyer programs.
Even better, look for a mortgage broker, who will shop for a competitive loan rate for you among multiple lenders, unlike a bank, which can only offer its own products.
3 Months Out
Get pre-approved for your loan. At this point, if you’ve been following this timeline, your credit score, paperwork, and down payment should be on track. You’ve done your research on lenders and buyers’ agents. Now it’s time to start working with them. First you’ll need to get pre-approved for a mortgage.
Make an appointment with your lender or mortgage broker and bring all your paperwork. He’ll run a credit check on you and tell you how much of a loan you’re approved for. It often makes sense to borrow less than the maximum the lender allows so you can live comfortably. Draft a budget that accounts for mortgage payments, insurance, maintenance, and everything else you have going on in your life.
Start shopping for your new home. One you’re pre-approved, the buyer’s agent you’ve chosen will be able to target homes that meet your priorities in your price range. This way you won’t be wasting time looking at homes you can’t afford.
2 Months Out
Make an offer on a home.It usually takes at least four to six weeks to close on a home. So if you have a firm move-out date, allow enough time to deal with any hiccups that can delay closing.
Get a home inspection. One of the first things you’ll want to do after an offer is accepted is have a home inspector look at the property. If the home inspector finds something that needs repair, that’s a common example of something that can delay closing.
In the Last Month
Triple-check that all your financial documents are in order and review all lending documents before closing. You’re in the home stretch! If you’ve been keeping your documents up to date, and your down payment is in reserve, these final steps are the easiest. Reviewing the mortgage documents is probably the most difficult. Your agent can help guide you through them.
Get insurance for your new home. Don’t forget to secure insurance before closing. You’ll need to bring proof of insurance to closing.
Do a final walk-through. Do a final walk-through of your new home, usually a day or two before closing, to make sure the home is in the shape you and the seller have agreed upon.
Get a cashier’s check or bank wire for cash needed at closing. Make sure you get an exact amount of cash needed for closing. You’ll get that number a few days before closing so you can secure a cashier’s check or arrange to have the money wired. Regular checks aren’t accepted.
Mortgage rates were down across the board this week, lowering borrowing costs for potential home buyers and refinancers.
“After holding steady last week, rates dipped slightly this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 10-year Treasury yield fell roughly 7 basis points, while the 30-year mortgage rate dropped 4 basis points to 3.90 percent.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 9:
30-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.4 point, dropping from last week’s 3.94 percent. Last year at this time, 30-year rates averaged 3.57 percent.
15-year fixed-rate mortgages: averaged 3.24 percent, with an average 0.5 point, falling from last week’s 3.27 percent average. A year ago, 15-year rates averaged 2.88 percent.
5-year hybrid adjustable-rate mortgages: averaged 3.22 percent, with an average 0.5 point, dropping from last week’s 3.23 percent average. A year ago, 5-year ARMs averaged 2.88 percent.
About 60 percent of first-time home buyers put down 6 percent or less on a home purchase in September. The median down payment has dropped from 6 percent to 5 percent for first-time buyers, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers.
But there are still many potential buyers on the sidelines who may be under the impression they need a bigger down payment before they can buy.
NAR conducted a survey of non-homeowners earlier this year and found that most consumers believe you need a down payment of 10 percent or 20 percent to buy a home.
“They may not be aware that these programs are available, and they may not be taking advantage of them,” Jessica Lautz, NAR’s managing director of survey research and communications, said in the latest Down Payment Report, published by the Down Payment Resource.
Thirty-two percent of first-time buyers said they saved for more than two years in order to be able to have enough to buy a home. Student loan debt was the most often cited obstacle to saving. The second most cited barrier for saving was credit card debt.
“Despite widespread access to low down payments, looser lending standards, and mortgage rates that are still historically low, potential first-time buyers are putting off buying a home until conditions improve,” according to The Down Payment Report. “For many of these discouraged young families, rising rents and high levels of debt, especially student loan debt, are keeping them trapped in rentals by making it harder to save for a down payment.”
By September, first-time buyers had showed more signs of pulling back. They comprised just 29 percent of sales, down from 34 percent a year prior. Since 2011, the share of first-time home buyers has been below the historic norm of 40 percent.
A shortage of homes for sale is now affecting the upper tier of the housing market too and prompting prices to escalate even more. The top 5 percent of homes by price sold in the third quarter saw their prices rise 4.9 percent compared to a year ago, according to a new report by Redfin, a real estate brokerage.
The higher prices are due to a sharp decrease in the number of listings in the luxury sector, according to the report. The number of homes for sale priced at or above $1 million dropped to just over 18 percent compared to a year ago.
“There is still strong buyer demand for high-end homes,” Nela Richardson, Redfin’s chief economist, told CNBC. “Despite declining inventory, luxury sales soared in the third quarter.”
Indeed, sales of homes $1 million or up rose 11 percent from a year ago. Sales of homes at $5 million or above were up by 10 percent. However, inventories are falling in those upper price ranges. For example, the number of homes for-sale priced at $5 million or higher dropped 19 percent.
Luxury homes are selling faster. In the third quarter, luxury homes sold, on average, in 70 days — four days faster than a year ago, according to Redfin.
Redfin predicts that demand will likely remain high in the luxury market as supplies of homes for-sale continuing to shrink. Economists point to a booming stock market and higher demand from international buyers as two big factors driving a surge in luxury sales lately.
Female homeowners are growing in numbers. As they skyrocket within the housing market, they pave the path for future generations of women to do the same. Desiree Patno, founder and CEO of the National Association of Women in Real Estate Businesses, highlighted the importance of female homeowners while leading a Saturday session at the REALTORS® Conference & Expo in Chicago, “The Value and Power of Women’s Homeownership.”
Single women who pursue homeownership do for reasons related to a desire for freedom, and to live how and where they want, Patno said. Last year, NAR data found that single women compromised 17 percent of homebuyers in the country, compared to single men at 7 percent. These unmarried buyers are not waiting for a spouse to receive the many perks of homeownership, Patno said, such as building wealth, having a stable home to raise children, being able to accommodate pets, and feeling connected to the community in which they live. Many of these buyers have taken a second job or adjusted their budgets to afford a down payment, Patno adds.
“[These women] are living their single lives fully, and they are empowered,” Patno said.
Patno also addressed diversity inclusion in the workplace and stressed how vital it is to have women and minorities included on all management levels within a real estate company. She suggested that real estate professionals get a “Women Owned Small Business” certification for their business in order to attract clients looking to work with women.
If I were a real estate agent and I had worked weeks, months, or even years with a client, I would dread home inspection time. Experienced real estate professionals know there are hundreds of ways a deal can fall apart, from credit and financing problems to appraisals to just plain cold feet. But certainly, one of the more common deal killers is the home inspection. But it doesn’t have to be. To help prevent home inspection time from becoming contract termination time, here are a few thoughts from the point of view of an experienced home inspector.
Houses and Home Inspectors Do Not Kill Deals
From my experience, there are three home inspection situations that lead to a canceled transaction. You might be surprised to hear two things are not on this list: the house and the home inspector. Having spent more than a dozen years performing more than 5,000 structural home inspections, I have found that some real estate agents do think that the home or the home inspector is to blame, but let’s step back for a minute and look at what really happens in these situations.
When the findings uncovered in a home inspection significantly alter the buyer’s expectations about what they thought they were buying, this causes problems. You might hear something like, “Gee, I thought I was buying X, but now that we have looked closely, I see the house is more Y” from your client.
From this point of view, the cancellation has everything to do with the client’s expectations coming into the inspection. It might be tempting to wish the home inspector had been less forthcoming about the condition of the house, but that implies that the client should experience some level of deceit or poor communication from the home inspector. The better solution to this common problem is buyers having more realistic expectations before they sign the contract. This is why I wrote my book, The Confident House Hunter—to teach people skills that will help them look at houses and evaluate risk so they are more prepared to make an offer on the right house. Here are the top three reasons buyers cancel a deal after the inspection.
1. Buyers Are Unprepared
There are no classes in college or high school to teach people how houses work or where risk lies in a residential building. Even professional real estate agents have little or no training to help them understand how to look at houses and identify issues; most of these skills are learned on the job through the school of hard knocks. This problem has been exacerbated in recent years by a new generation of home buyers, many of whom who did not grow up working on their houses with their parents.
2. Buyers Have Higher Expectations
Adding another layer of complexity to modern homebuying is how much our assumptions about houses have changed. Most buyers now expect a level of luxury and comfort in a house that consumers could scarcely have imagined as recently as the 1960s. The result is that people are now buying more expensive and more complex homes, yet have less understanding of how they are built or how they work. And in markets enduring tight inventory conditions, your clients have less and less time for decision-making, as multiple offers and spontaneous action become the norm and increase the chances for buyer remorse.
3. Technology Has Dramatically Improved Reporting
Further complicating matters is the reality that home inspections have changed as well. It’s a relatively new industry, and over the past 15 years, I’ve watched computer-generated reports, digital cameras, and other new tools lead to rapid innovation. Today, upon hiring a quality home inspector, a buyer can expect to receive a 40- to 60-page report with dozens or even hundreds of high-resolution color photos, detailed diagrams, and links to additional information. The reality is, your clients have access to more information and receive more data about the home they are purchasing than ever before. However, they often lack the tools to help them digest all of the facts.
A New Motto for Buyers
The number one reason deals fall apart after a home inspection is that the findings significantly change what the home buyer thought they were buying. Many make the mistake blaming the home inspector or the house. That’s why I created a new motto for home buyers: “All houses have problems, but every house is a great house for the right person at the right price.”
I’ve inspected houses that I felt were teardowns, meaning the property would be costlier to fix than it was worth. Upon giving this information to one homebuilder client, he said, “Great! I was hoping to tear it down anyway.” I have inspected other houses that I thought should be torn down, but buyers wanted to renovate them anyway because they were in love with the cabin-like feel of the place and they had the resources to make their dream come true, even if it was not the most cost-effective approach. If an inspection on a teardown can go well, then really any inspection should be able to be successful, right? Looking at property from this point of view, we start to see that “bad houses” are extremely rare, even though unrealistic expectations on the part of buyers or sellers can make them seem like they are common.
I am always surprised when people read my inspection reports and comment something like, “Oh, you hated that house.” I do not hate houses. I am simply doing my best to document the condition of the property so the right person can buy it at what they believe is the right price. I love houses; it is unrealistic expectations that I don’t like.
Are Home Inspectors Sometimes Responsible for Killing Deals?
One of the hardest things for me to hear is the charge that home inspectors are killing deals. I do feel that the industry could do more to train inspectors on both technical and communications skills. In fact, communication training is particularly lacking in home inspection schools and continuing education courses. But I also feel that the real estate industry could do more to prepare agents to teach buyers a better way to look at the “bones” of houses. I am not aware of any requirements for new real estate agents to learn anything about houses to get a real estate license in my home state of Washington, and maybe that should change.
The truth is all houses pose some level of risk, and there are skills everyone can learn to help evaluate that risk and make appropriate offers on the right homes. A more transparent approach could help us all show up to the inspection armed with realistic expectations. This could save everyone a lot of time and heartache, resulting in happier clients, better referrals, and a lot less talk about home inspections killing deals.
You really don’t know who else has keys to your home, so change the locks. That ensures you’re the only person who has access. Install new deadbolts yourself for as little as $10 per lock, or call a locksmith — if you supply the new locks, they typically charge about $20 to $30 per lock for labor.
2. Check for Plumbing Leaks
Your home inspector should do this for you before closing, but it never hurts to double-check. I didn’t have any plumbing leaks to fix, but when checking my kitchen sink, I did discover the sink sprayer was broken. I replaced it for under $20.
Keep an eye out for dripping faucets and running toilets, and check your water heater for signs of a leak.
Here’s a neat trick: Check your water meter at the beginning and end of a two-hour window in which no water is being used in your house. If the reading is different, you have a leak.
3. Steam Clean Carpets
Do this before you move your furniture in, and your new home life will be off to a fresh start. You can pay a professional carpet cleaning service — you’ll pay about $50 per room; most services require a minimum of about $100 before they’ll come out — or you can rent a steam cleaner for about $30 per day and do the work yourself. I was able to save some money by borrowing a steam cleaner from a friend.
4. Wipe Out Your Cabinets
Another no-brainer before you move in your dishes and bathroom supplies. Make sure to wipe inside and out, preferably with a non-toxic cleaner, and replace contact paper if necessary.
When I cleaned my kitchen cabinets, I found an unpleasant surprise: Mouse poop. Which leads me to my next tip …
5. Give Critters the Heave-Ho
That includes mice, rats, bats, termites, roaches, and any other uninvited guests. There are any number of DIY ways to get rid of pests, but if you need to bring out the big guns, an initial visit from a pest removal service will run you $100 to $300, followed by monthly or quarterly visits at about $50 each time.
For my mousy enemies, I strategically placed poison packets around the kitchen, and I haven’t found any carcasses or any more poop, so the droppings I found must have been old. I might owe a debt of gratitude to the snake that lives under my back deck, but I prefer not to think about him.
6. Introduce Yourself to Your Circuit Breaker Box and Main Water Valve
My first experience with electrical wiring was replacing a broken light fixture in a bathroom. After locating the breaker box, which is in my garage, I turned off the power to that bathroom so I wouldn’t electrocute myself.
It’s a good idea to figure out which fuses control what parts of your house and label them accordingly. This will take two people: One to stand in the room where the power is supposed to go off, the other to trip the fuses and yell, “Did that work? How about now?
You’ll want to know how to turn off your main water valve if you have a plumbing emergency, if a hurricane or tornado is headed your way, or if you’re going out of town. Just locate the valve — it could be inside or outside your house — and turn the knob until it’s off. Test it by turning on any faucet in the house; no water should come out.
