Hurlbuthomes.com Blog

Lately there have been some screaming deals on real estate out there. And I mean "at the top of your lungs" screaming deals. $30,000 or even $40,000 off some homes. Rediculous pricing. As rediculous as the price increases were a few years ago, some foreclosures are as rediculous the other way now. (You may not get a stove, fridge, carpet or a roof, but it's still a DEAL!). As consumers, we tend to focus on price. A lot. I do it. You do it. We all do. But when is it not JUST about the price? When it's about the overall deal, that's when. Let me explain.

If you could get a home for $350,000, or the EXACT same home for $325,000, which would you buy? (You know me well enough by now to not answer that right away don't you?)

Right now interest rates are at historic lows. Like crazy low. Let's say you go to a seller that has their home offered for $350,000 and you offer $325,000. Now $25,000 in this market may not seem like a lot off, but consider that maybe, just maybe, the seller doesn't have $25,000 to move on the home without going into a short sale. But let's say that same seller offers to buy down your interest rate to say 4%? It might cost the seller $10,000 - $12,000 to do that, but what does that really mean to you? Look at the examples below:

	Example A	Example B
Purchase Price	$325,000.00	$350,000.00
Down Payment %	3.50%	3.50%
Amount Financed	$313,625.00	$337,750.00
Interest Rate	5.50%	4%
Term in Months	360	360
Number of Pmts PerYear	12	12
Taxes (Annual)	$3,600.00	$3,600.00
Insurance (Annual)	$600.00	$600.00
Payment (P&I)	$1,780.73	$1,612.47
Total Payment (PITI)	$2,130.73	$1,962.47
Homeowner Dues (Monthly)	$40.00	$40.00
Total Pmt (PITI) withHOA	$2,170.73	$2,002.47

You'll see that in each example, the only thing that varies is the purchase price and the interest rate, but the $350,000 purchase price is actually CHEAPER on a monthly basis than the $325,000 purchase price.

This can be a mutually beneficial scenario for the Buyer and Seller. Why? Well the seller is able to sell their home without giving up a ton of cash. In this case, about 1/2 of the amount they would have given up had they accepted the Buyer's original offer. So they come out ahead. The Buyer actually gets into a lower interest rate loan, fixed for 30 years and ends up paying less month over month than they would have had they actually gotten their original offer accepted. This means the Buyer is more likely to be able to stay in the home for the long term.

Finally an ancillary benefit to this scenario is that (assuming the home appraises for the higher amount) property values in the area stay higher keeping everyone that's staying in the neighborhood happy as well.

So, when you're considering buying a home, make sure you have a Real Estate Professional that understands the "Art of the Deal" and try to not focus solely on price. I know it's tough, but you can actually come out ahead if you think outside the box.

Call me at (253) 222-2626 when you're ready to buy or sell. I'll help you understand your individual situation too.

2009, the year of the investor! I recently overheard a great quote that I'd like to pass along:

"A Recession is a Terrible Thing to Waste"

Obviously it's a take on the old quote "A mind is a terrible thing to waste" but think about this. When everyone is jumping out and running scared, the investors jump in and get rich! But the ones that do it successfully are the ones that have a system.

Another quote I'm fond of is "You've got to buy it right". Basically the premise here is that if you don't buy your property right (right price, location, condition, etc.) it doesn't matter what you do to it, it's not going to be the perfect investment.

I've got the skills to help you buy that first or 10th investment property right. The following article will give you some good pointers. While we're in this recession, if you've got any disposable income at all, now is the time to build your fortune. Give me a call and we can discuss strategies for your particular situation.

10 Tips to Buying A Fixer-Upper

Whether it’s a starter home, an investment property, or simply a fun project, according to the National Association of Realtors®, buying a house in need of some TLC requires a few special considerations.

1. Purchase a home that is at least 30 percent below the market value of comparable homes in the neighborhood.
2. Choose a location with a low crime rate, good schools, and quiet streets. There isn’t anything you can do to cure a poor location.
3. Choose a house with three or four bedrooms. Smaller homes are unlikely to have the same buyer appeal.
4. Avoid homes that need major, unprofitable repairs: wiring, major plumbing, foundation repairs, major kitchen or bathroom renovation, and room additions. Spending money on these basics doesn’t add value, though buyers will expect them.
5. Find a home that needs profitable cosmetic improvements: fresh paint inside and out, new light fixtures, new carpets and flooring, and fresh landscaping.
6. Look for affordable, low-down-payment financing, such as taking over an existing mortgage, lease with an option to buy, seller carry-back, or a combo.
7. Avoid obtaining new bank financing until the fix-up work is complete and the market value has increased.
8. Don’t buy a house that is more than an hour from your current residence since you’ll be visiting it every day while renovation work is being done.
9. Make sure that that seller or tenants will vacate immediately upon transfer of title.
10. Look for sellers who are motivated and want to make the sale happen.

Housing prices stabilize, mortgage rates remain low

I think we all saw a market slowdown coming, but I don't think anyone REALLY knew what was going to happen last year.

Combining factors contributed to the overall slowdown of the economy last year, it wasn't just housing that saw a tumble. Commodities markets flared on speculation (oil, etc.) that turned out to be unfounded. This resulted in oil prices soaring to over $147.00/barrel in mid-2008 which lead to near $5.00/gallon gas prices at the pumps. As the speculation waned, oil prices fell and by the end of the year, gas had fallen to below $2.00/gallon.

The stock market saw it's worst tumble since 1931 as the full extent of the housing crsis was realized. With Sachs going under and AIG immersed in a government bailout, the stock market fell over 30% erasing gains of the past 6 years in a flash.

So that leads us to 2009. What's going to happen to housing in 2009? Housing seems to be the stimulus for lots of different portions of our economy and at least in the downfall of 2008, housing led the charge. Will it be the source of the resurgance in 2009?

In 2009, I predict the following:

1. Housing Prices Will Stabilize - As a number of government programs come on line, and banks begin to sort through their portfolios of bad mortgages, fewer homes will go into foreclosure, more borrowers will be able to work out solutions to rising mortgage costs and this will bring housing inventories down. Less inventory spikes demand, demand spikes prices and many areas will begin to see modest appreciation again. (BTW, Thurston County in Washington in November reported a 1% increase in housing prices over the same period last year, it's coming people!)
2. Mortgage Rates Will Remain Low - Toward the end of last year, we saw rates on a 30 year fixed mortgage fall to a low of 4.625% (at least that's as low as I saw, there may have been cases lower than that). This spiked mortgage activity and applications for new purchases or re-finances remained at a 5 year high. (BTW, that 5 years includes 3 years of a frenzied market, so SOMEONE is getting a loan, why not you?) Keeping mortgage rates low is in the best interest for everyone. It allows someone who is just shy of being able to make their payments perhaps re-finance and avoid foreclosure. It allows someone who is perfectly capable of making their mortgage payment re-finance and have other money available to pump into the economy or investments.
3. Inventory Levels Will Continue to Fall - The National Association of Realtors (NAR) suggests that a 6 month inventory level is a balanced market. Not a buyers market and not a sellers market. We saw inventory levels rise to as much as 13 months in some counties (as high as 27 months in some price points and some neighborhoods) last year. At the end of the year levels were between 7 - 8 months. My prediction is that with builders building less, banks figuring out how to save homes from foreclosure, we'll see inventory levels continue to drop.
4. Government Programs Will Actually DO Something - Last year the HOPE program was introduced. The intent was to provide lenders with funds to make available to homeowners facing foreclosure. I watched one report where a mortgage broker was interviewed in which he had taken over 1,200 individual applications for the HOPE prorgram and not ONE person was approved. Congress has admitted that this was a dismal failure and my prediction is that new programs coming about WILL actually help people stay in their homes.
5. The Stock Market Will See Modest Gains - I don't think we'll see the DJIA rise above 11,000 again anytime soon, but I don't think the mid 9,000 range is out of reach. I'm by far not a financial expert, for that, contact my buddy Mick Buller at Merrill Lynch. But in my humble opinion, I think (hope?) we've seen the worst of the stock market crumble.
6. GM, Ford and Chrysler Will Live to Fight Another Day - 2008 was humbling for a lot of people, not the least of which was the American Auto Industry. I think (again, hope?) that they FINALLY get it and will produce environmentally friendly, reliable cars.

So, there you have it. My predcictions for 2009. Check in with me in December to see how close I came!

And as always, for ANYTHING real estate related, don't hesitate to give me a call. (253) 222-2626.