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Ryan Parks' Blog

By Ryan Parks | Agent in Chicago, IL
  • 3 Questions to Ask Before Buying a Home

    Posted Under: Home Buying  |  January 22, 2014 9:03 AM  |  162 views  |  No comments

    If you are thinking about purchasing a home right now, you are surely getting a lot of advice. Though your friends and family have your best interests at heart, they may not be fully aware of your needs and what is currently happening in real estate. Let’s look at whether or not now is actually a good time for you to buy a home.

    There are three questions you should ask before purchasing in today’s market:

    1. Why am I buying a home in the first place?

    This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:

    • A good place to raise children and for them to get a good education
    • A place where you and your family feel safe
    • More space for you and your family
    • Control of the space

    What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

    2. Where are home values headed?

    When looking at future housing values, we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

    Here is what the experts projected in the latest survey:

    • Home values will appreciate by 4.3% in 2014.
    • The cumulative appreciation will be 28% by 2018.
    • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 16.8% by 2018.

    3. Where are mortgage interest rates headed?

    A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates.

    The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months.

    The KCM Crew on January 20, 2014 in For Buyers

  • Harvard: 5 Financial Reasons to Buy a Home

    Posted Under: Home Buying  |  December 12, 2013 12:53 PM  |  188 views  |  No comments

    Harvard: 5 Financial Reasons to Buy a Home

    by The KCM Crew on December 10, 2013 in For Buyers


    Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. This year he released a new paper on homeownership - The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home.

    Here are the five reasons, each followed by an excerpt from the study:

    1.) Housing is typically the one leveraged investment available. 

    “Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

    2.) You're paying for housing whether you own or rent. 

    “Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

    3.) Owning is usually a form of “forced savings”.

    “Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

    4.) There are substantial tax benefits to owning. 

    “Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

    5.) Owning is a hedge against inflation.

    “Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

    Bottom Line

    We realize that homeownership makes sense for many Americans for many social and family reasons. It also makes sense financially.

  • Knowing Your Options for the "Fixer Upper"

    Posted Under: Home Buying  |  December 5, 2013 2:54 PM  |  189 views  |  No comments

    We are happy to introduce Preston Sandlin as our guest blogger today. Preston is the owner and founder of Home Inspection Carolina and has over 15 years experience in the inspection industry. - The KCM Crew

    Couple PaintingThe fixer-upper properties on the market will give you more purchasing power when shopping for a new home. Bargains can be found in homes that have been foreclosed, seized by the government or just fallen out of repair due to homeowner neglect. While it is true that you will save thousands of dollars on these homes that will need lots of work, there are hidden costs that buyers fail to consider. Ask yourself if it’s worth it and know your options.

    Know exactly what you are getting into

    Don’t underestimate the cost of renovations and repairs. A home inspection will let you know the fundamental repairs and maintenance that must be done to the home. Without a home inspector, you may end up over paying for the fixer-upper anyway.

    The inspector will evaluate any problems with the interior and appliances, roofing, heating and cooling system, plumbing, electrical wiring, insulation and ventilation, and the structural foundation, exterior faults and more. Fixer-uppers may have a lot of problems with these parts of the home. A home inspector is worth hiring to get an unbiased perspective and uncover problems you can’t see yourself.

    You ultimately have to decide how much money you are actually saving by buying the fixer-upper once you add in the costs. Once you spend all the money on repairs to make it habitable, will you still be satisfied with your choice? Will you hire someone to do the repairs or do you have the patience and skill to do it yourself?

    Consider a FHA insured HUD 203(K)

    It is worth checking to see if you qualify for a program known as HUD 203(k). It allows the buyer to purchase a fixer-upper with a FHA guaranteed loan, and the best part is that it protects you from extra costs if the “fixing” part costs more than estimated. You must submit a comprehensive list of repairs with corresponding cost estimates with your application, so you will need to get a home inspector, have the cost of labor and repair determined, and prepare your detailed plan for accomplishing it all for the FHA and your creditor.

    DIY

    The ideal fixer-upper would consist of superficial revamps rather than major appliance, ventilation, or structural repairs. Minor renovations would be painting inside and out, installing ceiling fans and light fixtures, and replacing carpets, windows, or doors.

    Be patient

    Fixing up the house might take longer than you originally planned, but it can be well worth it. Remodeling and minor repairs will most likely take longer than you expect, especially if you are haven’t dealt with this before. You chose to save money with a fixer-upper. It takes time to give a house the proper care that will result in a comfortable house to call your home. Do your homework and make an informed decision

  • Buying a Home? Consider COST not just Price

    Posted Under: Home Buying, Property Q&A, Home Ownership  |  November 19, 2013 8:49 AM  |  290 views  |  No comments

    We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home. Let us explain.

    Last month, the Mortgage Bankers Association(MBA), the National Association of Realtors, Fannie Mae and Freddie Mac all projected that mortgage interest rates will increase by about one full percentage over the next twelve months. We also know that many experts are calling for home prices to also increase over the next year.

    What Does This Mean to a Buyer?

    Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 even if home prices don’t increase:

    Cost Waiting blog

    Purchasing-Impact

  • Chicken Little is Wrong: Homeownership Still the American Dream

    Posted Under: Home Buying, Home Ownership  |  November 5, 2013 8:51 AM  |  259 views  |  1 comment

    by The KCM Crew on November 4, 2013 in For Buyers




    Chicken LittleAfter the harrowing challenges experienced by so many homeowners over the last few years, many housing experts had predicted that the belief in homeownership as a major element of the American Dream would soon die. There is now conclusive evidence that these experts were wrong. As we reported back in September,The Joint Center of Housing Studies at Harvard University completed a study which concluded:

    "The long term cultural preference for owning seems to have weathered the recent housing crisis."

    Now, a second source recently announced similar results. Fannie Mae just released their National Housing Survey of Delinquent Mortgage Borrowers. The survey asked questions about the value of homeownership to the most sensitive of all groups – those delinquent on their mortgages. Here is what they found:

    Of those delinquent borrowers:

    • 74% still see homeownership as better than renting when building up wealth
    • 71% still see homeownership as better than renting when saving for retirement
    • 73% still see homeownership as better than renting for overall financial stability
    • 80% still see homeownership as better than renting as an investment plan
    • 70% still see homeownership as better than renting for creating an overall tax strategy

    Bottom Line

    Homeownership has always been and will always be a crucial piece of the American Dream.

  • Taking the Spooky Feeling Out of Foreclosure

    Posted Under: Home Buying, Foreclosure  |  November 1, 2013 7:24 AM  |  278 views  |  No comments

    by Joan Erni on October 30, 2013 in Foreclosures




    Today we are excited to have Joan Erni, as our guest blogger.  Joan is the Director of Business Development at Michael Saunders & Company, and wrote today's post in response to last Wednesday's blog post re: foreclosures. - The KCM Crew

    Buying a Foreclosure isn’t as Risky as You May Think, with the Proper Know-How

    Last week, when Amanda Kostina laid out her 10 Hidden Hazards When Buying Foreclosure, it hit close to home. My husband and I relocated to Florida in the midst of the credit crunch, and what awaited me in my new home state was a depressed real estate market. Even though foreclosures had always been part of my repertoire, nothing could prepare me for the crash course I was about to get in the owned-asset market.

    At my five years at Michael Saunders and Company, we have managed and sold an extremely high volume of properties for financial institutions and government sponsored entities (GSEs). And I have found that despite the inherent stigma that comes with purchasing a foreclosure, REO properties are a great opportunity for buyers, especially first time buyers.

    That’s because there are built-in incentives to revitalize the area. All GSEs, and most banks, offer programs called First Look Initiatives. These programs allow for owner occupants to have first crack at their listings over buyers who are looking to purchase a listing as an investment. The hope is to pass the property to stable, caring owners. In fact, Freddie Mac has a policy to repair at least 65% of their inventory, seeking to rejuvenate the neighborhoods where their properties are listed.

    With those improvements comes some assurances of a relatively-smooth transaction. My foreclosure sellers provide disclosures of anything they are aware of, or have been made aware of, with the property, as well as ensure all liens are satisfied and code issues are rectified, and pass clear title.

    Now, while the hazards Amanda listed are present, I don’t know if they’re necessarilyhidden. After all, if there are holes in the walls or the electric is off, you’ll know. But there are some precautions you can take to navigate some of the unseen, volatile waters of owned-assets.

    Find an Agent Familiar with Foreclosures: An agent who doesn't know the process and/or the seller's contracts and policies could slow or derail an otherwise sound transaction. A trusted, experienced Realtor® can steer foreclosure buyers clear of unspoken pitfalls, and ensure an expedited process.

    Get a Home Inspection: Many buyers feel that, because they are buying "as is" property, a home inspection is a waste of time and money. Not so. Having the home inspected will uncover problems within the inspection period. That’s important, because should you want to cancel the contract and it’s outside the timeline, some REO sellers will keep the earnest money deposit.

    Consult with an Attorney on Your Contract: Many buyers don't have an attorney review their contract because they've been told that REO sellers won't allow any changes to it. That is definitely true: changes aren’t allowed, but, if you sign without fully understanding the contract, you (and your selling agent) might be surprised by what you've bound yourself to. For example, 99% of the sellers of properties we list have a policy to turn on the water and electric if possible. It is not guaranteed that it will be.  Not even for inspections. So, if the plumbing is cut out, don't expect the house to be re-plumbed because you have to have utilities on for inspections. No, you don't, and the contract addendum you signed probably says so.

    In any real estate transaction the buyer should beware, and that rings particularly true when purchasing an REO. But working with a Realtor® who is well versed in the REO market can allow buyers to see the benefits of purchasing a property that has been foreclosed on, and many times, those benefits can outweigh any potential “hazards”.

  • 10 Hidden Hazards When Buying Foreclosures

    Posted Under: Home Buying in Chicago, Foreclosure in Chicago  |  October 29, 2013 7:12 AM  |  334 views  |  No comments

    We are pleased to present, Amanda Kostina, as our guest blogger today.  Amanda is a writer for Whitefence.com. - The KCM Crew

    ForeclosureBuying a foreclosed home can seem like a dream. What could be better than getting a home for a fraction of the market value? Some may even say that the deals sound like they could be too good to be true. In some cases, those doubters aren't too far off the mark. There are some hidden dangers in buying foreclosure properties that, if you're not aware of them, could be disheartening and disappointing. If you are pursuing this route in buying your new home, be sure to look out for these hazards and hidden costs.

    1. Destruction of Property – A sad truth about foreclosure properties is that they have often been purposely destroyed. Sometimes the homeowners do this out of frustration over losing their homes, or out of simple carelessness when they realize their home is irretrievably gone after too many missed mortgage payments. If the homeowners have not destroyed the property themselves, there is also a chance that the home has been vandalized by other people because it has been left sitting empty.
    2. Poor Maintenance – If homeowners were unable to afford their mortgage payment, they almost certainly were unable to perform routine maintenance on the property. Problems can be as minor as a few leaky faucets, or as major as damaged roofing or central units.
    3. It May Be Unclean – A house being left unoccupied for a significant amount of time can mean it will be unclean, either through neglect on the part of the former owners or normal depreciation as the property is left uninhabited and not looked after. When a homeowner is selling the home, they will scrub the house clean or hire a cleaning service to entice buyers. A foreclosed home will not have this benefit. Depending on how long it was left and what condition it is in, there may even be vermin or termites to deal with.
    4. Undesirable Renovations – Sometimes homeowners were in the middle of a renovation when they lost their ability to pay their mortgage, so you can wind up with a half finished project on your hands when you purchase the property. There is also a chance that a garage or basement was turned into a living space to rent out in order to try and offset the cost of the mortgage.
    5. No Electricity – There is a good chance the electricity will be off in the foreclosed home, so you will have a hard time seeing what you are buying. Depending on the weather it may also be very hot or very cold in the house, and vacancy can take its toll on appliances left behind.
    6. Personal Property Left Behind – Many homeowners leave items behind, either because they now have no place to put them or because they were locked out of the house before they could retrieve them. You will now be left with the job of disposing of these items if you decide to purchase the property.
    7. Lack of Landscaping – More than likely, nobody has been maintaining the lawn of a foreclosed home. You may have a yard full of dead grass or a lawn so overgrown it seems like a jungle! Your foreclosed home will almost certainly require some degree of upkeep when it comes to to the landscaping surrounding the structure.
    8. No Disclosure – Because the owner of the property is a bank and the bank has not actually lived in the house, they have no idea what problems or issues there may be in the home and they have no obligation to tell you even if they did. You will have to get your own home inspection done to uncover potential issues.
    9. Stripped Bare – You may find your new foreclosed home completely stripped of appliances, copper piping, and anything else that might be worth money. Many times the previous owners do this to try and make back some money on their lost home. Other times, the home was broken into and robbed after the previous owners left.
    10. Judgments and Liens – Foreclosure properties can sometimes come with titles encumbered by judgments or liens that you may have to pay off to close on the deal.

    In short, buying a foreclosed property can be a great way to save money. However, be sure to look into all the potential costs involved before making a final decision. Do the math to determine if you will really wind up saving, or if the property will end up costing you when all is said and done.

    Resources: http://www.investopedia.com/articles/mortgages-real-estate/08/foreclosur...http://www.zillowblog.com/2012-08-17/buying-a-foreclosure-watch-out-for-...

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