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Red Flags in the Real Estate Market

by Hart Real Estate Solutions

The real estate market is similar to the stock market—it’s a roller coaster. Prices fluctuate, demand is seasonal, and a lot of money can be made by those who know how to play the game.

Tracking the trends and market conditions of your local area is key to anticipating opportunities and threats in the real estate market. Here are some of the biggest factors to look for to help you make smart, informed decisions, whether buying or selling a home.

Months of Supply, or Days on Market (DOM), determines whether the market favors buyers or sellers. As the phrase implies, months of supply indicates the average number of months it takes for a house to sell. Greater than 6 months of supply is considered a buyer’s market, less than 4 months is considered a seller’s market, and anywhere between the two is considered a balanced market.

Number of Closed Sales is a great way to get a feel of how “hot” the market is. Following the trend for closed sales is helpful for understanding the seasonality of your local market. Summer months are typically much busier than winter months.

Mortgage Rates is a major factor in determining buyer demand. The rule of thumb is that as rates go up, buyer demand goes down. In particular, if mortgage rates and housing prices outpace income levels (which is a national trend today), buyer demand will likely decline as home affordability becomes an issue. The Fed funds rate is also an indicator for which direction mortgage rates will go, and the Federal Reserve normally announces what the Fed funds rate will be in the coming years.  

New Construction is a big player (especially today) in determining price levels and available inventory. Currently, much of the nation (including here in Bozeman, Montana) is experiencing a housing shortage, causing prices to rise and intense competition among homebuyers. The construction industry is still recovering from the housing crisis, and is struggling to keep up with demand as millennials enter their prime home buying years.

Local Development is vital to uncover opportunity. Much like a business, real estate investment is all about location, location, location. Development such as new roads, schools, and shopping centers are all signs that property values may increase. A growing community (like Bozeman, Montana) can be very profitable you invest early.

Housing Affordability in city limits is an indicator for future development in outlying areas. Much like what we’re experiencing here in Bozeman, as properties in town become limited and overpriced, you can expect the outer fringes to soon be in high demand.    

Staying informed with these trends will help equip you with the best decisions going into the real estate market. Anticipating which direction the market will turn will not only uncover investment opportunity, but also help insulate you from any threats (like the recent housing crisis).

For exclusive information and statistics in your local market, you can contact a Realtor® for the most recent market conditions. Subscribe to our newsletter, and once a month, we’ll send you local market reports and news updates for the Bozeman, Montana area. 


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How Homebuyers Win in a Seller's Market

How Homebuyers Win in a Seller's Market

by Hart Real Estate Solutions

With limited inventory, and no clear signs that new construction will be catching up any time soon, homebuyers are forced to face a seller’s market. In a seller’s market, competition among buyers is strong, and the pressure is on to place an offer before someone else does. However, there are a few key steps you can take for a competitive edge in a seller’s market.

Know Your Local Market. It’s crucial to know local market conditions, more than ever in a seller’s market. You should get a firm grip on housing prices, inventory levels, information about different neighborhoods, development plans around town, and as much information as you can find (Sign up for our newsletter and, once a month, we’ll send you market reports for the Bozeman, Montana area). Realtors® are also a valuable resource for exclusive insights about market conditions, and can serve as your trusted guides in the real estate market.

Get Pre-approved for a Mortgage. This is huge, but surprisingly ignored by most buyers. From what we’ve experienced as Realtors®, most buyers will start shopping around with an estimate from an online mortgage calculator. Not to be the bearer of bad news, but online mortgage calculators can greatly exaggerate what you can truly afford.

If you’re serious about buying, don’t rely on what you find online. Contact a loan officer and get pre-qualified before you start shopping around. This has several major advantages, including:

#1 Saving Time. It would be a big disappointment if you come across a home that you absolutely love, but is sold before you’re ready to make an offer. Having your finances in order will streamline the process, and allow you to place an offer before other buyers.

#2 Signals to Sellers That You’re Serious. Any offer that isn’t backed by a pre-approved mortgage will likely be ignored. Having proof of financing in-hand shows sellers that your offer is serious, giving you the advantage over other buyers that skipped this pre-emptive step.

#3 Knowing Your Budget. This may be stating the obvious, but it’s important to get an accurate estimate of what you can afford—buying a home is no small deal! A pre-approval from a loan officer is the really the only way to get an accurate estimate, not online mortgage calculators.

Start Shopping Early. While it may be a seller’s market, it can be seasonal. The winter months are typically much slower than the summer months, so buyers may find better leverage and negotiating power earlier in the year. The downside, however, is that slower periods typically means less houses on the market, so you’ll have less to choose from.

Act Fast. In our market, we’ve personally seen listings sell within just hours after being active. This is why the previous tips are so crucial—you need to be ready. When you see a house that you love, and absolutely must have, don’t expect the seller to wait for you. Be prepared to drop everything you’re doing and go see the property, and don’t spend too much making your decision. While you should never buy on impulse, you also need to be diligent if you plan on scoring your dream home in a seller’s market.


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Top 5 Home Staging Tips

by Hart Real Estate Solutions

If done properly, home staging can make the home look much more appealing to buyers in photos and showings. Other than just the obvious tasks of cleaning, which is the first thing you should do, there are several essential steps in staging a home to sell.

 

 

#1 Make Obvious Purpose for The Space

An empty room makes it hard for buyers to imagine what they can use an empty space for. Put a desk in the office space, a T.V. in the family room, a chair with a reading lamp in the reading space, and twin beds in children’s bedrooms.

 

 

#2 Position “Floating” Furniture

It is a common mistake for sellers to think that a room looks larger by pushing all the furniture against the walls. In reality, space between furniture and walls actually opens the room up and makes it seem larger. Push your furniture away from the walls and position for conversation groups and easy traffic flow. 

 

 

#3 Guide Buyers’ Attention with Color Contrasts

By clever use of colors, you can control your buyer’s gaze. Red and Yellow attract attention, while blues and greens tend to be ignored. Have a beautiful kitchen? Place a bowl of yellow bananas and red apples in the middle of it. Have a boring corner of your home? Place a green potted plant there.

 

 

#4 Use Directed Lighting

To highlight the best features of your home, such as a beautiful fireplace, kitchen, or book case, install some directed lighting over them.

 

 

#5 Use “Warm” Lights

The kind of light bulb you use makes a big difference in the look and feel of your home. Soft lighting enhances the “warm” colors of you home, which influences a healthier, uplifted attitude—just what you want in a buyer. Harsh lighting will make you skin look pale, and nobody wants that. Use LED 2700-3000 K light bulbs for the best lighting.


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Get Energy Audit To Improve Home Efficiency

 

 

5 Steps Toward Buying A Home

by Hart Real Estate Solutions

 

Buying a home can be a particularly stressful, painstaking process, especially for first-time home buyers. To prepare you for the real estate market, follow these 5 steps toward buying a home.

#1 Save Years In Advance

Down payment requirements depend on the loan program, ranging anywhere from 3% to 20% of the home value. Zero down payment loans are also available from the USDA or VA for those who qualify. Most buyers should expect to put a large sum of money down to buy a home, so it’s important to plan on saving years in advance. 

In addition to the down payment, is the closing costs. While it depends on the state, closing costs can add several thousand dollars on the cost of the sale. Some sellers may agree to cover the closing costs for the buy, so be sure to consult with a real estate agent to try to work that into the contract.

It’s also important to save for additional cash reserves after buying a home. Not only is it a requirement by some lenders, but is also financially safer to not put all your eggs in one basket.

#2 Estimate What You Can Afford

The next step is to determine how much you can afford putting into a home. The size of your approved loan will be determined by your income, the down payment you saved for, assets, and debts, liabilities, and other obligations.

The general rule of thumb for homebuyers is to stay within a price range that is no more than “three to five times than your annual household income”, or “payments under 36% of household income.” 

#3 Keep An Eye On Your Credit

To get a good loan with good rates, you need good credit. As the determining factor in the mortgage loans and interest rates you qualify for, it’s essential to keep a close watch on your credit score. It’s possible for errors in the calculation of your credit score, so be sure to check for mistakes and dispute it if one exists.

#4 Get Pre-Approved For A Mortgage

There are a couple of advantages of getting pre-approved before your home search. A pre-approval will allow to know exactly how much you can afford, as wells as put you a step ahead other buyers toward making an offer on that perfect home you come across. 

Before getting pre-approved, you will need to be pre-qualified. This is a simple process of providing your mortgage lender with your income, asset, and credit information. The mortgage lender will then determine how much you’ll be approved for.

Getting pre-approved goes a step further, requiring documentation of your W-2s, bank statements, pay stubs, and possibly your federal tax returns.

Once pre-approved, you’ll be ready for a mortgage loan. Having this pre-approval signals to sellers that any offer you make is serious. It’s a competitive market with today’s low inventory and high buyer demand for housing, so having this advantage over other buyers is important.

#5 Hire A Real Estate Agent

Hiring a real estate agent is single most important step to take before making an offer on a home, especially if none of the above steps were taken. A home, for most people, is the most expensive investment you will make in your lifetime. A good real estate agent will make all the difference in the successful sale of a home, whether buying or selling. 

There is a long list of codes and regulations associated with real estate, which changes every year, and can be complex to fully understand and abide by. Real estate agents are required, by law, to stay up-to-date with these codes and assure that nothing is violated. 

Being experts in the industry, real estate agents can also catch certain faulty features of a home that you may overlook. 

Hiring a real estate agent is worth the investment because real estate agents have the knowledge and experience in the local market to effectively negotiate a better sales price, while assuring the contract is without flaws or loopholes.

 

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Hart Real Estate Solutions—Your Trusted Guides

 

Source: 

First Time Home Buyer : The Late-2016 Guide to Buying a Home by Dan Green

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