June 25th, 2019 10:07 AM by Jackie A. Graves
homeownership supply and demand tug-of-war continues, deterring some homebuyers
and prompting banks and public institutions to create special programs to
give the demand side more juice.
enterprise Freddie Mac, for example, just announced its “All for Home” program
which offers targeted services for lenders, real estate agents and homebuyers
that addresses down-payment
issues, outreach and education.
the Mortgage Bankers Association (MBA), which represents more than 2,200 member
companies in the real estate finance industry, launched a new affordable
housing initiative to create partnerships in policy and the private sector to
solve the affordable housing problem.
“The lack of
affordable housing is presenting significant challenges to families across the
country. We need to explore how the lending community can better partner with
public, private, and non-profit stakeholders to ensure more Americans have
access to homes they can afford,” said Robert D. Broeksmit, MBA president, in a
meantime, homebuyers shouldn’t necessarily wait for a perfect market, says
Diane Hughes, senior vice president at UMB Bank. There are several components
that make up a housing market — from interest rates to
supply — so expecting every moving part to line up in the buyer’s favor is
Here are a
few ways buyers can crack the homebuying code without waiting for a sea change
in the market.
your homebuying search
The old maxim
in real estate is “location, location, location” — but what if that location
comes with enormous costs? If you can afford to be flexible in your search,
then looking outside of your chosen location could save you money, says Paul
Akinmade, CMO at HomeFundIt.
“A home just
over a certain county line could dramatically reduce the cost of property taxes
and put you in a better position to buy,” he says.
the difference in median home prices in Middlesex County, New Jersey and
Richmond County, New York is $170,072, according to data from the National
Association of Realtors, or NAR.
payment on a median-priced home, $530,000, in Richmond County, with a 4.5
percent interest rate on a 30-year mortgage is $2,685 per month. On the other
hand, the same mortgage terms and interest rate on a median-priced home,
$360,000, in Middlesex County is $1,824 per month.
between those counties is roughly 20 miles. When you consider the price
difference, someone who can’t afford in Richmond County might be able to drive
40 minutes to Middlesex County and find a house within their budget.
view can be advantageous – for example, the buyer may be able to get more for
their money in the way of a bigger home and more amenities than they were
originally seeking,” Hughes says.
a rent-to-own deal
home agreements are not common, but they do happen, particularly if sellers are
having a tough time offloading their home, says Kim Burchett, an agent at Sold
by the Sea Realty in Wilmington, North Carolina.
or lease-option, agreements give buyers the right to buy the home before the
lease expires. This can be helpful for buyers who are not financially ready to
buy a home, but want to pin down a house (and its sale price) while improving
their credit or saving up for a down payment.
these agreements can be a good deal if they’re able to lock in the sales price
so that it doesn’t change when it comes time to buy. This is great in today’s
market where home values are steadily rising every year — the same wasn’t true
10 years ago when home values were falling. Buyers should ask that a portion of
their rent goes toward the sale price, which allows them to build future equity
while leasing the property.
the owner says they will have the home appraised later when you are ready to
buy, you run the risk of a higher home price. While rent-to-own might work in
some cases, it’s hard to make a generalization here,” Akinmade says.
advantage of lease-option contracts, Hughes cites, is being able to live in the
home before you buy it, so you can see the pros and cons of the property and
there are nuances that buyers should watch out for before signing a contract.
Lease-purchase agreements, for example, don’t give tenants a choice to buy at
the end of their lease; instead they’re contractually obligated to purchase the
example of a rent-to-own contract buyers should think twice about is when
renters-turned-buyers receive credit toward a down-payment only if the home is
valued at a higher price than the rate at which they’re currently renting,
be afraid to name your price
pass up a house because it’s outside of your budget, consider negotiating.
Buyers might be surprised at how willing sellers are to lower the sales price,
says William Martin, associate real estate broker at Douglas Elliman Real
Estate in New York. He says that in today’s market, with home-value increases
slowing and less competition, buyers have more room to negotiate.
“I have had
great success with negotiating on behalf of my buyers. In some cases, the
results are astonishing. Don’t be afraid of rejection. If you don’t ask, you
can’t accomplish the goal,” Martin says.
Hire a broker
who knows the local market well and can work with you to present a strong
offer. If you lowball the seller without good reasons, then your chances of
getting a better deal are diminished. Details about how long the house has been
on the market or whether it comes with the same amenities as other houses in
the area might be strong cases for a price reduction.
there are programs for
buyers who need down-payment assistance or help finding affordable housing. To
qualify with many of these programs you only need not have owned a home for the
previous three years.
will work with buyers experiencing circumstances like these and find mortgage
loans that fit their specific situations,” Akinmade says.
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