Lee Morof's Real Estate Blog

The National Association of Home Builders reported the highest builder confidence reading in seven months for May. May’s reading exceeded expectations for an index reading of 64 and rose three points to 67.

Component readings for the main NAHB reading were also higher. Builder confidence in current housing market conditions rose three points to 72; confidence in housing market conditions for the next six months rose one point to 72 and the reading for buyer traffic in single-family housing developments rose two points to 49.

Any reading over 50 indicates most builders are positive about housing market conditions, but the reading for buyer traffic is often lower than 50. May’s reading suggests that builders were expecting solid buyer traffic as the peak home buying season started. The average NAHB Housing Market Index reading for 2018 was 67; 2019’s average reading is 62.

March housing starts were the lowest in two years. Lower mortgage rates could increase demand for homes and possibly compel builders to ratchet up construction, but there are no guarantees that low mortgage rates will hold steady over the long run.

Builders Cite Ongoing Obstacles Including Tariffs And Labor Costs

Home builders continued to experience higher materials and labor costs. Tariffs were cited as a cause of higher materials costs that are passed on to buyers by raising home prices. While would-be buyers may enter the market due to lower mortgage rates, higher home prices are likely to sideline first-time and moderate income buyers who are concerned with affordability and strict mortgage qualification requirements.

Freddie Mac reported that based on its survey of recent buyers, about 16 percent of recent home buyers relied on seller assistance. While seller contributions to home buyers are carefully regulated, this type of transaction can help buyers get into a home without spending their last dollar.

Rapidly rising home prices and buyer competition have skewed housing markets in favor of sellers in high-demand markets, but slower growth of home prices in recent months could help more renters buy homes. Continued trade negotiations and increased tariffs on China could impact housing costs depending on terms of negotiations and tariffs imposed.

For those who have not taken a look at the innovative technology that is now used to make artificial grass, they will be surprised at how realistic some of the newest products look when compared to living grass. Installing artificial grass, which is high quality, does not come cheap.

Prices range from $8 to $14 per square foot. However, this investment may pay off well because of improved resale value, low monthly water bills, and other benefits. The best artificial grass can last up to 25 years with little to no maintenance.

Here is a comparison of the advantages and disadvantages of the most innovative artificial turf to help homeowners and business owners decide if these new products are suitable for their properties.

Disadvantages

Besides the investment cost, here are some other disadvantages.

Hot To The Touch

Some artificial grass products do no dissipate heat very well. In areas where there is a lot of direct sunlight this problem can make artificial grass too hot to walk on barefoot.

Nevertheless, there are advanced designs of artificial turf, which have perforations that allow water to easily run through. These can be quickly cooled down by simply spraying the artificial turf with a light water mist spray.

Homeowners Association Rules

The rules of the homeowners association (HOA) may prohibit the use of artificial turf. Check the HOA rules before installing artificial grass. There may be a need for an exception to the rules.

High-quality artificial grass looks as nice, if not better, than real grass. Low-quality artificial turf looks like cheap, green, furry plastic. Make sure the HOA sees a sample of the artificial grass product for the project for their more accurate understanding and consideration.

Advantages

There are many advantages of using high-quality artificial grass.

No Water And Low Maintenance

In drought-stricken areas, water for irrigation may not be available at all, has use restrictions, and/or is extremely costly. Artificial grass does not need a huge amount of water that real grass needs to survive. It is very low maintenance.

No mowing or lawn care is needed to keep it looking perfect. It is washable, which makes it easy to remove dirt, dust, and pet litter. It is durable and tough.

Curb Appeal

High-quality artificial grass makes a home stand out. When all the neighbor’s homes are dull with dead, brown, real grass or another bland-colored ground cover, a vibrant green artificial lawn really looks spectacular in comparison.

Pet-Friendly

Pets like quality artificial turf. It is easy to clean. It should be able to withstand plenty of pet activity without showing ugly wear and tear. Depending on the installation, pets are discouraged from digging up the lawn.

If a portion does get damaged, it is fairly easy to replace a damaged section.

Conclusion

Artificial grass is increasing in popularity. In most cases, the advantages far outweigh the disadvantages. Even for properties, which have the option of maintaining a real-grass yard, artificial grass is something worth considering.

For tips on home improvement projects that can improve your resale value and attract buyers, be sure to consult with your trusted real estate professional.

Bargains in real estate may come from identifying motivated sellers who are willing to let a property go for less than it is really worth. Real estate investors who acquire properties at a discount from current market value enhance their success by increasing their profit potential. Real estate agents who list properties owned by motivated sellers increase their chances to sell a property quickly and have happy sellers who might refer them in the future.

Here are some tips on how to find motivated sellers:

Distressed Discounts

A property that lists for a long time and then the listing shows a discount is a clear sign the owner is becoming motivated. However, just because a property shows a discount from the original listing price, it still may not be a bargain. It is important to learn if the present owner has an unreasonable expectation. Check the recent comparable sales (comps) and then offer no more than 25% less than the sales price of the lowest comp.

Track Foreclosures

For real estate investors with the liquidity to do all-cash deals, tracking foreclosure dates creates opportunities. Properties may be bought just before the final foreclosure date at a large discount because the owner knows that the house will soon be lost anyway.

Short Sales

Another all-cash deal is the short sale. In this type of sale, the lender is driving the deal. The lender is willing to accept a steeply-discounted price to avoid an expensive legal foreclosure process. These homes almost always sell for way below market price and the seller is highly motivated.

Divorce Proceedings

A couple going through a disputed divorce may be forced to sell a home in order to be able to divide the assets owned by them. These are highly motivated sellers who may simply want to get rid of the home fast as part of the process of being finished with the relationship.

Estates

Another reason why a home may need to sell is if the person who owned it died. An estate sale may be a good deal if the executor of the estate is motivated. This happens if there are multiple family members who are impatient and have claims to a portion of the assets as their inheritance.

Will Pay Cash For Houses

A simple sign or flier posted many places with “Will Pay Cash For Houses” and a telephone number on it actually may work in some areas to find motivated sellers.

Personal Networking

Ask everyone if they know of someone who needs to sell a home quickly.

Summary

Finding motivated sellers is a useful thing to do for investors looking for great deals and real estate agents wanting faster-selling properties to list. Ask a homeowner why they want to sell to learn their motivation. Property owners who experience troubles create opportunities for others who are ready to help them sell a property fast and when the need is urgent.

Real estate agents, who are successful, know that getting listings is the life energy of their business. It is boring to sit around waiting for a new client to call. It is expensive to spend extraordinary amounts of money on general advertising to get listings. Clever real estate people learn how to find properties for sale before they are listed.

Value Of Unlisted Properties

Real estate agents and investors have a competitive advantage when they find properties for sale that are not listed. These off-market properties may be available at a better price. There may have little or no other competition from other potential buyers making an offer. Real estate agents can motivate buyers to move quickly to close a deal on an unlisted property before it goes on the market.

Finding Off-Market Properties

Here are five ways to find properties before they are listed:

1. Check Tax Records

Sometimes it is as simple as looking up the current owner in the tax records, making a contact, and giving an offer. That direct approach may work well as long as enough contacts are made to improve the odds of finding a motivated seller.

2. Maintain Contact With Past Buyers

Real estate agents should always stay in contact with past buyers of a property that they sold. On the anniversary of the sale date, send a nice postcard with a handwritten note that says something like “I remembered this was the date you bought your home (or building). If you ever want to sell it, give me a call.”

3. Networking

Another technique is in-person networking with people. Join professional associations, mingle with people, and learn what neighborhood they live in. Tell them someone is thinking of moving there and ask them if they might be considering selling their home or if they know someone who is.

4. Friendly Neighborhood Scouting

Become known in a neighborhood as a buyer. When an investor likes a neighborhood, a terrific strategy is to wander around, knock on doors, and hand out business cards.

People hate someone knocking on the door who is trying to sell them something. However, they usually have a very positive reaction when someone wants to buy the home. There is no need to be shy. Walk around a neighborhood, get to know it better, and the people who live there.

5. Title Companies And Real Estate Departments Of Banks

Make friends with the staff at title companies. Get to know the people working at banks in the real estate department that handles the short sales and foreclosures. These two groups are very strong sources for off-market deals.

The staff of title companies knows when a sale fails at the last moment due to loan funding issues. Bank staff knows when new foreclosures come in before they list for resale. By moving fast, an investor takes advantage of the short gaps between the time these properties are available for sale and when they get listed.

Summary

Learning how to find off-market properties creates many benefits. Investment opportunities expand for real estate investors and real estate agents create more listings for themselves with these proactive strategies. Think of this as a treasure hunt and it actually can be a lot of fun.

Home price growth slowed in February according to the Case-Shiller 20-City Home Price Index. Home price growth hit its lowest rate in more than six years; this indicates that the roaring growth of home prices is settling and could provide opportunities for more would-be buyers to enter the housing market.

The 20-City Housing Market Index rose 0.20 percent in February as compared to January. Year-over year home prices grew by 3.00 percent and missed analyst expectations of a 3.20 percent growth rate. The 20-City Index reported slowing trends in home price growth and emerging trends in housing markets within metro areas tracked.

California’s Hold On Top Housing Price Growth Topples

Home price growth in Los Angeles, San Diego and San Francisco, California slowed enough to lose their hold on highest home price growth rates seen in recent years. San Francisco was the only city to lose ground in national home price growth with a reading of 1.40 percent growth.

The top three cities with highest gains in home prices were Las Vegas, Nevada with year-over year home price growth of 9.70 percent; Phoenix, Arizona home prices grew by 6.70 percent and Tampa, Florida where home prices grew by 5.40 percent year-over-year.

No double-digit home price gains were reported in the 20-City Home Price Index in February; as a comparison, home prices in Seattle, Washington had grown at a seasonally-adjusted annual rate of 12.70 percent a year ago. Rapidly rising home prices slowed in California due to lack of homes for sale coupled with affordability.

Buyers seeking affordable homes in temperate climates shifted their searches to metro areas offering more homes for sale at affordable prices. While fluctuating mortgage rates impact homebuyers depending on home loans, slower rates of home price appreciation can encourage would-be home buyers to enter the market.

Regional Home Price Growth Trends Shift

Home price growth slowed nationally; Case-Shiller’s February reading showed a year-over-year rate of 4.00 percent growth as compared to January’s reading of 4.20 percent home price growth. David M. Blitzer, chair and managing director of the S&P Indices Committee, cited slowing growth in new home sales, housing starts and residential investment as more signs of cooling housing markets. Mr. Blitzer also said that regional trends in home prices growth were shifting. While home price growth in East and West Coast and Great Lakes regions slowed, home price growth gained in inland areas.

If this is your first time working with a real estate agent, you may be wondering how often you’ll be in contact with your real estate agent. Obviously, you want to be sure they’re still working for you even when you don’t hear from them. So how often should your real estate agent contact you, and when?

When Your Agent Will Likely Contact You

Expect a call from your agent when the following situations occur:

• Your agent wants permission to have an open house at your home
• Your agent is giving you feedback about the open house
• A buyer wants to view your home 
• A buyer wants to come back and see it again 
• An offer has been made on your home 
• Your counteroffer has been approved/rejected
• A prospective buyer has made an offer on a different home
• A home inspection/photographer’s/home staging appointment is pending
• A change is needed in your listing (raise/lower price, etc.)
• Other pertinent information becomes available

When Your Agent Might Not Call You

• The buyers who viewed your home have not made an offer or expressed interest
• No one has called about viewing your home
• No action is pending

Is No News Good News?

You might go several days or even weeks without hearing from your real estate agent. No news or contact from your real estate agent isn’t necessarily good news or bad news. It’s just indicative that there’s been no activity on your home sale.

You can certainly reach out to your real estate agent, but that won’t change the fact that they have no news for you. If too much time passes with no activity, your agent will certainly contact you to make a new plan about your home listing. 

There’s really no set schedule for how often a real estate agent should contact you except that they will always keep you abreast of pertinent information to do with selling your home. Remember that your agent is working for you even when they go “radio silent.”

Your agent’s primary work before the sale is behind the scenes; attending other open houses and networking with other agents and brokers to spread the word about your home for sale. Be patient and know that the wheels are turning, even if they aren’t squeaky!

When you started thinking about putting your house up for sale, you probably made a list of repairs that need to be done ahead of time. If that list was long, you might be at a point where you’re asking if it’s all worth it. Will prospective buyers really notice the little things? And even if they do, will that affect how much you’re able to get for your home?

You Can Sell An Imperfect House

Your house doesn’t need to be perfect in order to sell it. Many older homes have some issues like outdated kitchens and bathrooms or wall-to-wall carpeting that needs to be replaced or gotten rid of.

But be aware that a house in need of repair or is different than a house that needs updating. Outstanding repairs are a red flag to buyers that you haven’t maintained the home as you should have over the years. Buyers may suspect that your home needs even more repairs than the obvious issues. So first off, you might have more buyers walk away from a house in need of repair and second, you will probably get less money for your home. 

Outstanding Repairs Give Buyers Leverage

When you try to sell a home that’s in need of repairs, you give buyers leverage to get a lower price out of you. For instance, if your house needs a new furnace, the buyers might say, “Well, we’ll make an offer but it’s lower by this amount because we know we’ll have to get a new HVAC system as soon as we move in”.

That amount for the HVAC system will usually be more than what you could have paid for a new furnace before listing your home. You can almost always sell your house for more by taking care of repairs first.

One thing that real estate agents advise is to get an independent home inspection report before you sell. This will give you an official list of all the repairs that need to be done. Then you can pick and choose among which repairs you should take care of.

This also helps to avoid unpleasant surprises later on. Even though finishing repairs can be costly and time-consuming, many home sellers find that it’s worth it to do as much as possible before listing. The final purchase price often ends up reimbursing you for your expenses, if not for your time.

Be sure to consult with your trusted real estate professional to help you prioritize home improvement projects prior to listing.

Last week’s economic news brought good news to U.S. consumers on several fronts. Mortgage rates fell and national unemployment fell to its lowest rate in 50 years. Inflation slowed and the Federal Reserve held its target federal funds rate steady.

Freddie Mac analysts credited strong labor markets, high consumer confidence and falling mortgage rates as factors setting the stage for more home sales.

Pending Home Sales Rise as Construction Spending Falls

The National Association of Realtors® reported higher pending home sales in March; home sales under contract but not completed rose 3.89 percent in March as compared to February’s negative reading of -1.00 percent growth. Pending home sales provide a gauge for completed sales and mortgage loan volume.

Increasing home sales will help balance a lop-sided housing market fueled by an acute shortage of homes for sale and rapidly rising home prices that provided prospective home buyers with few options. High demand for homes drove prices up as buyers competed for available homes in popular metro areas.

Real estate pros repeatedly say building more homes is necessary for bringing housing markets back into balance, but construction spending was -0.90 percent lower in March. Analysts expected spending to dip -0.40 percent; February’s reading showed an increase of 0.70 percent in construction spending; Builders face ongoing headwinds including shortages of buildable lots and higher materials prices.

Mortgage Rates Fall as Fed Holds Key Rate Steady

The Federal Reserve did not raise its current federal funds rate range of 2.25 to 2.50 percent and inflation is growing slower than expected. These factors and low unemployment boosted consumer confidence in April; more home buyers were expected to enter the housing market as mortgage rates fell last week.

Freddie Mac reported that the average rate for 30-year fixed rate mortgages fell six basis points to 4.14 percent; the average rate for 15-year fixed rate mortgage was four basis points lower at 3.60 percent. Rates for 5/1 adjustable rate mortgages averaged nine basis points lower at 3.68 percent.

Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

Labor Sector: Lowest Unemployment Rate in 50 Years

National Unemployment fell to 3.60 percent for the first time since 1969; this reading was lower than the expected reading of 3,70 percent the March reading of 3.80 percent. Public and private sector payrolls grew in April.

ADP reported 275,000 new private sector jobs in April; the Bureau of Labor Statistics reported 263,000 more public and private-sector jobs; this exceeded expectations of 213,000 jobs added and the reading of 189,000 public and private sector jobs added in March. First-time jobless claims were unchanged from the prior week’s reading of 230,000 first-time claims filed.

Consumer confidence rose to an index reading of 129.20 in April; analysts expected a reading of 126.90 percent based on the March index reading of 124.20.

What‘s Ahead

This week’s scheduled economic news includes readings on inflation, job openings and weekly readings on first-time jobless claims and mortgage rates.

Most consumers believe if they pay their bills on time, they need not worry about their credit score. Oftentimes, it is a rude awakening when they apply for a mortgage loan, car loan, or any revolving credit to learn they are not going to get the lowest rates available due to their credit score. This is because paying bills on time only accounts for 35 percent of your credit score. The remaining 65 percent is spread out among other factors that impact your credit score.

Credit Usage And Impact On Score

Nearly one-third, 30 percent, of your credit score is based on how much of your available credit you are using. For example, if you have combined credit available of $100,000 and you use $90,000, you will suffer a decline in your credit score. Those consumers who have similar credit lines and are using $9,000 will get a slight bump in their score.

New Credit vs. Old Credit

We seldom think about how long we have held a line of credit open. However, some consumers “exchange” credit lines for other credit lines due to special offers made by credit card companies. This is not necessarily a good idea since 15 percent of your credit score is determined by the age of your credit accounts. The longer you have had an account, the better in most cases. The calculation will take all open credit accounts, take the amount of time they have been open and get an “average age”. If you have six accounts which have been open less than a year and six that have been open five years, the newer accounts will count against you in this case.

Mixing Up Credit Lines

A consumer who has only a mortgage and a single credit score will take a modest hit on their credit score versus a consumer who has multiple credit cards, a mortgage, and an auto loan. The types of credit you have will account for 10 percent of your credit score and the more varied your open credit lines, the better. While it is inadvisable to open new credit lines simply to show a variety of types, having installment loans, retail credit cards, and traditional credit cards is a good idea.

New Lines Of Credit Opened

One danger many consumers are unaware of is suddenly opening new lines of credit. For example, a new homeowner may open a new account with a home improvement store, a general retail store, and a new credit card to help them furnish and repair their new home. This could be a red flag since the credit lines are new, and there is no established history on the mortgage, or the new credit lines. Since this factor accounts for 10 percent of your credit score, you could suffer a temporary decline in your credit score.

Consumers should be aware of the factors which impact their credit score, and also be aware of the factors that do not impact their scores. Understanding your credit score may be the most important tool you have when buying a home, or refinancing your current mortgage.

Taking a good look at your credit and finding out how much financing you are pre-approved for is as important as working with a great realtor. Be sure to contact your trusted real estate professional to help you find just the right property for you. 

The meeting of the Federal Reserve’s Federal Open Market Committee ended Wednesday with the Committee’s customary post-meeting statement recapping monetary policy matters considered by the Committee. Members voted not to change the current target rate range of the federal funds rate. The current rate range of 2.25 percent to 2.50 percent.

Federal Funds Target Rate Range: Monetary Policymakers Remain “Patient“

FOMC members cited low inflation pressures, global and domestic economic and financial developments as supporting the Committee’s decision to leave the Federal funds rate unchanged despite recent political pressures to lower the rate and increase the Fed’s accommodative stance toward boosting the economy.

FOMC members evaluated actual and expected economic conditions, labor markets and readings on global and domestic current events and economic news. Based on their assessments, FOMC members again asserted their willingness to be patient concerning Committee decisions to change the federal funds rate range.

The Fed’s dual mandate of supporting maximum employment and stable pricing as indicated by low national unemployment rates and the benchmark inflation rate of two percent are foundational influences on any decision about changing the Fed’s key interest rate range; the national unemployment rate has hovered near a historically low rate of 3.80 percent in recent months and inflation is also below the Fed’s benchmark of two percent.

Fed Chair: No Strong Case for Moving Federal Funds Rate in Either Direction

Federal Reserve chair Jerome Powell said during his post-meeting press conference that FOMC members did not see a strong case for moving the federal funds rate in either direction. Mr. Powell cited improvements in global economic conditions within Europe and China and said that trade negotiations with China and Japan were also improved.

When asked about lowering the Federal funds rate based on lower inflation rates, Chairman Powell said that maintaining inflation near two percent was important, but viewed lower inflation during the first quarter of 2019 as a result of transitory influences. He reassured his audience that short-term fluctuations in the inflation were not considered a problem.

Chairman Powell said that the Fed is not influenced by political pressure and that the Fed’s monetary policy is not based in any way on political commentary or pressures. Mr. Powell said the outlook for domestic economic growth was good based on consumer spending and business investments. He said that resolution of trade issues would likely improve consumer sentiment.