Real Estate: Find Opportunity Next Year
By
Carla Fried, CNN Money
After five years
of tumult, order and opportunity are finally being restored to the housing
market.
Home
prices are expected to rise a modest 1% from the fourth quarter of this year to
the end of 2013, according to the real estate research firm Fiserv. David
Stiff, Fiserv's chief economist, notes that after some choppiness early on,
prices should increase 3.4% from the second quarter of 2013 to the second
quarter of 2014. In hotter regions out West, you can expect bigger gains.
"Housing
is finally turning the corner," Stiff says. "There is no reason to be
fearful of further large price declines."
This
creates a new playing field for homeowners, who are finally able to sell, as
well as would-be buyers who've been delaying a purchase in anticipation that
prices would keep falling. The Mortgage Bankers Association forecasts that more
and more house hunters will start coming off the sidelines, with new-home loans
for purchases expected to jump 55%, based in dollars, in 2013.
With
that increased competition, "the days of buyers sticking it to sellers are
over," says Salt Lake City real estate agent Tracie Peay.
Sellers:
Don't get too excited just yet. You don't have a vise-like grip on this market
either. Indeed, for many, it still makes sense to wait to get better prices.
This is especially true if you know that you won't be able to break even on
your investment by unloading your house now, once you factor in the sales
commission and other costs. That said, don't assume that prices will be off to
the races again in a year or two.Fiserv forecasts that between now and 2017,
homes will gain 3.3% a year in value. That's hardly red-hot. But at least the
market isn't frozen anymore.
THE
ACTION PLAN
Sellers
The
price still has to be right
Homes
in many markets are selling in a matter of weeks, often attracting multiple
bids -- but only the ones that are properly priced. Take San Francisco.
Although the city is one of the strongest sellers' markets right now, the
average home there goes for 103% of list price, not 120%.
"Buyers
aren't going down the road that got so many people in trouble during the
bubble," says Dallas real estate agent Mary Beth Harrison.
Focus
on the appraisal
Whoever
bids on your home will probably finance the purchase. That means any deal is
still beholden to a third party.
"You
can take the highest offer, but at the end of the day the appraiser has the
final say on the value of the home," says David Howell, chief information
officer at McEnearney Associates, a real estate agency in the D.C. metro area.
With
so much riding on the appraisal -- it can kill an agreement or require
renegotiation -- your agent should be present. Harrison has a tip for making
sure this happens: "The minute we have an offer, we take the keys off the
door to make sure the appraiser has to meet us to get in."
Your
agent should also prep a package of pertinent information for the appraiser,
says Chicago real estate agent Fran Bailey. That includes the latest comparable
sales data and documents detailing any upgrades or renovations to help the
seller's cause. "It's part of my job to make sure the appraiser has the
correct information," she says.
Buyers
Be
ready to deal
With
competition heating up, casual house shopping isn't going to cut it anymore. If
you are serious about making a move, be prepared: Three months out.
Despite housing's green shoots, getting a mortgage remains incredibly tough.
The average FICO credit score for recently denied applications on conventional
purchase loans was 729. The score on approved mortgages was 762, with a 21%
down payment, monthly payments equal to 21% of household income, and total debt
that did not exceed 33% of income.
On
the bubble with any of those requirements? Now's the time to burnish your
finances. And if you plan to house hunt in the spring, watch your holiday
spending.
Deal
time. "If
you want to buy, you have to be ready to make an offer," says Howell.
Plus, your first offer should be very close to your best. "If the house has
been on the market for three months or longer, you can be more
aggressive," says Bailey. "But if it's a new listing, a low-ball bid
will get you ignored."
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