05/23/2022 – What’s Going on with the Interest Rates??

If you read some of my rantings, you may notice I don’t post as often as I should. But I thought I would give my thoughts on what is happening with today’s Real Estate Market.

I need to say first that ANY real estate market should be looked at individually. After all, what is going on in the National Real Estate market may not be necessarily going on in your market. Every market is different. The number of houses listed on the market varies, the number of buyers looking to move into a particular market varies and of course the “selling tactics” vary.  As a buyer you need to offer list price, you may need to make an offer above list price… there are lots of different markets.

So today I’m going to talk about interest rates.  At one point in my market interest rates were below 3% yes, I personally saw people getting 2.5% interest rates a few months ago. We all thought that would last, but in the past several weeks I am seeing interest rates for new loans over 5% A quick search says FHA interest rates today are 5.492%.

There is a way to get lower interest rates on a home you are buying.  In my area, because it is just about a rock throw from the USAF base in Jacksonville, many existing loans are VA loans (currently at 5.47%).  VA and FHA loans are assumable.

Sometimes USDA RD Loans are also assumable, but I have not looked at those closely enough and from some of my research the interest rate may be changed to updated rates. There is also the ability to finance the equity in another loan.

ASSUMING A VA LOAN

If you do a little research, you will find that VA loans are assumable. In the mortgage documents you will find some stipulations on how your loan can be assumed by another buyer. There are also things to consider for the seller, presumably a Veteran or Active Service Member, such as a “release of liability” for the original loan and the “substitution of entitlement”.  In simple terms, “substitution of entitlement” means that the Seller will have his full entitlement benefit restored to its original amount and the Buyer will have it subtracted from his.

Buyers for a home with a VA mortgage will still have to meet all the buying criteria of a VA Loan such as credit score and debt to income ratios and they will probably have to come up with a larger down payment depending on how much the Seller has paid toward his existing mortgage and the amount that the property has appreciated.

Another benefit may be that the buyer’s closing costs could be less when they assume an existing VA loan.  

A VA loan assumption can be a good thing if everything falls into place. It is something to talk to your lender and Realtor about.

ASSUMING AN FHA LOAN

FHA loans are also assumable. The same things apply for the Buyer, they must quality for the loan by having a good credit score and debt to income ratio. The seller also has to receive a “release of liability” from the current loan amount from the lender. This is very important to every seller.

MY FINAL THOUGHTS

As a Realtor, I’m constantly trying to update my knowledge in Real Estate to be the best possible agent to represent my buyers and sellers. Am I perfect, that’s a big fat-ass NO. But all Realtors are going to have to learn to navigate this new reality.

One place where I can see these assumption scenarios coming into play would be divorce situations where one party gets the house and the other party gets the shaft. Only half kidding.  Regardless, if the ex-spouse can qualify (for VA is a Veteran or Active Service Member) for the existing loan and pay the other party any equity that the court feels he/she is entitled to, then why not? Closing costs should also be reduced. Many times, one of the parties just wants to “get the house out of his/her name” so they can purchase another house and move on with their life.  Especially if his/her children will not have to move from their home.

Another situation is the death of a spouse.

Anyway, I’m sure there is a lot more to the process. At least more than I am including in this short writing. But way back when I was an agent in the 80s, when interest rates were above 13%, the best thing a seller could have is an assumable loan at 7%. 

Damn, I’m dating myself big time…  

I am not a lender and I am not a mortgage specialist or broker. I am not a lawyer. I am an old school, (but thoroughly modern ha!) Realtor and I sell houses. That’s the job I get paid for. But all of these things should be discussed and thought about since interest rates are jumping up when buying or selling a home.

Let’s talk Crap!

Let’s talk about a subject that most people don’t even think about… well, unless you live in a rural area where there is not a municipal sewer system. 

This topic of this post could be “Where does the crap go?” or one of a number of references to what is referred to as a Septic System. 

In a nutshell a septic system is an underground wastewater treatment facility that you have in your very own back yard. It uses a combination of nature and technology to treat wastewater from the plumbing in your house. It is where all the water from your sinks, laundry, kitchen and even your toilets go. 

Septic Tank

A septic system is a tank and a system of field lines (drain field) and /or a soil absorption field. It digests organic matter and separates floatable matter like oils and grease and solids from the wastewater. Soil based systems discharge the liquid from the septic tank into a system of perforated pipes in a leach field and then into the soil. 

It is not my intention to specifically tell you how a septic system works; the EPA has some wonderful information on their site as does Wikipedia (where I stole/borrowed one of the pics for this article). 

What I want to talk about is how to maintain your septic system.  

1. Toilets are not trash cans! While it is perfectly ok to flush toilet paper, it is certainly not advisable to flush paper towels, feminine hygiene products, dental floss, pharmaceuticals, diapers, Q-tips, facial cleaning pads… Just toilet paper and poop and perhaps an occasional vomit.
2. Watch what you put down your sink! Oil and grease and even some soaps can congeal and form a nasty mass of floating ‘stuff’ that will rise to the top of the septic tank. In this photo it is called scum. I think that pretty well describes it.
3. Every few months or so it is nice to flush some Rid-X down the toilet. My mom used to flush yeast. Just like those little packets used to make bread. This will keep the bacteria working in the tank that actually eats the solid stuff that falls to the bottom.
4. Watch what you use to clean your toilets. A lot of bleach and similar products can kill the bacteria that are alive and working in your septic system.
5. Every few years, it is necessary to have the septic system pumped by a professional.

 As a Realtor, I’ve had more than a few run-ins with septic systems.

Once a family contacted me to tell me they were having issues with their toilets backing up and laundry water standing in the yard. I asked them if they had the septic inspected before purchasing the house. Well they had NOT had it inspected, so I suggested they have it pumped and ask the fellah to do a quick inspection. They called me in a few days to let me know that their septic tank had collapsed and they were looking at about $7000 to have a new one installed with new field lines. Expensive! Because they had not had the system inspected, there was no liability to the original seller.

Just the other day I was at a client’s house having the septic tank inspected and pumped. I worked with the seller and advised him at the onset that he was probably going to be asked to pump the septic system. Although he thought it was unusual, after my story about the collapsed septic system, he understood why and was expecting the expense.  

septic truck

Luckily the septic tank is in good shape and ready for a new family! 

So there I sat behind the poop truck… I still get a giggle out of the view…

A few months ago, I found that it was time to make a move to another brokerage.

It wasn’t because one morning I woke up and felt a compelling urge to move. Because at this stage of my career, I knew it was not going to be the easiest thing for me to do.

Fortunately for me, I know most of the agents in this small town of Cabot, AR and I have good relationships with the majority of them. I did my research, talked to several agents and Brokers and resorted to the old fashioned “Ben Franklin” close.  You may have heard of it…. it’s quite simple.  Draw a T on a piece of paper dividing it into two columns. On the right side list all the reasons to stay. On the Left side list all the reasons to leave.

For me, it all boiled down to technology. I have considered myself to be a ‘would-be geek’ as long as I can remember. I can write a little code, I’ve embraced Customer Relationship Managers since the early 90’s, and I like to see progressive changes in marketing.

It’s not an easy process.  New cards and contacting clients is only a small part of it. It is changing all of your websites, Facebook Pages, Blogs… everything.

So now I’m with Crye-Leike Realtors – Cabot Branch. Let the good times roll!

Sometimes life gives you lemons… and sometimes it is my job to turn those lemons into something palatable. It may not be the best lemon meringue pie, or the sweetest lemonade, but it will be tastier than choking on the whole lemon rind and all.

A foreclosure happens when life deals you a hand that you can’t play. It’s like getting a pair of twos and your up against a royal flush.  Perhaps it is a job loss, or an illness and a person falls behind in their payments.

There are a few alternatives to losing your house and your good credit. If you have enough equity in your home, you can sell it, clear the mortgage and walk away hopefully with a jingle in your pocket. You have to realize that you can’t wait on this option. Banks will apply late fees that will eat up the equity pretty fast and those fees normally have to be paid at closing reducing the jingle substantially.

Another option is bankruptcy. I’m not a bankruptcy expert, by any stretch of the imagination, so you would have to check with a bankruptcy attorney to see if filing for bankruptcy will help you.

I am however, as close to being a short sale expert as an agent in this market can be.  I’ve done at last count over 25 of them in this small area market.

Continue Reading →

Razzle Dazzle them with curb appeal! 

Most of my friends know that my DH is a horticulture guy. While my yard is not the Garden of Eden, sometimes it comes pretty close… minus the snake and apple. 

He has his favorite plants and I have mine. I absolutely hate Echinacea. Well, at least I hate it where he plants it because it blocks my yard art and little pond. He is not partial to day lilies. I don’t know why he doesn’t like them, but I imagine it’s because next year he is going to have to choose to either move the day lilies or move the calla lilies because they are so close to each other neither gets to put on a show. 

The standout plants in our yard this time of year are our Razzle Dazzle Dwarf Crape Myrtles that line our driveway.

Razzle Dazzle Crape Myrtle

As I drive around showing property I see so many people plant Crape Myrtle trees in the wrong place. Builders especially seem ignorant about the growth patterns of Crape Myrtle trees. They have no idea that these beautiful trees can grow to 30 feet with a span of 20 feet or more. They also do best in full sun and get spindly in shaded yards.

This Crape Myrtle will cause problems!

If you have these beautiful trees planted close to your house, you can and probably should move them. I have moved Crape Myrtles that were upwards of 15 foot tall. I’ll tell you how I did it if you want… but it involved muscle shovels a couple of strong kids and a 4 wheeler.

One of the best things about Crape Myrtle trees is that as they age they develop the most beautiful bark. The canopy is nice too with its umbrella shaped branches. Never ever commit Crape Murder… meaning don’t let your tree have nubby branches because of bad pruning. You don’t have to prune these trees, except maybe to clear area toward the bottom of the tree. 

Don’t commit Crape Murder!

But I digress… let me tell you about my Razzle Dazzle Crape Myrtles. These trees were planted in my yard almost 9 years ago! The tallest one in the photo is maybe 4 feet tall. This is the way you create curb appeal with a Crape Myrtle planted next to your house… along your driveway or just about anywhere you don’t want the tree interfering with your gutters and roof. 

Always remember… A wise woman once told me “The best time to plant a tree was 20 years ago… the next best time to plant a tree is today!”

How to Create Curb Appeal! 

I can’t count the times I have had a client in my car and drove up to a house where they have simply not wanted to go inside to take a peek. Of course this puts me in a bit of a spot when I have to tell the listing agent,  “I’m sorry. My client just didn’t want to go inside.”    

Sometimes this happens because of things that the Seller has no control over… such as the slope of the yard or the condition of the neighboring houses. But most of the time it is because the house just isn’t that appealing. It doesn’t say “Welcome” and it certainly doesn’t look special or stand out from the crowd in a good way. 

Those of you that know me personally know that I really don’t mince words. Some houses are just downright pitiful! Ugly houses are hard to show and hard to sell. When I market a home, I’m spending my time, my energy, my money and I put a little bit of my heart into each house I represent. 

Fix that Front Door!

Pay attention to your front door. A fresh coat of paint in a snappy color can mean a lot. Please make sure your lock works. Opening that front door with a key that works smoothly is so VERY important. A Realtor fighting with a lock for even a few minutes in this heat can make buyers sweat and want to get back into the car. I once had a house sit on the market for months. I took the time and personally painted the front door yellow and hung a wreath on it and it sold within a week. Coincidence? I don’t think so. 

Mow the grass!

Not everyone is a Master Gardener, but a manicured lawn is important to curb appeal. Edge the beds and pull the weeds, put out a couple pieces of ‘yard art’ (Please don’t take this to mean that you need Doc, Dopey, Happy and the whole dwarf crew perched on your front porch.) And please, water the grass… there’s nothing worse than walking across crispy grass. 

Replace the blinds!

Blinds that have been chewed or broken by kids and dogs can be seen from the street. Untangle that knot in the cords while you are at it. If at all possible spring for the faux wood blinds not the $2.00 kind from the dollar store. They should all match if visible from the street. The slats should be positioned where the light reflects upwards toward the ceilings, not down toward the floor. This keeps the view through the window shielded but allows light reflect from the ceiling into the room. 

Wash the house!

Broom off the cobwebs and dead bugs. Knock off the ‘dirt dobber’ and wasp nests! And for goodness sakes remove the bird nest that is over your front door and wash the bird poop off the front steps! You may enter your house from the garage, but buyers use the front door. Realtors and Buyers especially don’t like to be attacked by nesting birds. Then wash down the front of the house with a hose. You don’t need a pressure washer most of the time. There is a product called Jomax that you can buy at most big box stores that will do the trick with a little bleach and a garden hose.  

If I can’t get buyers through the front door, they will never see your well-appointed chef’s kitchen with stainless steel appliances, or your new walk in shower.  

Hit me up if you would like my pre-inspection check list for sellers. It saves a ton of grief when you are under contract and are expecting the buyer to do inspection.

Buyers Agency – Who works for you??

I believe the most common mistake a buyer can make is thinking the agent that shows them houses is working for them.

One of the hottest topics in real estate right now is the issue of agency. Agency is important because it answers the most fundamental question asked of any real estate professional: Who do you represent in this transaction?

The relationship between a listing agent and the seller is understandable. There is usually a contract stating that the agent is employed by the seller and defines the terms under which compensation (commission) will be paid.

In the good old days (approximately pre-1985 when I first became a Realtor®), every agent represented the seller. Because the person who pays the commission gets the allegiance of the Realtor®.

Let me explain… The seller pays the commission, his agent shares the commission with the agent who brought a buyer to the closing table. This creates an implied contract; a sub-agency agreement; every agent involved with the house, even those that only showed the house or talked about the listing is a sub-agent representing the seller. (ie working for the seller)

Because of the representation or lack of representation for the Buyer… a Buyer’s Agency came into being…

Arkansas law requires real estate agents to clearly disclose to all parties in a real estate transaction which party(s) he or she is representing.

Buyer agency is a contract where an agent agrees to assist a buyer in locating a home, and represent that buyer’s best interests in negotiating a purchase, and closing on a home.

Here’s a simple scenario that will shed some light on this…

You meet an agent at an open house. This house is perfect for you. You tell her that you have $45,000 in cash and you will offer $92,000.00 but if you have to you can go up to $96,000.00… (been there done that??)

What can this agent tell the Seller??? Unless you have a “Buyer’s Agency Agreement” in place with your agent, she is most likely working for the seller. That means she has a fiduciary obligation to the seller to disclose any information that might “promote or protect his interest”. She has an obligation to tell them exactly what you have told her.

My advice to Buyers is to make sure that the agent you work with (no matter who it is) has agreed in writing to represent you as a Buyer’s Agent.  Even if the agent sells you a property listed by her company, a ‘dual agency’ exists. In these instances there is a pre-defined code of conduct that must be adhered to very closely.

Simply put, never say anything to anyone unless you want it to get back to the seller. Assume everyone is working for the seller until you have a Buyer’s Agency Agreement in place. This will insure your agent will represent you in any transaction even FSBOs (For Sale By Owner).

In most cases the commission will still come from the sellers, but with a Buyer’s Agency Agreement in place, your agent works for you.

Get that Pre-Approval Letter!

As a Realtor® I made a conscious decision some years ago to abide by certain rules.  One of these rules is to only show property to qualified buyers.

When people list their property with me, I assure them that only ready, willing and able buyers will be tromping through their house, opening their closets, peeking in their cabinets and looking at their stuff.

So, unless you will be paying cash for your home, the first step in buying any home is to make sure you will be able to finance it through a mortgage lender. There is no reason to run around all over town looking at houses wasting gas and get your hopes set on a particular house until you get this first and very important step done. Continue Reading →