3 Reasons That Now Is The Best Time To Buy

Posted on May 4, 2012 by Garn

 1- Home prices are at their lowest valuation in more than a generation. With home prices down by nearly one-third from their high, housing affordability as calculated by the National Association of Realtors has moved to the highest levels since the recordkeeping    started in 1971.  Also, with rents on the rise again as vacancy rates fall, the required annual home price appreciation needed to “break even” on a comparative analysis of buying versus renting costs has also fallen to levels not seen since the 1970s.

2- The large (but declining) number of distressed sellers provides buyers with negotiating power. On the supply side, extremely low housing starts will limit the number of new homes hitting the  market. The dearth of construction and tightened credit standards force people into rentals –boosting rents and changing the buy-versus-rent calculus back in favor of homebuyers and landlords/investors looking to cash in on the rental boom.

 3- Mortgage rates won’t go any lower.  For the past couple of years, interest rates have hovered at levels last seen when the veterans came home from the Korean War. According to HSH.com, which tracks mortgage rates, at the beginning of August the      national average 30-year fixed rate was 4.5%. FHA loans, which require only a 3.5% down payment, had a 4.3% rate. Adjustable-rate mortgages are even cheaper, and even rates for jumbo mortgages have hit lows not seen since the 1980s.

Freddie Mac forecasts a 30-year fixed rate of 5% by year-end and 6% by early 2013. Standard & Poor’s downgrade of the U.S. credit rating won’t have an immediate effect on rates because of the weak economy (see Ripple Effects of the U.S. Debt Downgrade). But credit is tighter, and you’ll need a credit score of 740 or more and a down payment of at least 25% to nab the lowest rates. If you fall short of that, you’ll pay interest-rate risk premiums if the bank plans to sell your loan to Fannie Mae or Freddie Mac. For example, lenders must charge an extra 0.25 point if a borrower has a 740 credit score but puts down less than 25% (but at least 20%).

 

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Foreclosures can be a great deal…

Posted on March 26, 2012 by Garn

Although foreclosed properties can be good deals, the process of buying is rife with pitfalls. Here is what you must know when considering buying a foreclosed property in South Jordan, Sandy, Draper and West Jordan in fact in all of Salt Lake County:

1. Have you done your research?
A foreclosed property may have all sorts of clouds on its title, from multiple bank loans to tax and contractor’s liens. Once you buy, you’re responsible for all such balances. Be especially wary of the situation where one bank forecloses, but another still demands to be paid.

2. How far has the process gone?
If the foreclosure hasn’t happened yet, it’s often possible to contact the owners and arrange a pre-foreclosure sale, which can benefit both parties. The next step is the foreclosure auction, where the greatest risks and rewards are found. Finally, it’s possible to buy post-auction properties from the bank. These are usually spruced up, but they’re priced higher as a result.

3. What is the condition of the property?
When buying at auction, you’re usually not allowed to tour the home. Even in the other two situations, you usually buy “as is.” Always assume you’re buying the value of the land and basic structures, and discount everything else. Disgruntled homeowners have been known to strip cabinets and appliances and pour concrete down the drains. If you’re able to get into the property, hire a thorough home inspection before making a bid.

4. Will you have to evict?
If the property is occupied, getting the former owners out is your problem. An unoccupied property is often a better bet. If a formal eviction is necessary, be sure you take the cost into account.

5. Can you get a loan?
Keep in mind banks are often unwilling to loan money on properties in poor condition. Moreover, auctions usually require you to show up with cash in hand. Given extra repair costs and other possible surprises, foreclosure purchases require an ample cash cushion.

Foreclosures can be a great deal, but they are best pursued by those with a tolerance for hassles, knowledge of the game, and an ample checkbook. If that’s not you, a non-distressed home sale or a short sale is a better option.

 

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The Top Three Ways to Improve Your Home’s Resale Value

Posted on December 21, 2011 by Garn

Improving your home’s resale value not only puts more money in your pocket when it’s time to sell, but it also enhances your quality of life in the moment. Here are the top three ways to improve your home and add value.

1. Add Square Footage
Square footage is one of the first things an appraiser looks at when determining the value of your home. If your home is noticeably smaller than others in the neighborhood, you should definitely consider adding square footage. Just be sure that you conduct any remodeling according to local building codes and permits.

Where to Focus: Adding an extra bedroom or living area will increase the value of your home, but these projects are expensive and time-consuming. It is more affordable―and just as appealing to prospective buyers―to finish your basement or attic. Make sure the quality of the finish is in line with the rest of your home. You can also add a deck or porch to your home, or convert your existing porch to a sunroom.

2. Remodel Your Kitchen
A kitchen remodel is one of the most popular and cost-efficient ways to improve the resale value of a home. If handled wisely, many improvements in the kitchen can add more value than the initial cost, meaning that your return on investment is quite large. An attractive and well-planned kitchen catches potential buyers’ eyes and gives the impression that the entire home is in excellent condition.


Where to Focus: If you have a small, dark kitchen, create space and light by installing sky lights or sun tunnels. Replace worn carpet or cheap linoleum with lovely ceramic tiles or eco-friendly bamboo. Cover your countertops with granite, recycled glass, or marble, and create a matching backsplash on one of your walls.

3. Improve Energy Efficiency
According to JM’s Energy Awareness Month Survey, only about five percent of homeowners realize that improving the energy efficiency of their homes will increase the resale value. Yet every dollar saved in annual utility costs is equivalent to a $20 hike in the market value of a home, reports the Appraisal Institute. For instance, say you insulate your attic, resulting in a $300 annual savings on energy costs, you can then add $6,000 to your home’s value.

Where to Focus: Over forty percent of the average home’s energy use goes towards heating and cooling, so you should start with insulation. Then install solar panels and a new furnace. Finally, attend to the details by installing programmable thermostats and energy-efficient light bulbs.

You might want to check  these two sites to find out about which energy efficency rebate programs are still available in Utah.

http://www.thermwise.com/utindex.html

http://www.rockymountainpower.net/env/epi.html

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Thinking of building a new home?

Posted on September 3, 2011 by Garn

Thinking of building a new home along the Wasatch Front? There are several questions that you should consider and ask your General Contractor.

1. First and definitely most important: Are you licensed?

While the fact that your contractor has a license does not mean that he will do a great job, it will improve your chances of finding one who knows what he’s doing.

Just remember: you should never take his word for it. In Utah you can check on line at: www.dopl.utah.gov/licensing/contracting.html

2. Secondly: are you insured?

In addition to being licensed, any contractor that you consider should be covered by general liability insurance. This ensures that, should he or any of his crew members damage your property in any way, the expense to repair it will be covered by the insurance company. Again, insist on seeing proof of a current policy.

3. Are your workers insured?

General liability will cover your property, but not injuries to your contractor or his crew. Make sure he or each of his sub contractors carries Worker’s Comp insurance or the equivalent, so you won’t have to worry about footing the medical bills should someone get injured on the job. One-man-shows are sometimes exempt from having to carry this insurance, but even so, you could be liable for injuries.

4. How long have you been in business?

While this should be an obvious question, I would be a bit leery of someone who just got their license and had never built a house before. I would prefer someone that had at least 5 years experience to build my home.

5. Do you offer a written guarantee?

Because shoddy workmanship sometimes doesn’t appear for several months after the job is completed, a reliable general contractor will offer a guarantee of at least 12 months after completion of the project. If he doesn’t, this should be a “huge red flag (buyer beware)”. Make sure you have read and understand the guarantee before signing the contract.

6. Do you personally visit each site every day or do you have a supervisor?
Most general contractors use sub-contractors. Ask how long the general has been working with his sub-contractors. Remember, you don’t want to have the low bid always get the work. You want responsible contractors on your site. Ask whether or not they will be on the job every day, and if not, who the responsible party will be. Unless they have a superintendent or foreman who is as competent as they are, find someone else.

7. How do we contact you?

Nowadays everyone has a mobile phone and most, if not all, people know how to use text messaging. If your general is not available by these methods, is there a place that you can leave messages? Will your general contractor

commit to a time each week to meet at the site? Is there a time of the day that is better to contact the contractor? Make sure that your lines of communication are open and available.

8. Do you have references?

Any general contractor should be more than willing to hand over a few references for you to check. Ask for customers who have worked with him in the last year or so, and call them to find out how they liked his work. You might also want to check with his preferred lenders and title companies-they will know how he handles his business and if he is reputable. If you hear anything negative, give him the opportunity to explain the situation, but don’t hire him until you understand what happened.

There has never been a better time to build your dream home. Historically low interest rates, combined with reduced prices on labor and construction and the recent roll back in land costs (I am writing this in August of 2011), make this a true buyers market. I think that you’ll agree that now is the best time in recent history to build your dream home!

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