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Buying a home? Don’t make these costly mistakes

The housing market is gaining steam, fueled by an improving job market and near record-low mortgage rates.

Pending home sales rose in April to the highest level in nine years and the median price jumped as well. And millennials represent the largest share of homebuyers, according to an analysis by the National Association of Realtors. Nearly one-third of all homebuyers, and 68 percent of first-time buyers, were 34 or younger last year. And those numbers are expected to grow.

Read More Don’t be ‘house poor’: Know your market

Buying your first home or know someone who is? Here are three common, and potentially costly, mistakes to avoid.

Mistake #1: Overestimating what you can afford.

Real estate brokers say first-time buyers often focus on the down payment and monthly mortgage amount when calculating how much they can afford and forget to factor in closing and other costs.

“They get to the closing and they’re shocked by the amount of money they have to pay,” said Vicki Fillet, certified financial planner and president at Blueprint Financial Planning in Hoboken, New Jersey.

Read More House flipping: 5 tips for big returns

It’s important to remember too that monthly payments include not just the mortgage, but interest, taxes and insurance—something that buyers can often forget when figuring out their budgets.

It’s a good idea to get pre-approved for a mortgage loan so you know how much a bank is willing to lend you before you make an offer on a home. But keep in mind that the amount you’re pre-approved to borrow from a mortgage lender may be more than you can actually afford once you factor in taxes, insurance and other costs like condo or homeowners’ association fees and maintenance.

As a general guideline, your total monthly payment (including mortgage principal, interest, real estate taxes and homeowners insurance) shouldn’t exceed 28 percent of your gross, or pretax, income.

While some sellers are still asking for 20 percent down payments, it’s possible to pay much less. Mortgage giants Fannie Mae and Freddie Mac announced guidelines late last year for loans with down payments as low as 3 percent under a new program largely aimed at first-time homebuyers. Just remember that the lower your down payment, the bigger your mortgage loan (and the more you’ll pay in interest).

Read More 7 major housing markets now ‘overvalued’

Mistake #2: Letting your emotions get the best of you.

Don’t get so attached that you buy with your heart and not your head. “It’s difficult not to get emotionally attached. Homeownership is an investment in your future,” said Chris Polychron, president of the National Association of Realtors.

But be careful. Get too emotionally attached and it can set you up to spend more than you can afford.

Cathy Moyano of Coccia Realty in Kearny, New Jersey, recommends prioritizing what you want in your home. Make a list of the most important qualities, whether you want a certain school district, updated bathrooms, a backyard, etc. Then figure out what you aren’t willing to give up. You won’t find the perfect home that meets your entire list so narrowing it down to what matters most can help you through your search process.

A real estate agent can help facilitate the searching and buying process. Using apps and sites like Zillow, Trulia, StreetEasy and Redfin can also help speed up your search.

Mistake #3: Not planning ahead.

Once you’ve narrowed the search and you are ready to make on offer, check with your agent about the demand. Is the home getting multiple offers? Has it sat on the market a long time? Will it require a lot of upgrades?

Make sure you get a thorough inspection. Fillet said buyers often don’t get an inspector with expertise to check the pipes, the plumbing, or air conditioning. You want someone who knows what they are doing, not just an inspector from the real estate broker, she said.

Read More Housing by the numbers: Something is weird

Remember the resale opportunities. Consider the school district, Fillet said, because even if you don’t have children or plan on having any, the next buyer might.

Don’t overly improve the property either or “over customize to your personal taste,” Moyano said. “Let’s say you’ve painted your dining room purple, before you sell it, paint it back to a neutral color. This sounds like a little thing, but it does leave an impact on when you’re showing homes.”


Rental rates grow faster than home values locally, nationwide

Low mortgage rates have made homebuying more affordable than renting, according to Zillow research.
Rental rates in St. Louis continue to grow at a faster pace than home values. Home values in St. Louis averaged $133,700 in April, up 3.3 percent from the same month last year. Rental rates, meanwhile, have risen 4.5 percent year-over-year to $1,137 per month. It’s the eighth consecutive month rental rates have outgrown home values.

That trend holds true nationwide, too. Rents grew faster than home values in 20 of the 35 largest U.S. housing markets. U.S. rents — up 4 percent year-over-year in April at $1,364 per month — grew at their fastest pace in two years.

According to the research, U.S. homebuyers can expect to spend on average about 15.3 percent of their income each month on a typical house payment. By comparison, renters can expect to spend about 30 percent on a monthly rent payment.

“There are tremendous incentives to get into homeownership these days: Mortgage access is improving, interest rates are low, and home values remain below prior peaks,” Zillow Chief Economist Stan Humphriessaid. “But it will be increasingly difficult for many renters to realize these benefits as this country’s growing rental affordability crisis continues to worsen. More income going to rent means less going to savings for a down payment and other costs, keeping renters renting longer and feeding into the high demand that is contributing to rising rents in the first place.”

Nationwide, Seattle-based Zillow (Nasdaq: Z) projects home values to increase 2 percent. In St. Louis, home values are projected to increase 2.9 percent in April 2016.


St. Louis housing market’s on the road to recovery

From Jim Gallagher, St. Louis Post – Dispatch

The St. Louis-area real estate market is recovering from last year’s case of the blahs. That’s good news for home sellers, but a mixed bag for buyers.

Sales are up as the spring house-hunting season gets into gear. Prices are up, too.

St. Louis Housing Market RecoveryMortgage rates are down from last year, although they’ve been creeping up for the past three weeks. But buyers are finding fewer homes to choose from.

In St. Louis County, home sales are up 9 percent so far this year through April, after falling 7 percent through all of 2014. It’s the same story in St. Louis, with sales up 11 percent. They are up 7 percent in St. Charles and 13 percent in Jefferson County.

Sales were up 19 percent in St. Clair County and flat in Madison County, according to the Greater Gateway Association of Realtors in Metro East.

Rising sales usually mean rising prices, and that seems to be the case. As of March, St. Louis-area prices were up 4.8 percent from a year earlier, according to CoreLogic, the real estate data firm.

Zillow, the real estate website, thinks St. Louis-area home values in March were up 3.7 percent over the year, and predicts a 3.5 percent over the next year. The firms use different methods for measuring trends in a market where houses differ widely and prices change block by block.

The rise in sales may reflect the fact that more people have jobs — unemployment here is at a seven-year low of 5.5 percent — and that mortgage lenders are a little looser.

Mortgages are a little cheaper this year, with 30-year loans averaging interest rates of 3.85 percent last week, compared to 4.2 percent a year ago, according to Freddie Mac. Rates dipped as low as 3.65 percent in late April.

Freddie and Fannie Mae, which back most mortgages, have also cut required down payments to as low as 3 percent for some homebuyers. The FHA cut the mortgage insurance premiums it charges borrowers. All of that allows more people to afford houses.

Rising prices also reflect a mismatch between supply and demand in many neighborhoods. Real estate agents have been complaining for two years about a lack of homes for sale here, and supply is getting skimpier.

In St. Louis County, there were 2,900 homes for sale last month, compared with 3,700 in April of last year and 6,400 in the depths of the housing recession in April 2010.


Barb and Larry Schmidt, a retired couple, saw the market from both sides this spring.

They had tried to sell their Ballwin home two years ago, when the market was weaker. “We were hoping to get a certain amount to cover everything we put into the house. It didn’t go,” said Barb Schmidt, so they removed it from the market.

But the Schmidts found the pickings slim when they went shopping for a new home in the Ballwin area. They wanted a “villa,” an attached home designed for older people.

“What they were asking for was ridiculous in price for very little offered,” Barb Schmidt said.

They had to head west to St. Charles County.

“We went out to Dardenne Prairie and got what we wanted,” she said.

Realtors consider a six-month supply of homes to be a balanced market, with no advantage to buyer or seller. There’s only a four-month supply on the Missouri side of the Mississippi River. That makes this a seller’s market.

But the St. Louis region isn’t one real estate market. It is dozens, and conditions can differ widely by neighborhood. It’s often difficult to discern trends in small areas over short periods, since a few unusual sales can distort the averages.

In St. Louis County, the greatest sales and price increases are concentrated in the western suburbs this year. North and South County present mixed pictures, with prices and sales up in some areas and down in others.

The market is hottest in the $150,000 to $250,000 price range, with high demand and low supply.


Secret real estate listings you won’t find on the market

Just because there isn’t a “For Sale” sign in a yard, doesn’t mean the homeowner isn’t taking offers. You just have to know the right person.

Despite strong demand in many markets across the country, some homeowners are skipping the process of officially listing their home on the multiple listing services, leaving agents with the task of finding a buyer without publicly advertising it.

And real estate professionals say these “secret” listings — commonly known as “pocket listings” — are becoming more popular.

But in a seller’s market with bidding wars driving offers well above the asking price in some areas, why would a homeowner sell their home in secret?

The reasons vary: some want privacy, others are testing the waters and some think the exclusivity can draw a higher sale price.

“Many times I’ve had pocket listings where people will say, ‘If I get this number I will sell, otherwise I have no desire,'” said Jade Mills, a real estate agent with Coldwell Banker Residential Brokerage in Beverly Hills, who recently sold a $38 million home off market. These secret listings make up about 10% of her sales, an increase from previous years.

Not publicly listing a home can reduce the pool of buyers, which could potentially mean missing a top offer.

Mills said nonpublic listings tend to be advantageous for properties listed at $10 million or higher. “In the upper price ranges, you don’t have as good of a chance of getting multiple offers.” She recently sold a house for $1.35 million, more than the asking price and after getting multiple offers, something that she said probably wouldn’t have happened if it wasn’t publicly on the market.Secret Listings Off Market Properties Non MLS Listings Pocket Listings St. Louis

Off-market listings can be beneficial to agents by upping their commissions if they represent both the buyer and seller. But connecting the right buyer for an off-market listing or drumming up new listings can be a challenge, experts said.

Nartey frequently plays real estate matchmaker at social events.

“Any time I hear at a cocktail party or birthday party … if a [guest] mentions they are considering selling, I make a mental note of it,” he said. “And then when I am another event and hear someone who is looking, it becomes a matching game.”

He added that public sales can lead to off-market sales when a neighbor stops by an open house and questions the asking price of the home. When the home sells for that once-thought inflated price, Nartey will sometimes approach the neighbor about selling. “We have the buyer demand to pair them with a home that isn’t even on the market.”

Pocket listings are also sold among agents representing buyers and sellers. Those with an offline property will work with other professionals to find a seller.

Some use a distribution list to connect an off-market seller with a buyer, said Brett Forman, managing director with Dolly Lenz in New York City. “There are people we know in trusted markets and companies that we believe have the Rolodex to insert themselves into a unique situation,” said Forman.


By Kathryn Vasel, CNN


4 Easy Tips for DIY Home Staging

Whether you’re showing your home with the intent to sell or having a cocktail party and want your home to be as impressive as possible, there’s no need to hire a professional home stager to maximize your home’s appeal when you can easily do that yourself. When staging your home, it’s important to remember the purpose of staging: emphasizing your home’s strengths, minimizing its weaknesses, and making your home appealing to as many people as you can. With that in mind, here are some tips for do-it-yourself home staging.

Rid Your Home of Clutter

Kitchen and table ideas for DIY home staging

It’s more than just cleaning; when your home has excessive clutter, it’s hard for anybody to see past all of your stuff. No one will notice lovely built-ins, the vintage chandelier in the dining room, all that expensive granite in the kitchen, and the restored crown molding when all your home’s features are hidden. Even if it means making a trip to a Container Store to give your home an organization overhaul, minimizing all the things you have sitting around the house can make a dramatic difference and allow your home’s personality to really shine.

Reconsider Your Furniture Groupings

Living Area

There’s a misconception that chairs, sofas, and other seating should be placed against walls to clear a path of travel through the room. However, especially if the room is large you should try floating your furniture by pulling it toward the center and grouping seating in a practical, social way. This will make large space seem even bigger while encouraging prospective buyers and guests to move around the room rather than being boxed into the center by furnishings. In addition to being more attractive, it encourages conversation when guests are seated and doesn’t appear as though your furniture is being used to route traffic through and out of the room.

Re purpose Any Unused Space

Stairs and Entry Way

Find the spaces in your home that only serve to gather clutter, then give those areas a purpose. That little area next to stairs is notorious for being a catch-all for school bags, briefcases, boxes, suitcases, and things you intend to take upstairs on the next trip. Put an armchair there with a small end table and suddenly it’s a cute little reading nook. Since they don’t live in your home and see the space every day, guests and prospective buyers can easily pick out all those awkwardly bare spaces that usually catch all your random clutter. By eliminating those spaces and giving them a purpose, your home won’t appear to have wasted space, which buyers can’t stand, and it’ll help them to imagine all the things they could do with those spaces.

Have a Variety of Lighting

Well Lit Living Area

One of the most effective ways that you can make your home warm and inviting is with lighting. There are three types of lighting you need to have: Ambient lighting consists of your overhead fixtures, but you don’t want to only rely on those. Also incorporate plenty of task lighting, such as reading and under-cabinet lights, and accent lighting like table lamps and sconces. You can also replace the bulbs in your lamps with higher-wattage bulbs so you can use secondary lighting rather than overhead lighting and give your home more charm.


Solar Panels Spur Fights between Homeowners, Property Associations

5503420944a1c.imageFrom the St. Louis Post-Dispatch

The controversy didn’t end after the Greycliff Homeowners Association wrapped up discussion on mailboxes, a rental property and the neighborhood clubhouse’s annual budget.

A family that chose to install solar panels without the approval of association trustees was in the room.

The decision by Teresa Barnes and her husband, Dr. John Tosi, to cover the roof of the house they bought with solar panels had come to this: a last-ditch effort to win a variance from trustees at their annual meeting held Tuesday.

Already, the fight between the homeowners and their neighborhood association in this south St. Louis County suburb has been simmering for months. Trustees say the family can mount the panels in the back of the house, but Barnes says that will only expose them to two or three hours of sunlight a day. The lawyers got involved, and Barnes began walking door-to-door to gather signatures of support within the roughly 180-home neighborhood.

“We’re just one of many families across St. Louis and Missouri fighting this battle,” Barnes said in an interview at the large home she and her husband plan to move to from Memphis, Tenn. “We wanted to make this work, and the next thing we knew, they had filed a lawsuit and my husband was served in front of his patients. What they want to do is more complex than what we have.”

The Oakville fight is one of several playing out in several regional court cases pitting homeowners against their property associations, exposing nasty rifts among neighbors over a technology expected to become more common in years to come.

At least 12 homeowners association disputes have scuttled a property owner’s plans for solar panels or wound up in court, according to solar advocate Frances Babb.

“The list of people who are experiencing problems is growing,” she said. “Really the only way you can solve this problem is to go to court and fight.”

Babb faced her own fight with the city of Clarkson Valley, in west St. Louis County, after she installed solar panels two years ago. But after winning that round last year, she was sued by her neighborhood association. Homeowners associations say it’s a simple matter of following the property indenture rules residents buy into. Babb’s association, the Kehrs Mill Estates Resident Association, is seeking damages even though at this point they may not be able to force her to remove the panels.

“We can’t have the homeowners running wild doing whatever they want,” said David Bender, an attorney for the Kehrs Mill association. “We need to pursue people who do not obtain the necessary approval.”

But unlike fence height and paint color, the national interest in renewable energy has gathered enough momentum to prompt state laws that overrule homeowners associations’ aesthetic sensibilities.

In Missouri, bills have been filed for the last several years to give homeowners the right to install solar panels. Several states have already enacted similar laws. In Illinois, state law has required homeowners associations to approve solar panel installations since 2011.

But with little movement in the Legislature, the legal conflicts between homeowners associations and residents may end up clarifying the question of solar panel rights in Missouri.

Stephen Jeffery, an attorney who has represented multiple homeowners fighting with cities and neighborhood associations over solar, said Missouri has a solar law, enacted in 1979.

“It gives their argument traction from the get-go,” Jeffery said. “There is a state law on the books, and has been on the books for 35-plus years, that says that solar energy is a property right.”

The question, he said, is whether it trumps property covenants that require architectural review but don’t specifically have provisions regarding solar installations.

“That’s an issue that is going to the courts, and there’s yet to be a definitive ruling on it,” Jeffery said.

One of his clients, Brian Hauge and Susan Hanley, recently won a case in St. Louis County Circuit Court. Their homeowners association, the Highlands of Chesterfield, appealed the case last month. Another case in St. Joseph may also soon be heading to the appellate courts.

At the Cliff Cave Branch of St. Louis County Public Library, where the Greycliff Homeowners Association met Tuesday, Barnes argued the 1979 solar law already gave their family the right to the panels over the trustees’ objections. But many attendees told her that the property covenants, which specifically reference solar panels, trump that law, and she shouldn’t have bought a house in the neighborhood if she didn’t like the rules.

“To quote the laws that you did is fine, but they aren’t the only ones that apply,” said Adam Vickery, a Greycliff trustee.

They declined to approve a variance. The two sides may settle the lawsuit soon.

Greycliff’s attorney, Todd Billy, said the law is on their side and requires trustee approval for solar panels.

“They never contacted the association, so we were surprised by it,” he said of the solar array.

But Billy, who specializes in community association law, is actually part of the effort to pass the Missouri legislation that would give homeowners more rights to install solar panels. As a member of the Heartland chapter of the Community Associations Institute, which represents neighborhood associations in three states, he helped draft the bill’s language.

“We have so many communities that do have this total prohibition (on solar panels),” Billy said, adding: “The ultimate underlying reason (for the legislation) is pure social benefit. … We’d rather be ahead of it than not.”

In the meantime, it could just take some more acceptance of a technology whose falling cost is increasingly within reach for many families. Even arrays that aren’t illegal, like Patrick Casey’s, can cause headaches for homeowners. His panels, already approved by city code inspectors, were cited by O’Fallon, Mo., 15 months later. A letter from the city said “it has come to our attention” that the panels were several inches too high from the roof’s surface.

And late last year, the Homefield neighborhood association drafted a new policy on solar panels. Casey is now facing a fine under the new policy — two years after he installed the array.

“We’ve gone through pure hell for the last two years because of trying to do the right thing and go green and cut our carbon footprint,” he said.

The Missouri legislation is Senate Bill 47.


Lenders begin easing requirements to get a mortgage

By Kenneth Harney, Los Angeles Times

A closely watched index that tracks mortgage credit availability — lender requirements on credit scores, down payments and other key loan terms — has some good news for potential home buyers: Things are finally loosening up.

After years of progressively tighter rules on borrower eligibility in the wake of the housing bust, banks and mortgage companies have begun modestly easing their requirements and even expanding the types of mortgages they offer. The Mortgage Bankers Assn.’s latest credit availability index reported improvements in all four of its loan categories during January. The improvements mainly reflect positive lender responses to government efforts to ease regulations and improve affordability in the housing market — all of which means an improved environment for mortgage shoppers.

Among the initiatives: giant investor Fannie Mae’s resumption of purchases of conventional mortgages with as little as 3% down. Freddie Mac, another major investor, is planning to begin similar 3% down loan purchases for mortgages closed on or after March 23.

According to Mike Fratantoni, chief economist for the mortgage banker’s group, “roughly 40% of investors” already have begun offering the Fannie 3% down program. The guidelines for the Freddie Mac program are in lenders’ hands and there’s likely to be a strong rollout for it as well.

Also contributing to better affordability: the Federal Housing Administration’s reduction late last month of its costly upfront mortgage insurance premiums, a move that could expand eligibility for home purchases to thousands of buyers, according to industry estimates. Virtually all lenders who work with the FHA program began offering the lower mortgage insurance premiums when the reduction took effect in late January. The FHA insures loans with down payments as low as 3.5%.

Brad Blackwell, executive vice president of Wells Fargo Home Mortgage, the country’s largest-volume mortgage originator, is certain about what’s underway in the market: “Things are looking better for home buyers and refinancers” — not only in terms of underwriting requirements but in the cost of credit as well.

Wells Fargo has been “gradually opening up the credit box,” Blackwell said, in part because of helpful policy clarifications and changes at Fannie Mae and Freddie Mac. Those changes give lenders greater confidence in lending to a broader spectrum of borrowers, including those who don’t have high credit scores and ready cash for big down payments.

For example, he said, although the bank previously had a credit score minimum — 660 FICO on conventional loan applications — now it requires no hard and fast minimum. Instead, if Fannie Mae’s and Freddie Mac’s automated underwriting systems accept the application — say you’ve got a relatively low credit score but strong compensating factors such as solid income, ample reserves and a large-enough down payment — the bank won’t say no to you solely because of the low score.

This could be especially important to people who had tough economic experiences during the recession that damaged their credit but who are now excellent candidates for a loan. On FHA applications, the bank will now accept FICO scores as low as 600, down from its previous 640 standard.

Wells Fargo also has relaxed its policy on gifts to borrowers by relatives and friends to defray part of the down payment and closing costs. On conventional loans with 5% or lower down payments, Wells Fargo previously required borrowers to contribute at least 5% of the total costs from their own financial resources. Now that’s been cut to 3%, which allows for more generous gift assistance.

Some major real estate firms confirm that they are seeing the first signs of credit easing by mortgage lenders, but that most potential first-time and move-up borrowers are not yet aware of the changes.

Joseph Rand, a managing partner of Better Homes and Gardens Rand Realty and an affiliated mortgage company, Rand Commercial Services, in the New York City suburbs, says the improvements are not huge, but “it’s a welcome thing. Loan officers are excited about it.”

Nonetheless, he said, “it’s going to take some time” for the message to get out to renters and others who assume that the rules in the market would still preclude a loan approval.

Bottom line: If you’ve been stuck on the home-buying sidelines, check out what’s going on. Talk to lenders and mortgage brokers. Who knows — maybe the opening of the credit box, even if it’s just a crack, might be enough to help you buy a house at today’s near-historic low rates.


Rents rise for seventh straight month in St. Louis

Brian Feldt of the St. Louis Business Journal reports that January rents in St. Louis have rose 4.2 percent to an average of $1,138 per month, according to real estate website Zillow. According to Zillow, it’s the seventh consecutive month rental rates have risen.

In January, national rents were up 3.3 percent year-over-year to $1,350 per month, leading Zillow officials to say the rental market could be hindering home purchases.
“The rental market used to be and should remain a stepping-stone to homeownership,” said Zillow economist Stan Humphries. “But given how widespread rental affordability problems have become, the rental market could be acting more like a barrier to buying. More supply will help ease the crunch, both from new construction and as current renters transition into homeownership, creating more vacancies in existing developments. But neither will happen overnight.”

The most expensive market remained San Francisco, where renters pay on average more than $3,000 per month. Kansas City rent, meanwhile, rose 8.5 percent year-over-year to $1,214 per month.

A handful of developments in downtown St. Louis will add nearly 1,000 new apartments to an already crowded market over the next few years. Most recently, Crowne Plaza, a 440-room hotel on North Fourth Street, was sold with plans to turn the building, valued at $6.35 million, into mostly apartments. Downtown STL Inc. reported 282 apartment units were added to the market in 2014, up from the 186 rental units that hit the market in 2013. Another 300 are expected this year. Doug Woodruff, president and CEO of Downtown STL, said occupancy rates are around 90 percent. He said downtown has 7,800 apartment residents living in 6,800 units.


Frontenac aldermen delay vote on new home project until revisions are made

The developer of what began as a $60 million residential proposal on the site of the former Ladue Early Childhood center on Clayton Road will return to the Frontenac Board of Aldermen with a reduced version of the plan next month, they say.

The Pulte Group can expect another sharply opposed group of residents.

Pulte representatives said after an hour’s discussion Tuesday night they would like to return with a plan that drops townhomes from the proposal, but retains villas as well as an assisted living facility with 86 beds, although the latter would be moved to the east part of the 11-acre site. The site is west of the city complex and southeast of the Interstate40-Spoede Road overpass. The project would be known as Frontenac Square and The Grove in Frontenac.Frontenac Ladue New Homes For Sale

More than 100 people opposed the plan at a January public hearing; about 30 attended Tuesday night’s meeting, and repeated often their contention that the plan is too dense for the site, which has always been one-acre per family. Traffic from residents, visitors and employees would be too much, they say.

The aldermen voted 5-1 to delay their decision until hearing the new plan. But Mayor Kenneth Krieg, referring to several months of meetings with the Planning and Zoning Commission, said the new plan “is the end of it,” as far as the city is concerned.

Alderman Tom O’Brien said in his view the project also deserved to be turned down immediately.

Pulte reportedly has an option to buy the site, last used by the school district in 2011. The center, at 10601 Clayton Road, was replaced by a new childhood center on Ladue Road in Creve Coeur. Two one-acre lots were added to the Frontenac site when the proposal seeking planned development use was made last spring to the Planning and Zoning Commission.

The density of the plan was reduced through several meetings with the commission over the past nine months, and the plan was eventually endorsed by the commission.


9 Real Estate Myths That Need Debunking

Real estate myths are often passed around among buyers and sellers. Some of them have some truth; others are outright false; and still others depend on a variety of factors that are best discussed in depth. Be prepared to help educate your buyers and sellers, so they make the smartest choices, rather than just accept what they hear.

Myth #1: Always change bold paint colors to neutrals before selling.

Reality check: False

Bold doesn’t automatically mean bad, says Kim Grant, broker with John Greene Realty in Oswego, Ill. Sometimes, a room calls for a grand color in order to play up an architectural feature, divide a room in two visually, or add cheer when there’s little natural light. But even if a room sports a bold shade of paint, home owners don’t always have to grab a brush to change it up before listing. Sellers can tone down a strong color with a neutral counterpart, such as a calming rug or tranquil array of fresh greenery. If the room needs a change, Grant suggests sharing the name of a painter, getting a bid on the cost of repainting, and offering a handful of paint chips that demonstrate alternative color options that are more universally appealing. “It’s up to the salesperson to explain that another color can transform the space without much effort,” Grant says.

Myth #2: Never buy the biggest house on a street.

Reality check: Usually true

The largest house on a block or in a neighborhood often is the most expensive, which may affect its appraisal and make its price much higher than other homes in the same neighborhood on comparative analyses, says Michelle Shurtleff, salesperson with the Miami Real Estate Team in Key Biscayne, Fla. Most buyers today are concerned about value when making an investment in a home, so they’ll appreciate a caveat about limiting their pool of future buyers by pricing themselves out of or above the local market, she says.

Myth #3: Always avoid first-floor condos because of noise and safety concerns.

Reality check: False

A first-floor unit can be a terrific bargain and a wonderful place to live, says salesperson L.J. Ganser of Fenwick Keats Real Estate in New York, who has sold many in Manhattan. He has found they offer numerous advantages, and sometimes they just need a few tweaks to dampen possible sounds and make owners feel safer. Among the advantages: “You don’t have to wait for an elevator [or] climb stairs, and you can enjoy the changes in scenery from the ground level up,” he says. Suggest ways to soundproof the unit with a good-fitting door and sound-dampening acoustical panels on the interior side. Also, suggest window treatments that block noise and views such as “top down, bottom up blinds” that can be raised from the windowsill to a height that prevents pesky pedestrians from ogling the buyer’s home but still allow in light. For safety, suggest wrought iron bars, if the unit doesn’t have them, or an alarm system.

Myth #4: Sellers should expect to earn back everything they invested in remodeling projects at resale time.

Reality check: False, but…

A quick check of the annual “Cost vs. Value” survey will demonstrate to sellers that it’s nearly impossible to get 100 percent of the money they put into a redo back when they sell. A siding replacement of fiber-cement brought the highest return in the most recent survey in the upscale project category, and that percentage was 84.3 percent. Still, Roman Bruno, a salesperson with Coldwell Banker in Los Angeles,has found that remodeled kitchens and bathrooms continue to be huge selling points to prospective buyers. “They make a home more attractive to potential buyers—and help them avoid doing the work,” he says. Paul Rosso, ABR, GRI, a salesperson with RE/MAX Properties Ltd. in Newtown, Penn., agrees that it pays to keep a house updated and in line with similarly priced homes in the community. The two times he cautions against upgrades are when a home owner plans to sell soon after making changes and when the market is flat or heading downward.

Myth #5: To sell quickly in this market, you must have the most popular features buyers are seeking.

Reality check: False, but…

It’s true that items such as master bedroom walk-in closets and first-floor master suites are all the rage now. But most homes in Los Angeles don’t have these features because they were built before these residential trends became widespread, says Bruno. “There is always a market for these homes, and someone with a vision may buy it just to update it,” he says. “Right now, we have little inventory and a lot of buyers — including absentee owners and investors — so we don’t see the need for redos as a problem.” Rosso agrees, but warns that the selling price usually reflects the absence of the feature: “Every home will sell, but at the right price. Price is the great equalizer.”

Myth #6: If buyers don’t like an exterior, they’ll never go inside.

Reality check: Often true

Without some curb appeal, most think, “Why waste the time,” says Grant. She suggests buyer’s agents prepare clients for the exterior ahead of time by asking buyers in advance what styles of houses they like and dislike, and even showing them images before checking out a place in person. If a house works otherwise—its layout, number of bedrooms and bathrooms, and maybe a backyard—she says listing agents can find ways to remove or downplay features that may not appeal. Exterior changes may be as simple as adding landscaping that dresses up part of the offending façade, painting shutters and a door to focus attention, or upgrading a walkway with a nicer material.

Myth #7: Homes with swimming pools are always tougher to sell.

Reality check: False

While they bring with them high maintenance and utility costs, a lot of buyers look specifically for homes with pools, especially in warmer climates. Usually it’s just the seasoned investors and older home owners who shy away from homes with pools, says Bruno. To appeal to buyers not looking for a pool, he suggests sturdy canopies that can slide over the top to make a safe, walkable patio. But he never advises clients to remove a pool. “You don’t cater to a market that doesn’t want something. Instead, you use it as a tool to attract those who do,” he says.

Myth: #8: Green features automatically mean a higher listing price.

Reality check: Not always

Bruno says many buyers find added value in smart, environmentally friendly homes. “LEED certification has become a huge marketing feature, and it’s not just something for home owners living on either coast,” he says. Still, Rosso says many buyers shy away from these houses if they’re priced much higher than comparable non-green homes. “In my area, I haven’t seen buyers willing to pay a green premium. I view them as added value that can help with marketing a home,” he says.

Myth #9: Always remove holiday decorations before listing a home.

Reality check: False

If the decorations are tasteful, they’re fine, says Ganser.  If it’s Christmas, go green and minimal with a tree, some fresh boughs on the mantle, and a pretty wreath on the door. “There will be some Grinches who come and object to Christmas décor on principle. Perhaps Jacob Marley will pay them a visit that evening and convince them to lighten up,” he says. “But most people like the holidays, and if sellers can warm their spirits with a light, welcoming touch, I say do it. But don’t make potential buyers wonder what’s going on with a corner that’s blocked by a 9-foot-high tree.” Follow the same rules for other holidays, he advises. At Halloween, fill a dish with candy corn; for Easter, bring on the jelly beans.

So what’s always true?

The professionals at The Agency always advise buyers and sellers to avoid accepting widely held truisms as fact, help clients put these and other myths in the context of overall economic trends, local and neighborhood factors, and the special features that distinguish individual properties on the market.


Delmar Loop trolley construction set to begin in March

Delmar Loop Trolley University CityBy Jeremy Kohler St. Louis Post-Dispatch

Construction of the $43 million Loop trolley is set to begin next month, officials announced Tuesday. The project is scheduled to be completed in mid-2016 and to begin service in late 2016.

The first improvement will be a permanent roundabout near the Lion Gates at Trinity Avenue and Delmar Boulevard, designed to increase safety, improve traffic flow and create an attractive entrance to the Loop, according to Chris Poehler, administrator of the Loop Trolley Transportation Development District.

Trolley track construction is expected to begin in late May, starting on Delmar near Kingsland Avenue. Traffic will continue to flow during construction.

The 2.2-mile fixed-track electrical trolley system will make 10 stops along Delmar and DeBaliviere Avenue, connecting The Loop to the Missouri History Museum.

The Loop Trolley Transit Development District is also working with Great Rivers Greenway to extend the multi-use paths of the St. Vincent Greenway to run adjacent to the trolley from Delmar along DeBaliviere south to Forest Park Boulevard.

Contractors include KCI Construction Company for track and civil infrastructure, Wissehr Electrical Contractors for the trolley overhead contact system and lighting, and KCI Construction Company for rehab of the maintenance/storage facility. Kwame Building Group is the construction manager for the project.

The line is funded by a 1-cent sales tax within district boundaries, as well as by tax credits, grants, tax-increment financing and private contributions.


3% down payments lure first-time homebuyers

Joel Aschbrenner, USA TODAY

DES MOINES, Iowa — After years of moving around the country for his job with Marriott hotels, John Eddleman wanted to put down roots.

Last month, he bought a brick bungalow on Des Moines’ south side, taking advantage of a recent federal policy change that allows down payments of as low as 3%.

“It came at just the right time because otherwise I would have had to scrape a lot more money together,” Eddleman, 49, said. “At 3% down, you can’t pass that up.”

A collection of new policies — including lower down payment requirements, decreased mortgage insurance premiums and looser lending standards — are intended to make it easier for first-time buyers like Eddleman to get a loan.

Some say the changes won’t remove the underlying hurdles for first-time buyers, like slow wage growth and student loan debt. And some lawmakers have criticized the policies as a step toward the risky lending practices that led to the 2007 housing crash. But lenders and real estate officials say they expect the changes to bring a wave of new homebuyers in 2015.

“It’s being predicted in Iowa and across the country: This is going to be a year when we see a lot of Millennials and first-time homebuyers get into the market,” said Brennan Buckley, general manager of Iowa Realty.


Recent policy changes aim to improve access to home loans in several ways:

• In December, mortgage giants Fannie Mae and Freddie Mac announced they would reduce the minimum down payment on certain mortgages from 5% to 3%. For someone buying a $150,000 home, the change means the difference between a down payment of $7,500 and $4,500.

• In January, the Federal Housing Administration announced it was reducing mortgage insurance premiums by 50 basis points. The White House said the reduction would save the average homebuyer about $900 a year and would enable about 250,000 people to buy a home.

• Lenders have been lowering some of the requirements on borrowers in response to federal regulators clarifying mortgage lending rules created in the wake of the 2007 housing crash.

Brad Blackwell, executive vice president with Wells Fargo Home Mortgage, said he expects first-time home sales to grow less than 10% in 2015, but he said it would still be a “meaningful” increase.

Wells Fargo, the largest mortgage lender in the country, is offering two types of 3%-down mortgages. It’s still a bit early to gauge demand, “but we’ve seen a lot of excitement about them,” Blackwell said.

In the past year, Wells Fargo has rolled back several borrower requirements. The company increased the amount of “gift money,” like cash from a homebuyer’s parents, that a borrower can use toward a down payment on some loans. It also reduced the minimum credit scores for certain loans.

To qualify for a 3%-down mortgage from Wells Fargo, borrowers need a credit score of at least 620. But without a good job and a solid explanation for credit blemishes, buyers will probably need a score of 660 to 680, Blackwell said. The minimum score for FHA mortgages is 600.


Easier access to credit will be one factor in getting first-time homebuyers into the market. A bigger factor may be that Millennials are finally starting to settle down, Blackwell said.

“We’re starting to see them become homebuyers,” he said. “Forget the financial end. The pure demographics are going increase the number of first-time homebuyers in the market.”

Frank Nothaft, chief economist at the real estate research firm Corelogic and the former chief economist for Freddie Mac, said lower down payments and mortgage insurance premiums come at the right time. Interest rates remain low, and the spring buying season is around the corner. But they’re not a cure-all.

“It doesn’t mean everyone who is renting right now will suddenly qualify for a mortgage,” he said. “There are still plenty of challenges in the marketplace. Many younger households are still struggling to find good paying jobs and may not have the income or savings to qualify for a mortgage.”

Millennials have been slow to jump into homeownership. The generation of 18- to 34-year-olds came of age in the recession and they’re starting to buy homes in their early 30s, not their mid- to late-20s like previous generations, Blackwell said.

This year, Millennials are poised to overtake Baby Boomers as the nation’s largest generation, so getting them to trade rent checks for mortgages is seen as critical to strengthening the housing market.

First-time homebuyers accounted for only 33% of home sales in 2014, the smallest share since 1987, according to a report from the National Association of Realtors.

Historically, first-time buyers have accounted for more than 40% of sales and have played a key role in the market, allowing established homeowners to trade up for pricier houses.

“There is an upward domino effect,” said Buckley, the Iowa Realty executive. “When they enter the market, it can kick off two or three home sales right up the line.”


Iowa real estate agents are entering the spring buying season with sense of optimism. Des Moines area home sales in January were up 13%.

“I think by the middle of March, we’re going to be so busy we’re not going to be able to breathe,” said Monica Janelle, an Ankeny-based agent who is currently working with three 20-something clients looking for their first homes.

Laura Quint, 25, of Huxley, is looking for a two-bedroom townhouse in Ankeny with a garage and an open kitchen. She has been pre-approved for a 3%-down conventional mortgage and a 3.% down FHA mortgage.

“It definitely makes me want to buy now rather than keep renting,” she said. “It’s some incentive to start putting equity into a place.”

Eddleman ended up putting down about $2,400 on his house. He plans to refinish the floors, renovate the kitchen and turn a bedroom into his art studio. The smell of paint still hung in the living room last week after he finished covering the pea-soup-green walls with a more muted color.

“It was a great deal for me,” he said of the 3%-down loan. “The money I would have spent on the down payment I’m going to be able to spend on the house.”


Transformations: 20 projects shaping St. Louis’ future

The St. Louis Business Journal is highlighting 20 local projects that are changing the face of our region.  City Arch RiverThe exclusive will publish on Dec. 5 and provide an overview on the companies, architects, contractors and others who are working to transform our community.

2014 Transformations projects:

  • CityArchRiver 2015
  • SLU Law School
  • Ikea
  • Ballpark Village
  • St. Louis Premier Outlet Mall, Taubman Outlet Mall
  • BJC HealthCare campus renovation
  • New Mississippi River bridge
  • Arcade Building
  • Centene Plaza
  • Saint Louis Art Museum East Building
  • Washington University lofts in the Loop
  • Express Scripts at North Park
  • America’s Central Port
  • Reinsurance Group’s new headquarters
  • Page Avenue extension
  • SIUE dental school
  • Memorial Hospital
  • Streets of St. Charles
  • St. Charles Old Post Office incubator

US existing-home sales pick up in December

WSt. Louis Home Sales Increaseashington (AFP) – US existing-home sales rebounded in December from a November slump, led by gains in the key single-family home sector, the National Association of Realtors said Friday.

Total sales of used homes rose 2.4 percent from November to an annual rate of 5.04 million in December, climbing above the five-million mark for the sixth time in seven months despite low inventory on the market, NAR said.

Total inventory at the end of December tumbled 11.1 percent to 1.85 million existing homes, a 4.4 month supply at the current sales pace, slowing from 5.1 months in November.

“A drop in housing supply in December raises some affordability concerns in the months ahead as minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates,” said Lawrence Yun, NAR’s chief economist.

The median price for an existing home rose to $209,500 in December, up 6.0 percent from a year ago. Prices have risen year-over-year for 34 months in a row.

For all of 2014, existing-home sales totaled 4.93 million, down 3.1 percent from 2013. The median home price hit $208,500, the highest level since 2007 and up 5.8 percent year-over-year.

Sales of single-family homes, the largest share of the market, rose 3.5 percent in December, and were up 4.0 percent from a year ago. Condominium and co-op sales slumped 5.0 percent last month and were unchanged on an annual basis.

“The underlying path of activity looks about flat, consistent with the low and steady trend in mortgage applications. Rapid payroll growth is increasing the pool of potential homebuyers but mortgage lending conditions are still tight and we see little near-terms scope for a real revival in housing activity,” said Ian Shepherdson of Pantheon Macroeconomics.

“Homes are still selling a bit more quickly than a year ago but overall, the market is moving sideways.”


U.S. mortgage applications surge; 30-year rate below 4 percent


Applications for U.S. home mortgages surged by the most in more than six years last week as 30-year mortgage rates dropped below 4 percent for the first time since May 2013 on the back of falling U.S. government bond yields, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, jumped 49.1 percent in the week ended Jan. 9, its largest weekly percentage gain since late November 2008, in the middle of the U.S. financial crisis.

Refinancing activity was especially heavy. The MBA’s seasonally adjusted index of refinancing applications jumped 66.4 percent, the largest percentage gain in volume also since late November 2008, to its highest level since July 2013.

The gauge of loan requests for home purchases, a leading indicator of home sales, gained 23.6 percent to its highest level since September 2013.

Fixed 30-year mortgage rates averaged 3.89 percent in the week, down 12 basis points from 4.01 percent the week before. They hit their lowest level since May 2013.

“The U.S. economy and job market continued to show signs of strength, but weakness abroad and tumbling oil prices have led to further declines in longer-term interest rates,” said Mike Fratantoni, MBA’s chief economist.

The yield on the U.S. 10-year note, the benchmark from which most mortgages are priced, on Tuesday marked its lowest end of day level at 1.905 percent since May 2013.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.