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Who Pays for What in Real Estate Transactions? A Guide for Buyers and Sellers

One of the most common questions clients ask when entering a real estate transaction is, “Who pays for what?” Understanding the financial responsibilities of buyers and sellers can be crucial in navigating the complexities of a real estate deal. This simple breakdown will help clarify these responsibilities so that you can feel more confident as you approach your next home sale or purchase.

Seller Responsibilities

As a seller, several costs are typically associated with the sale of your property. Here’s a list of the most common expenses you can expect to pay:

Document Transfer Tax
Depending on your location, you may need to pay taxes related to the transfer of property ownership.
City Transfer or Conveyance Taxes
These are additional taxes that some municipalities impose when property changes hands.
Termite Inspection and Work
A termite inspection is often required, and if issues are found, repairs (Section 1 work) are generally the seller’s responsibility. This cost is negotiable, however.
Home Warranty
Sellers may offer a home warranty as a form of insurance for buyers, covering repairs for appliances and systems. This is also negotiable.
HOA Document and Transfer Fees
If your property is part of a homeowners association, you may need to cover the costs associated with transferring ownership documents.
Notary Fees and Escrow Fees
These fees are incurred during the closing process and are typically the seller’s responsibility.
Title Insurance Premium – Owner’s Policy
This protects the seller against any title issues that may arise post-sale.

Overall, these costs generally amount to about 7-10% of the sale price, depending on local regulations. While this may sound intimidating, it’s essential to remember that when you purchased your home, the seller paid for similar expenses.

Buyer Responsibilities

On the flip side, buyers also have their share of financial obligations. Here’s what you can typically expect to pay when purchasing a home:

Title Insurance Premium – Lender’s Policy
Buyers usually need to pay for this type of title insurance to protect the lender against any title issues.
Notary Fees and Escrow Fees
Like sellers, buyers are responsible for these fees during the closing process.
Lender Document Preparation Fees
If applicable, these fees cover the preparation of necessary loan documents.
Recording Changes for All Documents in Buyer’s Name
There may be fees associated with recording the change of ownership.
Tax Proration
Buyers will be responsible for property tax proration from the date of acquisition.
Loan Origination Fees
Depending on your lender, you may incur fees for processing your loan application.
Interest on New Loan
Interest on the new loan will be owed from the date of funding until the first payment is due, usually about 30 days later.
Home Inspection
While not a requirement, a home inspection is highly recommended to identify any potential issues with the property.
Homeowner’s Insurance Policy
Buyers are required to obtain insurance for the property to protect against potential damages.

The costs associated with buying a home can vary significantly based on the type and amount of your home loan. It’s crucial to work closely with your lender and real estate professional to get a clear picture of what to expect.

Clarity is Key

Understanding who pays for what in a real estate transaction can help alleviate some of the stress associated with buying or selling a home. By being aware of these financial responsibilities, both buyers and sellers can better prepare themselves for the costs involved in their respective transactions. If you have any questions or need assistance estimating these costs, don’t hesitate to reach out to a real estate professional who can guide you through the process. Knowledge is power, and being informed is the first step toward a successful transaction!

If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526

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Your Home’s Exterior Creates the Prospective Buyer’s First Impression

When it comes to selling your home, first impressions matter immensely. The exterior of your property is the first thing prospective buyers will see, and a well-maintained exterior can set the tone for their entire viewing experience. A little time and effort invested in sprucing up your home’s curb appeal can pay off significantly when it comes time to close the sale. Here’s a checklist to ensure your home’s exterior looks its absolute best before you list it.

1. Keep the Lawn in Top Shape

A well-cut lawn is inviting and showcases your attention to detail. Make sure the grass is neatly trimmed, especially around sidewalks, walkways, and the driveway. Consider edging for a clean finish, and perhaps even a fresh mow just before showings.

2. Tidy Up Flower Gardens

A weed-free flower garden can enhance the overall aesthetics of your home. Spend some time weeding and planting colorful seasonal flowers to add vibrancy and life to your outdoor space.

3. Trim Shrubs and Trees

Overgrown shrubs and trees can create an unkempt appearance. Trim them back, removing any dead branches or trees to make your yard look more manicured. This not only improves curb appeal but also showcases the beauty of your landscaping.

4. Clear Clutter and Debris

Take a walk around your property and remove any debris, such as leaves, sticks, or trash. Store toys and lawn equipment out of sight to create a tidy and organized appearance.

5. Repair and Repaint Fences and Gates

If you have fences or gates, ensure they are in good condition. Repair any damage and consider repainting them if necessary to enhance their appeal. A fresh coat of paint can work wonders in making your home look well-cared-for.

6. Check the Roof and Gutters

Inspect your roof for any missing shingles or signs of wear. Ensure gutters and downspouts are in good repair and free of debris. A well-maintained roof is crucial not only for aesthetics but also for potential buyers’ peace of mind.

7. Clean Driveways and Sidewalks

Driveways and sidewalks should be clean and well-maintained. Wash them down to remove any dirt or stains, and check for cracks or crumbling. A smooth, clear path leads the way to a welcoming entrance.

8. Replace Cracked Windows and Screens

Prospective buyers will notice cracked windows or torn screens. Replace these items and ensure all windows and window sills are clean and free from grime. This small detail can make a significant difference in the overall impression.

9. Clean Doorknobs and Hardware

Make sure the doorknobs and hardware are clean and shiny. These often-overlooked details can leave a lasting impression, as they indicate how much care you’ve put into maintaining your home.

10. Ensure Lights and Doorbell Work

Lastly, check that the doorbell and front lights are functioning properly. Replace any burnt-out bulbs, and consider upgrading fixtures to modern designs. Well-lit entrances create a warm and inviting atmosphere for potential buyers.

The effort you put into enhancing your home’s exterior can lead to a smoother selling process and potentially a higher sale price. By following this checklist, you can ensure your home is inviting, well-maintained, and ready to impress prospective buyers. Remember, a little bit of work today can yield significant dividends when it’s time to close the sale!

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Navigating the New Landscape of Real Estate Contracts

Real estate contracts is undergoing a significant transformation, particularly for home buyers. Following a landmark $418 million settlement with the National Association of Realtors (NAR), new rules now require buyers to sign agreements with their agents that detail fees and services before beginning their property search. This change aims to demystify the complex commission structures that have long defined the industry, but it also brings new challenges. Here’s what you need to know as you navigate this evolving landscape.

Understanding Buyer Representation Agreements

Buyer Representation Agreements (BRAs) are now a crucial part of the home-buying process. These contracts specify what services your agent will provide and how much they will charge. The new rules, which went into effect on August 17, have already led to a slight decrease in average commissions—from 2.62% to 2.55%—according to a Redfin report. However, this shift places the onus on buyers to negotiate their agent’s compensation, a significant departure from the traditional model where sellers covered both agents’ commissions.

Key Considerations for Home Buyers

Clarify Commissions: It’s essential to understand how you will compensate your agent. You can negotiate a flat fee or a percentage of the sale price, but these terms must be clearly outlined in your contract. This transparency will help avoid misunderstandings later in the process.
Cash Payments: Be aware of any cash payments included in the deal, often referred to as “concessions,” “bonuses,” or “incentives.” These payments can significantly impact your overall costs and should be disclosed upfront. Understand who these payments are going to and how they might affect your financial obligations.
Conflict of Interest: Dual agency agreements allow an agent to represent both the buyer and seller, which can create a conflict of interest. If you’re considering such an arrangement, ensure that this conflict is disclosed and discuss how your agent plans to manage it. You may prefer to seek an independent agent for a more balanced perspective.
Termination Clauses: Life changes, and sometimes you may want to switch agents mid-search. However, the fine print in many contracts can complicate this. Understand the termination clauses and any penalties that may arise if you decide to back out. Some contracts may label your withdrawal as a breach, leading to potential fees.
Default Fees: When you make an offer on a property, you typically put down earnest money. If you withdraw from the deal without meeting specific contingencies, you risk losing this deposit and may be liable for the agent’s fees. Ensure your sales contract includes detailed contingency language to protect yourself in unforeseen circumstances.
Arbitration Agreements: Some BRAs may include clauses that limit your right to pursue legal action, forcing disputes into arbitration instead. Be cautious about signing such agreements, as they can limit your options in case of a dispute.
Additional Fees: Keep an eye out for extra fees, such as administrative, transaction, or retainer fees, which may not be covered by the agent’s commission. Understanding these costs upfront can prevent financial surprises down the line.

The Bottom Line

The real estate landscape is changing, and these new buyer-centric agreements empower home buyers like never before. However, they also require you to be vigilant and informed. By thoroughly reviewing and negotiating your Buyer Representation Agreement, you can avoid common pitfalls and ensure you receive the representation you deserve.

As you embark on your home-buying journey, remember: knowledge is your greatest ally. Take the time to understand these agreements, ask questions, and don’t hesitate to seek guidance from consumer advocates, realtors, or legal professionals. With the right preparation, you can navigate this new era of real estate with confidence and clarity.

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https://www.washingtonpost.com/business/2024/09/24/new-real-estate-contracts-buyers/

The Fed’s Rate Cuts and What It Means

The Federal Reserve recently made headlines with its decision to cut rates by half a percentage point, a move signaling the start of six to eight rounds of further rate cuts expected to continue into 2025. With the next rate cut anticipated after the Presidential election, this trend reflects cooling inflation and slower job growth. While the Fed is taking action, how will these cuts impact the housing market and, more specifically, mortgage rates?

Mortgage Rates Have Already Adjusted

Mortgage rates are always a hot topic for home buyers, and it’s essential to understand that while the Fed’s rate cuts influence the broader economy, they don’t directly control mortgage rates. In fact, the 30-year mortgage rate has already dropped by 150 basis points since the start of the year. This means mortgage rates have largely priced in the Fed’s future actions.

What does this mean for prospective home buyers? While more rate cuts are on the horizon, any further decrease in mortgage rates will likely be minimal. And despite lower rates, the huge federal budget deficit could reduce the amount of capital available for mortgage lending, further limiting the impact of Fed cuts.

Increased Purchasing Power for Home buyers

The good news is that current mortgage rates are much lower than they were in the spring, providing a significant boost to home buyers’ purchasing power. For those budgeting around $2,000 per month for a mortgage payment, the decrease in rates has increased their potential buying power by roughly $50,000.

This adjustment could bring new buyers into the market, especially those who were previously priced out due to higher rates earlier this year. It’s an excellent opportunity for those looking to buy a home, as lower rates can make home ownership more accessible without increasing monthly expenses.

What to Expect Going Forward

With more rate cuts anticipated, some home buyers may hold out for even lower rates. However, it’s important to recognize that the remaining impact on mortgage rates is expected to be limited. The combination of future Fed actions and the federal government’s large borrowing needs will likely keep rates from dropping much further.

If you’ve been waiting for a window to purchase a home, now may be the time to take action. Mortgage rates are currently at more favorable levels than earlier in the year, and the potential savings from these lower rates may be as good as they get.

The Federal Reserve’s ongoing rate cuts are part of a larger strategy to combat inflation and stabilize the economy. While these cuts have indirectly contributed to lower mortgage rates, future cuts may have less of an effect due to economic factors like the federal budget deficit. With mortgage rates already providing an advantage for buyers, now is an excellent time to capitalize on the increased purchasing power and re-enter the housing market.

Whether you’re a first-time home buyer or looking to upgrade, these favorable rates could make a significant difference in your home search. Keep an eye on economic conditions…

https://www.nar.realtor/blogs/economists-outlook/instant-reaction-fed-rate-cut-september-18-2024

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Mountain Property for Sale: Invest in Paradise

37186 Rock Creek Rd, Duchesne, UT 84021

42.31+/- acres nestled in the heart of the mountains, where breathtaking views and nature’s beauty converge. This property is an investor’s dream, perfect for creating a destination that attracts couples seeking a romantic wedding venue, families looking for a unique getaway, or outdoor enthusiasts craving adventure. With ample space for gatherings and events, Rock Creek can easily be transformed into a stunning backdrop for any occasion. Don’t miss this rare opportunity to own a slice of paradise in the mountains. Whether you’re looking to invest, create a family retreat, or host unforgettable events, Rock Creek offers the perfect blend of natural beauty and adventure. Embrace the mountain lifestyle and make this dream property yours today!

For more pictures and details: https://www.utahrealestate.com/2021400

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Listed by: Cherlyn Jarvis and Paige Steckling, Real 6975 Union Park Avenue
Suite 600 Cottonwood Heights, UT 84047

The Condo Market Slows Down: What’s Behind the Decline?

If you’ve been considering buying a condo as a more affordable alternative to a single-family home, you might be surprised to learn that the condo market is facing significant challenges. While condos have often been viewed as an entry point into homeownership, recent trends show that condo sales are slumping more than those of single-family homes.

In July 2024, condo sales were down 12% compared to a year ago, while sales of single-family homes dropped by just 1%, according to the National Association of Realtors® (NAR). This shift isn’t limited to any one region; it’s happening across the country. Let’s take a closer look at what’s behind this downturn in the condo market and what it means for buyers and sellers.

Why Are Condo Sales Slowing?

There are several key reasons behind the decline in condo sales:

1. Rising Costs of Ownership

Owning a condo often comes with additional costs like homeowners association (HOA) fees, which cover the maintenance of shared spaces, building insurance, and other services. These fees have been rising steadily. Currently, the average HOA fee for condos listed on Realtor.com is $650 per month. In addition to monthly fees, condo owners are sometimes hit with large assessments for building repairs and upgrades, especially as buildings age.

Many condo buildings constructed in the late 1970s and early 1980s are now over 40 years old and in need of significant maintenance. The tragic collapse of the Champlain Towers South in Florida in 2021 highlighted the importance of keeping up with these repairs. As a result, buyers are more wary of potential assessment costs and the rising insurance premiums that accompany older condo buildings.

2. Higher Per-Square-Foot Costs

While condos may seem like a cheaper option based on the overall list price, the price per square foot can actually be much higher than that of single-family homes. In July 2024, the median list price for condos was $296 per square foot, compared to $218 per square foot for single-family homes. This premium is especially pronounced in urban areas where condos are often located.

Buyers looking for “more bang for their buck” are increasingly opting for single-family homes, even if they have to stretch their budget. The higher price per square foot of condos makes them less appealing, especially in a market where home prices and mortgage rates remain high.

3. Slower Appreciation Rates

From an investment standpoint, single-family homes tend to appreciate faster than condos. While both types of homes saw significant price increases during the pandemic, condo prices have started to decline. Condo list prices in July were down 5.4% compared to a year ago, while single-family home prices edged up slightly by 0.2%. As a result, condos are becoming less attractive to buyers seeking a return on their investment.

Real estate experts note that buyers are increasingly getting “stuck” in their condos, unable to sell them as quickly or for as much profit as they could a single-family home. This slower appreciation, combined with the rising costs of ownership, is making the condo market less appealing to potential buyers.

4. More Inventory, Less Demand

As demand for condos wanes, the supply is increasing. In July 2024, condos made up 21.2% of active real estate listings, up from 19.5% a year earlier. This surplus of inventory is another sign that the condo market is cooling off.

With more options available, condos are sitting on the market longer. The average time on the market for a condo in July was 58 days—eight days longer than single-family homes. This extended time on the market can create headaches for sellers and drive down prices even further.

Regional Variations in the Condo Market

The condo market slowdown isn’t just a Florida issue, although Florida’s market has been affected by rising insurance costs and new laws increasing assessment fees. Across the country, condo sales are down significantly:

The Midwest saw a 17% decline in condo sales over the past year.
The South experienced a 15% drop.
The West had an 11% decline.
Only the Northeast remained relatively stable, with flat sales numbers.

While some areas in Florida, like Fort Myers, saw condo sales rise, other markets, like Daytona Beach, have seen sales fall sharply. This inconsistency makes it difficult to predict how the condo market will evolve in specific regions.

What This Means for Buyers and Sellers

If you’re considering buying a condo, now might be the time to negotiate a better deal. With more inventory on the market and prices beginning to drop, buyers could find themselves in a stronger position to ask for concessions from sellers.

However, it’s essential to factor in the additional costs of condo ownership. Higher HOA fees, potential assessments for maintenance, and rising insurance premiums can make a condo more expensive over time than a similarly priced single-family home. Be sure to carefully review the condo association’s financial health and any upcoming assessments before making a purchase.

For sellers, the cooling market may mean a longer wait to find a buyer and potentially lower offers. Pricing competitively and being transparent about fees and assessments will be crucial to attracting interest in a slower market.

Navigating the Changing Condo Market

The condo market is currently in a slump, with sales down and costs rising. For buyers, this could present an opportunity to purchase a condo at a lower price, but it’s important to weigh the long-term financial implications, including HOA fees and future assessments. For sellers, the market may be more challenging, with condos spending more time on the market and fetching lower prices than single-family homes.

Whether you’re buying or selling, understanding the current trends and adjusting your strategy accordingly can help you navigate the shifting landscape of the condo market.

If you’re unsure about your next steps in this unpredictable market, working with an experienced real estate agent can provide valuable insights and guidance tailored to your specific needs.

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https://www.realtor.com/news/trends/condo-market-sales-slowdown/

Working with an Agent Who Puts Compassion First

When it comes to buying or selling a home, working with the right real estate agent can make all the difference. While experience and a strong track record are important, there’s another essential quality that sets exceptional agents apart: compassion. A compassionate agent is one who truly has their client’s best interests at heart, treating the transaction as if it were their own.

Why Compassion Matters
It can be easy to focus on the bottom line, but compassionate agents go beyond just closing deals. They prioritize understanding their clients’ unique needs, concerns, and goals. They take the time to listen, ensuring that every decision made reflects what’s truly best for the client, not just the quickest way to a sale.

Acting in Your Best Interest
A compassionate agent will go the extra mile in every aspect of the process. From performing thorough due diligence to negotiating fiercely on your behalf, their dedication to you is unwavering. They don’t treat your transaction as just another job—they treat it with the same care and attention they would if it were their own home on the line.

Handling Challenges with Care
The real estate journey isn’t always smooth. Challenges are bound to arise, whether it’s navigating a tricky market, dealing with unexpected repairs, or managing time-sensitive negotiations. Compassionate agents understand that these moments can be stressful, and they work tirelessly to mitigate risks while staying opportunistic. They find solutions that keep their clients’ well-being front and center.

The Intangibles That Set Them Apart
What separates an exceptional agent from a merely good one is often the intangibles—the empathy, patience, and personal connection they bring to the table. A compassionate agent takes the time to understand what home means to you and will guide you through the process with care, ensuring you feel confident and supported every step of the way.

Choosing the Right Agent
When selecting an agent, ask yourself:

Do they listen and understand my goals and concerns?
Would they negotiate and perform due diligence as if it were their own home?
How do they handle challenges and stressful situations?
Are they willing to go beyond the transaction to ensure my best interests are prioritized?

By finding an agent who demonstrates these qualities, you can be confident that your real estate journey will be not only successful but also compassionate and supportive. Working with someone who truly cares about you and your goals can make all the difference in achieving the best possible outcome.

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Luxury Home Sellers: The Surprising Hotspots in the U.S. Market This Fall

When you think of luxury real estate hotspots in the U.S., you might immediately picture sprawling estates in Los Angeles or high-rise penthouses in Manhattan. However, this fall, the best luxury markets for sellers aren’t necessarily the ones with sky-high prices. Instead, they’re in more affordable regions of the Midwest and Northeast. These areas offer luxury sellers a unique advantage due to strong demand for high-end homes, even if the price points are lower than in traditional luxury markets.

St. Louis: An Unexpected Luxury Haven

St. Louis may not be the first place that comes to mind when you think of luxury real estate, but this market is proving to be a strong contender. With luxury median listing prices up nearly 8% annually in the second quarter, there is a clear demand for upscale properties. Unlike the high-pressure markets on the coasts, St. Louis offers luxury buyers more affordable options without sacrificing amenities.

Homes that feature modern upgrades, such as new kitchens and pools, are moving quickly in St. Louis. The city’s affordability, coupled with a desire for quality living spaces, is attracting buyers from various parts of the country. As a result, luxury sellers in St. Louis have a significant advantage, especially with a limited inventory that keeps the market competitive. If you’re considering selling your luxury home in St. Louis, now might be the perfect time to capitalize on this market trend.

Portland, Maine: A Luxury Market on the Rise

Portland, Maine, has become a magnet for luxury buyers seeking a blend of affordability and exclusivity. The luxury median listing price in Portland has risen by nearly 14% over the past year, reflecting a growing interest in the area. Many buyers are coming from larger cities like Boston and New York, drawn by the promise of a more relaxed lifestyle without completely severing ties with major urban centers.

One interesting trend in Portland is the influence of climate migration. Buyers are looking for locations with more predictable and stable weather, and Portland fits the bill. This shift is likely to continue, making Portland an attractive market for luxury sellers. However, real estate agents caution that the market isn’t as frenzied as it was during the peak of the pandemic. Sellers should be mindful of pricing their homes appropriately and ensuring that they are well-prepared before listing.

Detroit: A Market for Unique Luxury Homes

Detroit’s luxury market is quite distinct, characterized by historic homes and unique properties that appeal to a specific segment of buyers. The luxury median listing price in the Detroit metro area is just under $800,000, offering tremendous value compared to other cities where similar homes might cost significantly more.

One of the challenges for luxury sellers in Detroit is the limited supply of homes, which can drive up interest in properties that do become available. Buyers in Detroit are often looking for something specific, such as historic charm or newly built luxury houses in certain neighborhoods. For sellers, this means understanding what makes their property unique and marketing it to the right buyers.

Agents in Detroit recommend having a plan in place for your next move, especially if you plan to stay in the area. Knowing where you’ll go after selling your luxury home can make the process much smoother and more stress-free.

Tips for Luxury Sellers in Affordable Markets

If you’re considering selling a luxury home in one of these affordable markets, here are a few tips to help you make the most of the current conditions:

Understand Your Market: Research the specific demands of luxury buyers in your area. Are they looking for modern amenities, historic charm, or proximity to certain features like downtown areas or schools?
Price Appropriately: Even in a seller’s market, overpricing can turn away potential buyers. Work with a local real estate agent who understands the nuances of pricing luxury homes in your market.
Prepare Your Home: Luxury buyers expect high standards. Ensure your home is in top condition, with all necessary repairs and updates completed before listing.
Market Strategically: Use high-quality photos and consider virtual tours to showcase your home’s best features. Highlight what makes your property unique in the market.
Be Ready for a Quick Sale: In hot markets, homes can sell fast. Have a plan for your next steps, whether it’s moving to a new home or renting temporarily.

The luxury real estate market is evolving, with new hotspots emerging in more affordable areas of the Midwest and Northeast. If you’re a luxury homeowner in cities like St. Louis, Portland, or Detroit, this fall presents a unique opportunity to capitalize on strong demand and favorable market conditions. With careful planning and strategic preparation, you can make the most of this moment and achieve a successful sale.

By staying informed about market trends and understanding the specific needs of luxury buyers, you can navigate this dynamic market with confidence. Whether you’re looking to sell now or considering it in the near future, keeping an eye on these emerging luxury markets could be your key to success.

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Is the Housing Market Thawing? The Impact of Falling Mortgage Rates

For the past few years, the housing market has been stuck in a bit of a freeze. High mortgage rates have made homeowners who locked in lower rates hesitant to sell, leading to fewer homes on the market and less activity overall. However, this could be changing soon. As mortgage rates begin to drop, new analysis suggests that certain metro areas may see an increase in seller and refinance activity, signaling a potential thaw in the housing market.

Why the Market Has Been Frozen

The main reason for the slowdown in the housing market has been high mortgage rates. Many homeowners who bought their homes when rates were lower have been reluctant to sell and take on a new mortgage with a higher rate. This “lock-in” effect has kept many homes off the market, limiting options for potential buyers and slowing down market activity.

The Signs of a Thaw

According to a new analysis from Realtor.com, certain metro areas could see early signs of increased market activity as rates continue to fall. These markets have a high percentage of recent home sales when rates were above 6.5%. Homeowners in these areas are now “unlocked” and in a better position to refinance or sell their homes as rates dip below this threshold.

Naples, FL leads the list, with 15.2% of mortgages estimated to be above the 6.5% cutoff, compared to a national average of just 5.3%. Other cities on the list include St. Louis, MO (13.9%), Myrtle Beach, SC (13.4%), Cape Coral, FL (12.4%), and Miami, FL (11.7%). These areas could be among the first to benefit from falling rates, as homeowners look to refinance or sell.

What’s Next for the Housing Market?

The Realtor.com economic research team projects that mortgage rates will continue to fall, potentially reaching 6.3% by the end of this year. If this happens, the identified cities could see a significant increase in market activity as more homeowners feel financially comfortable selling or refinancing.

“From this point forward, assuming rates continue to ease, selling or refinancing may look increasingly attractive to many homeowners in these markets,” says Realtor.com senior data analyst Hannah Jones.

However, it’s worth noting that the marginal benefit of selling might still be too small for some recent buyers, especially if they have only recently purchased their homes at higher rates. In these cases, refinancing may be a more appealing option.

The Cities with the Highest Share of ‘Unlocked’ Mortgages

The cities identified by Realtor.com have seen significant recent population growth and home price increases. For instance, home prices in Naples, FL, have grown 69% from 2020 to 2023. As rates fall, these markets may return to a more balanced state between buyers and sellers.

Cities like Fort Wayne, IN, Albuquerque, NM, Kansas City, MO, and New Haven, CT also made the list. These areas are diverse in terms of geography and affordability, and each has a high share of owner-occupied homes with mortgages above the 6.5% threshold.

The Path to a Balanced Market

As mortgage rates continue to decrease, the housing markets in these cities are moving back toward balance. In July, inventory climbed annually in each of these markets, which could spur further sales despite still-high mortgage rates. Buyers in these markets currently enjoy a variety of home options and can potentially take advantage of falling rates.

For homeowners feeling “locked in” by high mortgage rates, the easing of rates could provide new opportunities. Whether choosing to sell or refinance, it’s essential to keep an eye on market trends and make informed decisions based on current conditions.

As mortgage rates begin to fall, there are clear signs that the housing market may be warming up in certain metro areas. If you’re a homeowner or a prospective buyer, now is a great time to stay informed about these changes. Keep an eye on market trends in your area, and consider consulting with a real estate professional to explore your options.

https://www.realtor.com/news/trends/mortgage-rates-unlocked-markets-sellers/?cid=eml__1946:66c8b15d745cc047a403a690:ot_Marketing_Consumer_Weekly_EditorialNewsLetter082424&crdl_section=Article1

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Understanding Home Builder Financing: What You Need to Know

When purchasing a newly built home, one of the key decisions you’ll face is how to finance it. Home builder financing offers a specific type of mortgage provided through the construction company or developer. Whether you’re eyeing a production home or custom build, understanding the ins and outs of home builder financing can help you make an informed decision that best suits your needs.

What is Home Builder Financing?

Home builder financing is a specialized mortgage option designed for buyers of newly constructed homes. This type of financing can be offered directly by the builder through an in-house mortgage company or via partnerships with preferred lenders. For instance, Toll Brothers operates its own mortgage company, while other builders may collaborate with independent banks or mortgage companies to offer financing solutions.

Financing Requirements

The type of home you’re buying will influence the financing options available:

Production/Spec Homes: These are move-in ready homes built in advance of a buyer. Financing for these homes is similar to traditional mortgages, with options like conventional or FHA loans. Typically, you’ll need a down payment ranging from 3-5% and a credit score of at least 620 for conventional loans or 580 for FHA loans. Some lenders may also offer jumbo or non-conforming loans depending on the price of the home.
Custom-Built Homes: Financing a custom home, which you design from scratch, often requires a construction loan. These loans have stricter requirements, including a 20% down payment and a higher credit score, often around 680. Construction loans can also come with higher fees compared to traditional mortgages.

Financing Deals and Incentives

Builders frequently offer incentives to encourage buyers to use their preferred financing options. These deals can include:

Home Upgrades: Builders may allow you to finance additional features or improvements into your mortgage, such as upgraded appliances or flooring.
Closing Cost Credits: Some builders provide credits toward closing costs when you use their preferred lender.
Discounted Mortgage Rates: Builders might offer temporary buydowns on mortgage rates, reducing your interest rate for the first one to three years.

These incentives can be a great way to enhance your new home or reduce initial costs, but it’s crucial to understand the terms and ensure they offer real value.

Pros of Builder Financing

Competitive Interest Rates: Builders’ preferred lenders may offer lower interest rates compared to the national average.
Easier Upgrades: Financing upgrades through the builder can simplify the process and reduce out-of-pocket expenses.
Streamlined Process: A strong relationship between the builder and the lender can lead to a smoother and quicker closing process.

Cons of Builder Financing

Higher Costs: Builder financing may come with higher fees or increased interest rates after initial incentives expire.
Stricter Qualifications: Some offers might require higher credit scores and larger down payments.
Limited Choices: Incentives may be tied to specific homes or locations, limiting your options.

Making the Right Choice

While builder financing is a convenient option, it’s not the only one. You’re not obligated to use a builder’s preferred lender. To make the best decision:

Compare Lenders: Shop around and compare mortgage rates from multiple lenders to ensure you’re getting the best deal.
Ask Questions: Inquire about the terms, discounts, and any potential fees associated with builder financing.
Read the Fine Print: Carefully review all details related to incentives and financing offers to understand their impact on your overall costs.

Home builder financing can provide valuable benefits, including competitive rates and attractive incentives. However, it’s essential to weigh these advantages against potential drawbacks like higher fees and stricter qualifications. By comparing options and understanding the terms, you can make an informed choice that aligns with your financial goals and home-buying needs.

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