Potential Deal Killers To Avoid Prior To Closing On Your Johnson County KS Home

The Pulse Of The Kansas City Real Estate Market

So you’ve taken the big leap, gotten Pre-approved to buy a home, located the perfect home, made an offer and have now gone under contract… You’ve heard that all that’s left to worry about is the home inspections, right? While these are several of the most critical aspects of the real estate transaction, there’s another aspect which often gets overlooked by home buyers. And that aspect is making any changes to your credit report after the time you got pre-approved and prior to closing on your home.

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When many home buyers here this, they think as long as they stay current on their current payments that they’ll be in good shape. While those are very important, it’s more complicated than that and because the home buyer also needs to know they shouldn’t buy any new items that require using credit. Doing so will very likely alter your credit score, even if all payments are made on time. So buying a car after you go under contract is a terrible idea and home buyers should always wait to make any additional purchase until their real estate transaction has closed.

Just last month one of my buyer’s agents had a buyer go and purchase a refrigerator after going under contract. It had such an affect on the buyer’s credit that the automated underwriting system determined the buyer no longer qualified for the loan and that stopped the real estate closing. Fortunately for everyone, the lender was able to rerun the credit a couple of weeks later and the buyer’s credit was back in line enough to allow the closing to take place. Fortunately the seller was patient enough to extend the close date or it could have turned out even worse for everyone. 

So be sure to hold off buying the new car, boat, appliances, jewelry, furniture, etc until you have closed on your home. You should also avoid opening any new credit card accounts or doing anything else that would result in a change to your credit report. A couple of other things to avoid doing after you get pre-approved and before closing… Don’t switch bank accounts during this time and avoid making any unusual (ie. large cash) deposits into your bank account. 


Posted by Jason Brown

When Is The Best Time To Buy or Sell A Johnson County Kansas Home?

Checking The Pulse Of The Kansas City Real Estate Market

People will try to time the market but in many cases the proportion of buyers and sellers are similar at different times of the year. In May there will be a lot of buyers out there but there will also be a lot of sellers competing for those area home buyers. Without knowing more about the factors surrounding the buyer’s home purchase or the seller’s home sale, that doesn’t necessarily give a buyer OR a seller an advantage.


Some think the best time to buy a home is in August or January when there are the fewest number of buyers in the marketplace. But the good homes have often sold by July and December and there’s a low volume of listings typically coming on the market at those times. So, is buying home when the best listings are gone and when are there fewer listings on the market really a good idea?

Deciding the best time to buy a home is truly a personal decision. That’s why I believe the best time to sell and buy a home is when the time is right for YOU. Yes, May is generally a better time to sell than March, but if you need your home sold soon I wouldn’t wait simply on the assumption it will be better if you do so. And February is probably better than December but if you hope to follow up a home sale by getting involved in spring buying market, then waiting could actually have a negative net affect on your sale/purchase outcome if it takes you longer than anticipated to sell your home.

More than anything, I recommend looking at the supply and demand at a given time. As a seller you want to sell when the months of inventory seems to be at a low point. As a buyer, you want to buy when the months of inventory seems to be a high point. Doing so will put you at an advantage in your real estate transaction and it won’t matter if your calendar shows that it’s June or December.


Posted by Jason A. Brown

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Some Background On What To Expect At Your Closing When Buying Or Selling A Kansas City Home

Checking The Pulse Of The Kansas City Real Estate Market

The real estate closing is usually the last big hurdle when buying or selling a home. Most closings are an after-thought but what goes on behind the scenes is vital to a successful real estate transaction and can surprise a buyer or seller — and even a seasoned Kansas City Realtor on occasion. Kansas City home buyers and home sellers who are nearing the end of their home purchase or home sale need the transaction to go off without a hitch and they don’t want to get confused with the terminology, closing costs and escrow.

In the Kansas City metro area, most real estate closings occur at a title company. In some other parts of the country, real estate closings occur at an attorney’s office. Virtually all home sellers close at the title company here in the metro area.  With home buyers, probably 80% close at the title company as well. But it’s the buyer’s lenders choice on whether the loan will close at their own mortgage office or at the title company. Most lenders choose to not mess with handling the closing and let the title companies earn the profit from doing so.

You may hear a closing referred to as a settlement closing or an escrow closing and they all mean the same thing. The result in any case is the transfer of ownership of a property from one owner to another. The average closing occurs about 30 to 45 days from going under contract, but some transactions can close quicker if needed. This is especially true on cash closings and/or closings on vacant homes. If a home is occupied by the home seller or if the buyer is getting a mortgage loan, it’s pushing it to try and close the transaction quicker than 30 days out.

The amount of closing costs involved can vary greatly from one transaction to another. There’s many factors that are outside of the title company’s control and a big one is how much a particular lender may be charging the buyer to provide the loan. Whether or not an appraisal and/or home inspection are done could effect the final closing cost amount. Title insurance costs also vary and the more expensive the home, the more expensive the title insurance will be (for home sellers). There are other items to consider as well, including varying government charges, taxes and recording fees and most loans will require a buyer to put cash in an escrow account to pay property taxes and insurance as they come do.

In addition to handling the closing, the title company has the important job of providing the title insurance. Title insurance protects a homeowner’s claim to the property because the title company researches and assures the seller and buyer that there are no other issues or claims to the title on the property.  Once everything is in order, we’re ready to schedule a closing time. The title company typically sends the buyer and seller a preliminary copy of the HUD settlement statement. This document details the financial figures of the transaction – for both the seller and the buyer – and this helps to ensure everyone is on the same page for the closing that is about to occur.


Posted by Jason A. Brown

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You Know It’s A Buyer’s Real Estate Market In Kansas City When…

Checking The Pulse Of The Kansas City Real Estate Market

You know it’s a buyer’s real estate market in Kansas City when…

1. … a buyer’s agent tells a listing agent the seller better accept that contingent offer or else.

2. … a buyer expects every single item on the inspection report be corrected by the seller.

3. … a buyer rules out a 50-year old because it has a squeeky floor.

4. … a buyer views 20 homes and doesn’t find a home they like.

5. … a buyer won’t consider any home that doesn’t have a finished lower level, fence and a butler.

6. … a buyer asks for $5,000 in seller paid closing costs yet the buyer has a $25,000 down payment.

7. … a buyer won’t give a home seller even a half day after closing to give up possession of the home.

8. … a buyer demands a sales price equivalent to the sale’s price of the foreclosure home next door.

9. … a buyer rules out a home out because it has wallpaper in one bathroom.

10. … a buyer asks for a home warranty, the refrigerator and the dog to be included for free.


Posted by Jason A. Brown

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Are You Underestimating Today’s Low Interest Rates When Deciding If The Time Is Right To Buy A Kansas City Home?

Checking The Pulse Of The Kansas City Real Estate Market

Mortgage interest rates have risen about a half percent recently but they’re still at unbelievable lows. Buyers who continue to sit the fence are likely costing themselves a higher mortgage payment down the road. Of course, the price of a home also needs factored into the equation, but interest rates have a more dramatic effect than many Kansas City home buyers realize.

If you’re thinking of waiting for lower home prices before you buy a home, consider the following scenarios…

Scenario 1 (Today’s market):
123 Oak can be purchased today for $200,000.
Interest rates are 5%.
Buyer’s monthly principal & interest payment would be $1,074.

Scenario 2 (Down the road):
Home prices fall 5 percent and now 123 Oak can be purchased for $190,000.
But interest rates rise 1/2 percent and are now at 5.5%.
Buyer’s monthly principal & interest payment would be $1,079.

Scenario 3 (Down the road):
Home prices fall 10 percent and now 123 Oak can be purchased for $180,000.
But interest rates rise 1 percent and are now at 6%.
Buyer’s monthly principal and interest payment would be $1,079.

So if interest rates rise ONE percent (which is eventually going to happen), then a buyer will be able to afford $20,000 less home ($180,000 versus $200,000) using the price range in the sample above! A general rule of thumb to use when considering whether to buy today or wait until tomorrow is this… For every half percent interest rates rise, you’ll be able to purchase 5% less home in the future.


Posted by Jason A. Brown

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Move-Up Home Buyers In Kansas City Need To Overcome Home Selling Paralysis By Analysis

Checking The Pulse Of The Kansas City Real Estate Market

If you’re nearing retirement and wanting to sell your home and move into a retirement home, this is a tough time to sell. If you can’t afford your current house payments and need to sell your current home and buy a smaller home, I feel for you. In the latter situation, today’s lower interest rates will soften the blow. However it’s unlikely to help you overcome the net losses that will come with selling a larger home and buying a smaller one in today’s market. But there’s a perplexing paralysis by analysis with move-up buyers who are passing up what I believe in hindsight will prove to be opportunities of a lifetime.

There’s really is a serious disconnect that needs overcome or it’s going to take longer than it should to get out of our current real estate rut. There are a lot of home buyers who want to buy a home at a huge discount but refuse to sell their current home at today’s market value. It’s human nature to want to get a good deal when selling AND buying. But what buyers are missing is that they don’t have to win both the battle of selling and buying. We know we can get them a great deal when buying but that’s not enough for some sellers who can’t get over the hurdle of selling their home for less than what they feel it’s worth.

This thought process is certain to cost a lot of people a lot of money. There are more deals than ever in today’s real estate market and if you are a move-up buyer, waiting any period of time could cost you the deal of a lifetime. Selling a smaller home AT MARKET VALUE and then buying a new, larger, home AT MARKET VALUE has a positive net effect — due to buying larger when prices are at a discount. So many potential move-up buyers are so caught up in trying to win the selling battle that they are going to lose the war — and will live to regret not making the move when they could have moved up in a discount market and with such low interest rates.


Posted by Jason A. Brown

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Even If Kansas City Home Prices Fall, Buyers Could Lose If Interest Rates Spike

Hands On The Heartland
Checking The Pulse Of The Kansas City Real Estate Market
 

We’re seeing the most incredible mortgage interest rates in my lifetime yet many homebuyers are sitting the fence waiting to see if home prices will fall. The instability in many of our markets justifiably has investors moving cautiously. Yet it’s very important that homebuyers factor in the incredible low interest rates that we’re seeing today. If a buyer waits to see if home prices are going to drop and in the mean time interest rates spike upwards, there will clearly be an offsetting effect. Mortgage interest rates are eventually going to rise and, all other factors being equal, higher interest rates mean higher mortgage payments for a borrower.

Let’s consider a buyer who’s found the perfect home that today is listed for $200,000. In this hypothetical scenario, the buyer decides to wait and 6 months later he finds that his dream home is still on the market but now can be purchased for just $190,000. After doing a little victory dance, Joe contacts his mortgage lender and is informed that rates on a conventional 30-year fixed rate loan have jumped 0.5% in the mean time. Joe says he doesn’t care because he’s going to save $10,000 by having waited. There’s a clear flaw in Joe’s logic if interest rates have risen significantly during that time period. Check out the following two scenarios to see why…

Scenario 1 (Today’s market):
123 Oak can be purchased for $200,000.
Interest rates are 5%.
Buyer’s monthly principal & interest payment would be $1,074.

Scenario 2 (Down the road):
Home prices fall 5 percent and now 123 Oak can be purchased for $190,000.
But interest rates rise 1/2 percent and are now at 5.5%.
Buyer’s monthly principal & interest payment would be $1,079.

Scenario 3 (Down the road):
Home prices fall 10 percent and now 123 Oak can be purchased for $180,000.
But interest rates rise 1 percent and are now at 6%.
Buyer’s monthly principal and interest payment would be $1,079.

So if the price of 123 Oak falls 5% but interest rates rise a half a percent the monthly payment remains virtually the same! You see the same thing if a home’s price falls 10% but interest rates were to rise 1% over the same time period. For the sake of simplicity, these scenarios make the assumption of a borrower doing a 100% loan (no down payment). These examples show the importance of factoring in today’s interest rates when making the decision to move forward with a home purchase or waiting. When it comes to interest rates it could be a case of here today gone tomorrow.

Posted by Jason A. Brown

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