Tag Archives: Kansas City Home Buyers

Kansas City Home Buyers Are Missing Out On The Perfect Storm

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Checking The Pulse Of The Kansas City Real Estate Market

I continue to see home buyers sitting on the fence, feeling there’s no need to hurry and/or waiting for the market to head back up before buying a home. But buying once the market is in a clear upward trend means paying a higher price for a home. It’s futile to try to time a market and signs right now indicate home prices are stabilizing in most areas. Many smart home sellers are realizing that they may lose money on their home sale but they’ll make it up on their home purchase. If they’re a move-up buyer, they’re in an even better position to see increased gains simply by buying more real estate in a down market. The more expensive homes are also the better deals in today’s market.


This is the perfect storm for Kansas City home buyers and we’re unlikely to ever again see the great deals present in today’s Kansas City real estate market. From Overland Park to the Northland and from Lenexa to Lee’s Summit, the volume of foreclosure and short sale listings present buyers with amazing choices. Even for those who don’t want to mess with a home in the condition of a distressed sale, the low prices of those homes is pushing down the price of move-in condition homes as most sellers realize they’ve got to be aggressive with their pricing to get attention.

In today’s buyer’s real estate market, buyer’s are getting away with being firm at the negotiating table… including close date and price in many instances. If you’re going to make a lateral move like selling a $200,000 home in Overland Park and buying a $200,000 in Olathe, now is a great time to make a move. If you have a good agent assisting you, you’ll minimize the losses on the your home sale and maximize the gains on the home purchase. If you’re a move-up buyer, even better. If you’re currently renting, you simply need to schedule a meeting with me and I’ll show you why buying a home makes more sense than ever.

Posted by Jason A. Brown

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Remember When Kansas City Home Buyers Were Trusted On Their Stated Income Level?

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Checking The Pulse Of The Kansas City Real Estate Market

It’s hard to believe that stated income loans – a.k.a. liar loans – were a common lending practices just a few years ago.  A borrower who was between jobs could simply tell the lender they’re monthly income, accept a slightly higher interest rate, the lender wouldn’t verify the income and the buyer was on their way to closing. Amazing. But those days are gone and it’s become much more black and white to get a mortgage loan today. If you don’t have a 3.5% down payment, you better have VA loan eligibility or be talking to me about one of the special loan programs out there that require you to jump through hoops to get a loan.

You definitely need to have stable employment and decent credit scores. Think about this for a moment… I actually had a buyer with 800 credit scores and 50% down get harassed late in the process to provide additional documentation. He was self-employed and my first thought was, wouldn’t a bank WANT a buyer with 50% equity to default on the loan.  But it took just a moment to rationalize things and realize that banks don’t want any more REO properties on this books — even ones they’d make money on by taking back through the foreclosure process and selling later.

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?

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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

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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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Is It Time For Kansas City Home Buyers To Get Off The Fence?

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Checking The Pulse Of The Kansas City Real Estate Market

At least one economist believes that “every major price index points to a housing market that has hit bottom”. If true, that would be music to Kansas City home seller’s ears. But it would also mean that prices would likely start trending up at that point. When they do – and they will eventually – then lookers who didn’t buy will have missed out on some great deals. Buying at the bottom of a down market is going to make a lot of people money but buying at the perfect time involves as much luck as skill, mainly because we’ll already be well into a recovery by the time it’s reported.

Even though it will take history to show us whether this was the perfect time to buy, indications are present that now could be the time to get off the fence. I pay close attention to the economists who study our real estate markets daily and to hear a reputable economist’s assessment that we’re now at the bottom of the real estate market is promising news. If more economists jump on board touting that we’re indeed at the bottom, it will be PAST home buyers who bought at the perfect time.

The above quote from William Wheaton, Professor of Economics and Real Estate at MIT in Boston Massachusetts certainly got my attention and Professor Wheaton further points out that home prices have stabilized in nearly every United States region and that median U.S. home price increased from $164,000 in February of 2010 to $182,600 in August of 2010 — which is a  HUGE 11% increase in just 6 months time!


Posted by Jason A. Brown

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Home Sales Are Slowing Despite Interest Rates Dropping Even Lower In Kansas City

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Checking The Pulse Of The Kansas City Real Estate Market

Mortgage interest rates dropped yet again this week, giving buyers further opportunities to refinance their current home or buy a home and lock in low mortgage payments for the next 15 or 30 years. It’s hard to fathom that Kansas City home buyers can secure a long-term home loan at just 4.25% interest. This assumes the borrower has decent credit and a 5% down payment.  Yet it’s become apparent that low mortgage interest rates alone aren’t going to carry us into a housing recovery.


Today’s low interest rates simply aren’t stimulating buyers the way they have in the past. That’s understandable though with more than 10,000,000 U.S. homeowners upside down on their homes and many more worried about job security and whether home prices will fall further. The market has certainly changed from five years ago when Kansas City home sellers were selling a home they bought two years earlier and turning a profit — AFTER factoring in real estate commissions, title fees, moving costs, etc.

In the past, when mortgage interest rates dropped, it was the signal for home sales to pick up. This time around however, it’s just not bringing as many home buyers out of the woodwork. Although low rates haven’t picked the real estate market up, I wonder if they’ve prevented the market from a complete collapse. It’s impossible to say for sure and I’m just thankful that the home buyers who are searching for a good deal don’t have to factor higher interest rates into the buying equation.

Posted by Jason A. Brown

Buying A Home Without A Kansas City Buyer’s Agent Could Prove Extremely Costly

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Checking The Pulse Of The Kansas City Real Estate Market

After beginning a steady rise to prominence in real estate transactions over the past decade, Buyer’s Agents are now involved in more than 80% of real estate transactions I see completed. Yet many home buyers still don’t understand that my representation comes at NO cost to them. Many don’t realize that my commission is already factored into the list price of the home and they don’t pay me a dime for showing them all the homes that fit their needs and  representing them throughout the Kansas City home buying process. I don’t even charge my buyers a transaction fee to cover my auto or gas expenses (like many Kansas City Realtors do to their buyers). My broker also doesn’t charge me any silly brokerage fees per transaction, so it’s not necessary for me to attempt to pass such fees on to my Buyers (like many Kansas City Realtors do).  Nope, my representation TRULY comes at no cost to Kansas City homebuyers.


How does it work specifically? On any home you see listed on the Kansas City MLS, a Buyer’s Agent commission is factored into the advertised list price. This means it’s also already factored into the sales price when the home goes under contract and ultimately closes. Assuming your buyer’s agent isn’t charging you any transaction fees, then having a buyer’s agent represent you costs nothing and makes all the sense in the world. For those curious as to how a Buyer’s Agent actually gets paid, the commission is often handled as follows. When the listing agent lists the home with a Seller they agreed to a total real estate commission to be paid at closing – for the sake of round numbers, let’s throw out 6%. At the time of the listing, the listing agent lets the Seller know how the total commission will be split – say, 3% to the listing side and 3% to the selling (Buyer’s Agent) side. The listing agent would then split 3% with their broker at closing and the Buyer’s Agent would then split the other 3% with their broker.

Now I understand that there are some savvy Kansas City home buyers out there with enough ability to get a deal through to the closing table without a Buyer’s Agent involved. The question though, is at what cost? If for no other reason, it makes sense to have a Buyer’s Agent just to get into and view the homes in an organized and timely fashion. If I were buying a home in Sacramento California I would NOT head out there to buy a home without the assistance of a local Buyer’s Agent. I can’t imagine contacting multiple listing agents to get me into each home individually. If there were 10 homes I wanted to see, a Buyer’s Agent could likely get me into all the homes in the same day – if things went well maybe even in a 5-hour window. Try to get that done by contacting 10 different listing agents and I might not get in all the homes in a 5-DAY window.

There’s many other advantages to having a Buyer’s Agent on your side. The process of buying and selling real estate is much more complicated than it was just a few years ago and a buyer’s agent can simplify the process in a way that allows a Buyer to not have to oversee the many critical and often mundane tasks involved with the real estate process. A Buyer’s Agent could help save your earnest deposit if a deal goes wrong. Although agents can not provide legal advice, simply having a Buyer’s Agent involved who knows what they’re doing can steer their clients clear of potential pitfalls and potentially even legal trouble. In all my years, I’m not aware of any of my clients being sued or suing another party in the real estate transaction. While a lack of law-suits  may not seem like the best way to rank success, it’s certainly worth consideration when you’re dealing with what’s likely the most expensive investment of a lifetime.

Now some buyers also think they can get a better deal if they go directly to the listing agent without a Buyer’s Agent. The problem is that the commission agreement is with the seller and the listing agent is going to be working to get both sides of the commission if there’s no Buyer’s Agent involved. If there’s no Buyer’s Agent involved, the listing agent is going to have to do twice the work, so the agent isn’t simply going to let a Buyer off the hook by giving away a large portion of the real estate commission. Even in a hypothetical example where a Buyer could save, say, 1% off the commission, the Buyer could have come out far ahead overall by having had a Buyer’s Agent represent their best interests, negotiate a better deal, avoid peripheral costly pitfalls like the inspection process, etc. It’s difficult to quantify because every deal is different, but the vast majority of home buyers would quickly lose more than they  might appear to have “saved” by not having a Buyer’s Agent representing them.

Posted by Jason A. Brown

Asking The Magic 8 Ball “Is Now A Good Time To Buy A House In Kansas City?”

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

I asked the Magic 8 Ball “Is now a good time to buy a house in Kansas City? and the answer was “Maybe”. Worthless Magic 8 Ball. OK, I do believe it’s a good time to buy a home because there are so MANY great deals in today’s marketplace. I must go further though and add that it weren’t for the historically low interest rates and the government handing out huge home buyer tax credits, it would be a more difficult argument. Strictly from an investment stand-point, many would argue it’s a risky time to be buying real estate.  But it’s also possible that we’re nearing the bottom of the market and those jumping in today could make others look silly for not  having jumped into 2009’s real estate market that is plush with tax credits and low interest rates.

Should You Buy A Kansas City Home?

Should You Buy A Kansas City Home?

Let’s look at a hypothetical example of buying a $200,000 home today or waiting three years to buy a $200,000 home. If a buyer purchased a home for $200,000 today and it lost $8,000 in value the next three years, the $8,000 tax credit they received when purchasing would negate the loss in value – so you can see the huge cushion the  government is providing with these tax credits – and if the home didn’t lose any value then the buyer really makes out like a bandit.

Let’s now take a look at interest rates. If a $200,00 home was purchased today at 5% interest rate (with 3.5% down) the principal and interest (P&I) payments would be $1,035/month.  Now if the buyer waited three years to purchase that $200,000 home and interest rates jump to 7% (which is entirely possible), then their P&I monthly payments would be $1,284/month – meaning the borrower is losing about $250/month by having waited. That would equate to a $3,000 loss each year going forward and $9,000 over the next three years!

Let’s also factor in the mortgage interest deduction. We have to make an assumption here, so let’s assume the buyer of a $200,000 home is in the 25% tax bracket (keeping in mind that I’m no accountant). A borrower who pays $1,000 interest per month would be able to write off 25% of each month’s interest and in this scenario that would be $3,000 each year – so that would be $9,000 over the three year period!  If renting, there would of course be NO interest write-off.

Putting all three factors together, the buyer who doesn’t purchase in 2009 would lose (1) the  $8,000 tax credit, (2) $9,000  in the 2% jump in interest rates and (3) $9,000 in mortgage interest deduction for having rented versus owning.  That would be $26,000 lost over just THREE years by waiting to purchase a home. These losses would of course continue to mount each and every year thereafter as well.

The pride of home ownership should also not be underestimated.  The great wealth made during the housing boom led many to forget the main reason our parents and grandparents owned a home – shelter. It’s entirely possible that a person who loses a few thousand on a home rather than renting is a happier, more productive person for having owned and lost some value than for having rented and treaded water. All I’m saying is that there are intangibles that can not be quantified when it comes to home ownership. I guarantee that if you told me my options were losing a few thousand over a few years owning versus living in an apartment, the decision would be easy. I lose  thousands on my vehicle each year and you could bet I’d also choose to own and lose a little over living in an apartment. Of course,  there are other choices besides just those two scenarios – one of those being to locate one of the many great real estate deals that are out there today.

Posted by Jason A. Brown

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$7500 Tax Credit For First Time Kansas City Home Buyers Coming To An End

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

The $7,500 tax credit introduced in 2008 and designed to stimulate home buyers is still in effect but the opportunity to use the tax credit is set to come to an end on 7/1/09. So home buyers wanting to reap the benefits of the tax credit will need to hit the home search trail hard this spring.

The tax credit essentially operates as an interest-free loan and buyers shouldn’t misinterpret the credit as the government simply handing out $7,500 in free money. The tax credit benefit also isn’t realized at the closing but rather at tax time. The home buyer does get a true dollar for dollar credit – meaning a person owing $10,000 in taxes (and who took the full $7,500 credit) would instead owe just $2,500 in taxes. The buyer has to pay the tax credit amount back but gets to do so over 15 years at zero percent interest. $7,500 is the maximum tax credit and to get the full grant amount the buyer must purchase at least a $75,000 home. The credit is figured at a rate of 10% of the sales price thus a $50,000 home would net a $5,000 tax credit.  

The tax credit only applies to first time home buyers or buyers who have not owned a home in the previous three years. Buyers who make more than $90,000 a year in adjusted gross income (or $170,000 for couples filing jointly) do not qualify.  If you’re considering use of the $7,500 tax credit be sure to contact a Certified Public Accountant to discuss the tax ramifications of any real estate decision you are considering. You can also learn more here at the IRS Tax Credit To Aid First-Time Homebuyers or here at the National Association Of Home Builders.

Posted by Jason A. Brown

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