Realtors: Real Estate Has Already Bottomed
According a real estate industry group, U.S. existing-home sales have likely hit bottom and should gradually rise this year, but sales should still fall short of last year's mark.
The National Association of Realtors said it expects sales of previously owned homes in 2007 to reach 6.44 million units, down slightly from last year's 6.48 million units. It forecast sales of 6.64 million in 2008.
"After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing home sales to gradually rise all this year and well into 2008," NAR chief economist David Lereah said in a statement.
While NAR said sales of existing homes looked set to rise, it looked for further weakness in new-home sales. It said sales of new homes would come in at 961,000 units this year and 971,000 in 2008, both below the 1.06 million sold last year.
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Say "No" to Mortgage Life Insurance
Mortgage insurance is designed to repay your mortgage in the event of your death, disability or some incapacitating disease. But the cost of this type of policy can be three to five times as much as comparable term-life insurance, according to Consumer Reports.
Plus, the value of this insurance actually declines as you pay down your mortgage. If you're worried about burdening your heirs with mortgage payments, you'd be better off buying straight life insurance.
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Natural Disasters - Are You Prepared?
Tornado devastation like Florida residents experienced recently could happen anywhere at any time. Here's what you need to know about your homeowners' insurance.
1: Check Your Policy
Unlike hurricane and flood insurance, tornado coverage is relatively uncomplicated. That's because wind events are covered under your homeowners policy, says Sue Nestor of the Independent Agents and Brokers of America.
"[With tornados] you don't have [the] storm surge and the massive flooding that comes with hurricanes," she says. But it's always a good idea to dig out and review your policy. Even if you live outside "Tornado Alley," the area of the country that runs north from Texas through eastern Nebraska and northeast to Indiana, you are still vulnerable to tornadoes.
Kansas, Oklahoma and Texas may see more of these unpredictable and dangerous storms than other states, but the rest of the country also gets its share of twisters.
Learn more about what you need to know to make sure you're covered
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Real Estate and Retirement
Before you start counting your real estate profits from selling your home and downsizing, think about how much you'll pay for the house you'll live in next. Unless you're willing to move far away, the cost of your empty-nest dream cottage has probably also shot up too.
Consider the recent explosion in prices an anomaly.
Many boomers face another challenge. You won't be able to tap all your home's equity if you've already borrowed heavily against it.
As with stocks, demographics could also dampen home prices as boomers first downsize and then, move on. Some economists think real estate is even more vulnerable to those trends.
Though this may lower returns, it doesn't necessarily portend a crash. Housing economist Karl Case of Wellesley College notes that boomers span a wide age range. "I'm 60, and if I'm going to be in my house another 20 years, the baby boom still stretches out another 20 years behind me," says Case. "The pattern isn't as cliffy as you might expect."
Even if the value of your house slides, Case adds, you have built-in insurance: The cost of the house you're buying will have gone down too.
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Real Estate Contract Negotiations Like a Pro
When buying a home you want to get the lowest possible price and close on the house within a reasonable amount of time so you can move in. The seller wants the most for the home he or she can get, so it takes some negotiation to make it all come together for both parties.
- Let the seller know what you need or expect in a clear and reasonable manner. Sometimes buyers submit letters to sellers depicting why the property is not worth the asking price and pointing out the faults. This is a sure way to start the negotiations off with a defensive seller. It would be best to anchor a reasonable price, while continuing to remain polite and respectful of the sellers' home.
- Be prepared to solve any repair, title, survey or loan problems fairly so there are no future problems to be addressed at closing.
- Never respond to offers emotionally. This style of negotiating can turn the seller angry or defensive and can escalate into negative comments, table pounding and threats to walk out on the offer.
- Keep your cool. Never argue. Arguing can sometimes make the seller want to work against you instead of working with you.
- Don't be too quick to respond. Don't ignore or respond to the sellers' arguments or statements immediately. Make it known that you are listening carefully and considerately, but don't reject or accept any offers until you have had time to carefully consider them.
- Have any unclear portions of the proposals clarified completely.
- Never discuss personal issues which involve the seller or buyer, such as an urgency to move in or some particular financial status.
- Let trust increase the buyers leverage by;
–>listening and understanding what the seller has to say;
–>convey an appreciation or admiration for the sellers home decorating and gardens;
–>respond to counter offers within a reasonable time frame.
- Find a common ground with the seller. This can be a very powerful tool in the event of multiple offers. Sometimes a seller may select a contract for personal reasons, like if the buyer's family reminded the sellers of themselves when they bought a home with their young children, or just by sharing the same religion.
- Understanding your leverage as the buyer. The more the buyer can find out about the seller's needs, the better chance the buyer has to find solutions in negotiation. The buyer must be able to appeal to the seller's concerns. For instance, if the house has been on the market for over 300 days, the seller will have a lot more leverage than they would have with a brand new listing. If the sellers time frame is forthcoming, then the buyer can meet it with some leverage, unless the sellers have multiple offers.
Most buyers usually offer less than the listed price of a house. So, how much under the listed price should you offer? That all depends if the house is listed in a strong seller's market and the market analysis of the recent sales in the neighborhood from where the house is being sold. The buyers should do their homework before submitting an offer. They might risk offending the seller and have their offer rejected immediately if they don't.
If there are multiple offers on one property, disclosure is favored among all parties. However, the seller or agent representing them will make the final decision as to how the offers will be handled. The seller may disclose the terms of one offer to stimulate another buyer to submit a better offer. Normally the procedure for multiple offers is to notify each party of the multiple offers that have been received. Each of the parties is then given an opportunity to amend their offer and submit it within a certain amount of time. After all offers are on the table, the seller is once again free to review the amended offers and select a buyer to negotiate with. Sellers are in no way obligated to accept the first offer that comes in. Any offer selected may be countered, negotiated, or accepted as is.
Have you ever encountered a bad contract negotiation experience? Tell us about it with your comments. We'd love to hear from you.
