Big Sales, Little Inventory

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Fast pace sales in the fall St Louis real estate market is beginning to lead to a “luxury problem” for home buyers:  lack of inventory.

Obviously this is going to vary based on what market and how narrow a buyer’s search criteria is.

Good buyer’s agents work hard in times like this to poll other local agents to find prospective listings for buyer’s to view, since good agents know about their ‘pipeline’ of listings months in advance.    Viewings can be arranged in advance of the home going on the market, and the buyer can take advantage of additional variety to choose from.  The downside to this type of prospecting is that homes “pre-listing” periods often times catch the seller when they may have less realistic pricing.  The lack of inventory gives them a sense of confidence that may not be respected by an appraiser weeks later.  Another option is to look through the expired listings.  Homes that were listed earlier in the year are often just waiting for the chance to sell.  Reaching out to them can produce a prospective home for a buyer and having already been listed unsuccessfuly, the seller may be ready to deal.

What’s a buyer to do?

Good professional consultation about the market is important.  An opinion is one of the easiest things to get:  Mom and Dad, bus drivers, homeless people, cashiers and undertakers all have opinions on what home buyer should do.  Home buyer’s should be careful that the opinion being offered is an informed, relevant, and timely idea from a local professional that is actively working in the local market a buyer wants, presently.

Lastly, a good general suggestion is to have patience.  Obviously convenience and timing are important for making transitions smooth, but buying the right home is something that a buyer will enjoy the most ESPECIALLY when its time to sell.  There are some situations where now means now, but often times the hard and fast deadline for home buyer’s is something that isn’t as hard and fast as it is presented.  Landlords will often extend leases, and temporary housing is available when the right home just isn’t there.

HAPPY HOLIDAY HUNTING from StL Buyer Guide!

St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis CitySt Louis CountySt CharlesBallwinChesterfieldKirkwood,Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

St Louis Real Estate Wiki

Home buyers in St Louis looking for their questions about home buying can now look to a new resource specific to the St Louis area, the new St Louis real estate wiki.

If I was a non-real estate or legal professional, I would ask, “why does it matter? Why do we need a real estate wiki specific to St Louis?”

As real estate professionals, we’ve seen for years where information on some of the nationally known websites, newspapers and television shows describe the real estate transaction or process of buying a home that is specific to the state they are covering. Typically there’s no disclaimer saying that, but ‘all real estate is local.’ Real estate is governed by local laws, which is shaped and influenced by local customs.

One example is the sale contract. Sales contracts must be legally appropriate in the state that they are used. Going one step further, some states, like Missouri, have different local associations that provide contracts and forms that are used solely in their local area. In St Louis, Realtors mostly use contracts from the St Louis Association of Realtors, and can also use contracts provided by the Missouri Association of Realtors. Other items are laws that vary from state to state. When the general public wants information about real estate, often times they get information that isn’t accurate for the state in which they live or are buying property. This may cause confusion and problems with transactions based on relying on inaccurate information.

Another item is the difference in local market conditions and practices.

After a few years in the business, it started to register with us that some seller clients would comment about not receiving offers after open houses.  It didn’t register immediately, but one day when watching a show about amateur home remodelers, it dawned on me that seller’s view shows like that as real estate resources.  On that show, they typically show the remodeling process all the way up to the seller’s first open house.  After that, they interview the seller, which almost always refers to the offers they’ve received.   As viewers, we can only assume that the offers are received at the open house.  In reality, that probably doesn’t happen, but in areas where the home supply is much lower (like California) it may be more common.  In St Louis, most open house attendees aren’t in the market to buy a home within the next 60 days, and some are waiting more than a year.  This underscores why having a local real estate resource is desperately needed.

 

Loan (pre) Approval vs. Loan Commitment

mortgage approvalThe process of getting a home mortgage can be confusing.

Its confusing mostly because its overwhelming. Lender spin accounts for a little confusion too. Lastly, the consumers desire for things to be simple makes it more overwhelming still.

One thing that trips up a lot of buyers is the pre-approval.

There’s the pre-approval mantra we hear so often. Homes listed used to say “bring your pre-approved buyers”, bank tag-lines talk about getting pre-approved, stream-lined pre-approval process, pre-qualification and more. Buyers meet up and tell their Realtor that “the loan is APPROVED, we just need to pick the house.” That tells me the mortgage lender is blowing some serious smoke where they shouldn’t be. That seems to be a common belief among buyers though.

Changing gears a bit, the St Louis Association of Realtors standard Residential Contract has a built in loan contingency in the contract. This contingency is called the loan commitment period, a time after which one can not back out of the contract due to the inability to obtain a loan without being in “breach of contract”. Restated simply, a home buyer has a certain period to get their loan approved. Usually about 3-4 weeks are needed to get this (clear) ‘loan commitment’ from a lender.

Back to the whole pre-approval thing. So if a buyer gets pre-approved before starting the whole real estate buying venture, what else needs to be done? Is the home shopper really “approved”?

The answer is NO.

The pre-approval process is usually a basic analysis of the major qualifying information. A few questions about employment terms, annual income, name, date of birth, social security number and so on. A credit report is run, but otherwise, little if any verification takes place before the buyer is pre-approved. Some lenders go further. They may ask for the last two years W-2 forms. The bottom line is that pre-approval amounts to a preliminary screening of the credit worthiness of a buyer.

The buyer finds the perfect St Louis home with their Realtor of choice, they negotiate a deal and are “under contract. Then what?

There’s a bunch of things we’re not addressing on the real estate side, but regarding the mortgage, here’s what happens:

1. The lender gets a copy of the contract and reviews the terms.

2. The lender will need to meet with the buyer, or work via mail to prepare a mortgage loan application.

3. The loan application, along with 2 years of tax returns, a check for the appraisal and other documentation specific to you will be returned to the lender.

4. Good lenders wait until buyer’s have passed through the inspection period to move forward with appraisals, but once they get the green light, an appraisal is ordered.

5. CONDO’s or HOMEOWNER ASSOCIATION HOMES ONLY -Good lenders get necessary questionaire completed early in the process. There may be a fee for this also. Finding out if a condominium can be financed before ordering an appraisal can be good.

6. Lenders get the application, credit reports, all corresponding documentation and the appraisal and submit it to their UNDERWRITER. Good lenders have “in house” underwriters, since having to submit items to an outside source complicate things immensely.

7. The Underwriter responds to the application at some point with CONDITIONS. These are the conditions that need to be “cleared” for them to approve the loan. The fewer conditions the better. Most good lenders would anticipate what conditions would come up and “put out the fires before they start”. Conditions that come up usually are letters of explanation from the buyer, their employers, the appraiser and additional documentation. Sometimes the underwriter can reject an appraisal completely and ask for a new one.

8. Responses to all the conditions must be submitted to the underwriter, then, ideally the loan passes from underwriting to the closing department. At this point, the buyer or buyer’s agent may receive what is known in the St Louis area as “loan commitment”. Other areas of the country are often times not familiar with this term. Here in St Louis, its part of the Residential Sales Contract.

So between the pre-approval process and LOAN COMMITMENT, there are 8 basic “hoops” that need to be jumped through, plus everything else, from writing the contract through inspections that need to be addressed before the bank can give the real approval. Final approval usually happens when the bank wires the funds and authorizes the title company to “fund” the deal, so BUYER’S, keep this process in the back of your mind when you make an offer and make sure you choose your lender quickly after your contract is written.

The moral of this story: a week after a contract is accepted is not the time to still be shopping rates and interviewing lenders! Talk to your Realtor every step of the way and make sure YOUR THINKING correlates to what you’ve agreed to in the contract and everything should turn out fine.

St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

New Real Estate Search Engine

Searching for a home can be difficult.

st louis real estate

Visit 4SaleStLouis.com and search for homes like an agent!

Talking to buyers almost every day, the one thing that is most common is confusion and stress.   That’s where a good buyer’s agent comes in handy;  to simplify the process.

But aside from what a St Louis buyer’s agent can do for you, finding a great real estate home search website is a great way to kick back and begin to take baby steps towards buying a home.

The best site for St Louis real estate searches has recently gone through a complete upgrade to serve the home buyers and sellers in St Louis.  The site has hundreds of pre-built searches from buying foreclosures, buying short sales, homes in the City, Homes in the St Louis County, and Homes in St Charles, Downtown Lofts, Ladue Luxury Homes and everything in between.  You name it, and we probably have that search already set up.  If not, there’s a very nice  and simple custom search portal that will give buyer’s updated listings wherever you want to search within the St Louis Missouri area.

Visit the new and improved listing site,  fewer ads and more functional than Zillow, Trulia and even Realtor.com which are really just advertising company sites anyway.
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St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

Preferred Lender Myths

Home Mortgage ProcessOne of the most common confusing things about buying a home is the home mortgage.

Most Realtors that work daily in the business have great lenders that they refer out.  Clients often perceive that this is because of some kickback or benefit that the lender gives out.  In reality, this is more because the headaches Realtors get from incompetent lenders and the errors they make that cost clients the homes they want.

When the Realtor refers out a a “preferred lender”, 2 things happen.  First, a lender with whom they have experience throughout an entire transaction is working on the deal.  Secondly, the client has more leverage to make sure things happen as they need to.  This is because if the lender screws up, they could lose more than just one deal,  they could potentially lose the referral stream from an agent which could cost them thousands of dollars per year.

RULE NUMBER 1:  Buyer’s should try to use the lenders referred by their agents!

St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

Ten Commandments for St Louis Home Buyers

10 Commandments for St Louis home buyersIn our world, characterized by instant gratification, many home buyers have difficulty understanding that there are several processes involved in home buying.

Looking is an exception. It doesn’t take a rocket scientist to figure out that the selection process sometimes takes time. I will admit though, I’ve had buyer’s apologize to me for what they perceive as taking “too long” to find the right home. It takes what it takes.

The process of making sure the title is clear can cause confusion, but the biggest surprise to many home buyers is the fact that there’s a process to getting a home loan. Often times buyer’s think that giving a lender a few bits of information and a quick credit check (pre-approval) is all that’s required.

The process isn’t excruciating for most people, but it does take some time for the bank to review the buyer and the property and to do everything feasible to minimize the chance of loaning to a buyer that will default. Big changes in your “profile” during the review process can mean the difference between being able to buy or not.

The list below is a great list of the “do’s” and “do not’s” for buyer’s as they go through the process. This is really the domain of a good lender, but most REALTORS have experiences where something went awry as the deal was supposed to close due to actions taken by the buyer between pre-approval and closing. Its good information for any buyer getting ready to take the plunge.

1. Thou shall postpone any career moves until after your closing.
If at all possible, try not to make a career move during the time between your mortgage application and the closing on the home you
are purchasing. One of the factors mortgage companies consider is the length of the present employment; they are partial to stability.
2. Thou shalt not apply for new credit.
Why not? Because applying for new credit changes what is called “debt-to-income ratios” (the relationship of your income to your
debt). This could impact your ability to qualify for your mortgage loan and may initiate a new round of paperwork.
3. Thou shalt not incur new debt such as purchasing or leasing a new vehicle.
This should go under the general heading of “no new debt.” As with any debt, this will change your “debt-to-income ratios” and may
cause you not to qualify for your mortgage.
4. Tholl shalt not charge up your credit card balances.
5. Thou shalt not make a venJ large deposit or withdrawal from your bank account.
6. Thou shalt not change your mind after locking a rate.

7. Thou shalt not co-sign for someone else’s loan.
8. Thou shalt not spend your down payment money.
9. Keep holy thy closing date and paperwork.

Please try to schedule vacations for AFTER your closing date. If you’ve started packing for a move, remember to keep out any bank
statements, tax returns, or other important paperwork.
10. Thou shalt not file for divorce prior to closing.
Filing for divorce affects your marital status in a court of law; this change of status may sometimes complicate the process when
paperwork is being finalized.

St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

Word to the Wise: PRIORITIZE!

St Louis home buyingIn working with St Louis home buyers, there are lots of variations. Some buyers know exactly what they want, what they can pay, and where to look; they just need a REALTOR to make the connection. Other buyers in St Louis are really clueless. They have no idea what they want or where to look. They want a REALTOR to tell them where to go and what to do throughout the entire home buying process.

Question: which is better off?

Answer: Neither

Some would say that home buyer #1 is in better shape. They’ve done their homework, they are confident, they have a plan.

The problem with this type of buyer in many cases is that they make their plan BEFORE they have the benefit of working with a professional. Sometimes this type of buyer has begun the process of narrowing down their search and has ruled out homes or areas based on the direction of misinformation or the opinions or wishes of others.

Home buyer #2, some would argue, shouldn’t even buy a home. They need to know what they want before they start working with a REALTOR. This may be true in some cases. Often times this type of buyer allows a professional to get involved to assist them through the ENTIRE process, not just the final act. Often times a REALTOR can help a home buyer do a better job of considering all possibilities then methodically narrowing down the search based on realistic factors.

In ALL cases, there’s no “1 right way” to buy a home. Factors vary for everyone. The point is, that either too much preparation, or too little preparation can put a home buyer in a position where they aren’t allowing their real estate professional to help them or putting too much in their hands.

Buyer’s best bet is to take the time to make out a list of priorities about what they want in a residence. Proximity to work, proximity to family or friends, price range, type of community, type of home, and realistic idea of the duration of the residency should all be considered. Nothing is more disappointing to buyer’s agents as a call from a home buyer shortly after a purchase when they are disappointed in where or what they’ve purchased. Also a drag is when a buyer finds themselves wanting or needing to move because certain factors weren’t considered prior to the purchase.

Home buying is a PERSONAL decision, so allowing anyone to have too much influence in the factors that are personal can lead to frustration. That’s why taking a few minutes to list priorities BEFORE friends, family and strangers start the process of unsolicited counseling.

Once home buyers have that list, a REALTOR should be consulted. Often times a good buyer’s agent might think of possibilities that a home buyer may not consider just based on information on the list.

St Louis home buying is exciting! Finding a place can be exhilarating and a fantastic investment. Something to really be proud of! The right amount of preparation in advance can make a wonderful impact on the whole process.

St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

Difference between Ads & Service

homes for sale in st louis moThe tech stock world is ablaze today with the initial stock offering (IPO) of the real estate website Zillow. Exceeding the pricing expectations anticipated, the investment world is watching.

First thing monday I missed a call from one of my pals at Zillow. Every other month or so, a sales person from Zillow contacts me about their latest “whiz bang” program for agents. As an agent, I see Zillow for what it really is; an ADVERTISING COMPANY!

There are lots of other advertising company’s out there…Trulia, HomeGain, and more. Then there’s the local paper & their websites. All funded and supported by ads.

While these can all be decent sites to check out, they have major limitation. The best source for information on the real estate market is still the MLS (multiple listing service). Instead of a cross section of homes, it has everything on the market. Instead of being updated daily, weekly or monthly; its updated in ‘real time’ and instead of homes that are “under contract” and just awaiting their closing date, the MLS updates those homes too.

The only seeming drawback of the MLS is that a person has to contact an industry professional to have access. Is that really a problem? No obligation or fees to have a professional with experience in finding, inspecting, insuring, buying, negotiating, writing contracts on homes, with a rolodex full of other resources. Not a bad deal!
St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

Buyer Beware!

buyers agent st louisHome buyers are often nervous.

They should be. There’s a lot of factors involved and often times an overwhelming amount of details to consider.

A good professional buyer’s agent with relevant experience can make a huge difference in the end result.

That begs a question: how much should a buyer pay for this service?

Historically, the buyer’s agent has been paid by the seller. Commission to sell the home covers the listing agent and the buyer’s agent, split based on the listing agreement and published in the MLS.

Some of the giant real estate corporations are starting to break away from what has been a successful system for Realtor compensation. These corporations, often housing less experienced agents, are charging fees to the buyer at closing.

Last month, I experienced this for the first time. An agent with absolutely no experience in the given market charged her buyer’s an extra $500 on top of the commission paid by the seller. What was most frustrating for our agents was that the buyer’s agent had to be ‘baby-sat’ throughout the entire transaction. We work with many agents that are astute and competent, seeing them charge extra wouldn’t be nearly as hard to swallow.

The interesting thing is that many prospective home buyers don’t even know how a buyer’s agent is compensated, so seeing the ‘big corporate bonus’ isn’t as much of a suprise as it is to the agents.

Big corporations are a relatively new phenomenon in the real estate world. These corporations are building themselves up by adding income streams to the traditional real estate model to add to their bottom lines. Charging large fees to new agents and selling signs and other materials for a profit are things that typically don’t happen with smaller “boutique” REALTORS.
Word to the buyer: stick with the tradition and look for an agent with plenty of experience in your market BEFORE you pay a fee!

St Louis real estate is our specialty! If you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search now.

Great Reasons to Buy in the Fall Winter

Home for Sale in St Louis

Our First Home

Last week this article in the Wall Street Joural really caught my attention. “10 Reasons to Buy a Home” was a pretty good response to Time Magazines yellow journalism in last months article decrying home ownership. The Wall Street Journal article points out they had a very different tone when home prices were peaking back in 2005-6. What comes to mind is Warren Buffet’s statement “Be fearful when others are greedy and be greedy when others are fearful.” When everyone was ridiculously excited about real estate, we now know that it wasn’t the best time to buy. Now that prices are low and interest rates are extremely low and other buyers are hestitant, its a GREAT TIME to BUY. History constantly shows that many people won’t be excited until prices start climbing again, and by that time, the deals won’t be nearly as good as now.

My thoughts go to my first home buying experience. Not that we did everything right, but our apartment lease was coming due in 6 months and I was itching to buy a house. My new bride and I were at odds about location, but we both liked Kirkwood and Webster Groves area. I wanted to buy in the City, she wasn’t familiar enough. We looked and looked. One day my mother called and told me that we should look in the subdivision just north of hers in the City of Manchester. There were was a place selling in our range, we called our Realtor to take a look.

The house was in dire shape, but it was winter, and there weren’t many other buyers in the market. It was an estate home (owned by heirs of the prior owner) and they were getting desperate. We got an analysis of the neighborhood sales from our agent and discussed strategies on how to make an offer. We end up getting the home for a great price and had many happy years there.

Ever since then, I’ve experienced some really great reasons to buy a home during the off peak months of fall and winter. A few are listed below:

1. Seller’s are at a psychological disadvantage. Many sellers are anxious about the lower amount of traffic from summer. Offers are taken more seriously as there is less certainty that another offer will come along.

2. Realtors have more time. When I work with buyers in the fall and winter, most realtors have more time to spend because they aren’t working with as many other clients.

3. Prices have dropped on many of the homes that were listed in the spring and summer, sellers are more motivated.

4. Homes don’t show as well in bad weather and less tidy landscaping, and it gives buyers more leverage.

5. Buyer’s are less likely to encounter “multiple offers” which tilts negotiations in the sellers favor.

6. The average days on market is usually longer (fewer seller’s try to sell in the fall / winter) so the homes that are on the market have been ‘sitting’.

7. Other services, like mortgage brokers, inspectors and title companies aren’t as busy and have more time to work with a buyer’ schedule.

Buyer’s can have great experiences in their efforts all year long. If getting the most for your money and being able to thoroughly explore areas with the full assistance of a Realtor is important to you, then fall / winter buying might be the best alternative for you. Happy Home buying!

St Louis real estate is our specialty! Visit us online at 4SaleStLouis.comIf you’re looking for real estate anywhere in the St Louis, MO area, including St Louis City, St Louis County, St Charles, Ballwin, Chesterfield, Kirkwood, Webster Groves, or one of the other areas we serve, simply click the “Search St Louis Real Estate” link at the top or bottom of this page to begin your home search