Jared Hopgood

Realtor

My Blog

Berks County Market Trends for June

7/18/2016

 

 

June was another strong month for the Berks County Real Estate Market. 

Inventory

Year-to-date the number of new listings is down 6% from 2015. Coupled with a 16% increase in sales year-to-date, inventory is 24% below the year ago level. Still, the MSI is at 5.3 months, indicating a reasonable balance between supply and demand.

Settled Listings

June closed sales were up 21.2% from last June and are 16.2% ahead of 2015 year-to-date. The median property marketing period (PMP) year-to-date is 51 days compared to 64 year-to-date last year.

Median Price

The median sold price of settled transactions year-to-date is, $7,000 (4.8%) higher than 2015 trailing only Philadelphia County in price appreciation this year.

Settled Price vs Original Price

The sold price in June was equal to 96.5% of the original list price and is at 95.1% year-to-date, within the normal range of 93-96%.

In summary, the market is still strong and inventory is still the lowest it's been in many years.  This is what most would consider to be a healthy market for both buyers and sellers.  These of course are broad statistics for the whole of Berks County and there are certainly areas within Berks that may be seeing a very different market picture.

As always if you would like help deciphering a housing market that you are interested in contact me and we can walk through it.

 

 

 

Is Cash Really King?

7/18/2016

http://poluscapital.com/wp-content/uploads/2014/08/CashIsKing_1.jpg

Cash is King.  A lot of us have heard this phrase before.  In real estate cash can be king also, but what makes cash so special is the amount of flexibility it affords you while negotiating to purchase a home.  I’ve come across a misconception amongst some buyers that when you submit an all cash offer, you can expect to receive a deep discount on the purchase price of a home.  This could not be farther from the truth.  Remember that if you buy a home for $200,000 and pay all cash, the seller receives $200,000 at closing.  If you bought that same home at the same price, but used a mortgage to make the purchase, the seller receives…wait for it…$200,000 at closing. 

So what is the advantage to using cash?  The easiest way to answer that is to explain some of the downsides to mortgages.  When a bank issues you a mortgage they are going to require an appraisal, a home owner’s insurance policy that meets the bank’s standards and various inspections may be required depending on the type of mortgage you receive.  Those things all cost money and take time to complete.  Most Sales Agreements include contingencies that allow you the buyer to not complete the purchase if you can’t secure a mortgage.  This puts sellers in a very nerve wracking position.  The sellers take the home off of the market while both sides are finalizing the sale all the while knowing that if the bank does not like some part of the deal, it can refuse to issue the mortgage and the sellers have subsequently lost weeks of marketing time and have to go through the process of re-listing the home and negotiating with another buyer.  Long story short…there are a lot of moving parts involved with obtaining a mortgage and any one of those parts can destroy a deal.  Cash on the other hand allows you to eliminate most or all of those moving parts.  Since an all cash purchase does not involve a bank you are able to settle quickly, with no contingencies if you like.

When submitting an all cash offer you can have your only contingency being that the home makes it through a home inspection in a satisfactory condition for you.  Seeing as how you can have a home inspection completed in as little as 7 days, you would be able to settle the sale very shortly after the home inspection.  I had a cash buyer that elected no contingencies and wanted to settle in 9 days.  The only reason it took that long was because we needed a little time to complete the title search.  Needless to say the sellers were happy even though we offered them less than asking.  From their perspective they got to sell their home quickly and with really no risk of the sale falling through due to some outside force (mortgage lender) getting in the way.

It's really the contingencies (or lack there of) that make cash king in real estate.  If you plan to purchase a home using cash you can expect a small discount but always remember there are more things involved in a real estate transaction than price alone.  Cash is indeed King but only if you know how to use it. 

Buying a Foreclosed Property

7/11/2016

Foreclosures can be a great opportunity to get a deal on a home.  Foreclosures are homes that the bank now owns because the last owner was unable to pay their mortgage on time.  Foreclosures also go by the name REO (Real Estate Owned) or just Bank Owned.  Foreclosed properties are typically managed by what is called an Asset Manager.  The Asset Manager (AM) is in charge of selling a banking institution’s foreclosed properties.  The AM may have quite a few properties that he is responsible for selling.  Due to the sheer number of properties this AM is responsible for, the negotiating process is usually more rigid and business like as opposed to the often emotional negotiating process that takes place with more standard real estate transactions.

One often overlooked aspect of buying a foreclosed property is the additional closing costs.  Banks are exempt from paying transfer tax – which is usually 1% of the purchase price – so that cost falls on the buyer.  Banks also will not pay for Use and Occupancy Inspections that certain municipalities require.  That cost will also fall on you as the buyer.  In a lot of cases the banks will have the utilities turned off which makes it difficult to have a home inspected or even appraised.  The only solution is to have the utilities turned on for a day or two in order to complete the inspections and appraisal.  Who pays for that you ask…well the buyer of course.  Did I mention that banks will typically not pay for any repairs and explicitly make it clear you are purchasing the home as-is.

To be fair, the extra costs that I listed above can sometimes only equal a few hundred more dollars added to your closing costs.  But since we are on the topic of closing costs, do you think the bank will help cover your costs?  If you answered no…you would be incorrect.  It is not unheard of for banks to help with a little bit of seller assist but it is also not very common.  You may get a percent or two in assist or have to offer more than the listed price.

When it comes to financing the purchase of a foreclosed property, you can utilize a lot of the normal mortgage products available to you for more standard real estate transactions.  However, certain homes may only qualify for certain types of financing or may not qualify for financing at all.  This is where I would really have to guide you through the process.  With a pre-approval letter and a quick conversation with your lender I can save you a lot of time by advising you on the probability of securing a loan to purchase a particular property based on the property’s condition.  FHA loans are the most difficult to utilize to purchase a bank owned property.  The property would have to be in pristine condition relative to other bank owned properties.  A conventional loan can be used to buy a foreclosed property.  There are less strings attached to conventional mortgages so the property itself does not have to be in great shape.  There are also rehab loans available which can be really great options to buy a foreclosure but the details on those are for another day.  Of course cash is still king. 

Buying a foreclosed property is a high risk but high reward proposition that should not be taken lightly.  If you have been thinking about finding a foreclosed property to purchase you should contact me to fully discuss your situation as well as what you are trying to accomplish by buying a bank owned property. 

Buying a Short Sale

7/5/2016

 

 

 

Short sales can be a great opportunity to buy a home at a price that is below market value.  This is fantastic, a home purchased below market value is a home with instant equity.  As with most things in life, there is some fine print involved. 

First, a short sale gets its name from the fact that when the home sells the proceeds the seller receives will not be enough to cover the full amount still owed on the mortgage.  Therefore, the seller will be short on funds after the sale

Second, short sales can be anything but short when it comes to how long they can take to settle.  In most cases it will take months and in some extreme cases it can take over a year to get a short sale to close.  This is primarily because the bank that holds the mortgage has to agree to the terms of the sale.  The banks can take a while to even review the buyer’s offer let alone agree to it.  As a result, it might take 60-90 days to even hear back from the bank after submitting an offer.  Remember that is 60-90 days that you must maintain your current financial situation.  Don’t open new lines of credit.  Don’t sell a bunch of stuff at a yard sale that produces a large sum of untraceable cash in your bank account and so on, until the sale closes.

Third, the banks establish an amount of money they need to receive after closing and they will not budge from that number.  Depending on the number they came up with there may be no funds available for any seller assist or repairs after the home inspection.  For a lot of people this is not a huge issue but if you are a buyer that is strapped for cash, this may be a deal breaker.

In closing, if you are a buyer that is in no particular hurry to make a purchase and you have enough cash to possibly make repairs and cover your closing costs, a short sale may be a fantastic opportunity to buy home at a great price.

Berks County Market Trends for May.

6/29/2016

I'm sure many of you are aware of the improved sentiments regarding the housing market.  We are leaning towards the seller side of a neautral market.  Every month the local Multi Listing Service (MLS) releases market statistics for the previous month in Berks County.

Inventory

Year-to-date the number of new listings is down 5% from 2015. Coupled with a 14% increase in sales year-to-date, inventory is 20% below the year ago level.

Settled Listings

May closed sales were up 14.7% from last May and are 14.1% ahead of 2015 year-to-date. The median property marketing period (PMP) year-to-date is 59 days compared to 76 year-to-date last year.

Median Price

The median sold price of settled transactions in May was $155,900, $10,900 (7.5%) higher than May 2015. Year-to-date the median sold price is 3.6% higher ($6,000) than 2015.

Settled Price vs Original Price

The sold price in May was equal to 97.5% of the original list price and is at 93.5% year-to-date, within the normal range of 93-95%.

 

The summary of all this information is there are fewer homes available to more buyers than this time last year, which is causing homes to sell at a slightly higher average price.  These of course are broad statistics for the whole of Berks County and there are certainly areas within Berks that may be seeing a very different market picture. 

As always if you would like help deciphering a housing market that you are interested in contact me and we can walk through it.

I Don't Know If the Schools are Good

6/21/2016

I don’t know if this is a good school district.  I may have opinions on whether or not I would send my children to a particular school but I will never share those opinions with my clients.  Why you ask?  Well, because what I consider a strong selling point and what you consider a strong selling point may be two very different things.  I may like the fact that a school has strong athletics, while you are more interested in the music department.  If you purchase a home based on my OPINION of a school, you may find that you do not share the same opinion as me. 

Buying a home is a major decision and you should not take any short cuts when performing your due diligence.  As a REALTOR® I can point you in the direction of the information you seek, however, I cannot interpret that information for you.  Unless of course that information is directly involving the home itself.

I provide links on this website that may help you determine which school district is right for you and your family so feel free to click on those to poke around and look at various statistics. 

I strive to be a resource for my clients so I am always looking for new ways to assist them.  If you know of any other places to find relevant school district or community information just shoot me an email so I can better assist people in the future.

Realities for Buyers in the Current Market

3/18/2016

Every now and then I feel the need to share information with the public at large and more specifically active or soon to be active real estate consumers.  This message is directed at buyers and has been prompted by my first hand observations.

For the last couple of years everything that we have read or heard has indicated we are in a 'Buyer's Market' here in Berks County and surrounding areas.  A 'Buyer's Market' is simply when there are more homes for sale than people looking to buy.  This increased competition for each buyer leads to reduced sales prices, longer time on the market and more concessions by sellers in order to get a deal done.  Not any more.  While we are not quite in Seller's Market in most areas we are certainly no longer in a Buyer's Market.  This is more of a very healthy equilibrium.

What does this mean for buyers?  Two new and very important realities have taken over for buyers.  Good homes do not stay on the market long and seller concessions are drying up. 

As buyer you need to be decisive and realistic.  Be decisive in that when you find a home, you are prepared to make an offer on it sooner than later.  Waiting a few days to decide if you like a home can be the difference between getting your dream home or starting your search over.   Once you have found the perfect home and are preparing to make an offer...be realistic.

Let me set a scenario:  A home comes on the market, I get you in to see it the next day, you love it and want to make an offer.  I tell you the home is priced well and won't last long.  You tell me you want to offer 10% below asking price while also asking for a 6% seller's assist to help you cover closing costs.  You are essentially offering 16% less than asking on a home's 2nd day on the market.  In most cases this offer will not be considered and you may or may not get a counter offer.  Assuming you get a counter offer, now we have started a lengthy negotiation process and by the way other buyers are still viewing the home and forming their own offers.  Now you find yourself in a multiple offer situation where any significant discounts are going to be hard to come by.  We could have streamlined the process a bit by submitting an offer that is more likely to motivate the seller to sell to YOU instead of somebody else coming late to this party.

As has been the case forever now, that pre-qualification or better yet pre-approval letter from your lender is gold in this current market.  If you want to look at all the shiny new homes on the market, you better have proof of funds to make an offer.  Take a look at the above scenario and replace the lenghty negotiation procees with the getting a lender pre-approval and the end result will look very similar.

The moral of this story is that the days of seeing a great home, going back a week later to see it again, sleeping on it for a week and then coming back to with an offer well below asking and numerous concessions are quickly disappearing.  It's still a great time to buy but make sure you're truly ready to enter this market.

Energy Savings Tips for This Winter and Beyond

11/2/2015

 

 

 

Ways to Save Energy in Your New Home

  • Raise the temperature slowly to keep your bill lower. Quickly raising your heat pump's temperature activates the heat strip, which uses tons of energy.
  • Cover all bare floors. Carpeting or rugs add to comfort and heat retention, especially if there is little or no floor insulation.
  • Don’t block air vents with drapes and furniture.
  • Dust your fridge the next time you dust your house. Check the coils behind the refrigerator — and use coil vacuums or dusters to clean it off and keep costs down.
  • Wash and dry several loads at once, so that your dryer isn't completely cooled down when it heats up for the next load.
  • Use copper-bottomed pots and pans that use heat more efficiently when cooking on the stove.
  • Always wash with cold water, laundry detergent works just as well, and you’ll save 40 cents per load.
  • Turn off your water heater if you plan on leaving home for a few days. And you get back. Most models will reheat the water to the set temperature in about an hour.
  • Plug electronics into a power strip, then turn the strip off when not in use to save in energy costs
  • Set your computer to sleep or hibernate mode instead of using a screen saver so it uses less electricity during periods of inactivity.
  • Unplug battery chargers when the batteries are fully charged or the chargers are not in use. Many chargers draw power continuously, even when the device is not plugged into the charger.
  • Open interior doors so that warmed air flows freely throughout your home.
  • Install a door sweep on your garage door to seal the gap between the bottom of your door and the threshold. This prevents cold air from coming in and warm air from escaping from your home.
  • Run cold water for your garbage disposal. Hot water requires energy to warm. Cold water solidifies grease, moving it more easily through the disposal and pipes.
  • Use glass baking dishes in the oven when possible. Glass retains heat better than other materials, so it helps food cook faster, and you usually can reduce your oven temperature by about 25 degrees

Thank You to my Friends at NRG for providing this great list of energy saving tips.

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