Property Profiles
If You’re Buying, If You’re Selling

If You’re Buying…

Now is the time to get what you want.

Kansas City’s housing market has not suffered the extreme ups and downs that other cities have, all while we get more home for the money, benefit from historically low interest rates and have excellent yet undervalued properties from which to choose.

Yes, now is the time to buy real estate, but before you jump into today’s market, you need to know a few things. Here are 10 tips to help prepare you to make one of the largest purchases of your life.

1. Choose a lender who has a local office. You want to establish a business relationship with your lender eye-to-eye because you may want to visit with him or her in the future for refinancing, or if you fall behind in your payments, it’s much easier to work with someone you know instead of a stranger you have to call on a 1-800 number.

2. Don’t believe everything you read or hear about banks not lending money for home loans. Most banks and mortgage lenders have plenty of money to lend and are eager to make home loans at very attractive rates to qualified applicants. However, the days of zero-down and no verification of funds are gone, and you must play by the bank’s tighter lending rules to get the best rates.

3. Get your finances in order. Most conventional loans, such as 30- and 15-year fixed, require a minimum of a 5-percent down payment, private mortgage insurance (PMI) and a credit score of at least 620. To get the best rate, you may need a credit score of 740 or higher, depending on the lender and the program you choose. Your lender will probably ask you to provide the last two years of W-2s, the last 30 days of pay stubs and asset statements (bank, 401(k), IRA, etc.). If you are self-employed, you will need to provide the last two years of income tax returns. 

4. Consider your loan options. Federal Housing Administration (FHA) loans, which are insured by the government so your lender can offer you a better deal, are becoming popular with today’s buyers because they are not credit score-driven and require only a 3.5-percent down payment. Also, if you are a veteran, a VA loan is an affordable way to buy a home with little or no down payment. Finally, ask your lender if you qualify for any county, state or federal first-time home buyer assistance programs or tax incentives.   

5. Get a good faith estimate (GFE).  Your lender should give you a GFE in writing on letterhead within an hour after your credit score has been pulled and the other information has been reviewed. If your lender cannot do so within two hours, find another one.

6. Begin browsing. Once your lender pre-qualifies you, call on an experienced real estate agent to help you find a home in your price range and in the area you desire to live. There are plenty of new and existing homes to choose from in the Kansas City area, so do not let your emotions, friends or real estate agent pressure you into making an offer on the first home you find. Shop around and make an offer on the home that gives you the most value (bang) for the buck. 

7. Make an offer. You and your real estate agent should present a realistic and fair offer that will be accompanied with your earnest money deposit of at least $500. This “buyer’s market” doesn’t give you or your real estate agent the right to insult the seller by making a ridiculous lowball offer or asking them to pay for all of your closing costs, fees and other expenses. However, if the home’s appliances, furnace, water heater and A/C are older than five years or beyond their warranty period, ask the seller to provide a home warranty program (about $400) as part of your initial offer.

8. Expect the seller to counteroffer. If your real estate agent advises you to counter that offer then do so with caution. Otherwise, it’s probably best to accept their counteroffer and agree to purchase the home.

9. Hire an inspector. You’ll have 10 days to conduct an inspection of the property (which you will pay for). I always advise my clients to have the home they wish to buy inspected by a qualified home inspector, even if it is a brand new home. I also recommend the home be checked for termites and radon and, if it was built prior to 1978, for lead and asbestos.
 
10. Make your new “house” a “home.” After you close on the home and have moved in, throw a house-warming party and enjoy the biggest investment you probably will make in your lifetime… your home.

If You’re Selling…

Be flexible

Sobering statistics have split local home sellers into three camps. The first is those who purchased their homes between 2001 and 2005 when the market was hot and prices were higher, and they haven’t built up enough equity to make a profit at current market prices. The second group includes those who have built up equity but are unsure what they have to do to make their home appealing to today’s buyers or how much it will cost. They don’t want to spend too much of their hard-earned equity in remodeling and     not get it back at closing. The third group comprises homeowners who need to sell because of job relocation, death, divorce or other personal matters. For them, selling quickly at the best price is uppermost on their minds. 

History shows that people buy and sell houses regardless of economic conditions. If you are putting your home on the market, here are 10 tips for the taking.  

1. Choose an experienced real estate agent. You need someone who knows today’s market conditions and who will set a realistic price for your house that will attract buyers. Remember this truth about real estate: It is the buyer who sets the selling price for a house, not the seller.

2. Clean and tidy up the house. Your house will be in fierce competition for a buyer, so it must look its very best both inside and out. Buyers know they can afford to be choosy because of the excellent inventory of available houses.

3. Post quality photos online. Seventy-four percent of buyers make their decision to tour a house from the photos they see online. Also make sure the verbiage highlights your house’s best features. 

4. Eliminate odors, mold, water problems and worn carpets. Make necessary repairs before you put the house on the market. 

5. Modernize an outdated kitchen and bathrooms. Exterior upgrades such as fiber-cement siding and energy-efficient windows will also help sell a house. 

6. Increase curb appeal. Most buyers formulate a strong opinion of a house within the first 11 seconds of driving up to it. If they don’t drive away, they may walk in with a negative attitude, looking for something wrong to justify their opinion.  

7. Hire a professional stager. If the house is empty, professional staging can help make it look more appealing. Once it is staged, have your agent schedule an agent’s tour and regular open houses.

8. Consider offering incentives. Offer to pay the first year of HOA dues, credit toward the buyer’s closing costs, a whole-house warranty or more commission to the buyer’s agent.

9. Network. In today’s market, putting a house on the MLS with a few photos and a sign in the front yard is not enough. You and your agent should send flyers about your house via e-mail to other agents and mail out listing postcards to your neighbors. Make sure all of your friends, co-workers and any groups you belong to (church, sports team, etc.) also receive a flyer. They may not want to buy your house, but they may know someone who does.

10. Don’t think of your “house” as a “home.” You are selling a very expensive commodity, and it’s probably the largest financial transaction you have ever made. Don’t allow any emotional attachment to your “home” cloud your ability to make a wise financial decision to sell your “house.”


KC homes on the market (Dec. 31, 2008): 13,626+
2008 average listing price: $137,132
2007 average listing price: $155,339
Percent difference: 12
Average days on market for a single-family home: 85

Dave Pleskac is a Realtor with Reece & Nichols Realtors in Leawood, Kan., and the host of Kansas City’s longest-running real estate talk show, “Real Talk with Dave” on 980-KMBZ radio every Sunday at 9 a.m.