John Beckett's Real Estate Blog

If a new house is listed for only slightly more than older ones you’re looking at, is it worth jumping on? Here’s a look at the pros and cons.

Some homebuyers will take nothing less than a new home with an untouched bathtub. Others want a home with character in an established neighborhood.

Personal preferences aside, there are pros and cons to buying a newly built home over a resale, as well as financial implications for each option.

New-home advantages
Rochelle Fitzgerald, a sales associate with Coldwell Banker Residential Brokerage’s Rockwall office near Dallas, says, “There’s no question that some people prefer that ‘new-home smell’ and the idea that no one else’s feet have been on the carpet. On top of that, many people like to personalize their home by picking out everything from the beginning.”

Some buyers focus on the more practical aspect of buying a new home because it typically will require less maintenance than an older house.

“It’s very important to some buyers to have everything new, plus they have the peace of mind that comes along with the builder’s warranty,” says Dan Kruse, broker/owner of Century 21 Affiliated in Madison, Wis.

On the financial side, builders, particularly in a slow real-estate market, offer plenty of incentives to buyers.

“In a sellers market, new homebuyers will often spend as much as 10% or more above the purchase price for optional features,” says Jeff Ristine, broker/owner of Weichert, Realtors: Kingsland Properties near Chicago. “Now many builders are offering free options as an incentive to buyers, such as a finished basement and an upgraded kitchen. Builders are tailoring their incentives to specific buyers, so some will throw in things like initiation fees for a country-club membership.”

New-home disadvantages
In spite of the added builder incentives, real-estate experts say new homes are typically more expensive than existing homes.

“Traditionally, new homes are more expensive because they are being built from the ground up,” Kruse says. “In recent years, some new homes have come down somewhat in cost because the builders have been hurt so badly by the downturn in the housing market. For the most part, though, builders try to keep price integrity and will offer closing-cost assistance or upgrades rather than lower the base price.”

Upgrades and closing costs are typically tied to the buyer using a builder-designated lender and title company.

“I would caution buyers, at least in our market in the Chicago area, to be careful buying a new home because builders are competing against foreclosures and it could be long time before a new home will increase in value,” Ristine says. “Even with builder incentives, you are usually paying a premium for buying a new home, so you need to hold onto it for five years or more to build any equity.”

Fitzgerald says buyers of new homes should expect to own for longer than buyers of existing homes because of differences in price appreciation.

“In a new-home community, if you need to sell within a year or two, you are competing against the other homes that are still being built and can be customized,” Fitzgerald says. “Buyers will choose a brand-new home rather than a 1-year-old home, especially if the builder can offer incentives that a regular seller cannot.”

One other downside is the potential for living amid a construction site for several years, particularly if the builder has slowed development because of the recession.

When to buy a new home
Real-estate agents agree that the best values for a new home come when the development is nearly complete.

“In years past, buyers wanted to get in early to take advantage of pre-construction pricing and a better location within the community,” Kruse says. “But now, buyers want to get in late, so if you have to sell you won’t be competing with newer homes in the development.”

Ristine says buyers should be cautious about buying before a community is nearly complete, because some builders are so financially strapped that they cannot complete their developments.

Existing-home advantages
“The biggest advantage of existing homes is the maturity of the community,” Kruse says. Buyers can look at how well the homes have held their value historically. Plus, buyers willing to purchase a fixer-upper can more easily increase the value of their property than someone with a new home.

Fitzgerald says that buying in an established community allows homeowners to know more about the schools and neighbors before they buy.

Long-term value in new and existing homes
For most homebuyers today, the biggest concern is whether the property will hold its value.

“In 10 years, a new home purchased today is likely to have more value simply because you own a newer home designed to meet today’s standards,” Fitzgerald says. “A new community will have newer amenities, too, including schools and shopping areas.”

Kruse and Ristine believe long-term value depends more on location than the age of the property.

“Value depends on where a home is located and how well the home has been maintained,” Ristine says. “People do like new things, but if a home has been upgraded with a new kitchen and bath, it can compete very well with a new home.”

Ultimately, the decision to buy a new or existing home comes down to what a buyer values more: a maintenance-free, new home or a mature neighborhood.

Read at:  http://realestate.msn.com/should-you-buy-a-newly-built-home

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Open houses can be a wonderful way to find your next house. They can be just as helpful in gathering intelligence about a neighborhood, getting a feel for its housing stock or simply scoping out real-estate agents that you might like to work with.

But what should you ask when you pay a visit? In this month’s Buying Advice, we consulted agents and other real-estate experts for their insights on how to navigate open houses.

We’ll also update you on the latest housing and mortgage stats, and see how most people are feeling about the housing market’s prospects. And real-estate author and blogger Ilyce Glink will answer one reader’s question about whether he can legally have two primary residences.

Open-house questions
If you play your cards right, an open house can tell you a lot more about a property than its floor plan or the condition of its floors. The key is asking the right questions, agents say. (Or if you’re looking with your agent, making sure they do it for you.)

Here are some questions to ask the listing agent and how these questions might help you in your purchase of the home:

Have you had any offers on the property? That lets you know if you have competition for the property, says Kim Drusch, an agent with Century 21 Award in San Diego. You’d also want to know if the sellers had rejected any offers and why, agents say. It could help you better craft an offer that will meet with their approval.

Has this house been in escrow? If it has, and didn’t sell, you’d want to know why. Was it an appraisal issue? Did a home inspection turn up some major damage? If it has been in escrow, ask if any inspections were done on the house. If there were, ask for copies of these reports, so you know what you’re dealing with, and what kind of secondary inspections you might need should you decide to make an offer.

How long has the property been on the market? If it’s getting a little stale, it might be ripe for a lower offer, experts say. Likewise, find out if there’s been a price reduction and when it happened.

Why are the owners selling? The agent showing the house is likely to remain mum on this one. But, then again, she might also let it slip if they are moving soon, are under financial pressure or are building another house and might need more time in the house if she’s a little desperate to move the property. Any information you can glean can help you decide how much to offer, when to close, etc.

Are there any liens on this property? You don’t want any surprises, so make sure there aren’t any construction liens, tax liens or other claims on the property resulting from unpaid debt, such as unpaid homeowners association dues.

Is the home going to meet a lender’s appraisal expectations? Do you have comparable sales in the last 90 days? These days, with prices on the decline, and more and more properties getting taken back by banks, appraisal at the listing price isn’t always a sure thing. Take a look at the recent comps and have your agent check pending sales to make sure you won’t get stuck once you’ve starting spending money on inspections and other aspects of the process.

Are there any other costs of ownership? Here again Drusch says you want to make sure there’s nothing to surprise you after closing.  If it’s in a condominium complex or other planned community, ask about association dues and additional taxes or assessments, especially if it’s a newer community. And if there is a homeowners association, get its phone number and call it to make sure there aren’t any rules that conflict with your lifestyle, pets, etc. You don’t want to find out, after the fact, that your husband can’t park his work truck in the driveway of your new home, Drusch says.

Have your agent follow up with the listing agent via fax or email to get it all on paper.

“Make sure everything is in writing,” Drusch says. And, as always, make sure you have your own home inspection done, even if you have been assured there are no problems with termites, plumbing, etc.

Home-sales update
Existing-home sales dipped 0.8% in April from the previous month and 12.9% from the previous year, when the homebuyer tax credit was in effect, according to data from the National Association of Realtors. The national median home price declined 5% from last April to $163,700.

Lawrence Yun, the NAR’s chief economist, says tight credit and low appraisals are putting the brakes on many home purchases.

“Although sales are clearly up from the cyclical lows of last summer, home sales are being held back 25% to 20% due to the very restrictive loan-underwriting standards,” Yun said.

Moreover, distressed homes, which trade at double-digit discounts to traditional listings,  are still weighing heavily on the market. Distressed homes made up 37% of sales in April, down from 40% in March, but well above the 33% posted at the same time last year.

Investors are the most excited about the still-floundering market. All-cash deals accounted for 31% of transactions in April, down from a record 35% in March.

Mortgage rates drop
The one bright spot for buyers is that mortgage rates continue to drop, increasing affordability. Fixed-rate mortgages declined for the fifth straight week, as of May 19, Freddie Mac said in its Primary Mortgage Market Survey, with a 30-year fixed averaging 4.61% and the 15-year averaging 3.8%.

Economists versus consumers: The outlook
Just don’t look for that investment to appreciate in value immediately. Economists don’t predict a return to home-price gains until early to mid 2012.

Fannie Mae, for one, expects the median home price to decline 6% in the second quarter of this year from the same time in 2010, with those losses slowly tapering off this year, until the market hits bottom in the first quarter of 2012.

Analysts at J.P. Morgan expect an additional 6% decline in prices from where the market stands today.

But perhaps most bearish are consumers themselves.

In a joint housing survey conducted by Trulia and RealtyTrac, released in mid-May, 54% of those polled said they don’t expect the housing market to recover until 2014 or beyond. Twenty-four percent expect a recovery in 2013.

It’s clear, says Fannie’s chief economist Doug Duncan, that despite low prices, low interest rates and improving job numbers, consumer attitudes have yet to rebound in a way that will really push the needle up on home sales.

“In spite of the positives surrounding the housing market, we see that consumers are still hesitant to take on a large financial obligation,” Duncan says.

Still, he says he expects home sales to rise some this year, as the economy gets on surer footing.

And for many, it might begin to make more sense to buy. According to Trulia’s most recent data, it is now more affordable to buy a home than rent a similar home in 78% of major U.S. cities.

You can read actual question from other readers at:  http://realestate.msn.com/june-buying-advice-what-questions-should-you-ask-at-the-open-house?page=2

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When the iPhone 4 came to Verizon Wireless earlier this month, the wireless giant said that initial online sales were the highest ever from any previous Verizon launches.

But subsequent online and store sales have been falling short of expectations, according to reports.

According to Boy Genius Report, a source from Apple said that unit sales from Verizon Stores and Apple Stores during the first five days of availability were far from stellar, and came in below Verizon expectations. Also, the Apple source noted that online preorder sales totaled around 550,000 units.

Reports that iPhone sales were falling short of expectations were so rampant that Verizon’s CEO Daniel S. Mead needed to go on record to refute such reports.

In an interview with the Wall Street Journal last week, Mead said that the iPhone sold better than any previous launch, including the highly touted Motorola Droid and Droid X. The previous numbers were solely based on several individual stores and did not include online sales, Verizon said.

In addition, Mead shared that Apple is ready to launch a 4G device on its network, possibly the iPad 2. “They understand the value proposition of LTE, and I feel very confident that they are going to be a part of it,” Mead said.

The truth probably lies somewhere in the middle. Sales of the iPhone 4 on Verizon likely were not as high as Apple had hoped, but for Verizon, the phone was a success. Early adopters of the device on Verizon’s network are mostly current Android and Blackberry owners.

A few prominent factors prevented the phone from selling as well as Apple or Verizon hoped for. In February, an unusual cold spell blanketed much of the Northeastern United States. A main reason, some experts say, is that most people who would like to switch carriers are locked in at AT&T and would be subject to hundreds of dollars in termination fees should they switch carriers to own an almost identical phone on a different network. That’s a high price to pay in today’s economy.

Verizon also made a few mistakes during the iPhone launch that could have helped sales, according to Gerson Lehrman Group, a business consulting and research firm.

Verizon, for one, did not allow side-by-side retailing at Apple Stores, pitting its version of the iPhone right next to the AT&T version, and allowing potential consumers to decide the difference. Perhaps the biggest misstep, according to Gerson, was that Verizon was too busy targeting current AT&T iPhone owners to realize that current Blackberry owners were the biggest targets to convince them of a switch.

After the Verizon iPhone 4 went on sale, it was discovered that roughly one-third of sales went to current Blackberry owners, and only 14 percent were AT&T iPhone owners switching carriers.

Read at:  http://www.theepochtimes.com/n2/business/verizon-iphone-sales-tepid-at-best-52105.html

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You’ve been out looking at homes with your real-estate agent all day. As you walk through the door of the last house on your list, your mouth falls open.

Finally, you’ve found “The One,” the perfect house. Stars shimmer in your eyes. You love the layout, the paint colors and the little powder room by the back door.

You make an offer and move in within the month. It’s not until things settle down that you discover that the roof leaks and that the foundation must be replaced — immediately. Suddenly, the stars dim as you face the prospect of several expensive repairs and unexpected home-improvement costs. Not fun at all. 

Homebuyers, especially first-timers, often are caught looking at the wrong things when they buy a house. They fall in love with all the things that are easy to fix and never think to look at the important clues that the house might be more trouble than it’s worth.

What should you do to make sure you’re not buying a lemon? Here are seven tips.

1. Check the foundation
A house’s foundation is probably one of the most expensive things to fix, which is why you must go down to the basement before you even look at the rest of the house. Do you see any cracks in the concrete or stone? If so, the foundation might be structurally unsound. If the basement is finished, look for cracks in the drywall, especially around windows and doors.

2. Inspect the HVAC equipment
While you’re down in the basement, look at the heating and cooling equipment. How old is it? Does it look like it’s running properly? Are the vents connected well? These are important questions to answer to make your home energy-efficient and to reduce your utility bills. Replacing a home’s HVAC system can cost tens of thousands of dollars, but many first-time buyers never give it a second look.

First, one-time occurrences, such as a basement leak, can happen again. Second, that water damage could have opened the door for mold, especially dangerous black mold, to grow.

Look for brown or white stains down the side of the basement walls. These can indicate a past leak. If the floor is bare, look for horizontal stains.

Be suspicious if the basement has been painted recently. Sellers often do this to hide water-damage stains. It’s also important to check the bathroom and under the kitchen sink. Look for stains that would indicate mold growth.

4. Check the electrical system
If you are looking at a home built before the 1930s, it still might have old knob-and-tube wiring. It can be a problem, if has been tampered with in any way. For example, if the attic has blown insulation sitting on top of the knob-and-tube wiring, this is tampering — and it’s a serious fire-safety hazard. Most insurance companies consider knob-and-tube wiring to be unsafe, so you’re going to pay more or be turned down for homeowners insurance if you don’t replace it. Replacing it means rewiring the entire house, which will cost tens of thousands of dollars.

5. Look at the house at least twice
Remember, when you first see that “perfect house,” you’re looking through rose-colored glasses. Always sit on the decision to make an offer and go see the house again a few days later.

6. Get a home inspection
This seems like old advice, but many people still don’t get a home inspection before they make an offer. If the home inspector says more research is necessary or files an inconclusive report, get a second opinion.

7. Consider that if the price is too good to be true, it probably is
Trust your gut here. If your dream home’s price is suspiciously low, there’s probably a good reason.

Beware. Buying a house is a huge decision and investment, especially if it’s your first home.

Don’t let first impressions and appearances sway you. Make sure you do your research and watch out for some of these pitfalls.

Read At:  http://realestate.msn.com/article.aspx?cp-documentid=27522974

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Read at:  http://www.heraldtribune.com/article/20110216/BREAKING/110219793/0/news300?Title=Gas-prices-hit-28-month-high