It Boils Down To Perceived Value of Motivation

Texas is a non-disclosure state. By that, it means that real estate sales price are not public records. That means buyers and sellers have a more challenging time to figure value. Often times, real estate consumers rely on their realtors for this knowledge. Many homes are sold through the MLS system, thus sold record data may be held there.

Realtors perform comparative market analyses to figure out the value of houses. Again, value is only in a form of an opinion. What the actual house will sell for depends on the given buyer and seller under their own motivation and circumstances.

I have come to the conclusion that no matter how much market data, stats and comps you see (as a home buyer or seller), in the end, realtors may provide you with a suggested price range of which a house should sell for, it is ultimately a willing buyer and willing seller that determines the price. In this equation, one thing called the perceived value of a buyer's and a seller's motivation is often times difficult to evaluate, or in short, put a dollar value to it. How much it is worth to you, your realtor cannot tell you.

For example, if you are seller that needed your house sold 1 month ago has more motivation to sell when compared to a seller who wants to see if he can get what he wants. If you are Seller #1, and assuming you had the exact same house as Seller #2, most likely, your price would be lower than Seller #2.

When dealing with a buyer who just absolutely disregard a suggested price range of the market value and is a bargain hunter, there is nothing much to say other than testing how low a seller would go. A value is based on today's value yet so many buyers make offers based on the fact that this is a declining market. Is it really? You would have to prove it based on alot more market statistics and data to come up with the answer - if it is indeed a true declining market. Not just what newspapers and TV say.

Often times, sellers have their reasons to sell. Some have relocated, some want to move closer to family in a different place while others just want to upsize or downsize. Some have to sell for financial reasons while others seize the opportunity to cash out their equity. All these are reasons and in actual fact, has a dollar value denomination to a seller. What this number is depends on the individual.

As real estate professionals and the market area experts, we could only provide a somewhat systematic approach to our opinion. But the rest do obviously lie in the decisions of the buyers and sellers. Motivation truly has a value. Really.

In All Seriousness Of An Offer

Written by Loreena Yeo

3:16 team REALTY

Copyright 2008

Most parts of the country, including my Frisco TX real estate market is undergoing a Buyer's market - generally speaking. (Some spots - whether it is the price range or location of the market are not suffering at all) By that I mean that Buyers have many houses to select from and being a Seller at this point in time is definitely not fun. You are right, it down-right awful. However, despite the current real estate market conditions, if you are a purchaser in this marketplace, there are some facts you ought to know.

Even you have the upper hand in this Buyer's market, do understand that your offers have to be somewhat "reasonable". For example, If the Listing Price is $350,000 and the comparables support a $342,000 number, your verbal offer of $220,000 most likely would not buy you that house. In all seriousness, the contract that you and your realtor put together could perhaps be just a waste of time. (Again, perhaps).

Not only your number should be somewhat "justifi-able", it should also be endorsed with a written formal offer. Then, your experienced real estate agent could perhaps include a copy of your pre-approval or bank approval letter, copies of your earnest money and option fee checks (account numbers blacked out).

Again, market comparables are only used to indicate what the "typical" or "average" house would sell for in the neighborhood you picked. However, we know that ultimately, it is a Buyer and Seller for that specific home that determines the final price.

What Does This Mean If You Were a Buyer In A Real Estate Transaction?

You can make any and all the offers you want. It is ultimately yours and the Seller's decision to determine the final price. No doubt that this is a time where you can take an advantage, the odds are great for you. However, Sellers still do need see if they could accept the price you offer. Again, a verbal offer in a real estate transaction bears no weight and credibility. I understand that you are very conscious about the price, however, all terms come into play besides just the price. In short, there is just more than price that determines the transaction is successful. Your experienced realtor will be able to assist and navigate this path with you.

What Does This Mean If You Were a Seller In A Real Estate Transaction?

First of all, please do not get upset or offended by the Buyer who has just given you a "low" offer. Again, the word "low" here is relative. Many times, Buyers consider many factors before placing that number on the contract. Most of the time, it is simply because he/she is taking the chance that this real estate market has NOT bottom out yet. However, the positive side to this is that you at least have an offer to chew on. Some buyers are just down right trying their luck. Most of them who care enough to give you a formal written offer ultimately are interested in purchasing the house. If you do have a contract, you at least have something to negotiate rather than being on the other side of the extreme, that your house will probably sit on the market for much longer. Give it a good work out (negotiation rounds). See if there is a number that truly would make you and your Buyers feel at ease.

What Does This Mean If You Were an agent?

You must get your buyers to show some good faith that there is some seriousness in the offer. However, all I can say is that do not take the written offer "personally". It may or may not be a reflection of you. (Some are jokes!). Ultimately, we are hired to work in our clients' interests. After seriously discussing the effects of an offer (reasonable or unreasonable), just let it be and see how the situation pans out.

Buyers and Sellers Rethink their Suburbia Strategy

The gas prices has gone up very significantly over the past year (now around $4.00 per gallon here in North Texas) and consumers are also a severe hit on grocery costs. The rising costs of living are definitely making consumers change their lifestyles and change their ways of running errands. Let's not even discuss vacation and other non-important luxuries in this picture.

Here in Texas, we stand proud with our gas guzzles. In the past, it is rather more common to see the Ford and Chevy trucks, the Ford Expeditions and other giant SUVs and large cars instead of the tiny Chevy Aveos, Toyota Yaris(es) and Ford Focuses. But our highway landscape has changed in the past year due to the rise of energy costs.

It is very common for residents in the Dallas-Fort Worth metroplex to drive over 30 minutes to get from one place to another. Many homeowners choose to live in one city and drive over many more only to work in the city at the other end of the metroplex. It takes over 1 hour to commute each way and many have chosen to do that. I have many friends and clients that drive from Frisco to their places of work in Irving, Hurst and Fort Worth.

However, buyers (and sellers) are rethinking their suburbia strategy these days. They are choosing to find houses closer to work to save on gas. In the past, buyers choose a house because of the features it offers, but today, location, location and location becomes a very hot topic. Gas and grocery prices will probably hover around the $4-5 per gallon price range for a while and there's not much possibility for it going back down to the levels we are used to.

In The Midst of Multiple Offers

Yes, in this Buyer's market, there are still ample possibilities of having multiple offers on a property. The key is pricing it very attractively. This blog is not about how to receive multiple offers on a property, but it is more geared for buyers - specifically if you are one of the multiple offer entries.

In the midst of multiple offers, be cautious! Because you know that there are multiple offers, many times, we get very involved in wanting a bite on it too. Since everyone wants it, it must be a great deal! Yes, chances are that it could be a great deal. But......... evaluate the property - if it is a great deal for you (and your family).

Go back to the basics. If you didn't want a LARGE yard to mow, it would still costs you more per month on hiring the mower to do that for you. If you didn't care for the odd-shaped kitchen and it does not fit your family's lifestyle, think carefully if it is a great house for you.

Calm down and re-think your evaluation. Sometimes it is truly indeed a great deal - in terms of price per square feet. But it is not just numbers that you are evaluating. A house you call home will have to fit your lifestyle, your tastes and your likings. Just because everyone else is jumping on the deal does not necessarily mean it is the deal for you.

A Year in Review 2007 - Frisco TX real estate market

Frisco sold 3082 single-family homes in 2007. The statistics below do not include townhomes, duplexes and condominium units.

The average home consists of 4 bedrooms, 3 bathrooms and just over 3,000 square feet. The list price is at $304,000 with the selling price of $293,000 (96.5%) at 76 days on the market.

The median home consists of 4 bedrooms, 3 bathrooms and around 2,800 square feet. The list price is at $245,000 with the selling price of $238,500 (97.4%) at 55 days on the market.

The cheapest home in Frisco (2 bedrooms, 1 bathroom, 872 square feet) sold for $49,000 at 1 day on the market while

The most expensive home in Frisco (7 bedrooms, 8 bathrooms, over 8,000 square feet) sold for almost $2.1 million dollars at its full asking price in 763 days on the market.

Current Absorption Rate (based on February 2008 statistics) = 50.9 weeks.

What Does This Mean To You if you were a seller?

With the real estate market going at its present rate, it will take about 1 year to clear all the inventory on the market. If you have special circumstances to sell ie facing foreclosure soon, lose your job, relocating out of town, pricing and marketing your property becomes even more crucial in your success. Whatever your reason to sell is, I do believe that there must be a special marketing plan specifically designed for each property. Thus, working with an agent who possess that skill becomes more vital in today's challenging market.

What Does This Mean To You if you were a buyer?

No doubt that this is a Buyer's market. However, real estate is very local. But that I mean that one neighborhood may vary from another. One price range may sell "hotter" than another. So, are you looking in the right places? In order to find the good deal you are seeking, a good real estate agent may be able to assist you. Remember that it is not only the price that you would negotiate, there are lots of factors that can contribute to a winning successful contract.

Definitions:

Average is the sum of all numbers and divide the total number of houses.

Median is a type of average, found by arranging all the numbers from lowest to highest and selecting its middle number.

Absorption Rate is the rate in which it takes the homes to sell at its present rate.

Are You Ready For The Perfect Storm In The Real Estate Market?

Definition of a perfect storm according to Wikipedia is: The simultaneous occurrence of events which taken individually, would be far less powerful than the result of their chanced combination. I cannot help but to relate this to the
current state of the real estate industry.

How is a time such as this refer to as the PERFECT STORM in REAL
ESTATE?

• Interest rates are at its historical 40-year low and remain there.


• Foreclosures are at a 52-year high.
  
• There are lots of inventory out there. Sellers are more susceptible in accepting offers.
  
• Investors do not trust the stock market and actively seek a safe place to put money.
  
• The mortgage industry is cleaning up their act.
  

It is a good time to be looking for houses. I call it the "Perfect Storm" because
the unusual chains of events have come together to create an optimistic economic climate for buyers that I have never seen before.

I get this question asked very often:

I want to buy but I'm not sure if the market is at its bottom yet?

My answer is this:

"I do not have a crystal ball and I cannot predict what tomorrow or 6 months
will be like in the real estate market, but I do know this. If you are financially and emotionally ready to purchase a home or move-up in house, or down-size in home, the Perfect Storm is happening. If you feel that you need to protect your "investment", then let's offer a price that you feel comfortable with - within reasons and see what the Seller plan to take it from there."

And if you have read the above statement in the heart of its content, you will not that the stress is placed on your buying decision for your family when you are financially and emotionally ready.

The PERFECT STORM is happening. But it is only PERFECT with my statement above: when financially and emotionally ready.

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How Is The Market Doing - really ???

A close friend asked me the Million Dollar question earlier this morning,

"How Is The Market Doing? Really?" With a spark in his eye, he added, "I know the news is talking about how bad the market is doing, but how is it, really?"

I smiled and answered,

"Really.... if you really wanted to know, this is what I will tell you ......

There's really two kinds of houses here in Frisco, or the Dallas metroplex for that matter. There are those who sell within 30-60days and then, there are those who will be in it for the long haul."

How Does This Relate To You If You Are Buying?
A great home priced correctly moves FAST. It also does not mean that you would have alot of negotiation power if it just came on the market a few days (this is merely a generalization statement. Each listing/ seller has its own reason to sell). Making a low-ball offer may not get you the house and perhaps other buyers would recognize the same potential and could offer the Seller a reasonable offer.

How Does This Relate To You If You Were Selling?
It really depends on which category you want to be in. There are some steps you need to take in order to ensure you are on the first category (not the latter):

1. Work with an agent who knows what he/she is doing - as far as pricing and marketing the home.

2. Per an experienced agent's recommendation, follow the advice he/she gives you in order to sell the home.

3. Trust the person you hire. (If you dont, it is difficult to build a successful relationship that will get you where you want to be: move on to your next plan).

More importantly, this is a question you need to ask yourself:

Do you really want to move? Or are you just testing the market to see what it would take?
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For no fluff real estate market advice, please contact Loreena Yeo - broker/ principal of 3:16 team REALTY. Proudly serving Frisco, Plano, Dallas, Richardson, Allen, McKinney, Celina, Prosper, Little Elm real estate markets.

Time Value of Money in closing costs

You can now actually apply the principle you have learnt in the Finance class 101. Here it the gist of what Time Value of Money means to a buyer in a real estate transaction.

In a real estate transaction, everything is NEGOTIABLE. We do not just negotiate on the price but the terms such as closing date, closing costs, option fee, earnest money and who pays for what in the transaction.

Let's understand this Time Value of Money concept in terms of the closing costs.
As a buyer, you can negotiate the closing costs ie Seller having to contribute to your closing cost in a real estate transaction instead of taking that amount (say $500 for example) towards the price reduction.

Why is that?

The answer is the Time Value of Money recognized today is not the same as if it was taken over a long period (30 years, in terms of a mortgage note for example). The $500 seller contribution towards closing cost will net what you need to bring ($500 less) to the closing table. If you have asked for a price reduction, $500 you are paying $2 less a month in your monthly payment. A rather small amount that will not make or break your monthly household budget.

Also, $500 is worth $500 today rather than the $500 spreaded over the life of the loan.
So, when you negotiate a real estate contract, do consider asking for some closing costs even after the price has been agreed upon. It probably be worth more today than many years from now.

Advocate for a 100% loan?

Are you an advocate for a 100% loan to purchase a home?

I'm sorry, not me. I've done that and I would never do it again. Back in the days when I was hyped out about using other people's money (OPM), I felt that having my money in my own pocket is much better than in yours. So, we got a 100% loan while we just have the money sitting in the bank. Looking back, that was not a very good idea simply because we ended up using the money to furnish number of things in the house and these are things we can live without. Looking at the interest that we make on the entire life of the note simply makes my head spin. So, eventually, we paid the 2nd loan off after servicing several thousand dollars in interest. How wasteful!

While some smart financial advisor may advise us to "invest" the money, since I'm only paying a 6% interest and when I make a 12% gain in the stock market, I would still gain 6%. After taxes, maybe a 3.5 - 4% profit. Not bad. But this whole equation sits on a "what-if" scenerio that I would pick the right stocks to purchase. I'm never that lucky so, thinking back, starting off in the right foot probably will get me started in paying off my home sooner (several thousand dollars at least).

So in my case, I had the money but just did not choose to use it wisely in the first place.
However, the truth out there is that there are many more who has not much savings to speak off, should they be purchasing?

In the past, my answer would be a strong NO. Today, my answer would be a MAYBE. Why? Find out more soon.

How Losing Weight Is So Similar To Saving For A Down Payment

As I was exercising this morning, I remembered how hard it was to remain motivated. It's so easy to just step off the treadmill and say, I've had enough for the day. Then I told myself, every step I take will get me closer to my goal of looking slim again. Ahhhhh........

Little did I realize (as I talk to myself, and dream a little, it helps to get my mind off the monotonous walk on the treadmill) trying to lose weight is very similar to save money for a home.

• Have a vision: My goal is to loose 28 lbs. I have lost 2 lbs in the first week. Saving for a downpayment must also begin with a vision and a focus. The vision must be quantitative. X amount of dollar. If you know that you are purchasing a $200,000 home, 20% would make it $40,000. Having a vision gives you a starting point.

• Have a plan of action: My plan of action during my weight-loss challenge is to exercise an hour a day, 5 days a week, to eat smaller portions of everything and to stay of sweets and carbs (only allow myself 1 carb meal per week). So, with the home savings program, have a plan of action: create a budget, live within the budget, eat at home instead of out, think twice before purchasing and never purchase on impulse. Do not deviate from the plan.

• Lifestyle change: Like loosing weight and resisting delicious food temptations, saving for a home also requires a lifestyle change. It requires a complete change of mindset in order to success. It takes long-term lifestyle change to get rewarding results.

• No quick-fix: There are no quick-fixes and easy solutions to anything worth achieving. Namely, weight-loss or savings for a home. Changing your mindset requires time, commitment and patience.

• Determination and will power: It's not easy getting up extra early just to get on the treadmill while I could definitely use an extra hour of sleep. However, with a vision, and knowing that I must have determination and will power, I need and must complete the task I lay out for myself. Savings is also a daunting task. Put it in bite sizes and see it mounting from a small hill to something pretty significant. It is a skill and discipline that will take you to your goal.
  

Thus, losing weight is just very much like saving for a home. It requires alot of sacrifices and saying No to many temptations. If you can loose weight (very challenging for me), you can save for a home.

Furnish Your Home With Great Treasure Finds

So, you are moved into your new home with your boxes all over the house. As you unpack, you find that you need a sofa table here, a mirror there and a larger piece of entertainment unit would fit that space just a little better. If you are like me (against swiping that credit card and having to pay for the $50 buffet lamp for the next few years in credit card balance), you would find alternative and creative solutions to furnish your new home.
Look into:

• Garage/ Estate Sales:
  I am a garage-sale junkie. I find alot of joy and excitement in turning someone else's trash into my treasure. If I ever invited you into my home, pick any one item in the house and chances are it's another great garage-sale find. I haul it back home, perfectly fit it into the corner, and (wa-la), you would never know I paid $500 for a $3000 French Antique 8-feet tall entertainment center - now proudly sitting in my family room. How about $3 for a Victorian Stained Glass lamp that easily cost the original buyer at least $80? I paid $900 for a set of (now get ready for this) solid rustic Old-World dining table that sits 8 and a buffet table that the owner had only used twice. She would have spent easily over $2000. Granted, I feel I had paid a little more for this set, but then again, once it sits in my dining area and had my friends over, no one could tell it was used. The great story was to tell them I paid only half of what it would cost. I am picky in choosing my pieces so sometimes I may have to pay a little more for the specific things I am looking for. Also, patience in virtue in this case. I waited over a year for this rustic dining table. I vowed I would not drive to the store to haul it back in my car!
  Searching and spotting for garage sale signs is a skill in itself. I have been doing this for the past 10 years and I am so good at driving, making U-turns and spotting for these signs. They are the signs of your treasures!

• Freecycle:
  If you have not heard about this network, today is your lucky day. Freecycle is a network of people who joins to recycle what they do not want and in return, get to exchange it with something they want. The best part is that it's FREE. Now, how cool is that. The purpose of this group is to keep good items out of landfills. If it's a chair that you want, ask for it. If it's a radiator of a car that you need, get on the network. To participate, find the area where you are located.

• Craigslist:
  Most people are familiar with the Craigslist network. You can purchase so many things on there. It's a great place to sell your items too. Note: Garage-sale finds are typically cheaper than Craigslists. However, it still beats having to pay full price in the retail store when compared to Craigslists.

• Clearance Racks at Retail Stores:
  If you saw me at a retail store, chances are you would find me at the clearance racks...... Learn to shop at the ends of racks instead of picking your items from the regular shelves. These are tremendous markdowns and it will save you alot of money furnishing your new home.

• Habitat Humanity Resale Stores:
  Most cities have their own Habitat Humanity Restores. If you considering remodeling your home, you will find the items at this store at a fraction of what you would pay at a regular home improvement store. The items sold by the Restores are typically donated by building supply stores, contractors and demolition crews. The proceeds from the sale help fund the construction of Habitat houses throughout your communities. If you have not visit this gem, you'd be in awe by what you find (here in the Plano, Texas store at least!).

The most important thing is not to spend it on credit. Now, they dont call me El-Chepo for no reason!

The Freecycle and Habitat for Humanity logos belong to their respective owners.

When Foreclosure Hurts

Several years ago when the real estate investment hype was going strong, Collin County (Texas) realtors cashed in on selling real estate as investment properties. Some went to California, bought large billboard signs and phone calls/ "investors" came in by the hundreds, if not thousands. They conducted seminars about the real estate investment opportunities in this area. Many of them cashed in on their Californian home equities to purchase these properties. Business was hustling and bustling. Life was good.

Fast forward 2-3 years later, these properties continue to sit on the market VACANT. Ouch (not a pretty word for the investors).

Why????

You see, these California investors purchased properties by the dozens. Many of them bought existing homes and many more bought new properties. When you purchase 3-5 properties at one time, you betcha the Home Builders would cut you a pretty good deal on the houses. These are very large houses too (by that I mean 3,000-4,000 square foot homes). Corresponding to that, large homes tend to come with large rents. If you knew the Texas (or specifically Dallas) real estate market, you would know that generally, most renters do not rent huge McMansions and pay over $2500 - $3500 homes no matter how new they are. So, these homes become very difficult to lease and obviously sat on the market for over a year EMPTY. Ouch. So, these investors have to resort to selling them (at a very huge lost) or many of them have been foreclosed upon.

Just to quote a specific example: Panther Creek Estates in North Frisco has too many houses such as this. Back in 2004-2005, you could purchase a home for something close to $200,000 (and by that I mean, single-story starter homes). Fast forward 3 years later, you can now buy 4,000 square-feet homes for around $200,000. And these are available by the dozens. Quite a few for you to pick from.

Foreclosure hurts everyone. Not just these investors. It hurts the Sellers who are NOT in foreclosures, trying to sell their homes for whatever their reason. Granted, these non-foreclosure houses are alot better quality and have many finishing touches in them, these Sellers cannot justify a $50-$100K more in price no matter what you have in the house! Sellers who are not realistic with their expectations continue to sit on the market, awaiting this One-Special Buyer who thinks that their house is worth that much more.

This scenerio continues to grow all over the Dallas area real estate market. When investors are foreclosing by the hundreds, it hurts everyone. Buyers will seize the opportunity to purchase.

Lesson learnt?

Think twice when some salesperson sells you something. Do your due diligence in anything concerning money. And if you are interested in investing in real estate (which I still absolutely believe in), invest in your backyard to begin with. I personally do not advocate investing in unfamiliar territories and more so, some where you cannot get to easily.

For realtors, please take on a better job in discussing the pros and cons about investing in real estate. Do not just get these Investor buyers and leave them fending for themselves (I know several realtors in town that have done so). At the same time, I understand that it takes two to tango. So, investors, again do your due diligence.

Betting/ Gambling in real estate is NOT the way.

Are You Having Spending Fever?

Every once a while, I get into a spending fever. I'd feel that I've "deprived" myself because my family have learnt to deny ourselves of today's luxuries.

In 2004, we felt it was time to buy something.... anything nice for us. So, we looked into a Chevy Tahoe - something I love very much (at that time)..... The payments were going to cost us $500-$600 per month. Yikes!!! Like all consumers think, we could afford it (those famous words)!

So, what did we ended up with?

For $500 - $600/month, we ended up moving up in house (yes, Frisco real estate!) . No doubt that we make to make this extra payments for 30 years, instead of the car for 5 years, I still think it is worth it.

Stephen Wolfe's (the real estate expert in Birmingham, Alabama) blog about Dont Buy That Car! brought back memories of this specific experience.... I had to investigate if my purchase was still justifiable.

That same Tahoe I would be driving today would be worth $20,000 at BEST CASE scenerio. I would have paid $38,000. A depreciation of $18,000. Ouch!

In comparison, my house appreciated at least $20,000 - yes in this slow depressing market so Jim Cramer said. I also assumed that my house has maintained a zero appreciation value for the past 18 months. My family turned our first home in 2004 into our rental property. That property probably appreciated $20,000 - a very low ballpark estimate.

Per Dave Ramsey famous words, "Dropping like a ROCK!".... and he is right. At this point in our financial life, we cannot afford to purchase a brand new car with the depreciation rate like it is. And guess what?

I'm driving a RX 330 today. I bought it 3 years used (and yes, it still depreciates but not like I would if it is brand new). I "feel" it is a much better car for me too.

My houses continue to appreciate and someday my car will be worth $500. A huge divide!!!

Sharing A Different Buying Message

More media splashes this week about the looming sales of the housing market. Well, you have seen it in just about every major news publication. Should buyers stop buying now and wait till the prices drop "even further"?

When investing in the stock market or even the housing market, most buyers use the common emotional reactions: buy when everyone is buying (or the market is HOT). In a Buyer's market (where there is more Buyers than Sellers), and especially with the stories we constantly here that prices will continue to drop for at least xx months, most buyers hold off their plans in hope that prices do continue to drop further.

However, do realize that real estate is a local concept. By that I mean, the effects and results of them are totally dependent in the areas you are interested in purchasing. Even in a slow market, there tend to be pockets of areas within your city that are "hot" or "hotter" than others. Some neighborhoods continue to thrive and increase in price. Hence, working with a local area expert would be essential in guiding you through the right process. Respectfully, it does not quite work with just what the news are saying.

In general, buyers love SALES..... Know that the "higher" the discount, the "more" we as consumers feel that it is time to buy. If you enjoy sales, you should enjoy the "SALES" that is going on in the housing market right now. We do not necessarily say this house is ON SALE or have stickers or banners all over the house (I will admit that would be a little over the top and cheesy), but you can most generally assume that the Sellers do understand that it is harder to sell in this market now and will seriously evaluate the offers that come in. They do know that they are not sure they will get another offer on the table tomorrow. Just like the stock market where the price per share has dropped, as a good investor, you would want to buy then instead of on the "high" time. Why?

This leads to my next point. When you invest (especially when you buy a home), you are investing in your family and your home. You are not buying to speculate the market. While real estate professional do not guarantee that the price you pay for your home will be higher when you are ready to sell it, you should not use this concept to make your purchase. You buy with the long-term mindset. It may be unfortunate that you might need to sell the next six months for whatever reason, but do understand that when you make the buying decision, you are buying for long-term reasons.

At the time of this publication, we are in early September. Sellers are continuing to cut prices - in the Dallas metroplex/ Frisco and surrounding city real estate markets. Buyers can expect to still have a good selection of inventory to choose from whereas in the Winter months, there tend to be less inventory for your selection even though prices may/ could be lower then. It is a chance you take and back to the buying for long-term philosophy, is it worth $2000 or $5000 wait? Who knows how much lower it may be.

Interest rates is still considered historically low. While I have never seen the 15-18% interest rates back in the 80s, long-term fixed rates today remain low. Good mortgage companies with good loan programs continue to stay in business. If you fear the fall of subprime mortgages and you were on the borderline: qualify versus non-qualify status (understand where I am coming from with my next statement, I am not here to burst your American Dream - I am in building people's American Dream of homeownership), you do need to consider your purchase or the amount of your purchase. Can you really afford it?

The difference between 1% rate difference in mortgage for $200,000 (a very common and realistic number for the Dallas metroplex) is approximately $125 per month. If this amount would make or break your monthly home budget, you should not consider this loan amount in the first place. Remember that over time, your salary tend to increase - unfortunately with the rest of the consumer products you need to purchase also.

Buying with the long-term mindset is also a form of FORCED SAVINGS. Understand that your buying psychology, you will continue buy - from clothes, to restaurant food, a boat, a car or an RV. When you purchase real estate, you set a fixed amount of funds aside to make your payment on a house - typically an appreciated asset in the LONG RUN.

There are also lots of financial and emotional benefits to homeownership now, rather than later. Tax benefits can be another topic in itself to discuss...... The physcological, pride and a sense of belonging that are priceless.

So, what should you as buyers now? You decide for yourself. Waiting is an option. It could be a right option for you. But think through it. If it is to save more for a rainy season, great. If it is to speculate that prices may fall even further, know that you as a buyer can control the price you want to pay - regardless of what the news tell you.

Related Articles:
Frisco Real Estate Home Report - Summer 2007
What Do You Get For Your Money In Frisco
Subprime Mortgage Dampen Your American Dream

Is Buying always better than Renting?

Is homeownership on your horizon? Are you excited about your possibilities? Wow... you can finally paint the wall black, green or purple just because you can!!! How cool would that be?
So, you pay $1,000 in rent now. For $1,000* in mortgage payment a month, you could buy a $150,000 home at 7% interest for 30 years. In the Dallas/ Fort Worth market, $150,000 buys you a pretty good starter home.

Hold on..... before you go on further, let's ponder on some important issues of homeownership first.The $1,000 in mortgage payments have not even included the property taxes and insurance. Okay, so let's back up to a little less house then. Let's assume that the property taxes and insurance is approximately $250 per month. That makes the mortgage payment (principle and interest) to about $750. At that amount, you are probably looking at a house valued between $110,000 - $120,000. Still not bad.

So, here you are. You put your signature on the dotted line. Your real estate agent called you to tell you that your loan closed and funded. You received the keys. You now own your American Dream. You move in and you are happy.

New homeowners start to think differently. The mix and match furniture from the college days suddenly do not fit the taste of their new home. They did not like the wallpaper the previous owner left behind. The yard needs to be mowed, edged and trimmed. The garage needs some organization. So, what would a "regular" new homeowner do in this situation? They go out to make Home Depot and Lowes their second home. They could also qualify for a reserved parking spot just because of their frequent visits. These are the unseen foreseen expenses that homeownership incurs. How much is ever enough? So, out they go to get a Home Depot or Lowes store credit. Zero percent interest for 18 months? Sounds like a no-brainer. Have pure intentions of paying this way before the zero percent deal ends? But life got in the way? Before you know it, you are looking at more debt.

Even if you are disciplined enough not to do home improvement projects and do not mind using the couch Aunt Janet gave you, homeownership could have maintenance costs to consider. Remember in your apartment days, when the air conditioning unit is not cooling enough, you pick up the phone to call the apartment manager? Gone are the days. When your heater goes out, you pay for the repair. When your toilet gets clogged, you sign the invoice.

It is not my intentions to dampen your spirits. But if I was your realtor - the one who watch for your best interest, if I did not discuss these scenerios about your possibilities and just share with you about homeownership as a bed of blissful, sweet smelling roses, I feel I did not paint the whole canvas.

A well-prepared new homeowner is a smart planner. Remember that your home should be a blessing for you. It should serve you and your family well for many, many years, not the other way around. So, if you feel that homeownership is on your horizon, pick up the phone and call. I'd love to share tips and strategies with you to make your American Dream a pleasant experience.

House Rule: Is Buying ALWAYS better than RENTING?
The answer: In the long-run, yes. In the short-run, no. It can leave a bad taste in your mouth for a while.

Suprime Mortgage Dampen Your American Dreams?

Has the Subprime Mortgage got you a little down on your American Dream? The dream of owning your own home? What has the media done recently? The stock market is like a roller coaster - One day it is up and another day, the sky seems like it is falling. News splashes everywhere talking about foreclosures at an all time high, more houses on the market now than ever before.....


What is Subprime Mortgage?
A sub-prime lender is one who lends to borrowers who do not qualify for loans from mainstream lenders. Some are independent, but many big-time mortgage companies have set up sub-prime departments to take part in this lucurative market.


What is a Subprime Borrower?
A subprime borrower is one who cannot qualify for prime financing terms but can qualify for subprime financing terms. The primary disqualification for mainstream loans is primarily due to weak credit scores.

What could be the Subprime Lending Terms?
With the higher risks of borrowers defaulting, subprime terms are normally at a higher interest rate, some with early pre-payment penalties, etc.


So, what does this really mean to you - if you have not achieve your American Dream?

The fall of the Subprime Mortgage is a good thing. What???? What do I mean? No doubt, I am in the business of assisting people achieve their American Dream. Let me get this straight - I AM ALL FOR THE AMERICAN DREAM. After all, I came to this country in search of the American Dream. But before I go further, let me describe to you what "my version" of the American Dream is about.

My American Dream goes far beyond owning a piece of real estate. Coming from a third-world country and a minority in my very own country where minorities fight to be the fittest to survive, I call America - the greatest Land of Opportunity. In this place, regardless of my race, color, nationality or sex, if I put my mind into anything I want, the great blue sky is my limit. If I can dream it, I can achieve it!!!

So again, what does this mean to you? The Fall of the Subprime Mortgage? You might have just fall onto the "disqualified" category and did I say it is a good thing? There is always a reason why you were disqualified. It is most likely your weak credit history. Evaluate to see where you stand financially in the past three years. Have you ever been late on payments? Are you close to maximizing the credit cards you have? Do you have debts? Are you not saving money each month?

These are some painful questions to ponder on. If your answer could be Yes to one of these questions, reflect to see if you really are ready for homeownership. Your home should be a blessing to you. It should not be something you work, work and work just to make the payments. Worry one day, if you would be foreclosed on because you barely made the cut into qualifying for the loan.

Build your financial strength prior to achieving the American Dream. That means no debts of any kind and a good stash of savings to sit on (3-6 months of monthly expenses). Then your American Dream is a blessing for you and your family.

With the covers of news media splashing foreclosures every day, how sweet is the American Dream now to those who are going through this stress? I am not looking down on those who are in foreclosures today. There could be many, many unforeseen reasons. But if you could build your foundation on solid rock (no debts and savings), should you give yourself and your family that advantage of building the American Dream?

What To Do In This Declining Market?

We are hearing the Chicken Little cry all over again. This time is it with real estate. "The sky is falling, the sky is falling".....

Media headlines are splashing with screaming reports, "Sales of new homes fell in June - largest amount in 5 months and WORST DOWNTURN in 16 years".... quoted MSNBC. Foreclosure rates are at its highest, it is more difficult to qualify for loans. The National Association of Realtors (NAR) reported recently that the sales of existing homes dropped to its slowest pace since November 2002 and the decline was twice worse than expected. Some economists say that the weakness in housing could linger well into 2008. The rise and fall of the US Stock Market is clearly not helping either. We recently hit the highest point at the Dow Jones at 14,000 points (July 19 2007) but it did not last long. Before we know it, we were riding the roller coaster downhill plunging over 500 points over 2-days by the following week (July 26 and 27). People at Wall Street is calling this a Meltdown.

So, as buyers and sellers in the current real estate market, what should you do in the mean time? Sellers: Should you retract your house on the market, make plans to continue stay where you are at? Is that possible for your plan(s)? Buyers: Is holding off your plans a possibility because interest rates are heading higher? Or would now be a great time because Sellers are more open to offers?

When purchasing a property to house your family, even though there are investment and appreciation factors to consider, what really goes on with the "market" should not be the MAIN deciding factor on whether you want to buy (for buyers) or sell (for sellers). No doubt that it can be much more challenging than ever for Sellers, hence partnering with a local market area expect is key in bringing you the success you are looking for. At the same time, when you purchase a house and plan to make it a home - haven for your family, chances are these relatively "short" term commotions should not affect your major purchase decision.

Be in the Buying or Selling market now to fit your schedule and circumstances now. And not how the market is doing. Since you are making this decision on as long-term decision for your family needs, the short term swings of the real estate and stock markets should not hinder your plans. If you try to make your long-term buying/ selling decision based on short term affects, what you are trying to do is to "time" the market.

Just like participating in buying and selling stocks (even though we know real estate is not as liquid as stocks), market timing known as the attempt to predict the future price of houses, can be a dangerous strategy. It becomes more of a gamble. Is the happiness of your family worth the risks? Hence, sticking to the safer path is like walking on solid grounds.

Purchase or sell a house when you are ready. It is the BEST time to do it. Not when other factors affect you. Worst still, factors beyond your control such as higher interest rates, rising and falling of the stock markets and whether your neighbor is in foreclosure or not.

If you are considering a real estate purchase or sale in the North Texas real estate market, I will be delighted to speak to you. I work in the Frisco, McKinney, Allen, Prosper, Celina, Little Elm, Richardson, Dallas, etc. (Denton, Collin and Dallas counties).

Down To Earth Home Buying Tips

I'm a huge advocate of encouraging friends and family to make our homes a true blessing. Hence, my thoughts and my blogs will reflect that. More than anything, my family do our best to live by it.
There are some very simple guidelines to follow when purchasing a house to call HOME. However, be prepared that these are not easy to achieve because we live in a society that feeds on "I want it NOW" attitude.

1. Be debt-free. This plan includes becoming debt-free of all store accounts, credit card debts, school loans, car loans, medical bills and any kinds of consumer debts. Only when we become debt-free, it relieves us from the vicious cycle of "minimum payments" and continuous fear of never-ending "emergencies". Credit cards are not our source of "emergency savior" - get out of that rutt, please! I'm sad to say, for some people, lunch may be an emergency.

2. 3-6 months of living expenses saved.Having a good stash of savings prepare us for the "RAINy days". To start, have a minimum amount of cash stocked away for "emergency preparedness". That "special" number may differ person to person. For those of us who are more "emergency" prone, maybe begin with $2000. For those of us whose jobs are "more secure", life has less risks, then perhaps $1000 may be sufficient to tide small emergencies. Beyond that, attack the consumer debts with a vengence. Be willing to change our lifestyles. Most of all, be prepared to make alot of UNHAPPY sacrifices. A quote that I continuously remind myself when I wonder why I do what I do:
Live like no one else, so that later you can live like no one else (Dave Ramsey).
After having all the consumer debts paid off, continue to save 3-6 months worth of living expenses ie the expenses that is needed for survival. Since we are getting ready to purchase a house, be sure to save a sizeable down payment on top of that. Remember, a house should be a blessing. The difference between a blessing and a curse (after Murphy moves in) is the savings.

3. 15-year, fixed mortgage. Get 15-year, fixed mortgage. Be sure that the payment is no more than 1/4 of our take-home pay. Would other numbers work? Sure it would (or maybe).... Remember that we are discussing Down To Earth Home Buying strategy for the blessed home? We can work all our lives to buy more or "house" more, but do we really want to live in the Merry-Go-Around Chase the House Payment rutt?

4. Furnish room by room. Dont go out to furnish the ENTIRE house all in one go. When we purchase a house, HomeDepot and Lowes are our second home. It's not a matter of "if" it would happen, it's more about "how bad" it will be. Do not begin the whole cycle (Step 1) that we have worked so hard to get out only to fall back in. Shop cheaper alternatives: estate sales, goodwill (blog).

5. Not in the 1st Year.For first time buyers, please dont shop for a house until the 1st Year has pass. Why? The first year of marriage is one of the most crucial years of a married couple's life. Get to know each other first. Learn to live on one-income (even if both husband and wife works). Learn to live less than we make. Learn to live below our means. It's already stressful, dont add house-shopping to the list.

Will other steps work? Most definitely. But I could almost assure you that a person who had not had a car payment will tell you the wonderful feeling of not having one. A family who wished they had waited to save enough will tell you that they wished their home is a blessing. I know I may be stepping on a few toes about this. But these are just my humble opinions on How to Make our House a blessing. There's no big secrets to home buying.

Blessed are those who lives in their house filled with happy days.

I proudly serve the North Texas real estate. I work in the Frisco, Plano, Dallas, Little Elm, Prosper, Celina, McKinney, Denton, Anna, etc. markets. Please give me a call for all your real-estate related needs. I'll be looking forward to hearing from you.