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Time to Buy
2 of 2
Time to Buy
The real estate market couldn’t be better – if you’re buying. Prices are down and lots of homes are on the market.
But, what if you are selling? That can work, too, if you have given careful attention to presenting and pricing your property.
“The market in the Roanoke Valley is more normalized than it had been from 2004-2008,” says Tim Toohig of Re/Max All Points, REALTORS. “The fixed 30-year mortgage rate is still below 5 percent, which makes housing very affordable.”
Because there are many homes for sale, the buyer gets a nice selection, Toohig says.
“The sellers need to be realistic about pricing, however, and the house needs to be immaculately clean and staged to appeal to buyers. The sellers need to be patient, especially in the upper price ranges,” says the veteran agent.
While the Roanoke Valley market did not have the widespread devaluations some other areas experienced – drops as high as 30 to 50 percent – it has certainly not avoided the economic downturn, says Spring Cho of Spring Cho Real Estate Group.
Potential buyers generally will find a seller more willing to negotiate, but that does not mean a buyer can be unreasonable, Cho says. Residential real estate prices in this area are down 8 percent to 10 percent. The average time a house is on the market is about 105 days, but can vary considerably based on the location, condition and asking price of the house.The higher the asking price, in general, the longer the seller must wait to sell.
“The vibrant medical communities at Carilion and Lewis-Gale have helped maintain a steady market for high-end housing,” Cho says. “And, even at the lower end of the market spectrum, people continue to evidence a desire to own their own homes, and they are willing to struggle with more stringent lending requirements and less income opportunity to reach that goal.”
Anyone who wants to sell a house should start by determining how much the house is worth.
“Get as many indications of current value as you can,” advises Cho.
Start with the tax-assessed value. Next, check on sales of comparable property as reported in the news media. Get opinions of value from a realtor.
“Then, you must give yourself time to repair your house, to make it as structurally sound and attractive as possible to likely buyers. Buyers today are more demanding about getting repairs made before submitting an offer,” she said.
Often there are concessions sellers must make, says Susan Bailey, agent with MKB Realtors.
One house Bailey listed sold for $315,000, about $5,000 above its tax assessment value, but the owners had to agree to provide the buyers with $42,000 in concessions at closing.
“Every closure I have had has been at the tax assessment value or less,” she says.
Buyers are savvier than ever and harder to sell. “The average buyer is well educated and can find out everything about a property before seeing it. . . get tax information, see pictures. . .,” says Bailey.
Understanding That Monthly Payment
Once you’ve made the decision to buy, avoid any shock to the family budget by calculating just what the monthly payments will be. And remember, there will likely be 360 of them.
You can find mortgage calculators at bank sites or at places like Interest.com.
The annual interest rate has a profound effect on how much the homebuyer pays a month and also over the total term of the mortgage. To examine its effect, let’s look at the typical 30-year fixed mortgage with two different rates. The results will certainly get your attention.
A $300,000 home paid over 30 years at 4.75 percent annual interest rate requires a $1,564.94 monthly payment, according to the calculator on Interest.com. The same home at 6.75 percent annual interest means the payment will be $1,945.79 per month. If the buyer has just paid a sizable down payment, having to pay the larger monthly payment could create some anxiety, so planning and budget discussions are essential to managing a smooth cash flow after moving into that fabulous new house.
The annual interest rate also controls the total interest paid over the life of the mortgage. At 4.75 percent annually, the total interest is $263,379.12. That’s a significant sum but it is the price of borrowing the mortgage money. If the mortgage rate is raised to 6.75 percent, the total interest paid soars to $400,485.94. That’s a difference of $137,106.82, enough to make more than 87 monthly house payments at the 4.5 percent annual rate.
There are, of course, a number of ways to reduce your monthly payment. Buy a smaller house or make a larger down payment to reduce the mortgage size, or take advantage of today’s lower rates. A homebuyer who is really on the ball will find ways to combine two or even all three strategies to gain value over time.
What’s the lesson here? Mortgage rates during early July 2010 were at or near 50-year lows, the Associated Press reported, so this may be the time to take advantage of them. Once rates start to rise, and they will as the economy gains more momentum, it may be many, many years before such an opportunity occurs again.
Couple Finds Market Experience Similar
Eric and Julie Shelton relocated from Richmond to the Roanoke Valley this summer and found buying and selling this time only slightly different than with their three other moves.
Their home in Hanover County – in the $300,000+ range – sold in less than four weeks. “The two before that sold within a week, but the house before them took six months,” Julie says.
The Hanover house was in good shape, she says, but to get it ready for market, the couple looked around for anything that might need repair. They did some touch-up painting, took down a couple of small trees, pruned bushes and did some general sprucing up of the yard.
“We got close to the price we asked and were satisfied. We had to do a few things to please the buyer.”
The main surprise in the house search for the Sheltons was that they did not find housing prices in the valley to be all that different from their previous area.
Wendy Gilbert of the Tim Toohig Team at Remax used the couple’s “must haves” and “can do withouts” to produce lists of properties for them to consider.
The couple wanted a house with a master bedroom and bath on the first level, which they discovered was not easy to find. They visited more than 30 houses, including in South Roanoke and Roanoke County, but ended up buying in Steeple Chase in Botetourt County. That location also is closer to Eric’s family, which was one of the reasons they wanted to come to the area.
“We were willing to do cosmetic changes to a house, but I wasn’t going to knock out walls,” Julie says. She was still working in Richmond during the house hunt, and used the Internet to view links Gilbert sent and decide which houses she wanted to visit during weekend trips here.
“We didn’t walk into any homes that were a disaster, but in some cases I thought the homeowner should have put some furniture in storage so it would not look so cluttered.”
Julie says she saw early on that she needed to take careful notes on each house visited “because they begin to run together in your mind.”
She has learned in house shopping to remain unemotional about a property, especially when deciding to make an offer to buy. “We did some negotiating with the sellers; everybody needs to do that. I don’t think anyone expects to get the listing price.”