The upside of this trend is consumers have the ample opportunity to find out about national trends in the market. The downside is that “scanning” doesn’t make you an expert and can create some seriously twisted misconceptions about what’s happening both nationally and locally.

Here are four of the 2014 myths that may have your buyer and seller clients in the wrong (or slightly skewed) mindset about today’s market.

Myth 1: You Have to Sell to Move On

Talks of inventory shortages, price increases, and a more normal housing market are conjuring thoughts of selling among many property owners. Why? They want to profit off of their investmentand move up to something bigger or better.

Unfortunately, the most common debate—to sell or not to sell—leaves out a great option in today’s market; becoming a landlord. Your seller prospects who show up wanting to list to get in to their next property may need a reality check.

Use resources like the rent vs. buy calculator and Trulia rental search results to show what they could be making in rental income. This may open up a new opportunity to profit and land you an instant buyer client who is primed and ready to move.

Myth 2: Buying Today Has Less Short-Term Risk

Prices are up, interest rates are down, buying must be “safe” again, right? Wrong.

During market upturns many buyers think that the “worst” in terms of market change is behind them.

Karl “Chip” Case, economist and co-creator of Case-Shiller Index was recently quoted saying, “If you’re not buying it for the long haul, don’t buy because there’s a good chance you’ll have to sit through some down cycles.”

Buying will always have its risks. That’s why choosing the right home for the right reasons is critical.

Download and pass along this helpful handout “4 Big Signs You Should Buy” to help your prospects and clients understand how to make the purchase that will benefit them in the long run.

Myth 3: The Starter-Buyer Pool Is Slim

If you’re selling a starter home or looking to jump in to home ownership for the first time, some of the headlines have been down-right depressing. Most read that Millennials and the market’s potential first timers are held up with 18 roommates or in their parents’ basements.

The real fact is that the true home ownership rate among Millennials has been steadily climbing since late 2011.

According to Chief Economist Jed Kolko, “The official homeownership rate published by the Census gives a misleading picture of homeownership trends. In fact, homeownership among young adults is both on the rise and not too far off from where demographics say it should be.”

Myth 4: It Takes Top-Dollar to Win a Bidding War

While price is one of the biggest factors in any housing deal, it doesn’t stand alone. Many buyers in this market are anxious because of the constant talks of price increases. They may think they can’t afford to compete for the home they really want.

This is where a little agent education can go a long way. In super-competitive markets and multiple offer situations, there are other motivators buyers can use to win the deal including:

• Committing a quick closing dates
• Limited or no concessions
• Accepting responsibilities for some needed repairs
• Heart-felt letters that share why buying this particular home is important

At the end of the day, there are humans on both sides of the tables with multiple priorities. Appealing to the other, less black-and-white needs of the seller can give your buyer clients the ammunition to close in this market.

Written By:  Jovan Hackly

1. What tax benefits did homeowners get in the recent ‘fiscal cliff’ budget agreement? Two tax provisions that ended in 2011 were reinstated for 2012 and 2013: 1. Mortgage insurance premiums are again tax deductible for people with adjusted gross income below $110,000; 2. Homeowners will continue to get tax credits for certain energy-efficient home improvements. For details, visit www.irs.gov or ask a tax professional.

2. What are the home related tax deductions people most often claim? One of them is the mortgage interest deduction (which can mean about $3,000 in tax savings for the average itemizing homeowner) and another one is the deduction for property taxes.

3. What is the #1 mistake homeowners make with their taxes? If your real estate taxes are not part of your monthly mortgage payment, you are billed by your town or county. Those tax bills often include other items like trash collection and snow removal fees. Be careful to deduct only the part of your bill that is property tax.

4. What tax deduction should I be sure to take? Make sure to deduct any points you paid on the mortgage you took out to purchase your home in the tax year you paid them. But if you refinanced, you need to amortize and deduct any points you paid over the life of the mortgage. People can easily forget the deduction after a few years.

5. What’s the most important thing I should do as a first-time homeowner? Look at the HUD-1 form you received when you closed on your home. There may be fees like prepaid taxes or interest you can now deduct.

6. What should I look out for if I’ve owned my home for a number of years? If you’ve refinanced and taken out home equity loans or lines of credit, remember that the maximum outstanding home equity debt that’s deductible is $100,000 and the maximum amount of deductible mortgage interest is $1 million.

7. Which home improvement records should I keep? Keep all receipts for the capital improvements you’ve made to the property. Tax rules let you add these expenses to your home’s cost to reduce any profit you might have to pay taxes on when you sell. But most people are exempt from taxes on the first $500,000 of profit for joint filers ($250,000 for single filers).

8. What’s the difference between a capital improvement and a repair? Fixing a furnace so it keeps working is a repair; replacing it is a capital improvement.

9. Will taking a home office tax deduction increase my chances of being audited? Taking the deduction shouldn’t generate an audit by itself. But if your expenses are unusually large, or if it looks like you’re using office costs to create artificial losses, the IRS will probably look into it.

NOTE: Always consult a tax professional for the definitive answer to any tax question.

AN OUNCE OF PREVENTION

Doing routine home maintenance is the best way to avoid those really expensive repairs that can come when things aren’t looked after. Plus, when it comes time to sell, buyers will pay more for a well-maintained home. Here’s how to stay on top of the upkeep.

1. Make a schedule and stick to it. Most maintenance can be done annually: roof, gutter, and downspout repairs; sealing exterior cracks; weatherproofing windows and doors; furnace and air conditioning checkups; inspecting and cleaning the drainage system. Put these on your calendar, then do them!

2. Take care of problems as soon as they appear. If a pipe leaks, repair it immediately. If a roof looks worn, repair it before it leaks. When gutters back up, even on a new house, water can come down inside walls and even damage the framing. You want to avoid the extra damage that can occur after something fails.

3. Assemble a team of contractors and repair people. Ask friends in your area, neighbors, and your real estate agent to recommend trades people. When buying a home, ask the seller for a list of the people who have worked on the property.

4. Be careful when choosing the least expensive contractor or building materials. Don’t make cost the most important factor. Shoddy work and inferior materials will cost you more when you have to redo the job.

5. Ask your home inspector to re-inspect your property. Periodically bring in a professional inspector to show you what needs to be done to keep your home in good shape. Inspectors can point out simple, inexpensive things, like sealing cracks and touching up paint, which can make a big difference in the long run.

It’s also a good idea to keep up with the latest home financing information. If you’re thinking of buying a new home, refinancing your existing one, or funding home improvements, please call or email us – we’re always here to help…. Have a great day!

WASHINGTON (January 28, 2013) – Pending home sales declined in December but have stayed above year-ago levels for 20 consecutive months, according to the National Association of Realtors^®.

The Pending Home Sales Index,^* a forward-looking indicator based on contract signings, fell 4.3 percent to 101.7 in December from 106.3 in November but is 6.9 percent higher than December 2011 when it was 95.1. The data reflect contracts but not closings.

Lawrence Yun , NAR chief economist, said there is an uneven uptrend. “The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis,” he said. “Buyer interest remains solid, as evidenced by a separate Realtor^® survey which shows that buyer foot traffic is easily outpacing seller traffic.”

Yun said shortages of available inventory are limiting sales in some areas. “Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” he said. “We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing. Much of the West is already a seller’s market for homes priced under a million dollars, but conditions are much more balanced in the Northeast.”

Even with tighter inventory, a pent-up demand and favorable affordability conditions bode well for the market. Yun expects existing-home sales to increase another 9 percent in 2013, following a 9 percent rise in 2012.

The PHSI in the Northeast fell 5.4 percent to 78.8 in December but is 8.4 percent higher than December 2011. In the Midwest the index rose 0.9 percent to 104.8 in December and is 14.4 percent above a year ago. Pending home sales in the South declined 4.5 percent to an index of 111.5 in December but are 10.1 percent higher December 2011. In the West the index fell 8.2 percent in December to 101.0 and is 5.3 percent below a year ago.

The National Association of Realtors^®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: Fourth quarter metro area home prices will be published February 11, existing-home sales for January will be reported February 21 and the next Pending Home Sales Index will be on February 27; release times are 10:00 a.m. EST.

Getting approved for a mortgage, finding the right agent, searching for the perfect home and staying within a budget are some of the challenges buyers must face before they become homeowners.

Here are ten common mistakes first-time homebuyers should avoid.

1. There’s more to it than mortgage payments

Many first-time homebuyers decide to buy when they feel ready for a mortgage. But just because they can afford the mortgage payments doesn’t mean they can afford to own a home, says New York attorney Rafael Castellanos, a managing director at Expert Title Insurance.

“They have an idea of what their mortgage payment is going to be, but they don’t realize there’s much more to it,” he says.

Property insurance, taxes, homeowners association dues, maintenance, and higher electric and water bills are some of the costs first-time homebuyers tend to overlook when shopping for a place.

“Keep in mind property taxes and insurance have a tendency of going up every year,” Castellanos says. “Even if you can afford it now, ask yourself if you’ll be able to afford the increased costs later.”

Even though it’s your first home, you must think of it as a long-term commitment, says Ed Conarchy, a mortgage planner and investment adviser at Cherry Creek Mortgage in Gurnee, Ill.

“If you have to switch jobs in a year or two and may have to move for the job, you should think twice,” says Conarchy. “Ideally, you should picture yourself living in that house for five to seven years.“

2.  They don’t ask enough questions of their lender and end up missing out on the best deal.

3.  They don’t act quickly enough to make a decision and someone else buys the house.

4.  Looking for a home first and a loan later

Homebuying doesn’t begin with home searching. It begins with a mortgage prequalification — unless you’re lucky to have enough money to pay cash for your first house.

Often, first homebuyers “are afraid to get prequalified,” says Steve Anderson, a broker and owner at Re/Max Benchmark Realty in Las Vegas. They fear the lender may tell them they don’t qualify for a mortgage or they qualify for a loan smaller than expected. “So they pick a price range out of sky and say, ‘Let’s go look for a house,'” Anderson says.

And that’s not how it should be done. Yes, it’s more fun to go look at houses than to sit in a lender’s office where you have to expose your financial situation. But that’s a backward approach, Conarchy says.

“You get preapproved, and then you find a home,” he says. “That way you’ll make a financial decision versus an emotional decision.”

5.  They don’t find the right agent who’s willing to help them through the homebuying process.

6.  Not getting professional help

New to the homebuying game? You’ll need a reputable real estate agent, a good loan officer or broker, and perhaps a lawyer.

Venturing into this process alone, without professional help, is not a good idea, says Anderson. While every rule has its exception, generally, first-time buyers should not try to deal directly with the listing agent, he says.

“If you are getting divorced, are you going to go to your husband’s attorney for help? Of course not,” he says. “Same here. If you go to a listing agent, they are only going to show you their listings. You must find a buyers’ agent to help you.”

If you hire an agent without a referral from friends or family, ask the agent to provide references from previous buyers. The same goes for loan officers or mortgage brokers.

“It’s very hard for first-time homebuyers because they don’t know who they are dealing with,” Anderson says.

It’s crucial to find a professional who will give you “truly independent advice,” Conarchy says.

Sometimes that means hiring a lawyer, says Castellanos.

“You are about to make what is possibly the largest single investment of your lifetime,” Castellanos says. “You want to make sure it’s done right.”

7.  Exhausting entire savings on the down payment

Spending all or most of their savings on down payment and closing costs is one of the biggest mistakes first-time homebuyers make, Conarchy says.

“Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all,” he says.

Homebuyers who put 20 percent or more down don’t have to pay for mortgage insurance when getting a conventional mortgage. That’s usually translated into substantial savings on the monthly mortgage payment. But it’s not worth the risk of living on the edge, says Conarchy.

“I’d take paying for mortgage insurance any day over not having money for rainy days,” he says. “Everyone — especially homeowners — needs to have a rainy-day fund.”

8.  They don’t do enough to make their offer look appealing to a seller.

9.  They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.

10.   No Furniture shopping until the deal is closed

You have prequalified for a loan. You found the house you wanted. The contract is signed and the closing is in 30 days. Don’t celebrate by buying furniture or a car, if you plan to finance those purchases.

In this tight lending environment, lenders pull credit reports before the closing to make sure the borrower’s financial situation has not changed since the loan was approved. Any new loans on your credit report can jeopardize the closing.

Buyers, especially first-timers, often learn this lesson the hard way.

“They sign the contract and they want to go buy new furniture for the house or a new car,” Anderson says. “I remember one case where just before closing, the buyer drove to the office and said, ‘Look at my brand-new car.’ I told them, ‘You better go back to that dealership.'”

Luckily, the dealership agreed to wait a couple of days to report the loan to the credit bureaus, he says. Otherwise, it could have killed the deal.

By Jill Krasny

As the housing market slowly improves, more consumers are finding themselves in the market for a new home, or at least one worth dreaming about.

One place they start their search is an open house tour, though they can forget these are helpful for more than just checking out the kitchen’s color scheme.

Open houses are a smart way to gauge whether a listing’s catching heat and if it’s worth seeing again in a private showing.

“If you’re just getting started with the process, an open house tour is like a get-out-of-jail-free card,” says Zillow.com real estate expert Brendon DeSimone. “It’s free, you can go because there aren’t restrictions and it’s a great way to learn the market.”

To his mind, the primary thing that home shoppers overlook tends to be the most obvious: the crowd. Observing other shoppers is key, he says, as that’s the best way to gauge the market’s response to the home.

“If you like the house, watch the people. Is it packed? Are they hovering around the agent?,” he says. If so and if they’re asking pointed questions as well, you can bet that there’s serious interest and the listing is going to go fast.

Another strategy is to observe the agent, he adds.

“If you go to a house and you like it but no one’s there, maybe there are issues there,” says DeSimone. “You should watch the listing agent’s reactions because he wants to see the response to the house and how crowded it is.”

And don’t miss the opportunity to ask the agent about the seller.

“You should ask why he’s selling, nothing rude, just what’s the story,” DeSimone says. “What’s their motivation to sell?” That should give you a feel for the pricing and whether the listing is gathering dust.

Questions like, how many days has the home been on the market?, or Have you lived here for a long time? should get the conversation going. Perhaps there’s a looming job transfer, or the seller is just moving down the street.

“If they’re not motivated you won’t want to waste your time,” says DeSimone. But at least you’ll know where they stand.

Source: “Open Houses: How to Gauge the Market on a Home Tour” Business Insider (Oct. 11, 2012)