Guide Me Home to North Jersey

Aside from location, number of bedrooms, and schools, the most important criteria for a buyer is usually the price of the house. Many say right up front in the search process, “I want to spend between X and Y dollars.” Usually, the buyer prefers the more expensive home as it has more features than they are looking for!

But in this market, it’s important to understand that rising interest rates can have a huge effect on the monthly expense of mortgage and taxes. Right now, conventional wisdom says that interest rates will go up after March 31st causing higher monthly payments and the tax credit expiration will end April 30th causing buying activity to slow down. This will result in more inventory on the market. Good old-fashioned supply and demand in play here! Both buyers and sellers must be acutely aware of the cost of the house vs. the price of the house in this time period.

Let’s look at the consequences of an interest rate increase. The general rule of thumb is that for every 1 percentage point interest rate increase, the mortgage costs approximately 10% more. That means the buyer must lower the top price he is able to pay, put more money down, or resign himself to a higher monthly payment (sellers must be willing to lower the price of the home quickly to remain a viable and competitive player in the market). Now let’s look at the consequences of increased inventory. Unless a house is priced sharply and correctly, it will not sell in a glutted marketplace. Buyers have an opportunity to make an educated lower offer, maintain the projected monthly payments they can afford, and buy the house they want (hopefully, sellers will react, with the help of their agent, to meet this problem head on and lower the price of the home).

Posted by:Mary Jane Benedetto

In my first blog in this series, I talked about how homes and sellers are competing with each other in this buyer’s market in three ways. In the last segment, I talked about price.

Presentation is the second competitive factor. Today, buyers are less willing to forgive anything negative in their eyes since there may be another home that does not have that negative!

Roofs that need repair, water in the basement, or neglected landscaping are powerful deterrents to buyers, even if you have the perfect floor plan! Before closing, the buyer will schedule a home inspection. The results will point out any issues and the seller will have to either fix them or negotiate. The ultimate closing price will fare better if any problems are taken care of up front.

Other negatives might also include strong decorating styles, messy housekeeping, wood work in need of paint, smells, or difficulty viewing a property. The main rules here are to simplify and make your home spacious and neutral. You will end up throwing away lots of unnecessary things before you move, so why not do it now? Buyers need to imagine things such as where their furniture will go, where will the TV go, and how can their lifestyle fit in to your home. Don’t make it complicated! If you are a seller, your agent will be able to tell you what needs to be done.

What is the third way in which homes and sellers are competing with each other? Check back here soon for Segment Three of this series!

Posted by: Mary Jane Benedetto

In these dicey economic times, there are buyers who truly want to buy a new home. They have a mortgage pre-approval, a good idea of where they want to live and are looking faithfully at homes with a buying mindset. They are perfect buyers except for one small detail: they don’t want to own two homes because they aren’t sure they can sell their current home quickly!

These circumstances are really no different than normal times. It’s strictly a matter of confidence: buying and selling a house concurrently used to be the rule, as all involved had confidence it would all work out. But today, different buying strategies and selling strategies must be used. In effect, two hats must be worn following one rule: It’s a buyer’s market!

The serious buyer or seller will find a market and an inventory very different than a few years ago. All are to the buyer’s advantage while some are to the seller’s advantage! Some of these differences are a more leisurely pace of viewing homes, longer “Days on Market” than previously seen, more homes to be seen and judged, quicker and bigger price reductions, and buyers and sellers who are either realistic or idealistic. Homes and sellers, instead of buyers, are now competing with each other!

How do they compete? Bookmark this website and check back often!

Posted by: Mary Jane Benedetto