July, 2009

Let’s start with the West, which in June led the nation in the strongest increase in home sales. In this region, existing home sales rose by 6.4 percent in June, compared to May. That’s also eleven and a half percent higher than June a year ago! But, as you might expect, prices were down. The median sales price in the West in June was down nearly 25% compared to a year ago.

Next up? The South! Home sales rose in this region as well in June: The numbers were up by four percent over May. Although, compared to a year ago, sales were down nearly four percent, this June’s numbers show a substantial rise over May. And, again, despite the rise in sales, prices in the South were down nearly 12% compared to a year ago.

The Northeast experienced a 2.5% sales spike in June, compared to May. These sales were 4.7% below the same period last year, and prices also were down, nearly 6% compared to a year ago.

And ending up in the Midwest. In the Nation’s mid-section, sales rose just under one percent in June over May, and again, the sales numbers were down compared to last year, but not by much — just under two percent fewer sales. And the prices were down 9.1 percent in the last year.

So what’s it all mean to you? Prices are lower than they were in the big real estate boom, but homes are selling! And, more homes are selling every month! And that, of course, means that fewer homes are for sale, and the inventory is down across the country. And, the lower inventory gets? The sooner we’ll be back to a normal real estate market.

First – If you keep your current property, are you ready, and able, to be a landlord? Keeping your home means renting it out. You need to keep in mind what it means to be a landlord. You will have to deal with renters, faulty appliances, credit applications, late rent checks, and the list goes on. And you cannot forget that sometimes being the landlord means being the tough guy, to ensure everything goes smoothly.

Let’s move on to the second thing for you think about: if you don’t sell, will you have enough money for your new home without using the equity from your current home? You need to have enough money in the bank for the down payment plus closing costs. Most people need their equity from their old house to buy their new house. But if you don’t require this, you could be able to manage owning two properties.

Has the idea of not selling left your mind yet? If not, you have one last thing to consider…

Finally, will your income support both places? If you can’t find tenant right away, you must be able to support your two mortgages while you find a renter. Talk to your REALTOR® about how much you can rent the place for, and once you have that monthly amount, compare the monthly rent to the monthly expenses. You can find your monthly expenses by adding up your monthly mortgage, insurance, taxes, and condo or HOA fees. Don’t forget to include any utilities you plan to pay for as well. You might make profit, you might not, but this will let you know what you are getting yourself into financially. But without a tenant, you need to be sure that you can support both places for anywhere between two weeks to six months!

If you have the patience to find a tenant, the money for the down payment with closing costs, and enough cash flow to both places running without a tenant, then congratulations- you have what it takes to be a landlord!

1. What you make
2. What you have saved
3. What your credit report looks like

Each one of these items requires some paperwork. We recommend having a designated “buying a house” folder to collect all the paperwork in.

Let’s start with your income — this requires your pay stubs. The more you have, the easier this process will be. Have at least two on hand, but we recommend a few months worth. Make copies of all your stubs so you will be ready for whichever the lender asks for, the originals or the copies. Beyond your pay stubs, your other types of income, such as alimony or child support, needs documentation, also. If you are divorced, you’ll want to have a copy of your divorce agreement, particularly the page where it spells out alimony and child support. Most lenders will also want are your two most recent tax returns. If you don’t already have copies, contact the IRS for these.

Next up… Your savings. To prepare for this, get all your monthly or quarterly statements ready. This would include your checking account, savings account, 401k, IRA, life insurance- everything. The lender wants to see your whole financial picture, so make sure you don’t miss anything. Gather up all of the statements, and you guessed it- copy them and put them in that folder of yours.

The third and final step- your credit! Finally, no paperwork needed! The credit reporting agencies will give your lender this information. But, while you didn’t need to do the paperwork yourself, you still need to make sure that your credit report is correct. Take a look at it carefully and make sure it is 100% right, and if not call the credit bureaus to make it right.

That’s it! You’re organized! And now you’re ready to move on up…

REALTORS® are the best way to ensure that all of your real estate transactions occur in a timely manner. They can also help you with the safeguards that will protect you when buying and selling simultaneously to ensure that you don’t end up stuck in a bad situation, or facilitate a timeline extension, if needed.

The listing process will let the REALTOR® and the client talk about what concerns they may have; that way if the client is uneasy about being without a home for a little bit, then it can be put in the listing agreement that the sale is dependent on the client finding a home within a certain period of time.

The primary objective is to ensure that the buyer is then aware of this condition when they enter the contract. The biggest challenge in a situation like this will be the mortgage. The process will be a lot easier is if both sides come in pre-approved for their mortgages.

With a REALTOR®, as with anything, experience will be the asset in the transaction – REALTORS® have valuable insight to make deals like this, go smoothly. You want a REALTOR® who can stay on top of what is happening, get done what needs to get done, and keep everyone informed of any updates. Having that kind of REALTOR® will ensure that you and your family are protected when buying and selling.