Real Estate Information

Lancaster Chicken Barbecue Coming in May ! Fun time, lots of things to do. Check it out

Here is the latest info. For the first quarter of 2011 there was 731 homes sold in Lancaster County. This is a 3.7 percent decrease from the first quarter of 2010. The five year average of homes sold for the first quarter is 881. The average sales price for the first quarter was $170,772, a decrease of 8.6 percent over the average sale price of 2010's first quarter.  For homes priced under $200,000 we are actually 3.1 percent ahead of 2010 but for homes prices over $200,000 we are 17.9 percent behind 2010.  This pretty much explains the decline in average sales price. It's due to that being a larger part of our market. We are still seeing times where there is more than one offer at the same time on a home. Homes that are well priced and in really nice shape are still selling quickly.

You Pay for the home you live in. Ever hear anyone say that before? I have.

What does it mean? Well sounds pretty straight forward, but it’s worth thinking about.

I had a settlement this morning with a home buyer I was representing that really represented this saying so well and made me think of it again.

This couple was getting ready to rent a town home. They had already viewed it with the owner and put their name on a list of prospective renters he had shown it to. (All of who were ready to help this nice landlord pay for his property)  He was in the process of painting it and getting it ready to rent.  It offered three bedrooms and one and a half baths and was in a prefect location for this couple. The monthly rent was going to be $985.00 a month plus utilities.

A town home entered the market FOR SALE right down the street and we connected. We viewed the home together and they loved it! The home for sale actually offered an additional full bath and was in better shape than the rental.

I assisted them with financing options and we found out they qualified for a 100 percent financing program! We wrote an offer and were able to get the seller to agree to pay most of the buyers closing costs.

This morning these folks, who were days away from being renters, paying $985.00 a month for rent and PAYING for the home they live in for SOMEONE ELSE ( the landlord ) became homeowners! Their total monthly mortgage payment?  $932.00 !  ( Makes me smile )

This is $53.00 less a month they will pay owning their own home, a bigger nicer home, than they would have been paying in rent. Now they are paying for the home they live in   for themselves and not paying for someone else’s home!

( Of course this same principle applies if you are renting an apartment. The factor is where is your monthly payment going, to benefit you or someone else )

They also needed about the same amount of cash to purchase as they would have needed for the security deposit and first months rent for the rental.

This does not even begin to factor in the tax deductions, appreciation, paying the mortgage down and gaining equity aspects of this equation. These items would make the monthly saving over renting well over $200.00 a month!

Yes, we pay for the house we live in. The question is, are we paying for it for someone else, or for ourselves?

Buying an investment property you plan on renting out and wanting a good deal brings different things to consider. For example, what’s the goal of the investment? Is it to bring in monthly cash flow? Or, maybe like some people I have worked with you are more interested in building your long term net worth.  What’s the difference? Suppose your find a modest little town home, maybe in the city. One that, based on what we can tell today, may be limited based on the size, location, etc of having a good chance for going up much in value in the future. However, due the price of the home it could be rented out and have nice positive cash flow on a monthly basis. This could be a good deal for the buyer because that’s what they wanted to accomplish.

The second example for buying Lancaster Real Estate as an investment would be a little nicer home that would cost more in a great location. This home, if bought right may break even on a monthly basis. So, it would pay for itself but it would not be putting cash in the pocket of the owner on a monthly basis. However, let’s say you own that home for ten years. During that time the tenants have greatly paid down your mortgage and because it was a desirable floor plan in a desirable location the home has increased in value and now has a great deal of equity in it. That home was a good deal!

So, it’s important to understand what your goals are when looking for a property. What is a good deal to one person may very well not be anything the next buyer would even consider.

What is a good deal when buying homes in Lancaster?

I am looking for a GOOD DEAL! I have often heard a potential buyer make this statement. And let’s face it, who doesn’t want a good deal? A “good deal” can mean different things depending on the goals and needs of the buyer. Part of my job is finding out what those goals and needs are.  For today let’s talk about a real estate investor.

For example, if you are a real estate investor looking to buy a home in Lancaster County to fix up and resell, your requirements for a good deal will be different. You will need to buy a home at a price that will allow you room to make a profit after putting money into the home for improvements and reselling it rather quickly. Most professional investors are in a position to look at a property and make a VERY quick decision. They can usually make an offer without any contingencies such as needing to sell a home in order to be able to purchase the investment home. They can often make the offers cash, as is, with a very quick settlement. This allows them to offer the sellers the best possible terms and improves the chances of the investor buyer to purchase the property at the best price possible. This type of real estate buyer is not looking at the home thinking about if the master bedroom will be big enough or if the home is in the right location for his or her commute to work or if they like the layout of the kitchen. This buyer is looking at the numbers. Does this make sense and can they make the needed profit. So, the consideration for a true real estate that is looking for a good deal or a well priced Lancaster Home because they are an investor who is buying to resell is very different.

How about someone that wants to buy a home to rent out to help them build long term wealth or have monthly cash flow? Well that buyer will have very different requirements than the fix and flip buyer. Also, the home that's a "good deal" for that buyer-investor may be very different, because that buyers needs is different, than what the first buyer needed in a good deal.  More to come in my future posts!

Since 2004, the maximum VA loan is the same as the maximum FNMA mortgage which is currently $417,000.  Occasionally, a Veteran wants a loan in excess of that amount.  If the Veteran will put a 25% down payment on the excess amount, a mortgage company will loan the other 75% needed. Most buyers using VA financing here in Lancaster County do not need loans that high but every once in a while it does happen.

Example

VA loans are eligible for veterans of the military with a certificate of eligibility.  A Veteran can get a 100% loan up to the maximum VA loan amount and the seller can pay ALL their closing costs which would allow a Vet to get into a home with no down payment and no closing costs.  The VA Funding Fee can be rolled into the mortgage or paid by the Seller. Just last week I represented a buyer making an offer on the very nice townhome. This buyer put the home under agreement at a sales price in the $135,000 range. His total monthly payment will be $935.00 a month. This buyer was getting ready to rent a smaller home that was not as nice and his RENT payment was going to be $985.00 a month ! So, he is buying a his OWN HOME , a nicer home and his payments will be $50.00 a month less than his rent! This does not even begin to take into account his tax benefit of owning, long term appreciation and so much more. VA can be a great option for many buyers.

When the Vet sells the home, their VA loan is assumable at the existing interest rates but does require qualification of the new buyer.  The benefits would be a possible lower interest rate and lower closing costs. This may also help make the home even more desirable to new buyers.

There's more to finding the "Right" home than driving around looking at houses.  A Residential Finance Consultant can help you make better decisions to help you understand the tax advantages, financing alternatives and investment aspects of homeownership.

If you haven't heard by now, FHA is increasing the annual Mortgage Insurance Premium again by .25% on April 18, 2011.  Payments will be higher even if the interest rates remain the same. Also, more and more buyers are using FHA so it's important you have this info.

Buyers who are ready to take action can still lock in the lower MIP.  If they have a contract signed by all parties and get a FHA case number issued prior to 4/18/11, the lower MIP rate will apply.

For a $175,000 home at 5% interest, the new MIP will mean the buyer will pay $35 more to live in the same home.  If you don't have to pay more, why would you?

Another possibility is that if interest rates go up .5% by the same effective date, you could pay $88 more to live in the same home.  What would you spend $88.36 on if you don't have to make a larger payment?

April 18th is a Monday this year, so you'll probably need to get your contract completed by the previous Friday at the latest to give your loan officer an opportunity to order the case number.  If you don't have a loan officer, Kim and I can recommend a reliable one.  We can even give you the names of a few if you want to compare. Making good decisions will improve your entire homeowner experience and save you money.

The past two weeks for Kim and I have been very busy. Why do I share this? Many people think this time of year, as the weather starts to get cold and the Holidays approach things come to a halt in the Lancaster Real Estate Market.  We have found year after year this is just not the case.  In the past two weeks we represented SEVEN buyers putting homes under agreement, listed two homes, attended four home inspections, had three settlements and showed about 15 homes!  Often this time of year brings out the most serious home buyers. People that just sold a home and NEED to find another. Home Buyers or sellers being transferred due to a job change.  Someone who’s lease is expiring and needs to make a decision, etc. etc.

Yes, come January and February things do tend to slow down some. But, if the weather is not bad and we don’t have a lot of snow often even these months can be rather busy. Bottom line is, life goes on, and many of the reasons people have a need to move goes on, regardless of the month of the year or the outside temperature.

Yes, you have a lot of fun and exciting choices this weekend in Lancaster County! You could head downtown for First Friday tonight. Walk around and explore 70+ arts venues. If you have kids, be sure to stop by the Pennsylvania College of Art & Design for "Storytelling Through Art". Participants at this FREE family event, will have children's stories by 2010 Caldecott Medal winner Jerry Pinkney read to them by actors from the Fulton Theatre.

This weekend also kicks off the Annual Fall Open House at Eastland Alpacas in Mount Joy. Visitors, including children, can "get up close and personal with an alpaca or baby cria." Enjoy a wagon ride, view an obstacle course demonstration by the 4-H Club, and then stop by the "Boutique" featuring a variety of items made from warm, soft alpaca fibers. Here is a photo taken during last year's open house:

Have a fanastic fall weekend; whatever you do. And if you're running in the Amish Country Bird-In-Hand Half Marathon on November 6th - We wish you good luck!

We hope you are enjoying the beautiful sights and fun activities that fall brings. There's so much to see and do around Lancaster County! Tomorrow is your last chance to enjoy Kids' Pumpkin Picking Day at Oregon Dairy.

Have fun, whatever your plans are for the weekend. The weather should be great!

This colorful photo that was taken at Stauffers Fall Fest a few weeks ago.