Four Signs that a Buyers’ Market is Coming

Since February 2012, home prices have been rising at an accelerating pace, fueled by a combination of extraordinary demand and inadequate supplies of homes for sale. Over the past year, prices have been rising faster than incomes, reaching an annualized rate of nearly 7% a year. Median prices in more than half the nation’s housing markets had reached all-time highs. Now, sales are lagging and prices are rising at much slower rates. Fundamental changes are underway in the real estate economy that should bring a degree of relief to the record-breaking millions of millennial first-time buyers who are struggling to save enough for a down payment.

The laws of supply and demand govern real estate markets. High levels of demand deplete supplies and prices rise until homes become too expensive for average buyers, and demand declines. High prices also encourage sellers to list their homes and builders to build new ones. Supplies increase until prices moderate and decline. Buyers’ markets occur when the supply of available properties for sale exceeds demand (the number of buyers actively shopping for properties). Sellers’ markets occur when demand exceeds the supply of available homes on the market.

In sellers’ markets, homes sell faster and for prices at fair market value or higher. Often, more than one buyer will make an offer, creating a multi-bid situation where buyers may raise their offers to win the contract. In buyers’ markets, houses take longer to sell and sellers may decide to settle for offers below list price. Sellers may offer incentives, such as including a home warranty insurance policy that covers appliances and systems like air conditioning at the time of sale.

Buyers’ Markets Are Inevitable

Real estate markets are cyclical. Even the longest sellers or buyers’ market will eventually end as demand, price, and supplies change. Over the past year, the laws of supply and demand have been at work, changing the dynamics of hundreds of housing markets. Prices in half the nation’s markets have reached peak heights, and they continue to increase in most markets, albeit at a slower pace than last year. Sales began sagging 18 months ago, then stabilized recently as more buyers became active to take advantage of lower interest rates.

Most markets today favor sellers. However, many are in the early stages of becoming buyers’ markets and your market is probably one of them. Eventually, your market will make that transition. With the help of your real estate agent, who has access to local data from your local multiple listing service or other sources that are not readily available to consumers, you can read the signals in your market data that professionals use to anticipate the change before it occurs.

When using real estate data to track market trends, be careful to account for seasonality. Prices, sales volume, inventories and the time it takes to sell a home all change with the seasons. Spring and summer months are traditionally more active and, on a month-to-month basis sales will usually rise, and supplies will probably decline during the warmer months. That’s why real estate economists compare data on a year-to-year basis, or they will adjust monthly data using a formula to account for seasonality.

buyers marketbuyers market

Here are four signs that decipher the direction in which your market is headed:

  1. Houses take longer to sell. The time that passes from the day a home is listed for sale and the day a seller accepts an offer is an excellent indicator of demand. When demand is weakening, houses in a market will sell less quickly than they were selling a year ago. Demand can be measured by days on-site, the time that has passed since the home was listed on a web site like or days on market, the number of days since the home was listed on the local multiple listing service. To express the effect of demand on the domestic supply of homes for sale in a particular market, some economists prefer months’ supply―the number of months that it would take to deplete the local inventory of homes for sale at the current rate sales.

There is no specific definition for buyers’ and sellers’ markets in terms of time on market, but generally, the average listing time is 46 to 55 days. By itself, time to sell a home is not enough to define a buyers or sellers’ market. However, a lengthy time on market during the fall and winter months is a sure sign of a buyers’ market. When a listing takes six weeks or less to sell in the spring or summer, you are probably in a sellers’ market. By comparing changes in the time on market over the past two or three years, you can identify trends and get good sense of whether conditions are improving for buyers or sellers.

  1. Sales slow down as demand drops. Home sales quickly reflect changing supply and demand. When sales decline from levels of a year ago over a period of several months, it’s a reflection of either falling demand or low levels of inventory. Demand may fall for one or more reasons ranging from consumer confidence in the economy, changes in mortgage rates, or price increases that exceed what local buyers can afford.

Your agent should be able to provide you with monthly data on local sales trends in the form of closings and contracts or pending sales. Though about 15% of contracts fail to close, pending sales are an indicator of future sales trends.

  1. Prices appreciate at rates lower than 3%. Prices reflect changes in the relationship between supply and demand. Prices rise in a sellers’ market and are flat or trend down in a buyers’ market. As a rule of thumb, residential real estate appreciates about 3% in a typical year. In July 2019, home prices rose 4.3% over 2018, suggesting that we are still in a sellers’ market, but less so than in July 2018, when prices were 6.9% higher than in 2017. If price appreciation falls below 3% next year, it’s a sign than a buyers’ market is here. To get a sense of recent price trends, ask your real estate agent for a graph illustrating price trends in your market over the past three years.
  2. Supplies of homes for sale exceed demand. When inventories of affordable homes fell so low that they started to hamper sales, many housing economists were caught off guard. By 2017, the month’s supply of available homes for sale in the nation’s largest markets had declined 25% over the preceding two years. Inventories continued to fall quickly, until the point that the lack of affordable homes for sale was making the problem even worse by pushing prices up so high that middle-class homeowners in many markets could not find move-up homes which would free up the houses in which they were living for first-time buyers. By late 2017, the first signs of relief appeared in hotter markets. On a year-over-year basis, new listings started to improve, and supplies of active listings stopped shrinking every month.

Several factors contributed to the inventory drought: low levels of new home construction, the conversion of 7 million homes from ownership to rental, move-up buyers who could not afford the move up, and above all, the coming of age of the largest generation of prospective homebuyers in history― the millennials.

Inventory shortages may be the most destructive cause of home price inflation. When supplies cannot meet the demand, buyers find themselves bidding against each other for a house they can afford. By the time the bidding ends, winners often turn out to be the real losers because they have stretched their budgets to the maximum. Also, shortages can creep up on buyers and their agents if they are not following market reports carefully which will artificially drive up prices.

The nation’s housing markets have not recovered from the inventory drought. The relationship between prices and inventories is very delicate. For example, in June 2019 demand improved when mortgage interest rates fell unexpectedly. Many buyers became active to take advantage of the rates. With demand up, inventories fell slightly below levels of a year ago. Should rates continue to rise, demand will return to its slow decline.

Pay attention to inventories and new listings in your market. Your market with not make the transition from sellers to buyers’ market until supplies of homes for sale outnumber sales on a monthly basis.

Markets do not change quickly from sellers’ to buyers’ or vice versa. The process is a slow one, giving you time to prepare. If you are a potential seller, you can track these trends to help you decide when to sell in advance of a changeover. If you are a buyer, particularly a first-time buyer, get your ducks (credit score, down payment) in a row so that you will be ready when the market turns in your favor.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


Staying Prepared in a Recession | Tips for Financially Protecting Your Home

It was one for the history books, second only to the Great Depression, the Great Recession saw countless homes foreclosed, numerous bankruptcies, and overall catastrophic distress in the housing & financial markets. In fact, during the 10 years that spanned the Great Recession, 7.8 million foreclosures happened. For those that lived through the financial turmoil, there is fear and hesitancy of history repeating itself. The real estate market has certainly recovered; however, there is chatter that a looming correction could be on the horizon. Whether it’s just an adjustment in the housing market or a full-blown recession, there are steps you can take now to hedge your bets and place you in the best place financially.

African male holding piece of paper while paying gas and electricity bills online on notebook pc. Young family calculating their expenses, planning domestic budget, sitting in kitchen interiorAfrican male holding piece of paper while paying gas and electricity bills online on notebook pc. Young family calculating their expenses, planning domestic budget, sitting in kitchen interior

Take Advantage Of Current Low Interest Rates

For much of 2019, interest rates have been low. One of the contributing factors to foreclosures during the recession were extreme or variable interest rates. There are two ways to take advantage of low interest rates to protect yourself in case of another recession:

  1. Buy A Home. Arguably one of the best ways to hedge your bets is to have affordable housing that can sustain an economic downtown. Locking in a mortgage with a low interest rate helps a buyer experience more affordable monthly payments & more money applied to the principal balance.
  2. Refinance Your Mortgage. If your original home mortgage was secured pre-recession, you probably know the impact of variable rates, interest-only loans, & balloon payments. Even if your mortgage was secured after the recession, mortgage rates have since declined and your home equity could have increased. By refinancing your current mortgage, you can lower your overall monthly payment. Decreasing your overall monthly housing budget is a critical step in recession-proofing your finances.

Create Multiple Streams Of Income

While the housing market took a downtown during the recession, the rental market remained steady and one of the ways to withstand an economic downturn is to have multiple streams of income. While demand may be less from buyers due to a recession, the demand by renters typically increases. By purchasing rental properties with lower interest rates, the additional stream of income can be a vital asset during a recession. While strategies may vary in how to acquire a cash-flowing rental property, the math is still the same: purchase low with a 20% down payment and a low interest rate will help an investor to not only maintain but cash flow the rental.

Pay Down Your Mortgage

Whether you choose to refinance your current mortgage or not, paying down your existing mortgage will not only build equity but provide freedom in the next recession. By utilizing programs such as Bi-Saver, homeowners can experience flexibility in mortgage payment schedules as well as increased equity. Programs like Bi-Saver act as a third party that collects the mortgage bi-weekly throughout the life of the loan– by the end of each year at least one additional mortgage payment is applied to the loan. This process can erase years off the life of the loan. By combining a low interest rate and additional mortgage payments each year, homeowners have the ability to experience some breathing room in their finances.

While nobody knows if, or when, the next recession will be, it’s important to make cautious and wise financial decision now that your future-self will thank you for. By taking advantage of lower interest rates, creating multiple streams of passive income, and paying down your mortgage will help you to hedge your bets!

Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.


COVID-19 And Its Impact On The Real Estate Market

As thousands across the globe struggle with the impacts of the Coronavirus (COVID-19), there are few industries left untouched. The U.S. real estate market is among many that have implemented changes, navigated a new normal, and worked to find solutions in this ever-changing COVID-19 climate. As investors and home buyers are re-evaluating and sellers remain unsure of what’s next, it’s important to understand how the Coronavirus has impacted the industry, but also how real estate professionals are working to mitigate the impacts.

Increased Interest Rates

As the stock market continues to fluctuate and unemployment claims rise due to layoffs and furloughs, interest rates have been ticking upwards. As interest rates affect buying power, this has the potential to impact the upcoming spring housing market which is typically the busiest time of year for real estate professionals. Lindsey Mahoney, Realtor with The Rigali Group With Danberry Realtors in Toledo, Ohio, says buyers are “more curious about their interest rates and how that will affect them.”

One of the most important keys to securing the best rate possible is to begin working with a lender now. Working with a seasoned and professional mortgage lender, as well providing all necessary documentation to the lender, allows you to lock-in a great rate when the rates dip again. Request that your lender stay in daily contact with you to apprise you of the daily rates and how it affects your buying power.

taxmortgage couple on computertaxmortgage couple on computer

Decreased Buyers In The Market

According to a National Association of Realtors March 2020 survey, nearly half of Realtors responded that “home buyer interest has decreased due to the Coronavirus outbreak.” Decreased buyer activity can be attributed to economic fears, furloughs, and social distancing. However, there are methods that real estate professionals can implement to calm buyer fears and promote a safe environment:

  • At the direction of NAR, provide virtual open houses rather than in-person
  • Do not drive clients to showings per NAR Coronavirus safety guidelines
  • Disinfect all surfaces- doors, handles, lockboxes, countertops, etc., before and after every showing
  • Provide disposable gloves and masks for clients to utilize during showings
  • Offer virtual tours, electronic signing, wire transfers, etc.

Tenants Unable To Pay Rent

As furloughs and layoffs continue, many hitting hourly and seasonal workers, landlords may find themselves in a situation with a tenant unable to pay rent. Lindsey Mahoney, who also owns a rental property in Toledo, says that while her tenants have not contacted her yet regarding rent, she has procedures in place to work with them. Mahoney suggests “giving a month free” to tenants and then “come up with a solution.” If landlords can’t provide a free month, she suggests coming up with a solution where tenants just pay the mortgage amount- rather than any increased cash flow amount. Other alternatives landlords should consider:

  • Remove late penalty fees
  • Allow tenants to pay in increments
  • Discuss delaying payments
  • Any changes to the lease should be put into writing

Significantly Increased Airbnb Cancellation Rates

Due to travel bans, social distancing, and fear of the pandemic spreading, many are choosing to stay at home rather than travel. For investors like Sarah Karakaian, who owns six Airbnbs and manages 20 others in the Columbus, Ohio area, this has caused a major disruption in her livelihood. The co-host of the short-term rental podcast, Thanks for Visiting, says, “Our Airbnb business has absolutely been impacted. We’ve seen about a 90% cancellation rate between March 13th and April 15th, 2020. Our occupancy rate went from 80% to 10%.”  As Airbnb issued a blanket refund policy to travelers, many hosts are concerned about what is next for their investment. Karakaian says, “Because Airbnb issued a blanket refund policy that absolutely favors the travelers, I’m thinking travelers will now trust Airbnb more than ever. When the sun comes out and everyone starts traveling again, I believe travelers will look to Airbnb to help them book their stay knowing that Airbnb had their back when times were tough. That would be excellent for hosts in the future.”

Galveston, Texas USA - November 3, 2019: The Silk Stocking Residential Historic District contains beautifully restored vintage homes of the Queen Anne architecture style.Galveston, Texas USA - November 3, 2019: The Silk Stocking Residential Historic District contains beautifully restored vintage homes of the Queen Anne architecture style.

If hosts are looking to recoup lost revenue, Karakaian suggests:

  • Updating cleaning procedures and informing guests
  • Include a picture of the cleaning team and cleaning products so guests can feel assured
  • Caption photos with what you are doing to keep the space sanitary
  • Diversify your advertising outside of Airbnb. Make use of social media, VRBO, Facebook, etc.
  • Consider providing cleaning materials for guests to utilize during their stay
  • Offer discounted prices or incentives

Disrupted Business-as-Usual for Banks

As many banks are locking their doors, they are having to get creative in meeting the needs of consumers and the real estate industry, while keeping people safe and healthy. Natalie Bartholomew, Chief Administrative Officer at Grand Savings Bank in Northwest Arkansas and the voice behind The Girl Banker says, “We are in uncharted territory and we’ve been preparing for the impending threat of the coronavirus for several weeks. We closed all branch lobbies on March 17th.” Even as the pandemic continues to sweep across the globe, the banking world doesn’t stop. When asked how COVID-19 might affect the mortgage loan process, Bartholomew says “Depending on the impact to staffing, third parties such as appraisers, title companies, etc., delays are highly likely as this situation progresses.” She assures borrowers that lenders are working to do their part to help: “We have created a payment deferral program for our consumer installment borrowers and in-house home mortgage borrowers and are willing to revisit as the situation progresses.”

The situation with COVID-19 is fluid and changes daily, if not hourly. As more shelter-in-place mandates are issued, the impact on the real estate industry may continue to grow. And while the unknown may be overwhelming, it’s important to remember whether you’re buying, selling or investing that the real estate industry is prepared. Blair Ballin, a real estate agent with Conway Real Estate in Phoenix says “We will get through this. Yes, there will be losses (employment) but that does not mean the real estate market will crash.”

Read more:

Be safe, everyone! Stay tuned for more helpful tips from your resource for all things home.

Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.


How Low Mortgage Rates are Making Housing Shortages Even Worse

Perhaps the most damaging aspect of the chronic drought of homes for sale is the destructive way shortages are concentrated on the least expensive properties on the market– the starter homes that are the gateways to homeownership.

When I worked at the National Association of Realtors, I learned about the homeownership ladder.  Here’s how it works: First-time buyers purchase the least expensive homes on the market; this transaction makes it possible for a young, growing move up to the next price level. The proceeds from the sale of their starter home get a good start on a more expensive home with a sizeable down payment, then the ladder continues until the kids are on their own and a large family home costs too much to maintain. Then it’s time for the retiring couple to sell, cash in their equity and either purchase or rent a retirement home. This phenomenon continues as the family moves from one town to another.

At each rung of the housing ladder, except the first and the last, each family moving up the ladder generates two transactions, a sale, and a purchase. Should large numbers of owners get stuck at a certain level and they do not move up, the housing ladder slows down. This creates problems for homeowners that are above and below the problematic level to suffer.

buyers marketbuyers market

The housing ladder works best when all generations are roughly the same size, housing inventories at all levels remain constant, and new home construction replace tear-downs. At local levels, many events ranging from natural disasters, economic disasters, exceptional growth or population decline may cause local housing to break down. At the national level, only events that impact large numbers of the nation, like national disasters, recessions, depressions, crises that cripple the nation’s housing finance system, significant changes in the nationwide housing inventory or substantial changes in the sizes of generations.

Today several of these factors are creating a chronic national crisis in inventories of homes for sale. Housing ladders are slowing down as problems affecting one level impact others.

These problems are:

  • The successive coming of age of two of the largest generations in history, the Millennials followed by Generation Z;
  • The conversion of 6 million of the lowest-level homes into rentals;
  • The inability of new home construction to relieve these shortages;
  • New construction cannot meet the demand from first-time buyers, about one out of three buyers,
  • Prices generated by shortages of homes for sale are creating widespread unaffordability at lower levels of the housing ladder; and
  • The generation at the top level of the housing ladder is choosing to age in place rather than sell their homes.

The housing ladder makes it easier to understand how an event that impacts one tier will also affect adjoining tiers. For example, the decision by millions of Boomers to “age in place” is reducing the available inventories today but will increase supplies as Boomers die off in the next decade. Prices of large homes will drop, encouraging move-up buyers. The increase in Boomer homes for sale will work down the hosing ladder and may eventually increase the number of homes available to move-up buyers and reduce prices.

HousingWire reported that last December, the inventory of mid-tier housing houses priced below $200,000 declined 18.1% year-over-year. In the next tier, houses priced between $200,000 and $750,000 fell 10.2%. Listings of homes priced over $1 million shrank by 4.4% year over year. The shortfall originated at the entry-level and worked its way up the housing ladder from bottom to top, declining in strength at each level like an echo.

However, an event at one level may not produce the expected result at the next. Mark Fleming, the Chief Economist at First American, recently suggested that falling mortgage rates can incentivize homeowners to sell their home and buy a different one, but persistently low mortgage rates can have the opposite effect.

“While historically low rates increase buying power and make it more affordable for potential buyers to purchase a home, they also discourage many existing homeowners from selling,” he wrote.

“There is little to no house-buying power benefit for homeowners with an already low mortgage rate, so the only way existing homeowners can increase their house-buying power is through household income growth. This helps explain why more and more homeowners have decided to stay put, reducing the inventory of homes for sale and increasing the length of their tenure,” he said.

While historically low rates increase buying power and make it more affordable for potential buyers to purchase a home, they also discourage many existing homeowners from selling. This helps explain why more and more homeowners have decided to “stay put,” reducing the inventory of homes for sale.

Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.


Summer Storm Safety Tips for Your Apartment Complex

As summer approaches, so does storm season. Severe weather can often be very unpredictable and require incredibly expensive repairs, so it’s a great idea to have a storm safety plan in place.

Most natural disasters and severe weather just cause localized problems, but there are always a few events each year that result in widespread damage. Many of these larger severe weather events occur during the summer months. In fact, nearly half of all of the billion-dollar weather events in 2018 struck between May and September.

weather disaster mapweather disaster map


Keeping yourself safe in your apartment during severe weather

While it’s important to have a personalized safety plan no matter where you reside, if you live in an apartment complex that plan will be a little different than those for people who live in houses.

To get you ready for the summer, here are some apartment complex storm safety tips that will make sure you stay safe if an emergency strikes.

1. Know your apartment complex’s emergency exits and storm protocols

If, for any reason, you find yourself having to leave your apartment unit during severe weather, knowing where every shelter and fire exit in the complex is crucial. Have your leasing agent explain storm safety and evacuation plans.

2. Designate shelters in your own unit

Depending on the style of your complex, you may not always have access to a shelter outside of your unit. Make sure you designate a location inside your home, preferably with no windows, where you can go if a storm causes you to be unsafe by windows or doors.

To prepare for a serious storm, make sure you keep a mattress or large piece of furniture by your designated safe spot so you can take cover under it if you need to protect yourself from debris.

3. Prepare a severe weather safety kit

Because severe weather can begin unexpectedly, it’s a great idea to have a safety kit ready at all times. In addition to first aid items like bandaids, gauze, gloves and disinfectant, add things like a flashlight and batteries, a portable radio, nonperishable food and water bottles, cash and a list of emergency contacts and phone numbers.

Keep all these items together in a large, clear bin so you’re not frantically looking for something you really need if the time ever comes. Storm safety experts recommend keeping a 10-day supply of all food, water and safety items.

4. When weather gets severe, get low

If tornadoes or debris become a concern during bad weather and you live in a high-rise or on a high floor, take shelter somewhere as low as you can possibly go.

According to Accuweather:

“Two of the most fundamental precautions that you can take in the event of a tornado, no matter where you are, is staying low to or below the ground in an interior space away from windows and covering your head with your hands and arms.”

If it becomes impossible to get to a lower floor, go somewhere as close to the middle of the building, as far away from windows and doors as possible, preferably in a very small room. Closets, bathrooms, laundry rooms and hallways may be safe options.

Cover yourself with as much protection (like furniture, cushions or a mattress) as you can. It might be a good idea to put a plan in place with neighbors on lower floors if your complex doesn’t have a designated safe-zone and you live on a high floor.

5. Bring the outdoors in and protect windows and doors

If you have a balcony or patio area, bring in any outdoor furniture, decorations, planters or other items that can become storm debris if winds get intense. For hurricanes and intense storms, put shutters up on any sliding glass doors and windows to protect windows from any debris and any impending damage.

If you’re a renter, make sure you know ahead of time whether your landlord provides shutters for you so you’re not stuck purchasing and installing them with the short notice of a bad storm.

6. Have a plan for your vehicle

Especially if your apartment complex doesn’t offer covered parking, figure out somewhere safe and covered for you to park your car or motorcycle while you ride out the storm.

Cars parked outside are likely to incur damage from flying debris, and there’s nothing worse than finding your car destroyed by tree trunks or your neighbor’s outdoor gnome collection after a rough storm.

7. Double check your insurance coverage

If worst comes to worst, you might find yourself with a lot of damage to your unit or personal items and will need to file a claim with your insurance. This is one of the many reasons why renter’s insurance is always a good idea to have, even if your landlord or apartment complex doesn’t require you have it.

Likewise, if you own your unit, ensure you have an adequate insurance plan on your home. Double check your coverage and protocol for filing a claim when you know a storm is coming so you have one less thing to do when you’re cleaning up its aftermath.




The Future of Homebuying: Questions to Ask in a Post-Coronavirus World

For almost all of the spring homebuying season, the real estate world has been rocked by ever changing guidelines and procedures due to COVID-19. As some states deemed real estate non-essential and federal guidelines tightened, buyers are experiencing a new landscape in real estate. As Americans slowly transition to the new normal, buying a home in a future that’s post-coronavirus may look a little different. Knowing what changes have occurred during COVID-19, as well as what questions to ask, is going a vital part of navigating the real estate world in the future.

gay couple buying a home gay couple buying a home

How Can I Tour the Property I Want?

One of the most obvious– and fastest– changes during the pandemic crisis was how buyers could safely enter the homes for sale. In most cases, this has been an individual brokerage decision, as well catering to the comfort level of sellers. However, there have been some general guidelines in place, as well as new alternative options, that allow buyers to continue their home search.

  • Masks worn by all individuals viewing the home
  • Requests for individuals that have travelled out-of-state to refrain from viewing in person
  • Shoe “booties” provided to buyers as they tour the property
  • Online virtual tours, like those available on, which allow buyers to view the property from the comfort of their own home
  • 360 degree walking tours
  • Zoom tours with a Realtor. Many agents are offering this service to reduce the number of individuals in a property while also allowing people to view the home

In a world post-coronavirus, or at least, post the social distancing guidelines, these safety recommendations may still be in the future of homebuying and selling. People will likely want to stay protected from outside germs, so having extra precautions in place will be around longer than you might think.

Read: How to Buy a Home During the COVID-19 Crisis

Read: What You Need to Know About Virtual Open Houses in the COVID-19 Era

Is My Down Payment Assistance Program Still Available?

Many first time homebuyers have relied on down payment assistance programs to purchase a home without having to pay 20% down; however, once COVID-19 hit and unemployment increased, many of the programs were suspended. It is important to note that not all down payment assistance programs were suspended and in the near future as guidelines loosen, many programs, if not all, will resume. If you as a buyer are relying on a DPA program to purchase your home in a post-pandemic world, it’s important to ask the following questions:

  • Will I still get a rate lock on my interest rate?
  • How will this impact the homebuyer education course that may be required?
  • Will there be a delay in processing my loan?
  • How often will I have to submit employment verification?
  • Has the credit score requirement changed?

Am I Still Approved For My Loan?

Since COVID-19, many lenders have tightened the requirements on loans. For many, they have increased down payment requirements and credit score requirements. In addition, many lenders are doing more employment verification checks throughout the loan process. Buyers may experience a delay in loan approval as processing times have increased, and as we continue to see the requirements loosen up in a post-coronavirus world, loan officers might become busier than before. These are some things to keep in mind about loan approval post-COVID-19 to prevent your approval from being dragged out longer than you want. Ask your broker these questions:

  • What do you need to verify my employment?
  • Is there a new minimum credit score requirement?
  • Will I be able to put less than 20% down? If not, what are my options?

How Will The Closing Process Work?

As attorneys and title companies work to close transactions during COVID-19, many are taking extra precautions to effectively protect themselves, and the public, while still conducting business. Each title company and attorney may have varying precautions, and many are even offering alternative closing options. It’s likely that as we continue to move forward with loosening up the restrictions of social distancing, many of these companies will be continuing to exercise precautionary steps. Here are some options you may be seeing come with us in the future:

  • Curbside closings to offer minimal contact
  • Electronic wire funding providing a touch-free funding option
  • Personal protective equipment required at in-person closings such as masks and gloves

What If I Was In The Process Of Buying But I’m Furloughed?

An unfortunate effect of COVID-19 is that many previously qualified buyers were furloughed or laid off due to no fault of their own. Unfortunately, while lenders may sympathize with the situation, most will not approve a home loan to an unpaid furloughed employee. Since this is uncharted territory even for lenders, requirements may differ. It’s important to ask the right questions if you’re currently furloughed, or expect to be out of work in the future, but are still wanting to buy a home:

  • How will my furlough affect my loan approval?
  • Will my time of employment have to start all over again once I’m not furloughed?

As we all adjust to a new normal, even in real estate, what has been business-as-usual may look differently. Buyers may experience more delays and hurdles in the process, but it is still possible to buy a home during and post-COVID-19. To begin your home search, download the free app or search online!

Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.


Acronyms of Real Estate: What Homebuyers Need to Know

Real estate is a regular smorgasbord of acronyms – everything from APR to REO. Here’s a list of the ones you’re likely to run into and what they mean when you’re buying or selling a house:

Acronyms You’ll Hear Associated with Real Estate Professionals

Real estate agents, builders and most other realty-related professions have numerous professional designations, all designed to set them apart from those who haven’t taken advanced courses in their fields. These designations don’t mean that professionals without letters after their names are not as experienced or skilled, but rather only that they haven’t taken the time to further their educations.

Read: How to Build Your Real Estate Team

Let’s start with the letter “R,” which stands for Realtor. A Realtor is a member of the National Association of Realtors, the nation’s largest trade group. NAR says it speaks for homeowners, and it usually does. But in that rare occasion when the interests of its members and owners don’t align, it sides with those who pay their dues.

Read: A Timeline of the History of Real Estate

NAR embraces a strict code of ethics. There are about 2 million active and licensed real estate agents nationwide, and 1.34 million can call themselves Realtors.

NAR members sometimes have the letters GRI or CRS after their names. The Graduate, REALTOR® Institute (GRI) designation signifies the successful completion of 90 hours of classroom instruction beyond the continuing education courses required by many states for agents to maintain their licenses. After the GRI, an agent may become a Certified Residential Specialist (CRS) by advancing his or her education even further.

black family touring a house to buy racial homeownership gap discriminationblack family touring a house to buy racial homeownership gap discrimination

Builders can obtain the GBI – Graduate Builder Institute – designation by completing nine one-day classes sponsored by the educational arm of the National Association of Home Builders. Those who pass more advanced courses become Graduate Master Builders, or GMBs. Remodeling specialists with at least five years of experience can be Certified Graduate Remodelers, or CGRs. And, salespeople can be CSPs, or Certified New Home Sales Professionals.

In the mortgage profession, the Mortgage Bankers Association awards the Certified Mortgage Banker (CMB) and Accredited Residential Originator (ARO) designations, but only after completing a training program that may take up to five years to finish. To start the process, CMB and ARO candidates must have at least three years’ experience and be recommended by a senior officer in their companies.

Acronyms Associated with Mortgage Lending

When obtaining a mortgage, you will be quoted an interest rate; however, perhaps the more important rate is the annual percentage rate, or APR, which is the total cost of the loan per year over the loan’s term. It measures the interest rate plus other fees and charges.

An FRM is a fixed-rate mortgage, the terms of which never change. Conversely, an Adjustable Rate Mortgage (ARM) allows rates to increase or decrease at certain intervals over the life of the loan, depending on rates at the time of the adjustment.

Female client consulting with a agent in the officeFemale client consulting with a agent in the office

A conventional loan is one with an amount at or less than the conforming loan limit set by federal regulators on Fannie Mae and Freddie Mac, the two major suppliers of funds for home loans. These two quasi-government outfits replenish the coffers of main street lenders by buying their loans and packing them into securities for sale to investors worldwide.

Other key agencies you should be familiar with are the FHA and the VA. The Federal Housing Administration (FHA) insures mortgages up to an amount which changes annually, as does the conforming loan ceiling. The Veterans Administration (VA) guarantees loans made to veterans and active duty servicemen and women.

LTV stands for loan-to-value. This important ratio measures what your are borrowing against the value of the home. Some lenders want as much as 20% down, meaning the LTV would be 80%. But in many cases, the LTV can be as great as 97%.

Private mortgage insurance (PMI), is a fee you’ll have to pay if you make less than a 20% down payment. PMI covers the lender should you default, but you have to pay the freight. Fortunately, you can cancel coverage once your LTV dips below 80%.

Your monthly payment likely will include more than just principal and interest. Many lenders also want borrowers to include one-twelfth of their property tax and insurance bills every month, as well. That way, lenders will have enough money on hand to pay these annual bills when they come due. Thus, the acronym PITI (principle, interest, taxes, and insurance).

Real-estate owned (REO) properties are foreclosed upon by lenders when borrowers fail to make their payments. When you buy a foreclosure, you buy REO. Short sales are not REO because, while they are in danger of being repossessed, they are still owned by the borrower.

houses real estate market selling buyinghouses real estate market selling buying

Acronyms You’ll Hear During an Appraisal

There is no acronym for an appraisal, which is an opinion of value prepared by a certified or licensed appraiser (though sometimes other types of valuation methods are used in the buying and selling process).

A Certified Market Analysis (CMA) is prepared by a real estate agent or broker to help determine a home’s listing price. A Broker Price Opinion (BPO) is a more advanced estimate of the probable future selling price of a property, and an automated valuation model (AVM) is a software program that provides valuations based on mathematical modeling.

AVMs are currently used by some lenders and investors to confirm an appraiser’s valuation, but they are becoming increasingly popular as replacements of appraisals, especially in lower price ranges.

Other Terms to Know

If you hear the term MLS, you should know it stands for multiple listing service. An MLS is a database that allows real estate brokers to share data on properties for sale, making the buying and selling process more efficient. There are many benefits to both homebuyers and sellers utilizing an MLS, for more information on how to get your home available through an MLS, work with a real estate professional when selling.

Read: What Buyers and Sellers Need to Know About Multiple Listing Services

Did you know? has some serious MLS partnerships, no joke! When you start your home search on, you’ll see accurate property information quickly so you’ll never have to wonder if a home is actually available.

House tourHouse tour

However, not all properties for sale are listed on the MLS. A home may be a for-sale-by-owner (FSBO), if the owner is selling his or her property without an agent and bypassing an MLS listing. In addition, some agents fail to enter their listings in the MLS for days or weeks at a time in hopes of selling to a list of preferred clients.

Read: Advantages of Buying With or Without an Agent

Finally, you may find yourself buying into a homeowners association (HOA) when you purchase a house or condominium apartment. HOAs are legal governing bodies that establish requirements everyone must adhere to in order to keep the community it oversees running smoothly and ensure property values are maintained.

Lew Sichelman

Syndicated newspaper columnist, Lew Sichelman has been covering the housing market and all it entails for more than 50 years. He is an award-winning journalist who worked at two major Washington, D.C. newspapers and is a past president of the National Association of Real Estate Editors.


How Much Is Capital Gains Tax on Real Estate? Plus: How To Avoid It

Capital gains tax is the income tax you pay on gains from selling capital assets—including real estate. So if you have sold or are selling a house, what does this mean for you?

If you sell your home for more than what you paid for it, that’s good news. The downside, however, is that you probably have a capital gain. And you may have to pay taxes on your capital gain in the form of capital gains tax.

Just as you pay income tax and sales tax, gains from your home sale are subject to taxation.

Complicating matters is the Tax Cuts and Jobs Act, which took effect in 2018 and changed the rules somewhat. Here’s what you need to know about all things capital gains.

What is capital gains tax—and who pays it?

In a nutshell, capital gains tax is a tax levied on possessions and property—including your home—that you sell for a profit.

If you sell it in one year or less, you have a short-term capital gain.

If you sell the home after you hold it for longer than one year, you have a long-term capital gain. Unlike short-term gains, long-term gains are subject to preferential capital gains tax rates.


Watch: How Much a Home Inspection Costs—and Why You Need One


What about the primary residence tax exemption?

Unlike other investments, home sale profits benefit from capital gains exemptions that you might qualify for under some conditions, says Kyle White, an agent with Re/Max Advantage Plus in Minneapolis–St. Paul.

The IRS gives each person, no matter how much that person earns, a $250,000 tax-free exemption on capital gains from a primary residence. You can exclude this capital gain from your income permanently.

“So if you and your spouse buy your home for $100,000, and years later sell for up to $600,000, you won’t owe any capital gains tax,” says New York attorney Anthony S. Park. However, you do have to meet specific requirements to claim this capital gains exemption:

  • The home must be your primary residence.
  • You must have owned it for at least two years.
  • You must have lived in it for at least two of the past five years.
  • You cannot have taken this exclusion in the past two years.

If you don’t meet all of these requirements, you may be able to take a partial exclusion for capital gains tax if you meet certain exceptions (e.g., if your job forces you to move before you live in the home two years). For more information, consult a tax adviser or IRS Publication 523.

What’s my capital gains tax rate?

For capital gains over that $250,000-per-person exemption, just how much tax will Uncle Sam take out of your long-term real estate sale? Under the new tax law, long-term capital gains tax rates are based on your income (pre-2018 it was based on tax brackets), explains Park.

Let’s break it down.

For single folks, you can benefit from the 0% capital gains rate if you have an income below $40,000 in 2020. Most single people will fall into the 15% capital gains rate, which applies to incomes between $40,001 and $441,500. Single filers with incomes more than $441,500, will get hit with a 20% long-term capital gains rate.

The brackets are a little bigger for married couples filing jointly, but most will get hit with the marriage tax penalty here. Married couples with incomes of $80,000 or less remain in the 0% bracket, which is great news. However, married couples who earn between $80,001 and $496,600 will have a capital gains rate of 15%. Those with incomes above $496,600 will find themselves getting hit with a 20% long-term capital gains rate.

  • Your tax rate is 0% on long-term capital gains if you’re a single filer earning less than $40,000, married filing jointly earning less than $80,000, or head of household earning less than $53,600.
  • Your tax rate is 15% on long-term capital gains if you’re a single filer earning between $40,000 and $441,500, married filing jointly earning between $80,001 and $486,600, or head of household earning between $53,601 and $469,050.
  • Your tax rate is 20% on long-term capital gains if you’re a single filer, married filing jointly, or head of household earning more than $496,600. For those earning above $496,600, the rate tops out at 20%, says Park.

Don’t forget, your state may have its own tax on income from capital gains. And very high-income taxpayers may pay a higher effective tax rate because of an additional 3.8% net investment income tax.

If you held the property for one year or less, it’s a short-term gain. You pay ordinary income tax rates on your short-term capital gains. That’s the same income tax rates you would pay on other ordinary income such as wages.

Do home improvements reduce tax on capital gains?

You can also reduce the amount of capital gains subject to capital gains tax by the cost of home improvements you’ve made. You can add the amount of money you spent on any home improvements—such as replacing the roof, building a deck, replacing the flooring, or finishing a basement—to the initial price of your home to give you the adjusted cost basis. The higher your adjusted cost basis, the lower your capital gain when you sell the home.

For example: if you purchased your home for $200,000 in 1990 and sold it for $550,000, but over the past three decades have spent $100,000 on home improvements. That $100,000 would be subtracted from the sales price of your home this year. Instead of owing capital gains taxes on the $350,000 profit from the sale, you would owe taxes on $250,000. In that case, you’d meet the requirements for a capital gains tax exclusion and owe nothing.

Take-home lesson: Make sure to save receipts of any renovations, since they can help reduce your taxable income when you sell your home. However, keep in mind that these must be home improvements. You can’t take a deduction from income for ordinary repairs and maintenance on your house.

How the tax on capital gains works for inherited homes

What if you’re selling a home you’ve inherited from family members who’ve died? The IRS also gives a “free step-up in basis” when you inherit a family house. But what does that mean?

Let’s say Mom and Dad bought the family home years ago for $100,000, and it’s worth $1 million when it’s left to you. When you sell, your purchase price (or “basis”) is not the $100,000 your folks paid, but instead the $1 million it’s worth on the last parent’s date of death.

You pay capital gains tax only on the difference between what you sell the house for, and the amount it was worth when your last parent died.

What if I have a loss from selling real estate?

If you sell your personal residence for less money than you paid for it, you can’t take a deduction for the capital loss. It’s considered to be a personal loss, and a capital loss from the sale of your residence does not reduce your income subject to tax.

If you sell other real estate at a loss, however, you can take a tax loss on your income tax return. The amount of loss you can use to offset other taxable income in one year may be limited.

How to avoid capital gains tax as a real estate investor

If the home you’re selling is not your primary residence but rather an investment property you’ve flipped or rented out, avoiding capital gains tax is a bit more complicated. But it’s still possible. The best way to avoid a capital gains tax if you’re an investor is by swapping “like-kind” properties with a 1031 exchange. This allows you to sell your property and buy another one without recognizing any potential gain in the tax year of sale.

“In essence, you’re swapping one investment asset for another,” says Re/Max Advantage Plus’ White. He cautions, however, that there are very strict rules regarding timelines and guidelines with this transaction, so be sure to check them with an accountant.

If you’re opting out of the rental property investment business and putting your money in another venture that does not qualify for the 1031 exchange, then you’ll owe the capital gains tax on the profit.

For more smart financial news and advice, head over to MarketWatch.


How to Finance Financial Freedom and Independence

v:* behavior:url(#default#VML);
o:* behavior:url(#default#VML);
w:* behavior:url(#default#VML);
.shape behavior:url(#default#VML);If you want to grow a small nest egg into a million dollars in 10 years, real estate investing is an independent business that you need to seriously consider. What beginning investors often fail to understand is that real estate investing is about controlling properties rather than paying for properties. The less of your own money that you invest in each property, the more properties that you will control for no money down or small investments.

© Davi Sales -

© Davi Sales –

The Paper Buy Out

If you think zero or low down deals are difficult to come by, you’d be correct. But that doesn’t mean they are impossible to come up with. I know of one investor that arranged a deal to purchase a $66,000 house for zero down. Of course, the seller was desperate. The seller was out of state and didn’t live in the house. He had repeat problems keeping a tenant in the house because he couldn’t afford a professional management company. Because he lacked steady tenants, he had gotten behind on the property taxes and the house was no longer insured. All he wanted was to get out from under the house without losing it for the cost of back taxes. The seller agreed to carry a second mortgage of $36,000 for no interest and no payments for five years. Based on that, the buyer found a lender willing to issue a first mortgage for the balance of the purchase price. The seller was full owner of the property and walked away from the closing table with $30,000 in cash. The buyer owned a low mortgage property that he could easily pay to have managed professionally. He could pull a profit out of the house for five years before having to make payments to the seller.

As an investor, your primary goal is finding a way to deal with the seller’s equity in the property. When you can leverage the seller’s equity, you can typically find a lender that will payoff any outstanding mortgage on the property if the lender can be in first position with a spread of 30% or more between the money loaned and the fair market value. That’s what makes short sales so difficult to close. The seller has no equity in the property.

Many Ways to Structure a No Money Down Deal

Sellers always want to maximize their equity in a deal. However, the market is what determines how much equity they actually have at any given time. Some insist on holding out on a sale until they receive the high end of what they perceive to be their equity in the deal. Others are more anxious to sell and will trade part of their equity for cash today. You number one secret to putting deals together is learning what is motivating the seller.

If the seller wants cash now, you make a low ball offer that leaves plenty of meat on the bone for a new lender willing to put up money based on the loan being well below the market value of the property. If the seller wants the high end of the fair market value, it becomes a question of how long they are willing to wait for the money. As an investor, you can offer them premium dollar if they will owner finance and take the full value in installments over the next 20 years. If the property cash flows sufficiently, you can take over their existing financing and make a second mortgage payment to them that pays off their equity over multiple years.

Of course, the majority of sellers want to sell at full market value and receive the highest price at the closing table. As a no-cash or low-cash investor, these are not the sellers you should even be talking to. Your strategy is finding the 5 percent of the market that is either willing to sell at a discount or take their full equity over time.

PhotoAuthor bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.


Our Moving Expenses And Moving Checklist – Colorado Move Update

Moving To Colorado On A Budget & A Moving Checklist

Moving To Colorado On A Budget & A Moving ChecklistToday, I’m going to talk about our move to Colorado. It kind of popped up out of nowhere but now we are right in the middle of it all. I can’t believe how quickly everything is moving along and I am extremely excited.

Out of all of the moves we’ve done, this one is definitely the largest. We’ve moved a few times now, but they have all been fairly cheap and short distance moves.

However, after collecting, hoarding, and buying things over the last 5 years, we have many more items to move this time around. Even if we were just moving across town it would be difficult with all of our stuff.

Moving to Colorado will be our longest move as well as our most expensive. I’ve heard of people spending over $10,000 moving, and that is something we didn’t want to come anywhere close to.

Below are some updates for our move to Colorado, including our moving expenses and what’s left on our moving checklist.


Moving supply costs.

Moving supplies weren’t as expensive as I thought they would be. I highly recommend you shop around, as I found widely varying prices for moving supplies.

For instance, many moving companies charge around $5 per box, whereas places like Home Depot and Lowes charge between $1 to $1.50 per box. There are also moving box sets that usually end up being a better deal, such as with this one.

We also bought bubble wrap and lots and lots of tape. Our total cost for moving supplies was around $100.

We could have completely skipped any costs for moving supplies if we would have looked around though. You can often find free moving supplies on Craigslist, at stores, and so on. We would have gone this route but I will be honest and say I was a little lazy since the move sprung on us very quickly.

Moving To ColoradoThe cost of moving to Colorado.

Up until last week, we were set on renting a moving truck and trying to figure out a way for everything to work out. However, things just weren’t going to happen that way.

Our main problem is that we have two cars and a moving truck to bring to the new house, yet there are only two of us. And this is why we didn’t think a company such as UHaul or Budget would work for this specific trip.

Yes, we could tow one of the cars behind a moving truck, but we need a fairly large moving truck for all of our things. Towing a car behind it on such a long move (over 1,000 miles) and through steep mountains just seems like too much for us.

Then, Wes’s dad the other day said the company he works for uses UPack to move their employees, so I decided to look them up.

After debating for some time, we made the decision to use UPack for our moving to Colorado needs.

UPack was the easiest and cheapest option for us. UPack is a company that moves your stuff for you. They drop off a moving trailer at your home, you load it up, they pick it up a few days later, then they drop it off at the location you are moving to. They handle all of the actual moving, which is exactly why we chose them. We can make the whole 15 hour trip with only stopping one night, but I know if we drove a moving truck ourselves then it would require much more planning, more stops, and possibly even paying for car shipping because we would have to find a way to bring our second car to the new house.

Going the UPack route is pretty similar in pricing to renting a moving truck as well, and much cheaper than hiring a full-service moving company. I priced out several rental moving truck companies and once I priced everything out, it was very comparable to the pricing that UPack gave me. This is because once you factor in the extra lodging, the higher gas costs because we would have to drive a moving truck, insurance costs, and more, renting a moving truck quickly added up.

A UHaul moving truck rental would have been around $2,500 including the rental truck, insurance, gas, etc. Then, we would have had to still pay for extra lodging and somehow still transporting our second car to Fruita as well. I’m assuming that would have made our moving cost somewhere between $3,000 to $3,500 for the extras. The UPack expense from St. Louis to Fruita is $3,000, so it was an easy choice for us since it meant much less work on our end and a much safer way to move.

My Moving Checklist.

Moving to Colorado hasn’t been as stressful as I originally thought. While there are many things we have already completed on our moving checklist, everything seems to be going smoothly even with all of the tasks that are left. If you need a thorough moving checklist, UPack has one that I found very helpful.

What’s left on our moving checklist:

  • Arrange for the drop off of the moving trailer at the new house (and pickup a few days after). This is one of the more important things on our moving checklist because I need my stuff, of course!
  • Turn the internet off at our Missouri house. We’ve already cut cable.
  • Confirm with moving truck unloaders about what time they should be at the new house. Since it’s only me and Wes (and I am extremely weak), we need someone to help us bring all of our heavy furniture into the house.
  • Wait for Charter internet at the new house. Yes, this is getting installed within the first hour of moving into our new house. After spending all of that time actually moving to Colorado, I will need internet quickly set up so that I can continue working. I just can’t go without it!
  • Notify companies of our move. There are still a few more places we need to inform, such as our car insurance company, our bank, and more.
  • Run through the house one last time. Before we move, we need to run through the house and make sure nothing is left behind and we also need to make sure it’s perfectly clean too for the home sale.
  • New driver’s license. We also need to license our cars.
  • New health insurance. This is the last task on our moving checklist but also very important. Our current health insurance is only good at certain Missouri healthcare providers, so we definitely need this.

How much did your last move cost you? How did you try to save money? Are we crazy for moving to Colorado at the last moment? Is there anything I am missing from my moving checklist?

Related Posts