Rent or Buy?

A recent analysis conducted by the Associated Press shows that the gap between the median rent and monthly mortgage on a median-priced home has shrunk, from $771 to $221, in the last 3 years. In some metro areas, such as Cleveland, Atlanta, Indianapolis and St. Louis, the gap is less than $100 a month. The gap is likely to shrink further as home prices are expected to fall in the near-future. Given the fall in home prices, low interest rates and tax incentives, the scales are tipping toward ownership. But with banks tightening their credit standards, renters may not find it easy to get a loan for buying home.

“There’s still those buyers that are having trouble getting financed,” says Brad Snyder, an agent with ZipRealty. “A lot of them are still just looking for that easy way in, and it’s just not there.” In addition, renters who work in sectors such as education, retail and transportation industry find that their salary is insufficient to even pay their rent, according to a study by the Center for Housing Policy. Experts say homeowners face a number of additional costs such as insurance and association fee, making the “buy” option expensive.

Mortgage applications rise but concerns remain

According to Mortgage Bankers Association (MBA), its total loan applications index rose by a seasonally adjusted 2.8% to a reading of 528.9 last week, even as 30-year mortgage rates rose by about 1/4 percentage point to 5.31%. The index of applications to purchase homes moved up by 1.3% last week to 262.1. Economists say concerns about the economy are forcing many potential homebuyers to adopt a wait-and-watch approach. “The primary negatives right now are the high rate of unemployment and general uncertainty about the future path of the economy, which make people reluctant to buy,” said David Stiff, chief economist at Fiserv. The MBA’s index of refinance applications gained 4% last week to 2,089.7. The prospect of further fall in home prices too keeps buyers at bay. “The one silver lining in rapidly declining prices at least is that we’re falling back in line with household income levels,” Stiff said.

Value Matching - Selling What Matters Most

There is a new trend hitting America that every real estate professional and short sale investor should use to their advantage; getting back to basics. You’ve seen the credit card commercials with feel good family values that claim conspicuous consumption is dead or the big box stores touting stay-cation’s rather than expensive European getaways….but how can you make it work for real estate?

It’s simple once you understand the basics about value matching. Keep reading to learn more:

1.      Don’t Pigeonhole. Value matching is not about putting labels on people; in fact, that is a sure-fire way to fail. Instead, it is about learning what values are important to your target population then meeting their needs by providing the best “fit” possible. Real estate is one of the most important investments most people will make during their lifetime. Aside from the large dollar amount, it is often a critical decision which will define the future of their family and social standing for years to come.

2.      Listen. Value matching requires the ability to listen in order to understand the needs, hopes and desires of the buyer (or seller). It’s imperative to find out what matters most to each client then sell those factors - forget about the typical trappings of success (unless that is indeed what matters most to your client) and instead focus on what they value most. The typical family will fall into several distinct categories including:

*       Family - Young married couples searching for safe, affordable family oriented neighborhoods. Schools, cost, local amenities like parks and safety take top priority.

*       Empty Nester’s - Convenience typically trumps everything else. Low maintenance yards, access to hospitals/grocery/shopping/golf and good neighbors get their attention.

*       Sanctuary - Freedom, privacy and safety is of utmost concern for some; don’t be too quick to put a label since these come in all shapes and sizes. From high net worth individuals seeking solitude to good-ole-boys that want to practice commando moves in their back yard, those seeking safety and privacy will pay a premium for the right property.

3.      Build Relationships - The future will require the ability to build meaningful relationships even for temporary transactions like those of real estate. Trust has become a bigger issue than ever as people feel uncertain about whether or not they are getting a good deal or will encounter trouble later down the road. Word of mouth marketing has always been a real estate agents best friend but now, investors are recognizing the benefits as well.

4.      Position as a Problem Solver - Become more than a sale person or investor by positioning yourself as a problem solver with solutions to people’s most urgent housing related needs. People have an inherent need to feel unique and a growing grudge about paying for simple ‘paper shuffling’. On the other hand, everyone is grateful when someone solves their most pressing problem…even if the cost is higher. Remember, its part of the value you bring to the table during any transaction.