When thinking of buying real estate, which market would you rather be in? A Buyer's market or a Seller's market? Not too difficult to figure is it?

When looking to buy a home in a seller's market, a home buyer may experience a shortage of available homes to look at, may have to compete with other buyers interested in the same home and may be in situations where there are multiple contract offers from home buyers interested in the same home resulting in bidding wars among buyers and higher sale prices. In a market such as that, buyer demand exceeds available home inventory, listing days on the market begin to drop and asking prices begin to increase. And there have been various real estate markets like this in the past 38 years when mortgage interest rates were no where near historic lows! Economics 101, supply and demand, at its finest!

The fact of the matter is that the real estate market began to change in earlty 2006. Listing inventory stayed on the market longer as there were fewer home buyers. Buyers became hesitant and were no longer anxious to meet home owner's asking prices or counter offers. Real estate values began to stabilize, and then started to drop. And they have continued to drop, creating an ideal opportunity and the perfect real estate market for all type of buyers.

I cannot remember a real estate market in the 38 plus years I am selling real estate where mortgage interest rates are at levels of creating new historic lows and real estate values have dropped as substantially as they have! Over the years I have been selling real estate, I have often been asked home buyers when looking to purchase,  "what do you think this home will be worth 5 years from now" or "how much appreciation can I expect if I sell it in 5 years". Reasonable questions to be asked by a home buyer.

My answers were always the same. It depends. It depends are on the current market when you will be selling, it depends on the mortgage interest rates, it depends on the economy and the financial markets, it depends on the  the job market, it depends on national events, it depends on local market conditions, it depends on what improvements you've made or didn't make to the home. It just depends on so many things!

However, back in 2006 and 2007 when I answered that question when asked, never did I think that the drop in real estate values would have been as severe as they have been, especially since high mortgage interest rates were not a factor and did not enter the scenario. Likewise, I could have never believed that my technolgy stock profile would drop as severe as it did after the stock boom in 2000. But it has.

Why is the current real estate market a buy now scenario for home buyers? Two important reasons: Mortgage Interest Rates and Favorable Home Prices!
   * Mortgage Interest Rates: Take a look at the 5 Year History of Average Mortgage Interest Rates!                                                              

Mortgage interest rates are at or near 40 year historic levels! The questions is, how long can they stay at these levels? The funny thing is that we never never know when interest rates hit bottom, until they've gone up! Then it is too late! A change of just .05% in the mortgage interest rate increases the monthly mortgage payment by $82.88, or $994.56 per year  on a mortgage of $275,000. That slight increase in the mortgage rate reduces the amount of the mortgage to be borrowed by approximately $15,000 in order to keep the same payment as the lower interest rate. More simply put, if a buyer did not want a higher mortgage payment, their price range or mortgage amount would need to drop by $15,000 or they would need to have add an additional $15,000 to the down payment.
                                                                              
Too Follow Shortly: Favorable Home Prices: So what has happened to real estate values in the same period?

Real estate sales activity is up in 2010 in Middlesex County, New Jersey, as compared to 2009. But what about average sale prices?

In what price range is there the most sales activity? Are sales transactions up in all towns in Middlesex County? READ More...

Comparative Market Analysis

Homeowners should stay in touch with the real estate market and continually be aware of the current value of their home, if for no other reason than making sure their homeowner's insurance reflects current market value. Homeowner's insurance is necessary to protect the real estate assets owned, and carrying the proper amount of fire insurance limits becomes very important.  It is important to keep insurance limits as accurate as possible!

Simply worded, a Competitive Market Analysis is a real estate agent's opinion of market value of real estate as detailed by recent sales of similar properties. It is not a written real estate appraisal.

Knowing the current market value of your home is most important when thinking of selling, especially if the proceeds of the sale are needed to purchase another home. If a  homeowner guesses wrong, they begin to look at homes or purchase another home in the wrong price range or find that the amount of equity is much less than anticipated as initially planned.

When planning to sell a home, obtaining a reliable and comprehensive "Market Analysis Report" is a very important consideration for homeowners. The key is obtaining a comprehensive report, not just a print out of closed sales.

A Market Analysis Report should contain much more than sold properties. While sold properties are the most reliable indicators of value, they represent events of the past. Real estate values vary from one time frame to another. Just because a home sold for a certain price three or six months ago does not mean that a similar home will sell for the same price today. It could sell for more, if the the real estate market is strong and values are rising, and it could sell for less, if the real estate market is weak and values are dropping.  

It is the current real estate market which determines market values. A comprehensive analysis of market value should also include active listings, under contract sales and expired listings, those properties which did not sell during the marketing term. The analysis should include asking price history and days on market.

Real estate is local, whether the home is in Colonia or Iselin, New Jersey, in Middlesex County or in some other State. What is occuring in one section of the Country, State, County or Region may not be representative of what is occuring locally. Home sales and home values vary from one Town to another and from one Neighborhood to another.

When properly prepared and presented by a REALTOR for a Homeowner, a Market Analysis Report should provide a realistic and reliable estimate of the current value of their home.

Related Artice: Factors That DO NOT Affect the Value of Real Estate
What information is provided in a CMA?

A Realtor Website should be more than "just homes for sale"!

I have now added even more content for home owners, information which is vital to protecting, improving and maintaining one of the largest investments they have made, their home. It's all about being a more educated and a smarter homeowner.

The additional home ownership content is provided by the National Association of REALTORS, is designed by HouseLogic and is an inter-active website specifically targeted for current homeowners. This website offers information of value for homeowners. The content and consumer oriented design provides homeowners with the ability to view, read and print valuable real estate home ownership information on protecting, maintaining and improving their home. It provides the abilty to log on and create a personal account.

With a personal account, the consumer/homeowner can then obtain and receive more personalized information, and experience a more personalized involvement in the information they need or would like to have regarding home ownership, home repairs or home remodeling. Upon creating a personal account, articles can then be saved or printed.

Additional benefits include step by step instructions on how to complete many home improvement projects important to owners. A homeowner can then organize home projects, create to-do lists, set reminders, set goals and then measure the progress as they move forward in improving and repairing their home.

Begin helping yourself in protecting, maintaining, improving and enhancing your home. Help and assistance is now available online on a consumer oriented Website developed by REALTORS for Homeowners!

Visit my Website to begin obtaining vital home ownership information and to creat your personal account. There are numerous categories and lots of good reading on topics such as:

• Tax Credits for Home Owners(You may surprised at the amount of money you can get back when making improvements)
• IRS Home Buyers Tax Credit for Current Home Owners and First Time Buyers • Essential Home Maintenance
• Repair or Remodel
• Repair or Replace
• Things Homeowners May Not Know
• Homeowners Can Save Money, Go Green
• Important Information For Homeowners

And more articles will be added! Be sure to Bookmark www.DavidFialk.com for easy access to valuable home ownership information.

Sitting on the fence wondering if you should purchase a home?

Wondering if real estate values will drop futher?

Wondering if mortgage interest rates will drop further? Hoping to take advantage of the $8,000 First Time Buyer Tax Credit?

If the $8,000 First Time Buyer Credit is important , the time to act is quickly approaching. To qualify, a First Time Buyer must close on their purchase by November 30, 2009. Again, that is close title on the purchase, not be under contract to purchase. With the recent changes in mortgage processing, a  time frame of two months to accomplish everything and close on a real estate purchase will be close.

Coincidently, August under contract sales were extremely robust. Coincidently, buyer activity, contract offers and sales have been very robust the last week of August and into this end of Summer Labor Day weekend. Apparently, many other First Time Buyers are realizing that the time to purchase is now!

As important, mortgage rates are very favorable, currently hovering around 5.25 %, based on the buyer's mortgage loan program. Opportunities to otain such favorable mortgage interest rate financing like this cannot last much longer. If real estate sales and mortgage applications increase, as they have been in the past 3 months, how much longer will it be before lenders increase the mortgage interest rate?

What about real estate values? Yes, they are much lower then they were in 2006. Too much attention is given to when they will hit bottom. The bottom will only be known when prices begin to increase. More attention needs to spent on affordability, and affordabilty is a combination of purchase price, interest rates and, yes, having the opportunity to receive the $8,000 First Time Buyer Credit.

If purchasing a home is in your plans, invest some time now and meet with a REALTOR in the area you would like to move to and meet with a Mortgage Representative to see what mortgage options are available to you and obtain a Mortgage Pre-Approval.

Interested in viewing real estate statistics in Iselin, New Jersey, Colonia, Edsion or any other town in Middlesex County? There's lots of information here.

A Look at Real Estate in Middlesex County

Real estate values are local.

Home values differ from one neighborhood location to another. They differ from one Town to another, from one County to another and from State to State. Obtaining reliable local home sale real estate information is important, whether you are just curious about home values or are looking to buy or sell a home, whether the home is in Iselin, New Jersey, Colonia, Edsion, in Middlesex County or any other State.

Obtaining reliable local real estate home value information is important when looking to buy or sell a home. Real estate statistics are helpful, but they cannot provide market value estimates. When there is a need to obtain reliable information, contact a local REALTOR who can provide a detailed "Market Analysis"

I am providing real estate real estate sales information for one family homes and condos/townhouses in Middlesex County, New Jersey as provided by the Middlesex County Multiple Lisitng System.

View the May, 2009 Year to Date Sales Comparison Report for Middlesex County Real Estate.
For more detailed reports, visit www.RealEstateSalesData.DavidFialk.com.

Conditions in the Contract Offer

A contract to purchase real estate includes a sale price, a mortgage amount to be obtained and a closing date whether the home being purchased is in Iselin, New Jersey, in Middlesex County or any other state.

However, there is more to a contract to purchase than these details, and that includes the content language in the contract document. The form of the real estate contract prepared by a REALTOR® or real estate licensee can be different from one real estate company to another, from county to county and from state to state.

While price and terms are important, the most overlooked aspect and perhaps a very important consideration for the seller are the conditions in the real estate contract offer, if any. All real estate contracts have conditions. A condition in a contract offer can be more easily explained as a subject to event.

The most common condition is that the contract is subject to the buyer obtaining mortgage approval and a written mortgage commitment within a certain time frame in the amount required to purchase the home.
  
Another very common condition is that the buyer performs a termite inspection, home inspection and  perhaps a radon inspection within a certain time frame. These type inspections are so common that they are pre-printed and included in the real estate contract. Read More

Terms of the Contract Offer

Initial Deposit

Be prepared to write a deposit check when making a contract offer to purchase real estate. Commonly referred to as a Binder, more commonly known as the initial deposit, this is the check made out to the Selling Real Estate Office when submitting a contract offer. In simple terms, it is a good faith deposit to express interest in purchasing real estate.

What is the required amount of a binder deposit? There is no law as to a required amount, but local real estate practices may determine what is acceptable. Common sense should prevail in determining the amount of the Binder deposit however. Writing a check for $100.00 shows good faith, but what kind of statement is that making to the owner when the contract offer is presented to them?

Would a more substantial initial deposit, say $1,000.00, make a stronger statement? How about $5,000 as an initial deposit, or even more? Wouldn't a larger initial deposit check make a stronger impression with a seller in making a decision to accept a contract offer or in contract negotiations? 

The Binder is generally not deposited by the Real Estate Broker until there is offer and acceptance, a signed contract of sale. However, there are State Real Estate Licensing Laws which regulate how long a Real Estate Broker can hold a deposit check without depositing it into the Company's Trust Account. In cases where contract negotiations are prolonged, perhaps beyond five business days, most Real Estate Brokers will either deposit the check into their Trust Account during contract negotiations, or ask the buyer to write a new check as contract negotiations continue.

If the contract offer is not accepted, the Binder is returned to the buyer. If the contract is accepted and signed by the owner, the Binder will be deposited in the Broker's Trust Account and will be applied to the buyer's down payment and the purchase price.

Earnest Money Deposit

Commonly referred to as the second deposit, this is the additional upfront deposit made in the purchase of real estate and is also part of the buyer's total down payment. The earnest money deposit could be 10% of the purchase price depending on the real estate market the home is being purchased in, the price range or the total amount of the down payment being used by the buyer.

It is quite common in many real estate markets that homes are purchased where the total down payment is less than 10% of the purchase price. In these type real estate transactions, the earnest money deposit will generally be some portion of the total down payment, or perhaps the entire amount of the down payment in a transaction where the buyer has a total down total payment of 3.5 % to purchase a home. The amount of earnest money deposit is something that may eventually be determined during contract negotiations.

The earnest money deposit is generally paid within a certain time frame or after completion of Attorney Review. It is generally paid to the Selling Broker, unless local real estate practices provide otherwise, or there is a change made to the contract of sale during the Attorney Review process where the Seller's Attorney requests to hold all deposit monies in their Trust Account.

There are times when a contract of sale is terminated after Attorney Review, such as home inspection problems, mortgage denial and others. In those situations where a contract to purchase is cancelled in accordance with the terms of the contract, all deposit monies previously paid by the buyer are refunded.

Many buyers, and buyer agents, under estimate the importance of these two aspects of contract preparation, and the benefits they can provide in contract negotiation. The Initial Deposit and Earnest Deposit can be the difference in whether a contract offer gets accepted and signed by the seller, especially in multi-contract presentations.

Read More

The Contract Offer: What Price to Start With

When a decision is made to make an offer to purchase a home, be sure to go back and take a second look. It is so much easier changing your mind about a home before a contract offer is made than after a contract offer is accepted and signed by the seller. This second appointment would be a perfect time to bring along others who may have an impact on a buying decision, such as parents, friend, contractor, etc.

Go through the home a second time and look beyond the owner's décor, whether it was the home just previewed, the first one seen earlier in the day or the one previewed last week. Why? There are many reasons, but most importantly is seeing if the second look creates the same good feeling as the first, and then taking a closer look to see if there are aspects of the home missed during the first preview which may alter the decision to submit a contract offer.

So what is the right price to start with?

Some Preliminary Information

Be it the real estate market in 2009 or any other real estate market for that matter, the structure of a real estate purchase contract offer can be the difference in it being accepted or rejected. No, the offering price is not the only factor in negotiating a contract to purchase a home.

Regardless of the number of pages in the sales contract, a contract offer can be broken down into 3 separate parts which can be important to the seller: price, terms and conditions. Each has to be satisfactory in order to obtain seller acceptance. In some situations, full price offers are not acceptable due to the buyer's terms and conditions in the contract offer. In other instances, contracts get accepted and signed even though the offer was much lower in price than other competing offers, but was more favorable for the seller in terms and conditions.

What then is the secret in preparing and submitting a contract offer to buy real estate? This is where the value of an experienced Buyer's Agent is with providing assistance in preparing the contract offer and structuring the contract offer to purchase in a manner that does not create questions or concerns for the seller and their listing agent when it is presented to them.

There is more to purchasing a home than just looking at houses, whether the home is in Iselin or Colonia, New Jersey, in Middlesex County or any other state for that matter.

Read More