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Buying "Small" in Salt Lake

With all the plusses that come with more square footage, the smart buyer will look at the additional costs.

Whether you are buying a home as an investment, or planning on living there a long time, there are many reasons some Buyers choose to buy "small" rather than buying "large" homes.

Most Buyers who choose to buy small do so out of some necessity: The home is closer to work, their buying budget only gets them a small home, etc.

But some buyers who could buy big, still choose to buy small and their reasons are food for thought.

Some of the prevailing things I counsel buyers to consider are:

Large homes generally have higher utility costs than smaller homes. (Although newer "greener" technology can make a newer home better in that regard than some older homes.)
It costs a whole lot more to remodel 4-6,000 square feet than it costs to remodel 1000-2000 square feet.

Some of the reasons I hear Buyers give for choosing to buy small:

Less housework.
The community/schools are nicer
"I don't want to pay for space I won't need or use."
Some older (smaller) homes have more charm than newer larger homes.
The finish level can be much nicer in a smaller home for the same cost.
It costs less up front.

If you are planning to buy a home in the Salt Lake City area and want a true agent who will look out for your best interests, make sure you hire an Exclusive Buyers Agent! Make sure you get an Agent on YOUR side of the transaction!

If you have excellent credit and will be buying a $250,000-$750,000 home in the next 30-60 days and would like an agent who will work exclusively for you, call us at (801) 969-8989 or contact us via the link on this page.

Exclusive Buyer Brokerages do not list homes and never represent Sellers. Their agents represent Buyers ONLY on the Buyer's side of the transaction. They work to get BUYERS the Best Price and Terms when they Buy...

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/03/2008 03:53 PM

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Buying Small in the Home Buying Channel

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Are Builders Partially to Blame for the Real Estate Crisis?

Can you blame builders for getting sucked into the hype?

When you are taking orders for homes as fast as you can build them, why not decide to build a ton of "spec" homes?

Still, builders should have seen an end coming at some point, and those who did, planned accordingly and had an exit strategy. (Always a good idea: Have an exit strategy.)

I also don't fault builders directly for building spacious homes with lots of "extras" and amenities.

After all, this is where some of the most profit is made, and buyers were buying up their homes just the same!

To show I can be somewhat fair, I know a number of builders who might have been just as happy building and selling more "starter" sized homes. Moderate homes.

Why didn't they?

Well, planning and zoning departments in some cities started to set minimums in order to maximize tax revenues. For example, where you may have been able to build an 800 or 1000 square foot home without a garage years ago on a tiny lot, some cities now require a minimum lot size of 8,000 or 10,000 square feet. They also require a minimum "finished" square feet of 1300 sf. (On most homes in Utah, this would mean a 2600 sf home if it were a rambler/ranch, or an 1850 sf home if it were a 2 story). Oh yeah, and now all homes (in some communities) are required to have a 2 car garage and RV parking... There goes your "starter" home option!

And, why should they have built smaller when the Buyers were able to "afford" the larger, more luxurious home?

Again, the fault doesn't lie with the builders alone. That was their business. But, they likely didn't ever say to a Buyer: You know, you might want to be more conservative here. No. They likely didn't do that very often.

Remember: The agents at the Model Home work for the Builder, NOT the Buyer.

Surely some blame is left to be placed on the agents who allowed or encouraged buyers to overextend and/or overpay to buy homes over the past few years.

Last year we saw builders including all kinds of "incentives" or bonuses to Buyers in order to not have to reduce the price of the home. This year, in Utah, although some builders have suffered, those who scaled back early enough are still able to compete and make a living building homes, just not at the level they used to. Strangely enough, some builders are still offering "incentives" but among some of them, those incentives are getting smaller or are even non-existent. Some have determined that simply pricing the home at a fair value is the best solution to their predicament, and many times they are right.

If you are planning to buy a new home in the Salt Lake City area and want a true agent who will look out for your best interests, make sure you hire an Exclusive Buyers Agent! Make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/03/2008 03:20 PM

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Real Estate Crisis of 2008 in the Real Estate Market Channel

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Are Downpayment Assistance Programs Bad?

**So were (are?) Downpayment Assistance Programs bad?**

I don't think DAPs are bad in and of themselves.

But coupled with additional items from the lender's bags-of-tricks, they likely contributed to a number of defaulted mortgages, including some that will continue to default as adjustment dates and balloons come due.

(Click Here to read How a Downpayment Assistance Program Works)

Here's why:

In many cases, those who got this "help" from down payment assistance programs, unfortunately also bought more home than they should have. They went for the big new home instead of the more traditional "starter" home.

In order to buy the bigger home, some took ridiculous ARMs or Interest Only loans with short term fixed periods and/or short term balloons. These loans were also often packaged with a "bonus" pre-payment penalty.

The borrower does share in the blame, but somebody (the agents? the loan originator? the underwriter?) should have tried to talk some sense into counsel with the buyers.

I don't know what to say about the buyers who were buying for the second or third time around... I guess it just gets back to wanting everything now.

I'm all for credit. I'm even for easy credit to a degree.

But debt should always be taken on responsibly. What went on over the past few years was just irresponsible on everybody's part.

My job as an agent is to help my clients consider the possible downsides to the options they are presented with, not to "sell" them something.

If you are moving to the Salt Lake City area and want a true agent who will look out for your best interests, make sure you hire an Exclusive Buyers Agent! Make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/03/2008 02:49 PM

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Downpayment Assistance in the Real Estate Market Channel

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Downpayment Assistance Programs (DAPs) or, The "Money-Go-Round"

Downpayment Assistance Programs are being allowed less and less. One "stated" reason is that they likely helped contribute to the breakdown of the real estate market.

Here's how a downpayment assistance program (DAP) usually worked:

The Seller would give 3% plus some "administration fee"...

(sometimes 1% of the Purchase Price)

to a "neutral" third party "non-profit corporation"...

(Did I mention they sometimes took up to 1% of the Purchase price in exchange for providing a paper and money shuffle?)

who would then "gift" that money (well, just the exact amount needed) to the Buyer to use as a Down Payment.

(On loans requiring 3% down payment).

The Buyer, in most cases, paid the Seller 3% (plus the "fee") more for the home than they would have without requiring "participation" in the down payment assistance program.

The third party would "technically" use funds from a separate pool of donations, although if the Seller didn't "participate" in the program (at the amount the Buyer needed plus the admin fee), the Buyer wouldn't get any funds from the "pool."

So, essentially, the borrower was taking out a 100-104% loan, even though the lender would view it as a 97% loan. (Yes, they were wearing rose-colored glasses, now banned.)

The Buyer very likely could have bought the home for that much less without the program in the deal. I believe many Buyers could have done even better in negotiations without the DAP (Downpayment Assistance Program) as part of the deal. (If the Seller or their agent knew the Buyer needed the assistance, they would often hold out at full price plus the cost of participating in the DAP.)

Oh yeah, and I forgot. Closing costs. On top of the cost of the DAP, the Buyer often "rolled" the closing costs into the loan the same way: Pay the Seller more, the Seller pays the Closing Costs. (The TOTAL allowed to be "contributed" by the Seller for all of these things could not exceed 6% of the Purchase Price.)

Why the shell game?

Sellers are not allowed to give the Buyers the down payment funds directly, specifically because that messes with the true market value of the home. Lenders consider that something "abnormal" is going on if the Seller were to "pay" the Buyer's Downpayment. Well, somewhere along the way, the DAPs became "acceptable" to lenders, underwriters and investors, and yes, even the FHA.

Strangely enough, nobody seemed bothered by the fact that it was actually costing everybody more to run the funds through these third parties than it would have cost to simply allow the Seller to pay the Downpayment, but that's how it was. They wanted to be able to show a 97% loan to value at the end of the day, even if it weren't true. (Sounds a little like "cooking the books" doesn't it?)

So, are Down Payment Assistance Programs bad? Read on...

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/03/2008 02:37 PM

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Downpayment Assistance Programs in the Real Estate Market Channel

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The Great Housing Bust of 2008

Harry Dent predicted our current situation when he showed that a slowdown in the birthrate 25-35 years ago would lead to fewer people entering the housing market to buy homes. It is those new buyers who fuel the growth of the rest of the residential real estate market.

If you look at the following graphic and imagine the following scenarios, you can see how the cycle speeds up or slows down. (We'll scale down the numbers to make them conceivable)

real estate cycle - first time buyers - move up buyers - empty nesters - 2nd (vacation) home buyers

Imagine a "normal" or traditional sum of about 10,000 first time buyers entering the market yearly. (Remember, we scaled this down). I don't remember the exact age, but somewhere between 25-35 years old are the demographic.

Those buyers buy pre-existing starter homes (Historically. We'll introduce new construction down the line).

The Sellers of those homes buy another, slightly better (larger, more expensive, better neighborhood/schools) home from someone else and this happens a number of times until somebody who is selling downsizes into a condo or a smaller home (The Empty Nesters).

OK, now let's introduce some variables:

What happens to supply and demand if the number of First Time Buyers increases to 30,000?
What happens to prices?
What happens to supply and demand if getting a loan gets tougher and the supply of buyers shrinks?
What happens to prices?
What if Builders overbuild based on 30,000 1st time buyers entering the market, and then only 8,000 show up the following year?

Why all of a sudden were there so many?

Lenders gave loans to borrowers who traditionally were not ready to buy. Buyers who were younger, with poorer credit, little or no down payment, less time on job, etc. (The pool of first time buyers increased, contributing to an artificial buying "boom".)
1st time buyers bought homes like (or better than) those that took mom and dad 30+ years of working to buy. (Another factor of the money coming easy, or appearing to come easy)

Then what?

Builders overbuilt these "fine" homes that historically would be more fit for move-up buyers, but hade been getting gobbled up by first time buyers.
The number of 1st time buyers shrinks because they can no longer get a home without down payment, good credit etc. This on top of the fact that there were already going to be fewer first time buyers in the pool anyway. (Remember, 10 year olds aren't buying homes.)

the great boom ahead

This is where we are today.

Mr. Dent isn't always right. But basing buying trends on age demographics made sense to me at the time, and still makes sense to me today.

If the topic sounds interesting, even though it is out of date, the book provides for some interesting things to think about. Perhaps it will give you some ideas as to how you might win out in today's market?

If you are moving to the Salt Lake City area, buying a home still makes sense in most cases.

If you buy a home in today's market, make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/02/2008 05:28 PM

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Housing Bust of 2008 in the Real Estate Market Channel

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Salt Lake City, Utah Job Market Among the Most Healthy in the Nation

Job Supply/Demand Rate Chart The latest Conference Board Press Release (Dated October 1, 2008) shows some areas of the country where the number of available jobs exceeds the number of unemployed. One of those cities (the one at the top!) is Salt Lake City, Utah.

The Conference Board reports that "35 of [the] top 52 Metro areas post over-the-year declines in job demand." Those living in the Salt Lake City area have a lot to be greatful for. The real estate "boom" here started late and ended early when consumers saw surrounding areas starting to bust. Home values have held fairly flat, which is pretty good under the circumstances nationwide. People and companies still relocate here because of the many benefits that come from living in the area.

If you are moving to the Salt Lake City area, buying a home still makes sense in most cases.

If you buy a home in today's market, make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/02/2008 04:22 PM

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Salt Lake City in the Real Estate Market Channel

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A Possible Solution to the Real Estate/Mortgage Crisis

Million Dollar Bills I would strongly urge lenders, banks and investors to consider agreeing to adjust notes back to the start rate on the adjusting and ballooning mortgages (or the start rate +.25% or .50%).

Don't pay them any incentive or "bailout" to do so.

They made the bad loans or let them be made. Let them take some responsibility for those actions. The result would keep a huge number of people in their homes who otherwise would lose them, preserve the value of the collateral and help minimize future defaults.

True, the investors will get less return than they hoped. But they aren't likely to see their hoped for return on many, if any of these loans anyway. What is better, some return, or none? In real life, if you lend money to someone who you know likely won't pay you back, you usually get nothing.

Bailing out Banks, Lenders and Investors is the worst possible message that can be sent to the American Public. The American Public (Um. And the American Government) makes enough poor financial decisions on its own, without needing encouragement that someone will be there to bail you out for your poor choices.

Fiscal responsibility needs to be taught and practiced by the government and corporations, not just the American People.

There should not be a double standard:

One for the American people - "Too bad, you lose, you're on your own for the bad choice you made."
And another for the government or corporations "This stinks, here, we'll just print more money or increase the national debt to cover your stupidity."

Telling institutions they can ignore rational and reasonable practices and still be rewarded is ridiculous.

That's the same story these institutions were selling all those borrowers when they sold them into the loans they shouldn't have gotten into. It's time for everybody to put the greed away and sit down at the table to talk rationally and realistically.

A compromise that doesn't require a complete overhaul of the system would benefit all parties in the long term.

It would be an acknowledgment by all parties that "Yes. We made bad decisions. We all risked more than we were able to bear. We are all to blame. In consequence, we will all give or receive something worse than what we hoped (gambled) for initially."

Investors get: Lower return than they thought (Not too bad considering if people could refinance their places at lower fixed rates, a portion of this problem would have already been resolved.)
Lenders get: Fewer (questionable) loan products than they had before. (This has already happened, and is a GOOD thing!)
Borrowers get: A higher payment than their start rate, but one that gives them a "chance" to keep their home and pay back their loan honorably.
Future Borrowers get: To save up a down payment for a home, and to learn to use credit wisely and appropriately, thereby reducing the likelihood of another round of this "breakdown" occurring in their lifetimes.

Lenders and Investors should not be the only ones who benefit from a government bailout.

Borrowers need relief as well or any bailout will just be more money thrown at institutions who have proven they have a tendency to make bad financial decisions when the potential reward for doing so, however risky, is great.

I know this won't solve the entire crisis, but sitting down and looking for reasonable and rational compromises is better than just throwing money at the problem. Simply throwing money at it without a long term strategy that successfully addresses the needs of all parties involved will just make things worse down the road.

If you buy a home in Salt Lake City or the Surrounding Area, Make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/02/2008 10:54 AM

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Bailout in the Real Estate Market Channel

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Bailouts Bids Benefit Banks but Borrowers Being Abandoned

hundreds of millions of dollars Why are we bailing out the banks when consumers were duped into the cruddy loan products the banks sold them...? (At least some of them were "up-sold" the ARM or some other ridiculous loan, perhaps with an inflated Debt/Income ratio as an added bonus?)

Why should businesses be saved when consumers will lose their homes?

The whole mess came about because loans were made that shouldn't have been made... (hundreds of thousands of loans, maybe even millions of them!)

The facts are:

Buyers should come in with down payment,
Home prices should be set at an affordable level (by offering sound loans to qualified buyers only) and
People who can't prove they can pay should pay a higher rate to offset that risk or continue as renters...

And if you look at the crisis and what is naturally coming about in the free market because of it, those exact things are happening. The reason we are in this mess is because banks ignored those basic guidelines.

If the banks had followed sound business practices, we wouldn't be in the mess we are in today.

The long-term answer is to get the banks back to following sound business practices. They basically took on more than they could back up. I know a number of lenders who didn't push these risky mortgages on clients and they are still doing well.

I don't know of a single past client of mine who is anywhere near a short-sale position or having any trouble making their mortgage payment... Why?

Because

they got fixed rate mortgages when rates were the lowest they had been in their lifetimes,
they bought homes they could afford, and
they weren't buying a home while barely making ends meet (or not making ends meet).

I understand there is a big problem, but if the banks are going to be "bailed out", certainly consumers should also benefit and get some "bail out" support.

And what about those who continue to make payments on their homes and will continue to make those payments...? Shouldn't those citizens be rewarded for their common sense and for making the situation better than it would have been if we had all decided to max out and gamble our futures (because the banks allowed, and yes, even promoted it)?

Why give the bail-out money to the people who have proved they can't properly handle money?

The fair and equitable (and free-market) answer is to let the banks go through exactly what their borrowers are going through... let these companies, based on what value is really left in them, be "short-sold" to people (other corporations) who know how to properly handle money.

And NO, that would NOT be the Government!

Buying a home in Salt Lake City or the Surrounding Area? Make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 10/01/2008 03:03 PM

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Bailout in the Real Estate Market Channel

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Military Family Relocating to Utah Benefits by Hiring an Exclusive Buyer's Agent

a real estate agent on the buyers side Our family was relocating to Utah after 5 years in Japan. Although we had done lots of internet searching for houses we really had no idea as to neighborhoods, schools, shopping, etc. The "house hunting" experience was old even before we left Japan.

In doing our initial research into rates, lenders and trying to learn about neighborhoods we came across advertisements for an EBA (Exclusive Buyer's Agent). Although we have owned several properties both as primary and rentals, we had not heard of a Buyers Agent. I have always disliked the idea that the selling agent was also my buying agent. The idea that the agent would be working for us and getting us the best deal was appealing. After a couple of emails and phone calls, enter Homebuyer Representation and Ben Clark.

We had some very specific needs and boundaries we wanted to stay within and from the very first day Ben listened. Besides listening to what we needed, Ben offered suggestions that were absolutely pertinent and helpful. After reviewing close to one hundred houses we got down to fifteen we wanted to view. Ben met us, showed us the houses and offered his years of knowledgeable experience in evaluating the house, neighborhood and financial growth potential. His evaluation and expertise were invaluable in our ultimate decision.

a real estate agent on the buyers side Ben handled the negotiations professionally and it was quickly obvious that he truly worked for us. He negotiated a well below market and appraised value sale and the inclusion of numerous additional items. When the sellers failed to meet the closing deadline he negotiated a rental agreement that reduced the total sale price even further and allowed us to move into the house on the original closing date.

Ben kept us informed as to the progress of the sale and whenever the seller missed a deadline he negotiated something else beneficial to us.

Where was this guy when we purchased our former homes!?

We have been in our home for just over two months and are very happy with the house, the EBA (Exclusive Buyer's Agent), and in particular Ben Clark. We can not speak to the enthusiasm or professionalism of other Buyer's Agents but we can unequivocally recommend Ben Clark to anyone that seeks to maximize their buying potential.

Buying a home in Salt Lake City or the Surrounding Area? Make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 09/21/2008 01:01 AM

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Exclusive Buyers Agents in the Home Buying Channel

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Salt Lake City, Utah Area Homebuyers Benefit when Having Agent on Their Side

More Happy Clients of Salt Lake City's Exclusive Buyer's Agents

We had a wonderful experience with our agent, Benjamin Clark.

We had been looking at houses on our own for about six months, and were getting frustrated trying to find decent houses to look at, physically locating the houses without getting lost, and scheduling appointments to see the houses with various listing agents. It felt like we were getting nowhere in our searches, and as first-time home buyers, we did not feel knowledgeable enough about the housing market to make a good decision on our own.

That was when we heard of exclusive buyer agents that work on the buyers' side. My husband was sold on the the idea of a buyer agent the minute he heard about it, and he even drew out a little diagram for me depicting why it made more sense to use a buyer agent as opposed to a traditional real estate agent. He did an online search and found Benjamin Clark, who was the only exclusive buyer agent in the Salt Lake City, Utah area.

One of the most important qualities for us in finding an agent to work with was the ability to ask him or her questions with ease, and discuss all of our concerns openly. Benjamin always answered our questions thoroughly, based on his knowledge and eleven years of experience with the housing market. We were impressed immediately when Ben set up 18 appointments at different houses all over Salt Lake County in one evening, complete with a time-efficient mapped out driving route and copies of the MLS listings of each house. It would have taken me weeks to make that many appointments on my own!

Ben personally drove us to each house and worked around our work and commuting schedules, even though it usually meant meeting us in different locations and looking at houses in the evenings. He allowed us to see a lot of houses in a short period of time, and was very upfront about the pros and cons of each house we looked at. He never tried to persuade or push us to buy any particular house, and he continually modified our housing searches to include new criteria.

Benjamin Clark made buying a home enjoyable

One of the listing agents that we met with at a particular house told us, "You have a great realtor. He confirmed with me twice about the time and date of our meeting today!" We were not surprised by his remark, because Benjamin was well organized and was always prompt in returning our phone calls and emails. He made us feel like a priority, although we knew he was working with other buyers at the time.

In addition to Benjamin saving us a lot of headaches in finding our house, he saved us a LOT of money. At first, we thought we would use our personal banker to obtain a housing loan. Benjamin encouraged us to shop around for other lenders. He suggested a few lenders to check with for rates and lender fees that we would not have even considered. We could not believe the difference in rates and fees we found amongst the various lender companies! Ben put together a spreadsheet called the total cost of the loan evaluation, and in so doing, allowed us to choose a lender with the lowest rates and fees. Our closing agent even remarked, "I was so surprised with how low your lender fees were! I thought you must be related to your loan officer to obtain fees that low!"

Not only did Benjamin save us money with our lender and interest rate of our loan, he saved us a lot of money in the purchase price of our home as well. He helped us to stay within our budget and with his detailed market analysis, Ben painted a really good picture of what our home was worth and what we might be able to get it for. He was firm with the listing agent regarding our offer, and negotiated in our behalf. As a result, the sellers accepted our first written offer with no counter, and we got an amazing deal on our home.

Even after our offer was accepted, Benjamin walked us through every step we had to take until our closing date. He provided us with resources to obtain homeowners insurance, a home inspection, a home warranty, a title company and even set up our utilities! He also went as far as to make sure that the appliances were green-stickered before we moved in, and all home repairs were completed. We would have had no idea where to start with any of these items, so Ben was really a lifesaver with his leg work that we did not think realtors even dealt with!

Benjamin Clark was able to make the stressful experience of finding a home enjoyable. He will save his clients money and allow them to enjoy the journey along the way to buying a home!

Buying a home in Salt Lake City or the Surrounding Area? Make sure you get an Agent on YOUR side of the transaction!

Finally...

Posted by Benjamin Clark - Exclusive BUYER'S AGENT - Salt Lake City, Utah on 09/18/2008 12:28 AM

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Exclusive Buyers Agents in the Home Buying Channel

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