What interest rates really mean

The Fed did this! The Fed did that! Rates are up! Rates are down! Aaaagggh! Okay, now exhale.  In turbulent economic times the media can't wait to report what interest rates are doing.  Pundits prognosticate, forecasters forecast and soothsayers sooth.  When should you buy a home based upon interest rates and when is it the right time?

The fact is that interest rates, while important, have little impact when it comes to buying a home.  Alright, alright, I'll admit: it's important...but it's not a deal-killer.

There is a fixation on what rates are doing.  A fixation on what rates will be in the future and what rates were in the past.  I've heard potential home buyers tell me, "I'm not sure I want to buy now because rates are ¼ percent higher now and I think I'll wait." I say,  "Wait for what?"  I say let's not look at the rate but instead concentrate on what that rate actually represents ... your monthly payment.

Let's look at what an interest rate move of ¼ percent really does to a $200,000 mortgage.  Say a 30-year interest rate at 6.00 percent "jumps" to 6 ¼ percent. Shall we sit on the sidelines, thinking such a move is suddenly unaffordable?  No.  The payment on a $200,000 loan "jumps" by about $32 a month!

Now let's get a bit more draconian and look at a ½ percent increase and the monthly payment increases by $64.  Putting that into daily financial terms, $64 is about a tank of gas. While not insignificant, it's hardly a reason to stay on the sidelines of home ownership. Right now, buyers should have more urgency than ever. Home prices have declined enough to make buying more affordable than it's been in recent memory and interest rates (whether at 6 percent or 6 1/4 percent) are historically low. It's time to act.

Are rates important? Sure they are.  But are they the end-all?  Heck no.  Interest rates over the past few years have been in a very tight range, with few major swings.  Just remember what interest rates represent, your monthly payment, and pay less attention to the headlines.

Overcoming the misconceptions about the "credit crisis"

Financing Solutions

You've watched the news and read about it in the papers. You know, the "credit crisis" and how buyers need 20 percent down in order to buy a home? And even if you found a buyer with 20 percent down, lenders aren't making loans anyway. So, why bother, right? Wrong!

We're right smack in the middle of what just might be the biggest disservice ever perpetrated on potential home buyers.  It seems the press just can't get enough of all the gloom and doom in the housing industry.  The fact is that mortgage money is as available today as it was a year ago and loans are being made this very moment with little or no money down. And, no, platinum credit isn't required.  You just need to know where to look.  Who are these lenders? They're right down the street.

Federal Housing Administration (FHA) loans are exploding onto the mortgage scene; recent estimates are that one out of five mortgages are FHA loans. FHA loans never went away, their reemergence is a result of the collapse of the sub-prime market. FHA doesn't technically have a minimum credit score, although, in practice, lenders won't approve an FHA loan with a credit score below 500. But that's a far cry from the notion that an 800 score is the only thing lenders care about.

The best part?  FHA only requires 3 percent down. 3 percent. And that 3 percent can come in the form of a gift or grant.  FHA borrowers only need to have $500 in a transaction.  All the while, FHA mortgage rates are as good or better than their conventional counterparts.

Low or no down payment, extremely competitive rates and easier qualifying.  No wonder FHA is moving up the charts!

Please contact me if you would like more information about FHA loans or help getting into your first home.

I've moved to Keller Williams Greater Omaha!

I just joined the Keller Williams Greater Omaha office today and look forward to continuing to help bring buyers and sellers together in the Omaha market.

My new office address is 12720 I Street, Omaha, NE 68137, but my phone number 402.880.DIRT (3478) and fax number 866.622.0134 remain the same. My new email address is http://mailto:toddgraves@kw.com.

My new website is now up and running and has details on all my listings..

Feel free to call me with any questions you have or if you are ready to make a move!

Have a ball when agents don't show!

Frustrated not knowing if the agent who scheduled the appointment actually showed up? Here's a little trick to discover if anyone has been inside your house.

Before you leave the house, place a ball up against the door the agent will enter. When the agent  opens the door, the ball will roll away. If the ball is in its original place when you return, you know no one entered the house. Even if the agent  knew exactly where the ball was originally placed, it would be impossible to replace it to its beginning location. 

How well do you know your neighbors?

Just because someone is a convicted felon doesn't mean they will be a repeat offender. However, it would be nice to know if your neighbor has done time.

Go to http://felonspy.com/ to find felons residing in your area.

For the Registry from the Nebraska State Patrol which lists High risk, Level 3 sex offenders, go to http://www.nsp.state.ne.us/SOR/find.cfm. Please remember this information shall not be used to retaliate against the registrants in any way.

State of the Omaha Market

Omaha appraisal company, Mitchell & Associates has recently released two reports on the Omaha real estate market. 

The Midtown and West Omaha reports cover both the eastern and western sections of Douglas County. Whether you are buying, selling or just curious about the Omaha real estate climate you should access the full reports at: http://www.mitchellassociates.com/news/relnk/

Can I show your listing?

As a seller, you obviously want to get someone to buy your home. To do that, you need to get buyers to come look at it. How easy is it for that to happen?

Try calling your broker's company to set up an appointment to see your listing. What happens? Does the message say the office is closed even though it is an hour before they say they close? Is your agents phone forwarded to the office phone? Does the office message still say they're closed the next day during office hours?

You would be amazed how difficult it can be for an agent to show houses. Even vacant houses! Conventional wisdom would suggest making it as easy as possible for buyers to see the house for sale. As is often the case, conventional wisdom doesn't always prevail.

Omaha Home Prices Plummet 1/2%!

O.K. maybe one half percent isn't so bad. What about taking an extra week to sell, though?

As Satan rushes to the hardware store to stock up on mittens and ice melt, the real estate bubble has burst in Omaha. Not since 2001 when the average sales price dropped nearly 3%, has the Omaha real estate market been so gloomy.

According to recently released figures from Trendgraphix on the Omaha MLS, the median sales price has dropped .47% from $141,333 in 2006 to $140,667 in 2007. Market times have taken a toll, as well. Successful sellers found it took and average of 67 days to sell compared to 60 days in 2006.

If it's this bad at the middle of the pack, imagine how many million dollar homes have just sat there. Well, they all didn't just sit there. A dozen homes sold in 2007 for at least $1,000,000.

We realtors have been hit hard with the lower sales prices and longer market times. A real estate agent may have found collecting $20 less in commissions based on this drop in median sales price. The horror doesn't end there though. We also had to wait an extra week to get paid. Outlandish!

What's worse than a combination lockbox?

The lockbox revolutionized the real estate industry. Instead of driving around to real estate offices to collect keys to show listings, they can just access the key from the lockbox, usually hanging on the door knob of the listing.

There are three types of lockboxes in the Omaha area: The combination lockbox, the basic electronic lockbox and the upgraded infrared lockbox.

Several years ago, the Omaha MLS switched from a mechanical lockbox system where every member agent had an identical key. The new system featured an electronic lockbox that could only be accessed by a special pager sized device with an agent specific code.

Since the electronic lockbox rollout, an upgraded lockbox has been added to the system. This lockbox has an infrared eye that can read the beamed code from a Realtor's smart phone or be accessed the conventional method where the agent's device physically docks to the lockbox.

The combination lockbox works in a similar fashion, except to gain access to the key, a code must be manually entered via a dial or push buttons. The benefit of this type of lock box is that anyone with the code can enter the home. While perfect for contractors who need to get access to the house, it does not have any way of monitoring who goes in and when. Also, BEWARE some agents are not very creative with their code. 1-2-3-4 is an unbelievable popular combination!

Both combination and electronic lockboxes are great in facilitating the showing of properties, but there is one lockbox to look out for. If your house is for sale and you have a big beige lockbox on your door, BEWARE!

Everyday more and more agents are switching to the key operating on software on their smart phone. These tend to be the more active agents. NONE of these agents will be able to access your home because the beige lockboxes don't have the IR capability. How frustrating is it for you when you have a hot buyer on your front porch that can't come inside because your listing agent put up the dinosaur of all lockboxes?

Should you have a Flyer box?

Conventional wisdom says you should promote your listing anyway you can. Newspaper ads, flyers, agent tour, open houses... anything and everything. However, some methods are better than others. Some even work better when they are not done at all.

In the optimal world, potential buyers drive by a house they like and take a flyer from the box, decide they like it and call to find out how to see the inside and write an offer. Unfortunately, the optimal world doesn't exist.

Usually, the flyer gives the buyer some reason to move on to the next house. Was there too much information on the flyer? Is it 1,000 sq ft too small? Or is it 100 sq ft too small? Is it $5,000 over their price range? Or is it $50 over? What if there wasn't a flyer in the box? Are the buyers now slightly irritated towards the house?

What if there was no flyer box at all?

The buyer WILL call or check out the house on the internet if they are even slightly interested. Finding a buyer is like finding a needle in the haystack and sorting through less hay makes it easier. Forget the flyer box so you can separate the contenders from the pretenders and do it with less effort.