HEC Yeah! The Home Equity Coach

To build on my article from 2 weeks ago – accelerating home equity to Increase your Net Worth Faster – I have now coined it the Home Equity Coach program and have purchased www.TheHomeEquityCoach.com.  I plan to expand this free program over the next 12 months, as I strongly believe in building wealth thru real estate ownership, among your other investments such as stocks and businesses.  Since the road is not always clear on how to get there, I am offering my service on this important financial asset that can be easily overlooked and taken for granted .  Of course, I will continue my main occupation as a Realtor representing home sellers and buyers for years to come.  This program is a supplemental guide for homeowners to realize a larger payoff upon selling, which can then be used for a larger down payment on the next home, pay down other debts, invest in retirement funds, or however you wish! 

 

Financial experts seem to agree that the proper percent of home equity compared to your total net worth should be in the 20%-30% range, meaning if your net worth is $500,000 that your home’s value minus the loan(s) is $100,000 – 150,000.  This percent will fluctuate substantially over your lifetime – smaller when buying your first home, and higher when selling your last one.  Currently, the average person’s home equity is a much higher % of their total financial worth, as the average savings/investing rate is lower than it should be.  So even though my goal is to build your equity faster, I also believe you need to be properly invested and balanced in different asset classes.  You should not be house-rich and cash-poor.

I have represented 365 clients buying and selling a wide variety of homes and locations over a 27 year career that includes managing other agents for five years.  This experience has given me many insights on how to make a financially-smart purchase, to grow that value while enjoying your life there, paying down the debt sooner, and eventually selling it with a larger check in hand.  I can enter the picture in any of these stages to lend guidance in achieving these goals with you.  It can apply to your own home or to rental homes you own.  This is NOT a get-rich-quick scheme; buy-for-zero-down investment; flipping-houses-with-other-people’s-money; or anything you have heard advertised.  Nor is it designed to sell you a larger home (unless you want to of course, then I am happy to :).  I simply feel bad for folks that have missed opportunities to accelerate their wealth during their home ownership using tools already available to them.  In the end, I hope to earn/ keep your business when it is time to buy and sell homes.  That’s it!

If this terminology intimidates you, don’t worry, I can simplify.  If it is too basic, it is supposed to be.  The concept here is not difficult to grasp, just difficult to maintain the discipline, that is where having a coach can be invaluable.  Contact me soon to arrange a home visit where we can begin your plan.  Time to bring in the Coach!

Happy HEC-ing!

Home Appraisals – Should you get one?

Getting an appraisal has been a standard of the home sale industry for many years.  Lenders have required it for most loan types thru the years, and that is still the case.  Additionally, buyers feel more comfortable knowing that an unbiased professional agrees with the price they are willing to pay.  So what has changed?

The Game, that’s what.  If this was a normal market, we would not be talking about the merits of an appraisal, it would continue as a standard part of the sale.  This is no ordinary market.  Some homes are bitterly fought for.  Buyers strive to increase their odds of getting the home they want, and are looking at any angle beyond going up endlessly on price.  Escalation clauses, where the offer states they will raise their price to beat any others?  Passe’.  If a home draws 5 offers, 2 may have an escalation clause.  Sellers don’t want to go back and forth on multiple offers, just give your best price.  Too many cases of buyers getting cold feet on this and backing out.  Or worse, the buyers bid extremely high but insist on the appraisal rider, expect it coming in low and returning to a reasonable price – bingo.

Without getting into all the ways to sweeten your offer (contact me directly for that), removing the appraisal condition is a big one today, as sellers and agents are becoming more leery about ways buyers can terminate the sale.  The lender may still require it, but you control the contract conditions.  Inspections are still the number one cause of termination, but not many buyers are willing to buy as-is, and the seller has some say by agreeing to repairs.  After that is financing, although in the mid-to-upper price ranges, a low appraisal will kill the deal more often than lender denial.  If you as the buyer have the ability to overcome a low appraisal, e.g. come up with more down payment/have enough down already/agree to pay PMI/pay more PMI – and you want to make a real difference in your offer, consider removing the appraisal rider.  If you have 30% down payment or more, this can make for an easy decision.  If less, a bit harder as this can have ramifications beyond just down payment.  If you have minimum down, I would NOT recommend this.  Either way, having an experienced Realtor representing you is invaluable here.  He/she will have run a price analysis to make you understand pricing, values, and the pros vs cons.  You may even realize you are over market value but proceed anyway.

Not every home purchase offer goes thru this, in fact less than half of homes sold in St Louis end up in competition.  But you wouldn’t know that in some of our hottest areas like ranches from $150,000 to $400,000 in Lindbergh schools, Kirkwood and Manchester.  It pays to be prepared and discuss the possibilities, especially if you have lost out on a sale or two.