CategoryStarting A Family
First-time home buyers today face a tough road, shopping for homes during a pandemic, high housing prices, and deep economic uncertainty. For military families deployed overseas, it’s all even trickier to figure out.
In this second story in our new series “First-Time Home Buyer Confessions,” we talked with husband and wife Kyle LaVallee and Natalie Johnson. They were renting an apartment in Fayetteville, NC, when they decided to start shopping for their own home in the area in April.
At the time, LaVallee was stationed in the Middle East as a sergeant in the U.S. Army. Yet even though he was thousands of miles away, he managed to attend every home tour with Johnson via FaceTime. In July, they closed on a brick, ranch-style three-bedroom that LaVallee would not see in person until a long-awaited trip home in October.
Here’s the couple’s home-buying story, the hardest challenges they faced, and what LaVallee thought of his new house once he home managed to lay eyes on it for the first time.
Location: Fayetteville, NC
House specs: 1,166 square feet, 3 bedrooms, 2 bathrooms
List price: $111,900
Price paid: $115,000
A pandemic plus deployment seems like a tough time to buy your first house. What convinced you to forge ahead?
Johnson: Kyle was deployed in October 2019 while we were renting a one-bedroom apartment in Fayetteville. Kyle wasnât fond of renewing the apartment leaseâwe had been there for two years and were running out of space. We wanted to get a dog; we wanted a yard, and our own property where we can do anything we wanted.
We started educating ourselves on the process. We knew a mortgage was going to be significantly less than what we were paying in rent. Kyle thought it would be smart to buy because [nearby] Fort Bragg is one of the biggest military bases in the world. If we ever leave or get stationed somewhere else, weâre not going to have a problem finding anyone to rent it. And we could always come back.
LaVallee:Â I was interested in gaining equity and ownership, rather than just paying to rent something I’d never own in the end.
Johnson:Â We started looking at houses back in January. In April, we kept seeing information about lowering interest rates. Thatâs why we got serious about the process in the middle of the pandemic, and when we connected with our real estate agent, Justin Kirk with Century 21.
How much did you put down on the houseâand how’d you save for it?
Johnson: We put 20% down.
LaVallee: I was making a lot of money while I was deployed, and I had no expenses really. I was just saving everything I had, knowing I wanted to invest it in a house.
Johnson: I cut spending. I didnât buy things I wanted, just what I needed. The pandemic helped a lot, honestly because we obviously couldnât go out.
LaVallee:Â We qualified for a VA loan, but we just wound up using a conventional loan. Most people in the military will use a VA loan where you donât put any money down, but [since we had enough saved] we wanted the lowest monthly mortgage payments.
What were you looking for in a house?
LaVallee:Â We knew we might [eventually] be moving, so it wasnât like it had to be a house we would stay in forever, more of an investment property.
Johnson: We were looking for things that would be attractive to future renters. We had a military family in mind because Fayetteville’s got more than 50,000 active-duty. We looked for a location close to a Fort Bragg entrance. We thought three bedrooms was perfect for us because our families are close with each other, so theyâll all come down at the same time so weâll have two extra bedrooms for them. Kyle really wanted a garage, so that was a huge thing.
LaVallee: Garages arenât very common down here, so that limited a lot of options for us. A lot of houses have carports, or they finish the garage and turn it into a bonus room.
Johnson: We wanted something that needed a bit of fixing up, because we like to be handy and put our personal touch on everything, and we ultimately knew that would be a lower-cost house.
How many homes did you see in person, and how did Kyle participate from overseas?
Johnson:Â It was 10 or 12 homes. We were out three to four times a week looking at places with our real estate agent. We wore our masks for the tours, and I used hand sanitizer since I was opening and closing drawers and closets. Most were vacant, but we did tour one house that still had people living in it, although they were gone during the tour, so we avoided touching a lot of things.
During tours we FaceTimed Kyle in. We figured that was probably the most convenient way to do it since he could see every single house and room in detail.
LaVallee:Â Well, I couldnât really see all the details.
Johnson: He got to know our real estate agent really well via FaceTime. Our agent would say, “Let me know if you need me to hold Kyle while you go look in this room.” I felt so bad, though, because I work full time, so I’d tour homes around 5:30 in the evening, which for Kyle was 2:30 in the morning. But he stayed up for every single tour.
LaVallee:Â I was sometimes frustrated not being able to be there. I left it all up to her. I had to trust the feelings and vibes she got from each house.
How many offers did you make before you had one accepted?
Johnson:Â We put three earlier offers in.
LaVallee:Â They would be listed and the next day would be sold. The first three offers we put in were asking price, and Iâm pretty sure everybody else offered more, and ours were never even considered.
Johnson:Â It was ridiculous. It was definitely a sellerâs market, so you had to act really fast and you had to be really competitive. On our fourth offer, we ended up at $3,100 over asking. I felt like we had to fight for this house.
Were you competing with other offers for the house you bought?
LaVallee:Â There were multiple offers.
Johnson: Our real estate agent told us, “You should definitely write a letter and talk about how Kyleâs gone right now and youâre first-time home buyers and this one really clicked with you,â which it did. The second I walked in, itâs this adorable brick house, itâs super homey, it has a great yard. In the letter, we just talked about how all of that was so attractive to us as first-time home buyers, and we were really excited and could see ourselves in this home.
Our real estate agent suggested going in higher than asking, so we just rounded up to $115,000. He also suggested doing a higher due diligence paymentâwe usually did $200, but this time around we did $500. And the earnest fee we put in was $500 or $600.
After our offer was accepted, we knew it was going to be kind of difficult with the home inspection. They were already redoing the roof, which was a huge cost on their part, so asking for more was definitely going to be a challenge. So we didnât ask for much.
What surprised you about the home-buying process?
Johnson:Â How fast it went, for me at least. Our first home tour was in April and then by June, we had found our house and the contracts were written up. I guess I was expecting it maybe to be double the time that it actually was, but houses were just turning over so fast, we had to act fast.
LaVallee:Â From my side, I thought it happened very slowly! I felt like so much was happening in between each step in the process. I had to be patient because I had so little control of the situation, other than just trying to stay involved and be a part of it.
Johnson:Â You never really think that when youâre married, youâre going to buy your first house while your husband is on the other side of the world. But we got through it.
So Natalie, you were living in the house for a few months before Kyle returned from deployment in October to see it. What was that homecoming like?
Johnson:Â He came home a few days shy of the 365-day mark. We were anxious and excited. Several other families and I waited outside of a hangar on base, and soon after hearing their plane landing, we saw the group walking toward us and everyone start cheering and crying.
Because it was dark when we got home, Kyle couldnât see the outside of the house much, or the “Welcome Home” decorations I hung up! But the moment he set foot in the front door, he just stood there and looked around with the biggest smile on his face.
I gave him the grand tour the next morning. He said it looked much bigger than what he saw on FaceTime. We celebrated with a home-cooked meal and the wine our agent gave us when we closed. It was really special.
LaVallee:Â I came home to a nice house. Natalie was worried I would come back to culture shock. But Iâve felt at home ever since Iâve been here.
What’s your advice for aspiring first-time home buyers?
Johnson:Â I would say to go with your gut. Some of the houses youâll tour are really logical to buy, but if they have a bad vibe or theyâre just not really welcoming, then look at others. A healthy balance between logic and feeling is important.
LaVallee:Â We didn’t even know what we wanted until we saw five or six houses, so itâs definitely important to shop around and see what’s out there.
Johnson: We really didnât know much. I told our real estate agent, “Hey, listen, weâre really going to need some guidance. We donât know what things mean, we need you to break it down for us. You have to be patient with us.” I reached out to three different real estate agents, and Justin was the one who not only answered all my questions but was giving a ton of positive feedback. It was nice to have that encouragement, and it definitely made us more confident. You learn a lot by looking at houses, you learn a ton about yourself.
The post What This Military Family Facedâand FoughtâTo Buy Its First House appeared first on Real Estate News & Insights | realtor.comÂ®.
The real estate market is constantly changing, especially in the local Denver market. We like to keep an eye on it for you, so we can let you know whatâs going on! Hereâs the latest update:
Data from ReColorado from November 1, 2020 to November 30, 2020.
At 5,236, monthly sales are up 22% from this same time last year in the Denver metro area. While the sales are up from November 2019, they are 19% lower than sales in October. A decrease in monthly sales between October and November is fairly common.
November saw 3,695 new listings in Denver. This is a 1% increase from the previous November and a 40% decrease from October of this year, continuing the trend of a slow down as we move into the colder months.
The average sale price for homes in the Denver metro area in November was $547,094. This is a 13% increase from November 2019 and just a decrease of 2% from October of this year. Single-family homes are selling for higher prices than multi-family residences, such as townhomes and condos. The average sale price for a single-family home was $224,195 higher than multi-family residences.
Days on Market (DOM)
The number of days on market continues to drop, with an average of 22 days and a median of six days during November. The average is a 13-day decrease from last Novemberâs average and a 2-day decrease from this October, while the median is a 13-day decrease from last November and a 2-day decrease from this October.
Single-family residences spent an average of 6 days fewer on the market than multi-family residences.
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Get more tips on navigating the Colorado real estate market!
5 Tips to Help You Afford Your First Home
Common Home Buying Fears and How to Overcome Them
Can You Buy and Sell a Home at the Same Time?
The post Homieâs Denver Housing Market Update November 2020 appeared first on Homie Blog.
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You hear these terms thrown around all the time: Second home, investment property, vacation home, rental property. But is there any real difference among them? And does it even matter what you call it?
As it turns out, there are some very big differences between second homes and investment properties, especially if you are financing it.
âBoth are fantastic ways to build wealth over time by capturing the appreciation of a real asset,â says Tony Julianelle, CEO of Atlas Real Estate in Denver. However, âboth come with inherent risks and expenses that should be carefully considered when making a purchase.â
As with any real estate transaction, you’ll want to do your homework and make a smart choice for your wallet, no matter which path you go down. We chatted with experts to get the scoop.
What is a second home?
A second home is just that: a second property where you and your family spend time, away from your primary home. You might also hear a second home referred to as a vacation property. You may rent it out for a few days each year on Airbnb or VRBO, but you primarily use it yourself.
Buying a second home makes financial sense if there’s one particular vacation spot you visit regularly. Why spend a fortune on hotels or Airbnb when you can own your own piece of paradise that will hopefully appreciate in value over time?
âLet’s say you live in San Francisco, but you are an avid skier in the winter and like to hike in the summer,â says Rachel Olsen, a real estate agent in California. âIf you spend many weekends and vacations inÂ Lake Tahoe, it may make sense to purchase a second home there.â
What is an investment property?
An investment property, on the other hand, is one that you purchase with the explicit intention of generating income. The investment property could be right next door to your own home, or it could be in another stateâit doesnât really matter. Youâll be playing the role of landlord, with long-term or short-term renters paying cash to stay in the home.
âNever forget that an investment property is all about the Benjamins,â says Lamar Brabham, CEO and founder of financial services firm Noel Taylor Agency. âThe entire point is to turn a profit. No emotions, no affection.â
Before making an offer on an investment property, youâll want to crunch the numbers to make sure itâs a solid investment. Similarly, consider what factors will be important to prospective tenants (e.g., access to public transportation, good schools, parking, and low crime rates).
How to finance a second home or investment property
If youâre paying cash, you can skip this section. But if you need a mortgage for your new property, you should know that financing a second home or investment property is very different from financing a primary residence. And, while mortgages on second homes and investment properties have some similarities, there are also some key differences.
- Interest rate: You can expect to see a higher interest rate for both second homes or investment properties than for primary homes. Why? Because lenders view those transactions as riskier. If you get into a tight spot with money, youâre far more likely to stop paying the mortgage for your second/investment property than for your primary home.
- Qualifying: Whether you’re buying a second home or an investment property, you might need to do some extra legwork in order to qualify for that second loan. Your bank may require you to prove that you have healthy cash reserves (so it knows you can afford both mortgages). It’ll take a long, hard look at your overall financial situation, so be sure everything is on the up and up before you apply.
- Down payment: Depending on your situation and the lender, you might also need to bring a larger down payment to the table for an investment property or second home, typically 15% to 25%. Again, this is because the bank wants a bigger cushion to fall back on in case you default.
- Rental income:Â If youâre buying an investment property, your lender might allow you to show that anticipated rental income will help cover the mortgage payments. However, proving how much rental income the home will generate can be complicated. Prepare to pay for a specialized appraisal that takes into account comparable rents in your area.
- Location:Â Your lender may require a second home to be 50 to 100 miles away from your primary home. An investment property, however, can be anywhere in comparison to your primary home, even next door.
- Taxes: Federal income tax rules are different for vacation homes and investment properties. Generally, you’ll treat your second home just as you would your first home when it comes to taxesâif you itemize, you can deduct the mortgage interest you paid up to a certain limit. (The rules vary if you rent out your second home for part of the year.) If you own an investment property, you get to deduct the mortgage interest, plus many of the expenses that come with operating a rental business, but you also have to report your rental income, too.
Why it’s important to not confuse the two
Itâs important that youâre totally clear about the difference and not use the terms “second home” and “investment property” interchangeably. Some people try to pass off their investment property as a second home to get more favorable financing, but you should never do this.
If you lie on your loan application, you could be committing mortgage fraud, which is a federal offense.
Your lenderâs underwriting team is aware of this possibility, so donât try to pull the wool over their eyes. Theyâll take the big picture into account when deciding what loan terms to offer you, says real estate attorney David Reischer.
âA single-family residence by a lake that is located in a completely different state from the borrower’s primary residence is much more acceptable to be categorized as a second home by a bank underwriter,â he says. âA multifamily-unit property with rental income in an urban area is likely to be treated as an investment property.â
Bottom line: Keep everything aboveboard, and you wonât have to worry about a thing.
The post Second Home vs. Investment Property: What’s the Difference? appeared first on Real Estate News & Insights | realtor.comÂ®.
As the Las Vegas fall season comes around, the Las Vegas market keeps on going up. Read below for Homieâs update.
In October, the real estate market saw growth on most fronts including the number of listings, number of units sold, and in terms of median listing price and sales price. However, units available and availability went down year-over-year. With that said, weâre still seeing the market continue to grow month-over-month which might indicate that buyers and sellers are becoming more comfortable in the existing real estate market.
Hereâs the full breakdown:
According to the data from the GLVARÂ® from October 2020, Las Vegas real estate realized a 6.8% increase in the number of single-family units sold compared to 2019.Â
Average new list prices stay strong year over year as October records a 9% increase in new listing prices for single-family units and 8.8% increase for condo/townhouse units.Â
*Data from the GLVARÂ® from October 2020 and October 2019
Property prices continued to grow as this seller market keeps on strong. We saw an 8.8% increase in year-over-year median price for single family units, and also a 14.3% increase in year-over-year median price for condos and townhouses.
*Data from the GLVARÂ® from October 2020 and October 2019
Days on Market (DOM)
We saw the Average Cumulative Days on Market continue to decrease in October 2020, as demand for this market continues to go strong. Now averaging an insanely brief 33 days on market versus 81 Average Cumulative Days on Market in 2019. This is a strong indicator that the real estate market will continue to remain strong.Â
*Data from the GLVARÂ® from October 2020 and October 2019
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The post Homieâs Las Vegas, Nevada Housing Market Update October 2020 appeared first on Homie Blog.
Imagine finding your dream home, then, a week before closing the deal, losing your jobâand the house. House hunting during the coronavirus pandemic is no picnic.
COVID-19 has caused seismic changes not only to real estate markets, but also to the lives of home buyers hit with layoffs, furloughs, and other financial challenges. Just ask Katerina Rieckel, a digital strategist, knitwear designer, and first-time home buyer who, with her husband, was set to close on a glorious farmhouse in upstate New York in March.
But about a week before sealing the deal, Rieckel was laid off, which meant that she and her husband, a claims adjuster, could no longer afford the place.
As a part of our new series, “First-Time Home Buyer Confessions,” we asked Rieckel to share her story, and the hard-won lessons she wants to share with other first-timers.
Let her experiences show that even unemployment doesn’t need to spell the end of a house huntâalthough it may require you to dust yourself off after a loss and try, try again.
Location: Troy, NY
House specs: 1,544 square feet, 3 bedrooms, 2 bathrooms
List price: $249,900
Price paid: $245,500
2020 has been a wild one. How did you end up buying a home in the middle of a pandemic?
We started looking for a house a year ago, about halfway through the summer. At the time, both my husband and I had recently got new jobs, so the first issue we ran into was getting pre-qualified for the mortgage without a long track record at those companies. We also both felt pressure, as our jobs were very new.
What were you looking for in a house, and what was your budget?
We were looking for a house in the country that was move-in ready, private with at least 5 acres. We started off with a small budget, max $200,000, which made our choices more narrow.
Our search continued well into the winter, and around January 2020, we finally saw a house that was all we ever dreamed of and more. It was over our budget, at $229,000, but it had been listed for over a year, so we felt there was a good chance we could get it for less than the asking price.
What did you love about this house?
It was a beautiful, slate-blue farmhouse sitting on top of a hill, surrounded by woods. The house was warm and inviting, with chickens running around, as well as a big diving pool, and a workshop in the basement connected with a two-car garage. We got along with the owners really well, and we were going to keep the chickens. Everything went very smoothly, until just over a week before closing.
So what went wrong?
It was March, and COVID-19 hit hard. The digital marketing agency I worked for had clients pause their work for unknown time. I was laid off, which meant we couldn’t afford the house anymore, and had to back out of the deal.
I was crushed. We didn’t know what was going to happen, and the country was under a lockdown. We had plans for my parents to come visit us in our new house, but instead, I ended up with no job, no house, and I couldn’t see my family, since they live in Europe.
In the summer, I was very fortunate to get my job back. So we resumed our house hunt and began to search for a new contender.
When you started the search again, how had COVID-19 changed the market?
The housing market in upstate New York got totally crazy. I heard there were houses being sold within hours. The market was just incredibly competitive, and not many houses were being listed, as a lot of people didn’t want to let strangers in their house during the pandemic.
We saw about seven to 10 houses in person, but they usually ended up disappointing us, with some strange arrangements. For example, one house had around 25 acres, but half of that acreage was on the other side of the road, behind other people’s houses, which made it almost impossible to use.
With such a competitive market, how did you end up finding the right house?
Finally, around halfway through the summer, I saw a house listed that I hadn’t noticed before. I called on it right away and set up a showing that evening.
The real estate agent told me we were really fast, as he had just relisted this house. Someone had been buying it, but backed out of the process because of personal reasons.
How did you know this house was the one?
The house had over 10 acres, it was in the country, and about 35 minutes to Troy. It was move-in ready, but definitely needed upgrades, as it looked like it got stuck in the ’80s.
Even though we didn’t like the style that much, we felt instantly comfortable and decided to put in an offer that same evening. It was partly due to the pressure of the market, but in the end, we are really happy we made this decision.
What surprised you most about the home-buying process?
Nothing prepares you for the amount of aggravation you have to go through. Buying a house is like getting a second job for about three months.
What’s your advice for aspiring first-time home buyers?
Don’t trust the photos! The photos got me a few times. For example, a lot of times, the photos of the house are taken so that you can’t see the neighboring houses.
You think, “Wow, that looks so private!” Then you drive there, and you realize there’s a house sitting right next to it. Since privacy was very important to us, we got disappointed a few times by this. We started doing drive-bys first, before going in with a real estate agent, whenever possible.
Anything else home buyers should look out for?
Call the real estate agent and ask a lot of questions before you even go see the house, like what the property and school taxes areâvery important around here.
You also want to know what kind of heating the house has, as electric bills can really add up over the winter.
The driveway can also be a huge issue, which is why I think the first house we were buying was for sale for such a long time. It had a pretty steep driveway, which was definitely an all-wheel drive kind of thing in the winter.
We also changed who we were financing with while we were going through closing. We needed someone well-informed about the economy, who knew what they were doing and was ready to act fast.
Our first mortgage broker didn’t tell us as soon as interest rates started to go upâand basically sat on the information for a while. This is when we stopped trusting this person and went to work with a bank instead.
Maybe the best advice is not to fall in love with a house too quickly, since there can be so many setbacks that you will not see coming.
The post ‘I Lost My Jobâand My Dream House’: How This First-Time Home Buyer Bounced Back appeared first on Real Estate News & Insights | realtor.comÂ®.