Daily News And Advice
An Insider’s Look at the Reality of Home Staging
When it comes to home staging, there are typically two buyer camps: The first thinks it’s a waste of money and doesn’t want to pay more to potentially make their home more attractive to buyers—even if their real estate agent says they’ll make it up (and then some). The second realizes the value and is willing to make that smart investment.
But just how do those two contingents break down? The National Association of Realtors (NAR) Profile of Home Staging provides some insight. The study separated the study into three categories: Buyers’ Agent Perspective, Sellers’ Agent Perspective, and Buyer Expectations. We’re taking a closer look at the key points.
Home Staging: Buyers’ Agent Perspective
According to the study, “40 percent of buyers’ agents cited that home staging had an effect on most buyers’ view of the home” and “83 percent of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home.” Buyers agents also noted that, “Staging the living room was found to be most important for buyers (47 percent), followed by staging the master bedroom (42 percent), and staging the kitchen (35 percent).”
Home Staging: Sellers’ Agent Perspective
Per the study, “28 percent of sellers’ agents said they staged all sellers’ homes prior to listing them for sale,” and “13 percent noted that they only staged homes that are difficult to sell.” The living room (93 percent), kitchen (84 percent), master bedroom (78 percent), and the dining room (72 percent) were the most commonly staged rooms.
Sellers’ agents offered to do the staging 26 percent of the time, and, “The median dollar value spent on home staging was $400.”
Call it the HGTV effect: “A median of 10 percent of respondents cited that buyers felt homes should look the way they were staged on TV shows,” while “38 percent of respondents said that TV shows which displayed the buying process impacted their business.”
The real effect of staging
Now that we have the buyer’s agent, seller’s agent, and buyer’s perspective, let’s look at some real data about staged homes. According to the NAR study, 22 percent of sellers’ agents “reported an increase of one percent to five percent of the dollar value offered by buyers, in comparison to similar homes,” and “17 percent of respondents stated that staging a home increased the dollar value of the home between six and 10 percent. 28 percent of sellers’ agents stated that there were slight decreases in the time on the market when the home is staged, while 25 percent reported that staging a home greatly decreased the amount of time the home was on the market.”
Of course, time on market and sales prices can range depending on a number of factors, like age of home, location, square footage, and price point. The Real Estate Staging Association has found, overall, that staged homes sell “73% faster, on average, than their non-staged counterparts,” said The Mortgage Reports.
Are There Any Good Zero-Down Mortgage Programs?
Coming up with enough money for a down payment is one of the biggest obstacles new borrowers can face. And when you add closing costs to the mixture it can be an even bigger challenge. Most mortgage programs available today require some form of down payment.
Conventional mortgage programs ask for a down payment but you don’t need to have 20% to put down. You can put 5% down or even 3% down on a conventional loan but you’ll also have to add private mortgage insurance, or PMI to that monthly payment. This can certainly affect affordability, and with mortgage rates still at rates not seen for more than 20 years, that’s an issue. FHA loans can also ask for a minimum of 3% down but again there are additional fees to that loan along with mortgage insurance. So, is there any good program out there that doesn’t require a down payment?
One such program is sponsored by the United States Department of Agriculture, or USDA. USDA mortgages don’t require a down payment. But there are some restrictions that apply. For one, the property must be located in a pre-designated area. The USDA program evolved to help populate and establish rural areas. You can find the USDA home loan site, enter the zip code of the home you’re looking to buy, and the site will tell you if it’s in an approved zone.
There are also income restrictions for this program which will vary by region. You might find a household income limit of say $36,600 while up the road the income limit might reach $58,000 for the very same program. USDA loans also have one term option of 30 years. Rates are set by the USDA and currently they’re below conventional rates. There are other times when the rates are higher than conventional. You’ll need to do a little homework with this one.
The other zero down program is one of my favorites for those that qualify. The VA loan doesn’t require a down payment, either. Further, interest rates on VA loans can be very competitive. Individual lenders set VA interest rates, not the VA, with varying loan terms.
Who is eligible for the VA program? Active duty personnel with at least 181 days of service, honorably discharged veterans, National Guard members with at least six years of service as well as surviving spouses of veterans who have died while serving.
If you’re looking at somewhere rural, most definitely check out the USDA program. And if you’re an eligible borrower for the VA loan, hands down it’s the best option.
What Should You Know About Homeowners Associations?
If you’re thinking about moving, there are a lot of factors to consider aside from the house itself.
Homeowners associations are one example. Living in a community with a homeowners association can have its benefits but also its downsides.
It’s important to be well-aware of the implications of living in a community with a homeowners association before you make an offer on a house.
The Basics: What Is An HOA?
An HOA is a governing body in a community, and you’ll often find they’re present in gated neighborhoods, planned communities, and apartment and condo buildings. An HOA is funded and operated by residents, and there’s a board of directors.
HOAs have meetings, create budgets, and are responsible for enforcing regulations and rules. The rules set by an HOA are legally enforceable.
A well-run HOA can improve property values because they work to make sure the community maintains a certain standard as far as how homes and lawns look. Poorly run HOAs can be expensive and make it difficult to own a home in the neighborhood because of the bureaucracy.
If you’re a member of an HOA, you might pay dues monthly, quarterly, or yearly.
The dues are meant to go toward keeping up common areas like clubhouses, pools, walkways, and lighting.
Fees vary significantly depending on location and the neighborhood or building itself. HOA fees might be $50 a month to thousands of dollars a month.
How Do the Rules of an HOA Work?
HOA rules are referred to as conditions and restrictions, or covenants. If there is an HOA in a community where you’re thinking about buying a home, you need to understand them well.
The majority of HOA rules are going to be related to the exterior of a home.
For example, you may be required to maintain your lawn in a certain way. You may only be able to paint your house in particular colors. In condos and apartments, the rules might be related to things like pet ownership.
If you don’t follow the rules of HOA, initially, you’ll be asked to comply. If you don’t, you may have to pay fines, and then if it gets beyond that point you may face a lawsuit.
Additionally, if you don’t pay HOA fees, the board can put a lien on your home or even require you to foreclose, depending on the state where you live.
What to Find Out About an HOA Before Buying
If you’re looking at a home with an HOA, the following are things to find out or ask your real estate agent to find out for you:
• Ask if you can attend an HOA meeting, or if that’s not possible, request a copy of the most recent minutes. This will give you a feel for the behavior of the board members and whether their top priority is resident well-being.
• Your HOA should be in good financial standing. Otherwise, you may be hit with an unexpected assessment that you have to pay if work needs to be done in the community.
• Are there are a lot of issues between the board and homeowners?
• You’ll have to consider how well the HOA’s rules will fit with your lifestyle and if you’re comfortable with that kind of control being exercised over your home and living environment.
• Go over, in detail, what HOA fees will include.
Finally, along with thinking about how HOA fees and rules will affect you now, you have to think about how it’s going to affect the resale value of a home you buy. There are a lot of buyers who simply don’t want an HOA, and if you do want to sell your home, your pool of buyers may be limited.
Over time, as HOA fees go up, it may put living there out of many people’s price ranges, making it tough to sell your home.
What to Expect When You Close on a House
Buying a house is one of the biggest things you might do in your life.
The final step in the process is typically the closing. Once you reach this point, it can be a relief because you’re through the arduous underwriting process, but what should you expect when you’re closing on a house?
The closing date is usually decided during the contract negotiation. It’ll be listed on your purchase agreement. A seller accepts your offer, the earnest money is paid, and then, at some point you’ll have your closing.
A closing date can be weeks or months after the formal acceptance of your offer, depending on how much time is needed to complete the deal. Being prepared can speed up the process.
Go Over Your Closing Contingencies
If you have a good team on your side, the closing process should go pretty smoothly.
You will need to make sure all the closing contingencies are completed.
These often include the home inspection and appraisal, the completion of your loan documents, and the purchasing of homeowners’ insurance.
The final walkthrough is usually scheduled 24 hours before closing. This is not the same thing as an inspection. Your agent should schedule your final walkthrough. During this time, the seller should have removed all their belongings.
The condition of the home should match what you agreed on—otherwise, let your agent know.
Common Problems That Delay Closings
As was touched on, to get to a closing date can take weeks or even months. Knowing what some of the most common hurdles are can help you avoid them. Some of the things that often delay the closing date include:
• Appraisal problems
• Loan issues—preapproval can help you avoid this
• Problems with the home inspection
• Issues that arise during the walkthrough
• Problems with the paperwork
Once you make it to your closing date, there are closing costs. These are fees charged by third parties before the purchase of your new home can be finalized.
Closing costs tend to include appraisal fees, attorney expenses, and your premium for your homeowners’ insurance.
Overall, the closing fees usually come out to anywhere from 3 to 4% of the purchase price of your new home.
Your lender should send you a Closing Disclosure at least three business days before your closing date. This will tell you all the terms and costs, as well as who pays what and to whom it’s paid. Go over these costs carefully and make sure they match what you received in your Loan Estimate.
What Happens on the Day?
Once you arrive at your actual closing day, you’ll need to bring your photo ID, any paperwork or documents that are still needed for the mortgage loan officer or title company, and a certified or cashier’s check. The check needs to be made payable to the title or closing company. The check is for any closing costs that aren’t deducted from the sales price.
On closing day, you’ll pay any remaining closing costs that you should already be aware of based on your review of your Closing Disclosure.
The seller signs documents transferring ownership of the property.
You will sign a few things, including a settlement statement that outlines all the costs related to the sale, a mortgage note saying you promise to repay the loan, and a mortgage or deed of trust. Then, a title company registers the deed in your name.
Once you close on your new home, you may be able to move in as soon as the paperwork is completed unless the seller has asked for different terms, but those will already be in your contract.
Averages as of February 2024:
30 yr. fixed: 6.69%
15 yr. fixed: 5.96%
5/1 yr. adj: 6.13%