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To
Your Wealth Michael
P. Haubrich, CFP
Real
Estate Buying and Selling |
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Life transitions, such as
retirement, children leaving for college, or the death of a spouse often
bring along with them a closer look at housing requirements. For example, young growing families often
need more space while empty nesters prefer smaller, more user-friendly
housing with minimal required maintenance. As a financial planner, I often
become involved at an early stage in the life transition process. Sometimes clients get caught up in the
emotions of house buying/selling dynamics and experience less than optimal
outcomes. In most situations, those
negative outcomes could have been avoided by understanding the risks
associated with the real estate transaction and having proper representation
throughout the process. A Seller’s Market In recent years, real estate
prices have skyrocketed making it a great time to be a seller. Just this past
year the city of Let’s assume a buyer can afford
$1,000 per month in mortgage payments.
With a 30 year term and a 5 ½% rate, a buyer gets a $176,000
mortgage. A two percent rise in the
interest rates and that same $1,000 payment only buys a $143,000 mortgage
balance representing a decrease of nearly 20% in the amount of house their
money can buy. With recent interest
rates at 40 year lows, buyers face a potential risk of paying too much for
today’s real estate purchases. We just
have to look back to the late 1970s to see what happens when interest rates
rise rapidly – collapsing real estate prices. This is the strongest sellers’
market I have seen in 23 years as a financial advisor. If part of your life transition includes
selling a home, you represent a valuable commodity for real estate
agents. And as such, you need to be
prepared to bargain for service. Services offered from an agent include
things like a MLS listing, on-line virtual tour, open houses, agreed upon
amount and frequency of newspaper advertising, commission amount and length
of time of the listing. Be wary of low
commission/low service arrangements – you may be short changing your positive
marketing exposure and your ability to attract qualified buyers to your
property. Most important today is Flex-MLS
listing, with online presence. Seven
out of ten buyers start their real estate search online. The Milwaukee Metropolitan MLS serving
southeast Real Estate Brokers for Buyers I recommend that you be
represented by an experienced realtor who is a member of the Multiple Listing
Service (MLS). Historically, the real
estate brokerage industry was built around an exclusive listing agreement
with most agents focusing on getting a volume of listings. A buyer’s broker, on the other hand, works
for the buyer to find, draft and place offers, facilitate home inspections
and financing and any other steps leading to a successful transaction at the
best price and terms for the buyer. Many buyers deal with real estate
agents who are actually a sub-agent of the seller. The significance is that the agent’s duty
is to the seller not to the buyer and they are bound first and foremost to
ensuring the best possible deal for the seller. If you are buying real estate in today’s
market, you should consider being represented by a buyer’s broker to help
ensure that you’re not overpaying for a property and to help navigate you
through the entire transaction. For
more information for sellers and buyers, check out www.realtor.com.
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