I met a new homeowner in Brookfield today. I was not involved on either side of the transaction. Conversationally I asked him who his Realtor was. “Oh, I don’t’ remember,” he replied. “I just needed her to open the doors for me.” That really upset me because a good Realtor helps people define and achieve their housing goals. We act as problem solvers, financial consultants, information sources, and most of the time therapists. I want to give you just 2 examples of clients I dealt with last week. These are my clients but any Good Realtor deals with this type of scenario on a daily/ weekly basis.
Client #1 was referred to me by a Brookfield Chamber of Commerce Member who I have never done a “deal” with. She thought I might be able to find a solution for these clients who had had their house on the market 2 years ago unsuccessfully. I met with them and determined their goals were to get off of a main street and to buy a bigger home for about the same mortgage payment. Impossible?? Having bought in 2001 and having put a lot of money into the house they, like most sellers, were also worried about losing money. Turned out that they had good equity in their home and even selling it at a realistic price they could easily get into a home that fits their goals. Fixating on the PRICE, I pointed out to them, was preventing them from reaching their goal. A home is a commodity, like a stock. It is only worth what someone is willing to pay for it. We looked at the entire scenario and figured out given the equity ,interest differentials, the closing costs, and the difference in taxes for the new house that they could easily make the move and keep the payments for the next house about the same!!. Yes, their house was not worth as much as they had hoped but the DELTA between the 2 houses had shrunk in this market and the difference in the interest payments made the higher mortgage amount incredibly affordable. If their home had been worth more, the next house would also have been worth more and the delta wider thus making the eventual payment higher. If prices were high, interest rates would also be higher. Keep your eye on the ultimate goal and the factors that determine it NOT just the selling price of your home. You LIVE in the payment NOT the price.
Client #2 was referred to me by a past client. They were totally under water on their condo and when I told them that they would need to bring $50,000 to the closing table they thought that they were out of options. Expecting a second baby they just needed more space. Renting it and renting a larger house was an option but their carrying costs on the condo greatly exceeded what they could hope to realize through renting it. The interest rate on their condo was close to 6% and they were under the impression that since they had no equity they could not refinance. IF the loan had been held by Freddy Mac or Fannie Mae they could have refinanced no matter how far under water they were thanks to the Home Affordability Act. Since this was not the case with their loan we went to plan B. They could renegotiate with their current bank. Even though it was the huge Bank of America, one phone call got their mortgage reduced to 4% - a savings of $400/mo. Now, suddenly, they could rent the condo and not lose hundreds of dollars each month. Now, since they have no equity in the condo we could not count any of the rental income against the expense of the mortgage. They had also been led to believe that they needed 20% to put down on their new home. With an FHA loan they could put down as little as 3.5% and the debt ratios are higher. We ran multiple scenarios and carrying both homes (not factoring in rental income and determining if Mrs. Client would quit work, work part time or work full time) they could afford a $390,000 mortgage with Mrs. Buyer only working part time!! With money in their savings account they could easily move to a $450,000 home!!! They thought I was a magic princess..which I think I will use as my new tag line. It is just having the right information and a little creativity to help people make good decisions about housing options.
A Good Agent does a LOT more than just open doors!!
McCaffrey Professionals of Coldwell Banker
300 Federal Road
Brookfield, CT 06804