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Knowledge Is Power When It Comes to Appraisals and Inspections

October 25, 2021 • Walter

Knowledge Is Power When It Comes to Appraisals and Inspections

Buyers in today’s market often have questions about the importance of getting a home appraisal and an inspection. That’s because high buyer demand and low housing supply are driving intense competition and leading some buyers to consider waiving those contingencies to stand out in the crowded market.

But is that the best move? Buying a home is one of the most important transactions in your lifetime, and it’s critical to keep your best interests in mind. Here’s a breakdown of what to expect from the appraisal and the inspection, and why each one can potentially save you a lot of time, money, and headaches down the road.

Home Appraisal

The home appraisal is a critical step for securing a mortgage on your home. As Home Light explains:

“. . . lenders typically require an appraisal to ensure that your loan-to-value ratio falls within their underwriting guidelines. Mortgages are secured loans where the lender uses your home as collateral in case you default on the agreed-upon payments.”

Put simply: when you apply for a mortgage, an unbiased appraisal – typically required by your lender – is the best way to verify the value of the home. That appraisal ensures the lender doesn’t loan you more than what the home is worth.

When buyers are competing like they are today, bidding wars and market conditions can push prices up. A buyer’s contract price may end up higher than the value of the home – this is known as an appraisal gap. In today’s market, it’s common for the seller to ask the buyer to make up the difference when an appraisal gap occurs. That means, as a buyer, you may need to be prepared to bring extra money to the table if you really want the home.

Home Inspection

Like the appraisal, the inspection is important because it gives an impartial evaluation of the home. While the appraisal determines the current value of the home, the inspection determines the current condition of the home. As the American Society of Home Inspectors puts it:

“Home inspections are the opportunity to discover major defects that were not apparent at a buyer’s showing. . . . Your home inspection is to help you make an informed decision about the house, including its condition.”

If there are any concerns during the inspection – an aging roof, a malfunctioning HVAC system, or any other questionable items – you have the option to discuss and negotiate any potential issues with the seller. Your real estate advisor can help you navigate this process and negotiate what, if any, repairs need to be made before the sale is finalized.

Keep in mind – home inspections are critical because they can shed light on challenges you may face as the new homeowner. Without an inspection, serious, sometimes costly issues could come as a surprise later on.

Bottom Line

Both the appraisal and the inspection are important steps in the homebuying process. They protect your best interests as a buyer by providing unbiased information about the home’s value and condition. Let’s connect so you have an expert guiding you throughout the entire process.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

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The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. The author does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. The author will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Important Distinction: Homes Are Less Affordable, Not Unaffordable

October 21, 2021 • Walter

Important Distinction: Homes Are Less Affordable, Not Unaffordable

It’s impossible to research the subject of buying a home without coming across a headline declaring that the fall in home affordability is a crisis. However, when we add context to the most recent affordability statistics, we soon realize that, though homes are less affordable than they have been over the last few years, they are more affordable than they historically have been.

Black Knight, a premier provider of data and analytics for the mortgage industry, just released their latest Monthly Mortgage Monitor which includes a new analysis of the affordability situation. Here’s what the report reveals:

“The monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210) over the first nine months of 2021, . . . It now requires 21.6% of the median household income to make the monthly mortgage payment on the average home purchase, the least affordable housing has been since 30-year rates rose to nearly 5% back in late 2018.”

Basically, the report shows that homes are less affordable today than at any other time in the last three years. However, in a previous report earlier this year, Black Knight calculated that the percentage of the median household income to make the monthly mortgage payment on the average home purchase over the last 25 years was 23.6% (see graph below):

National Payment-to-Income Ratio

Today’s payment-to-income ratio is more affordable than the average over the last 25 years. Given that context, we can see that American households still have the same ability to be homeowners as their parents did 20 years ago.

This confirms the recent analysis of ATTOM Data resources where Todd Teta, Chief Product and Technology Officer, explains:

“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”

Bottom Line

It’s true that it’s less affordable to buy a home today than it has been the last few years. However, it’s more affordable to buy today than the average over the last 25 years. In other words, homes are less affordable, but they’re not unaffordable. That’s an important distinction.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

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The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. The author does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. The author will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Homebuyer Tips for Finding the One [INFOGRAPHIC]

October 15, 2021 • Walter
Infographic

Homebuyer Tips for Finding the One [INFOGRAPHIC]

Some Highlights

  • The best advice carries across multiple areas of life. When it comes to homebuying, a few simple tips can help you stay on track.
  • Because of increased demand, you’ll need to be patient and embrace compromises during your search. Then, once you’ve fallen in love, commit by putting your best offer forward.
  • If you’re looking to buy a home this year, let’s connect so you have a dedicated partner and teammate to help you find the one.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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Linkedin
Twitter
Instagram

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. The author does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. The author will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

What Do Supply and Demand Tell Us About Today’s Housing Market?

October 6, 2021 • Walter

What Do Supply and Demand Tell Us About Today’s Housing Market?

There’s a well-known economic theory – the law of supply and demand – that explains what’s happening with prices in the current real estate market. Put simply, when demand for an item is high, prices rise. When the supply of the item increases, prices fall. Of course, when demand is very high and supply is very low, prices can rise significantly.

Understanding the impact both supply and demand have can provide the answers to a few popular questions about today’s housing market:

  • Why are prices rising?
  • Where are prices headed?
  • What does this mean for homebuyers?

Why Are Prices Rising?

According to the latest Home Price Insights report from CoreLogic, home prices have risen 18.1% since this time last year. But what’s driving the increase?

Recent buyer and seller activity data from the National Association of Realtors (NAR) helps answer that question. When we take NAR’s buyer activity data and compare it to the seller traffic during the same timeframe, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy (see maps below):

August Buyer and Seller Traffic

This combination of low supply and high demand is what’s driving home prices up. Bill McBride, author of the Calculated Risk blog, puts it best, saying:

“By some measures, house prices seem high, but the recent price increases make sense from a supply and demand perspective.

Where Are Prices Headed?

The supply of homes for sale will greatly affect where prices head over the coming months. Many experts forecast prices will continue to increase, but they’ll likely appreciate at a slower rate.

Buyers hoping to purchase the home of their dreams may see this as welcome news. In this case, perspective is important: a slight moderation of home prices does not mean prices will depreciate or fall. Price increases may occur at a slower pace, but experts still expect them to rise.

Five major entities that closely follow the real estate market forecast home prices will continue appreciating through 2022 (see graph below):

Home Prices Forecast 2022

What Does This Mean for Homebuyers?

If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. Even if price increases occur at a slower rate next year, prices are still projected to rise. That means the home of your dreams will likely cost even more in 2022.

Bottom Line

The truth is, high demand and low supply are what’s driving up home prices in today’s housing market. And while prices may increase at a slower pace in the coming months, experts still expect them to rise. If you’re a potential homebuyer, let’s connect today to discuss what that could mean for you if you wait even longer to buy.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.

The Main Key To Understanding the Rise in Mortgage Rates

October 5, 2021 • Walter

The Main Key To Understanding the Rise in Mortgage Rates | MyKCM

Every Thursday, Freddie Mac releases the results of their Primary Mortgage Market Survey which reveals the most recent movement in the 30-year fixed mortgage rate. Last week, the rate was announced as 3.01%. It was the first time in three months that the mortgage rate surpassed 3%. In a press release accompanying the survey, Sam Khater, Chief Economist at Freddie Mac, explains:

“Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June.”

The reason Khater mentions the 10-year U.S. Treasury yield is because there has been a very strong relationship between the yield and the 30-year mortgage rate over the last five decades. Here’s a graph showing that relationship:

Average Historical Spread

The relationship has also been consistent throughout 2021 as evidenced by this graph:

The 2021 Relationship Between Mortgage Treasury Rates Remain Consistent

The graph also reveals the most recent jump in mortgage rates was preceded by a jump in the 10-year Treasury rate (called out by the red circles).

So, What Impacts the Yield Rate?

According to Investopedia:

“There are a number of economic factors that impact Treasury yields, such as interest rates, inflation, and economic growth.”

Since there are currently concerns about inflation and economic growth due to the pandemic, the Treasury yield spiked last week. That spike impacted mortgage rates.

What Does This Mean for You?

Khater, in the Freddie Mac release mentioned above, says:

“We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.”

Nadia Evangelou, Senior Economist and Director of Forecasting for the National Association of Realtors (NAR), also addresses the issue:

“Consumers shouldn’t panic. Keep in mind that even though rates will increase in the following months, these rates will still be historically low. The National Association of REALTORS forecasts the 30-year fixed mortgage rate to reach 3.5% by mid-2022.”

Bottom Line

Forecasting mortgage rates is very difficult. As Mark Fleming, Chief Economist at First American, once quipped:

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

That being said, if you’re either a first-time homebuyer or a current homeowner thinking of moving into a home that better fits your current needs, keep abreast of what’s happening with mortgage rates. It may very well impact your decision.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.

Reasons Renters Buy [INFOGRAPHIC]

October 1, 2021 • Walter
Infographic

Reasons Renters Buy [INFOGRAPHIC]

Some Highlights

  • When deciding whether you should rent or buy, make sure you’re considering these factors.
  • Buying a home means consistent monthly payments. Homeownership also helps to build your wealth. And owning a home gives you greater flexibility than renting.
  • If you’re ready to take advantage of the perks of homeownership, let’s connect to explore your options.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.

As Home Equity Rises, So Does Your Wealth

September 30, 2021 • Walter

As Home Equity Rises, So Does Your Wealth

Homeownership is still a crucial part of the American dream. For those people who own a home (and those looking to buy one), it’s clear that being a homeowner has considerable benefits both emotionally and financially. In addition to long-term stability, buying a home is one of the best ways to increase your net worth. This boost to your wealth comes in the form of equity.

Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.

The best thing about equity is that it often grows without you even realizing it, especially in a sellers’ market like we’re in now. In today’s real estate market, the combination of low housing supply and high buyer demand is driving home values up. This is giving homeowners a significant equity boost.

According to the latest data from CoreLogic, the amount of equity homeowners have has continued to grow as home values appreciate. Here are some key takeaways from the Homeowner Equity Insights Report:

  • The average homeowner gained $51,500 in equity over the past year
  • There was a 29.3% increase in national homeowner equity year over year

To give you an idea of what that looks like in your area, the map below shows the average equity gains by state.

Homeowner Equity Gains over the Last Year

What does all of that mean for you?

If you’re already a homeowner, you likely have more equity in your house than you realize. The numbers in the map above reflect year-over-year growth. If you’ve been in your home for longer than a year, you’ll likely have even more equity than that. That equity can take you places. You can use the equity you’ve gained to fuel your next move, achieve other life goals, and more.

On the other hand, if you haven’t purchased a home yet, understanding equity can help you realize why homeownership is a worthwhile goal. Homeowners across the nation gained an average of over $50,000 in equity this year. Don’t miss out on this chance to grow your net worth.

Bottom Line

If you want to learn more, let’s connect. A trusted advisor can help you understand where home prices are today, how they contribute to a homeowner’s net worth, and the impact equity can have when you own a home.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.

Don’t Tackle Selling Your Home on Your Own – an Agent Can Help

September 29, 2021 • Walter

Don’t Tackle Selling Your Home on Your Own – an Agent Can Help

If you’re looking to maximize your sale and minimize your effort, you need to work with a real estate professional. In a sellers’ market like today’s, it can be tempting to list your house on your own – known as For Sale By Owner (FSBO). But the truth is, a real estate professional can save you time and money by managing every step of the process, from pricing your home to reviewing documents and handling negotiations.

Before you decide to sell your house on your own, here are five reasons why working with an agent is your best bet to maximize the sale of your home.

1. First impressions are everything – and an agent knows how to make a great one.

Prepping a house for sale requires a significant amount of time and effort, even though it may seem simple at first glance. Doing it right so it stands out takes expertise and an understanding of what buyers are looking for. An agent considers things like:

  • Should you take down any personal art or pictures?
  • How much landscaping should you invest in to boost your house’s curb appeal?
  • What wall colors are most appealing to buyers?

An expert real estate advisor relies on their experience to answer these questions and more so you don’t invest in the wrong things. Your time and money are important – you shouldn’t waste either.

2. Agents have tools to maximize the number of views your home gets.

Put plainly, the more buyers that view your house, the better your return will be. In our current market, homes are receiving 3.8 offers on average per sale, according to recent data from the National Association of Realtors (NAR). While that’s promising for the sale of your home, it’s important to understand your agent’s role in bringing buyers in.

Agents have multiple tools at their disposal – from social media to agency resources – to ensure your home is viewed by more prospective buyers. Leveraging the tools available to your agent and your agent’s expertise may help boost your sale price as well.

3. An agent won’t miss anything in the fine print.

Your agent can also save you time by taking any guesswork out of navigating the required documentation. Today, more disclosures and regulations are mandatory, meaning the number of legal documents you need to juggle is growing.

Because there’s so much to take care of, it can be hard to truly understand all of the requirements and the fine print. That’s where an expert advisor can truly shine. They’ve been through the process before and can be your guide to avoid any costly missteps.

4. Expert advisors know the market and how to price your home.

Another way your agent maximizes the sale of your home is by making sure it’s priced right. Real estate professionals have the experience to compare your house to recently sold homes in your area. They also understand the market at large and can factor in any upgrades you’ve completed to your home. Combining these factors is the key to making sure your home is priced to move quickly – and at a competitive price.

When you FSBO, you’re operating without this expertise. Even with your own research, you may not find the most up-to-date information and could risk setting a price that’s inaccurate or unrealistic. If you price your house too high, you could turn buyers away before they’re even in the front door. This could also cause problems when it’s time for the appraisal.

5. Your agent will be an expert negotiator.

In addition to their experience navigating sales, real estate professionals understand how to negotiate every aspect of a deal. They also know all the parties that will be involved with the sale, including:

  • The buyer, who wants the best deal possible.
  • The buyer’s agent, who will use their expertise to advocate for the buyer.
  • The inspection company, which works for the buyer and will almost always find concerns with the house.
  • The appraiser, who assesses the property’s value to protect the lender.

An agent relies on their experience and training to make the right moves during the negotiation. They’ll know what levers to pull, how to address each individual’s concerns, and when you may want to get a second opinion. Selling your house as a FSBO means you’ll need to be prepared to have these conversations on your own.

Bottom Line

Selling a house takes time, effort, and expertise – don’t go at it alone. Let’s connect to make sure you have an expert on your side to make the most of your sale

 

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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Linkedin
Twitter
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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.

Early October is the Sweet Spot for Buyers

September 28, 2021 • Walter

Early October is the Sweet Spot for Buyers

Are you looking to buy a home? If so, we’ve got good news for you.

While there’s no denying the housing market is having a great year, many of the headlines are focused on the perks for sellers. But what about buyers today? As a buyer, you’re likely braving bidding wars and weighing low mortgage rates versus price appreciation as you search for your dream home. If you find yourself a bit discouraged, hear this: there are clear signs buyers may have more opportunities this fall.

According to realtor.comthe sweet spot for buyers is just around the corner. In a recent study, experts analyzed housing market trends by looking at data from the past several years. When applied to the current market, experts determined the ideal week to buy a home this year. The research says:

Nationally, the best time to buy in 2021 is the week of October 3-9. This week historically has shown the best balance of market conditions that favor buyers.”

So, what’s that mean for you? If you’re looking to buy a home, there’s a golden window of opportunity coming. Here’s what you can expect from that week.

Increased Housing Supply

The number of homes available for sale should increase. According to realtor.com, you can expect to see more new listings come to market the week of October 3. The findings estimate we’ll see roughly 17.6% more homes available than we saw at the start of the year.

This means you’ll have more options to choose from which should be a welcome relief in a market with tight housing supply.

Fewer Bidding Wars

With more homes available, you should also see a slight decline in the number of bidding wars. Having more options means buyers may not be competing as intensely for the homes on the market because there are more choices to go around.

This means when you write an offer, you may have less competition and a better chance of being the top bid. Just remember, it’s still important to come in with a strong offer.

Adjusted Homes Prices

As we move into the end of the year, the findings from realtor.com note this week may also be one of the peak weeks for price reductions in 2021. Historically the data shows an average of 7.0% of homes have a price reduction that week. Why? When housing supply ticks up, sellers need to look for other ways to make their house stand out.

This means, while home prices are still appreciating overall, you may see some homes with price adjustments from eager sellers. The process of closing a house takes time. To close before end of year, sellers may be more motivated this October.

Bottom Line

If you’re in the market for a home, don’t lose steam now. Data shows early October may give you the long-awaited opportunity to find the home of your dreams. Let’s connect so you have a trusted ally and advisor to help keep you motivated so you can find the perfect home for you.

 

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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Linkedin
Twitter
Instagram

THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.

If You’re a Buyer, Is Offering Asking Price Enough?

September 27, 2021 • Walter

If You’re a Buyer, Is Offering Asking Price Enough?

In today’s real estate market, buyers shouldn’t shop for a home with the expectation they’ll be able to negotiate a lower sales price. In a typical housing market, buyers try to determine how much less than the asking price they can offer and still get the home. From there, the buyer and seller typically negotiate and agree on a revised price somewhere in the middle.

Things Are Different Today

Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:

  • Receiving an average of  3.8 offers
  • Selling in just 17 days

Homes selling quickly and receiving multiple offers highlights how competitive the housing market is right now. This is due, in large part, to the low supply of homes for sale. Low supply and high demand mean homes often sell for more than the asking price. In some cases, they sell for a lot more. Selma Hepp, Deputy Chief Economist at CoreLogicexplains how these stats can impact buyers:

“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months. Now, almost 6 in 10 homes listed are selling over the asking price.”

You May Need To Rethink How You Look at a Home’s Asking Price

What does that mean for you? If you’ve found your dream home, you need to be realistic about today’s housing market and how that impacts the offer you’ll make. Offering below or even at a home’s asking price may not cut it. In today’s market, the highest bidder often wins the home, much like at an auction.

Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the sellers are asking. That’s important to keep in mind as you work with your agent to craft an offer.

Understand An Appraisal Gap Can Happen

Because of today’s home price appreciation and the auction-like atmosphere in the selling process, appraisal gaps – the gap between the price of your contract and the appraisal for the house – are more frequent.

According to data from CoreLogic:

“Beginning in January 2020, nationally, 7% of purchase transactions had a contract price above the appraisal, but by May 2021, the frequency had increased to 19% of purchase transactions.”

When this happens, your lender won’t loan you more than the home’s appraised value, and the seller may ask you to make up the difference out of pocket. Buyers in today’s market need to be prepared for this possibility. Know your budget, know what you can afford, and work with a trusted advisor who can offer expert advice along the way.

Bottom Line

Bidding wars and today’s auction-like atmosphere mean buyers need to rethink how they look at the asking price of a home. Let’s connect so you have a trusted real estate professional who can advise you on the current market and help determine what the market value is on your dream home.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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Linkedin
Twitter
Instagram

THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.
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