NEWSLETTER • August 25, 2022

13 Home-Buying Myths to Unlearn Right Now

by Susan Fleisher

Your future homeowner self will thank you for it.

Home buyers today have access to a wealth of information about the home-buying process before they even begin talking to a real estate agent. Friends and family, social media — everyone has a lot to offer. While much of this guidance can be good or well-meaning, some may be outdated or inappropriate for your situation. With that in mind, here are 13 home-buying myths you should beware of and the corresponding home-buying truths you should know.

Myth #1: You need a 20% down payment.

Fact: A 20% down payment hasn’t been required to buy a home for decades, if ever.

Many home loans allow a down payment as low as 3%, as long as your loan amount is less than the so-called “conforming” loan limit for the county where the home you want to buy is located. The limit for most counties is currently $647,200. Just keep in mind you will need to pay PMI (private mortgage insurance) on a conventional loan if you put down less than 20% of the home’s purchase price. Try our mortgage calculator to view an estimated calculation of your PMI based on your loan and down payment amounts.

Here’s a quick overview of some loan types with low down payment options:

HUD/FHA loans allow a 3.5% minimum down. HUD/FHA loans are insured by the Federal Housing Administration (FHA), within the U.S. Department of Housing and Urban Development (HUD).

USDA/RD loans don’t require a down payment. USDA/RD loans are backed by the Rural Development (RD) arm of the U.S. Department of Agriculture (USDA).

VA loans also allow 0% down. VA loans, primarily for active-duty and veteran military members, are guaranteed by the U.S. Department of Veterans Affairs (VA).

Small, specialty loan programs may also permit very low down payments. One example is a HUD Homes program in Florida that allows just $100 down for qualifying buyers with FHA financing.

All mortgage loans are subject to the lender’s guidelines, requirements and restrictions. Ask your mortgage loan officer for details.

Myth #2: Your preapproval rate is the rate you’ll get when you close.

Fact: Interest rates adjust daily. The rate you’re quoted in a preapproval is based on current market conditions as well as factors like your loan amount, credit score, property type and where the home is located. In general, your actual rate can’t be “locked in” until you find a home and sign a purchase contract with the seller.

“At that time, your loan officer can explain your options and help you choose a rate,” says Wesley Black*, a senior loan officer for Zillow Home Loans in Irvine, Calif.

Your locked-in rate may be higher or lower than your preapproval rate. But be aware that locked-in rates can expire, so you should ask how long yours will last.

Myth #3: You should wait to buy a home until prices are lower.

Fact: Buying a home after a big run up in prices may seem risky, but waiting carries some big risks as well.

“There’s no guarantee prices will fall,” says Zillow Senior Economist Jeff Tucker. “If they do, it may take a long time for them to reach their bottom. Meanwhile, you need a place to live. If you’re renting, you’re facing some of the fastest growth in rents on record. When prices begin to rise again, due to low inventory and high demand, it might be hard to find the right home.”

Myth #4: Buying a home is always cheaper and a better investment than renting.

Fact: Renting a home can sometimes be cheaper than buying, and home prices don’t always go up and up in a neat, straight line.

However, a home you own is an asset that can appreciate over time. A rental may appreciate as well, but as a renter, you won’t capture that additional value; the property’s owner will.

Myth #5: You have to find a home before you apply for a home loan.

Fact: Getting prequalified for a loan before you shop for a home is not only okay, it’s also smart.

Once you’re prequalified or preapproved for a mortgage, you’ll have an idea of how much you can borrow to buy a home, you can shop for homes in your price range and you won’t fall in love with a home outside your budget. If you’re not able to get pre approved, you’ll find out what you need to do to position yourself so that you can.

Myth #6: Buying a fixer-upper will save you money.

Fact: True “fixer-uppers” need a lot more than a fresh coat of paint. These homes generally have major problems that may not be visible. Even a skilled home inspector can’t see inside walls.

“If you’re looking into a fixer-upper, you should get quotes on the repairs needed beforehand,” says Korenn Meno**, a mortgage loan officer at Zillow Home Loans in Seattle, Wash. “You’ll have to be patient, good with finances and willing to sacrifice all your spare time to work on your home or go into debt to get your home fixed up.”

You may end up with a home you love, but you probably won’t save money with this strategy. (Take our quiz to see if tackling that fixer-upper is really right for you!)

Myth #7: You have to get your loan from the lender who preapproves you.

Fact: A preapproval is a great starting point for getting a mortgage loan, but you’re not obligated to stay with that lender. You can shop around for a lender that makes a competitive offer and is a good fit for you.

Just keep in mind that it’s best practice to shop for a lender before you go under contract or lock in a rate. However, once you are under contract and have completed inspections and appraisals, it is typically not a good idea to shop around for a new lender. If you do, you will need to notify the seller’s agent of the change. Any delays or changes could put you at a higher risk of getting your offer rejected by the seller.

Myth #8: You shouldn’t buy until you can afford your ‘forever’ home.

Fact: Selling a home can be costly, but if you wait to buy until you can afford your “forever” home rather than buy a lower-cost “starter” home, you may never buy at all.

Or, you may miss out on years of equity building and price appreciation that could offset your selling costs when you trade up to your forever home.

Caveat: Considering a home you already know that you’ll outgrow in the very near future? It may make sense to wait until you find a home where you can stay at least a few years. “It’s a common rule of thumb to only buy a home you expect to spend at least five years living in, and ideally longer,” Tucker says. “It’s hard to know what the future holds, but some parts of careers and family life do have predictable changes, so if you’re considering a home that you can already foresee your household outgrowing in the near future, it probably makes more sense to shop for one better-suited to the long haul.”

Myth #9: A 30-year, fixed-rate mortgage is always the best choice.

Fact: Depending on rate movements, adjustable-rate mortgages (ARMs) can save thousands of dollars of interest over the life of the loan compared with a fixed rate. ARMs have an initial fixed rate period, and then can adjust up or down, resulting in monthly payments that can change over time.

“Finding the right loan program and term is kind of like picking an outfit,” says Black. “Everyone is going to want or need something slightly specific to fit their unique situation.”

ARMs aren’t a fit for everyone, but for many, they are worth considering.

Myth #10: You can’t buy a home if you have student loans.

Fact: Student loans can both help and hurt your chances of buying a home.

The potential help comes from boosting your credit scores, if you make your payments on time. The potential hurt comes from raising your debt-to-income ratio, or DTI, which is a factor in loan approval. Student loans are not an automatic barrier. They’re just another form of debt that’s part of your DTI calculation. Many people have student loans and a home mortgage.

Myth #11: You have to pay the seller’s asking price to buy a home.

Fact: The seller’s asking price is the amount the seller hopes you’ll pay, but it’s not necessarily the price you’ll actually pay.

This may seem obvious, but home prices are typically negotiated with offers and counter-offers until you and the seller agree on a price. Be sure to ask your agent for “comps” for a home you’re interested in — this is a report of prices of recently sold, similar homes nearby — in order to draft a competitive offer or understand whether the listing price fits in your budget.

Myth #12: You need excellent credit to buy a home.

Fact: Good home loans and attractive rates are available for people with less-than-perfect credit as well as those with excellent credit.

Who can’t qualify? People who develop a habit of always paying cash for their purchases. “Establishing positive tradelines and using credit responsibly is what we’re looking for,” says Casey Godwin***, a mortgage loan officer for Zillow Home Loans in Overland Park, Kansas.

Myth #13: Fall and winter are bad times to buy a home.

Fact: Fall and winter can be advantageous times of the year to buy a home.

Spring is sometimes called the “home-buying season” because many families prefer to move when their children are out of school for the summer. That doesn’t mean you have to buy in the spring or that you’ll pay less if you do.

* Wesley Black, NMLS# 1889226
**Korenn Meno, NMLS# 1876162
***Casey Godwin, NMLS# 1540246

NEWSLETTER • August 11, 2022

Possible Economic Downturn Likely to Be Mild

by Susan Fleisher

The country isn’t officially in a recession yet, despite two consecutive quarters of national contraction of the gross domestic product, a commonly cited indicator of an economic downturn, says Lawrence Yun, chief economist for the National Association of REALTORS®. And several healthy economic trends, including a robust job market, coupled with new efforts to boost affordable housing could stave off a more serious slump, Yun adds.

New guidance from the Treasury enabling state and local governments to use leftover emergency COVID-19 funding from the American Rescue Plan to create affordable housing should help ease the inventory crisis and counteract the effects of a tightening economy. Still, there are questions about whether the U.S. has entered “stagflation,” a period of high inflation combined with an economic slowdown, as many Americans feel the frustrating effects of a slower economy and higher consumer prices. But the National Bureau of Economic Research, the council that watches over U.S. business cycles, has yet to declare a recession, Yun notes.

There are two major factors at work counteracting current economic conditions:

Job creation is robust. Total payroll jobs were over 150 million in early 2020 before the onset of the pandemic, Yun said at NAR’s Real Estate Forecast Summit last week. While COVID-19 shutdowns precipitated a steep decline in jobs, each month showed strong job creation after the restrictions were lifted. Though there is variation across the country, Yun says, the job market has largely recovered. “We are essentially at the same level of jobs and W-2 employment now compared to pre-COVID days,” he said. Data from the Bureau of Labor Statistics shows that right now, there are more job openings than unemployed people. As of June, there were 5.9 million workers searching for jobs and over 10 million job openings. So, while high unemployment typically characterizes a recession, “the ratio [today] is almost two to one,” Yun said. “It’s a very unusual recession—if we are in one.”
Commercial real estate is growing. Though a recession typically means bad news for commercial properties, the commercial market as a whole is flourishing despite a stagnant office sector, Yun writes in a recent REALTOR® Magazine column. Rental demand is booming, and rents are up significantly. Demand for warehouse space has surged as retailers stock up to avoid supply chain disruptions. Hotel bookings, air travel and park attendance are now above pre-pandemic levels. All of this increased activity has led to high demand for new commercial construction. “The improving construction sector means that any recession will be mild,” Yun said.

Despite the positive economic signs, falling homes sales remain a concern. “Home sales are down largely because mortgage rates have risen sharply,” Yun said at last week’s event. “If interest rates rise further, then home sales will decline even more—even if there is no recession.” One long-term solution is to increase housing supply, which is why the Treasury’s announcement is meaningful. The change in ARP guidance could mean significantly more funds going to housing supply and a reduction in costs for buyers over time. Another factor that will help in the short term is employers finding a way to match workers to openings and fill jobs, Yun said. “We still need workers. In an environment with rising mortgage rates, what will drive homes sales is jobs.”

NEWSLETTER • August 9, 2022

July 2022 Greenwich Single Family Home Market Statistics

by Susan Fleisher

The Greenwich Association of REALTORS® announces the statistics for home sales in The Town of Greenwich, CT for the month of July 2022.

There were 74 single-family residential closings reported during this period according to figures provided by The Greenwich Multiple Listing Service, Inc., the multiple listing service used by REALTORS® in the Greenwich area.

The number of single-family residential closings decreased compared to July 2021 when there were 143 closings. The median sale price for a single-family home decreased to $2,402,500 from the median sales price in July 2021, which was $2,475,000.

The average days on the market (DOM) for residential homes was 52 days; which was a decrease from 79 days in July 2021.

NEWSLETTER • March 10, 2022

The Expanded Role of the Real Estate Agent

by Susan Fleisher

By Susan Fleisher

When I began my career as a real estate broker 20 years ago, homebuyers’ expectations of a broker were quite different from today. The initial responsibility of the broker was to define the needs of the client and screen the market to identify the best matching properties as identified by particular specifications, location, and budget. The following phase included presenting listings to the client and organizing showings. The final step was facilitating negotiations to get the best deal to ultimately close a transaction.

Today, the new generation of buyers is extremely informed before ever contacting an agent. Of course, they have all the information they could need at their fingertips—they do their research on real estate sites and use analytical tools that help them to better understand the market, trends, prices, and more—and are much more cost-conscious than ever before.

Consumers today look to their real estate broker more as a consultant—a professional aid to assess, reassess, and/or validate their findings. They are looking for someone who can bring professional and personal experience.

Because everything and everyone is online, the broker must be tech-savvy—and fast—in order to keep up with the consumer. Brokers need to be resourceful and quick on their feet in order to prove their value to consumers. It is a welcomed opportunity for growth to constantly innovate and remain ahead of the curve.

And yet despite the shifting media landscape, my expertise firmly lies in lived experience—I am a lifelong resident of Fairfield County, Connecticut, and former owner of a luxury retail store with a breadth of knowledge of local life—that cannot be found on the Internet. And while my clients are well-versed, they value a professional who can help navigate the complexities and emotional process of purchasing a new home. Think of the new role of the broker as a full-service concierge.

In my current role, my work often extends beyond the point of sale. Consumers value my ability to take care of them long after close by making connections with the best contractors and subcontractors.

So as much as technology takes over the industry, a hands-on broker who truly cares for the client will always be invaluable. I have and always will approach each client with all the attention I would hope to receive as a buyer, for this is how you build reputation and relationships.

Real estate is more than just business. Buying a home is a financial investment, yes, but it’s also an investment in the future. If I can connect with new people and help them get one step closer to achieving a fulfilled and happy life, then I consider my job well done.

A contracting economy typically means a recession, but other economic indicators are likely to mitigate the effects of the slowing economy, says NAR’s chief economist.

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