Buying • December 23, 2023

Pre-Qualified vs Pre-Approved: What’s the Difference?

by Debbie Marett

Pre-qualification and pre-approval are two terms you may hear used interchangeably when shopping for a mortgage, but they are actually two optional steps you can take to start the loan approval process. A mortgage pre-qualification is usually a much shorter process that requires you to honestly report your own financial information, while a mortgage pre-approval typically requires you to submit more documentation like W-2s to verify your financials — making it a lengthier process.

Neither pre-qualification nor pre-approval will guarantee you a loan, but getting pre-qualified or pre-approved before you start searching for a home can help you more easily find a home you love within your budget. A pre-approval may also make the process of completing a full loan application much easier and faster, because you’ll already have submitted a lot of necessary information to the lender.

While both pre-qualification and pre-approval from a lender help identify your price range, a pre-approval letter can signal to your real estate agent and sellers that you’re serious about buying a home. Agents often require a pre-approval letter, because it is a strong indication that you are a qualified buyer and can make a competitive offer.

What does pre-qualified mean?

Pre-qualification means you may satisfy a lender’s general criteria for a mortgage, based on your self-reported financial information like income, assets, credit and debt. Pre-qualification can be as simple as a short phone conversation with a lender. Afterward, the lender may or may not provide you with a letter detailing the types of loans you may qualify for and the loan amount you may be able to borrow.

Pre-qualification is just a starting point. According to a Zillow survey, about a quarter of prospective buyers who have not yet started working with an agent reported getting pre-qualified (27%).

If you’re unsure where to begin in your home buying journey, or aren’t even sure what homes you can afford, start the pre-qualification process to learn more about your loan eligibility.

Keep in mind, a mortgage pre-qualification is only as accurate as the information you provide the lender. That’s why those who are ready to buy in the near future often go straight to pre-approval, which is a more comprehensive verification process.

What does pre-approved mean?

A mortgage pre-approval means you have a conditional commitment from a lender to approve you for a loan as long as you continue to meet their conditions by the time you close on the home. You’ll need to provide the lender with documents like bank statements, W2s and pay stubs. The lender will also run a credit check, which will show as a hard inquiry on your credit report.

Once pre-approved, you’ll receive a pre-approval letter detailing the loan amount, types of loan programs you may qualify for (e.g., conventional, FHA, VA), an estimated interest rate and annual percentage rate. Assuming you continue to meet the lender’s financial loan qualifications during the underwriting process, your lender will be able to issue a final loan approval. You will still have to complete a loan application before being fully approved for a specific loan program.

A pre-approval letter accompanying your purchase offer suggests to the seller that if they were to accept your offer, financing is more likely to go through than without one. Your offer becomes more compelling. According to Zillow’s Consumer Housing Trends Report 2022, 85% of sellers say that they prefer to accept an offer from a buyer that is pre-approved.

Difference between pre-approved and pre-qualified

A pre-qualification can help you prepare to take the next steps towards buying a home and give you a sense of a reasonable budget to stay within when shopping for home. A pre-approval gives you a more concrete understanding of your budget, so you can start making offers and can signal to the seller that you are a serious buyer. Here are a few more key comparisons between pre-approval and pre-qualification.

Pre-qualification	Pre-approval
You provide self reported financial information to the lender and are accountable for its accuracy	You complete a pre-approval application and the lender may or may not verify your financial information
Estimate of how much money you can borrow	Conditional commitment to lend you a specific amount of money
No interest rate provided	Estimated interest rate provided
Either a soft credit check or no check is required	Hard credit check is required
Less official than a pre-approval	Speeds up loan approval process
Not a guarantee of a loan approval	Not a guarantee of a loan approval

FAQs about pre-qualification vs pre-approval

Why should I get pre-qualified vs pre-approved?

Getting pre-qualified for a mortgage can be a good starting point if you’re a first-time home buyer or if you’re in the very early stages of considering a home purchase. Most pre-qualifications don’t require a hard credit inquiry, so your credit score won’t take a hit if you decide to press pause on buying. And when you decide to move forward with a pre-approval, you’ll already have a good idea of which lender you’ll want to work with.

Either way, if you choose to get pre-qualified vs pre-approved or vice versa, you’ll still need to have an offer accepted, a loan application completed and a purchase contract in place before your lender can fully underwrite and approve your loan.

Why wait to get pre-approved?

Buyers may want to get pre-qualified to get a ballpark for their budget and get pre-approved when they’re ready to seriously shop and make offers. This is because pre-approval letters only last for an average of 45 days. After this period, a new pre-approval is typically required since your financial circumstances could change. For example, you may make new purchases that increase your debt and tighten your house affordability, or you may get a new credit card that causes a hard inquiry on your credit report and lowers your credit score.

With each new pre-approval, a hard inquiry is made on your credit report which can affect your credit score over time. Keep in mind that during that 45 day period (from the date of your first mortgage credit check), all hard inquiries are consolidated and won’t individually impact your credit. If your pre-approval expires and you’re still actively shopping, reach out to your lender to discuss timing for your next pre-approval.

Are pre-qualification and pre-approval the same thing?

A mortgage pre-approval is not the same as a pre-qualification, but they serve many similar purposes. Both help you estimate the loan amount you’re likely to qualify for. Both can help show real estate agents and sellers you’re a serious buyer.

Which is better pre-approval or pre-qualification?

A pre-approval letter typically carries more weight than a pre-qualification, since the pre-approval is a conditional commitment from a lender to approve your loan. If you’re uncertain which is the best option for you, your moving timeline can be a good indicator of whether you should choose a pre-approval or pre-qualification. If you’re fully committed to buying a home, starting the pre-approval process first might be the right option for you. If you’re curious about whether or not you qualify for a loan and how much you may be eligible to borrow, mortgage pre-qualification will provide you with helpful information you can use to find a home within your budget.

Do I have to use all the money I’m pre-approved to borrow?

You don’t have to search for homes at your maximum pre-approved amount, but it is a good idea to search for homes that don’t exceed that budget. Take into account your own monthly spending habits and priorities when deciding how much of your pre-approved amount to borrow.

Do I need a pre-qualification letter to look at houses or work with an agent?

You don’t need to be pre-qualified to start looking at houses, but many real estate agents like to see at least a pre-qualification letter before committing a lot of time and effort to showing you homes. Also, getting pre-qualified can help solidify your budget and prevent you from touring properties that may end up being above your price range.

Do I need a pre-approval letter to make an offer?

You don’t need a pre-approval letter to start making offers, but your offer will be more desirable to sellers if it comes alongside a pre-approval letter — especially in a competitive market.

Article shared from Zillow.com

Buying • Selling • December 23, 2023

What Are Contingencies in Real Estate?

by Debbie Marett

How Contingent Offers Are Used in Real Estate

Contingencies offer a way to protect both the buyer and seller in a real estate transaction. The homebuying process requires a series of steps and at any time in that journey, unexpected issues may arise that neither party was prepared for. Contingent offers act as a guide for when these problems present themselves and instruct either party on what they can expect next. Sometimes, the issues can be remedied through re-negotiation. Other times, deals fall apart when they fail to follow the contingency guidelines.

Most Common Contingencies Found in Real Estate

In real estate, there are distinct types of contingencies and, as a buyer, you decide which ones apply to your situation while also taking the condition of the real estate market into account. You should also consider your real estate agent’s expertise when drafting your contract. Here are the five most common contingencies you may use during your homebuying process.

Home Inspection Contingency

Home inspection contingencies predicate the sale or sale price of the home on the findings of a licensed home inspector. The inspector will visit the property and examine the more important parts of the home such as safety features, foundation and roofing, major systems (i.e., electrical and plumbing), and even the facade. Many buyers either can’t see or don’t think about these things during the process.

If the inspection uncovers problems or flaws that are in the contract, the buyer can either rescind their offer or negotiate with the seller to remediate the problems. Sometimes, the seller will agree to make the repairs before the property is turned over to the buyer. Financial credits are another way that sellers and buyers work out a less than stellar inspection report. Either way, you don’t necessarily have to walk away from a home you like due to reparable flaws.

Mortgage Contingency

A mortgage contingency is often used when the buyer needs time to get financing to buy the property. The process of getting a mortgage can be a tumultuous journey, and it is not uncommon for buyers to believe they are on track for approval only to find at the last minute there was problem preventing them from securing financing.

One of the ways to avoid this hiccup is to make sure that you are preapproved for the mortgage and not just prequalified. Being “prequalified” requires little information to determine whether or not you’ll qualify for a mortgage. Being “preapproved,” on the other hand, requires a thorough evaluation of your financial status, including a credit check.

Keep in mind that although a preapproval is a positive step in obtaining a mortgage, life changes, such as a new job or a credit-based purchase such as a new car, can cause the metrics you were initially evaluated on to change and can cause a delay in finalizing the mortgage process.

Appraisal Contingency

Lenders do not offer home loans on properties that cost more than their appraised value. This is where an appraisal contingency factors into the mortgage process. Although you may feel that the home is worth the price the seller is asking, that home’s actual value could be drastically different. For the lender, it doesn’t matter if you and the seller come to terms on the price; after all, it’s their investment as well. The bank will require a third-party appraisal to determine the appropriate loan amount.

However, if you find yourself pining over a property that has appraised for more than the bank will lend, you still have options. You can offer to put down more of your own cash up front to close the gap between the mortgage amount and the purchase price of the home. You may also consider renegotiating the price with the seller based on the appraisal amount.

Title Contingency

Similar to used car purchases, homes need to have a “clean” title for the sale to go through. The title discloses who currently owns the home and ownership history. Some sellers may have had issues in the past with liens or other encumbrances that limit what they can do with their homes, including selling it. Buying a home that has claims against the title poses a substantial risk.

A title contingency protects the buyer because it requires that any claims or other title issues be cleared up before the sale of the property is completed. Even after the title is clear, buyers should get title insurance in case another title claim issue arises in the future.

Home Sale Contingency

A home sale contingency is put in place when the sale of the property is dependent upon the buyers selling their current home first. In a seller’s market, this type of contingency will likely be rejected because it’s basically asking the seller to risk an unknown when they could easily accept one of the other offers.

However, if you’re a buyer who needs to offload your current home before buying a new home, hope is not lost. Your lender may be willing to offer you a bridge loan. You can also try to ask for a closing date that will give you more time to sell your current home. It’s important to note that sellers who have their own timeline may not accept your proposed closing date. However, if the seller is in a similar situation where they are looking for a new home before selling their own, they may be more amenable to waiting.

What if a Real Estate Contingency is Not Met?

The homebuying process is based on contracts, and contingencies are a part of those contracts. So, when a contingency is not met, the contract may be considered void. Of course, before buyer and seller decide to go their separate ways, there could be room for more negotiating. For example, if a buyer fails to fulfill a mortgage contingency, the seller can dissolve the deal. But the seller and buyer may also agree to extend the buyer’s time to secure financing.

What Are the Pros & Cons of Contingent Offers?

Adding a contingency to your offer, if you choose to add one at all, is a personal decision. The market, type of property, and your personal situation can all be factors that drive your choice to add contingencies into your contract. Whether you add them or exclude them, the fact remains that they are in place to protect the parties’ interest. Let’s look at some of the pros and cons of either decision.

Cons: Some Things to Consider About Contingencies in Real Estate Offers

Seller Might Prefer an Offer with No Contingencies in Place

Contingencies are often put in place to protect the buyer from incurring certain financial losses, namely earnest money. Because of this, sellers may reject offers that come with contingencies. Keep in mind that sellers also consider the profit potential, and a list of contingencies could be more of a financial hit to their bottom line than they are willing to take.

In a seller’s market, adding contingencies is an even more risky proposition because sellers have myriad offers to consider and may decide to accept an offer that is more straightforward and requires no additional financial investment on their side (i.e., a request to repair a roof or repave a driveway). While you should never be afraid to ask for what you want in your contract, you should be aware that the longer the list of contingencies, the less likely it is your offer will be accepted by the seller.

Your Options Might Be Limited While Under a Contingency Clause

Placing a home sale contingency or any other contingency that causes the seller to wait on you can limit your homebuying options. A seller who is looking to offload their property in a certain time frame probably will not want to base the sale of their home on whether your current home sells due to unpredictability. If you must include this type of contingency, make sure you craft a stronger offer that may make the seller feel that the wait is worth it.

Might Overly Complicate the Entire Transaction

Contingencies are conditions that must be met before a transaction can be finalized. Therefore, adding these conditions inherently makes a straightforward process more complex. One contingency may be doable. But when multiple contingencies come into play, that means more people become involved in the transaction which can cause a lot of added stress to both buyer and seller.

Pros: Reasons Why You Might Want Contingencies in Your Offer

They Can Protect You & Your Real Estate Transaction

Contingencies protect you and the real estate transaction. Not setting certain conditions of the deal can open you to significant financial risks such as losing your earnest money or having to produce extra cash to remedy problems that could be covered by contingencies.

Buyers & Sellers Can Protect Their Investments Easier

While buyers and sellers are the stars of the homebuying show, each of the parties make other investments into the process; namely their time and assets. For sellers, contingencies may mean they lose out on the profit potential of their home. For buyers, contingencies can help avoid spending too much money and other resources on a home that may not live up to their expectations.

Ensures You’re Getting What You Want Out of the Deal

Although there is some give and take during the negotiation process, ideally, both the buyer and seller should walk away from the transaction satisfied and feeling as if they received a fair deal. Contingencies are a good way to make sure that nobody feels taken advantage of and that the investment, be it time or money, is protected.

Article shared from The CE Shop Team December 2, 2024

Selling • December 16, 2023

If Your House Hasn’t Sold Yet, It May Be Overpriced

by Debbie Marett

I have this conversation often when I meet with sellers prior to listing their home.

I take the time to prepare an in depth market analysis on their property, analyze comparable homes and recent sales in their area. Sometimes there is data that “the public” cannot see on the actual final sold price of a home in their neighborhood.

Has the seller offered closing costs to the buyer?
Did the sellers have costs in repairs and if so, how much?
Did the property make the lenders appraisal value and if not, did the seller have to adjust the sales price to move forward on the contract and get to the closing table?

Once the home is presented/listed to the market, over pricing is a big mistake.

The offer price needs to be in line with what the market says the home is worth.

Overpricing for the sake of “negotiating room” is one of the biggest mistakes sellers make. The percentage of buyers who will look at your home at market value is about 60%. As the price versus market value goes up this percentage drops considerably. Getting traffic is the prerequisite to getting offers!

Has your house been sitting on the market a while without selling? If so, you should know that’s pretty unusual, especially right now. That’s because the supply of homes available for sale is still far lower than what we’d see in a normal year. That means buyers have fewer options than they usually would, so your house should be an oasis in an inventory desert.

So, if homebuyers have limited choices and your house still hasn’t sold, there’s a reason why. Let’s break one potential sticking point that may be turning buyers away: your asking price.

Especially with today’s higher mortgage rates already putting a stretch on their budget, buyers are being a bit more sensitive about price. As a recent article from the Wall Street Journal (WSJ) says:

“If you are serious about selling your home now, don’t get greedy with the asking price. This is still a seller’s home market as there simply aren’t enough affordable homes for sale in many parts of the country. But with average 30-year mortgage rates above 6%, buyers are much more price-sensitive than they were a year ago.”

Why Setting the Right Price Matters

While you want to maximize the return on your investment when you sell your house, you also need to be realistic based on current market conditions. The simple truth is your house is only going to sell for what people are willing to pay right now.

This can be a hard thing to accept. Especially since emotions can run high during the selling process, which only complicates matters more. After all, you may have lived in this house for years, so it’s only natural you’re emotionally tied to it – and those heartstrings can make it harder to be objective.

But it’s important to acknowledge that a bigger-than-expected price tag deters buyers and may make them dismiss your house as a possibility before even seeing it. And if no one’s looking at it, how will it sell?

If you want to get your house sold, you’ll need to do something to spark interest in your home again. That’s where a local real estate agent comes in. They’ll help use data to find out if it’s priced too high for your local market. They balance the value of homes in your neighborhood, current market trends and buyer demand, the condition of your house, and more to find the right price for your house, so you can close this chapter and start your next one.

Bottom Line

While it’s true there aren’t that many homes available for sale right now, your home’s asking price still matters. And, if it’s not selling, it may be priced too high.

Building a Home • December 9, 2023

The Expert Guide of Home Building Terminology

by Debbie Marett

Great Article Shared from a Local builder – David Weekley

Learn about the home building process with this list of home construction terms and definitions written to be easy to understand.

Home Building Glossary

The field of home building is often where skilled craftsmanship meets specialized knowledge. With the specialized knowledge comes a lot of specialized language and terms used in the day-to-day work of Builders. Homebuyers are often curious about what the jargon means, so we’ve created a helpful guide to offer more clarity.

This glossary provides clear definitions and detailed descriptions of common home building terms, allowing you to confidently know and understand terms used in home building.

A/C Condenser

What is an A/C Condenser?

The Condenser is the big metal air conditioning cabinet on the outside of your home. Metal coils inside the condenser fill with heated coolant so the heat can be dispersed outside the home by the fan. The chilled coolant then returns to the indoor part of the air conditioning system to keep your home at just the right temperature.

Acre

How Big is an Acre?

An acre is a standard measurement for tracts of land. One acre is equal to 43,560 square feet, or 4,840 square yards. An American football field, including the end zones, covers 1.32 acres.

Aggregate

What is Aggregate in Construction?

The gravel, sand, stone and other materials combined with cement and water are used to form concrete. The admixture of aggregates changes depending on the intended purpose of the resulting concrete.

Air Space

What is Air Space in Home Building?

Air space is the gap between the interior architectural structure of your home and the exterior surface of your home.

Alcove

What is an Alcove?

An alcove is a recessed portion of a wall, creating a partial addition to a room. One of the most common types of alcoves is the Bay Window, which typically bumps out a living or dining space wall to allow additional natural light and cozy seating.

Anchor Bolt

What is an Anchor Bolt Used For?

An anchor bolt is a heavy-duty metal rod used to secure a home’s foundation to the sill plate, thus “anchoring” the home to the foundation.

Attic

What is an Attic?

An attic is the space directly below the roof in homes with a pitched roof.

Backing

How is Backing Used in Home Building?

Backing refers to frame lumber used between structural studs of the home. This backing lumber adds extra support for hanging drywall and can be used for sturdier hardware installation.

The Coleton in Colorado Springs - Staircase

Balusters

What are Balusters?

The balusters are vertical posts supporting the handrail (banister) along a stairway.

Banister

What is a Banister?

A banister is the handrail build alongside a stairway, typically supported by Balusters.

Board Foot

What is a Board Foot?

A board foot is the basic unit of measurement for lumber. One board foot is 1’ thick, 12” wide and 12” long. A 3-foot-long piece of 2×6 lumber would be 3 board feet.

Cathedral Ceiling

What is a Cathedral Ceiling?

A cathedral ceiling is a high, double-sloped ceiling with its highest point at the center. This arched shape is inspired by cathedral architecture and is especially popular in open floor plans where the ceiling can run the full length of a living space. The angle of a cathedral ceiling matches the slope of the roof.

Caulking

How is Caulking used in home building?

Caulking is used to seal gaps between various home building materials and features. This helps prevent water, dust and insects from intruding into the home and improves a home’s energy-efficiency.

Dimension Lumber

What is Dimension Lumber?

Dimension lumber refers to the sturdy wood planks used to finish and shape a home’s frame. 2-inch by 4-inch lumber is the most common type. Advanced framing techniques typically use 2-inch by 6-inch dimension lumber.

Door Jamb

Which Part of the Door is the Jamb?

The door jamb is the inner portion of the door frame that the door hangs from and fits into when closed.

Easement

What Does an “Easement” Mean for My Home?

An easement is a portion of a private property that other parties are legally allowed to access for various purposes. A common type of easement allows utility service workers to access parts of properties to work on electrical and telecom lines.

Eaves

What Are the Eaves of a House?

The eaves are horizontal portions of the roof that extends out beyond the outer wall of the house. Eaves direct water away from the foundation, extend the lifespan of the home’s siding and helps prevent water intrusion.

The Providence in Portland, OR - Front and Side Exterior

Façade

What Is a Façade on a House?

The façade refers to the front, public-facing exterior of a home. Façade is a term more commonly used in non-residential buildings. In home building, the front exterior is often referred to as the elevation.

Flashing

What Does Flashing do?

Flashing is the weather-proofing sheet metal applied to a variety of seams and joints to help prevent water from seeping into the structure of a house. There are several applications of flashing you may hear referenced, such as base flashing, cap flashing, counter flashing, drip caps, pitch flashing, step flashing, valley flashing, J flashing, l flashing and z-bar flashing.

Gain

What Is a Hinge Gain?

A gain is a notch cut into a door frame to fit a hinge, thus allowing the door to close flush.

GFCI

What Is a GFCI Outlet?

GFCI stands for “Ground Fault Circuit Interrupter.” These are electric outlets that are purposefully designed to be extra-sensitive to power surges and to shut off at the hint of one. They include reset buttons on the front of the outlet to easily return to operation after the shut-off mechanism has been tripped. You’ll often find these installed in kitchens, bathrooms and outdoor outlets.

Hardware

What Does “Hardware” Mean in Home Building?

In home construction, hardware refers to the metal fittings installed during the final stages of building a home. These include things like door knobs, locks and towel bars.

Hose Bib

What Are Hose Bibs Called?

A hose bib is a water faucet located on the exterior of a home. Hose bibs are also called, perhaps more commonly, spigots. They may also be called sillcocks, though a sillcock is technically a different type of spigot than a hose bib.

Hot Wire

What Is the Hot Wire in a House?

Hot wires are black or red electric lines running through the walls of a house. These lines carry an electric current, as opposed to neutral wires, which are usually white.

Infiltration

What Is Infiltration in a House?

Infiltration is an HVAC term that refers to the unwelcome entry of external air and escape of conditioned interior air via unsealed gaps in the home’s envelope. Infiltration decreases energy efficiency and allows dust to enter the home.

Irrigation

What Is an Irrigation System in a House?

Home irrigation refers to the sprinkler or other watering system installed to maintain a home’s landscaping in times of inadequate rainfall.

Joist

What Is a Joist in a House?

Joists are the oversized pieces of lumber laid horizontally as part of the structure of ceilings and some floors. Joists transfer the weight of the structure above to load-bearing vertical beams.

Keeper

What Part of the Door Is the Keeper?

The keeper is the metal plate attached to the door frame. The door knob plunger fits into the keeper when the door is closed.

King Stud

What Does the King Stud Do?

King studs support the top plate on either side of openings, including windows and doors, where the regular interval of wall studs may be interrupted.

nee Wall

What Is the Purpose of Knee Walls?

A knee wall is a short, vertical wall that supports the rafters and closes off the small, unusable portions of an attic. Knee walls are typically between 2 and 3 feet in height.

Landing

What Is the Landing in a House?

The landing is a larger section of a staircase, typically where one flight of stairs ends and a new flight begins in a different direction or where the staircase ends.

Lap Siding

What Is Lap Siding?

Lap siding refers to overlapping wedge-shaped siding installed horizontally. The overlapping slats, when installed correctly, direct water away from the home.

Lot Line

What Is a Lot Line in Real Estate?

The lot line refers to where one piece of property ends, and another abutting piece of property begins. For a home, the lot line (also known as property line) is the boundary between your homesite and those of your neighbors. Fences are typically built along these lines, though not always exactly.

Masonry

What Is Masonry on a House?

The stone or brick-and-mortar structure of a home is commonly known as masonry. There are other substances, such as concrete blocks or clay tiles, that may also be referred to as masonry, especially when discussing historical or non-residential building techniques.

Mastic

What Is Mastic Used For?

Mastic is an adhesive substance used in bonding a variety of building materials, including its use as a sealant to connect HVAC ducts. It is very similar to the type of plaster you might think of as being used by hospitals to make casts.

Moisture Barrier

What Does a Moisture Barrier do?

Moisture barriers are specially treated materials designed to keep outside moisture where it belongs: outside your home. The exact type of material and how it is applied will vary by climate and region.

Newel

What Is a Newel?

The newel is the structural post at the top and bottom of a staircase’s handrail. There may be additional newel posts at landings or where a stairwell turns.

Nonbearing Wall

What Is a Nonbearing Wall?

Nonbearing walls serve to separate spaces but do bear the load of the home’s structure. If you watch home renovation TV shows, you’ve likely seen one or two Nonbearing Walls get demolished with little more than a sledgehammer and an abundance of gusto.

Plat

What Does a Plat Mean on a Map?

A plat map shows the layout of a new community in development. More specifically, it shows the location and boundaries of the individual homesites (or “lots”) throughout the community. A Plat Map is usually most important to Homebuyers when purchasing a to-be-built home and taking homesite selection into account.

Plumbing Rough-in

What Does Plumbing Rough-in Mean?

When a home builder talks about plumbing rough-in, they’re describing the installation of the pipes and water lines that will connect the home to water utilities. Later in the process, this rough-in plumbing will be finished with fixtures to become functional. In some instances, such as an unfinished basement, the rough-in plumbing is left unfinished and ready for future living space expansion.

R-Value

What Do the R-Values Mean?

The R-value of a building material is the measurement of its ability to resist heat escaping or intruding through it. The higher the R-value, the better the material acts as insulation. For example, steel has a very low R-value because it allows a lot of heat to transfer through it (which is why steel makes good cooking pans). Lumber and drywall have higher R-values than steel, but even these values are much lower compared to purpose-made insulation, such as fiberglass or polystyrene.

Rake

What Is the Rake of a Roof?

The rake is the angled overhang of a roof. Essentially, they’re the non-horizontal eaves of a gabled portion of the roof. They typically extend from an eave at the bottom to the roof ridge at the top. The rake siding and rake fascia refer to pieces of the rake that redirect water down and away from the home, helping protect against water intrusion and deterioration of the home’s siding.

Riser

What Is a Stair Riser?

The riser is the vertical portion of a stair step underneath the tread. When discussing the “rise and run” of a staircase, the “rise” refers to the height of the risers, which determines the vertical distance between one tread and the next.

Setback

What Is a Home Building Setback?

A setback dictates how far in from the property lines a home or related structure can be built. Setbacks vary by local restrictions, HOA rules, and developer preferences.

Slab Foundation

What Is a Slab Foundation?

A slab foundation involves pouring concrete onto a space prepared for the home. This will typically include a sand drainage pad, steel reinforcement, and a wooden frame. Once the concrete is dry, the home can be built on top of it. Homes built on a slab foundation do not have a crawl space.

Soffit

What Is the Soffit on a House?

The soffit is the protective material covering the underside of an eave that finishes the enclosure of the attic. Soffits are sometimes part of the attic’s ventilation system. The type of soffit used to finish an attic depends on the length of the eave, as well as the ventilation needs of the particular attic.

Top Plate

What Is a Top Plate?

The top plate is the top-most piece of lumber of a home’s wall frame. The rafters of the roof rest on the top plate, which supports and helps distribute the weight of the rafters evenly to the frame lumber below.

The Bridges in Charleston, SC - Front Exterior

Transom Window

What is the Window Above the Front Door Called?

Transom windows are smaller windows situated above doors and other windows to add decorative interest and allow more natural light into the home. Half-moon transom windows are sometimes referred to as fanlights.

Tread

What Is the Tread in a Stair?

The tread is the top, horizontal part of a stair step. It’s the piece you step on to climb up or down a staircase. The “nose” is the portion of the tread that overhangs the riser (the vertical surface of a stair step). When discussing the “rise and run” of a staircase, the “run” refers to the depth of the treads.

Vaulted Ceiling

What Is a Vaulted Ceiling?

Vaulted ceilings extend upward from the walls and typically peak at the center. They create more vertical space in a room. Vaulted may or may not meet at the same height at the center. There are non-parallel types of vaulted ceilings, such as shed ceilings, that allow the room’s vertical space to be offset.

Weep Hole

What Does a Weep Hole do?

Weep holes are small gaps in the mortar of a brick wall that allows water from within to evaporate and exit the structure.

Market Info • November 16, 2023

The Good News for Real Estate Investments in 2024

by Debbie Marett

The 2023 housing market has seen many ups and downs, leaving investors wondering what to expect in 2024. The good news is that regardless of interest rate increases and lower than average inventory, real estate investments remain one of the most lucrative areas to invest in as we head into the new year.

High Demand Means High Return

One of the central trends that defines the market today is low inventory and high demand. According to Lawrence Yun, Chief Economist for the National Association of REALTORS®, “Lack of supply is behind ongoing multiple offer scenarios on moderate- to mid-priced homes.” This demand is also fueling rising home prices, which NAR predicts will increase from an average of $384,900 in 2023 to $395,000 in 2024. This “seller’s market” can work in favor of the investor. Those who purchase, upgrade and list a property could see a quick sale and solid return. For investors waiting to list a property they already own, now is the time.

Mortgage Rates Expected to Stabilize

Although interest rates have been nearing 7% recently, Fannie Mae predicts an average rate of 6.5% in 2024. This could lead to more buyers entering the market in late 2024 and into 2025. Strong job growth may also contribute to buyer demand. The Federal Open Market Committee forecasts the unemployment rate to average a “healthy” 4.1%, an important factor that should positively impact the real estate market as a whole.

Consumer Confidence is Growing

Investors will be happy to learn that consumer confidence is rising, a positive sign of good things to come. According to the Coldwell Banker® 2023 International Consumer Survey, a significant number of respondents say they are optimistic about the state of the U.S. real estate market. In fact, 80% of luxury consumers believe purchasing real estate in the United States is a safe investment, and 76% rate the current market conditions to purchase a home as “excellent” and/or “good.”

New Construction on the Rise

To answer the housing demand, new builds are expected to increase next year. The National Association of Home Builders predicts that single-family production will rise from an average of 744,000 units in 2023 to 925,000 in 2024. Newly constructed homes could not only be a promising investment opportunity – they are also expected to lessen demand and help stabilize home prices.

Rental Property Remains a Reliable Investment

Although most experts predict that rent growth to decelerate in 2024, rental property is still a reliable real estate investment. People who take advantage of the market by selling their current home often need to move into a rental unit as they transition, ensuring investors have plenty of potential lessees. Rental income also helps offset higher mortgage rates for the investor, and rental property offers owners the benefits of long-term appreciation and various tax breaks.

Buyers are Motivated

Regardless of market trends, life goes on, and housing needs evolve. Retirees, growing families and divorcing couples don’t often have the luxury of waiting for the perfect time to move. Investors should also consider the increased mobility that comes with work-from-home buyers. Many are heading to more affordable regions, leading to pockets of growth that investors can take advantage of.

Whether the market is trending up or down, smart investors pay close attention to current trends and adjust their strategy accordingly. Once you understand the real estate landscape, you can confidently plan your next move.

Shared via Coldwell Blue Matter : https://blog.coldwellbanker.com/the-good-news-for-real-estate-investments-in-2024/?fbclid=IwAR2OAc7ySLzTn-cMl78Pi_0jU7CDuP3lt6fao9WlwIWHgkNYD9rsibIvctQ

Uncategorized • November 7, 2023

Well written by a fellow agent regarding the Recent Realtor Industry Lawsuit

by Debbie Marett

Good and thoughts shared by a fellow agent. Some of you may have heard of and may have been following the recent Realtor industry lawsuit. News reports have spurred a lot of discussion in the Realtor forums.

I’d like to take a moment to share my perspective on the home buying and selling process, how Realtors are compensated, and how ‘Uncompensated Effort’ fits into the broader conversation.

Some of you may have heard of and may have been following the recent Realtor industry lawsuit. News reports have spurred a lot of discussion in the Realtor forums. I’d like to take a moment to share my perspective on the home buying and selling process, how Realtors are compensated, and how ‘Uncompensated Effort’ fits into the broader conversation.

These words and thoughts were shared from my buddy Steve Crossland–one of the most thoughtful, carefully worded, and insightful men I know. Thank you Steve!

Realtors earn a ‘Success Fee.’ This means we do everything for free up until the point of closing and funding. Then, we’re paid a commission. Efforts that don’t result in a closing are what I call ‘Uncompensated Effort.’ Every Realtor absorbs this overhead. It’s part of how the system works, to the benefit of consumers.

Both buyers and sellers appreciate this system because it allows consumers to avail themselves of services at no cost, even if they never purchase a house or their home never sells.

For instance, a buyer might contact an Austin Realtor recommended by a friend or family member, have an initial conversation, and agree to work with that Realtor. They might fly into Austin and spend three nights in a hotel on a scouting trip. I’ve had many buyer clients do this over the years.

During that stay, you’d be chauffeured around Austin to see neighborhoods and houses, receive information about the real estate market, the various communities, current affairs, pros and cons of different areas, commute times, schools, and area amenities and lifestyle activities.

You can ask unlimited questions and receive honest, qualified answers and opinions about anything you want to know (assuming you’ve selected a competent agent). Having lived in Austin since all my life, I have a wealth of knowledge to share.

Let’s say you view 8 or 12 houses on Friday, then 6 or 8 more on Saturday, and decide that Austin isn’t the right fit for you after all. Maybe the July heat was a deal breaker, or you realized that your budget and the desire for better schools meant a longer commute than you wanted, despite being warned upfront.

You part ways and owe nothing. But the service you received, the uncompensated effort given to you by the Realtor, and the knowledge you gained were invaluable to you and your family as you contemplate your options.

Similarly, when a seller hires a listing agent, we guide you through everything that needs to be done to properly prepare and price a home, including all of the backend tasks most consumers never see, and the marketing efforts. If, ultimately, that home fails to sell and you decide to take it off the market, you owe nothing. Everything you received was provided for free.

We operate this way for two reasons:

Consumers prefer it. The system facilitates the buy/sell process in ways that may not be fully appreciated by the average person. Most people move every 8 years, so it’s not something you think about constantly. But when life changes—like receiving a relocation offer or having a grandchild—you can start working with a Realtor in that city with no upfront costs.

Realtors, especially those of us who understand sales, like it too. The deals that close more than make up for the efforts that didn’t result in a sale.

This means successful transactions subsidize unsuccessful efforts. It might not seem fair, but it is. Yes, any single deal might look like the agent didn’t do much, but the commissions from those closed deals allow all of the aforementioned efforts to happen at no cost.

Thus, the system is built around ‘success fees’ supporting the ‘free’ efforts that draw the necessary number of buyers into the process to get homes sold. And the agents who bring those buyers, benefiting the sellers, are generally paid a commission that appears on the seller’s side of the settlement statement.

And it’s this commission appearing on the seller’s side of the settlement statement that’s at the heart of this big lawsuit.

Lastly, nothing I’ve said touches on how commissions are calculated. I won’t argue with someone who thinks x% of the sales price might be ‘too high.’ There are valid arguments and examples of this that Realtors should not shy away from.

But I’d prefer to have that discussion with individuals who understand everything I’ve just covered about how the Success Fee system functions within an industry that everyone wants to keep working well overall.

Market Info • November 5, 2023

What’s Up with Real Estate? National news and local views for the week ending Friday, November 3, 2023

by Debbie Marett

Very happy to deliver some good news to would-be buyers: mortgage rates just had a nice move downward! If you’ve put off buying (affordability) or selling (feeling locked-in by low mortgage rates), let’s have a discussion to make sure you’re ready to move when the time is right.

What’s Up with Real Estate?

National news and local views for the week ending Friday, November 3, 2023

National Real Estate News

Home prices keep rising

The Case-Shiller indexes are some of the best measures of home price appreciation out there. In August, the national index rose 0.9% month-over-month (that’s a lot in one month!), and is now up 4% year-to-date. 10 of the 20 big city indexes set new records in August, and ALL of the city indexes are up year-to-date. Many of the hardest-hit markets in 2022 (Seattle, Las Vegas) are rebounding quickly.

Fed keeps rates steady

Despite the very strong 3rd quarter GDP number and the resilient job market, the Fed chose to keep interest rates on hold for the second-straight meeting. This, in and of itself, is ‘dovish’ (suggests that rate hikes are already or nearly finished.) But of course, Fed Chairman Jerome Powell refused to officially end the tightening cycle, instead warning that more rate hikes could still be possible.

Big drop in mortgage rates

Was it the Fed’s double skip? The weaker than expected job growth from ADP? Whatever the reason, let’s just celebrate that treasury yields and mortgage rates had a big move lower recently. Are we truly excited about an average 30-year mortgage rate of 7.5%? Perhaps not. But it’s a lot better than the +8% we had over the last few weeks. And it feels like the market has turned an important corner.

Local Market Trends

As of Friday, November 3, 2023

Area	Median Price	Active Listings	New Listings – 5 days	Median Days on Market
Austin, TX	$650,000 0.1%	3808 0.2%	252	61 0.1%
78628	$564,990 0%	646 1%	28	94 0.4%
Pflugerville, TX	$439,999 0%	330 0.2%	24	55 0.1%
Round Rock, TX	$452,470 0%	524 0.2%	31	65 0.1%

Local Market Trends ( Red downwards arrow

) from Oct. to Nov. 2023.

Market Info • September 14, 2023

Has the residential real estate market changed? For the better or worse?

by Debbie Marett

By Mark Sprague, State Director of Information Capital

A question Realtors, economists, real estate analysts, and more have been getting for the past 18+ months: Has the residential real estate market changed? For the better or worse?

Contrary to owners/investors’ fears, the so-called “strong housing bubble” of the last 3+/- years has not burst (“bubble” in quotes because we never had a bubble by any definition). Instead, a gentle decline in both supply and demand has struck a balance, resulting in a boost to the housing median price/value. Throughout the first half of 2023, Texas’ median home prices consistently show a 0.3-0.4 percent monthly increase.

Due to current owners’ reluctance to sell their existing property (locked into a home financed at a lower interest rate, i.e., “Why would I sell my current home for a smaller house and higher payments?”), the demand for new construction has significantly increased. This shift in preference has led to a swift climb in the market share of new construction, which surpassed 20% in June (historically, builders control 15% to 25% of housing markets). Due to a lack of resale inventory plus strong demand, new construction should move up to a 30+% market share over the next two years.

Let’s focus on the shift in the Texas metro residential real estate market that began about 18 months ago, as the Federal Reserve raised rates to fight inflation in March-April of 2022, leading to slower sales and market environment over the past year. (While rates are higher, they remain below pre-2009 levels.)

I need to remind you that this market cycle has been very different from others we’ve experienced over more than thirty years. One of the clearest indicators of this difference is the ratio of sales (houses, condos, and townhouses) versus the number of listings each month since 1990. (For reference, in 1990, Texas was coming out of the S&L/oil collapse. 1,617 commercial and savings banks failed between 1980 and 1994. There were tons of foreclosures in Texas and the oil patch, with a 90% loss of real estate value, both residential and commercial.)

Over the last 30+ years, a monthly average of about 35% of active listings were sold each month. Before 2013, the average was much lower at 22%. 2012 was the year we emerged from the “Great Recession,” and 2013 was the first year of the current market cycle. With rare exceptions, absorption of active listings has been above 34% since 2013 and was driven to a much higher average of 70% by the frantic period in 2020, 2021, and early 2022. In March of 2021, our market actually sold three times as many homes as were listed! Through 2022, the market easily absorbed 80+% of each month’s listings.

This supply-and-demand imbalance has obviously impacted home prices (as well as other real estate channels); as stated above, value increases have slowed in 2023 but are still increasing monthly. Why? More inventory is needed.

Yes, inventory supply has crept up to more than three months. That is still not a balanced market if you go by the standard wisdom that six months of inventory is parity. We could easily burn through that inventory as more and more potential sellers decide not to sell due to the ‘locked-in effect’ of having much lower mortgage rates than current rates available now. Yes, ‘days on the market/DOM’ has increased, but again, that is more of a move toward a ‘normalized’ market.

Again, we are a long way from a balanced six months of inventory (the point where inventory changes a ‘sellers’ market’ into a ‘buyers market’). In addition, a buyers’ market brings discounting off the list price. This is not apparent presently, with most homes selling above 95% to 98% of the list price. (Pricing appropriately – closer to the median value – historically makes for quicker sales and fewer negotiations on value, etc.)

Rates have increased at the fastest pace in US history over the past year, and sales prices continue to be driven above the long-term trend lines.

So, back to the question, are values going up or down? Every month, each of our Texas metros has continued to see appreciation, with little chance of de-escalation due to a lack of inventory. So, those waiting for values to drop or be discounted will not see those goals met. If you want/need to buy, waiting will cost you both in value and monthly payments.

Consider these trends when thinking about whether or not you should wait to buy.

Due to job creation, inventory remains low—a longer trend expected to last 4 to 5 years.
Rents are not slowing. Concessions on rents are small, with little to no chance of escalation. Any slowing is in the rental market is temporary. Stricter lending standards for commercial loans will slow down new construction of apartments, leading to more competition for existing properties and higher rents.
The cost of Labor and materials will continue to rise due to lack of availability.
Lending rates will remain at this level or higher due to inflation. “Marry the house, rent the rate” is now the buzz phrase on the street.
Based on the points above, values/prices will remain strong for a while.
The lower-than-normal lending rates (less than 6%) of the last 15 years are likely a thing of the past. i.e., there is no real opportunity of getting a much lower rate in the near future….

Some may disagree with any or all of the above, but I have spent the last 40+ years analyzing market trends in housing, financing, consumer behavior, and more. I am not a Realtor or lender, but I track the data and speak to where the market is headed. Time will tell!

Buying • September 8, 2023

Should You Buy or Rent a Home?

by Debbie Marett

In today’s competitive real estate market, you may wonder if it’s better to rent a place or buy a home. Purchasing a residence can provide more privacy and future investment potential, while renting allows for more flexibility and less maintenance. Both options have a myriad of pros and cons, but it ultimately will depend on […]

Costs and Maintenance

When you rent a home, you typically pay a flat monthly rental fee plus utilities and insurance, and any repairs or maintenance are the landlord’s responsibility. However, when it comes time to renew your lease, you may find that your monthly rent goes up. When purchasing a home, your monthly mortgage payment remains constant and there’s always the option of refinancing if interest rates drop. Of course, you will also be responsible for your own maintenance and repairs.

Building Wealth

When you own your own home, you build appreciation and equity as the value of your property increases over time. In recent years as property values have appreciated across the country, owning a home has proven to be a smart investment. When you rent, your monthly housing costs go straight to the landlord.

Customization

For renters, landlords often have specific rules about the surrounding property and limit things like growing gardens, decorations, painting interiors and more. But when you own, it’s yours to do what you like. While your HOA may have some restrictions on exteriors, you are generally free to customize your property to suit your personal style. You can also add amenities and make upgrades like new appliances, light fixtures, flooring and other features that can increase its value and your future financial prosperity.

Flexibility

Rental agreements often span a year or go from month to month, which allows you to make quicker adjustments for lifestyle changes or new job opportunities. However, when it’s time to renew your lease, there is no guarantee that the property will continue to be available. When you own a home, adapting your living situation is a process and involves finding a buyer, as well as the transfer of taxes, title insurance and other legal documents. However, it will give you the stability needed to build long-term success.

In many markets, it’s cheaper in the long run to own a home than to rent, as rent prices have risen steeply across the country. Contact me to help you determine if purchasing a home is the right option.

JENNIFER MCGUIRE Coldwell Blue Matter Article

Home Improvement • August 29, 2023

Interesting how color can influence the human brain in a number of ways.

by Debbie Marett

Color can influence the human brain in a number of ways

Stagers typically recommend painting homes in neutral colors like beige or gray to appeal to more buyers. But that advice isn’t always true.

Science has proven that up to 90% of homebuying decisions are influenced by color, which can have a greater impact on people’s moods and reactions than previously thought. The human brain processes and organizes color signals in a split second. Color is a universal language, and you can guide clients on how to use color science in their home sale.

For example, you may have heard that exterior paint colors should be limited to two or three choices or that warm neutral colors are best if you want interiors to look more spacious. This is generally true. Highly-specific and stylized exteriors and interiors can be off-putting, particularly if they don’t match your prospective buyers’ tastes.

But touches of the right colors inside and outside a home can help compel buyers to make a quicker purchase decision. (Spoiler alert: White is not always the answer for giving the impression of a larger space.)

The impact of color on our brains is scientifically proven. Choosing colors based on color science to match desired outcomes has the potential to make or break sales in the highly competitive real estate market.

Consider the following science-backed findings.

Green creates a calming effect and can lower your heart rate. However, when splashed on walls, green can create a sickening look, which is why it shouldn’t be used in medical facilities. Instead, use biophilic design—incorporating greenery from plants—which will support a healthier living environment.
Red creates excitement, aids metabolism and increases heart rate. That said, too much red can lead to anxiety. That’s why it’s often used selectively for retail signage and product labeling. Think about Target and Coca-Cola. Use red sparingly and as an accent.
Blue signifies trust and stability. Men tend to like blue more than women. Note: Many financial institutions use it as their principal hue, likely because of the subconscious messages it sends.
Black connotes luxury among some lifestyle brands. A black front door can signal opulence, and some studies have even suggested it can lead to a higher listing and purchase price. (Get inspiration for how to use black.)
Soothing lighting in the hallway can put buyers at ease. Keep in mind that the type of lighting will change the effects of colors in the space. Warm tones, daylight bulbs or LED lights will have a massive impact on the coloring as well as the shading of your environment.

Visualize Other Colors

High-tech tools like virtual reality can take this further, enabling agents, brokers and developers to personalize properties to the tastes and imaginations of house hunters. Yet lower-tech versions also can help you visualize the possibilities. (Search online for “paint visualizer mobile apps” to find tools.)

Also, consider securing painting estimates from contractors or leaving paint chips out on display at listings so prospective buyers can visualize how they might personalize the walls to their own tastes.

Leveraging color can help drive sales in other ways. Incorporating a fun color quiz into your sales process, for example, can help your clients understand their reactions to certain colors. This also can help clients see the potential of a property beyond the existing colors or wallpaper.

Real estate professionals also can use color in their logo and marketing materials to build trust and excitement among clients and prospects. A signature color can help differentiate you among a sea of other brokers and agents. Ryan Serhant, a reality TV star and founder of his own brokerage, even went so far as to invest in a car in “Serhant blue.”

But try simple touches like colorful eyeglass frames, jewelry, hats, scarves, shoes or ties in your signature color, which can be less expensive and still memorable.

Color science is being applied to multi-family communities, student and senior housing, commercial spaces, schools, medical facilities and other structures. As researchers learn more about the human brain’s functions, professionals will be able to learn more about how color can impact our actions and reactions, including when it comes to real estate.

Shared from: https://www.nar.realtor/blogs/styled-staged-sold/how-to-leverage-color-science-in-real-estate