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Should you get a pre-qualification or a pre-approval letter?

June 11, 2011 By Leave a Comment

Should you ask your lender for a “pre-qualification letter” or a “pre-approval letter” to know if you can buy a home in Harrisonburg or Rockingham County?

Assuming you plan to finance a portion of your purchase, you will want to meet with at least one mortgage lender or broker at the beginning of your process so you can know the answer to an important question: “How much money can will bank lend me for a home?”  That dollar amount helps focus the home search.

There are many professional and qualified lenders in the local area who can evaluate your financial position and give you an idea of what you can pay to buy a home (contact us if you need a few suggestions for professional lenders).

Pre-Qualification vs Pre-Approval

It is common to confuse these two very different analyses.  Pre-qualification letters and pre-approval letters are both useful, but only one carries with it the credibility of a full study of financial history.

  1. “Pre-Qualification” – A Ballpark Estimate
    With some basic information about your income, credit history, and current debt, a lender can usually issue a pre-qualification within a day or so – sometimes within an hour.  A pre-qualification is an educated guess about how much home you can afford to buy.  It can be done in a quick meeting, over the phone, and even online – and it’s usually free. 

    A pre-qualification is a starting point to understand how much of a mortgage you can afford, but it does not take all aspects of your financial history into account.  It’s a ballpark figure, that can change with a more detailed analysis.  Because a pre-qualification is based surface level information – perhaps without any documentation, credit check, or proof of income – it should not be relied on as completely accurate.

  2. “Pre-Approval” Letter – The Real Deal
    A pre-approval letter carries much more weight and is an important step in buying a home in Harrisonburg and Rockingham County.  A pre-approval analysis requires documents such as tax records, proof of income, bank statements, credits reports, current debt-to-income ratio, and more. 

    By the end of this pre-approval analysis, a lender can give a confident estimate of how much of a mortgage you can afford.  Showing a pre-approval letter to a seller can give them confidence in your offer to buy a home in Harrisonburg or Rockingham County.

So, if you are very early in your home search process and just curious about what you might be able to afford, get a pre-qualification letter.  If you then plan to get more serious, contact the Kai Degner Homes Team to start your home search and simultaneously begin the process to get a pre-approval letter.

Questions about real estate in Harrisonburg or Rockingham County?  Contact the Kai Degner Homes Team anytime!

Filed Under: For Buyers

Steps to Buy a Home In Harrisonburg or Rockingham County

June 10, 2011 By Leave a Comment

Do you want to buy a home in Harrisonburg or Rockingham County, Virginia?  It’s a great choice!

The decision to buy a home is obviously one of the biggest for an individual or family.  The Kai Degner Homes Team prides itself in providing professional and comprehensive service helping people buy a home in Harrisonburg or Rockingham County.

There are a number of key stages to buy a home, each of which the Kai Degner Homes Team can assist with.

Steps to Buy a Home in Harrisonburg and Rockingham County

  1. Decide to Buy a Home in the Harrisonburg-Rockingham County Area!
    This might seem obvious, but it is important!  Some people dabble, searching through the homes on the market because it is interesting and fun.  Deciding to buy a home is a higher level commitment and should be approached in a serious manner.
  2. Meet with the Kai Degner Homes Team
    Don’t be shy, let’s start a conversation about your goals to buy a home.  Perhaps you want to a buy a home next year – or perhaps next month.  Whatever your timeline, let’s start a conversation about your goals and how we can make a plan to achieve them.  Contact us!
  3. Meet with Your Lender(s)
    Assuming you plan to finance a portion of your purchase, you will want to meet with at least one mortgage lender or broker at the beginning of your path to buy a home in Harrisonburg or Rockingham County.  There are many professional and qualified lenders in the local area who can evaluate your financial position and give you an idea of what you pay to buy a home. 

    1. Just dabbling? Ask for a “Pre-Qualification”
      With some basic information about your income, credit history, and current debt, a lender can usually issue a pre-qualification within a day or so – sometimes within an hour.  A pre-qualification is an educated guess about how much home you can afford to buy.  It is a starting point to understand how much of a mortgage you can afford, but it does not take all aspects of your financial history into account.  It’s a ballpark figure, that can change with a more detailed analysis.  
    2. Getting Serious?  Ask for a “Pre-Approval”
      A pre-approval letter carries much more weight and is an important step in buying a home in Harrisonburg and Rockingham County.  This analysis requires documents such as tax records, proof of income, bank statements, credits reports, and more.  By the end of this analysis, a lender can give a confident estimate of how much of a mortgage you can afford.
  4. Search the Market
    1. Let the Kai Degner Homes Team Search for You!
      Being members of the Harrisonburg-Rockingham Association of REALTORS© gives us access to powerful search tools that let us customize searches based on your desires.
    2. Search Yourself at SearchShenandoah.com
      The Kai Degner Homes Team has a custom online real estate property search tool designed for home buyers the Harrisonburg-Rockingham County area.  The features let you save search results and get automatic email updates when properties that fit your interests hit the market or lower their price.  You can register at www.SearchShenandoah.com right now!
  5. Visit Selected Homes for Sale
    Your online search of homes for sale in Harrisonburg and Rockingham County will identify homes you want to visit – and the Kai Degner Homes Team will organize these visits and come with you on each appointment.  We can can give extra insight into the property’s history, characteristics, and competitiveness.
  6. Make an Offer
    At some point, you will have found a home to buy and you will want to submit a offer to purchase the property.  The Kai Degner Homes Team uses official, legally-sound forms from the Harrisonburg-Rockingham Association of REALTORS.  We will walk you through these questions and considerations before making an offer to buy a home in Harrisonburg and Rockingham County: 

    1. Price (What’s a good price to offer?)
    2. Closing Date (How long should you leave yourself to secure financing?)
    3. Personal Property (Should you ask for that washer and dryer?)
    4. Home Inspection (How do you request an inspection be done before you buy?)
    5. Closing Company (What company should do your settlement)
    6. Closing Costs (Do you want the seller to pay some of these costs?)
    7. More!
  7. Negotiation
    The sellers may make a counter offer – and you might counter back – before agreeing to the final terms.  The Kai Degner Homes Team assists throughout this entire process.
  8. Home Inspection
    The home inspection is a critical part of many home purchases.  We will coordinate this inspection, help interpret the results, and work with you to determine what items you can ask to be fixed by the sellers.  This is done through a contractual process that we help facilitate.
  9. Pursuing Financing
    You will work closely with your lenders to provide necessary information for you to apply for a loan to buy a home in Harrisonburg or Rockingham County.  We provide real estate specific information during this process.
  10. Final Walk-Through
    Assuming the financing comes through, the home inspection rep/airs are complete, and other contingencies are met, you will do one final walk-through of the home prior to closing.
  11. Transferring Utilities
    The Kai Degner Homes Team will assist in making sure all your utilities are ready when you walk in your new home!
  12. Closing and Settlement
    The Kai Degner Homes Team will accompany you to the closing table and make sure that the settlement statement reflects what was agreed to in the purchase contract.  Assuming all is correct, closing will proceed – and you will own a home in Harrisonburg or Rockingham County!

It would be a pleasure to help you buy a home in the area!  If you are ready to have a conversation about taking the steps to buy a home, let’s begin a conversation.  Contact us today!

See Recent Tips for Home Buyers by the Kai Degner Homes Team

Filed Under: For Buyers, Real Estate Tips & Info

WSJ Says It’s Time to Buy

June 6, 2011 By Leave a Comment

The Wall Street Journal recently published an article title Why It’s Time to Buy, in which the authors argue that, “Despite all the gloom … there are growing indications that it is a good time to buy.”  This should be encouraging news for anyone considering purchasing a new home or investment, and has good credit and a strong employment history.

Ruth Simon and Jessica Silver-Greenberg cite low mortgage rates, low prices, and a high supply as two main reasons that we’re in a buyers market:

Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows.  Homes have become more affordable than they have been in years: According to Moody’s Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer’s market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

The article makes a number of interesting points and I recommend the read.

Filed Under: For Buyers, Housing Market Analysis

A Tale of Two Markets: Over and Under $125,000

June 1, 2011 By Leave a Comment

Units Sold at Various Prices in the Harrisonburg/Rockingham Real Estate Market Jan-May 2010 vs 2011

So, we’ve finished May – five months are complete in the Harrisonburg/Rockingham real estate market.  This week, there’s been much national news about a home price “double-dip“, and I’ll explore whether that’s the case locally in terms of price in an upcoming post.  For now, let’s just compare the first five months of this year’s real estate market with the first five months from last year using the number of units sold at various price points.

Take a look at the embedded summary image of number of properties sold vs their price.  There has been a marked increase in the number of units sold priced at $125,000 or less.  This suggests investors and others are confident and able to secure these lower priced homes.  There was an 141% increase in number of homes sold priced between $75-100,000, and 60% increase in number of homes sold between $100-125,000.

And, then comes the rest of the market: all prices ranges from $125-300,000 saw fewer homes sold this year compared with the same period last year.  One part of the explanation is the 2010 home buyers tax credit, which was a motivating factor in 2010 but was available in 2011.

The $325,000 and $400,000 price points show drop offs in number of homes sold in Harrisonburg and Rockingham County.  No price range from $325-400,000 saw more than four properties sell this year, and no price range above $400,000 showing more than three units sold so far in 2011.

The spring season is one of negotiations and writing purchase contracts, so it remains to be seen how the units sold comparison will look through as we go through the summer months in Harrisonburg and Rockingham County.

Filed Under: Featured Properties, For Buyers, For Sellers, Housing Market Analysis, Real Estate Tips & Info

Buyers Still in Driver’s Seat in Harrisonburg/Rockingham Real Estate Market

May 10, 2011 By Leave a Comment
Seasonal Spike in Average and Median Prices in Harrisonburg/Rockingham Real Estate

Figure 1: April 2011 showed an apparent seasonal spike in the Harrisonburg/Rockingham real estate market. The chart shows an increase in 2009 and 2010 similarly timed with April in 2011. (Source: Harrisonburg -Rockingham Association of REALTORS Multiple Listing Service, 5/09/2011)

The Harrisonburg/Rockingham real estate market report is showing a continued decrease in prices and an increase in average days on market for homes listed for sale.  It remains a buyer’s market!

Figure 1 shows a spike in the average and median prices of homes that sold in April 2011.  Initially, that might suggest that prices are going up and that the market is turning around.  However, the previous years show a similar spike in prices at the same time of the year, following by a decline in the following few months.

Harrisonburg/Rockingham Average and Median Prices Through April 2011

Figure 2: The last 12 months' average and median prices for homes in the Harrisonburg/Rockingham area continue to decline, though not as steeply as the national average. It remains a buyer's market! (Source: Harrisonburg -Rockingham Association of REALTORS Multiple Listing Service, 5/09/2011)

Figure 2 is a better clue for the overall average price of Harrisonburg/Rockingham real estate.  This chart averages the average and median price from the previous 12 months.  As is shown, the rolling 12-month Harrisonburg/Rockingham real estate prices continue a decent – meaning homes continue to be more affordable for people looking to buy or invest.

What does this mean for sellers?

For anyone with property currently listed for sale, they should pay attention to the declining prices and consider how competitively priced their home is.   [Read more...]

Filed Under: Featured Properties, For Buyers, For Sellers, Housing Market Analysis, Real Estate Tips & Info

Has the Harrisonburg/Rockingham Housing Market Hit Bottom?

February 13, 2011 By Leave a Comment

Figure 1: There were 57 closed transactions in the HRAR MLS in January 2011.

Harrisonburg/Rockingham Real Estate Market Report Shows Few Sales in January

This month’s Housing Market Report shows that only 57 residential units sold through the Harrisonburg-Rockingham Association of REALTORS Multiple Listing Service (HRAR MLS) during the month of January (Figure 1).

That’s no surprise, really, as the low number follows a trend for the winter months seen the last five years.  Most of these closing would have been from ratified contracts in November and December, a time of year where many people are focused on the holidays and buying gifts rather than purchasing real estate.

Anecdotally, it seems area REALTORS are seeing more activity by buyers the last month or so, which would suggest the coming months having an increased number of closings.

Good News for Balancing Market: Inventory Drops

Figure 2: The seasonal inventory trends (numbers of homes listed for sale) is approximately the lowest it has been since 2008.

More surprising is the more than 20% reduction in the number of homes for sale in the area (Figure 2).

Part of the cause for prices declining is supply is so much higher than demand, so sellers must lower their prices to be considered – so, a reduction of homes on the market is move towards a more balanced market.

Prices are Stabilizing:

Since September 2010, prices in the Harrisonburg-Rockingham area have stabilized, and even increased a bit (Figure 3).  The average is just a bit under $200,000.  The lower median value suggests more lower-priced homes are being sold, which is consistent with last month’s analysis on absorption rates.

Looking Ahead

The spring market consistently sees more homes listed for sale, but also more homes sold.  The proportion of both will be a determining factor in whether the coming months will see prices remain stable or not.

Figure 3: The trend for average and median prices in the Harrisonburg-Rockingham area suggests some leveling out after a sustained decline.

It remains to be seen whether this means the market has hit bottom – an increase in inventory, from more people putting their homes on the market in the spring for example, could begin to depress prices again.  Of course, it will be towards the end of 2011 before we will know for sure whether this is a turning point or just a temporary reprieve from a declining real estate market.

Check back often for additional analysis of the Harrisonburg-Rockingham real estate market.

Filed Under: Featured Properties, For Buyers, For Sellers, Housing Market Analysis Tagged With:

Founders Way Condos – Take a Look!

February 1, 2011 By 1 Comment

Founders Way Condos in Harrisonburg were featured at an open house today for area real estate agents, hosted by our friends at Coldwell Banker (listing firm) and Scripture Communities.   Aside from enjoying the food provided by Mr. J’s Bagels, I took advantage of the opportunity to learn more about these unique homeownership opportunities in Harrisonburg.

1290 Constitution Court, Unit 302 (Source HRAR MLS)

Five Founders Way Condos are currently listed for sale, ranging in price from $149,900 to $199,900.  In the future, a half dozen more buildings with bring the community to a total of 72 units.

Jerry Scripture (of Scripture Communities) showed me around two Founders Way model condo units, one about 1,300 square feet with two bedrooms and bathrooms, and another almost 1,900 square feet with three bedrooms and bathrooms.

Different than the more common two-floor town home arrangement (such as in Liberty Square), the first floor unit was all on one floor – which certain buyers may prefer over a two-story option. The top-level Founders Way Condos, though, do provide a two-story alternative for those wanting that option – with some units also having an extended loft.

Jerry also gave me some insight into the condo fees and utility payments, which sounded like a great value to me (all units have fiber optic cables, providing for communication lines and HD television).  The plans do include a pool and club house in the future.

Buying a Founders Way Condo
If you are interested in learning more, hearing up to date listing information, and potentially purchasing a brand new Founders Way Condo in Harrisonburg, let’s start a conversation!  Just contact me with this online form, email Kai.Degner[at]KlineMay.com, or call my cell at (540)442-0316.

Filed Under: Featured Post, Featured Properties, For Buyers

How quickly are homes selling in Harrisonburg and Rockingham County?

January 26, 2011 By 2 Comments

Absorption rate is a common statistic in Harrisonburg and Rockingham County real estate market reports.  Absorption rates describe how quickly or slowly homes are being sold in the market.  The higher the rate, the more aggressive a home seller needs to be to have their home noticed, because a higher rate means homes in that market are not selling as quickly.

Calculating 12-Month Absorption Rate

Absorption rates are calculated by choosing an amount of time, like 12 months, and seeing how many properties sold in that time in the market segment you are interested in exploring.  To get the 12-month absorption rate, divide the number of homes sold in a market segment in the past 12 months by 12 months.   Then, divide the number of properties currently for sale in the market segment (the inventory) by the previous result.  That’s the absorption rate.  A final result of 6 is considered a neutral market, a higher number (homes take longer to sell) is considered a buyers market and a lower number (homes are selling quickly) being a sellers market.

Studying Absorption Rates in the Harrisonburg/Rockingham Real Estate Market

The “real estate market” is in actuality many different markets, as the overall number of properties for sale can be broken down into almost endless subcategories.  Price ranges are a useful category to use when exploring a market, as they are a quick way to study differences in the market.  Townhomes and single family homes are also two useful categories of distinction.

Karl Waizecker of Kline May Realty recently studied 2010 real estate sales data from the Harrisonburg/Rockingham Associations and REALTORS MLS and calculated absorption rates at various price levels for townhomes and single family homes in Harrisonburg and Rockingham County.  His analysis included breaking down Harrisonburg and Rockingham County into the county’s geographic sections and Massanutten, but the figures here show only Harrisonburg and Rockingham County as a whole.

Figure 1 describes the 12-month absorption rate for the townhome market at various price levels.  The chart shows that lower priced townhomes are in more competitive market.  That makes some sense, since more people can afford lower priced townhomes and there is thus more supply relative to the demand compared with higher priced townhomes.  In fact, some of the lower price segments actually are in a sellers market – as are the highest priced townhomes!

Townhomes priced between $120,000 and $179,999 are selling the slowest of anything in the whole real estate market.  The big driver for this is how many townhomes in each category are for sale as of December 31, 2010: 51 townhomes for sale between $120,000-$139,999, 49 between $140,000-$159,999, and 35 between $160,000-$179,999.

Figure 2 shows the 12-month absorption rate for the single family home market at various price levels.  Again, at the lower priced levels, homes are selling at a quicker pace – but all the categories (except one) have an absorption rate higher than six, suggesting there is a buyers market at all price levels for single family homes.

Absorption Rates for Harrisonburg and Rockingham County Townhomes on December 31, 2010

Figure 1: 12-Month Absorption Rates for Harrisonburg and Rockingham County Townhomes on December 31, 2010 (Source: Harrisonburg Rockingham Association of REALTORS MLS)

Absorption Rates for Harrisonburg and Rockingham County Single Family Homes on December 31, 2010

Figure 2: 12-Month Absorption Rates for Harrisonburg and Rockingham County Single Family Homes on December 31, 2010 (Source: Harrisonburg Rockingham Association of REALTORS MLS)

Filed Under: For Buyers, For Sellers, Housing Market Analysis, Uncategorized Tagged With: ,

3 Harrisonburg Townhouse Deals

January 8, 2011 By Leave a Comment

2326 Breckenridge Court is a must see - click for a video tour!

Harrisonburg is in a buyer’s market – we all know that.  The low interest rates, the declined home prices, and the number of homes on the market are all elements that should encourage someone thinking about purchasing a home.  However, there are some properties on the market that I might upgrade from a “deal” category to a “steal” category.  I’ll highlight three Harrisonburg townhomes for sale right now that are particularly good deals – you can decide if they’re a steal!

  1. 2326 Breckenridge Court – Listed at $134,500
    This townhome is in excellence, move-in condition and is a must see for anyone considering a three bedroom townhome in Harriosnburg.  I have featured it as a Deal of the Week and included a video tour to highlight the many upgrades.  The City of Harrisonburg assessment on this property is $143,800 and similar townhomes on the same street are on the market for thousands of dollars more than this one – and I’m not just saying that because I’m the listing agent!
  2. 1485 Country Club Court – Listed at $129,000

    1485 Country Club Court is three floors with this neat backyard.

    This four bedroom Harrisonburg townhome is also in excellent condition and offers a terrific investment opportunity and the possibility of buying and having a roommate to help pay the mortgage.  The townhome is three floors, which offers privacy on the upper level.  The second and third floors each have two bedrooms connected with a full bathroom.  Let me know if you would like to take a tour!  The property is assessed at $135,500.  (Listed by Kline May Realty)

  3. 1211 Mountain View Drive – Listed at $134,900

    1211 Mountain View drive is a wonderful option for a quality townhome at a great price new JMU.

    Anyone looking for a townhome near JMU must take a look at this townhome on Mountain View Drive, which is over near the Hardy’s and CVS off Cantrell Avenue.  I have seen this quality townhome myself, and it is charming.  As with the other Harrisonburg townhome deals listed here, this one is priced competitively and offers good value.  The townhome is assessed at $145,800 – $10,900 above the list price.  (Listed by Kline May Realty)

    Please let me know if you would like to take a tour of these Harrisonburg townhomes – or any property in the area. Just call my cell at (540) 442-0316 or email me at Kai.Degner [at] KlineMay.com.

Filed Under: Featured Post, Featured Properties, For Buyers, Kai's Deal of the Week, Listed by Kai

Harrisonburg Housing Market Report December 2010

January 7, 2011 By 1 Comment

The change in total residential units sold in the Harrisonburg-Rockingham MLS shows the fifth consecutive year of fewer units being sold than the year before; however, the chart shows a decreasing trend of this statistic. (Source: Harrionsburg-Rockingham Association of REALTORS Multiple Listing Service, data accessed Jan 7, 2010)

So, 2010 is now behind us. As we look at the year and ask “How did the local real estate market do?”, our initial response is probably something like “Not too well!”.  Local Realtors will tell you 2010 was a tough year, one in which Buyers, Sellers and agents had to go to (sometimes) extraordinary lengths to complete a deal.  It was a year in which distressed properties exerted a heavy influence on our market and lenders continued in their attempts to refine their Short Sale and Foreclosure processes.  2010 was a year in which, despite falling prices, historically low interest rates and plentiful inventory, Buyers seemed reluctant to buy. [Read more...]

Filed Under: For Buyers, For Sellers, Housing Market Analysis, Real Estate Tips & Info Tagged With: , ,
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