Welcome to today’s live chat! Joining us today is Kiplinger’s housing expert Pat Esswein, and Editor Janet Bodnar and Senior Editor Mark Solheim. They’ll be taking your questions about buying and selling a home for the next hour. Thanks for joining us Pat, Janet and Mark!
My pleasure. I look forward to some interesting questions!
For those of you who are joining us for the first time, let me explain a little about how the live chat works: your questions will be submitted and held for moderation. Depending on the volume and complexity of reader comments, your question may not necessarily be approved right away. However, we will do our best to answer your question as quickly and thoroughly as possible!
Janet will be joining us shortly, but in the mean time can you get us started by telling us what you think are some of the most important things someone should consider before putting their house on the market?
One big factor is, are you willing to put it on the market at a realistic price? Prices on average are back where they were a decade ago.
Is your your house ready for prime-time? Have you cleaned, decluttered, spiffed up the interior and exterior? Today's home buyers want houses in move-in ready condition.
Entry-level houses are selling more briskly than move-up homes. So, the more expensive your market, the longer your home will take to sell, on average.
To pick on Mark's point, you (and your real estate agent) need to look at recent comparables--that is, the prices that houses comparable to yours have sold for in the past 3 to 6 months. That will help you determine the right price for your house.
Also, buyers are still being cautious. That's why you need to make your home as attractive as possible.
So, it's really a great market for first-time buyers?
Yes, it is. As long as you stay realistic about how fast prices will appreciate. Mortgage rates are low and prices are as affordable as they were in 1971.
It hasn't been this good since the early 1970s in terms of affordbily--that is, home prices compared with incomes. And mortgage interest rates are at historic lows.
Janet is here, too, with a question on behalf of my son and his new wife. They're prospective first-time buyers, but they're wondering if their student-loan payments will be held against them when they're shopping for a mortgage.
Well, it looks like we have a few first-time buyers joining us today. Let's get started with our first question.
And we have a comment from a real estate broker too, in regards to what Mark was saying about the current market.
The total amount of student debt doesn't count, but the monthly payment amount does factor in when lenders consider how much of a monthly payment you will qualify for.
While Pat provides more detail on the student debt question, let me say that I don't envy our real estate agents.
Hi, Dave, Yes, I've heard that from the many agents with whom I've spoken. It's still an issue--even 5 years after the onset of the real estate bust. That's why sellers need to hire an agent who will persevere in telling them the truth, whether sellers like it or not.
People got used to soaring home prices until six or so years ago, and it is difficult to face reality, for all of us.
Speaking of real estate agents, Adam has a question about how to choose one.
But the good news is, it looks as if prices are finally near bottom.
One way for sellers to get used to reality: Visit houses in your neighborhood that are for sale. Check out what condition and amenities they're offering compared with your house.
Also, Dave, feel free to weigh in on how to choose an agent.
You definitely want a go-getter, and someone you feel affinity for.
Mark, sure. How to choose an agent: You can surely ask for referrals from friends and family. But I also like to go to Realtor.com and www.crs.com and use their "find an agent" tools. You can look at agent's credentials, including areas of specialization. Look for someone who is working full-time, not part-time, and who is still ENTHUSIASTIC about the business.
Just to go back to student loans for a minute, that's actually encouraging, Pat. So if young people work out a
loan payment that's manageable, they can probably plan to buy a house.
Dave and Mark, you both make good points. I think I would ask for references from other recent sellers--and call them to check.
In theory yes, but lenders will consider how all your debt payments stack up against your income. They'll also consider your credit score. And they'll want you to provide lots of documentation of your resources. Lots of hoops to jump through.
lenders are very cautious these days. They expect total debt payments not to exceed 36% of income (monthly)
Thanks for the guideline, Mark.
And the whole payment for housing shouldn't exceed 28% of income.
Right, Mark. And monthly housing costs not to exceed 28%.
That didn't always happen in the past, which is one reason for the bubble.
A good baseline for our readers to keep in mind.