Last week I watched a speaker and a quote stood out to me “In uncertain times trust experience.” As I thought about what he said, it made perfect sense.

We don’t control all the circumstances and events that surround us. I believe people get frustrated when they cannot control things they are used to controlling. It is the loss of control, or the feeling of control that causes anxiety.

Control

 The reality is, perhaps we never controlled what we thought we did. What if the best managers are just better at adapting to changes and offering solutions? Everyone loves to have a sense of control. When you have to depend on others to do their job, we must realize that we give up some control.

Most Realtors I know attempt to take control back. We all prefer loans go through the lenders of our choosing because we have a high degree of confidence they will close. The same is true with inspectors, title insurance companies, insurance agents, etc. We deal with people we know because we know they are experienced and know how to do their job.

When an issue arises, we don’t yell at them and tell them to fix it. We work with them to fix it, because we have a high degree of respect and trust for that person. We trust that what they are telling us is a real issue, because they have knowledge and experience. We also trust that together we can find a way to overcome the issue and resolve it.

The bottom line is, we control what we can and trust others to help us. Agents with experience learn to do their job better than all other agents, and have the wisdom and experience to trust professionals with a proven track record to help in areas we cannot. The wisdom comes in knowing what we are capable of, and knowing who the best people are for the things we cannot.

Stay in Your Lane

 For instance, a good real estate agent shouldn’t be giving legal or tax advice. That should be reserved for the lawyers and accountants. A good real estate agent should know who some good lawyers and accountants are and be able to give recommendations. The same is true for architects, appraisers, inspectors, title companies, insurance, lenders. pest control, roofers, etc. Nobody can do it all, nor should they.

Experienced agents have been here before.  The Ellis Team has already worked through banking, insurance, housing, lending crises. While we didn’t always have all the answers the first time, we found them through hard work and talking with the right people. Crisis comes and goes. In uncertain times trust experience, and nobody is more experienced than the Ellis Team.  Brett and Sande have worked through many real estate cycles and know how to handle a good crisis. Sometimes it’s because we have experience in that issue. Other times, it’s a new crisis, and we have experience dealing with new issues.

Experience Develops Process

 The issue itself isn’t always the problem. The process of overcoming a problem is the answer, and experienced agents know how to overcome problems, new and old.

Have you ever watched someone make more of a problem than it really is? That’s typically because they don’t know how to tackle the issue.  It takes a certain set of skills and experience to overcome an issue. In the end, issues are just issues. We make them go away because we overcome them, somehow, some way, whenever possible. Sometimes it’s knowing what questions to ask, or who to ask. Other times it’s not panicking. Inexperienced people panic.

Experience Matters

 When there is a horrible crash, you want an experienced surgeon in the ER who has been there before. They don’t panic. They find solutions, even if they’ve never treated a stop sign sticking through a human leg. The same is true in real estate. Perhaps we’ve never had a person’s title stolen 3 days before closing. We will find a resource that can help our client.

Bottom line: In uncertain times trust experience. They can get you out of crisis, or steer you clear of crisis in the first place, because they’ve either been there before, or know the process of tackling the issue.

Always call the Ellis Team at Keller Williams Realty 239-310-6500 Put our experience to work for you!

The Ellis Team has created a new online home value analysis tool that allows us to track your home’s value over time from many of the online valuation sites. While these sites cannot be relied upon as 100% accurate, they do give us some insights.

Watch the Direction

Perhaps more important than the value it places upon your property is the direction of the market. Is the market going up or down for your property?  Most sellers want to know how the market is doing for their home.

Because we have premium access to many of the online valuation sites, we are able to log into the major sites and enter the data into a spreadsheet.  We then email you the results based upon the schedule we have for you. Here is a sample of what the report looks like.

We have  ****** out the various services here but they will be shown on your actual report. The computers will never be as accurate as we are as they have never been in your home and studied the condition of your home or evaluated some of the improvements the computer may not know about. You can always receive our home value analysis at www.SWFLhomevalues.com  Read below on how to get all the home value estimates and track over time.

Appraisers Being Replaced?

We are hearing that many of the lenders are going to online valuations versus actual appraisals in many instances, so knowing what the computers think is important. Personally, we believe there will always be a need for appraisers but lenders are rethinking that in some cases.

As interest rates were rising in 2022, we noticed median and average home values began to fall. The computers were delayed and were still showing price increases. Perhaps the specific homes we were checking on were still rising. Or perhaps the computers took time to pick up on the price declines. In the last month or so we have noticed the computers picking up on price changes.

This is why we say computers may not be as good as we are are at studying the market, but they are important to watch.

Online Home Value Analysis Tool Schedule

Compiling the data is a bit of work for us, so we want to prioritize those that need it most. We will perform this service free of charge for you based upon the following schedule.

If your circumstances change, you can always let us know and we can adjust the schedule.  Please call us at 239-310-6500 or email Brett at Brett@Topagent.com with your property address, email address and time frame and we will get you on the schedule!

Should I Sell Now?

Many sellers want to stay in their home as long as possible especially when prices are still rising. Some owners want to capture the equity they have built up in recent years. Nobody wants to sell when prices are still rising, unless they area fearful the market has neared its top. Sometimes values in a spreadsheet over time helps sellers identify trends and confirm their feelings on prices.

Brett and Sande Ellis would be happy to discuss your situation and help you decide if now is the right time for you to sell. We’ll look at where you would go, how much you would net at closing, and look at all your options. We are not high pressure.

If selling is the right option for you, we have a program to sell your home in 8 days, so you’re not caught chasing the market. Call us at 239-310-6500 and we’ll discuss your options.

Good luck, and Happy Selling!

Big Mortgage Changes Coming

RV Alert

Our Review of the Liquid Springs Suspension System on a new 2023 Fleetwood Southwind 37F

We’ll write a future blog post about the Liquid Springs soon for our RV’ers who may be interested.

We want to alert you to big mortgage changes coming that will affect home buyers and sellers soon. Effective May 1^st, all loans sold and secured through Fannie Mae and Freddie Mac will incur significant charges in three key areas. What this means is loans will need to be funded sometime in April to avoid these extra charges. The extra charges are in addition to rising interest rates.

Credit Score

The top tier credit score used to be 740. That is changing to 780. For borrowers with less than a 780 credit score there will be a premium added to the yield.  The lower the score, the more premium will be added. The increased yield can lead to either additional closing costs or higher interest rate, or both.

Amount Down

Borrowers putting 30% or more down with a 760 credit score escape the amount down premium.  Pretty much everyone escapes this premium with 70% down. As you can see from the chart, the credit score and amount down are interrelated.

Debt to Income Ratio

Borrowers whose total debt to income including the home loan exceeds 40% will also pay a premium of .25% to .375% unless they are putting 40% down.

As an example, a borrower with a 740 credit score putting 20% down on a $400,000 loan will pay an extra $1,500. The same borrower with a debt to income ratio of over 40% will pay an additional $1,500 for a total of $3,000 in extra costs. That money must come from somewhere. Either the buyer or seller must pay it, or it may get added to the rate.

Other Loan Types

People buying condos, second homes, investment properties, and other types of loans may also see some price increases.

Good News for FHA and VA Loans

There is some good news. FHA and VA are lowering their costs to borrow. The net result is we predict more buyers will utilize FHA and VA when they can. Sellers will learn to appreciate this too because FHA and VA buyers may have an easier time qualifying for a loan under the new guidelines. Sellers should not be afraid of these loans given the new lending landscape.

There are some downsides to FHA. The MIP (Mortgage Insurance Premium) of 1.75% is paid upfront. Not over time. For those with less than 5% down, the MIP never goes away, so FHA buyers should consider putting 5% down instead of the minimum 3.5% down.

VA buyers will also save by putting 5% down versus the minimum 0% down.

Big Mortgage Changes Coming-Overall Market Impact

Conventional costs and interest rates are going up. FHA and VA re lowering costs which means those loans will gain market share and increase in popularity. Look for more buyers to ask sellers for concessions and closing costs.

Strategy

If you are a buyer or seller, it would be best to get your property under contract by about March 15^th. Any time after that costs will go up. This will affect home buyers and it could ultimately affect home sellers too depending on demand.

The cost of waiting has never been greater. Not only are the costs of borrowing going up, but the actual rates are too. This is a double whammy for buyers. The triple whammy is rental rates are also skyrocketing, so they have no protection against rising housing costs. The only way renters can protect themselves is to purchase and lock in those rates. The big mortgage changes coming will force buyers to pay more for their loan or consider options to reduce costs.

If you are borrowing conventional, do so by March 15^th. Otherwise, consider FHA or VA after that date, but keep in mind there are loan limits by county for FHA.

Rising interest rates led to Lee County home sales decline of 20.63%. Nationwide home sales fell 17.8% in 2022 which was the sharpest annual decline since 2008.

Hurricane Ian Impact?

You might be wondering if the hurricane had an impact on our local sales. I went back and analyzed sales prior to the hurricane and we were down 12.24% through August. It is safe to say Hurricane Ian did negatively impact home sales as many homes were not sellable after the storm.

Experts are predicting home sales to fall further in 2023. One prominent trainer is telling agents to prepare for a further 35% fall in home sales nationwide. I just checked sources and here is what they are predicting:

National Association of Realtors predicts 7.0% decline in number of homes sold. Fannie Mae predicts 21.1% decline. Mortgage Bankers Association predicts 13.7%. National Association of Home Builders predicts 15.7% decline. Realtor.com predicts 14.1% decline in 2023. The bottom line is everyone is expecting less home sales in 2023.

The reasons for declining sales are many. Inventory is still low. Interest rates are still high but have come down some. Personally, I think SW Florida might do a little better than the national averages.

As damaged properties receive insurance proceeds and get fixed up some will go on the market. We have seen inventory levels shoot up throughout 2022 and the trend is continuing into 2023. Demand may not be what it once was, but there is still demand.

Buyers Are Here

 Already the first two weeks of January have seen stronger buyer demand. We may not have 50 offers per property, but we are still seeing full price offers on homes that are priced appropriately. Sellers are more reasonable as they understand we are not in the market of 2021 anymore. Home prices are well above what many paid for their homes. While sellers cannot get as much as they want, many are satisfied with what they can get.

Of course, the market does have some sellers that still believe it is March is 2022 and they want those prices, plus a premium. I’ve worked in the SW Florida real estate market for 35 years and no matter the market there will always be some unrealistic sellers. I can say the same for buyers too. The deals happen when the unrealistic face reality and become realistic. The only difference is how long it takes to get there and how much does it cost them to be unrealistic.

I’ll give two examples. Many sellers get caught chasing the market down because they were unrealistic. At some point circumstances change and now they must sell. They sure do wish they had sold earlier when prices were higher.

Similarly, we’ve spoken with many buyers that came down and didn’t like our prices because they had gone up. They wanted last year’s prices and were willing to wait out the sellers until the market gave them the price they desired. Later, they regretted missing a 100% rise in prices. Those buyers were so ate up with a 10% rise that they missed home prices doubling.

View all listings in MLS here.

2023 and Beyond

 We believe interest rates have stabilized and may bounce around where they are. With any luck they might even touch the 5’s soon. We know many companies have planned layoffs in the coming months. The Fed may raise rates again in February and March by 25 basis points each. At some point soon they may signal they are about done raising. This does not mean they will lower them in 2023. Many believe this process wouldn’t begin until 2024. If this scenario occurs, we could see 30 year mortgage remains remain steady or dip slightly, perhaps into the 5’s. This would setup a balanced real estate market in 2023 with prices neither rising nor falling much. We’ve already seen price declines in 2022 but nobody knows it. Inventory levels and pending sales will be what we keep watching in 2023. Lower interest rates could lead to a rise in Lee County home sales.