Mortgage Rates Remain Low - Again!

Mortgage rates have remained at almost historic low this week. The lowest average mortgage rates were around 3.31% in Nov 2012. Our most current rates are not much higher this week at 3.42% for a 30-year-fixed-rate. Rates have continued to drop ever so slightly over the last few months. I would not expect them to get much lower that they are now, so if you're in the market to purchase, I would certainly recommend doing so soon.

Here are the averages for the week:

  • 30-year-fixed-rates - 3.42%. This time last year, they were 4.09%.
  • 15-year-fied-rates - 2.72%. This time last year, they were 3.25%.
  • 5-year hybrid ARMs - 276%. This time last year, they were 2.96%.

Now is a great time to buy or sell! As always, if you or anyone you know is ready to buy or sell a home, investment property or commercial property, please feel free to contact me. Our local inventory is very tight in the Charleston area with this influx of new residents. However, if you're prepared when the perfect property becomes available, you should have little problem securing it.

-Troy Gandee

7 Billionaires Share Financial Tips

Everybody wants to be wealthy. The average person will tell you all the things they would do if they had a million dollars, but ask them how to make that first million and they have no idea. In most cases they will tell you that they just don't have enough extra money to begin investing in things. They say that if only they made more money, they would be wealthy. It's hard enough to make more money with your current job, but it's even hard to sock your excess funds into wealth building assets. There's a massive difference between being rich and being wealthy. Rich people make a lot of money at work. Wealthy people control assets that create more wealth passively. Being wealthy means financial freedom despite the economic climate. Being rich means you're always at the mercy of a changing economy. Most people will never be rich. I will never be rich, nor do I want to be. I want to be wealthy. Without an excessive amount of income to funnel into investing, those who want to invest must save in another way. By being frugal and being a smart consumer. It's easier to waste less money than it is make more money. It's amazing how many unnecessary things we purchase. Rather than purchasing useless items, we could be using those funds to create wealth by investing in assets that create more income. The first steps in becoming financially free is to consume wisely and invest intelligently. I recently came across an article from  SS Viral via Reddit entitled, "7 Effective And Easy Tips From Billionaires That Will Help You Get Your Financial Life On Track!," that shares 7 financial tips from various billionaires and I found all of these thoughts to be worth sharing with you.

  1. Michael Bloomberg - The financial information mogul is thought to be worth over 30 billion. Many of his inner circle have said that he has worn the same two pairs of shoes for over 10 years. You will hear from many wealthy people that they stick to what works and what they like when it comes to consumables. Why spend a fortune on shoes? It won't make you more wealthy. 
  2. Ingvar Kamprad - Ingvar is the CEO and founder of Ikea. He is pretty infamous for being frugal despite being worth over 50 billion. Ingvar prefers to travel economy class when traveling rather than affording a private jet or even flying first class. He prefers not to spend his hard earned fortune on unnecessary expenses.
  3. Mark Zuckerberg - Everyone knows Mr. Zuckerberg. Mark is worth somewhere around 35 billion dollars. Mark is well know to be less than flashy with his wealth. Just watch any interview with him and you'll see that he prefers jeans and hoodies to designer suits. It is also well known that he has driven the same $30,000 Acura for many years.
  4. Li Ka-Shing - Li is the second wealthiest entrepreneur in Asia. He is a well-known port developer, plastics manufacturer and real estate investor. Despite being worth around 30 billion dollars, he has always dressed himself in very economical clothes. He wore the same $50 watch for years and years before slightly upgrading to a Seiko.
  5. Oprah - I don't even need to put her last name there, do I? Oprah is one of the least wealthy persons on this list. She is worth around 3 billion dollars. Oprah credits her success to a few opened doors, as well as living with a passion. Oprah had a vision and pursued it. She had to make a great many sacrifices to accomplish her goals. That's living with intentionality. Decisions made with intention tend to produce the best results.
  6. Warren Buffett - Warren is the pinnacle of the well-rounded and thoughtful investor. He is another person who lives with great intentionality. Warren foregoes personal extravagancies in lieu of investing opportunities. Though he is worth over 60 billion dollars, he still lives the Nebraska farm house he bought in 1958. Today, his house is only worth around $300,000.
  7. Bill Gates - Bill is the wealthiest man in the world. Some times he falls to second, but that's not a bad place to be, either. Bill is also well-known for spending his money wisely and seizing opportunities. However, Bill credits his most informative moments to be when he has learned from his failures. In business, you will fail far more that you will succeed. In order to thrive, you must be capable of learning from your failures before you shrug them off and keep trying. 

That's all for today. I'll be back soon with more real estate specific information. It's just always nice to have some insight and reinforcement from the some of the world's most successful people. If you're struggling with your business or your personal finances, remember to celebrate all of the small victories and learn from all of the failures. Just keep plugging. 

And remember to remember me if you need any help buying or selling real estate in the greater Charleston area. There have been a lot of folks interested in income-producing properties lately, which is always a good thing. 

Thanks again!

Troy Franklin Gandee

Belated Post! Life Update and 8 Ways to Quell Mosquitoes!

It's been a long time since I was able to write a new post! We closed on a new primary residence on April 5th, so I was frantically trying to get the new house painted and cleaned up before we moved in. While trying to get the house ready to be lived in, I was also trying to find a good tenant for the house we had been occupying. Fortunately, I was able to get both of those done in good fashion. Then we had to move, which is always a gauntlet. Less than two weeks after moving, Rachel and I went on an 8 day trip to Iceland. It was an amazing trip that we had been looking forward to for almost a year, but it was a bit too long and we did a lot of driving (we drove around the entire country in 7 days). It's really, really hard to take any kind of Spring vacation when you're in the real estate industry. The Spring and Summer are far and away our busiest months. The stand out moment of the trip is that I proposed to Rachel on the second day. She really likes airplanes and there just so happens to be a WWII era plane that was crashed and abandoned on a black sand beach near the town of Vik on the Southeast Coast. We walked WAY out to see the plane and that's where I surprised her with the question. She said yes and the rest of the trip was our engagement celebration. We returned on May 8th and then I began the catch up game. I feel like I've just gotten caught up today. And now we start planning a wedding. I also closed the last rehab today that we own, so now I don't have any more of my own flips going on. I have an offer out on an REO and I hope to hear soon that it was accepted. I don't like not having a rehab in some phase of the game for any extended period. As if all of those things aren't enough, Rachel just started a new job on Monday. So far she's enjoying the job, but her morning commute is hellish.

The segue to the post is that we returned from Iceland's 35-45 degree weather to Charleston's muggy 80's and 90's with lots of rain. As an aside, we have a neighbor who doesn't maintain their yard, which is starting to breed an army of mosquitos. I found a very helpful article from RealtyTimes entitled "8 Great Tricks for Keeping Mosquitos Away" by Jaymi Naciri that inspired this post. Since we're going to be facing these things for the next few months, I thought I would share a few ways that you can lessen their presence around your home. 

  1. Plant some plants: There are many plants are proven to be mosquito-repellent. Some of these are lemongrass, lavender and marigold. 
  2. Grow some herbs: There are a number of herbs that are also mosquito-repellent. Herbs are also usually easier to cultivate than heartier plants and they provide more utility than plants. Basil is considered the most effective herb at repelling mosquitos, but thyme and rosemary also work well.
  3. Catnip: Surprisingly catnip is a wonderful mosquito repellent. It is considered to be the most effective plant for keeping them away from your home. If you have any cats; I'm sure they'll appreciate it. If you don't; you may have some soon!
  4. Make traps: There are a myriad of traps that you can make out of household items. One that I see on the internet all the time is to convert a two-liter bottle into a trap with brown sugar and dry yeast. Another trap/repellent that I've used in the past is to fill ZipLoc baggies with water and pin the up outside in the sun. The reflection confuses the bugs into thinking there is a large predator around which causes them to vacate! This is a common solution in the Low Country.
  5. Vanilla Perfume: There are a number of scents we find enjoyable that mosquitoes do not. Vanilla is one of them. If you dab a bit of vanilla on yourself, the mosquitoes should avoid you!
  6. Burn old coffee grounds: This one is strange and maybe a bit too much work, but it's said to be very effective. Once used, you can collect your coffee ground and place them in a cool, dark place until the dry. Once dried, you gather them up and light them on fire until they smoke. The smell of the old coffee grounds is said to be the most effective repellent for mosquitos. 
  7. Turmeric: Turmeric has also proven to be a very competent repellent for mosquitoes. While you could always rub some turmeric on yourself, turmeric will stain your skin like no other spice. I would recommend finding turmeric oil, which will not stain and smells surprisingly nice.
  8. Baby oil: Baby oil is one of the household items that has also shown to be helpful. While baby oil is not the strongest repellent, but it's ready to be used straight out of the bottle!

That's all for this post. I promise to be back with more content and more substantial subjects in the next couple of weeks. There haven't been any major changes in the market lately, but we're facing an incredibly low inventory, which I have been fearing. While it's not the kind of thing that will threaten an economy, it's just a pain in the ass for buyers. There can be very few options for some buyers. I'll be writing up a more in-depth post concerning this soon. 

As always, if you or anyone you know needs help with real estate, I would be happy to help! Feel free to send your friends and family my way. Enjoy the rest of your week!

Thank you,

Troy Franklin Gandee

4 Good Things About the Current Real Estate Market

People ask me pretty often if I think that we’re experiencing another real estate bubble at the moment. For the record, I do not. I think the market is very difficult for buyers lately and prices are definitely at their height, but I do not think we’re facing another crisis soon. In fact, many real estate experts and market analysts (including Gary Keller) think we have another 4 years or so of a strong market before we have another lull. That sounds scary and it is definitely frustrating for people who sell real estate like myself, but it’s just the cycle of real estate. When I say “healthy” I do not mean that prices will continue to increase. Actually, if prices were to continue increasing, I do think we would be heading towards an abrupt halt. What I mean by “healthy” is that it will be a fruitful market. At some point, the greater economic powers will influence the real estate market and cause some sort of hiccup like always. There are many reasons that the housing market can run amok and I have explained some of those in previous posts. So, for now, let’s just focus on the good news for at least the coming year. 

I recently read an article from Realtor Mag entitled “4 Reasons to Get Happy About Housing,” that highlights 4 major factors that will hopefully (and likely) strengthen the housing market in the near future. 

  1. Low Interest Rates - Rates are currently below 4% for qualified buyers. The Federal Reserve is expected to delay increasing those rates this year, which should encourage more people to take advantage of these great rates. I’m currently in the process of purchasing a new house and our mortgage rate is below 4%. I’m very excited about that. While many houses are being sold near list price, the rates are so low that the monthly payment is still often less than buyer’s expect.
  2. The Job Market and Wages are Still Improving - The national employment rate is below 5% at the moment, which is a vast improvement from what we experienced a few years ago. The more jobs there are, the more homeowners there will be. In addition to this, working wages are quickly being increased and have risen about 2.5% in the last year. While these wages are increasing, they are not typically keeping up with the cost of living, which makes it tough for those folks to buy homes.
  3. Millennials are Buying - This is one that I’ve been talking about for a long time. A lot of economists are so befuddled by Millennials that they didn’t expect us to want to buy homes like every other generation ever. I think they assumed we would all prefer to live in tent cities and spend all of our money on pointy shoes… Anyways, Millennials that are a bit on the more senior side are now largely able to afford to purchase. The reason I say that is because the more “senior” millennials are still just in their mid 30s. There are 75 million Millennials that will compose the engine of the economy very soon. These Millennials will soon be transitioning into more senior roles and careers, which will strengthen their finances.
  4. Post-Recession Purchasers - Unfortunately, many people lost their homes to foreclosures during the recession. Those individuals were often made to wait a certain amount of time before they would be considered a reliable borrower by lenders again. Mot of these folks have served their time and are now ready to purchase again. Plus, many of these folks were over-leveraged and needed that time to rebuild their finances. It’s hard to stipulate exactly how many of these folks are expected to re-enter the housing market, but I’m sure that they will be as soon as they’re able.

That’s all for this time. As you can see, there is quite a bit of good news on the horizon. I don’t foresee us having a major issue for some time. The real problem that we’re facing right now if that our inventory is low, which makes buying hard. However, if you have a really good Realtor, they can surely find you the right property. If you or anyone you know if in need of a Realtor, please let me know! I would be more than happy to assist you or your friend and family with buying or selling. 

Thanks!

Troy Franklin Gandee

Are You Still Renting? STAHHP!

Attention Charleston friends! 

I know I talk a lot about why you should buy a home (if you can). Surely, part of it is because I’m in the business of buying and selling home. But I also talk about it because I have become very entrenched in personal and business finances in the last few years. I know finances are boring as hell, but they’re important. I try to mitigate that boredom by pretending that it’s some kind of big, long table-top game. It’s basically a series of battles that ultimately will win or lose the retirement and financial freedom wars. So, that’s one reason I harp on the benefits of buying NOW as opposed to renting. Everybody knows that renting isn’t nearly as financially sound as buying. Everybody also knows that it’s hard as hell to buy a house when you’re young. However, we need to be realistic with our expectations when it comes to houses to purchase. It’s time that we seriously start considering moving outside of the city in anticipation of our families and financial well-being. Living downtown or in a desirable part of town is great, but most of us realistically can not afford it and it’s going to keep getting harder. 

Renting really is just giving money to someone else so they can pay the mortgage while they wait for the property to cash-flow at 100% with no more mortgage. I know that we HAVE to rent in order to have shelter. I also know that anyone who has had consistent employment for 2 years or longer and has decent credit with no outstanding financial issues can buy a reasonable home and the mortgage is usually cheaper than the rent they were previously paying. Many mortgages only need 3.5-5% down and the rates are staggeringly low right now. The other MAJOR benefit of buying a home (aside from saving a bit, in most instances) is that buying a house is basically a forced savings account. You HAVE to pay the mortgage or they will take the house away. Therefore, most people try their damnedest to pay the mortgage. Every payment you make goes towards the equity of the home (aside from the interest, insurance and taxes). When you have significant equity in the home, it is no longer a liability but an asset that you own. Owning and controlling assets is what makes you wealthy. Don’t you want to be wealthy?! 

The reason that I’m even writing this post is because a recent Post & Courier article was released that discusses Charleston’s last quarter hike in both rental rates and landlord’s increase in gross rents. The article is entitled "Charleston-area home rental rate jump 11th highest in U.S. last quarter,” by Warren L. Wise. The article explains that the last quarter in 2015 saw a 10.6% increase in rents and an 8.9% gross yield increase in investor’s pockets Charleston area. That 10.6% increase is literally a 10.6% increase in rent prices from the previous year’s 4th quarter. The 8.9% gross yield increase is an 8.9% increase in income that landlord’s in the Charleston area saw from the previous year’s 4th quarter. Of course, that gross income decreases once expenses are reduced, but it’s a direct reflection that investor’s in the area are raising prices for a variety of reasons. 

Let me sidebar here for a moment. I myself am a real estate investor. I do not necessarily think that these rental rate increases are Mr. Burns level evil. Housing is a business like any other. When demand increases, supply typically shrinks, which will lead to premium pricing. It’s just business. And people are paying it- begrudgingly, sure, but they’re doing it. If you asked your employer for a 10.6% raise and they complied, would you think twice? I do not think it’s wise business to raise the rental price of a unit by 10.6% every lease term unless the property is experience significant improvements, but I’m the kind of guy that would rather keep the same tenants for years by offering them a fair rate. Regardless, these folks are doing it and people are remaining their tenants. To be fair, landlords do get a bad wrap. There are a lot of bad landlords and many of them are giant, faceless corporate entities that do not care about their tenants. However, many of us are individual operators that bust our asses to provide comfortable and affordable housing. Any most of these kinds of investors have had to sacrifice a lot in order to purchase their portfolios in the first place.

Anyway, I do not expect rent prices to plateau any time soon. As we continue to win awards and attract more folks, we will continue to see more increases and less inventory. There is a lot of construction going on, but not enough to quell the demand. I work with people all the time who are moving to the South to retire for various reasons. Even though Charleston is expensive for the South, it is not very expensive for the National averages. These folks moving from other areas have the finances to afford these homes that we can no longer afford because the cost of living is lower here than wherever they came from. In these cases, we don’t stand a chance. And these transplants (I’m a transplant. WV!) are going to continue to move here because Charleston is a cool place and those of us that live here have contributed to that for years.

What I suggest is that, if you’re still renting and you’re unhappy with the product and price, you consider buying sooner than later. If you’ve been considering doing so, you should contact a mortgage provider to talk about your options. There is no obligation and it does not cost you a dime to have them discuss your situation and tell you what you may be able to afford. My preferred lender will ask you to just submit an online form and wait a couple of days until she can compile your data. These rental prices are going to continue to increase. I assure you. And the longer you wait, the thinner our inventory will be, which will make your home purchase even more expensive and competitive. And consider living a little way outside of your preferred neighborhood. As young people, most of us do not have the wealth to live in the preferred parts of town and it’s unrealistic of us to even feel as though we deserve to own in the center of town. We need to remember that we have to work to build wealth just like every generation before us. I say this because I own two homes in rough neighborhoods simply because I could afford them. I have lived in each as I did the renovations and they are both rentals now. Rachel and I want to live near town, but we can’t afford to. We’re in the process of moving further away from our desired area because it’s the nicest and safest thing that we can afford in Charleston County. But, it’s a great house, it’s in a gated community, we will have a community pool and it will only cost us about $950 per month. All that and it still only takes us 15 minutes to drive downtown. 

I’m done now. I legitimately love this city and I’m worried that we’re stretching it thin, but people have thought that about Charleston for years. We should just be happy that we live in a city that people are flocking to. We young people should also start to prepare ourselves for the rest of our lives. I know for sure that I work too damn hard every day to do this for the rest of my life. I want to retire some day. I want to be financially free so I can do whatever I want all day. The easiest way to do that for most people is to purchase their first home. It’s the easiest way to start building wealth.

If you or anyone you know is interested in buying or selling, please feel free to reach out to me. I work diligently to get my clients what they want. Referrals are the way to my heart. Even if it isn’t the right time for you to buy, there is no harm in speaking to a lender to see what steps you need to take in order to do so. I can always send you a list of properties that are on the market at this very moment so you can see what the market has to offer you. I also wrote an eBook about how to buy a house. I'm more than happy to send you that in PDF format or you can buy it for .99! It's listed at the top of the books section to the right!

Thank you for letting me rant,

Troy Gandee

Realtor & Real Estate Investor

Buying a Home with Student Loan Debt

Student loan debt is frustrating. The average student debt is somewhere near $30,000. Making your monthly payments on a $30,000 student loan can be really brutal. Especially when you're young and struggling like most of us millennials. The really scary figure is that there is over $1.2 trillion dollars in outstanding student debt. It's incredible that there is such a massive unsatisfied debt for something as basic as education. I definitely fear that the US economy is going to somehow be directed impacted by these loans. It is already problematic that young people can't contribute much to the overall economy because 1/4 (or more) of their paychecks go towards debt service. Hopefully, we can find some kind of resolve for these outstanding balances so that out nation's young adults can begin contributing fully to their economy. On top of these pestering student loans, young people also have to contend with rising rents. Rents have been skyrocketing for the last few years and they are expected to continue to rise another 8% through 2016.

This affects young people more than most. It is no surprise that many young people are still floundering to some degree. Whether they be unsure of what they want to do or if they are struggling to get their passion positions to pay them well, most young people are not rich. This is an historic fact. Young people usually do not have much in the way of assets and funds. That isn't just millennials. That's essentially every generation in their early adulthood. Hence, most young people that don't boomerang end up paying rent. One thing about millennials is that they are also considered urbanites, so they prefer to live near city centers, which is generally more expensive. Over the last few years, rents have been increasing at such an aggressive rate that many young people are being pushed out of their already gentrifying neighborhoods. 

These two major reasons (plus a scarcity of competitive employment) are what will affect young people the most when it comes to purchasing a home. I know a ton of people who would love to be able to buy a home in the immediate future. For the most part, they are unable to due to lack of funds or a high debt ration. I also know a ton of people who are able to pull it off because their expectations are realistic (and I often help them find homes to buy). CNN Money wrote a great article recently titled, "Should I Buy a Home while Still Paying Student Loans" by Kathryn Vasel. The article discusses some of the numbers and ratios involved in buying a new home. One large misconception is that you need to put down 20% or even 10%. That is not true. You can put down as little as 3.5%, but if you pay less than 20%, you will almost definitely have to pay PMI, which could be $100-$200 per month. PMI is just a safety precaution that lenders require you pay when you do not have the funds to put down a large down payment. Another very important number in this discussion is DTI (debt-to-income). DTI is an equation of your total income and debts per month. This equation will determine how much money you are capable of paying towards a mortgage each month. The issue here is that those with student loans already have a huge obligation on their books, which makes affording a mortgage incredibly difficult. The nice thing about renting is that they will not likely analyze your DTI in the leasing office. The terrible thing about renting is how rents are going to continue to rise and effectively phase out millennials. You would be surprised how many young people I work with who are interested in buying and later find that they will actually be paying the same or sell for a mortgage. Of course, mortgages are usually a fixed-rate and are not to rise in the same way as rents. 

So, should you buy a home with student loan debt? In my opinion, yes. As long as you can afford it, it is probably going to be a better move in the long run. The beautiful thing about working about with a mortgage lender is that they can analyze your finances and see what you can be approved for before you ever even go look at any homes. If you can not afford a home right now, just wait until you can (the lender won't charge you anything for a preapproval). But, I assure you that rents are outrunning inflation and there will be a big crunch in that industry soon. You can buy a home with a very low downpayment and moderate credit. Plus, interest rates are in the 3s and low 4s right now! That is awesome! You will find yourself in a better position if you buy now and watch rents from your front porch. The downside to purchasing a home is that you are responsible for the taxes and insurance, but luckily, that is included in your monthly obligation. The other thing to remember about purchasing is that you are responsible for the repairs and maintenance, so keep a fund for emergency repairs and maintenance. However, I still think that you would do better to pay a mortgage+repairs than to rent for the next 10 years.

The other huge issue here is that millennials like to be in city centers, as I said earlier. If course, living closer to town means paying far more money as home prices are quite a bit higher. What this means for millennials is that we will absolutely have to consider living farther away from town that we may like. Generally, the farther away you go from town, the lower the prices of homes. One saving grace in this scenario is that most millennials are used to smaller spaces and would do better than most in a home with lower square footage. One of the difficult things in this scenario is that many young people nowadays do not own cars, but rely on public transit and bikes to get to work or social affairs. In this instance, those individuals will have a hard time unless their town offers very reliable public transport. 

At the end of the day, I do think it's a precautionary measure to go ahead and buy if you can. If you rent, you WILL see your rent continue to increase. It may even increase at the end of each and every lease term. You would be surprised to see how much your monthly mortgage payment (plus taxes and insurance) would be on a reasonably priced home. In fact, my girlfriend and I are in the market for a new primary residence at the moment. We have been living in a house that I intended to be a rental when we get to move on. When I got my taxes back, I decided it was time to find something that we will stay in for a few years. At that time, I would like to keep that property as a rental, if we do not have to sell it. We made the mistake of going to an open house over the weekend that was out of our price range. We then found something in our price range that is very sensible and has some surprising amenities for the area. All in all, our monthly obligation is right around $1,000 for a 3 bedroom, 2 bath home. It's 1,400 sq feet and has a fenced in yard. It's in a gated community with a pool and walking/jogging trails. It's about 20 minutes from downtown and maybe 30 to the beaches. We still haven't gotten a response from the seller yet, but I anticipate our offer to be accepted. Hopefully, we can stay there for 4-5 years and upgrade from there. Buying a home is one of the fastest ways to utilize your own finances to start building wealth. You will not longer be leasing someone else asset at your own detriment. You will begin using your own qualifications to purchase your own asset and your payments will go towards building your own wealth and not someone else's.

If you have any question about buying or selling a home, please let me know! And if you or anyone you know needs a Realtor, I'd be happy to help. I also wrote an eBook about the process of buying a home. I would be happy to send you a free copy if you would like to learn a bit more about the process before taking action.

Thanks again,

Troy Franklin Gandee

Buying a Home is Still Getting Cheaper!

Mortgage rates have been falling consistently for 3 months. Many folks were worried that an interest rate hike by the FED would cause a spike in mortgages, but it's actually be quite the opposite. The stock market has been taking a real beating lately due to both the increase in rates from the FED and from China's tumultuous economy. Because of this, many investors have been dumping their capital into US bonds. The increase in funding from bonds means that Government affiliated mortgage lenders are flushed with funds to purchase more mortgages from banks. The housing market has been performing very well over the last year and half to two years, which creates a surplus of new mortgages for lenders. These mortgage lenders usually sell their mortgages after some time to Government associated lending giants, Fannie Mae and Freddie Mac. Because there is such a steady influx of new mortgages coming their way, these institutions are able to offer a lower interest rate than they have been in the recent past. The current 30 year fixed rate is around 3.79%. That's not the lowest that we've ever seen, but it is incredibly competitive. CNN Money has offered a short article to explain some of this entitled, "Mortgage Rates are Still Getting Cheaper" by Kathryn Vasel. There is also a short video to accompany the piece.

The real difficulty that we're facing right now in the real estate market is a thin inventory. There has been a surge of folks ready and willing to buy, which is great. However, there has not been a reciprocal amount of sellers. A healthy inventory for real estate is around "6 months". What this means is that if we continued to sell the way that we are but did not add any more homes to the inventory that we would sell out in 6 months. The last time I checked, we were around 4.5 months of inventory. That's good and bad depending on your side of the fence. It is good to be lower because it's indicative of a healthy market meaning that homes are selling at a rapid rate. On the other hand, it can be quite difficult if you are buyer because the seller has a bit more leverage. When it is a seller's market, you don't see sellers taking very low offers of reducing their list price as often. Last Spring-Summer, I saw a lot of offers that were presented at list price or slightly above in multiple-offer scenarios. That is not necessarily bad. Real estate is dictated by the market. That means that prices fluctuate according to what people are willing to pay for a property. If you buy a home for X amount of money, then it is likely to worth that amount or more. That system is supported by the appraisal process. When prices are inflated for a product, it is usually because some individual or company has set their price price artificially. The crash that we saw a few years ago was not a result of an organic market. That was a result of a group of companies getting together and offering a faulty product, which artificially inflated a market. As long as we continue to see these sensical rates, we are not likely to face another major decline in the real estate market. This is also great news for young people because it is definite that the rental market will continue to surge with no apparent end. The rental market is what we should be focusing on right now. Rates are increasing at an unbearable rate making it very difficult to find affordable rentals.

As always, let me know if yo have any questions regarding real estate! If you're thinking about buying or selling, I would be honored to help you!

Also, my girlfriend Rachel and I just got a new puppy yesterday. His name is Rancher. He was a rescue from Palmetto Paws and he's some sort of Australian Shepherd mix.

Thanks again!

Troy Franklin Gandee

Remodels of 2015 that Showed the Best ROI (Infographic)

I've been a little lax on writing blog posts lately! I'm actually writing an ebook about how to buy a home that has been eating up a lot of my time. It will be primarily used as a marketing tool, but I'm also planning on sending it to my first-time buyer clients when we begin working together so they can use it as a guide post when starting the process. If anyone reading this is interested in reading, I'll be happy to send you a copy! Anyway, that's the reason why I've been lacking a bit on the blog posts and why they have been less detailed than most. I'll get back into the swing of things when I'm done with this book (I will also be writing a Seller's version)!

Today's post is a retrospect on upgrades and renovations made throughout 2015 and a comparison on the various returns on investment that they provided. The article and infographic that we will be using is provided by RealtorMag and is entitle, "2015 Remodeling Impact:Return vs. Joy." The data in this infographic was gathered by various Realtors and gauges not only the financial ROA, but also the owner's "joy" ROI, meaning their enjoyment of the upgrades on a scale of 1-10. The financial scale is registered as a recovered percentage of the cost of the upgrade as a percentage. The higher the percentage is, the more value the upgrade adds to the home. However, most of these upgrades do not net the seller more right away because they paid outright for the renovations themselves. Keep in mind that these costs are typical costs for the average homeowner. If you can get the job done at a bargain, it will certainly net you more. They have broken these renovations up into interior and exterior. The interior category contains 12 upgrades and the exterior category contains 8. For the sake of impact, we will highlight the top three of each category.

Interior:

Top 3 Upgrades

1. Hardwood Refinish - 100% Recovery of Funds and 9.6 Joy Score

Refinishing your existing hardwood floors usually adds more value than installing new engineered or laminate hardwood floors. Engineered and laminate hardwood floors are much cheaper than installing real hardwood floors and more people seem to be using laminates and engineered floors than hard woods nowadays. True hardwood floors are still very expensive and the work is labor intensive. However, if you already have hardwood floors, refinishing them makes a massive difference and costs a fraction of installing new hardwood. When I rehab a home, if there is existing hardwood, I opt to refinish that floor over adding new flooring every time (as long as the flooring is salvageable). In this case, the cost of refinishing the floors was retained by the added equity, which makes it a solid improvement. And the owners ranked the improvement very high on satisfaction at nearly 10%!

2. Insulation Upgrade - 95% Recovery of Funds and 8.7 Joy Score

Second on the list of interior upgrades is the insulation upgrade. This is definitely not one of the more sexy improvements on the list, but it is certainly one of the most effective. Also, improving insulation is quite cheap in relation to most of the other renovations on the list. Rolls of insulation are quite inexpensive and they are often easily installed by the homeowner under the home, in the attic and in other exposed areas. Most home buyers are going to greatly appreciate the upgraded insulation when looking at homes. I have, however, been hearing from many inspectors and contractors recently that insulation under your home can actually cause more harm than good. Our climate is very wet and that insulation can retain moisture that can cause high humidity under the home leading to many bigger issues in the future.

3. New Wood Floor - 91% Recovery of Funds and 9.5 Joy Score

In contrast to the number one upgrade on this list, the number three upgrade is adding new wood floors to your home. If you do have existing hardwood floors that can be refinished, I would definitely recommend that route. However, if you do not have any hardwood to refinish and want to change the flooring in the home, I would recommend adding new hardwood. As the survey suggests, the homeowners that did this recovered 91% of their funds and they rank this upgrade as a 9.5 on the Joy scale. If you insist on real hardwood, go right ahead! But, I would suggest that you look into laminate hardwood floors. They are usually far less than hard woods and they make an array of options that look great including many that have trendier finishes like white washes and hand scraped machining.

Exterior:

Top Three Upgrades

1. New Roof - 105% Recovery of Funds and 9.6 Joy Score

Installing a new roof is the only upgrade on this list that will immediately net the homeowner any gains. This upgrade shows a 105% return, which is an additional 5% gain over the initial investment. It also shows a 9.6% joy score, which is quite high. From experience, I know the power of getting to market a newer roof to home buyers. A new roof can be one of the most expensive upgrades for a home and home buyers absolutely love the thought of a new roof. Typically, roofs last from 20-30 years depending on the quality of the shingle, so it is inevitable that your home will need a new roof at some point. It is wise to have this done before selling the home (if it needs it) to increase buyer confidence.

2. New Garage Door - 87% Recovery of Funds and 9.5 Joy Score

This is the second most effective exterior renovation. It is actually surprising to me that adding a new garage door can have a greater effect than say adding new windows. However, the most obvious improvement that a new garage door can make is to increase the curb appeal of the property greatly! Most home buyers will decide if they like the house or not in an instant and increasing the curb appeal is a sure fire way to increase the likelihood that a buyer will bite. This upgrade also provided a 9.5 on the Joy Scale, which shows that the homeowner is also in favor of the new garage door.

3. New Vinyl Siding - 83% Recovery of Funds and 8.9 Joy Score

The third most effective improvement is no real surprise to me. Adding new vinyl siding to a home not only increases the curb appeal like a new garage doors, but it also makes the home feel much newer while decreasing home maintenance. Vinyl siding is incredibly easy to care for. Essentially, all you have to do it pressure wash it from time to time to keep it looking new. It is also no surprise to me that this upgrade scored an 8.9 on the joy scale as it surely makes the homeowner feel like they have a brand new home!

That’s all for now! I hope you’ve enjoyed this post! I’ll be sure to write some more extensive posts like this when my books are all done.

Remember to keep me in mind when you or anyone you know needs a Realtor!

Thanks,

Troy Franklin Gandee

2015 --> 2016

2015 has been a pretty great year for me.  I’ve been very, very busy. We closed 2 rehabs last year, which should have been more, but we got tripped up on one. We have one selling in a couple of weeks. The buyer’s lender just found an issue with her credit, so hopefully it will be resolved. We have just picked up another a couple of weeks ago and I’m hoping for a quick turn around on that one. and we’ve just picked up I’m hoping to get through 4 this year.

On the Realtor side, I’ve had a really good year. I’ve closed 15 transactions (which is quite a lot for an individual without assistance at a small brokerage). I have another 3 in escrow that should be closing in the next few weeks. I’m sure that my business will just continue to grow and I am lined up to start my broker courses and exam in March. I would definitely like to increase my number of transactions and productivity next year.

Throughout 2015, I was able to get two properties myself for rental property purposes. Each of these, I have needed to do the work and then live in them briefly. The first house is now leased out and is performing pretty well for me. The second is the home that Rachel and I currently live in, but it will be leased out as soon as we move on to our next property. My hope is to pick up at least one rental property per year.

One of the most important steps in entrepreneurship and personal development is goal setting. I admit that I am pretty lax at setting physical goals. I keep mine in my head and they change too often. This year, I am going to take goals very seriously. In fact, the rest of the morning will be spent writing them down and making them realistic and achievable, yet challenging and worthwhile.

If you or anyone you know is in need of a Realtor, let me know! I would be my pleasure to help you with your real estate needs.

Thank you,

Troy Franklin Gandee

Is The Housing Market Going To Crash Again?

A lot of economists and legislators have bee trying to predict whether or not we're facing another housing market crash. Fortunately, it doesn't look like we'll be seeing anything too rocky in the next couple of years. The real estate market is like any other economic system in that it experiences ups and downs with static periods in between. The general estimation is that every ten years there is a pivot in one direction or the other. We're almost 10 years out from the last crash, which was a magnificent one. Hopefully, we'll never experience that kind of housing crash ever again. That one was largely due to predatory lending practices and bad judgement from most parties involved. The bubble of the mid 2000's was a real anomaly. That was the first time that we had seen such a surplus of sub-prime mortgages with very little oversight. The sheer number of tricky mortgages was what caused the last crash to be so catastrophic. 

Many people think that we're experiencing a bubble at the moment and that we're due for a market correction. I disagree. I think the market is a little too competitive right now, but it has drastically readjusted since the fall. If things stay this way, I believe we can have a very healthy market for quite some time. I have closed 12 properties on both the buying and selling side this year and I have another 4 in escrow. I have found myself making offers for clients in multiple-offer situations 3 or 4 times this year, however, I have not seen either party sweetening their offers with anything irrational. And of those 16 transactions this year, I have not had one property appraise under value.  When properties tend to appraise below the contract price, it is often an indication that the market is running away.

Fortunately, according to RealtorMag's article entitled, "6 Reasons Why a Housing Crash Isn't Likely," there are many indicators that point towards the market remaining healthy for some time. Here's a quick breakdown of those 6 items according to the article:

  1. Fixed Rate Mortgages: This is the primary reason that we will not be experiencing a crash any time soon. The previous fallout was largely due to adjustable rate mortgages that went wild and made it incredibly difficult for some to make their payments. Fixed rate mortgages are the most common and hopefully it will stay that way. Fixed rate mortgages mean that you know what your monthly obligation will be for the lifetime of the loan and there can be very little deviation to that amount.
  2. Old Foreclosures Are Being Finalized: There has been a huge uptick in bank repossessions this year, but that does not mean foreclosures. Banks begin the foreclosure process sometimes months and even years before they fully repossess the property. When the market rebounded, the banks responded by finalizing their foreclosures so they could put the repossessed homes back on the market. We have not seen an increase in new foreclosures, but rather an increase in banks finally completing their foreclosures so they can resell the properties. This means that there is not new distress, but rather a completion of old distress.
  3. Fewer Foreclosure: This is just a continuation of what I said in the last bullet. Currently, the foreclosure rate is about 2.1%, which is the lowest since 2007. That's great news. That means there are less folks having difficulty paying their mortgages. Those that are finding themselves in default are probably in that position for personal reasons rather than predatory lending practices.
  4. A Rise in First-Time Buyers: There are many more first time buyers entering the market than the last 10 years. There are a number of programs for first-time buyers (products/programs like the FHA mortgage) that are making it much easier for first-time buyers to purchase homes. There is also a move to reduce mortgage insurance premiums soon, which is a hinderance for many first time buyers. When first-time buyers are active, it is a great indicator of a healthy market!
  5. The Economy is Generally Healthier: Economics are cyclical. When the job market is strong, the housing market is strong. The recession may have largely been due to the housing crash, but the recession is now over and the job market has rebound almost to pre-recession levels. Employees have the funds to purchase homes and that is what keeps the housing market churning.
  6. There Is No Surplus of Homes: This is another big one. When there are too many homes being constructed, it causes an overture of homes and that has a negative effect on the market. There are far less available homes at the moment than there were up to 2006. That means that the market can stay competitive, which is a good thing. Too much competition can be bad, of course. Luckily, we seem to be an a moderate inventory of available homes.

I hope that this has all been good news! There will eventually be another crash. There are always slumps in the economy and the housing market just happens to be a large portion of the overall economy. In fact, slumps in the housing market can be quite beneficial to the consumer. It is necessary that any economy be checked from time to time to settle back in to a healthy medium. However, we don't seem to be in any danger at the moment! Hopefully, we can enjoy a healthy market for a long time!

Remember me when you need a Realtor. I'm always happy to help.

Thanks,

Troy Franklin Gandee

Realtor®, ABR, e-Pro, REInvestor

Realtor Economist's Letter to Millennials

I know I write a lot about millennials. I don't do that because I have no interest in gen X'ers or baby boomers. I do that because I am a millennial and I know the struggles that millennials face. Like every think tank, big business and economist, I am also aware that millennials are the mot potent economic group that this country has ever seen. Unfortunately, millennials entered the work force at various stages of the recession or in the recovery process shortly thereafter. Another unfortunate event is that many millennials are burdened with crippling student debt and are finding less employment than they had hoped to find. Our generation gets a lot of flack from our predecessors, but what younger generation doesn't? It doesn't bother me. I think we're doing quite well considering the previous and current economic climates. The fantastic thing for real estate professionals is that millennials consistently state in polls that they think home ownership is important and intend to own a home. However, it is still difficult for many millennials to qualify for mortgages. Fortunately, that may not be for much longer.

I recently read an article by NAR's chief economist, Jonathan Smoke, entitled "An Economist's Letter to Millennials Who Can't (Yet) Buy a Home." Jonathan recently attended a town-hall event with HUD Secretary Julian Castro at George Washington University where they faced a number of millennials and discussed their role and concerns regarding real estate. I'm sure that these gentlemen faced a volley of questions and concerns. Thankfully, Jonathan's article expands on some of the points that tend to restrict millennials the most when it comes to purchasing a home. The following points are some of the major concerns amongst millennials:

  • Debt - This is the big one. It's no surprise that millennials carry an astounding amount of student debt. The most unfortunate thing is that most young people incurred these debts in the hope that their education would make them so employable that it would outweigh their debts. While the economy has rebounded drastically, most of the individuals still hold a crippling debt load. With that being said, most lenders require that your debt ration be no higher than 43%. Mortgage providers use a debt-to-income ration to decide how reliable you are as a borrower. Their main concern is that they will be paid back and if you have too much other debt, the likelihood that you pay them back on time and in full is worrisome. Even if you do have less than 43% debt, if your income is low, you may still have a very hard time qualifying for the kind of home that you want. Currently, the only solution to this issue to not incur new debt and to be Spartan in paying off your prior debts. The current DTI for millennials that have purchased homes is around 36%.
  • Credit - Credit problems are certainly not a millennial problem. People of all ages are affected by credit woes. However, I do think that young people struggle with credit more than most. For being the richest nation in the world, we door a poor job teaching our youth financial education. Many young people don't even understand how credit works before they damage their credit scores. Anyways, the good news is that the average FICO amongst millennials is actually higher than that of the national average. The bare minimum for an average lender providing an FHA is a credit score of 580. Qualifying for a mortgage with a 580 credit score will not lock in the best terms, but it will get the job done. The higher your credit score, the better you terms because it shows your ability to pay your debts on time. A 750 or higher will have the greatest effect on getting great terms. 
  • Down payment - There is a misconception that you need 20% down on a home. You do not. There are many loans that do require 20% down but it is not common for a first time buyer. The more you put down on a property, the better your terms will be. Even putting 10% down will make a huge difference. However, there are many loans directed at first time/lower income buyers that require only 3-5% down. While your rates will not be the most competitive if you only put down 3%, it will get you into a house. The real problem here is that most millennials are so cash strapped from underemployment and student debt that they have no real savings. The first steps here are to reduce your debt ratio, save up enough for an emergency fund and then save for your down payment. Talk to your lender about an FHA or a comparable mortgage with a low down payment. 

Jonathan goes on to discuss the problem of ever-increasing rents. This is especially true in urban environments where millennials tend to flock. Rent prices have been experiencing an increase and they do not seem to be near the end of this. Unfortunately, when rent increases, it makes it even harder for people to save or to pay off their debts. Most young people have already taken to living further form their urban centers than they would like or living in less desirable properties. Unfortunately, this seems to be the only solution if you wish to manage your finances more wisely.  While it is taking us longer to purchase and to reach our desired incomes than our predecessors, it is only a matter of time before we reach our goals. We are soon to make up the vast majority of the work force and we are the most adept at technological advancement and prowess. It is no secret that our economy is dependent upon technology these days and we were born in the era of the computer. Keep you chins up and your debts low (unless it's leveraged debt, of course)!

That's all for now. If you have any questions or need any help buying or selling a home, let me know! I'm more than happy to help!

Thank you,

Troy Franklin Gandee 

 

Safety and Real Estate

There are more and more safety protocols in the real estate world every year. It seems like more often than ever there are Realtors and other real estate professionals finding themselves in compromising and dangerous situations when they're in the field. Many of you have probably heard stories of Realtors being assaulted both physically and sexually, violently attacked and even murdered by unstable individuals. Because of these reason, there are more and more precautions being taken by Realtors every year. These precautions are not just to protect the Realtor, but also to protect their clients. These safety precautions may seen unnecessary. However, they're quite the opposite. They are very important. They could mean the difference between a great showing and great bodily harm. And if anything terrible were to happen, these precautions are what could be your rescue or bring the perpetrator to justice.

I recently read a short article and watched a short video from the National Association of Realtors that they published on their blog. The piece is titled, "Video Explains to Consumers Why You're Taking Safety Precautions," and it was written by Graham Wood. The short video is very pleasant and it explains some of the precautionary actions used by us Realtors to avoid dangerous situations. Most Realtors are self-employed and self-promoters, which means that they use their likeliness to market themselves. If you look at any Realtor's website or marketing materials, you are likely to see a photo of them. Furthermore, most Realtors know that we MUST be accessible and provide multiple forms of communication to the public. Most of the crimes committed against real estate professionals are due to the fact that it is easy for a criminal to find a Realtor as an easy target and lure them to a vacant property. It is our job after all to visit unfamiliar properties on a daily basis.

One of the main precautions is to meet new clients at their office where they're in a public and familiar space. Many Realtors will go ahead and collect some personal information from you at that to keep as record that they did meet with you that day and will document that. Once a Realtor feels comfortable assisting you, they will begin showing you properties. In the old days, most clients would ride with their Realtors in one vehicle. This is becoming rare. Being in two different vehicles is much safer for both parties and it give the buyers or sellers an opportunity to speak candidly, as well.

Many Realtors will also avoid showing properties at night. The will especially avoid doing so with vacant properties like foreclosures. Many foreclosures or other REOs will often not have power, which means there is 0 lighting aside from phones and flashlights. It is unwise to view these properties with strangers- especially when it's pitch black. If there happen to be any unsafe conditions inside the property, both the Realtor and the clients are likely not going to notice and could be harmed. You may notice that your agent stays behind you when you walk through a property. This is to allow you to view the home at your own pace and not give off any signals that could influence your decision. Another precaution is that your Realtor will often not go in any attics, closets, garages, basements, etc. If you would like to view those areas, you are more than welcome, but you may notice that your Realtor will stay just outside of those areas. 

There are more and more real estate professionals choosing to carry pepper spray or firearms as a line of defense in the field. Of course, anyone carrying a firearm needs to take the necessary steps to be allowed to do so. Carrying a firearm means not just safety for the Realtor, it also means safety for you. Many of us take responsibility over our clients and want to provide safety to you. In order to achieve your concealed weapons permit, you must express knowledge in the firearms, using the weapon and firearm safety. Many of the homes that we visit are either abandoned or they are vacant. It is hard to tell who or what might be takin refuge in any property that isn't occupied. 

I personally carry a firearm with me on a daily basis. As a Realtor, I find it to be very important not only to protect myself, but to protect my clients. As a real estate investor, I visit vacant properties all the time. The number one type of properties that many investors frequent are distressed properties that can often be in troubled neighborhoods. Because I have access to these properties through my own devices, I almost always visit properties alone. I have seen all manner of sketchy in vacant properties. I've found makeshift beds, hot plates, piles of clothing, empty bottles and even used needles. It was visiting one of these properties when I decided that it was time to purchase a firearm and get my CWP. Since then, I make sure I am protected when I go to unfamiliar properties or meet with strangers. I often meet with folks I have never met at properties to discuss the property and to begin working with one another. Unfortunately, the way that internet marketing works, it often pushes us towards meeting for the first time at the subject property. It's not meant to be an offense to these individuals, but I make sure that my firearm is in my vehicle when I got to meet them. I have never needed my firearm and I never hope that I will! The next time that you're working with a Realtor, just know that both your safety and theirs is a top priority. None of us are being excessive for no reason. It is always to ensure that everyone stays safe!

If you are in need or a Realtor, feel free to reach out to me! I am always happy to help!

Thank you,

Troy Franklin Gandee

The Closing Process Has Changed

The real estate closing process has changed. For those of you that don't know, the "closing" is just the final meeting in which the buyers and sellers review all of their final documents, review their loan packets for the last time, sign those forms and actually take possession or transfer possession of the home.  Fortunately for the consumer, the closing process has changed for the better.  It is causing some stress and anxiety amongst real estate professionals as we get used to the new structure, but it will be a change for the better. The changes actually took effect October 3rd. However, since most real estate transactions go into escrow for at least 30 days before they close, the new system will soon be experienced by buyers, sellers and real estate professionals. Before I explain the new process, let me explain the old one. 

Stay with me here because this can get a bit confusing:

The old process required disclosures from the lender about the costs of a mortgage, which was brought on by TILA (The Truth in Lending Act). The old system required that the lender deliver to the borrower a disclosure known as the GFE (Good Faith Estimator), which was a preliminary estimation of how much the borrower would owe the lender and their monthly obligation (there were actually four separate disclosures that had to be delivered to the borrower throughout the process by the lender, but those were less crucial than the HUD-1 and the GFE). The old closing process required all of the important information and fees to be disclosed in the "HUD-1 (AKA HUD)," which was a slightly confusing document designed to chart all of the fees and costs associated with the purchase or sell of the home. The HUD, which is the map of all of the costs and credits that are involved in the purchase of the home, was a result of RESPA (Real Estate Settlement Procedures Act).  In 2013, it was revealed by the CFPB (Consumer Financial Protection Bureau) that in 2015 the major disclosures (brought forth by TILA and RESPA) would be combined into two new disclosures known as TRID (TILA-RESPA Integrated Disclosure) to be delivered to the borrow at two crucial moments in the process. Not only would these disclosures be combined, but they would be streamlined and made easier to understand for the borrower. The point of TRID is to protect the consumer. It was enforced by the Consumer Financial Protection Bureau, after all.

Got it? Let's move forward:

At the end of the day, TRID is used to make certain that lenders disclose to the borrower exactly how much their mortgage will cost and that those figures stay the same or extremely close by the time the borrower is ready to close on their new home. TRID is going to map out all associated closing costs like attorney fees, Realtor fees, insurances, taxes and will be much easier to understand. But, it's also going to make the entire process of disclosing related mortgage costs and fees innumerably easier for the borrower to understand.

I recently read an article from CNN Money titled, "How The Mortgage Process Just Changed" that explains some of the changes and shows images of the new forms. One of the biggest differences now is that the lender has to provide a "Loan Estimate Form" to the borrower within three days of them submitting their mortgage application. Once the borrower has received this form, they can visit other lenders to compare the costs. The Loan Estimate will not have a ton of information. The Loan Estimator will mainly disclose the cost of the monthly principal, interest and mortgage insurance (if needed), as well as some associated lender's closing costs. 

The next disclosure is the "Closing Disclosure Form" and it will have to be delivered to the borrower no later than 3 days prior to the closing. The purpose of this document is to disclose to the borrower how much they are actually going to pay and give them the opportunity to contest any issues with those costs. The borrower should compare their original Loan Estimator Form to the Closing Disclosure Form and insure that there are no discrepancies between the two, unless the lender and borrower have already come to terms with changes earlier in the process. 

All in all, this is a good change. It is meant to protect the borrower and provide more transparency to the borrowing process. The borrower will more easily be able to see what they're paying for and what those charges mean, rather than being told that they owe Y and not X at the closing table. However, the entire real estate industry is anxiously preparing for this new process. It is going to be challenging. Essentially, our entire closing process has been uprooted and our familiar ways are gone. The mortgage providers are really taking the brunt of the responsibility here, but both the agents and attorneys have to make some changes, too. The agent is now encouraged to satisfy all contingencies as early as possible and acknowledge them to the lender. We are also being told that we should extend the entire escrow period by at least 15 days to make room for these 3 day periods on the disclosures. That means that a typical transaction will not take 45. The attorneys are now asked to complete their title work as swiftly as they can and return that to the lender so they can factor those charges into their Closing Disclosure. I only say those last few things to encourage anyone buying a home in the next couple of months to be patient with their friendly real estate professionals as they learn the new operation. Once we are all familiar, this will be a great improvement that will help out the borrower in major ways!

As always, if you or anyone you know needs help buying or selling a home, I would be glad to help. The fall is a great time to buy or sell as the inventory in the market starts to thin out. It means both more negotiating power for the buyer and less competition for the seller. Let me know if you have any real estate questions or concerns!

Thanks!

Troy Franklin Gandee

Title Insurance - Inside and Out

Getting title insurance for your property is a must. A lot of first-time buyers are surprised to find the title insurance charges in their closing documents come closing time. Fortunately, title insurance does not cost that much and it's a real bargain if you ever come to find that your property has a title problem. 

Title insurance is an insurance policy that protects a homeowner's claims that they are, indeed, the owner of their property. The title insurer will search through court documents and previous owner records to make certain that there are no other individuals claiming ownership or ownership interest in the property that you are purchasing. If the property's title is clear, then you will proceed to purchase that property and the title insurer will insure that your property will not be faced with outside claims of previous ownership. If someone were to claim that they have ownership interest in that property for any reason, the insurer is responsible for settling that claim. It is rare to ever need to exercise your title insurance, but today's world is a very litigious one. Luckily, title insurance exists to protect you.

Though title insurance is a great thing, as most things legal, it can be incredible complicated. In the article recently written by Amy Hui forRealtorMag entitle, "Title Snafus and You," the author addresses 8 misconceptions that can arise concerning title insurance. 

  1. Title insurance only provides a clear title - Title insurers provide more than insurance that you will have a clear title on your property. Title insurance can also protect the owner against easements, encroachment, zoning, subdividing, and many more depending on their policy's terms. These are known as encumbrances. They are claims of rights/ownership that encumber your rights as the owner. 
  2. Title insurance covers ALL title issues on the property - This is also untrue. There is an area on a title policy referred to as Schedule B. Schedule B is where any known title agreements will be listed. These usually come in the form of easements or other encumbrances. These are essentially agreements that have been made to allow/deny restrictions or rights of use on certain real properties. Often these will be agreements to allow the neighbor's driveway to pass through your land, allow a utility company's meters within your properties boundaries, etc. These are a fact of life and they are much less scary than they sound. Schedule B will disclose all known encumbrances on the property and will usually cover losses from claims involving them. 
  3. Title insurance does not mean that you will have no claims - Title insurance does not guarantee that your property will never have a title issue. Title insurance is like any other insurance policy. Insurance indemnifies the insured from any claims that are made against them. Even then, the insurer will only indemnify the insured of claims that they have agreed to cover, which means that you MUST make your insurer aware of encumbrance if you are aware of encumbrances. 
  4. The title company will fix your issue in escrow before closing - Unfortunately, this is just not true. The title company can't just make a demand and the claimant back off. It doesn't work that way. The title insurer will need time to resolve your title, which can sometimes be a lengthy and legal process. This means that depending on the issue, it could take months to resolve and the property is not likely to close on time. You can always agree to wait it out with the seller/buyer!
  5. The insurer won't cover a claim that isn't in the agreement - This is also untrue. The insurer can provide assistance in the event that the policy doesn't cover the claim. It is rare, but they do some times help with claims that are not necessarily covered by the policy.
  6. The title insurer will always clear the title if a claim is presented - Unfortunately, this is similar to number 4. The insurer does not have a magic wand that can automatically clear the title if a claim is made. The have a number of avenues to explore to try to levy the claim. These include trying to fix the issue, taking legal action (e.g. filing a suit against the claimant), settling with the claimant, or settling the insured's losses arising from a claim. These things all take time. In most cases, the title will be cleared, but it takes some time for the process to be completed,
  7. There is only one policy on a property - In many cases this is true. That is only if the property was paid for in whole by the purchaser or if the lender does not require a policy. In most cases, the mortgage provider will also want a title policy. Their policy is known as a loan policy. The loan policy insures the lender.
  8. You will only need one policy forever - This is not the case if the financing on property changes or if you decide to change your insurer. Many people refinance their homes in favor of better rates. When this happens, the new lender almost always requires a new policy. 

That's all for today! Rachel and I have just recently moved into our new house (that needed a ton of work) and got our old house rented out. We also have a rehab under way on James Island and I'm representing a few people as the buy or sell homes. Needless to say, it's been a very busy few weeks and I was unable to write a post for while. Things are starting to get back to normal and I'll definitely have another coming soon! As always, if you or anyone you know needs help buying or selling a home, let me know! I would be happy to help!

Thank you,

Troy Franklin Gandee

Mortgage Rates On Slight Rise This Week

Mortgage rates this month show a slight increase as the financial industry worries of economic troubles following China's financial woes. China has the second largest economy in the world behind the US. The US has become increasingly more intertwined with China through global trade. At the moment, China is facing their worst economy since 1990. China has a very interesting economy. They grew like a root when they began providing manufactured goods at a lower price than other developed nations. After this, they began a series of infrastructure programs and many developers built tens of thousands of developments to bolster their GDP. Unfortunately, due to low wages, most Chinese citizens were not able to buy into these condos, apartments, etc. Eventually these developments and infrastructure projects became ghost towns. Without revenue, these developers began going bankrupt across the country, which has led to a massive decline in China's economy. There is much, much more to China's plight than the failed developments and infrastructure, but this has been a major factor in China's decline. Our global economy means that when one of the major players feels stresses; everyone else will, too. 

In response to China's woes, many banks have ticked up their interest rates on mortgages in anticipation for a ripple. There will surely be more economical responses to the global economy taking a hit, but for now the mortgage rate hike seems to be among the first. According to the article, "Mortgage Rates Hedge Higher This Week," from Realtor Magazine, the 30-year-fixed-rate mortgage rate came in at an average of 3.89% this week. That is up from 3.84% last week. Another reason for this hike is that the lending institutions are anticipating the Federal Reserve to increase interest rates across all financial platforms some time later this month. I have mentioned in previous posts that the Fed has been planning to increase interest rates for some time now and purchasing a new home before this happens would be wise. It will certainly not be an aggressive increase, but it will definitely be noticeable. The Federal Reserve is in need of revenue themselves to try what they can to dwindle down our national deficit and provide more operational funds for our Government. Many of these financial institutions are anticipating this rise and they seem to think that their new rates will be near the Fed's new rates. Even with the new rise in interest rates, we are still at a lower average for mortgage rates than we were a year ago!

Like always, if you or anyone you know needs a Realtor to help you buy or sell a home, let me know! The market will begin to cool down as we move into fall making it less competitive for buyers. However, many sellers should still be able to sell their homes with favorable outcomes for some time to come.

Thank you!

Troy Franklin Gandee