What Is The Difference Between A Pre-Qualification Letter and A Pre_approval Letter When Buying A Home?

As we enter the spring selling season and the last of the snow is melting away here in the Charlotte, NC. area and temperatures are rising back up to the 50's and 60's buyers are starting to come out of their hibernation and look at homes. With the rise in buyer activity comes multiple offer situations. One thing I always advise a seller to look at when in multiple offers is the pre-approval or pre-qualification letter. It can make a difference between two offers if they are close. So, what is the difference between a pre-approval letter and a pre-qualification letter? Quite a bit actually. When you go to talk to a bank about a mortgage generally you do not know the house you want to purchase yet. You are checking to see if you can qualify for a mortgage and how much of a mortgage you can qualify for. Thus the lender will typically do a pre-qualification letter to let you go out and shop for a house with. Now, do not get me wrong; there is nothing wrong with a pre-qualification letter but it is just that...a pre-qualification. This means that the lender has taken your personal information and pulled all three credit bureaus and reviewed it with you and based on the information on there and what you have VERBALLY told that mortgage broker for income and assets is what they are basing the qualification letter on. In other words they are taking you for your word on most assets and income. Unfortunately, there are things that the mortgage broker will not ask because it is early in the process and that could actually hinder your buying power. For example, you told him you made $50,000 last year combined. However; a portion of it was a bonus which you never got before or overtime for which you do not always get.... Those usually cannot be included in your income because they are not consistent or steady. On the other hand a pre-approval letter means that the mortgage broker has done everything that they would do with a pre-qualification but have taken it a step further. They have your w-2 for the last two years and have seen your paystubs and bank statements. They have visually verified your income and money situation as well as job through documentation. After putting that information in the computer they were able to give you a pre-approval letter. A lot of people will tell me so what.... But the difference is your buying power is stronger with a pre-approval letter versus a pre-qualification letter. As a seller they would rather they see a pre-approval so that there is a little more verification of funds and income up front and the chances of the deal closing are greatly improved. It does not hurt to start out with a pre-qualification letter but once you find a home you want to put an offer in on I recommend to all buyers that they contact the mortgage broker and update the approval letter from pre-qualification to a pre-approval to strengthen their offer... Dave diCecco Realtor/Broker Helen Adams Realty Cell: 704-519-7895 ddicecco@helenadamsrealty.com www.davedicecco.com

How Is The Housing Market Performing In Charlotte, NC. January 2014

There is a lot of talk about the housing market in Charlotte, NC. and whether it is improving or if the rise in interest rates has caused the market to slow down and prices to lower while inventory creeps back up. A monthly analysis versus the previous year and two years ago during the same month allows me to compare and see where the trends are and how they are impacting the housing market in Charlotte, NC. Here are the stats for January 2014: First, let's look at inventory of available homes buyers have to choose from in the Charlotte, NC. . In 2012 there were 7150 homes for sale in January. In 2013 there were 5034 homes for sale. Last month there were 3980 homes for sale. That is a decline of 56% in two years of available homes buyers have to choose from. Second, the average sale price of homes in the Charlotte, NC. for December 2012 was $198,492. In 2013 the average sale price was $212,409 and last month the average sale price was $235,267. That is an increase of 16% in the average sale price in the Charlotte, NC. market over the past two years during the month of January. Third, let’s look at days in inventory. How long are houses sitting on the market? In 2012 the average home sat on the market for 10.4 months before being sold in January. In 2013 the number improved to 6.1 months and last month it improved to 3.8 months. That is a dramatic drop in inventory of over 64% in two years for the average homes is on the market that sold. What the trends are showing is that the housing market is out of the recession and available homes for sale have decreased to the lowest levels we have seen in over 5 years coupled with prices slowly creeping back up and more buyers out there than homes available and you have signs of a robust market in Charlotte, NC. heading into the spring market. However; in comparison to last couple of months the trend is showing that the housing market has stabilized and prices are slightly increasing as we turned the calendars to a New Year. Generally in January we start to see homes available on the market start to come back on with the Holiday’s over with. This year with the odd weather patterns we have had in the Charlotte area I feel it has slowed the sellers from putting homes on the market. The good news for sellers is that you have less competition with existing homes and buyers have less competition when looking at a home and are not feeling as rushed to buy a home in fear that someone else may scoop it up first. The outlook is looking good for both sellers and buyers as interest rates are still at historic lows and affordability is high. As we get closer to the spring selling season we should see a dramatic uptick in available inventory. It would be a welcome sight for the housing market. Most analysts agree that a balanced market that favors neither the buyer nor the seller is one where inventory levels are hovering around six months on the market. When you get to low of inventory like we have now the market favors the seller and too much inventory favors the buyers…. Dave diCecco Realtor/Broker Helen Adams Realty Cell: 704-519-7895 ddicecco@helenadamsrealty.com www.davedicecco.com

What To Do In A Multiple Offer Situation In Charlotte, NC

As the spring market nears inventory in the Charlotte, NC. market is very limited currently. It has led to multiple offer situations on a lot of homes in highly desirable neighborhoods that are priced to sell. So, you are in one of those situations and do not want to lose the house in a bidding war; however do not want to bid yourself to high and leave money on the table. Is there a happy median that can help you get the house you want and at a price you are willing to pay in a multiple offer situation? Potentially yes. The normal procedure is that the listing agent will send out an e-mail to all the buyer's agents that have placed an offer on the house asking for their highest and best offer by a set deadline. After that deadline all the offers are presented to the seller to which they pick one to go forward with on the transaction. Generally that offer will be one that offers the seller the highest return in terms of money in their pocket. You want the house but do not want to over bid and at the same time do not want to under bid on the house....So what do you do to entice the seller to take your offer? Well I had a recent situation where this happened and was quite surprised at the offer and the seller actually was amicable to accepting it based on the terms. Come to find out others in my office have been trying this recently also with good results as well. It is called an escalator clause. It needs to be drafted by an attorney do to the legal ramifications with it and as Realtors we are not allowed to draft legal documents....I have a blank one I am now using prepared for me that is fill in the blanks. What is says in essence is that X dollars is our offer. (Note that I did not say highest and best offer). However; the buyer is willing to pay X dollars ABOVE the highest and best offer you receive as long as that number does not exceed X dollars. So, you have a dollar amount in mind you are willing to go up to base on advice from your Realtor and comparable out there coupled with your mortgage approval. But do not want to go to high and feel if someone wants to overbid for the house let them have it because as I tell buyers if it does not appraise then that number is fruitless.... But do not want to lose the house for your number at the same time. This clause protects you from over paying for the house but allows you to bid on the house up to a certain amount of money you feel comfortable with at the same time. It is a win win situation. If you get the house ti may be only a few thousand more than your offer but could be tens of thousands dollars less than the highest other offer. Because you do not know who the other bidder is and they may not be in love with the house enough to go that high or cannot go beyond a certain point or a slew of other reasons..... This protects you form drastically over paying and allows you to be competitive with your bid. This clause has helped me win a bid that we ended up paying less than what we would have paid for the house if we put in our max bid by 15% last month....So you do not know if your do not try. But the one caveat is you need to ensure your Realtor can convey this properly to the listing agent so they understand how your bid works and you do not get thrown out for a misunderstanding.... Dave diCecco Realtor/Broker Helen Adams Realty Cell: 704-519-7895 ddicecco@helenadamsrealty.com www.davedicecco.com