865 Real Estate

East Tennessee Real Estate & Neighborhood Source

How To Make A Strong Offer on a House in Knoxville, TN

By

Today’s homebuyers in Knoxville, TN are faced with a strong sellers’ market, which means there are a lot of active buyers competing for a relatively low number of available Knoxville homes. As a result, it’s essential to understand how to make a confident and competitive offer on your dream home. Here are 5 tips for success in this critical stage of the homebuying process and how to make a strong offer on a house in Knoxville, TN.

1. Listen to Your Knoxville Real Estate Advisor

An article from Freddie Mac gives direction on making an offer on a home in Knoxville. From the start, it emphasizes how trusted professionals can help you stay focused on the most important things, especially at times when this process can get emotional for buyers:

“Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.”

A Knoxville real estate professional should be the expert guide you lean on for advice when you’re ready to make an offer.

2. Understand Your Finances

Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to get pre-approved for a loan early in the homebuying process. Only 44% of today’s prospective homebuyers are planning to apply for pre-approval, so be sure to take this step so you stand out from the crowd. Doing so make it clear to sellers you’re a serious and qualified buyer, and it can give you a competitive edge in a bidding war (in fact in today’s market, most sellers aren’t even looking at offers that don’t come with a pre-approval letter from a lender.)

3. Be Prepared to Move Quickly

According to the latest Realtors Confidence Index from the National Association of Realtors (NAR), the average property sold today receives 3.7 offers and is on the market for just 21 days (Knoxville’s median days on the market is only 9 days!) These are both results of today’s competitive market, showing how important it is to stay agile and alert in your search. As soon as you find the right home for your needs, be prepared to submit an offer as quickly as possible.

4. Make a Fair Offer

It’s only natural to want the best deal you can get on a home in Knoxville, TN. However, Freddie Mac also warns that submitting an offer that’s too low can lead sellers to doubt how serious you are as a buyer. Don’t make an offer that will be tossed out as soon as it’s received. The expertise your Knoxville agent brings to this part of the process will help you stay competitive:

“Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.”

5. Stay Flexible in Negotiations

After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. You can strengthen your position with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Freddie Mac explains that there are, however, certain contingencies you don’t want to forego:

“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”

Bottom Line

Today’s competitive market in Knoxville makes it more important than ever to make a strong offer on a home. Let’s connect to make sure you rise to the top along the way.

Call/Text me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today! My team is ready to serve you!

Should I Buy a House Now or Wait?

By

Whether you’re buying your first home in Knoxville or selling your current house, if your needs are changing and you think you need to move, the decision can be complicated. You may have to take personal or professional considerations into account, and only you can judge what impact those factors should have on your desire to move.

The question MANY Knoxville home buyers are asking themselves these days is, “Should I buy a house now or should I wait?” When deciding to buy now or wait until next year, the financial aspect of the purchase is easy to evaluate. You just need to ask yourself two questions:

  1. Do I think home values in Knoxville will be higher a year from now?
  2. Do I think mortgage rates will be higher a year from now?

From a purely financial standpoint, if the answer is ‘yes’ to either question, you should strongly consider buying now. If the answer to both questions is ‘yes,’ you should definitely buy now.

Nobody can guarantee what Knoxville home values or mortgage rates will be by the end of this year. The experts, however, seem certain the answer to both questions above is a resounding ‘yes.’ Mortgage rates are expected to rise and home values are expected to appreciate rather nicely.

What does this mean to you?

Let’s look at how waiting would impact your financial situation. Here are the assumptions made for this example:

  • The experts are right – mortgage rates will be 3.18% at the end of the year
  • The experts are right – home values will appreciate by 5.9%
  • You want to buy a home valued at $350,000 today
  • You decide on a 10% down payment

UPDATE: Since the writing of this article, within a months time, mortgage interest rates have already risen past the expert prediction, increasing by almost a full percentage point to approximately 3.4% for a 30-year loan.

How Smart Is It to Buy a Home Today? | MyKCM

Here’s the financial impact of waiting:

  • You pay an extra $20,650 for the house
  • You need an additional $2,065 for a down payment
  • You pay an extra $116/month in your mortgage payment ($1,392 additional per year)
  • You don’t gain the $20,650 increase in wealth through equity build-up

Bottom Line

There are many things to consider when buying a home in Knoxville. However, from a purely financial aspect, if you find a home that meets your needs, buying now makes much more sense than buying next year.

Have questions or ready to let us help you find a home NOW? Call/Text me, Troy Stavros with CornerStone Realty Associates at 865-999-0925.

#chimein #888388DOOR

What is the Difference between an Appraisal and a Home Inspection when Buying a Home?

By

If you’re planning to buy a home in Knoxville, Tennessee, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a completely different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home in Knoxville.

Home Appraisal

The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal, which is required by the lender, is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their home under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted local Knoxville real estate professional will help you navigate any additional negotiations in the buying process.

Home Inspection

Here’s the key difference between an appraisal and an inspection. MSN explains:

“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your local Knoxville real estate agent is a key expert to help you through this part of the process.

Bottom Line

The appraisal and the inspection are critical steps when buying a home in Knoxville, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate through the entire home buying process.

Call/Text me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today!

5 Questions First-Time Homebuyers in Knoxville Should Ask

By

WATCH THE VIDEO ABOVE

1. Do I make enough money to afford a home? 

Many advisors recommend potential Knoxville home buyers use the 28/36 rule when determining whether or not they can afford a home . To put it simply, it means your mortgage should be 28% or less of your annual income. And all your debt payments should be less than 36% of your annual income. 

That said, average home prices vary all across the world. So, the annual income you’ll need to afford a home in Knoxville, Tennessee will be different than what you’d need in Los Angeles, California. 

2. What kind of down payment do I need as a first-time homebuyer?

One of the most challenging parts of home buying for first-time homebuyers in Knoxville is saving enough for the down payment. But luckily, potential buyers DO NOT have to put 20% down in order to be approved for a loan. Some loans require 10% down, while others require even less, like 5%, or 3.5% (or even ZERO down if you are utilizing a USDA Loan or a VA Loan.) 

The moral of that story is before you buy a home in Knoxville, check to see what type of loan you can be approved for, because that can make a big difference in regards to how much you’ll need for a down payment.

3. Is my credit score high enough?

The credit score you need to purchase a home in Knoxville varies depending on the mortgage you’re applying for. But one thing is certain, as a first-time homebuyer in Knoxville, you want your credit score to be in good shape. The lower the credit score you have, the harder it will be to qualify for a loan with a reasonable down payment.

4. What kind of property is right for a first-time homebuyer? 

Purchasing your first home is a big commitment. Besides considering all the many costs of owning a home, you also need to consider what kind of property is right for you and your family. 

For example, condominiums require less maintenance than homes. But with so many condo association rules, you might not be able to customize your home as much as you’d like. While you can customize all you want with a single-family home, you’ll be responsible for all the maintenance and repairs – which can easily add up. 

Before beginning your home search, research the many different types of properties and costs associated with them all. Pick an option that aligns with your finances. Also, utilize the expertise of a local real estate agent to help educate you on the types of properties available and what living in each of them entails.  

5. How long does it usually take to buy a house in Knoxville?

There’s no denying the home buying process can be a lengthy one. Besides the time spent finding your dream home, you have to find a real estate agent, get approved for a loan, make an offer, negotiate the offer, more than likely deal with competing in a multiple offer situation, get a home inspection, negotiate the repair or compensation for the inspection items, appraisal, etc. 

The amount of time it takes for each step in the home buying process varies. But typically after the contract is signed, it can take anywhere between 30 to 45 days to close.  Oh, and all those steps I mentioned above… you DO NOT want to do that alone, so find a trusted local real estate agent to help guide you through the process.

Have questions? Want to get the process started to get yourself into your first home? Call/Text me, Troy Stavros with CornerStone Realty Associates today! We are helping first-time homebuyers fulfill their dream of owning their own home all the time. Let us help you!

The Importance of Home Equity in Building Wealth

By

Homeownership has always been the first rung on the ladder leading to household wealth. As Freddie Mac recently posted:

“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

Home equity is the difference between the current market value of your home and the amount you currently owe on your mortgage. To estimate your equity, subtract your mortgage balance from the market value of your home.

You can find what you owe on your mortgage by looking at your last monthly statement or by contacting your lender. If you need help determining the current market value of your home, just let us know and we can help!

Is homeownership truly a better path to wealth than renting?

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are already baked into the rent payment – along with a profit margin. You don’t save money by renting.

The Importance of Home Equity in Building Wealth | MyKCM

As proof of this, First American broke down the net worth of homeowners and renters by income categories. Here are their findings: Only one income category ($127-192K) has a higher net worth for renters over homeowners. Every other category shows that being a homeowner leads to greater accumulated wealth.

The Importance of Home Equity in Building Wealth | MyKCM

According to the latest Homeowner Equity Insights Report from CoreLogic, the average homeowner gained $17,000 in equity in just the last year. Here’s a breakdown of the year-over-year equity gain by state:

When can you cash in on your housing wealth?

Your home equity is part of your total wealth as a homeowner. The two most common ways homeowners can leverage their wealth are:

  • Selling
  • Refinancing

Selling: When you decide to sell your home, the equity you’ve built over time will come back to you in the sale. For example, if you paid off your $200,000 mortgage and sold your home for $350,000, you would receive $150,000 after closing. Plus, if you have lived in your home as your primary residence for 2 of the last 5 years, the profit you made on the sale ($150,000) is tax-free!

Refinancing: You can refinance your current mortgage and take out some of the equity you have accumulated. With today’s historically low mortgage rates, you may be able to take out substantial cash and keep your monthly payment the same. Thankfully, homeowners today are doing this responsibly and not repeating the same mistakes made in 2006-2008 when some cashed out their entire equity to purchase luxury items like new cars, lavish vacations, etc.

How can these options help homeowners?

During these difficult times, many households are struggling with their housing expenses. Homeowners, because of their equity, have better alternatives. Odeta Kushi, Deputy Chief Economist at First American, recently explained that homeowners financially impacted by the pandemic will not necessarily be faced with foreclosure:

“The foreclosure process is based on two steps. First, the homeowner suffers an adverse economic shock…leading to the homeowner becoming delinquent on their mortgage. However, delinquency by itself is not enough to send a mortgage into foreclosure. With enough equity, a homeowner has the option of selling their home, or tapping into their equity through a refinance, to help weather the economic shock.”

What might the future bring?

The Importance of Home Equity in Building Wealth | MyKCM

Most experts are calling for home prices to continue appreciating going forward. The Home Price Expectation Survey, a survey of a national panel of over one hundred economists, real estate experts, and investment & market strategists, indicates appreciation will continue for at least the next five years. Using their annual projections, the graph above shows the equity build-up a purchaser would potentially earn by buying a $300,000 home this January:

Bottom Line

Home equity, for most Americans, is the quickest way to build household wealth. That wealth gives homeowners more options during good times and in difficult situations.

Have questions or want to get the process of buying a home started? Call/Text me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today!

The differences between FHA, VA, and USDA mortgages

By

When you get a mortgage in Knoxville, there are several options you can choose from, including FHA, VA, USDA, and conventional mortgages. And the one you pick will determine how big of a down payment you’ll need, what credit score you should have, and all the other requirements you’ll need to meet, as well.

But choosing the right type of mortgage can be difficult — especially if you’ve never bought a home before.

Are you confused about your mortgage options? Maybe need dome help deciding which program is the best fit for your upcoming home purchase? Here are your choices:

FHA mortgages

FHA mortgages are insured by the Federal Housing Administration. They allow for lower credit scores than most other loans. In fact, with some lenders, you may be able to get approved with a credit score as low as 500 (as long as you make at least a 10% down payment).

The one caveat with FHA loans is that they require a Mortgage Insurance Premium both at closing and as part of your monthly payment. The exact cost of this varies based on your loan balance and down payment.

Minimum down payment: 3.5%

Minimum credit score: 500 to 580, depending on down payment size

Who they’re best for: First-time homebuyers, low-credit score buyers

VA loans

VA loans are mortgage loans that are guaranteed by the Department of Veterans Affairs. Only homebuyers who are military veterans, current military members or their spouses can qualify for a VA loan. Applicants also need to meet certain service requirements, as well as obtain a Certificate of Eligibility from the VA.

VA loans come with some of the lowest interest rates around, and there are also no minimum credit score or down payment requirements.

Minimum down payment: Zero

Minimum credit score: None

Who they’re best for: Veterans, military members, spouses of veterans and military members

USDA loans

USDA loans are mortgages backed by the U.S. Department of Agriculture. They’re reserved for buyers in more rural parts of the country, and they’re only available in certain areas. Borrowers also need to fall under the set income threshold for their community. Like VA loans, USDA loans require no down payment. You can search for the eligibility of a particular address here: https://eligibility.sc.egov.usda.gov/eligibility/ If you don’t want to go through the hassle of searching every home we can set you up on a search that shows you only homes in areas that are eligible for USDA loans.

Minimum down payment: Zero

Minimum credit score: Typically 640, though it varies by lender

Who they’re best for: Rural homebuyers, low-income buyers, buyers who have no down payment savings

Conventional mortgages

Conventional mortgages are loans issued without any government insurance or backing, like those mentioned above. Because of this, lenders tend to be more strict about which borrowers they’ll approve for these loans.

Typically, conventional mortgages require higher credit scores than other mortgage options, though it varies by lender. The minimum down payment is just 3%, but if you go that low — or make any down payment under 20% — you’ll typically have to pay for Private Mortgage Insurance. Unlike the mortgage insurance on FHA loans, PMI is cancellable after you’ve paid off enough of your loan.

Minimum down payment: 3%

Minimum credit score: Typically 620, though it varies by lender

Who they’re best for: Buyers with good credit

Which will you choose, an FHA, VA, USDA, or conventional mortgage?

If you’re still not sure whether an FHA, VA, USDA, or conventional mortgage is the best fit for your home purchase in Knoxville, talk to a loan officer or mortgage broker in your area. They can help point you toward the best option for your budget and goals. We’re happy to recommend some excellent mortgage professionals so just give us a shout!

Call/Text me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today!