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Norm Terapak
Norm Terapak
Terapak Realty & Management
Glendale, WI 53217

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RISMedia - Home Buying 101

What to Consider When Selling Your Home in a Rising Rate Environment

There are many economic variables to consider when selling your home when interest rates are rising. If that’s the only changing economic variable, you’re generally going to see a negative impact on both home sales and home prices. This means as interest rates rise, the buyer pool for your home is going to shrink.

In 2008, the Federal Reserve set rates at 0.25 percent because of the recession and the lack of buyer confidence or demand. Since then, buyer confidence and buyer demand have risen. In December 2015, rates climbed to 0.5 percent and continued to rise to where they are today at 1.5 percent. The Fed has noted rates will rise to 2 percent in 2018 and then 3 percent by 2020.

What Happens to the Ability to Sell Your Home With These Rises in Interest Rates?
If interest rates rise 1 percent and all other economic factors remain the same, purchasing power for homebuyers will decrease by just over 11 percent; therefore, every quarter-percent (0.25 percent) rise of interest rates reduces homebuyer purchasing power by 3 percent.

That means for a home purchase of $300,000, a 1 percent interest rate rise reduces buying power to just under $267,000. So, someone who potentially may have been able to purchase your home may no longer have the buying power to do so. This creates a smaller buyer pool and less demand for your home. It’s also likely to increase supply as fewer people are able to purchase homes.

If mortgage rates rise, it becomes more probable for indecisive buyers to rush into the market, and the short term will likely see a decent boost; however, it could add extra pressure if rates continue to rise without leveling out.

While interest rates play a role in the housing market, there are a variety of personal and economic factors to consider, as well.

What Other Economic Factors Play a Role?
Supply and demand play crucial roles in determining the movement of home prices. If supply goes up, home prices go down. If supply goes down, home prices will probably go up. If demand increases, home prices mostly likely will as well; however, if fewer people are looking to buy homes, then prices will most likely decrease. As a seller, these are important factors to consider when putting your home on the market.

The sale of new homes is another factor to consider alongside rising interest rates because supply and demand will always play a factor in the home-buying process. Supply increases when new homes are created. Assuming that interest rates don’t rise too rapidly, paying attention to new-home inventory levels will give you an indication of what to expect as a seller.

Monthly income, as it relates to monthly mortgage payments, is a more important variable to gauge than interest rates alone. Your debt-to-income ratio plays a larger factor in your ability to qualify for a mortgage than interest rates alone. When monthly income rises, your ability to absorb higher interest rates does, as well. This means that as long as people are making more money, they’ll also be able to pay off any increase in debts.

When the real estate market crashed in 2007-2008, monthly payments of principal and interest were nearing 25 percent of the U.S. median family monthly income. Even with a rise in interest rates, Americans are currently seeing the highest monthly median income in the last 35 years. Because of this, the percentage of monthly income going toward monthly payments is still well below levels that analysts consider dangerous.

Overall, we seem much more hesitant to take out mortgages than we have been in the past.

One of the largest surprises is the percentage of all-cash transactions for home purchases. Even with interest rates at historic lows, the percentage of all-cash transactions is higher than normal because we’re more cautious about taking on debt than we have been in recent decades.

High stock market valuations allow people to diversify their percentage of assets, cash out and reinvest in real estate to keep their portfolio balanced.

The number of distressed properties is a result of a strong job environment. This allows folks to pay their mortgages without defaulting, while also helping to keep prices up even with a rise in interest rates.

While interest rates play a large factor in selling your home for top dollar, they’re in no way the only deciding factor. All of the factors mentioned above should be taken into consideration before you rush into selling your home because of high interest rates.

Ryan Fitzgerald is the founder of Raleigh Realty, a local real estate firm in Raleigh, N.C., that specializes in helping people find great homes for sale online.

This appeared first on ZING! by Quicken Loans. For more information, please visit

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4 Ways to Prepare for a Competitive Spring Home-Buying Season

(TNS)—With housing inventory far lower than demand and mortgage rates poised to rise, it’s going to be a competitive market for homebuyers this spring.

If you’re looking to buy a home this season, here’s how to prepare yourself to enter the fray. 

Get your financial house in order.
Unless you plan on paying for the house in cash, you’ll need to apply for a mortgage. No matter how streamlined the process is, you’ll still need to gather a significant amount of documentation to give an accurate financial picture to the lender.

Before you even begin house shopping, look at your credit report to make sure there are no errors that could affect your score. Also, pay off any delinquent bills and reduce any other debts you owe so that your debt-to-income ratio (DTI) is favorable. Use a calculator to figure out your DTI and see if you need to make changes. Your goal is to look as attractive to lenders as possible so that you are you approved and can get the best rate on a loan.

Make sure you’ll qualify for a mortgage.
In order to get a mortgage, lenders want to know you’ll be able to meet your monthly obligations no matter what. This means they’ll ask to see your entire financial situation including employment history, salary, savings, investments, debts and anything else that makes up your net worth. Use a prequalifying mortgage calculator to get an idea of what size loan is right for your needs.

Even if you think you’re a strong candidate, never assume you’ll automatically qualify with the first lender you contact. Lenders’ guidelines have become stricter since the housing crisis of 2008, and you could lose out on the house you want if you can’t close on a loan. “Sometimes one deficiency can be offset by another strength. For example, if you have a higher DTI ratio, saving up enough to put a bigger down payment can help,” says Bill Banfield, executive vice president of Capital Markets for Quicken Loans. 

Choose the right REALTOR®.
Unless you’re a seasoned pro, having a REALTOR® on your side can make a big difference.

“An experienced agent will know what could happen that might make a deal fall apart and how to keep that from happening,” says Dori Summer, a real estate agent with Keller Williams Realty in Coral Springs, Fla.

Making an offer on a house in a competitive market can require more than just a willingness to pay the price. If a seller has to choose between multiple buyers, they’re likely to choose the one that’s coming to them with the best overall package. A good agent will present your offer along with other information, including your ability to get a loan, how much you’re able to put down and anything else that might make you more appealing than someone else vying for the same property.

Be prepared to pay the price.
Home prices in close to two-thirds of the housing market are at an all-time high, according to a February 2018 report by the National Association of REALTORS®.

“Sellers in this current market get at least 95 percent of their asking price,” says Samona Rosenberg, a licensed real estate agent with Stein Posner Real Estate Services in Boca Raton, Fla.

If you see the house you want and you know it’s in your budget, it may not make sense to hold out to see if the price will drop.

“The best properties all have multiple offers,” says Erik Williams, a REALTOR® with Keller Williams Realty in Cambridge, Mass. “If it’s a desirable property, it’s desirable to buyers. The people that I see get places under agreement are the most prepared people and the most aggressive.”

Distributed by Tribune Content Agency, LLC

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Ask the Expert: What Can Sellers Do to Prepare for a Home Inspection?

Stark_BuddyToday’s Ask the Expert column features Buddy Stark, director of Operations for HomeTeam Inspection Service.

Q: What can sellers do to prepare for a home inspection?

A: Completing these quick and easy tasks before beginning the selling process will help reduce stress and save your clients valuable time during the home-selling process.

Clean the House
An important part of selling a home is keeping it clean in anticipation of a showing. Cleaning the home will convey that it’s been well cared for and that the house is less susceptible to any issues caused by neglect.

Check All Windows
Have your client take a quick inventory of the windows to make sure they’re in good working order. Replace windows that are cracked or broken before the inspection to save time during the selling process.

Finish the Honey-Do List
Some areas of the home, although not typically thought of as areas that would affect a home’s appeal, may be displayed as safety concerns on a home inspection report. Your client can help themselves by replacing burnt-out lightbulbs, testing smoke detectors, replacing air filters and unclogging drains. These little things are easy to forget in day-to-day life, but taking care of them is a relatively easy task that will help potential buyers focus on the important systems of the home.

Check All Outlets
A sampling of electrical outlets will be tested as part of the home inspection to make sure they’re in good working order. Encourage your clients to take note of which outlets are not functioning in the home and replace them. Or, they may want to consider hiring an electrician to make sure both outlets and the electrical box are updated and in proper working condition.

Clear Areas for Easy Access
Home inspectors will be looking at the major parts of the home, including the foundation, HVAC systems, electrical systems, plumbing and even the water heater. Making sure home inspectors can easily access these areas, including the basement and attic, will save time during the inspection process.

Consider a Pre-Listing Inspection
Hiring experienced and professional home inspectors can save a lot of headaches during the selling process. They will thoroughly go through the home and notify clients of any potential issues ahead of listing the property.

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Making Sense of Valuation’s Alphabet Soup: CMAs, BPOs, AVMs and Appraisals

The following information is provided by the Center for REALTOR® Development (CRD).

This article explains the four most common valuation methods used for real property transactions and how and when they are used. It’s important to note that the methods below are not necessarily mutually exclusive. Lenders, servicers, investors, and other professionals use one or more of these valuation methods, depending on circumstances and the type of transaction. Often, one valuation method is used to confirm or quality-check the results of another.

Comparative Market Analysis (CMA): A CMA is prepared by a licensed real estate professional and is most commonly used to help determine a home’s listing price. The CMA should not be the only factor in determining listing price; rather, it is a guide for the agent and owner to evaluate the active and sold competition, and to serve as a tool in the price-setting process. A CMA can also be used—depending on variations in state laws—for a variety of other purposes, including loan modifications, short sales and foreclosure/REO purchases, value trend analysis, mediation and negotiation. It should not serve as the sole method of valuing collateral in a real estate transaction where a mortgage is being originated.

Broker Price Opinion (BPO): A BPO is prepared by a licensed real estate professional and is an estimate of the probable future selling price of a property. Like CMAs, BPOs may be used—depending on variations in state laws—for a variety of purposes, including loan modifications, short sales and foreclosure/REO purchases, value trend analysis, mediation and negotiation. They normally should not be used as the sole way to value collateral in a real estate transaction where a mortgage is being originated, even though in some states both BPOs and CMAs are technically permitted for purchase money transactions when the transaction is less than $250,000 (though allowed, CMAs are rarely used for this purpose).

Automated Valuation Model (AVM): An AVM is a service or software that provides property valuations, often based on mathematical modeling. AVMs are most commonly developed or used by lenders, servicer appraisal staff, and investors. While AVMs are most often used by lenders or secondary markets to confirm valuations provided in appraisal reports, they should not be used as the sole method to value collateral in a real estate transaction where a mortgage is being originated. They may, however, be used as the sole valuation option for other types of transactions, such as refinances.

Appraisal: An appraisal is prepared by a licensed or certified appraiser and is an opinion of a property’s value. Appraisals are most often used to value collateral in a real estate transaction and are required for most federally-regulated transactions above $250,000. Exceptions include transactions where no new money is involved. In practice, appraisals are used for the vast majority of purchase money transactions involving a loan. For the most part, lenders or servicers determine the use of appraisal or another acceptable methodology for transactions that are not purchase money.


For more education about valuation and pricing, check out this month’s featured online certification course at the Center for REALTOR® Development, Pricing Strategies: Mastering the CMA, which is the educational requirement for NAR’s Pricing Strategy Advisor (PSA) certification, and is on sale this entire month of January at 25% off its regular price. This certification aims to help real estate professionals enhance skills in pricing properties, creating CMAs, working with appraisers, and guiding their clients through the anxieties and misperceptions related to real estate valuation.

For more information, please visit RISMedia’s online learning portal from NAR’s Center for REALTOR® Development (CRD) and the Learning Library. Here, real estate professionals can sign up for online professional development courses, industry designations, certifications, CE credits, Code of Ethics programs and more. NAR’s CRD also offers monthly specials and important education updates. New users will need to register for an account.

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Ask the Expert: How Can I Guide Clients Through the Home Inspection Process?

Today’s Ask the Expert column features Adam Long, president of HomeTeam Inspection Service.

Q: What can be done to guide clients through the home inspection process?

A: After being in business for 25 years and performing over a million inspections, HomeTeam Inspection Service has identified the top ways to ensure a smoother home inspection, contributing to happier clients and a better outcome.

Make It Convenient
The home inspection process—from scheduling to report delivery—should be convenient for everyone involved. Online scheduling, text messaging and electronic delivery of reports make convenience possible when it comes to the home inspection. If a home inspection company isn’t providing this, clients are missing out on the best possible experience.

Don’t Keep Them Waiting
Ten years ago, it was commonplace to wait five days or more for a home inspection, but today, consumers want it now. Plus, consumers are busier than ever today. They not only want a home inspection that can be performed soon, but also one that can be performed in half the time of the traditional three- to -four-hour inspection. That’s a large part of what makes HomeTeam successful. Our team approach allows for a faster inspection and more appointment slots each day.

Give Them Options
Clients only want to pay for services they need. While most home inspection companies offer a wide range of services, client needs vary, and the leading home inspection companies allow clients to schedule individual services like pest, mold and radon.

Ensure It’s Educational
A home inspector will not give a pass/fail grade on a home, but will give an objective assessment on the condition of the home during the inspection. Educating the client on their new home and how to maintain it is a sign of a professional inspector. Communicating information in a non-alarming manner is critical to helping clients absorb information and make prudent decisions. An inspector that’s accessible to answer questions onsite and after the inspection instills peace of mind in clients and makes them more confident in their purchase decision.

Deliver Accurate Reporting
In addition to a verbal report that the client receives onsite, the most professional inspection companies will furnish a narrative, electronic report that’s emailed to the client and agent. A narrative-style report is more detailed than a checklist-style report, putting forth a clearer picture of the home with less room for interpretation. Including photos and a summary helps the client easily identify any safety concerns or areas that warrant attention.

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Norm Terapak | 414-273-4363 | Email Me
5205 N Ironwood Rd., Suite 205 - Glendale, WI 53217
Copyright © 2016, All Rights Reserved

 Our focus is on Milwaukee and Ozaukee Counties. We are very familiar with Milwaukee neighborhoods on the East side including Riverwest and Bay View but we do cover the entire Metro area of Milwaukee and surrounding  suburbs.  

We can help you with municipalities including Shorewood, Whitefish Bay, Glendale, Brown Deer and Fox Point  We are finding more buyers are also interested in Mequon, Cedarburg, Grafton and Port Washington in Ozaukee county which offers a short commute to jobs in Milwaukee.

 We offer expert service for our buyers and competitive commissions for our sellers.  Our competitive commissions are based on price range and our perception of how quickly your home may sell.  We are full service Multiple Listing Service Realtors providing you with many years of experience that will result in an efficient transaction saving you time and money.