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Now that spring has finally arrived and optimism about returning to normal life in the near future is realistic, should you go ahead with your postponed plans to buy a home this year?

If you have perused the multitude of websites to see what is currently available for sale, you are probably shocked to see that there are very few homes on the market. Even if you find one that went on the market today, there’s a good chance that it will be under contract by tomorrow, sometimes selling for $10,000 to $50,000 above the listed price!

So why is this happening? The simple answer is that demand is significantly higher than the supply of homes that are available, a classic example of the “Law of Supply and Demand”. In simple terms, if the number of people looking for homes exceeds the number of homes that are available, the price of the supply will increase. As of now, the Existing supply of available homes is at an all-time low of <3 months verses what is considered a balanced supply of homes for sale of 6 months. If you remember 2008, the opposite occurred as available homes out stripped the number of buyers, causing a 20% to 30%+ drop in prices for existing homes.

Will this situation continue long term? While none of us, including myself, can predict what is going to occur in the housing market, the consensus among various real estate resources including the National Association of Realtors®, Zillow and, is that average home prices for 2021 will increase by 3% to 5%, depending on the market. As available homes for sale increase during the remainder of this year, prices should stabilize and the need to pay more than the listed price should be significantly reduced as there will be more choices for buyers.

So, here are 3 questions you should be asking yourself:

Do I have to buy a home now or can I wait for a few months to see what happens to the housing market in my area?

Right now, because the demand for homes far exceeds homes that are available, inflated prices coupled by bidding wars amongst buyers, has resulted in selling prices that are 6% to 10% more than their realistic market values.

Besides demand, according to the Freddie Mac’s weekly summary of mortgages, a 30-year fixed rate mortgage is currently around 3%. Rates for the remainder of the year are expected to continue to remain stable at 3% to 3.25%, allowing buyers to wait for the supply to increase with minimal impact of potential increases in mortgage interest rates.

Therefore, if you really need to buy a home right now, do not buy into a bidding war! While the supply of homes is at historic lows, home inventory will increase this year, giving buyers more choices. Additionally, as mentioned above, interest rates are expected to remain at the current 3% to 3.25% levels, so waiting until things “cool down” later this summer, to buy an existing home will probably eliminate much of the current buying frenzy of paying $10,000 to $$30,000, or more, over the listed price.

Are you wishing to build your new home?

Buying a new home could be a viable alternative but does have some drawbacks. Reputable builders base their pricing on profit criteria aka bottom-line dollars to them. They also understand that 75% of their business comes through Realtors®, meaning that they are reluctant to play the highest bid game. Also, from the buyer’s viewpoint, you will be locking in a price point now versus 4 to 6 months from now when the home is finished. With this said, builder concessions and incentives will be limited due to the current seller’s market, although, in most markets, closing cost incentives offered by the builder, if you finance through their “recommended” lender(s), will likely remain.

Am I going to be in the house for less than 3 years?

If your answer is yes, here are some facts that you need to consider before signing on the dotted line as there is a good chance that your home will sell for less than your investment when you close 3 years from now, especially if you finance >95% of your purchase price.

Let’s look at this example:

You just closed on your home and paid $25,000 over the asking price as this was the only home that met your realistic needs. Your total purchase price was $375,000 plus closing costs (as sellers in this market don’t need to offer closing cost assistance) of $8,000. Therefore, your total investment in the home is $383,000.

Three years from now, you sell your home for $385,000, 10% higher than the actual market value of your home when you purchased it. The costs to sell your home will generally be in the 4% to 8% range covering commissions, (even if you sell your home without a listing broker) and closing fees. In this illustration, we will use 6% for closing costs, which means you will net $362,000.

Original investment $383,000

Sale price after 3 years $385,000

Less Closing costs @ 6% (23,100)

You will net $361,900

Let’s now look at your mortgage balance –

Your borrowed 95% of the purchase price or $356,000

You now owe $343,540

Your net proceeds $18,460

Your original investment

(down payment and closing costs) $ 18,750

Your net loss $(290)

In closing, why not consider investing in one of our home buying guides which provide some great tools to guide you in making the best decision(s) for you.

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Updated: Jun 20, 2021

If you are selling or renting your home

Now that Spring is here, many of us will be buying and selling their homes without a Realtor®. To protect yourself, it is crucial that you are familiar and understand that you are still obligated to comply with all federal, state, and local fair housing laws. Failure to comply will subject you to substantial fines starting at $16,000 for the first offense under the Civil Rights act of 1968, Title VIII, which deals with fair Housing regulations.

The Civil Rights Act of 1968, Title VIII, applies to all residential properties, intended for occupancy as ones’ residence. The act prohibits discrimination in housing because of:

• Race or color

• National Origin

• Religion

• Sex

• Familial status

• Disability or handicap

Let’s review each of these categories

Race or Color - This means that you must not use a person’s race to deny them of their rights to purchase a home if they are otherwise qualified to do so. For specifics, please go the HUD website.

I had a discrimination situation when I was new to the business where a seller I represented refused to sign a purchase agreement because the couple was African American. The seller’s violation was reported to the Department of Urban Development (HUD), which enforces fair housing laws, who investigated and found the seller did violate the act resulting in a fine of $16,000 plus a civil judgement of $50,000 to the buyers and $9600 commission to my real estate firm as well as legal fees to defend this charge.

National Origin – As in race or color, discrimination against people from “Africa, Asia, Russia, etc. “ violates the fair housing laws. Currently, there are property owners that are refusing to sell or rent their homes to those "that come from China". This is a clear violation of the act.

Religion – Forbids discrimination based on one’s religion, or lack thereof.

I had a situation where a buyer wanted me to check the ownership of all homes in this neighborhood for owners that had "Jewish names". This is a clear violation of the act, which, obviously, I could not do.

Sex – In addition to discrimination based on being a female or male, sexual preference (gay or lesbian), transsexuals, and others related to LGBT is also strictly forbidden.

Once again, I had an owner that refused to rent their home to two unmarried women as "he only rents to married male and female couples". This is a clear violation under the act as well as Familiar Status, as defined below.

Familial Status – applies to children under the age of 18 living with parents or legal custodians; pregnant women and people securing custody of children under 18. This is one of the most common violations under the Fair Housing Act.

Examples of violations include giving out information on the number of children in a community, advertising adults with no children only, a buyer asking to see only neighborhoods with children.

Handicap or Disability – You can not refuse a person with a disability or handicap the right to buy or rent a personal residence based on handicap or disability if they are not a threat to themselves or others.

3 common examples deal with rentals -

If you are a landlord or owner of a property with a “no pet” policy, such policy does not apply to “service animals”, such as seeing eye dogs or companion animals for those with mental issues where pets are used as a treatment for their condition.

The installation of ramps for access to a property if the installation and, removal, of the ramps are paid for by the tenant and does not affect the structural integrity of the property.

Refusal to sell a property based on one’s handicap and/or appearance is another violation.

Prohibited Acts and Examples

Refuse to engage in a real estate transaction

  • I won’t show you my rental because I don’t like “Aliens”, which is a “protected” class.

  • I refuse to show you my home because you are Gay.

  • My home is not available to people from your country

  • Refuse to rent or sell property*

  • Thanks for the offer, but I do not wish to sell you the home because of your Asian heritage.

  • The ramp you will need to build to accommodate your handicap will detract from the neighborhood, so I will not be able to lease this home to you.

  • This is a quiet neighborhood, so I won’t sell my home to you because you have teen age children.

  • Set different terms, conditions, or privileges for a sale or rent

    • I require an additional month’s security deposit for people of your race.

    • I charge a higher interest rate for people from your country.

    • I charge a $300 fee for renters with pets, including your seeing eye dog.

    • Indicate that property is not available when it actually is available

    • I’m sorry, but this home is under contract, when in fact, it is not.

    • I don’t expect to build this model again even though construction has begun on 3 versions of the model in question.

    • I just received a deposit when, in fact, this is not true.

    • Threaten, intimidate, retaliate against, or otherwise interfere with the use and enjoyment of a property.

Here is what happened to me when, as a real estate agent, I met with the seller of a home I was trying to list. After going through my presentation, the seller placed a gun on the table where we were sitting and said he would list his home with me. He then looked at me and asked me if I knew what the gun meant and what it would be used for if any minority were to tour his home.

Since I am not a particularly brave person, I politely declined the listing and left the property with much speed.

After thinking about his method of persuasion, I called the local FBI office and told them what just occurred. Within “seconds”, at least 10 agents surrounded the seller’s home and hauled him off to jail.

While, in retrospect, my call was not the greatest of ideas, I learned quickly what happens if you are threatened by a homeowner.

Are there exceptions to this act? Yes, here is the primary exception

If you live in a 2-to-4-unit property, you can discriminate (refuse to sell or lease) if the reason is not based on race or color. There are other limited exceptions. These can be viewed on the web site listed below.

How do you avoid these potential infractions?

Download a copy of the Fair Housing Acts and read it! - Defending alleged fair housing violations are expensive and time consuming.

Do not respond to questions regarding protected classes - If you are asked a question relating to the federal, state, and local, if applicable, protected classes, your response must be “Sorry, I can’t respond to your question as by doing so, I would be violating fair housing laws, and therefore, you (the buyer and/or potential renter)need to determine if the property in question is a good fit for you”.

Advertising You must be careful that your ads do not contain any reference to the protected classes. The ads need to be specific to the property only outlining features such as location, number of bedrooms and baths, lot size, square footage and amenities. Reference to children, places of worship, schools (with some strictly limited exceptions), etc. will expose you to potential liability and expense.

For specifics regarding federal fair housing information, click on this link to view and download the HUD pamphlet which covers the federal laws in detail. For state and local fair housing laws and protected classes, Google state fair housing laws and/or city, county fair housing regulations.

Bottom Line

If a question relates to any federal, state, and local protected classes – Race and color, National Origin, Religion and / or Familiar Status, your only answer to such requests is – “that you aren’t able to respond to their question as by doing so, you would be violating fair housing laws, and therefore, you (the buyer and/or potential renter)needs to determine if the property in question is a good fit for them”.

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