Southeast Alaska Home and Real Estate Guide - September 2017

A PUBLICATION OF THE CAPITAL CITY WEEKLY

SOUTHEAST ALASKA

SEPTEMBER 2017

TABLE OF CONTENTS On The Cover: Photo by Hadassah Nelson 2 AlaskaUSA Mortgage 3 Coldwell Banker: Gwen Place 4 Ricker Real Estate Consulting AlaskaUSA Mortgage: Minerva Carandang Platinum Real Estate Valley Auto Parts 5 Ask a Broker 6 Selling your Home: 'X' Marks the Overlooked Generation.

7 Southeast Alaska Real Estate: Jocelyn Miles

By The Numbers 8 The Most Wonderful Time of Year 9 Home Buying: Real Estate Experts Exit Realty 10 A Sort-of Secret Home for Sale 11 First Bank Mortgage 12 Try this on the Grill 13 Overcoming Stressed-Out Shopper Syndrome 14 Cornerstone Homelending Changing the Idea of "Home" 15 Residential Mortgage State Farm: Malia Hayward 16 Southeast Alaska Real Estate: Karen Wright

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September 2017

ASK A BROKER

By Peter G. Miller QUESTION:

We expect to retire in the next year to 18 months. We have a mortgage on our house and the remaining balance is about $60,000. We have the cash to pay off this debt but does it make sense to prepay the mortgage before we retire?

ANSWER:

While prepaying the mortgage often is an attractive idea. it may not be the best use of your funds. Prepaying the mortgage will produce several benefits.

First, your expenses will be reduced in the amount of the monthly cost for principal and interest. It can be a significant cash flow savings, but you still will need funds for property taxes, insurance and any HOA fees.

Second, with less debt your credit score can increase.

Third, with smaller monthly costs, the money saved from prepaying the mortgage can be used to reduce other debts or increase savings.

However, the real question is whether you might do better by using the money in other ways. For example, credit cards have notoriously high interest rates. If you can eliminate credit card balances – and not create new credit debt – then paying down credit cards can be a real money saver.

Car loans might seem like a good candidate for prepayment, but vehicle financing is often structured with the so-called rule of 78s, a lending approach that moves much of the interest cost toward the start of the loan term, thus reducing the benefit of prepayments.

However, paying off a car loan may be attractive if it simply results in a lower monthly cost of living.

If you have a vehicle loan financed with simple interest like an ordinary

mortgage, then prepaying can be very attractive because it will result in both lower monthly costs as well as the repayment of the loan without an excess interest cost.

According to the Federal Reserve Bank of New York student debt has gone from $260 billion in 2004 to $1.3 trillion at the end of 2016. Not only is student debt enormous, it can be a better prepayment target than a mortgage. Why? If you get into financial trouble and go bankrupt student loans are extremely difficult and

often impossible to discharge.

Lastly, it simply may not be a good financial strategy to prepay a mortgage.

For example, it’s generally easier to come up with monthly payments than to accumulate large amounts of money – $60,000 in this case. If the cost is affordable, it might be worthwhile to make monthly payments until the debt is extinguished and hang on to the cash for emergencies.

peter@ctwfeatures.com Peter G. Miller is author of “The Common-Sense Mortgage.'

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JUNEAU PHOTO: ARUN SUBRAMANIAN

Juneau is 16% safer than other Alaskan cities and 6% safer than other American cities.

Source: AreaVibes.com

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SELLING YOUR HOME

By Erik J. Martin

'X' Marks the Overlooked Generation WHEN IT COMES TO HOME BUYING AND SELLING, GEN X IS BACK IN THE REAL ESTATE GAME By whatever name you call them – millennials, Generation Y or twentysomethings –consumers typically born between the early 1980s and mid 1990s continue to dominate headlines, especially when it comes to housing trends.

But their bigger brothers and sisters have been making some real estate news of their own lately that should interest home buyers and sellers of any generation.

Based on a new National Association of Realtors study, Gen Xers (often born between the mid1960s and early 1980s) have increased their home purchase activity by 28 percent in the year ending June 2016, up from 26 percent a year earlier and the highest rate observed since 2014. The report, which expects increased home buying from Gen X to continue in 2017, credits marked growth in home values, a more robust economy, and several years of solid job gains with spurring 37- to 51-year-olds to purchase more homes lately.

Racquel Popovic, agent with Mirdaor Real Estate in New York City, says she found the aforementioned 28 percent uptick statistic “astounding,” but can understand the drivers of this trend.

“Consider what life stage many Gen X individuals are in right now.

Many are thinking about retirement and moving in or out of big cities, and their children are now the ones requiring larger homes for expanding families,” Popovic says. “Many in this generation trust property over other investments and prefer the stability of the real estate market rather than gamble with stocks or other uncertain assets.”

The real estate crash nearly a decade ago affected Gen X the hardest, many believe.

“They were in prime buying and selling mode when the market rose, but were left holding the bag when it tanked,” says Gina Tufano, Realtor with Ashburn, Va.-based Pearson Smith Realty. “Thankfully, many have recovered through building equity or savings and are no longer trapped. Now, the time has come for them to be active players in the market again.”

Douglas Wagner, director of brokerage services for New York Cityheadquartered BOND New York Properties, says Gen X often has been

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overshadowed by millennials in media coverage because the latter is seemingly more homogenous.

“Their practically unison movements are quickly identifiable as trends, and, as such, millennials are interesting culturally. By contrast, Gen Xers live more like the Baby Boomers before them,” Wagner says. “But this new home purchasing data provides the media with an entirely new chapter to explore.”

Joshua Jarvis, owner of Jarvis Team Realty in Duluth, Ga., agrees that Gen X is a different breed from Gen Y. “Gen Xers have families and are coming into their own in their careers. They were generally taught to work hard to get what you want,” says Jarvis, adding that these qualities may not be as interesting to the media.

Wagner believes Gen X has learned from past mistakes, too.

“This generation suffered greatly from falling home values, predatory lending and the foreclosure epidemic. Some weren’t financially ready to undertake huge mortgage debt and learned from the Great Recession to live within their means,” Wagner says.

Gen Xers – or prospective buyers of any age group, for that matter – need to be honest with themselves about what they can afford and their future goals and needs, say the experts.

“Before purchasing, they should be confident they have enough funds on hand after closing to carry the property into the future, even if they should see an interruption in their incomes,” says Wagner, who recommends keeping a ratio of expenses to income at or below 30 percent. “And before selling, Gen Xers need to get multiple professional opinions on a home’s value and consider where they’re going to move next.”

Tufano advises buying based on “what is, not what you hope it will be,” she says. “The market will likely go up and equity will improve, but what if it doesn’t? Will you be able to sell this home down the road?

What if you can’t refinance? What if you get laid off?”

Ultimately, “think big picture, and you will likely find a home you not only love,” Tufano adds, “but one that will be an asset in your portfolio toward retirement.”

September 2017

By the Numbers

329

$

Average amount a renter who moved in the past year paid more per month than a renter who lived in the same place for five years or more.

Source: Zillow

2.1

Percentage increase in the Fannie Mae Home Purchase Sentiment Index (HPSI) in June – tying an all-time high.

Source: Fannie Mae

75.7

Percentage of homeowners that have at least 20 percent equity in their homes.

Source: Zillow

28

Percentage of Americans that think real estate is the best way to invest money not needed for 10+ years. It was the highest ranking investment.

Source: Bankrate.com

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BUYING

By Erik J. Martin

L AT E

S U M M E R C A N Y I E L D M O R E I N V E N TO R Y A N D B A R G A I N S — H E R E’ S W H Y

Conventional real estate wisdom holds that the prime period in which to peruse for and purchase a home is the spring. But fresh research suggests that there’s an even sweeter spot on the calendar: the month of August.

A new analysis by Zillow indicates there are more homes for sale near the end of summer than at any other point in the year, providing a wider selection of inventory and a better opportunity to score a bargain. Consider that, in August 2016, there were more for-sale listings in most major markets than any other month last year (8,000 more in August versus April 2016 in Los Angeles alone, for example). Moreover, the eighth month of the year has more price cuts: more than 15 percent of all listings last August had reduced prices compared to only 12.6 percent in March.

“Traditionally, early to mid-spring is thought of as the prime home shopping season, so it was somewhat counterintuitive to see that late summer actually offers a lot of inventory to choose from and sometimes better prices,” says Dr. Svenja Gudell, chief economist for Seattle-headquartered Zillow.

In the spring, she adds, shoppers rush to the market and can get caught up in bidding wars.

“But by the time fall nears, sellers are feeling the pressure and are more likely to consider a price cut in order to sell their homes,” Gudell says. “And many buyers also want to be done with the home buying process by late summer so they can settle their kids in for the new school year.”

Elizabeth Convery, founder of Very Real Estate in Philadelphia, concurs, noting that many sellers hold back new listings until the start of the fall season, which generally kicks off right after Labor Day. “This gap season in late summer is ripe for finding a deal for buyers who aren’t willing to rest. The inventory available in August generally includes homes that were put on the market in the spring and didn’t sell because they were either overpriced or the pending deal fell out of contract,” Convery

says. “Sellers of these homes are eager to move them before the new inventory hits the market in the fall.”

Beth Gittleman, associate broker with New York City-based Bohemia Realty Group, says there’s an additional reason why August bodes well for would-be buyers.

“At the end of summer, people are getting in last summer vacations and, if the heat is hearty, they’re feeling less motivated to get out in the field and look at properties when staying at home in air conditioning seems more appealing,” Gittleman says.

To capitalize on this limited calendar of opportunity, experts recommend acting fast.

“Buyers should have their financial set, get pre-approved for a loan and be prepared to make an offer quickly,” Gudell says.

Enlisting the aid of a pro also is crucial.

“It’s important to engage a real estate agent from day one,” Convery says.

“Someone who not only knows the market well but also can advise you on the specifics of your purchase needs.”

Keep in mind, however, that even though supply may creep up and prices creep down in August, you may not land the home of your dreams with perfect timing.

“Inventory remains limited compared with previous years, so there will still be competition from other potential buyers,” Gudell notes.

In other words, exercise patience and smart judgment. If you can’t find the right deal before autumn arrives, don’t beat yourself up about it.

“Be prepared, plan ahead, and assemble the best team you can to support the purchasing process. If you have flexibility, stay on plan and wait for something better to come along later,” Gittleman says. “If you don’t have the time or flexibility, then buy a property that doesn’t make you house poor.” © CTW FEATURES

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September 2017

HOME BUYING

By Laura Depta

Real Estate Experts...

Tips to assemble the perfect home-buying team Purchasing your first home represents a major life event, but you can’t do it alone. Home buying is a team sport, and you’ll only be successful with all the key players going to bat for you. Here are the pros you need on your side: THE LENDER First, you need to set your finances in order by selecting the right lender – this could be a mortgage broker, bank or credit union. “The financing is the most important part of the whole transaction,” says Rhonda Duffy, owner of Duffy Realty of Atlanta.

Duffy recommends speaking to several lenders and then comparing their loan proposals. “When you’re hunting the right kind of loan, you’ve got to know the questions to ask these lenders and then be able to compare what they tell you,” she says.

Once you’ve made a decision, the lender will help you determine what you can afford based on your application and credit history. Your lender will help you get pre-approved for a mortgage.

THE AGENT The agent is there to guide you through all the complex steps of finding and purchasing a home. “The agent’s role is to be a sounding board,” Duffy says. “To know what happens in the transaction next and to, with urgency, put those pieces into place.”

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Referrals are key. Ask the home-owning friends and relatives in your town.

THE HOME INSPECTOR Your real estate agent can generally recommend one, but it is also important to independently investigate the professionals on your team.

“For the inspector, the most important question to ask is, ‘Do you have general liability insurance?’” Duffy says. Since the inspector works for the buyer, the buyer is ultimately liable for any damages that may occur during inspection.

THE APPRAISER The appraiser is a member of your team, but not one that you recruit. The appraiser is hired by the lender to assess the home’s value to make sure it’s worth what they’re offering you. The goal is to protect both you and the lender to make sure you’re not overpaying for the home.

THE CLOSING AGENT The closing agent is the final piece of the puzzle. This could be an escrow company or an attorney, depending on the state. Either way, the closing agent works for the buyer, seller and lender to tie up the loose ends of the transaction. The closing agent escrows funds and ensures that contracts are being followed.

“Homeownership is very valuable,” Duffy says. “I don’t want [buyers] to be afraid of it, like they can’t accomplish it. All they have to do is apply a little bit of rational logic to an emotional process.” © CTW FEATURES

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HOME SELLERS

By Erik J. Martin

DOWN TIME

How to know when downsizing is right for you DOWNSIZING to a more manageable footprint can be challenging, especially in a

upstairs may not be suited for someone with mobility issues, who could benefit from a

however, it’s crucial to plan carefully and ponder all the ramifications, especially if you

tricky real estate market. Weighing your options carefully before moving down can help you avoid big regrets later, say the experts.

For starters, consider if you fit the criteria to benefit most from nest condensing.

“The best candidates to consider downsizing are individuals and couples who have a house that no longer meets their needs. For example, a house with a large

smaller home on a single level that is easier to get around in and maintain,” says Cara Pierce, financial specialist, ClearPoint Credit Counseling Solutions in Fresno, Calif.

Baby boomer or not, anyone who feels he or she is living beyond their means also should consider downsizing.

“The reasons can range from feeling overindulgent with your property’s size to having an empty nest to simply realizing your need to embrace a more frugal lifestyle,” says Samuel DeFranceschi, associate broker at New York -based Nest Seekers International.

“Learning to use less and become more efficient and consumer-friendly are all positive actions that can help your wallet [and] the environment.”

The exciting feeling that comes with starting fresh, the ability to make new friends, and the opportunity to de-clutter your life are other advantages.

Prior to pulling the trigger on downsizing,

enjoy entertaining, hosting family or a hobby that takes up a lot of space.

Additionally, although you may be able to save money on reduced utility and maintenance costs in a smaller property, be aware that unloading your home and buying another one involves closing costs and possibly steep taxes, such as capital gains, when you sell your larger home. Also, you could end up paying more in property taxes on your next residence, depending on the area.

Despite these potential financial hesitations, mortgage interest rates remain relatively low and sellers have a lot of leverage in many areas around the country.

For some, downsizing to a smaller singlefamily home, condo, townhome or other owned property can be more costadvantageous than renting, especially in markets where rental units are scarce and costly. For others, renting can be a safer bet.

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TRY THIS ON THE GRILL

TIPS FOR A MEMORABLE MEMORIAL DAY BBQ To many Americans, Memorial Day marks the unofficial beginning of summer. Though summer does not actually begin until later in June, Memorial Day weekend has become synonymous with backyard barbecues and trips to the beach.

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Backyard barbecues, in particular, have become a staple of Memorial Day weekend and the focus of many people's festivities. This year, consider the following tips to make your Memorial Day barbecue safe and memorable.

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Place the grill in a safe spot. Before any guests arrive or any fires are lit, make sure the grill is safely located on flat ground. Ideally, the grill should not be on the grass and should be away from trees or shrubs and any other flammable materials. If you need lighter fluid to start a fire, promptly put the fluid back in storage, away from the grill, once the fire has been lit.

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Clean the grill. Memorial Day marks the opening of grilling season for many grillmasters. Make sure the grill has been thoroughly cleaned and that there are no leftover ashes from last season clogging the vents.

Even if you thoroughly cleaned the grill at the end of last season, give it a once-over with a soapy sponge at the start of the season to clean any cobwebs, or dirt and grime that might have accumulated over the winter.

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Stock up on charcoal. Falling short in the charcoal department is a backyard barbecue faux pas that can bring the festivities to a halt. Because the weather in late May can sometimes be unpredictable, make sure you have extra charcoal on hand should strong winds or colder temperatures make it difficult to build a strong fire.

Keep the forks in the utensil drawer. Never use a fork to do a spatula's job. Poking foods on the grill with a fork allows the juices that make grilled foods so delicious to escape, resulting in drier fare that's not nearly as flavorful. Use a spatula or tongs to flip foods, including burgers, steaks, chicken, and even hot dogs.

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Spice things up. Why not use this year's Memorial Day barbecue to add a little extra flavor to traditional barbecue fare? Soak some dried herbs like rosemary, bay leaves or oregano in water and add them to the grill. These flavorful herbs will make the food taste better, and the grill will likely emit a more pleasant fragrance as well.

Make sure foods have completely defrosted before placing them on the grill. When cold meat is placed on the grill, it reduces the grill's temperature and prevents juices from getting seared in the food. So make sure all foods have been defrosted to ensure your foods are flavorful and the grill stays hot.

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Prepare foods for guests with varying palates.

Vegetarians and vegans love a good backyard barbecue just as much as their carnivorous friends and family members. Cook some vegetable kabobs and prepare some salads for guests who don't eat meat. Consider purchasing a smaller grill for veggies only, as vegetarians and vegans might not prefer to eat kabobs grilled on the same grill as meat.

This year, welcome the unofficial start of summer with a successful Memorial Day barbecue in the backyard with family, friends and great food.

September 2017

HOMEBUYING

By Erik J. Martin

From sweating the down payment to fretting about interest rates creeping up to worrying about overpaying, homebuyers face a lot of fears today – particularly in a market where sellers seem to have all the leverage. But with the right help, an organized approach and a positive mindset, they can feel more in control and better manage the process, say the experts.

Make no mistake: buyers feel pretty stressed nowadays. A new Owners.com study indicates that 72 percent of prospective buyers polled anticipate stress in the home purchasing process.

Their top concerns? Worry over losing an earnest money deposit (chosen by 64 percent); becoming “house poor” (61 percent); and the price going up due to bidding wars (59 percent).

“With high home prices, low inventory and increased competition in many markets, it’s not surprising that the financial aspects of buying a home are worrying for many people,” says Michael Lissack, a Greater Boston-based real estate agent and Owners. com spokesperson.

Gloria K. Frazier, president/broker with ERA American Real

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Estate in Shalimar, Fla., agrees.

“The main reason the process is so stressful is because buyers are having to make decisions quicker than they are comfortable with, plus most second-guess how good the idea is of bidding over asking price,” Frazier says. “Fear of loss is more powerful than opportunity for gain, so buyers become too competitive in bidding wars, make poor decisions and then regret it when they’ve won the war.” And for those buyers that find it hard to make quick decisions, “they can lose out on several homes or get totally discouraged and bow out of the market completely,” Frazier says.

Other factors that can ratchet up the pressure include appraisals coming in below the sale price and sellers demanding that you commit to the purchase price even if the appraisal doesn’t support that demand, says Rich Cebulak, a Chicagobased broker with Baird & Warner.

“Also, there’s social pressure – the thought that ‘my friends, neighbors or coworkers paid over asking price, so why shouldn’t I?’” Cebulak says.

His remedy for these and other tensions is simple: choose experts you can trust.

“Always work with experienced professionals, including a Realtor, loan officer, real estate attorney and property inspector,” Cebulak says. “Meet with your agent and determine a maximum bid before you even venture into the market, and ask for data to

support your decisions so that you don’t make them emotionally. Have a plan B whenever possible, too, so you can be ready to adjust and stay on budget.”

Another important way to curb worry is to get your financials in order well in advance. That means checking your credit score, saving up for the necessary down payment, learning what you can afford and getting pre-qualified with a chosen lender.

“Preparation is the key to finding your dream home,” Frazier says. “Make a list of your absolute needs and another list of your wants that you could live without. Communicate that to your agent, and ask him or her to show you homes that only fit these criteria – you’ll know soon enough if you’re being unrealistic with either your needs or wants. Remember to stick to your price range, but be flexible with your expectations.”

Have a loan pre-approval letter ready when it’s time to make an offer, as well, says Marta DuPree, broker/vice president of Keyes Company Realtors in Coral Springs, Fla. “In addition, be prepared to make an offer when a good deal comes on the market, because a qualified buyer who has the down payment and a strong pre-approval letter ready will have a better chance of getting the contract,” DuPree says.

Lastly, keep an open mind and avoid being pessimistic and self-critical.

“Try to maintain a positive attitude, which will hopefully help you find your dream home faster,” Lissack says.

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As the Millennial generation moves into the housing market, they’re jettisoning the traditional concept of a “forever home” – a home designed to last through multiple decades of life.

Instead, a recent survey found that Millennials desire flexibility and choice when it comes to where they live. As a result, a significant portion stated that they plan to spend less than 10 years in a home, while the vast majority are considering purchasing new construction because of the greater flexibility in floor plans.

Prospective Millennial Homebuyers

80% equal or more interested in newly built home vs. resold home

58% think that the term “forever home” is outdated

54% will use a so-called “starter home” as a first purchase

33% plan to purchase another home within the next 10 years

Source: Taylor Morrison Home Corporation's 2017 Consumer Survey © Content That Works

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September 2017

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