Real Estate Agent and Founder,
Mortgage Lending Sales Manager,
UW Credit Union
Franchise Owner, Two Men and a Truck
LISTEN TO THEIR CONVERSATION
Milwaukee Magazine: What advice do you have for someone selling their home?
Charlie Hutchinson: Interview at least three agents to get a good idea who can market your home properly for you, and loop them in well ahead of time. If you know that you’re selling this spring, for us the spring market starts at the
end of January.
Tim Lightner: The real estate market is very active right now, so you want to get out in front of it as much as possible. You’re going to want to interview different moving companies. The market combined with the labor shortage right now has got everybody booked up.
Patti Goodson: Do your research and be realistic with your asking price. When you’re considering offers, make sure that you’re considering those with pre-approval letters, and that their offer is from a local and credible lender.
CH: All three of us in our industries, I think sometimes people see it as, ‘OK, that’s my agent. That’s my mover. That’s my lender.’ We should all be working in unison together to make it as simple as possible for you. Let us do the legwork.
MM: What about for someone buying a new one?
PG: There are two musts: get pre-approved, and hire a buyer’s agent.
CH: The market is constantly changing. Make sure that your agent has sold a good amount of homes in the past 12 months – at least a house a month. Our team sold 105 homes last year.
MM: Tim and Patti, how do you both work with Realtors in your respective industries?
TL: We’ve been working with Realtors for a long time, both as a referral source and to get feedback so that we’re continuously improving our service delivery. Use us as a resource, just like you would for your bank and your real estate agent. There’s so much stress that’s involved in moving. We can really help you work through some of that and minimize it.
PG: At UW Credit Union, we’ve been in the business now for 90 years. Our relationship with Realtors is extremely strong. We’ve seen the closing process taking a longer time than it has in the past, primarily because of market conditions. It is imperative that the lender is communicating with the Realtor and with our borrower to let them know what these timelines are.
MM: What is the real estate market looking like right now?
CH: Supply is low; demand is high. After 10 years of selling, this is one of the best markets that we’ve sold in. We’re selling a lot of real estate even with the lack of inventory. The market’s especially good if you’re a seller, but because interest rates are so low, it’s really good as a buyer, too.
PG: We’re still at historically low interest rates. Today, interest rates are a tiny bit over 3%. I’ve been around long enough to remember rates when they were 10%. Fixed-rate mortgages will continue to be the most favored loan option from us.
But in fact, we have a 2.375% rate right now on an adjustable-rate mortgage [ARM]. For a three-year ARM, it will stay at that same rate for 36 months. After that, the rate will adjust based on the market conditions on a six-month interval. ARMs are excellent products, but they should only be used under certain circumstances. For example, if you know you are going to live in a city for three to five years, it makes total sense for you to move into an ARM.
The most important thing for you to do is talk to your lender. Let your lender explain all of the options.
TL: I think almost everybody agrees that interest rates are probably going to head up. But we’re bullish on the real estate market continuing to be very strong. Right now, average rents are increasing rapidly, and I think that’s going to drive demand for homes. But I do think the lack of inventory is going to continue to put pressure on prices as we move forward.
MM: Are you optimistic about housing inventory increasing in the future?
CH: I’d like to think that within the next 18 months that might happen, but it’s going to take a lot of different factors. Baby boomers are staying in their homes longer than, traditionally, people do. People are stuck in such a great interest rate, that the fear of going up even 1% makes them not want to sell their house.
TL: We’re closing in on about 10,000 moves this year in the greater Milwaukee area. We’re excited about the future. We’re expanding our fleet because we really believe that there may be some short-term hiccups here and there, but there is a lot more pressure for the real estate market to stay strong than there is pressure for it
to slow down.
MM: In such a competitive market, how can a buyer make a winning offer?
CH: We’re seeing a ton of people who waive inspections, who waive appraisals.
PG: I think that’s really risky, personally. If you are a cash buyer, waive your inspection and your appraisal. That’s your choice. But if you are looking to finance a home, I do not recommend waiving either.
CH: There are ways to keep all those contingencies, and still get your offer accepted. You can always shorten deadlines. When I first got in the business, it was very easy to get a 15-day inspection contingency. Nowadays we’re looking at seven to 10 days.
Keep the appraisal contingency but say that you’ll cover up to an extra $5,000 if it doesn’t appraise out at that value.
If you work with a reputable agent and a reputable lender, and they can communicate together, that goes a long way. If it’s my listing and I have five offers, and I get a call from one of the lenders on one of the offers saying, “Hey, Joe and Amy are really great. They’re overly qualified. They’re going to put 20% down.” That goes a long way.
MM: What are some common mistakes that you’ve seen home buyers and sellers make, and how can they be avoided?
CH: For sale by owner. When you advertise your house as “for sale by owner,” the buyer will be looking for a discount because they know that you’re not paying commission. When both parties are looking for a discount, guess who gets the discount? No one. If you hire a reputable agent and brokerage to sell your property, there’s no reason why you shouldn’t make that commission back on the sale price, if not more.
PG: One of the biggest mis-takes people make is not getting pre-approved right away. If you start looking at $500,000 houses, then you’re only approved for a $300,000 house, there’s not a single $300,000 house that’s going to look good. The other mistake I’ve seen this past year, is people paying too much for
a house in a bidding war.
TL: One of the biggest issues that drives up the cost is getting ready for the move: the packing, the sorting, the decluttering. It always takes more time than you think it would. I moved four years ago, and I couldn’t believe how difficult it was – and I’m in the industry. We offer a packing service, and that goes a long way to lowering the stress levels during this time.
CH: For buyers, the biggest mistake is not contacting their team soon enough. They need to contact the lender, the agent, the mover. All three of our professions are there for a reason. And if you use the right team, the job should not only be easier for you, it should be more fun, less stressful. And you should have great experience.