Do you like to negotiate?

Like to negotiate?

Negotiating the sale or purchase of a home requires give and take – for one person to get something, someone has to give up something!

Whether you like to or not, buying and selling a home involves negotiation at all stages of the process.  It is not like the retail world where once you decide to purchase, you pay the price.  It is easily the most expensive purchase or sale that most people experience and emotions get involved that could affect the negotiations adversely.

The word “home” by itself conjures up emotions and selling a home you’ve lived in for a while could even complicate things more.  A real estate professional can separate their emotions from the process to be able to help the one they are representing.

The price of the home, the type of financing and concessions, closing costs, personal property, closing dates and possession are just a few of the many things that can be negotiated in a contract.  Since the seller wants to get the most for their house and the buyer wants to pay the least, their objectives are diametrically opposed.

Even after the contract is signed, removing the contingencies can cause considerable negotiations.  The appraisal, the inspections or the repairs could be a source of reevaluating the terms and provisions of the contract.

Negotiating the sale or purchase of a home is a competition; for one person to get something, someone has to give something up.  If you don’t feel comfortable with this, it is important to work with an agent who can bring their skills to the table on your behalf.  As your advocate, they can champion your position.

I’d like to share how my skills, training and experience can benefit you in a sale or purchase.  Call me at (972) 333-8638.

McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Prepaying your mortgage

Prepaying your mortgage

Regardless of which way you go, prepaying a loan will save interest, build equity, and shorten the term on a fixed-rate mortgage.

Paying off your mortgage can provide peace of mind and is a worthy goal but is it the best thing for you to do at this time.

Do you have higher interest rate debt currently?  If you have credit card debt with double-digit rates or personal, car or student loans, you’ll probably save more money from interest by paying these things off before you pay off your mortgage which is usually one of the lower rates on debt.

Many financial advisors recommend funding your annual retirement contribution before paying down a mortgage.  If your company offers matching funds for your contribution, you would be leaving money on the table by not making the contribution to your retirement.  For instance, you would be getting a $10,000 value by putting $5,000 into your retirement if your company matches it.

Creating an emergency fund is another favorite of financial advisors.  When the rainy day arrives and you need funds, it may be difficult to get money from the equity of your home, especially if you have lost your job.  Six months’ worth of living expenses is a good target to have available should you need it and a year’s worth would be even better.

Children’s college funds may be another priority that takes precedent overpaying off the mortgage.  Whether you’re saving or investing to pay for their education, it is going to cost more than it did when you were in school.

When you are ready to start paying off your mortgage, decide on the best way to do it.  Regular principal contributions on a monthly basis are very predictable and will get the job done.  Setting up automatic bill pay with your bank will assure that you don’t re-prioritize that extra amount every month because there is always going to be something else to do with extra money.

It is important to be sure that the lender applies the additional payment amounts to the principal and not to the escrow account.

Use the Refinance Analysis to see what extra amount you’d have to pay to retire your mortgage in a certain time frame or by making a specific additional amount for each payment, you can find out when the loan will be paid.  Regardless of which way you go, prepaying a loan will save interest, build equity and shorten the term on a fixed-rate mortgage.

McKee Smith, REALTOR®, has been selling and buying homes in Dallas and Fort Worth for many years. He knows and understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Lower your cost of housing

Lower your cost of housing

When you look at it this way, the old saying makes sense – “Whether you rent or buy, you pay for the house you occupy.”

Homeowners still have considerable advantages from the amortization of the mortgage and the appreciation enjoyed by most homes even with taking the standard deduction instead of itemizing to take the interest and property tax deduction. 

There is an adage, “Rent or buy, you pay for the house you occupy.”  You either pay for it yourself or for your landlord.  The people who have job security, sufficient income, good credit and the funds for the down payment and closing costs can enjoy the many financial and emotional benefits of homeownership.

Looking at a $350,000 home purchased with an FHA mortgage with 3.5% down payment at 3.25% interest for 30-years, the total payment would be $2,420 a month.  During the first year, the average monthly principal reduction is $573 a month which builds the owner’s equity in the home.

At an estimated 3% appreciation, this home would increase in value at the rate of $875 a month during the first year which again builds the owner’s equity in the home.

Even if you consider the buyer will now be responsible for repairs and possibly homeowner’s association fees, the monthly net cost of housing in this example is $1,122 or less than half the monthly payment.  The difference goes to equity which a tenant does not benefit from.

If the buyer were paying $2,750 monthly rent, they would be paying $1,628 more each month to rent than to own.  In a year’s time, they would lose $19,500 of equity by continuing to rent.  The down payment in this example is only $12,250 which would leave $7,000 to pay for buyer’s closing costs.

Purchase Price$350,000
Down Payment$12,250
Total Monthly Payment (PITI + MIP)$2,420
Less Monthly Principal Reduction (average first year)$573
Less Monthly Appreciation (average first year at 3% annually)$875
Plus Estimated Maintenance & HOA$175
Net Cost of Housing$1,122

The equity for the homeowner in this example at the end of seven years would be almost $140,000 based on the appreciation and amortization of the mortgage.  Whether you rent or buy, you pay for the house you occupy.

Use this Rent vs. Own to plug in your own numbers for the price home you’d like to buy.  If you need help with it, contact me and we can do it over the phone at or in an online meeting.

McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

11 Essential packing Supplies to make moving day easier!

Moving supplies

Stocking up on packing supplies ahead of time is essential. It’ll make the move easier not just for you, but for your hired movers as well.

By Francey Beall of Fantastic Moves and Member of CCAR’s Affiliate Committee

It’s not surprising that moving is considered one of life’s most stressful events. After all, you need to pack up pretty much all your possessions and it has to get done by a certain date.

That’s why stocking up on packing supplies ahead of time is essential. It’ll make the move easier not just for you, but for your hired movers as well. Here’s our checklist of 11 moving supplies you need on-hand to make your move go smoother.

1. Boxes

Various Sizes Boxes are the most obvious packing supply you’re going to need for moving day. The key is to collect boxes of different sizes to accommodate specific types of items. Delicate knickknacks should be packed into smaller boxes with plenty of wrapping so they have no space to move around in. Larger boxes can be used for lighting, mirrors, and other big items.

2. Tape

Of course, you’ll need tape to seal up those boxes. Choose high-quality tape so those boxes stay sealed. Cheap tape sometimes comes with weak adhesive. Blue painters tape is good for delicate items and wrapping cords together.

3. Box Cutter / Scissors

A box cutter will make the tedious task of opening boxes faster and easier once you’re in your new residence. You’ll also be grateful to have one handy when you need to slice up unneeded boxes for the recycling truck.

4. Permanent Markers

As you pack and seal up items, mark each box with permanent markers to indicate what’s inside and what room they belong in. You’ll also need markers to let your movers know which boxes contain fragile items. Indicate which side of the box is the top by writing “this side up” and drawing arrows. Label boxes on sides and top of boxes.

Since you won’t be able to predict the weather on your moving day in advance, consider using permanent markers that won’t smudge in the rain. Or cover lettering with clear packing tape to seal out water.

5. Padding Materials

You’ll need to protect your delicate possessions by wrapping them in bubble wrap or sturdy tissue paper. Blank newsprint works well, as does regular newspaper as long as the item you’re insulating can’t get stained by the ink.

Buy bubble wrap by the roll so you can rip or cut off sheets as needed. Bubble wrap that features larger bubbles can be used to wrap bigger items or reduce space inside a box. Wrap so that the bubble side is making contact with the item for the greatest amount of protection. Using enough padding material so that there’s no movement inside a box once it’s sealed is one way to protect fragile items before your move.

6. Stretch Plastic Wrap

Stretch plastic wrap looks a lot like plastic wrap you use to store food, except it has some stretch. Use it to keep drawers safely shut on furniture. It is waterproof and provides protection against dings.

Stretch plastic wrap can even be used to completely cover and protect soft furniture such as chairs and couches.

7. Moving Blankets

Moving blankets are usually made of a thick polyester and cotton blend fabric. Wrap them around hard furniture pieces such as tables and chairs to protect them from getting scratched and damaged.

Most moving companies supply their own moving blankets or rent them to customers. Check with your chosen moving company before you purchase them.

8. String Or Rope

If you are moving yourself and renting a truck, rope will come in handy to secure your items in the vehicle.

9. Clear Sealable Plastic Bags

These can come in handy for storing furniture hardware, jewelry, toiletries, and other small items. Choose ones with a label area or label bags so you know what hardware goes with the right piece of furniture. Label all television remote controls and place in bags.

10. Tool Kit

If you’re going to be taking apart and assembling furniture, get yourself a basic tool kit that contains screwdrivers, a hammer, and a wrench. You may also need it for placing nails in your new home to hang artwork.

11. Moving Day Survival Kit

Food, toiletries, and other items may be unavailable as the move is underway or when you begin unpacking in your new home. Throw together a moving day survival kit that contains healthy non-perishable snacks, water, instant coffee, toiletries, and anything else you may need to help you and your loved ones get through the big day.

Purchase or borrow these packing supplies ahead of time to help make your move much less stressful. Knowing your valuables are protected with the right materials will give you one less thing to worry about on moving day.

Waiting to buy will cost more!

Waiting to buy will cost you more!

Mortgage rates have been kept artificially low by the Federal Reserve since the Great Recession in 2010. That is coming to an end!

Mortgage rates have been kept artificially low by the Federal Reserve since the Great Recession in 2010.  That is coming to an end! There is a whole generation of people who have never known what might be called normal mortgage rates.  And then, most of the rest of the adults in America have forgotten what average rates were in the 50’s, 60’s, 70’s, and especially, in the 80’s when they hit 18.45%.

The bottom of the market was February 2021 with 30-year fixed rates were 2.73%.  Current rates, as of February 10th, according to Freddie Mac, are at 3.69%.  Earlier predictions by the National Association of Realtors, Fannie May, Freddie Mac, and Mortgage Bankers Association were that rates would go as high as 4.00% by the end of the year.

Those estimates may be considered low now based on concerns about inflation and the federal government’s efforts to keep it under control.  The Fed has announced a series of policy rate increases for the balance of the year.  Mortgage lenders, in anticipation of the rate hikes, have already started raising their rates as evidenced in the rates since January 3, 2022.

It is possible that a year from now, 30-year fixed rates could be at 5% or above.  This could make a significant difference in a buyer’s payments especially compounded with rising prices.

A $450,000 purchase price today with a 90% fixed-rate 30-year mortgage at 3.69% has a principal and interest payment of $1,862 a month.  If things continue to heat up and the mortgage rate goes up by one percent while the price increases by ten percent, a year from now, the home will cost $495,000 and the payment would be $446 higher each month for the term of the mortgage.

Use the cost of waiting to buy to make projections on the price home you want to buy based on your own estimate of what interest rate and appreciation will do in the next year.

Acting now causes the payment to get locked in at the lower rate and the increase in value belongs to the buyer as equity build-up.  Unfortunately, with the current state of supply and demand on housing inventory, waiting to purchase moves the bar higher and higher until some buyers will not qualify.

For more information, download my Buyers Guide.

McKee Smith, REALTOR®, has been selling and buying homes in Dallas and Fort Worth for many years. He knows and understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Why a Home Should Be Your First Investment

First Investment

There are two powerful dynamics at work to increase the equity which include appreciation and amortization.

Real estate has been described as the basis of all wealth.  Without considering income or investment property, buying a home to live in is an incredibly powerful way to build wealth or financial net worth.

A home is an asset measured by the size of the equity.  Equity is simply the difference between the value of the home and the amount owed.  There are two powerful dynamics at work to increase the equity which includes appreciation and amortization.

Appreciation occurs when the fair market of the home increases.  The shortage of available inventory coupled with high demand has contributed to an 18% increase in value in the past year on average for homeowners in the U.S.

Most mortgage loans are amortized with monthly payments that include the interest that is owed for the previous month and an increasing amount that is paid toward the principal loan amount so that if all the payments are made, the loan would be repaid by the end of the term.

A 30-year mortgage at 3.5% interest on a $400,000 loan amount would have a principle and interest payment of $1,796.18 every month for 30 years.  After the interest is applied from the first payment, $629.51 would reduce the loan amount, thereby, increasing the owners’ equity.

Each succeeding payment would have an increasingly larger amount applied to the principal and a decreasingly lower amount applied to interest.

Recently, CoreLogic reported that homeowners with mortgages have seen their equity increase 29.3% since the second quarter of 2020.  Equity rich is defined as when combined loans secured by property are no more than 50% of the estimated market value.  ATTOM Data Solutions reported that 42% of mortgaged homes in the U.S. are considered equity rich as of the fourth quarter of 2021.

Another advantage of this powerful asset is that borrowing money against the equity of your home is a non-taxable event. Regardless of whether it is a refinance or a home equity loan, the borrowed money is not income and is not taxable.

A homeowner could stay in the home for years and as the home increases in value due to appreciation, they could borrow against their equity as many times as the value will justify.  They could continue to pull money out of their home for decades and under the current tax law, they could die and will the home to their heirs who would receive a step up in basis and the taxes would never have to be recognized.

Lastly, let’s consider the home as an investment by looking at the rate of return.  Obviously, it is a personal asset that the homeowner will be able to live in, enjoy, raise a family, and share with their friends.  In calculating the rate of return, we consider a $375,000 home with a 3.00% 30-year FHA mortgage with a 3.5% down payment.  Using an annual appreciation of 3% and normal amortization, the $13,125 down payment in this home turns into a $148,062 equity in seven years.  The rate of return calculated is over 40% per year for the seven-year holding period.

Even if you discounted the ROI by half for all the unforeseen other expenses that may affect the real equity, it is still a 20% return on investment which could easily justify why purchasing a home should be your first investment.

It is challenging, particularly in some markets with low inventory, multiple offers, rising prices and increasing interest rates, but the advantages of owning a home are significant.  Would-be homeowners need the facts about their market and how to get into a home.  Start with downloading the Buyers Guide and make an appointment with a trusted real estate professional.

McKee Smith, REALTOR®, has years of experience in the DFW area housing market. He knows the many unique features of Dallas and Fort Worth area home sales. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Why homebuying begins with the agent

Home buying begins with the agent

McKee understands the “what, where, when and by whom” of the many steps in home buying. He will make recommendations to save time and money!

It takes a team of professionals to buy a home like the lender, the appraiser, the inspector, the property insurance agent, the title officer, and others but the real estate professional may play the most critical role.

Baking bread seems so simple.  There are only four ingredients: flour, salt, yeast, and water; yet, there are steps that should be followed as well as a certain sequence to get the proper results.  Some people mix all of the dry ingredients before adding the hot water to activate the yeast.  Other people will activate the yeast in the warm water first to allow it to “bloom.”

Both methods can achieve satisfactory results but one knowledgeable person needs to be in charge of the bread instead of having multiple people to be concerned with just their one ingredient or contribution like mixing, kneading, fermentation, benching, shaping, proofing or baking.

Similarly, in a home purchase, the buyer’s agent can be the one who puts things in the proper order and sees that no steps are missed.  The buyer’s agent coordinates between the other professionals with the common goal of getting the home closed on time according to the terms agreed in the sales contract.

Even if a buyer has been through the process before and possibly, multiple times, the buyer’s agent will most likely have far more experience because it is their job. They perform their job on a daily basis and are not personally or emotionally involved like a buyer is.

McKee Smith understands the “what, where, when and by whom” of the many steps in buying a home.  He has worked with enough of the other professionals to know who is good at their job and can offer recommendations.  He has seen the things that make a transaction go smoothly and what can derail one.

Experience is a great teacher, but the lesson does not have to be learned by going through it by yourself.  Take the luxury of using my experience acquired through years of study and practice.  Allow me to advise you and coordinate the efforts to achieve the results you are expecting and deserve.

Learn more about the process and different steps by downloading my Buyers Guide.

McKee Smith, REALTOR®, is an experienced real estate agent that specializes in the Dallas and Fort Worth market. He understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Who decides value?

Who decides value?

Experience and understanding of the subject property and the marketplace are critical to having confidence that a value is accurate. 

The seller can put a price on the home but the value is ultimately, determined by the buyer. Individually, a buyer could pay over market value because they love the location, or the elevation of the home, or the proximity to something that is important to them.  The shortage of available homes resulting in increased competition among buyers could drive the value higher.

Most experts agree initially pricing it properly will generally result in the highest sales price.  If a home starts out too high, it could actually sell for a lower price after it has been on the market for a while.  It gives the impression that there must be something “wrong” with the house because it didn’t sell immediately.  

So, how does a seller determine what price to put on the home?  It has nothing to do with what the seller needs to get out of it.  Nor does the price the seller paid for it make any difference now.  Even if the seller made considerable improvements, they may not affect the value of the home.

There are three common sources for a seller to determine market value: an appraisal, a broker price opinion or an automated value model found online.

AVM, automated value models, are mathematical estimates that analyze limited public record data to determine a value.  While this process can easily compare square footage, age, number of bedrooms as objective data, it is much more challenging to make adjustments for subjective data like appeal, quality of construction, floorplan and updating.  Zillow Zestimates are the most common AVMs but there are many others providing similar services. These automated systems are notoriously inaccurate! They are known to vary by over 20% plus or minus!

Appraisals can only be made by a licensed appraiser.  Most mortgages require an appraisal as part of the underwriting process to verify that there is ample collateral to secure the mortgage in case of default by the borrower.  FHA, VA, FNMA, Freddie Mac and USDA as well as most private lenders require an appraisal, especially for high loan-to-value mortgages.  In some situations where the risk is lower, some lenders may use an AVM.

An appraisal requires the appraiser to visit the property, perform a visual inspection, analyze the property considering three approaches to value and accurately report the property information that is verifiable.

Broker Price Opinion, BPO, as the name indicates, is a price opinion on a property made by a licensed real estate agent.  The determination of whether the estimate accurately reflects the market will depend on the experience of the agent with that type of property and market area.  It is possible that a BPO could be more sensitive to the actual market because it will consider homes currently for sale and recently expired properties as well as comparable sales.

While all three methods, used recent, comparable sales to arrive at a value, the appraiser and the real estate professional can make a series of adjustments for the differences in the comparables.  While the appraiser is highly trained in this technique, the real estate professional also adds credibility to this process based on their experience in how the buying public might react to specific features and the home in general including positive and negative influences.

The current condition of the property is very important for a number of reasons.  In some price ranges, a buyer may only have the necessary down payment and closing costs but is not able to make improvements like paint, floor coverings, appliances or other major items.  In this situation, a buyer would have to live with the house in its current condition until they could afford to make wanted improvements.

Investors may not be deterred by making an additional investment in the home after purchasing it but will probably be motivated to do so only if it will increase the potential profit to be made.

An AVM can be a tool that a homeowner, prospective buyer, mortgage officer, appraiser or real estate agent can use to get a quick idea of price but there are inherent limitations that can only be considered by personal examination balanced with experience in the marketplace.

Experience and understanding of the subject property and the marketplace are critical to having confidence that a value is accurate.  Any person could go through the same steps to arrive at a value but an experienced, well-trained professional is far more likely to assess all of the variables more accurately.  If you are curious about what your home is worth, call or email for a Broker Price Opinion.

McKee Smith, REALTOR®, is an experienced real estate agent that specializes in the Dallas and Fort Worth market. He understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Rethinking home

Rethinking home

The repurposing has people evaluating whether their home still meets their needs or if some changes are necessary. 

The last 18 months of the new normal stay at home has led many homeowners to rethink the way they live in their homes.  It has now become an office for working at home; a school for children; a gym to stay in shape; and a place for recreation.

The repurposing has people evaluating whether their home still meets their needs or if some changes are necessary.  In some cases, adult children have moved back home, and, in others, there are parents who have moved in for the first time.

Staying at home and sheltering in place is necessary but how much togetherness can one family take and how long is it going to last?  Temporary is stretching into longer than expected and even when vaccines and treatments are discovered, will things really go back to the way they were?

A home is a place to call your own; to raise your family, share with your friends and to feel safe and secure.  Covid-19 has changed the scope of feeling safe and secure at home and may now be considered a sanctuary of safety more than ever before.

Many of the chief economists in the country feel that real estate will likely lead the country out of this recession.  The housing market is experiencing low inventory and has for almost a decade.  Building has not kept up with demand and prices of existing homes have continued to go up; 8% over last year.  

With 30-year mortgage rates at close to 3.25% and prices expected to continue to rise, an investment in a home can fit your needs and show returns in satisfaction, comfort, enjoyment, and monetary value.

If you are going to be spending more time in your home for all the reasons mentioned, maybe now is the time to consider finding a home that better suits your needs. It can be done in a responsible and safe manner using an online meeting with your real estate professional.  Find out what is available and what the process entails to protect you and your family.

McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Documentation for a mortgage application

Mortgage documents

It will take time to put these documents together, so doing it before you actually need them will help make the process easier!

Whether you’re getting pre-approved to find out what kind of mortgage you qualify for or have signed a contract subject to getting a loan or even refinancing your existing mortgage, borrowers need to produce a number of documents that will prove to the lender that the loan can be repaid.  Putting your hands on some of these things may take some time so it is a good idea to start early so you’ll have them available when they’re needed.

In most cases, the original document is not needed; copies will suffice. However, they will need the entire document with all the pages and supporting schedules such as in tax returns and bank statements.

Check with your lender to see if providing them digitally is acceptable; in most cases, it will be.

All Borrowers

  1. Driver’s License & Social Security card for all applicants
  2. Employment history for last two years with addresses and contacts
  3. Recent two years W-2 statements
  4. Recent two years’ tax returns
    • Complete returns & schedules
    • Personal and business if applicable
    • K1 forms if less than 25% owner
  5. Most current pay stubs/receipts for last 30 days
    • Social security or disability awards letter if applicable
  6. Proof of commissioned or bonus income
  7. Complete bank statements for all accounts for last two months
    • Explanation for unusually large deposits
  8. Quarterly statements for all IRA, 401k, CD, stocks, etc.
  9. Copy of sales contract*
  10. Insurance quote and agent contact information*

*If the loan application is made for pre-approval purposes, these items are not required until a home has been contracted for.  At this time, the borrower will be required to pay for the appraisal.

Documents may be required

  • Previous bankruptcy requires petition for bankruptcy and discharge including supporting schedule
  • Divorce decree if applicable
  • VA loans require copy of DD214 discharge paper
  • Gift letters if applicable

Refinance situations

  • Copy of note, settlement statement and survey

McKee Smith, REALTOR®, is an experienced real estate agent that specializes in the Dallas and Fort Worth market. He understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!