Using gift funds for your down payment on a home

True or false? Your parents or other relatives can always make your down payment for you. True some of the time.

Some loan programs require the buyers to pay part of their own down payment, but for conventional loans up to $1,149,825 for a primary residence, a gift from family for your whole down payment is allowed.

Larger loans and some other loan programs require 5 percent of the buyer’s money in addition to gift funds.

Gifts need to be documented with a gift letter and paperwork such as a wire transfer receipt and a transaction history.

If you are planning on using gift funds for your down payment, let your lender know ahead of time to make sure they are ok with it and to ensure you meet all requirements.

Does the home seller need to pay for repairs identified by an inspection?

True or false: If home buyers have a home inspection, the seller will have to pay for recommended repairs. False.

NC is an 'as is' state - meaning homes are sold 'as is'. Home sellers aren't obligated to make repairs - even if the home inspection finds something significant.

The buyer can lose their due diligence deposit if they terminate the contract, despite significant issues being found.

Having said that, if the home inspection finds something major or that is a safety concern, the seller may very well make the repair, because it's likely that other buyers will ask for it as well.

Not recommended: Borrowing from retirement to buy a home.

True or false? You can borrow from your retirement account to buy a house.

While this is technically true, and it can be tempting to leverage your 401(k) funds, it’s not advisable to use funds borrowed from your retirement account to pay for a house.

Financial advisors generally say the cons typically tend to outweigh the pros as this puts your retirement savings at risk.

People who dip into their retirement funds early also run the risk of missing out on appreciation, facing tax penalties, placing long-term strain on their budget, and more.

Do Winston-Salem home buyers have to pay all their closing costs?

True or false? Home buyers don’t have to pay all closing costs. True

Closing costs can be paid either by the home buyer or the home seller.

When negotiating a contract with a seller, you can request that the seller contribute toward your closing costs.

Before you do this - meaning before you even make an offer - it's good to check with your lender and make sure they're ok with it.

The home appraisal can impact this as well. If you offer $500,000 with the seller paying $8,000 in closing costs, and the home only appraises for $492,000 - then the bank will only loan $492,000, and the buyer will have to kick in an additional $8,000 to complete the transaction.offsetting the benefit of the seller paying closing costs

In a competitive situation, home buyers may not have much room for the seller to pay closing costs, because the offer amount will be close to the anticipated appraised value.

Do Winston-Salem Home Buyers have to make a 20% down payment?

True or false? Home buyers have to make a down payment of 20 percent. False.

The typical down payment for first-time buyers was 8 percent in 2023, according to the National Association of Realtors.

Loans guaranteed by the FHA require a down payment as low as 3.5 percent, and members of the military may qualify for a zero percent down payment VA loan.

Conventional loan programs can allow for down payments as low as 3 percent for first-time buyers.

While a smaller down payment can make home ownership more accessible, buyers will end up with a larger loan, and therefore larger payment.

On top of that, you will have to pay monthly for private mortgage insurance (PMI), which will further increase your monthly payments.

You will need to pay the additional PMI until you build up 20% equity.

Check with different lenders to find out what options are available to you.

True or False: Only low-income, first-time home buyers qualify for down payment assistance?

True or False: Only low-income, first-time home buyers qualify for down payment assistance?

…and the answer is … false: Repeat buyers and buyers with middle-range incomes sometimes qualify for homeowner assistance, depending on the program.

There are programs that allow for higher incomes and expanded property types, such as multifamily or manufactured homes.

The company, Down Payment Resource, maintains a database of more than 2,400 homeowner assistance programs nationwide.

So … there are programs to help more Americans become homeowners.

Hopeful future buyers should do research for programs that might apply to them.

NAR settlement doesn't help Winston-Salem home buyers

he recent NAR settlement doesn't help home buyers.

In North Carolina, I could show people homes under an oral agency agreement - - so no written contract was required.

Cooperating compensation, which is where the home seller would pay a portion of buyer agent's fee at closing, was fairly common practice, and was advertised in the MLS, so it was transparent.

Now, I can't show buyers a home without a written agreement - that's asking a lot of buyers that I've only just met.

Now, cooperating compensation can still be offered by sellers, but it can't be advertised in the MLS - so there's less transparency - there is no way that helps anyone.

It's unclear if sellers will use the change as a reason to stop offering cooperating compensation, if they do, some buyers won't be able to afford to make offers on homes without it.

They could choose to go without representation, and then they won't get the protections that buyer agents offer.

Home buyers can no longer tour homes without a written agreement

A written agreement is now required before providing any brokerage services to a buyer, including touring a home.

The standard buyer agency agreement is seven pages with a commitment to working with the agent.

I think most people who are just starting their home search might not be crazy about reading through a seven page agreement and committing to an agent they may have just met, or only talked to over the phone.

There is however a single page agreement that could be appropriate in some circumstances. To avoid having to commit to an agent that might not be for you, the term could be for one day.

Once you are comfortable with an agent, you can sign the longer agreement.

To help buyers get familiar with the forms ahead of time, you can find copies on my website, markschweikert.com. Click on Buyers and then scroll to the bottom of the page.

If you have any other questions, feel free to give me a call.

The impact of the Fed rate cut on the Winston-Salem real estate market

The Federal Reserve cut interest rates by half a percentage point.

Here are some thoughts on how the rate drop will impact the Winston-Salem housing market.

Mortgage rates will drop, but not as much as you might think, because the cut was expected, so mortgage rates have already been dropping in anticipation of the rate cut.

Lower mortgage rates could actually mean higher housing prices, because lower rates could drive up demand.

Dropping interest rates could lead to more housing supply because it will reduce costs for home builders and developers. This could eventually help ease pricing pressure, but that would be longer on the time horizon.

The bottom line is that affordability will still be a big problem, because lower payments from lower rates will be offset by prices that will probably continue to rise.

The Fed Drops Interest Rates by half a percentage point

The Federal Reserve cut interest rates by half a percentage point. It's the first cut in about 4 years.

The move is a very positive statement about the economy and inflation.

A Federal Reserve statement said “The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,”.

The Fed also expects to make another half-point reduction before the end of the year.

Through 2025, the central bank forecasts interest rates landing at 3.4%, indicating another full percentage point in cuts. Through 2026, rates are expected to fall to 2.9% with another half-point reduction.

NAR settlement impact for home buyers and sellers

NAR settlement highlights.

The recent NAR settlement is now in effect. Here are 3 of the biggest changes.

1. Cooperating compensation, which is what the seller is willing to pay for the buyers agent, will no longer be allowed to be shown in the MLS.​

2. Cooperating compensation will still be allowed, but it will have to be disclosed outside the MLS - somehow.

3. Written buyer agency agreements will be mandatory and must be signed before a showing is conducted.​ So … no showings without an agreement. That's a big change.

What remains to be seen is - - will sellers use these changes as a reason to stop offering cooperating compensation for buyer agents, and if that happens, how will buyers react?

Will they choose to go without representation? My guess is that it will be a mixed bag for a while.

Time will tell.

Big Changes Coming For Home Buyers from NAR Settlement - Cooperating Compensation

One of the big changes coming from the NAR settlement is that cooperating compensation will no longer be disclosed in the MLS.

Cooperating compensation refers to a home seller electing to have a portion of their proceeds go to the home buyers agent at closing.

Home sellers could still offer cooperating compensation, but it will need to be disclosed outside of the MLS.

It's possible that sellers will use this as an opportunity to stop offering cooperating compensation.

If some do and some don't, it will make performing a comparative price analysis even more difficult, because the arrangement will no longer be disclosed publicly in the MLS.

It will be hard to identify the inconsistencies and adjust the comparative value accordingly.

Home buyer essentials: Be transparent with your lender during loan pre-qualification

Does it seem like it would be best practice to make an offer on a home, and THEN find out that you don’t qualify for a loan?

It doesn’t seem to be the wisest to go about things.

If you get qualified for a home loan, don’t just go through the motions, giving your lender the minimum information.

The full loan approval process is more in-depth than prequalification. If there is anything you feel may negatively impact your ability to qualify for a loan, bring it to your lender's attention during pre-qualification.

If you think your job situation might change, let them know.

If you get prequalified and then you buy a new pickup truck, you may no longer qualify. Check back with them to see if you still do.

Bottom line - do all you can up front BEFORE making an offer to make sure you will qualify for a loan.

Essential for buyers to know: The Due Diligence Fee

As we head into buying season for homes, I thought it would be important to review some of the most important things for buyers to be aware of.

One is the due diligence fee. The due diligence fee is negotiable, and is often 1% or more of the offer amount. The fee counts towards the purchase of the home (it is basically a deposit).

The Due Diligence Fee is non-refundable except in the event of a material breach of this Contract by Seller.

Even if a home inspection finds a major structural defect in the home, the due diligence fee will not be refundable.

It becomes an obligation of the buyer as soon as an offer is accepted by the seller. It is due on the effective date of the offer (after buyer accepts offer).

If the buyer fails to deliver the due diligence by the due date, the seller will have the right to terminate the offer and collect not only the due diligence fee, but also the earnest money deposit and legal fees if they need to bring legal action to collect.

47% of Winston-Salem Home closings settled above list price

Reporting from the 100 acre wood.

At the end of February 2024, I pulled home closings over the past 30 days.

In the Winston-Salem area, 23% of this went under contract in the first 5 days. Out of those, 47% of those most settled above list price, and 12% settled at list price.

If you're looking at homes that just came on the market, and there is a lot of interest from other buyers and multiple offers on the property, it is likely that you will need to bid above or at least at list price in order to get your offer accepted.

Previewing an Elkin property for out-of-town buyers to look for any red flags

If I get a call about a property from folks that are from out of town, I will often screen a property for them to look for any red flags and make sure it is aligned with what they are looking for.

Quite often I save them the time and inconvenience of a long drive.

If you are interested in buying or selling land or a home, or if you have a question about anything, I would love the opportunity to discuss it with you.

Elkin City Schools Among Best In the State!!

A quick shout out to the Elkin City School District that was recently rated by niche or niche.com as one of the top school districts in the state.

They got an A rating.

I believe they ranked number 8t out of 115 with a 14 to 1 teacher ratio.

The categories they rated were Academics, Teachers, Clubs and Activities, Diversity, College Prep, and Administration. They got high marks on each of those.

Way to go Elkin City schools and Go Bucking Elks!!!

Top Winston-Salem Neighborhoods Overview

I've been going over top neighborhoods of specific individual zip codes in the Winston-Salem area, so let's look at a high-level overview of what I found.

At the top, you've got Brookberry Farm, 26 transactions, and an average price of almost a million dollars.

Right below it, you've got Buena Vista, 26 transactions with a slightly lower average price.

Sherwood Forest, 31 transactions.

Then you've got Lake at Larissa and Woodview Estates in Lewisville.

Salem Glen / Woodmont Golf Community and Waterford in Clemmons.

Bermuda Run and Oak Valley Golf communities.

Then, rounding it out, you've got: Hanes Lake, Brayden, Kinderton Village, Sequoia Place, and Clouds Harbor.

Hope that was helpful to you. Thanks.

Top Neighborhood in Advance 27006 Zip Code (Winston-Salem area)

The 27006 zip code, which is the town of Advance, was in the top five zips in the Winston-Salem area with regard to the highest average sale price as measured by a recent 180-day period.

Let’s look at some of the top subdivisions.

Bermuda Run and Oak Valley had twelve and five transactions respectively. They're both golf communities roughly across the street from one another.

Braden had 29 transactions and an average home sale price of $408,000 average.

Kinderton had eight transactions and an average of $354,000.

I hope this has been helpful to you. If you’d like any more information, please don’t hesitate to contact me.

Top Neighborhoods in Winston-Salem’s 27104 Zip Code

The 27104 zip code in the Winston-Salem area is one of the top five when it comes to average sale price, as measured by a recent 180 day period.

Let's go ahead and look at some of the top neighborhoods. Buena Vista is at the top, with 24 transactions and an average of $795,000.

Sherwood Forest had 28 transactions with an average of $562,000.

If you look at the rest of the subdivisions, there's none that really stick out with a lot of transactions. Country Club estates had six for an average of $333,000.

If you’d like more information on this or any other area, please don’t hesitate to contact me.