Your guide to apartment hunting in 2022 style
LISTEN TO THEIR CONVERSATION
Milwaukee Magazine: What is your advice to someone who is selling their house?
Charlie Hutchinson: Interview at least three realtors to get a good idea of who can market your home properly for you, and get them involved in good time. If you know you’re selling this spring, for us the spring market starts at
End of January.
Tim Lighter: The real estate market is very active right now, so you want to be in front of it as much as possible. You will want to interview different moving companies. The market combined with the labor shortage at the moment has booked everyone.
Patti Goodson: Do your research and be realistic with your asking price. When considering offers, make sure you consider those with pre-approval letters and that their offer is from a local and credible lender.
CH: I think all three of us in our industries sometimes see it like, ‘Okay, that’s my agent. This is my mover. This is my lender.’ We should all work together to make it as easy as possible for you. Let’s do the legwork.
mm: What about someone buying a new one?
PG: There are two musts: get pre-approval and hire a buyer’s agent.
CH: The market is constantly changing. Make sure your agent has sold a good number of houses in the last 12 months – at least one house per month. Our team sold 105 houses last year.
mm: Tim and Patti, how do you both work with real estate agents in your respective industries?
TL: We have worked with Realtors for a long time, both as a source of referrals and to receive feedback so we can continually improve our service delivery. Use us as a resource just like you would your bank and real estate agent. There is so much stress that comes with moving house. We can really help you manage and minimize some of these.
PG: At UW Credit Union, we’ve been in business for 90 years. Our relationship with real estate agents is extremely strong. We have seen that the closing process has taken longer than in the past, mainly due to market conditions. It is imperative that the lender communicates with the broker and our borrower to inform them of these deadlines.
mm: How does the real estate market look at the moment?
CH: The supply is small; the demand is high. After 10 years of selling this is one of the best markets we have sold to. We sell a lot of properties, even if there is a lack of inventory. The market is particularly good if you’re a seller, but because interest rates are so low it’s really good if you’re a buyer too.
PG: We still have historically low interest rates. Today, interest rates are just over 3%. I’ve been around long enough to remember interest rates when they were 10%. The fixed-rate mortgage will continue to be the most popular type of loan for us.
But actually, we currently have an interest rate of 2.375% on an adjustable rate mortgage [ARM]. With a three-year ARM, it stays at the same rate for 36 months. Thereafter, the rate is adjusted based on market conditions at six-month intervals. ARMs are excellent products, but they should only be used under certain circumstances. For example, if you know you’ll be living in a city for three to five years, moving to an ARM makes perfect sense for you.
The most important thing for you is to talk to your lender. Let your lender explain all the options to you.
TL: I think almost everyone agrees that interest rates are likely to go up. But we are optimistic that the real estate market remains very strong. At the moment average rents are rising rapidly and I think that will boost demand for apartments. But I think the lack of inventory will continue to put downward pressure on prices as we move forward.
mm: Are you optimistic that the housing stock will increase in the future?
CH: I’d like to think that could happen within the next 18 months, but it’s going to take a lot of different factors. The baby boomers stay at home longer than people traditionally. People are stuck in an interest rate so high that the fear of rising even 1% makes them reluctant to sell their house.
TL: We are approaching approximately 10,000 moves in the greater Milwaukee area this year. We are excited about the future. We’re expanding our fleet because we really think there might be short-term issues here and there, but the real estate market has a lot more pressure to stay strong than the pressure on it
slow it down.
mm: How can a buyer make a compelling offer in such a competitive market?
CH: We see a lot of people forgoing inspections, forgoing reviews.
PG: I personally think that’s very risky. As a cash buyer, do without your inspection and your expert opinion. That’s your decision. But if you want to finance a home of your own, I also advise against doing without it.
CH: There are ways to cover all of these eventualities and still get your offer accepted. You can always dead cutlines. When I got into the business it was very easy to get a 15 day inspection contingency. Today we assume seven to ten days.
Keep rating contingency but say you cover up to $5,000 extra if it is not rated at that value.
If you work with a reputable agent and a reputable lender and they can communicate with each other, that goes a long way. If it’s my entry and I have five offers and I get a call from one of the lenders about one of the offers, he says, “Hey, Joe and Amy are really great. You are overqualified. They’re going to put 20% down.” That goes a long way.
mm: What are some common mistakes home buyers and sellers make and how to avoid them?
CH: For sale from owner. If you advertise your home for sale by owner, the buyer will be looking for a discount because they know you’re not paying a commission. If both parties are looking for a discount, guess who gets the discount? No one. If you hire a reputable agent and broker to sell your property, there is no reason why you shouldn’t be paying that commission back on the sale price, if not more.
PG: One of the biggest mistakes people make is not getting pre-approval right away. When you start looking at $500,000 houses, you are approved only for a $300,000 home, there isn’t a single $300,000 home that will look good. The other mistake I’ve seen over the past year is that people overpay
a house in a bidding war.
TL: One of the biggest issues that drives up costs is preparing for the move: packing, sorting, decluttering. It always takes longer than you think. I moved four years ago and couldn’t believe how difficult it was – and I’m in the industry. We offer a packing service that will significantly reduce stress levels during this time.
CH: The biggest mistake buyers make is not contacting their team early enough. You need to contact the lender, the agent, the mover. All three of our professions exist for a reason. And if you use the right team, the work should not only be easier for you, but also more fun and less stressful. And you should have great experience.