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My Realtor is suggesting I take an offer from a cash buyer, saying they don't come along that often.  Why is that an advantage?

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  Getting a cash offer means a lot fewer things can go wrong during the closing process.

  Most of the red tape in buying a home is because of financing.  The lender is putting up a substantial amount of cash and their only collateral for the loan is the property.  So lenders become "involved" in the entire process.

  A borrower's credit history is reviewed as well as their ability to repay the loan and the source of their down payment.  The property is appraised to ensure value and condition of the property.  The property's title is reviewed to verify there are no clouds to the title and that the lender will have the first lien on the property.  Quality control procedures are in place to ensure there is no fraud in the transaction.

  All this takes time to put together, then it is reviewed by an underwriter, and underwriters normally make additional "conditions" before granting final approval. 

  A cash offer removes the lender from the equation. 

  Just make sure the buyer actually has the cash.

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What is up with Interest Rates?

   Even when interest rates are steadily declining, as they were between March and November, there are "spikes" where they also move upward.

   The last three months have been a roller coaster ride.

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 So What Happened in December?

   The economy was looking good, so rates were increasing in November.  After Thanksgiving, Christmas spending appeared a bit lackluster, so investors began moving money into "safe" investments. 

   Rates started plummeting.  Again.

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 January Bounce

   Because rates got so low in December, and because investors often get optimistic in the beginning of the year, moving money from safe investments into stocks, rates will probably "bounce" a bit in January -- meaning they will probably increase.

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  An increase in inventory means homes are coming on the market faster than they are being sold.  This affects price pressure on homes.  When inventory goes up, there is less upward pressure on home prices.

  Based on the recent sales pace, it would take 5.1 months to sell all the homes on the market at the time the latest sales figures were released.

  Last month inventory was quoted at 4.8 months.

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   Nationwide, the average sales price of existing homes increased 11.15% over the last year -  Northeast 15.61%, West 9.28%, Midwest 16.03%, with the South bringing up the rear at 7.84%.

  Don't get too excited, though.  Most appreciation occurred in the first few months of 2002. Between June and September, prices fell in most areas of the United States.

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   Nationally, seasonally adjusted home sales dipped 3.5% in November, according to the latest release of home sales statistics.

   The figures are "seasonally adjusted" to make allowances for the fact that more homes sell during the summer than sell during the winter.

  "There is a decline but the level of activity is still the sixth-highest ever. The level of sales is still very strong," said David Lereah, NAR's chief economist.

  Regionally, month-to-month home sales fell 5.9% in the Northeast, South 4.8, Midwest .9%, and were unchanged in the West.

   December figures will be available near the end of January.

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   When a homebuyer is thinking of buying a home, they sometimes wonder aloud about the most important thing they should consider.  Of course, you need to find a home that provides everything you need in a home, but after that? 

  A Realtor often replies with the phrase, "location, location, location."

  It's become an almost hackneyed phrase, but it still has meaning.

  Where a home is located is the most important factor in it's value -- both now and in the future.

  For example, suppose you are buying a new home and have a choice between two identical houses.  One is located close to the center of the tract and the other backs up to a potentially busy street.  The house in the center of the tract will have a greater value.

  On the other hand, you may be able to buy a four bedroom house on the edge of the tract for the same price it would cost to buy a three bedroom house on the interior of the tract.

  And so on...

  In an old-fashioned neighborhood with square blocks, a house in the middle of the block will have more value than an identical house located on the corner.  Corners have more traffic.

  A single family house in an area where there are mostly other single family homes will retain its value better than a similar home in an area where there are apartments, condominiums, or businesses -- not because apartments and condo are "bad" -- but because the neighborhood is fairly homogeneous.  All the properties are similar to one another. .

  .And so on...

   A home in a thriving vibrant community will have more value than a home in a city where industries are failing, the roads are uncared for and schools are on the decline.

  All other things being equal, a home in a desirable location is more valuable than an identical or similar home in a less desirable location. 

  So when deciding what you "need" in a home versus what you "want" in a home, sometimes it makes sense to settle for what you need in a desirable location -- providing resale value is important to you. 

  That's all real estate agents mean when they say "location, location, location.  Location is important because it is the greatest determining factor in value.

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