Helpful Tips for Househunters
March 19, 2013Thursday is the first day of spring, which means daffodils in bloom, Easter egg hunts, and new homebuyers coming out of hibernation. For employees considering a home purchase this spring househunting season, their decision could be the best or worst thing for their financial future. Your workforce may have opportunities to learn about the housing market by working with a local real estate agent or mortgage lender, but these professionals have an ultimate agenda to seal the deal. Employees can benefit from an unbiased workshop on the ABCs of real estate to help them make one of their biggest buying decisions. Helping your employees find their dream home can also benefit the company by encouraging a more stable, less transient workforce. Here are some of the topics that should be covered:
- Location, location, location: Any real estate agent will admit that this is the most important factor, and the address of an employee’s new home should be considered in how it will impact the commute to work, real estate taxes, and local amenities, such as a dry cleaner, good pizza place, grocery store, etc. Having a few employees who are already homeowners speak on the pros and cons of their own neighborhoods can be very helpful to prospective buyers. No one wants the surprise of a 10 mile commute taking an hour during rush hour.
- Inventory: There is a big difference in buying a home the traditional route versus bidding on a foreclosure. A tutorial on the difference between a regular sale, short sale, foreclosure, “as is”, or auction purchase is crucial in today’s housing market since 23% of houses sold in January were distressed sales. According to the National Association of Realtors, 14% of January sales were foreclosures and 9% were short sales. Foreclosures sold for an average discount of 20% below market value in January, while short sales were discounted 12%.
- Incentives: Depending on your city, there may be money available to help get your employees into their new home. For instance, Baltimore city offers Maryland house hunters up to a $25,000 incentive to purchase a distressed home in 12 targeted communities.
- House payment: Employees need to know what the realistic limit should be for overall housing expenses, so that they still have room in the budget to contribute to their 401(k) and to kick in their share for the office birthday celebrations. The typical mortgage lender will approve a payment of up to 28% of gross income, but a more comfortable rule of thumb should be 25% of take home pay.
These tips can be shared with your workforce either in a group setting with a lunch and learn workshop, a 1 x 1 individual coaching session, or through an article in your monthly newsletter.