Move over, fine china — homes just might be the hottest new heirloom.Americans are moving less than ever, according to an analysis of the U.S. Census Bureau’s Current Population Survey. Just 4.2 percent of American homeowners moved between 2015 and 2016 — which is almost half the 7.7 percent rate reported in 1990. According to the Consumer Housing Trends Report 2017, 86 percent of all American homeowners — defined as those who have owned their home for more than a year — have no plans to move in the next three years. Why? Those planning to stay in their homes list love of their home (58 percent) and neighborhood (45 percent) as the top reasons they don’t plan to sell. A smaller, but still sizable, percentage of homeowners list a very generous reason for staying. Almost one-quarter (23 percent), a total of nearly 14 million households, say they’re not moving because they plan to pass down their home to a family member. This is good news for younger generations, who may be struggling to afford to buy their own home or living with their parents while saving up to buy one. In fact, over the past two decades, there’s been a marked increase in the number of young Americans aged 18-34 living with their parents — 33.4 percent in 2016, compared to 27 percent in the late ’70s. This increase isn’t driven by younger generations who may be putting off moving out — it’s driven by older millennials. Since 2012, the percentage of 18- to 25-year-olds living with a parent has actually started to decline, while the share of 26- to 34-year-olds living with parents continues to increase. If their parent(s) are among the households planning to pass their home down, maybe they won’t ever have to fly the coop. Family financial gifts play a big role in helping people buy homes, above and beyond those generous families giving their entire home away. According to the Consumer Housing Trends Report 2017, 14 percent of all home buyers who purchased a home in the past 12 months used a gift from a family member or friend to help pay for the down payment. That number jumps to 20 percent for all millennial (18- to 37-year-old) home buyers. On Point Homevestments
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See the numbers behind how Americans rent, buy, sell and even think about homeBoth renters and buyers face challenges in finding a place to call home, and the Consumer Housing Trends Report is a deep dive into understanding them. They surveyed over 13,000 people to determine how Americans rent, buy, sell and think about real estate. Below, they break down some of the most surprising results. Renters More Americans are renting today than in recent decades — some by choice and some simply due to market conditions. Thirty-seven percent of American households are renters — about 43.7 million homes — which is an increase of 6.9 million homes since 2005. While part of this increase is due to the 8 million homes lost to foreclosure during the recession, renters today also prize the maintenance-free and flexible lifestyle renting offers.
Buyers Buying is tough in all markets. For most Americans, it’s the biggest purchase they’ll ever make and an investment they’ll tap into as part of retirement. In particular cities, purchasing a home has become a competitive game, complete with bidding wars and offer negotiations. It makes sense that most buyers rely on agents to help them through the process.
Sellers Although some hot markets have favorable conditions for sellers, selling is still rarely an easy process. Sellers have two main goals when they list their homes: sell their home in their preferred time frame and for their desired price. Balancing the two is a delicate dance, and most sellers are also buyers searching for a new home.
Homeowners Owning a home is a lot of work. It’s also a great investment, especially in many of today’s markets where annual appreciation rates are higher than they’ve been in decades.
On Point HomevestmentsDoes your home offer any of the perks some buyers will pay more for?To understand how much your home is worth, you have to know what affects its value. The appraisal of a home value is an estimate tool for extrapolating the real market value of your home, based on existing home-related data and actual sales prices in your area. Thousands of data points correlate with home values and sale prices — some of which are obvious (like the condition of the home) and some that aren’t. Here are several surprising things that can affect either the existing value of your home or the price someone is willing to pay for it, all based on data. 1. Proximity to a Starbucks How far do you have to drive to get a Frappuccino? If the answer is “not that far,” you’re in luck. A 2015 Zillow report found that, between 1997 and 2014, homes within a quarter-mile of a Starbucks increased in value by 96 percent, on average, compared to 65 percent for all U.S. homes, based on a comparison of Zillow Home Value Indexdata with a database of Starbucks locations. To evaluate if this effect is isolated to Starbucks, the research team looked at another coffee hot spot (one with particular pull on the East Coast): Dunkin’ Donuts. The data showed that homes near Dunkin’ Donuts locations appreciated 80 percent, on average, during the same 17-year period — not quite as high as homes near a Starbucks, but still significantly above the 65 percent increase in value for all U.S. homes. 2. Blue kitchens and blue bathrooms Beyond America’s obsession with curb appeal, what’s inside your house counts a lot too — especially the colors you paint the rooms (particularly the kitchen). According to Zillow’s 2017 Paint Color Analysis, which examined more than 32,000 photos from sold homes around the country, homes with blue kitchens sold for a $1,809 premium, compared to similar homes with white kitchens. Blue is also a popular bathroom shade. The same analysis found that homes with pale blue to soft periwinkle-blue bathrooms sold for $5,440 more. Walls painted in cool neutrals, like blue or gray, can signal that the home is well cared for or has other desirable features. 3. Trendy features Joanna Gaines’ aesthetic is permeating more than just your YouTube search history. Zillow listings mentioning the shiplap queen’s favorite features — like barn doors and farmhouse sinks — sell faster and for a premium, according to a 2016 Zillow analysis of descriptions of more than 2 million homes sold nationwide. Listings with “barn door” in the description sold for 13.4 percent more than expected — and 57 days faster than comparable homes without the keyword. Meanwhile, listings touting “farmhouse sink” led to a nearly 8 percent sales premium. Sellers can use the listing descriptions to highlight trendy details and features that might not be noticeable in the photos. 4. How close you are to a city If you own a home in a major American metropolitan area, you’re most likely sitting on a significant (and rapidly appreciating) financial asset. Case in point: Home values in the New York, NY, metro area are worth $2.6 trillion, per a recent Zillow analysis. The average urban home is now worth 35 percent more than the average suburban home. Since 2012, the median home value in urban areas has increased by 54 percent, while the median home value in suburban areas is up just 38 percent. On Point HomevestmentsEverything you need to know about buying a home — on one index card.A home is often the biggest financial investment you’ll make in your lifetime. In fact, a recent Zillow analysis reports that the typical American homeowner has 40 percent of their wealth tied up in their home. 1. Buy for the long run A home is a significant investment, not to mention a linchpin of stability. According to the Zillow Group Consumer Housing Trends Report 2017, the majority of Americans who sold their homes last year had lived in their home for at least a decade before selling. Some are even staying for the long haul. Almost half (46 percent) of all homeowners are living in the first home ever purchased. In short: Buy a home you want to live in for at least five years — one equipped (or ready to be equipped) with the features and space you need, both now and in the future. 2. Buy to improve your life, not speculate with money Your home is more than a financial investment; it’s where you sleep, eat, host friends, raise your children — it’s where your life happens. The housing market is too unpredictable to buy a (primary) home purely because you think it will net a big short-term financial return. You will most likely be living in this home for several years, regardless of how it appreciates, so your first priority should be finding a home that will meet your needs and help you build the life you want. 3. Focus on what’s important to you Today’s housing market is short on inventory, with 10 percent fewer homes on the market in November 2017 than November 2016. So, focus on finding a home you can afford that meets your needs — but don’t get distracted by shiny features that might break your budget. Nice-to-have features often drive up the price tag for things you don’t particularly value once the initial enjoyment wears off. Make a list of your basic needs, both for your desired home and for your desired neighborhood. Stick to finding a home that meets these needs, without buying extra stuff that adds up. 4. Set a budget and stick to it It’s important to set a budget early — ideally before you even start looking at homes. In today’s market, especially in the more competitive markets, it’s incredibly easy to go over budget — 29 percent of buyers who purchased last year did. The most common culprit? Location. Zillow’s data indicates that urban buyers are significantly more likely to go over budget (42 percent) than suburban (25 percent) or rural (20 percent) buyers. There’s nothing inherently wrong with that. Local schools matter, and psychologists tell us that a short commute improves your life. But be realistic about your local market and about yourself. Know what you’re willing to compromise on — be it less square footage, home repairs or a different neighborhood. 5. Aim for a 20 percent down payment If you can afford it, a 20 percent down payment is ideal for three reasons:
6. Keep a six-month strategic reserve While a down payment is a significant expense, it’s also important to build up a strategic reserve and keep it separate from your normal bank account. This reserve should cover six months of living expenses in case you get sick, face an unexpected expense or lose your job. A strategic reserve will not only save you from financial hardship in an emergency but also provide peace of mind. When we accumulated a strategic reserve, my wife and I finally felt ready to build for our future. Without it, we were living from paycheck to paycheck, anxiously managing our cash flow rather than saving or budgeting. 7. Get pre-approved, and stick with a fixed-rate mortgage The pre-approval process requires organizing all your paperwork; documenting your income, debt and credit; and understanding all the loan options available to you. It’s a bit of a pain, but it saves time later. Getting pre-approved also shows sellers that you’re a reliable buyer with a strong financial footing. Most importantly, it helps you understand what you can afford. There are a variety of mortgage types, and it’s important to evaluate all of them to see which is best for your family and financial situation. Those boring 30- and 15-year mortgages offer big advantages. The biggest is locking in your mortgage rate. In short: A 30-year fixed mortgage has a specific fixed rate of interest that doesn’t change for 30 years. A 15-year fixed mortgage does the same. These typically have lower rates but higher monthly payments, since you must pay it off in half the time. Conventional fixed-rate mortgages help you manage your household budgeting because you know precisely how much you’ll be paying every month for many years. They’re simple to understand, and current rates are low. One final advantage is that they don’t tempt you with a low initial payment to buy more house than you can afford. 8. Comparison shop to get the best mortgage Though a home is the biggest purchase many of us will ever make, most home buyers don’t shop around for a mortgage (52 percent consider only a single lender). The difference of half a percentage point in your mortgage rate can add up to thousands of dollars over the lifetime of the loan. It’s important to evaluate all the available options to make sure you’re going with the lender who meets your needs — not just the first one you contact. The three most important factors are that the lender offers a loan program that caters to their specific needs (76 percent), has the most competitive rates (74 percent) and has a history of closing on time (63 percent). 9. Spend no more than a third of your after-tax income It’s better to regret spending too little on your home than spending too much. One-third of your after-tax income is a manageable amount. This isn’t always possible if you live in a place like San Francisco or New York, but it’s still a good yardstick for where to be. 10. Be willing to walk away Buying a home is a time-consuming, stressful but ultimately rewarding endeavor — if you end up closing on a home that meets your needs. But it’s important to manage your expectations in case you don’t immediately find a home you can afford with the features you need. Always be prepared to walk away if the sellers don’t accept your offer, the home doesn’t pass a rigorous inspection or the timing isn’t right. Hold fast to your list of must-haves, stick to what you can afford and don’t overreach or settle. It’s no tragedy to miss out on any particular house. Remember that you’re playing the long game. You want to be happy 10 years from now. On Point HomevestmentsWe shed some light on buying a home as a couple so you’re not in the dark when it’s time to sign on the dotted lines.When couples start a new journey as homeowners, questions can linger as to whose name (or names) should be listed on the mortgage and title. Many couples want a 50/50 split, indicating equal ownership to the asset, but sometimes that isn’t the best financial decision. Plus, with more than one person on the loan, the legalities of who owns the home can get tricky. A home is often the largest purchase a couple or an individual will make in their lifetime, so ownership can have big financial implications for the future. Title vs. mortgage For starters, it’s important to note the difference between a mortgage and a title. A property title and a mortgage are not interchangeable terms. In short, a mortgage is an agreement to pay back the loan amount borrowed to buy a home. A title refers to the rights of ownership to the property. Many people assume that as a couple, both names are listed on both documents as 50/50 owners, but they don’t have to be. Listing both names might not make the most sense for you. Making sense of mortgages For many, mortgages are a staple of homeownership. According to the Zillow Group Consumer Housing Trends Report 2017, more than three-quarters (76 percent) of American households who bought a home last year obtained a mortgage to do so. When a couple applies jointly for a mortgage, lenders don’t use an average of both borrowers’ FICO scores. Instead, each borrower has three FICO scores from the three credit-reporting agencies, and lenders review those scores to acquire the mid-value for each borrower. Then, lenders use the lower score for the joint loan application. This is perhaps the biggest downside of a joint mortgage if you have stronger credit than your co-borrower. So, if you or your partner has poor credit, consider applying alone to keep that low score from driving your interest rate up. However, a single income could cause you to qualify for a lower amount on the loan. Before committing to co-borrowing, think about doing some scenario evaluation with a lender to figure out which would make more financial sense for you and your family. True ownership If you decide only one name on the mortgage makes the most sense, but you’re concerned about your share of ownership of the home, don’t worry. Both names can be on the title of the home without being on the mortgage. Generally, it’s best to add a spouse or partner to the title of the home at the time of closing if you want to avoid extra steps and potential hassle. Your lender could refuse to allow you to add another person — many mortgages have a clause requiring a mortgage to be paid in full if you want to make changes. On the bright side, some lenders may waive it to add a family member. In the event you opt for two names on the title and only one on the mortgage, both of you are owners. The person who signed the mortgage, however, is the one obligated to pay off the loan. If you’re not on the mortgage, you aren’t held responsible by the lending institution for ensuring the loan is paid. Not on mortgage or title Not being on either the mortgage or the title can put you in quite the predicament regarding homeownership rights. Legally, you have no ownership of the home if you aren’t listed on the title. If things go sour with the relationship, you have no rights to the home or any equity. To be safe, the general rule of homeownership comes down to whose names are listed on the title of the home, not the mortgage. On Point HomevestmentsDo your homework to get the best deal on a brand-new home.If you’re in the market for a brand-new home, you’ve got a ton of options. Sales of new homes surged to an eight-year high in 2015, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, and single-family production is estimated to reach 840,000 units in 2016, an 18 percent increase over 2015, according to the National Association of Home Builders (NAHB). Unfortunately for home buyers, new residential construction is coming at a steeper price: Last year the average price of a new home jumped to $351,000, up $100,000 from 2009, reports the NAHB. Nonetheless, there are still ways you can save when buying a new home. It’s like shopping for a new car: You need the right strategy to nab the best deal. Ask prospective builders these six questions in order to find the right home at the right price. “What financial incentives do you offer for using your preferred lender and title company?” The bad news: Production builders are often reluctant to set a precedent for negotiating sales prices. (Custom builders tend to be more flexible.) “If a new home is listed for $370,000 and it sells for $360,000, the next buyer in the development is going to want to pay that lower amount,” says Craig Reger, a real estate broker at Keller Williams Realty in Portland, OR. However, many offer handsome incentives to buyers who use their preferred lender and title company. Some may even knock off up to $10,000 in closing costs, says Peggy Yee, a supervising broker at Frankly Real Estate in Vienna, VA. Others will sweeten the deal by negotiating prices on finishes, such as upgrading carpet to hardwood floors. You should still shop around and get quotes from at least two other lenders before making your decision. But don’t just pay attention to the interest rates. “You need to compare each loan estimate’s terms to make sure you’re getting an apples-to-apples comparison,” says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis. “Which are the standard finishes?” When you tour a development’s model home, keep in mind that you’re previewing a high-end version of the standard home. “The model has all the bells and whistles,” says Dossman. Therefore, you need to find out from the builder which options are standard, which options are upgrades, and what each upgrade costs. One way to cut costs: Move into the home without an upgrade, then hire a contractor to do the work. “Builders charge a huge markup on certain finishes and products,” says Reger. “The builder might charge $4,000 to $6,000 for a high-performance air conditioner, but you may be able to get another company to install that same unit for as low as $2,500.” Granted, opting for the latter means you’ll probably need to pay the contractor in cash. “For some people, the benefit of paying the builder to do upgrades is that they can roll the costs into their loan amount,” Reger points out. “What are your long-term plans for the community?” Depending on the size of the land, the builder might be planning several subdivisions. This could impact your decision to buy. For example, let’s assume that only a few homes have been built and sold. If the developer plans to construct an additional 50 homes and you’re one of the first people to move into the neighborhood, you may have to deal with loud construction crews for several months. There’s also the risk that the builder loses funding and another company takes over the development. Dossman advises proceeding with caution: “If the builder changes and a lower-quality builder takes over, that could affect the value of your home.” “What are the homeowners association rules and regulations?” Each homeowners association (HOA) has its own Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws. Get these from the builder and review them carefully. “I’ve seen HOAs that don’t allow storage sheds in the backyard, solar panels, or private fences,” says Reger. In most cases, the HOA can assess a homeowner penalties for infractions, and some associations are more restrictive than others. Also, look into when you’re required to start paying HOA dues. Many builders cover the costs until at least 50 percent of the homes in the development are sold, says Yee. “What warranties do you provide?” Most builders offer a one-year workmanship warranty and a 10-year structural warranty, says Reger. Make sure the warranties you receive explicitly state what is and isn’t covered, and what the limitations are for damages. You should also receive manufacturer’s warranties on the washer and dryer, hot water heater, air conditioner, kitchen appliances, and roof. “Can you connect me with some of your past clients?” Always check references when vetting home builders, says Dossman. Ask past clients questions such as, “How responsive was the developer when you expressed concerns?” and “Would you use the builder again?” Caveat: Most builders will only provide glowing references, so you should still scout out some past customers on your own. You can find these people through reviews on Angie’s List, or knock on doors of homes in the neighborhood that have already been built. Wondering if new construction is right for you? Search new construction listings, and get more home-buying tips and resources to help you decide. On Point HomevestmentsWhen you've got to buy a house from across the country, start with a winning strategySearching for a house locally is not without its difficulties. Add hundreds or even thousands of miles to the equation, and it becomes infinitely more complicated. Though long-distance house hunting has its unique challenges, it’s not impossible. In fact, with the right agent and the convenience of modern technology, it’s never been easier to buy a house remotely. Here are a few critical factors to keep in mind when you find yourself in a home search from afar. Do your homework When it comes to long-distance home shopping, “the Internet is your friend,” remarks Meghann Shike of Synergy Realty in Nashville. “You know the neighborhoods you live around, but you know nothing about your new one. You don’t know where the mall is, the [grocery store], or the schools.” Though nothing can substitute checking out the neighborhood in person, Shike recommends looking up commute times to work, crime rates in the area, and, most importantly, how the schools rank. Even if you don’t have children or don’t plan to have children, it’s still good to know the quality of the schools for resale purposes. One of the biggest pieces of the long-distance house-hunting puzzle, however, is to make sure you’re researching who the best local real estate agents are. It’s always crucial to hire an agent you trust, but with a long-distance search the agent can make or break the experience. “You’re going to want someone local on the ground — someone who is very familiar with the city, neighborhood, and prices,” Shike says. “You need to get a feel for how that person operates. Are they available to talk to you? You’re going to have more questions than you realize, and your agent is going to need to be there to answer them.” Have a travel budget When Kyle and Samantha Steele found out they were going to be moving from Oklahoma City to Columbus, OH for Kyle’s new job, the couple looked at listings online, got in touch with real estate agents, and picked an upcoming weekend to house hunt in person. The Steeles’ agent showed them multiple houses, but nothing was quite right. Then they found out that many of the older neighborhoods in the area didn’t have great access to high-speed Internet. That’s when they decided to build. Their agent was instrumental in guiding them on their short house-hunting weekend, and in finding a builder. “[Our agent] basically helped us with everything, every step of the way,” Kyle states. “When we couldn’t find anything, she helped us find model homes in the area we’re building in, and showed us three different model homes. She answered questions, and helped us find the building company. She even helped us find a hotel for the weekend.” Inevitably, unexpected appointments came up during the building process that required one of the Steeles to be present. “We had to make an appointment to meet with the design studio to pick out the floors and the carpet,” Samantha remarks. “So far, I’ve been to Ohio twice.” The couple advises long-distance house hunters to prepare and plan ahead, especially for last-minute travel. “Be flexible,” Kyle says. “Make sure you have a few thousand dollars in reserve that you can spend on plane tickets and a hotel — because you will have to go back and forth.” From the agent perspective, Shike recommends planning a house-hunting trip that’s at least four to five days long, so you’re not cramming in tons of showings that you won’t remember at the end of the day. Know what you want When you’re in the market for a home, you should always have a running list of features you want, but it’s especially crucial when you’re buying from a distance. “I like to tell my clients to do a ‘top five.'” Shike says. “What’s your non-negotiable? Is it being able to step out the front door to walk your dogs? Do you want to walk your kids to school?” Knowing exactly what you want out of a house and location allows your agent to help you narrow down neighborhoods and homes more easily, and assist you in making an offer quickly, which is especially important in a fast-moving market. “Buyers need to get over the fear of writing an offer when they haven’t seen the house in person,” remarks Shike. “I can video chat our way through the house, but I can’t get you on a plane [to get here] in the same time the local people can who are shopping.” Overcome remote home-buyer jitters For those buyers who are nervous about making an offer sight unseen, Shike says there is the possibility of adding a clause in the contract that the sale is contingent on the buyer seeing it. Of course, there is also always the option of renting first before you take the plunge. “You could rent for the short term or get a six-month lease, which is enough time to get settled in your job or routine,” recommends Shike. “That can be nice for buyers who are a little more anxious about the process — to relieve that anxiety.” Overall, buying a house from a distance shouldn’t necessarily be looked at as a negative experience. In fact, Shike believes it can give many shoppers new opportunities, and buyers are often more excited when purchasing long distance. “It can be a nice change of pace for people,” Shike adds. “Another benefit to moving long distance is a fresh start: a new neighborhood, new culture, new people, and new experiences everywhere.” On Point HomevestmentsFollow these 10 tips to make the home-buying process a happy one.The arrival of spring means it’s time to start fresh. Along with pulling out your warm-weather wardrobe and tackling spring cleaning, you may have a bigger project on your to-do list: buying a new home. Before you start on your home-shopping journey, check out these 10 home buying tips to save you both time and money. Find the right agent Real estate expert Joe Manausa says the key to happy spring home buying is finding the most qualified agent to guide you through the process. With reviews available at your fingertips, finding a real estate agent you trust can be easy — provided you take the time to do some research. Check for agents with the best reviews, and give them a call. They’ll relieve some of the pressures of home buying, and walk you through all the necessary steps. Think location Sure, the three things that matter most in real estate are “location, location, and location.” Nonetheless, some buyers end up purchasing a home in a location that’s not right for them, simply because they make their choice for all the wrong reasons. “They’re looking at a house in the wrong area or the wrong school district, but they buy it because they like the kitchen,” Manausa says. Use the new open house The internet has completely changed the home-buying process, making it easier to choose which homes to go see in person. With 3-D tours available on the web, buyers can tour a home from their mobile device or a computer. Home buyers use online resources during their home search. Buy a home, not a project Buyers who purchase a fixer-upper can end up spending the same (if not more) than they would on a new home. “When buying a home, pay close attention to the ‘bones’ … and avoid getting caught up in the cosmetic features,” advises Dan Schaeffer, owner of Five Star Painting of Austin. If the kitchen cabinets are in good shape, but you want the space to be brighter, adding a fresh coat of paint is easier and less expensive than replacing all the cabinets. Ka-ching! Be a cash buyer Sellers are more likely to choose the buyer who already has money in hand over an offer that’s contingent on a mortgage loan. But if you can’t pay cash, getting pre-qualified for a loan can help the seller feel more confident that you’ll be able to secure financing. Avoid disaster — get a warranty The last thing you want after buying a home is for something to go wrong. You protect your car, so why not your home? Manausa recommends purchasing a home warranty: “[They’re] very affordable, and cover all the things that go wrong.” Your wallet will thank you. Make inspection time count Small problems eventually turn into big problems. The wood could rot, drains could leak, or the electrical panel may not be up to code. “Hire experts, and always get your home inspected,” adds Nathanael Toms, owner of Mr. Electric of Southwest Missouri. If the inspection reveals issues, be sure to deal with them effectively. For example, “it’s very important that a licensed electrician makes sure all circuits work properly,” say Dana Philpot, owner of Mr. Electric of Central Kentucky. Put safety first No matter the neighborhood or the home, your family’s safety should always be the number one priority after purchasing a home. “Even if the previous owner promised to return the copy of every key, it’s always a good idea to change the locks throughout the exterior of the home,” says J.B. Sassano, president of Mr. Handyman. “If the house has an alarm system, remember to change the code — and don’t forget the garage door.” Fix common repairs Repairs may come in the form of patching up small nail holes or weatherproofing electrical outlets. Whatever the need, Schaeffer recommends fixing the repairs before moving in your belongings. “An empty house is easier to maneuver and clean,” he says. For bigger jobs, find a professional to complete the repairs. Sites such as Neighborly can help you find home services providers. Add the finishing touches The best part about buying a new house is making it a home. Change the color of the walls, update the lighting, or add a more personal touch with a photo gallery wall. “It’s important to find the right gallery layout by measuring the wall space, which determines the size of photos you can use,” Sassano says. “Lightweight frames are the safest option, especially when hanging on drywall.” On Point HomevestmentsOnce you've got the basics, it's time to do a little more digging.Nearly every home search starts online these days. Sorting through listings, photos, floor plans and descriptions is a great way to feel out the market for those who are in the earliest stages of the home search. When you find a home you’re ready to bid on, it’s incredible how much background information you can find online. The Internet is full of data on past home sales, recorded sales prices, and the history of each sale, plus information that may not be as obvious — such as the safety of the neighborhood you’re considering buying into. Here are three ways to use online tools and real estate mobile apps to get more details about the home you want. Check building records Nearly all public information and documentation is now available online, and most municipalities provide web access to building permit history. Although the law requires most sellers to disclose previous work done on the property, there may be a history of earlier work the seller didn’t know about. For example, if there is a newer bathroom or kitchen but no history of a permit for the work, there is a chance someone did the work without a permit — and potentially not to health or safety code. And if you become the owner, this unpermitted work becomes your responsibility. To begin your search, type “building records,” plus your city’s name into your favorite search engine. Example: “building records Seattle.” Use Google Street View Researching an address using Google’s Street View can be one of the most revealing options available. Street View provides a snapshot of a property at a particular moment in time, which can provide insight into the recent history of the property or neighborhood. Be aware, however, that the image you see may not accurately reflect the home’s current state. For example, I helped a homeowner list and sell a home in San Francisco’s Lower Haight neighborhood a few years back. We planted a beautiful garden area to create a buffer between the sidewalk and the windows. But a search for the property on Google Street View revealed the windows with bars on them, and no garden. The previous owner had bars on the window, and someone had removed the bars to make the property look more inviting. Seeing the windows with bars on them in Google Street View could raise questions for potential buyers: Is the neighborhood unsafe? Was there a history of crime in the community or on the property? Are the street-level windows safe? Consult a neighborhood crime app A variety of crime reporting apps for mobile devices show on a map recent crimes that have been reported, including assault, theft, robbery, homicide, vehicle theft, sex offenders, and quality of life (which often means noise complaints). It’s an easy way to get a quick overview of how safe or unsafe a neighborhood is. So much information is available to buyers these days. You don’t need to rely solely on the seller’s or the real estate agent’s disclosures. Use online resources to find out as much background information on a property as you can, either before making an offer or during your contingency period. It is best to do as much research as possible, in order to make an informed final decision. On Point HomevestmentsSave some room in your budget for expenses after move-inBy the time you get the keys to your new construction home, you might feel stretched thin in the finance department. From earnest money and design center upgrades, to closing costs and moving expenses, buying a brand-new home is never cheap. As you take a look at the costs on the horizon, it’s wise to look a little past your closing date. There are a few post-closing costs that are unique to brand-new homes and some that are familiar to all new homeowners. Set aside a little money for these expenses now, and it’ll be smooth sailing once the “sold” sign is out front. Appliances Unless you’ve negotiated a washer and dryer into the price of the home with your builder, your new laundry room will likely be a big empty space when you move in — no washer and dryer to be found. Many builders don’t include a refrigerator either, opting instead to let homeowners choose a style that suits their needs. Here’s a tip to ease your wallet woes: Start shopping appliance sales once you know your approximate close date. Many appliance stores will let you purchase ahead of time to take advantage of a good price, then delay your delivery until you move in. Utilities If you’re upgrading to a larger home, your utilities will likely increase, especially heating and cooling. And if you’re moving to a new city or a location with a different utility company, you may have to pay a deposit to start service. If you’re interested in services like cable, satellite TV, or Internet, you may have to install some equipment that would already be installed if you were buying a pre-owned home. Window coverings Look at all those big, beautiful windows in your new home! And then notice that they’re bare — no blinds or curtains in sight. Most new homes do not come with window coverings, and they’re definitely something you’ll want to quickly look into when you move in. There are better ways to introduce yourselves to the neighborhood than through wide-open windows — or bed sheets pinned up for privacy. Furniture There’s nothing more exciting than picking up some great new furnishings and decor for a brand-new space. You may have pieces that worked well in your old space but don’t fit your new home’s layout. Or maybe you have a new guestroom to furnish, a deck that is begging for patio furniture, or beautiful hardwood floors that need area rugs. Set aside some money now so you can start decorating right after move-in day. Landscaping Did you know that some builders only landscape the front yard, leaving the backyard unfinished and unfenced? And, if your new neighborhood has a homeowner’s association, the rules may require you to finish your yard within a certain time period. That means you foot the bill for landscaping your new home’s yard, and whether you do it yourself or hire a professional, it’s still an expense you shouldn’t overlook. Setting foot in your brand-new, just-finished home is an exhilarating experience, and something you won’t soon forget. With just a little planning and saving in advance, you can spend more time making your new house a home, and less time stressing over how you’re going to pay for it all. On Point HomevestmentsShopping for a home has evolved over the years. Here's what you need to know about the new generation of buyers.For years we’ve seen the shift in Baby Boomers ditching their large suburban homes for the excitement of urban life. And we’re noticing the reverse from millennials: leaving behind small spaces along with the hustle and bustle of the city. They’re open to a new world of suburban living, with single-family homes, more storage and closet space, and some outdoor space all their own. These millennials, born between the mid ’80s and the late ’90s, came of age in a shifting cultural and social environment. Their experiences aren’t the same as their Baby Boomer parents, and as such, their preferences differ from those of their parents, who bought a generation ago. Here are some real estate considerations to help you sell to millennial buyers. Millennials are busy Today’s young people work long hours, and they want to spend the free time they have with friends and family. They’re also more transient than their parents’ generation. So, when it comes to real estate, many of them seek turn-key homes for quick and easy move-in. They can’t fathom taking the time to undertake renovating a bathroom or kitchen. No matter how great the opportunity, many of today’s buyers aren’t interested in painting or “making it their own” as our parents did when they moved into homes they planned on living in for 30 years or more. Home searching is like dating Millennials grew up attached to their phones. They hail a car and order food with their fingertips. And now, instead of meeting at a bar, they date with their thumbs. Swipe right for the potential mate, or reject them by swiping left. When it’s time to buy a home, their experience is much the same, thanks to smartphones and real estate apps. As a home seller, you and your agent must invest an incredible amount of time and money on your home’s photo shoot. If you don’t, you may never get a first “date” with your prospective suitor. If the buyer isn’t drawn to your photos, they’re on to the next place. Bigger is no longer better In the ’80s, a McMansion with quadruple master closets, oversized Jacuzzi tubs, formal rooms, and large basements were a sign of success, and coveted by home buyers. Today, millennials want smaller and simpler homes on smaller parcels. Bigger houses or any land more than half an acre equals more work and maintenance to these first-time buyers, accustomed to the easy life. You can’t make your home smaller, but if you are serious about selling and want to account for this trend, your price will need to meet the market. Location matters more than ever Millennial buyers want the urban experience, as best as they can get, in the ‘burbs. This means homes that are walking distance to a village or town, near the train, and in bustling neighborhoods are among the most popular. While being away from town, secluded, and with more land was a status symbol in the ’80s, it’s a deal killer today. Unfortunately, you can’t move your home to a better location — but you can adjust your price to meet the market. If you’re a Boomer selling a long-time family home now or in the future, and the millennial is your potential buyer (think: customer), you need to adjust your mindset to meet theirs. You can’t assume that anything related to your original home search applies today. Get ahead of it, or your home may spend many months (or even years) on the market. On Point HomevestmentsThroughout the approval process, push yourself to maintain your credit while lenders pull it.Navigating the purchase of a home can be overwhelming for first-time buyers. Lenders require documentation of seemingly every detail of your life before granting a loan. And of course, they will require a credit check. A question many buyers have is whether a lender pulls your credit more than once during the purchase process. The answer is yes. Lenders pull borrowers’ credit in the beginning of the approval process, and then again just prior to closing. Initial credit check for preapproval In the first phase of acquiring a loan, pre-qualification, you’ll self-report financial information. Lenders want to know details such as your credit score, social security number, marital status, history of your residence, employment and income, account balances, debt payments and balances, confirmation of any foreclosures or bankruptcies in the last seven years and sourcing of a down payment. This is only a portion of the total information needed for your mortgage application. Once you’re ready to get preapproved for a loan, lenders will verify your financial information. During this phase, lenders require documentation to confirm the information in your application and pull your credit history for the first time. You may be required to submit a letter of explanation for each credit inquiry in recent years, such as opening a new credit card, and for any derogatory information in your history, like a missed payment. Once you find a home within budget and make an offer, additional or updated documentation may be required. Underwriters then analyze the risk of offering you a loan based on the information in your application, credit history and the property’s value. Second credit check at closing It can take time for your offer to be accepted, and for your loan to pass underwriting. During this period from the initial credit check to closing, new credit incidents may occur on your history. Many lenders pull borrowers’ credit a second time just prior to closing to verify your credit score remains the same, and therefore the risk to the lender hasn’t changed. If you were late on a payment and were sent to collections, it can affect your loan. Or, if you acquired any new loans or lines of credit and used those credit lines, your debt-to-income ratio would change, which can also affect your loan eligibility. If the second credit check results match the first, closing should occur on schedule. If the new report is lower or concerning to the lender, you could lose the loan. Alternatively, the lender may send your application back through underwriting for a second review. It’s important for buyers to be aware that most lenders run a final credit check before closing, so the home-buying window is a time to prudently mind your credit. On Point HomevestmentsHome buying hurdles exist — but research, creativity and flexibility will help you clear them.Home buyers today face tough challenges — housing prices have soared, a dollar doesn’t go as far as it once did and rent is more expensive than the past. How are people today making such a large purchase despite these hurdles? With more flexibility and a bit of financing creativity, today’s buyers are finding ways to achieve homeownership. Know your options (and credit score) To even begin the home buying process, it’s important to know what resources are available. According to a 2017 Fannie Mae working paper, many Americans don’t have a strong, or even basic, understanding of what it takes financially to buy a home, nor if they meet the criteria. The first step to knowing if you can afford a home is figuring out what financing options are available to you, including what mortgages you’re eligible for and how much you need/can afford to put down upfront. Fannie Mae discovered that most buyers don’t know the minimum FICO score required by lenders and that 49 percent of buyers don’t even know what their credit score is. Home shoppers also aren’t sure how much they have to put down on a home, and about 40 percent are unsure of the lender-required minimum down payment. Plus, three-quarters of buyers don’t know about programs available to help with down payments, like FHA loans. Before buyers even start thinking about saving for a home, they should know what their financial resources are and if they’re eligible to buy. Make enough money to save With fewer resources to pull from than their older, wealthier counterparts, renters wanting to buy face tough financial headwinds. According to the Consumer Housing Trends Report 2017, renter households typically earn a median income of $37,500 annually, which is $50,000 less than the median household income netted by households who recently bought a home (of whom the median household income is $87,500 annually). While there are ways to enter into homeownership without making $87,500 in household income, it’s hard to afford to buy if you make significantly less. “If you’re making $37,500 per year, it’s probably not feasible for you to buy in almost any market,” says Chief Economist Dr. Svenja Gudell. Only 29 percent of Americans make $87,500 or more, per U.S. Census Bureau data. For perspective, only one of the top 10 most common jobs in the United States carries a salary above $37,500, meaning the jobs that the majority of Americans hold bring in less money than the median renter household. While households purchasing homes are more likely to have two incomes than renter households (and thus a higher median household income combined), even two-income households struggle to afford to buy in competitive markets. Save enough cash (but not as much as you think) One of the most daunting parts of home buying? The down payment. In fact, two-thirds of renters cite saving for a down payment as the biggest hurdle to buying a home, according to the Housing Aspirations Report. Per findings from the Consumer Housing Trends Report 2017, almost one-third (29 percent) of buyers active in the market express difficulty saving for the down payment. For people buying the national median home valued at $201,900, with the traditional 20 percent down payment, that’s $40,380 upfront — just to move in. “The down payment remains a hurdle for a lot of people,” says Gudell. “But they should know they don’t have to put 20 percent down.” Although putting down less than 20 percent means additional considerations, such as the cost for private mortgage insurance (PMI), some find it worth the hassle. In fact, only one-quarter of buyers (24 percent) put 20 percent down, and just over half of buyers (55 percent) put less than the traditional 20 percent down. Buyers are also getting creative about piecing together a down payment from multiple sources. According to the report findings, nearly 1 in 4 buyers (24 percent) build a down payment from two or more sources, including saving, gifts, loans, the sale of a previous home, stocks, retirement funds and other resources. Know your deal breakers, but be flexible To get into a home — even if it’s not the home of their dreams — some of today’s buyers are considering homes and locations outside of their initial wish list and getting increasingly flexible when it comes to neighborhood, house condition and even home type. Although single-family homes remain a dream for most home seekers, buyers today consider and buy condos and townhouses to secure a home in their ideal location. Buyers with household incomes under $50,000 are more likely to consider homes outside of the traditional single-family residence (40 percent), compared to those with incomes of $50,000 or above (24 percent). “I do think people get discouraged when they look in their target neighborhood and they see homes around $170,000 when they’re looking for a $110,000 home,” Gudell says. Affordably priced homes do, in fact, exist. But in popular areas, where people most often want to live, it’s going to be harder to find that cheaper home, Gudell says. “If you’re willing to take a longer commute and make a couple trade-offs, you might be able to find a home that is farther out that might be cheaper,” Gudell explains. “You have to leave the paved path before you can find cheaper choices.” On Point HomevestmentsStaging, curb appeal updates, and closing costs add up.Selling a home not only takes time, but also costs money. To help with budgeting, Zillow and Thumbtack identified several common — but often overlooked — seller expenses. From closing costs to home prep projects like carpet cleaning, U.S. homeowners can expect to spend more than $15,000 on these extra or hidden costs to sell the median home, according to Zillow and Thumbtack’s Hidden Costs of Selling Analysis. Closing costs The two largest closing costs are agent commissions and, in most states, sales or transfer taxes. Nationally, sellers spend $12,532 for both closing costs on the median home. Sellers should also prepare for a variety of other smaller closing costs, including title insurance and escrow fees. Home prep costs Most sellers will complete at least one home improvement project before listing. While some sellers prefer to complete these projects themselves, those who outsource can expect to spend more than $2,650 nationally to cover staging, carpet cleaning, interior painting, lawn care and house cleaning — five of the most popular seller home prep projects. Location, location, location As with all things real estate, these extra costs can vary significantly by region. In San Francisco, homeowners can pay more than $55,000 on the median home to cover these combined closing costs and maintenance expenses — the highest among the markets analyzed. Compare that to Cleveland, OH where home sellers pay just over $10,000 for the same costs. Estimating profit Even though selling a home costs money, most (73 percent) of sellers are still satisfied with the transaction, according to the Zillow Group Report on Consumer Housing Trends. To estimate potential profit, sellers who have claimed their home on Zillow can use Zillow’s Sale Proceeds Calculator. It factors in the home’s sale price, mortgage balance and agent commissions, along with other common seller fees. On Point HomevestmentsBeing a first time home buyer is as much of a skill as it is a privilege. Not unlike every other skill you have managed to acquire up to this point, buying your first home should be met with an acute attention to detail and a mind for due diligence. If for nothing else, home buying skills can be honed to the point that the scales will tip in favor of those that are the most prepared. That said, there are absolutely things you can do and learn to make the home buying process a positive one. If that sounds like something you could get behind, here are some first time home buyer tips you can’t afford to ignore. First Time Home Buyer Tips You’d Be Foolish To Ignore Here are some of our favorite first time home buyer tips we feel everyone would be better off sticking to:
We want to make it abundantly clear: first time home buyer tips can range from the utterly useless to the invaluable. Those we hit on above lean towards the latter, but they are far from the only tips you should take to heart. Buying a home is a complex process that is made easier by understanding as much as you can. So in addition to what I spoke of above, do your best to educate yourself on the process. Common First Time Home Buyer Mistakes To Avoid Here are some of the most common first time home buyer mistakes, and how to avoid making them yourself:
First Time Home Buyer Qualifications First Time Home Buyer Credit Score The first time home buyer credit score is one of the most important indicators lenders use to gauge a borrower’s trustworthiness. It is the credit score, after all, that best defines a person’s history with borrowing. That said, it’s in the best interest of first time home buyers to have a credit score that meets the minimum requirements of today’s lenders. First time home buyers should have a credit score of at least 620 if they hope to receive a conventional loan, and a minimum credit score of 500 if they intend to qualify for an FHA loan. First Time Home Buyer Down Payment The first time home buyer down payment will depend largely on the type of loan in question. FHA loans, for example, require a down payment of at least 3.5% for those with a credit score of 580 or higher. If, however, you apply for an FHA loan with a credit score between 500 and 579, you will be required to pay at least 10% down. Conventional loans, on the other hand, will require a downpayment somewhere in the neighborhood of 5% and 20%, as long as you meet the minimum credit score requirement: 620. It is worth noting, however, that most lenders will require borrowers that pay less than 20% down to pay what is known as private mortgage insurance (PMI) — it’s the lender’s method of protecting themselves from defaulting borrowers. According to BankRate, “PMI fees vary from around 0.3 percent to about 1.5 percent of the original loan amount per year, depending on the size of the down payment and the borrower’s credit score.” First Time Home Buyer Loans And Grants Here are some of the most common first time home buyer loans and grants:
Not surprisingly, these are a few of the most common loans made available to today’s first time buyers. That said, there are more loans out there if you don’t see the one you like. First Time Home Buyer Mortgage Calculator Mortgage rates are constantly changing, which makes calculating your future mortgage a bit more challenging. Fortunately, there are several dependable sites that provide their own first time home buyer mortgage calculator for your convenience. Zillow, for example, has a simple, easy to use first time home buyer mortgage calculator that will help you identify your own payments. Of course, it’s worth pointing out that Zillow’s mortgage calculator (and all others) should only be used by those looking for a ballpark estimate. For a better idea of what you could expect your own mortgage to be, you should consult the bank you intend to borrow from. Only they will be able to give you the exact number you are looking for. Key Takeaways
On Point HomevestmentsShould I rent or buy? A simple question, but nonetheless one that nearly everyone will ponder at one point or another. The rent vs buy debate wouldn’t be much of a debate if the question wasn’t so divisive, right? The only real way to develop your own objective opinion, for that matter, is to listen to the facts as they present themselves in the form of real world data. The real answer to the rent vs buy question is entirely dependent on each person’s unique situation. Before you jump to any conclusions, be sure to take everything you are about to read into consideration. With any luck, your own rent vs buy debate will correspond with a definitive answer by the time you are done reading this. Rent Vs Buy Analysis From A Pro The rent vs buy debate rages on to this day, and for good reason: each side has made some compelling arguments of their own that, at the very least, warrant your consideration. Owners, for example, will quickly point out the single greatest benefit of ownership: equity. Those that actually make purchases of their own build equity in a property with each and every payment made. That way, when it comes time to sell, there are profits to be made. It is worth noting, however, that the same equity argument posed by owners comes with a caveat: you must be willing to live in a property long enough for it to build equity, and even then, equity isn’t guaranteed. Proponents of renting are, therefore, quick to point out the disadvantage of living in the same home for a prolonged period of time. What’s more, there are some renters that think paying down a mortgage is a fool’s errand, in that a large percentage of owners never actually finish paying off their mortgage. To be perfectly clear, there are obvious advantages to each, and drawbacks, for that matter. As I already alluded to, homeownership awards owners the ability to build an equitable share in a valuable asset. In fact, equity is both an asset and considered to contribute to one’s own net worth. That said, equity isn’t a liquid asset. According to Investopedia, “it cannot quickly be converted into cash.” Moreover, “value fluctuates over time as payments are made on the mortgage and market forces play on the current value of that property.” We are a huge proponent of homeownership, but that doesn’t mean it’s for everyone. Of course, there’s the cost. While equity is great, it comes at a price. Homeownership isn’t cheap and usually requires a large down payment; one a lot of people can’t afford earlier in their lives. That, and the commitment that follows. Homeownership isn’t the result of a fleeting feeling; it’s a conscious decision to settle down and stay in the same place for what will most likely be a prolonged period of time. And while the idea of living in the same place suits a lot of people, there is a large contingent that hates the idea of being stuck in the same place for too long. Many of the same renters that covet the idea of being able to move at the end of a lease are strongly in favor of the price of renting. Renting, for example, doesn’t coincide with the same down payment as buying. Therefore, renting is more “accessible” to more people. In the end, the rent vs buy debate can only be settled once you take into account each person’s personal situation. Sometimes buying makes more sense for people, and sometimes renting makes more sense. It may not be the answer you wanted to hear, but it’s nonetheless an answer. The fact remains: whether or not you will benefit from buying or renting will depend entirely on your own situation. Rent Vs Buy Calculator There’s no simple answer to this simple question. As NerdWallet points out, “This is a decision with many moving parts, and things change: Your down payment savings grow, you consider moving to a cheaper or more expensive area, you’re curious what happens if you spend less on a home, or more.” As it turns out, those “moving parts” are as follows:
Using these indicators, you can roughly estimate which decision is right for your situation, but if you would rather plug the numbers into a rent vs buy calculator, NerdWallet has something you might be interested in. Renting A Home Pros
Again, there is a large contingent of people that are convinced renting is better than buying. The reasons many of them use to support their claim are primarily founded in the four bullet points above, and for good reason: there’s no doubt they represent poignant issues in favor of renting. For starters, the barrier to entry is considerably lower than homeownership. Whereas those looking to buy will need to put down 20% in order to avoid paying private mortgage insurance (PMI), most renters will only need a security deposit and maybe the first months rent in advance. A 20% down payment on a $300,000 home will set buyers back $60,000 right off the bat. There’s no question about it: it’s a lot more affordable to start renting than buying a home. Of course, those numbers start to change once you have been renting for a prolonged period of time, but we’ll get into that later. More importantly, it’s not just the money that redirects most people away from homeownership towards renting, but the underwriting as well. You see, owning a home coincides with receiving loan approval — not something everyone can get. There are a lot of underwriting regulations that must be addressed in order to even qualify for a mortgage. With that in mind, there’s a lot of people that not only don’t want to own, but also that can’t own. Renting is literally the only option they can choose. In addition to the initial cost, most rental proponents will be quick to point out the benefits of variable lease options. Renters are typically allowed to choose how long they intend to rent for, granting a degree of flexibility made unavailable to homeowners. Renters are, therefore, not locked into 15- or 30-year mortgages like their owner counterparts. As a result, most renters have the freedom to pick up and move more frequently. You would be surprised at how high renters value their freedom to switch homes at the end of a lease. Renting A Home Cons
There are two sides to every coin, and renting a home is no exception. That said, there are plenty of drawbacks that coincide with renting. Namely, the largest qualm most owners have with renting is the inability to build equity in a home you are simply renting. As a renter, your monthly rent checks are given directly to the respective owner. As a result, the person that owns the home is making money off of the renter’s payments, whereas the renter is simply trading money for a place to live — their money isn’t doing anything for them beyond that. Homeowners, on the other hand, build equity with each payment — renters will never see their cash again. What’s more, the amount renters are expected to pay can fluctuate from lease to lease. It is within the rights of landlords to raise rents, as long as they aren’t in a rent controlled zone. That means it’s entirely possible for rent to be increased at the end every lease. Leases can vary significantly in length; they can last from a single month to several years. Those with shorter leases, therefore, run the risk of their rents increasing more frequently. Finally, those inclined to rent limit the amount they can personalize their living space. Most lease agreements will prevent tenants from making changes to the property, even if it’s something as simple as painting a wall. If you are someone that appreciates a more personal touch, renting may not be the best option. Buying A Home Pros
Of all the potential options awarded to those looking for a place to live, I maintain that homeownership is the best way to go. There’s one simple reason I covet homeownership more than renting: equity. As I already alluded to, renters can’t build equity in a property; their money is traded for a place to live. However, the money homeowners pay towards their mortgage builds an equitable interest in a tangible asset. In other words, equity is both an asset and considered to contribute to one’s own net worth. The more an owner is able to pay down their mortgage, the more equity they can build. Once the principal is paid off, along with the interest, a homeowner will own the home free and clear. That means they will be able to live in the home without making payments to their mortgage provider. Of course, there are other costs, like maintenance and property taxes, but the mortgage is no longer detracting from their ability to save. In addition to that, the homeowner now has a valuable asset in their corner. If that wasn’t enough, the tax benefits that coincide with homeownership are equally as impressive. Most notably, homeowners are able to deduct the amount they pay in mortgage interest each year from their taxable income — that’s no small amount of change. Considering interest rates for the average 30-year fixed-rate mortgage are somewhere in the neighborhood of 4.5%, the interest one could expect to pay on a home could be significant. The tax deductions alone could trump the cost of renting for some. It is worth pointing out, however, that while the upfront cost of homeownership is a lot higher than renting, the scale starts to tip in favor of buying eventually. If for nothing else, there is usually a point when buying actually becomes cheaper than renting in the long run. Buying A Home Cons
While I am in favor of owning a home, buying a property is not without significant caveats; namely, the barrier to entry. First and foremost, buying a home is not cheap. There’s a good chance buying a house is the single most expensive cost most people will encounter over the course of their entire lives. The down payment alone can be enough to keep people from transitioning to homeownership, and that doesn’t even include the rest of the purchase price or interest on the loan. Put simply, owning a home has become synonymous with a much more expensive upfront cost. Again, owning can turn out to be cheaper in the long-run, but certainly not at the time of purchase. If the upfront cost wasn’t enough, there are also rules and regulations one must abide by to make the dream of homeownership a reality. Unfortunately, however, there are those that don’t qualify for a loan. Whether it’s a low credit score or a lack of available funds, there are several obstacles standing in the way of many prospective buyers that have no other choice but to rent. The rent vs buy debate continues to rage on, and for good reason: both sides have valid arguments. Truth be told, however, there is no universal answer. Whether or not you should rent vs buy is completely dependent on your own situation and what you want out of a property. It is worth noting, however, that owning a home has come synonymous with significant benefits, not the least of which renting could hold a candle to. Homeowners are awarded the opportunity to build equity and reduce their taxable obligations. Perhaps even more importantly, home ownership could eventually become cheaper than renting in the long term. Long story short: buying a home is worth it for those that can afford to do so, but not everyone can take the leap. Key Takeaways
On Point HomevestmentsThe last thing potential buyers want to hear is that we are currently in the midst of a seller’s market. However, we'd argue that there’s no cause for concern. There is absolutely a viable exit strategy in any market, regardless of whether or not it favors homeowners. The key is to maintain a level head and analyze the data in front of you. If for nothing else, it’s entirely possible to run a lucrative real estate investing career in a market that appears to favor only sellers; you just need to know how to work with what you are given. Seller’s Market Definition A seller’s market is the direct result of economic indicators that benefit homeowners more than the buyers they intend to work with. In its simplest form, however, a seller’s market is exactly what it sounds like: a real estate market whose scales are tipped in favor of those who currently own property. Perhaps even more specifically, a seller’s market is nothing less than a best case scenario for homeowners, which begs the question: Outside of the actual condition of a marketplace, what are the specific characteristics of a seller’s market? What factors actually give the edge to homeowners? Better yet, what’s it all mean for the whole of the real estate landscape? The vast majority of people understand the concept of a seller’s market (it’s relatively simple), but fewer have an intimate knowledge of why a particular market would benefit sellers over buyers. Fortunately, the fundamental concept behind a seller’s market isn’t all that difficult to grasp either; it can be broken down into one important principle: supply and demand. If for nothing else, a seller’s market is “a market condition characterized by a shortage of goods available for sale, resulting in pricing power for the seller. A seller’s market is a term commonly applied to the property market when low supply meets high demand,” according to Investopedia. When demand meets a shortage of inventory, the homes that are available for sale become inherently more valuable. In other words, when more buyers are competing over fewer properties, it’s likely that the homeowners are at a distinct advantage. The competition simultaneously allows owners to increase asking prices without risking the loss of interest. Therefore, it’s safe to assume a seller’s market coincides with everything buyers would rather avoid: higher prices, more competition and a much faster pace. The Differences Between A Buyer’s And Seller’s Market Anytime supply can’t keep up with demand, sellers will reap the rewards, inevitably resulting in a seller’s market. The more inventory levels are depleted, the more buyers will be willing to pay when they find a house that meets their criteria. Consequently, a buyer’s market occurs when there are more than enough homes to satiate demand. The ratio of buyers to available inventory will actually work in favor of buyers in a buyer’s market. When inventory levels are comparatively high to the amount of people looking to purchase a house, history suggests sellers will compete over shoppers that are awarded several options. Therein lies the single most important differences between a buyer’s and seller’s market: supply and demand. It is worth noting, however, that the housing market is nothing, if not self-aware. The same pendulum that can swing in favor of sellers will eventually course correct to offset the resulting imbalance and, in turn, over-correct to the point in which a buyer’s market is eventually realized. The housing market is, after all cyclical. Each seller’s market will eventually be replaced by a buyer’s market (and vice versa), with the middle ground representing the balance a healthy market covets. As a real estate investor, you would be wise to remember that. For every buyer’s market, there is a sellers market; for every seller’s market, there’s a buyer’s market. The two have become synonymous with each other, and those that can tell the differences between the two stand to gain an edge over the competition. Are We Currently In A Buyer’s Or Seller’s Market? We are currently in the midst of a seller’s market, but I digress. The fundamental indicators supporting today’s housing market are anything but normal. It is true: everything suggests 2018 is a seller’s market. Inventory levels can’t keep up with demand. As a result, we have seen home prices increase almost exponentially. It is important to note, however, that we haven’t seen as many homeowners participate in the market as we would like. Despite being a seller’s market, owners don’t appear ready to sell for one simple reason: the moment they sell, they will be forced to join the ranks of buyers competing over the little inventory that has made itself available. As it turns out, most homeowners are content living with their equity for the time being. It is, therefore, safe to assume we will continue to see a seller’s market until more inventory makes its way to the market. Tips For Buying In A Seller’s Market We maintain there is no market that can’t be taken advantage of by savvy real estate investors. More importantly, there’s an exit strategy for just about every scenario, no matter how expensive or cheap the market finds itself. That said, there’s no reason to be discouraged by a seller’s market if you are looking to acquire your next deal, but rather invigorated. Take solace in the fact that it is still possible to invest in a seller’s market if you exercise the right exit strategies. Due, in large part, to the absence of significant profit margins in a seller’s market, markets like the one we are seeing today tend to favor long-term strategies. Of course, it’s entirely possible to find a deal to rehab and flip in a matter of months, but the data suggests now may be a good time to look at acquiring rental properties. Rental property acquisitions won’t come with a smaller price tag, but they will award investors the opportunity to offset the higher costs with a few years of rental income. In other words, it could potentially pay off to buy a rental property in a seller’s market. You will certainly pay more upfront, but the passive income potential could easily make up for the initial cost. In some cases, it may only take a few years to make up for the added costs. At that point, investors may choose to continue collecting rental income or, if the market is right and the numbers work, rehab the property and sell it at a later date. The returns may not be immediate, but the idea of buying a rental property could pay off in the long run. Now, as for the process of buying a property in a seller’s market, there are a few things that could ease the high acquisition costs:
Selling A House? Here’s How To Thrive In A Seller’s Market Despite a seller’s market inherently favoring homeowners, there’s still a few things you can do to maximize your profits, not the least of which include:
We are currently in the midst of a seller’s market, but the doesn’t mean homeowners can sit back and rest on their laurels. Complacency could significantly reduce your opportunity to maximize profits. Instead, take the time to learn the ins-and-outs of a seller’s market, and what it takes to work in one. Only those comfortable working in any condition will find success easier to come by. Key Takeaways
On Point HomevestmentsFew things are more polarizing in the real estate landscape than the idea of a rent increase. Landlords are typically ecstatic over the possibility of increasing their income, whereas tenants are, well, less than enthused. The said, a good rental property owner needs to know how to navigate the waters of a proper rent increase with finesse and ease, at least if they want to maximize their profits. How To Notify Tenants Of A Rent Increase To be perfectly clear, the process for notifying a tenant of a rate increase will vary by state, so be sure to check with the proper authorities before moving forward with an increase of your own. That said, most states will require landlords to give “proper notice.” Again, the length of time is different from state to state, bust most seem to follow a 30 day rule, meaning landlords need to tell tenants they intend to initiate a rent increase at least 30 days before doing so. The notice must be in writing, and some states even require the notice to be sent through certified mail. Determining Your Rent Increase There is only one thing more important to tenants regarding a rent increase than the reason why prices are rising: how much they are rising. I highly advise against increasing the rent arbitrarily; don’t simply throw out a number without any reason to back it up. Not unlike making an offer on a property, you are free to throw out any number you wish, as long as you can cite a reason for doing so. In other words, don’t simply increase the rent because you can. Instead, determine why you are increasing the rent, and base your new price on the resulting data. With the exception of rent controlled living spaces, homeowners and landlords have a legal right to raise their rent if it doesn’t conflict with a current lease. More specifically, landlords can’t carry out a rent increase in the middle of a lease, regardless of whether it’s year to year or month to month. Landlords can raise the rent as long as they give proper notice, “which in most states is 30 days,” according to NOLO. As a result, most landlords will be able to raise their tenant’s rent as long as they tell them at least 30 days before their current lease ends. Of course, each state will coincide with different laws, so check to make sure you are in compliance with the laws in your area. There is also no limit to the amount a landlord can increase their rent, but not so fast. It can be quite easy to want to increase the rent as much as possible, but I’d most likely advise against it. While a significant rent increase cane look attractive to landlords at first, you need to think of the repercussions; namely, those that involve your current tenant leaving at the end of their lease. Instead of increasing the rent as much as possible, first land on a reason why you are increasing it in the first place, as it’ll act as your starting point. If for nothing else, the rent increase should be justified and proportionate to the reason why. If, for example, you are intent on increasing rent to compensate for a higher cost of living, the increase in rent should be just enough to cover it — nothing more, nothing less. Rent Increase Laws Let’s make one thing abundantly clear: rent increase laws will vary depending on whether or not the building is zoned in a rent-controlled area. More specifically, rent-controlled and rent-stabilized areas are subject to the rules set forth by local municipalities. The local governing bodies in charge of regulating rent-controlled homes are responsible for deciding how often and how much rents may be increased. That said, rent-controlled homes and apartments are basically the exception, and not the rule. In reality, the majority of homes are not governed by a rent-controlled body, meaning the rules pertaining to rent increases aren’t exactly set in stone. In fact, you could argue that rent increases are subject to whatever the market will handle without actually breaking. Landlords are within their right to raise rents as much as they see fit. In fact, the loose laws around rent increases are what gave rise to rent-controlled zones in the first place. While there aren’t too many restrictions on how much a landlord can raise rent, there are some on the amount of time they must give tenants. Most notably, landlords can’t raise rents without warning; they must abide by the rules set forth by their own state. More often than not, tenants must be given at least 30 days notice before the rent increases. According to NOLO, “the rent increase notice must be in writing; in some states, certified mail is required. Oral notices are ineffective in most states and, unless you specifically agree to the rent increase, you are not obligated to pay it.” Perhaps even more importantly, rent increases can’t be enacted over the course of a current lease. Landlords have no choice but to abide by the rules laid out in the signed lease, and can’t increase rent until the lease is over. How To Justify A Rent Increase It is never a good idea to propose a rent increase without the proper justification. You had better have a good reason for increasing the rent you expect your tenants to pay, or you could find yourself with a problem down the road. And while you certainly have every right to increase your rent, some reasons are less likely to anger tenants than others. Here’s a few of the most accepted reasons for a subsequent increase:
Justifying a rent increase has more to do with providing a reason the tenant can understand, and maybe even sympathize with. That way, they are more likely to accept the new rate, provided it isn’t absurd. Conversely, landlords that can’t justify a rent increase will most likely find their request met with more opposition than they would have appreciated. The idea here is to identify a cause an effect: circumstances changed, so you need to raise the rent — it’s as simple as that. Rent Increase Summary Rent increases are nothing less than a touchy subject for everyone involved. On the one hand, renters are never going to be happy about having to pay more for a place they are already living in. On the other hand, drafting a rent increase letter addressed to your tenants is a process that must be met with empathy and justification. If for nothing else, there’s a way to increase rent, and there’s a way that’ll cause more problems. To see to it that your efforts side with the former, make sure you take the appropriate steps when it does come time to carry out a rent increase. Key Takeaways
On Point HomevestmentsToday’s greatest real estate investors know it, and it’s about time you did, too: real estate trends, or at least the ability to translate them, can prove invaluable to the advancement of one’s career. Real estate market trends are, after all, the perfect indicator for divulging not only where a market has come from, but also where it has the potential to go. The more investors know about today’s emerging trends in real estate, the more likely they will be to realize success. But, of course, not all trends are created equal; some are inherently more valuable to follow than others. The key is to identify the trends most likely to last and capitalize on the position they may place you in. Real Estate Market Trends Impacting Buyers & Sellers This Summer The weather is on the brink of heating up in nearly every real estate market, and that means one thing for those with their finger on the pulse of the national housing sector: things are about to get a lot more interesting. If for nothing else, the summer real estate market represents the busiest time of the year. It is at this time when the whole of the entire housing market gains an incredible amount of momentum from both buyers and sellers. It is worth noting, however, that the summer real estate trends of 2018 look perfectly comfortable mimicking those of the previous years. The trends we have seen up to this point, and even the trends we should expect for the foreseeable future, are to be expected. To be perfectly clear, there are a number of real estate market trends that are impacting buyers and sellers this summer, not the least of which include:
It shouldn’t surprise buyers or sellers to learn that these trends look like they will carry over into summer. That said, it would be wise to familiarize yourself with them on a more intimate level. The more you can expect to glean from the upcoming summer real estate market, the more likely you are to navigate it with success. Who doesn’t like the sound of that? If you are interested in giving yourself a competitive edge this summer, you’d be wise to learn as much as you can about what to expect. Home Sales Of the real estate market trends most likely to carry a lot of weight in today’s investor landscape, home sales deserved to be talked about first. It is home sales, after all, that serve as one of the most important market indicators for gauging an area’s health, and those that take place over the course of summer are no different. Home sales will take place at a fierce pace this summer. According to Zillow, the average home lasts on the market for 78 days, but don’t get to caught up in that number. If anything, that number will witness a decrease in the coming months, as it does every summer. Case in point: home sells will speed up as the competition heats up. There are simply too many buyers eager to get into a new home, and summer appears to be the time they hope to do so. As an investor, take note of the speed in which buyers are willing to move; it’s one of the real estate trends most likely to be maintained by the state of today’s market. High Demand And Affordability Few housing markets across the United States, if any at all, have managed to solve the largest problem facing the real estate landscape: inventory levels, or lack thereof. More specifically, however, supply and demand is currently dictating today’s exponential increase in prices. It is worth noting, however, that demand hasn’t taken a step back. The economy is better off today than it was even a few short years ago, and there are more buyers looking to participate in the housing market, but there’s one problem: there aren’t enough homes to satiate demand. All year, in fact, prospective buyers have wanted to partake in the market, and have been met with opposition around nearly every single corner, and it doesn’t look like this summer will offer a solution. That said, investors should go into summer knowing that they aren’t alone. The next few months will be competitive to say the least, which means success will favor the prepared more than ever. As an investor, factor the competitive nature of today’s market trends into your acquisition strategy. Instead of low-balling sellers, try offering a little more, or even exercising an escalation clause. Real estate price trends suggest inventory levels will only continue to drive up prices, so be prepared for the cost to go up. Doing so could mean the difference between having your offer accepted or ignored. Hot Markets Hot markets are, for all intents and purposes, a relative classification. Nearly every market in the country is firing on all cylinders at the moment. However, there are markets that are doing better the others. Most notably, the California real estate market appears to be setting an incredible pace. Whether or not that pace is maintainable remains to be seen, but there’s no denying the activity currently taking place in The Golden State. More importantly, the California real estate market has several of the “hottest” markets in the country, not the least of which include:
According to Realtor.com, California accounted for 13 of the top 20 hottest housing markets as recently as the first quarter of this year. Real Estate Technology Trends The advent of technology has certainly shifted the way things are done in every industry, and the housing sector is no exception. Real estate technology trends have drastically improved the way people take on what can be, at times, an intimidating industry. Real estate technology serves one purpose: to make our lives easier. It is safe to assume that investors using the right technology are at an advantage over those that, well, aren’t. The key, however, is to adopt the right technology. There are technological advancements that are far superior to others, and it’s in your best interest to use those that will give you the best edge. Here are some of my personal favorite real estate technology trends at the moment, and how they can advance your career:
Commercial Real Estate Trends Real estate market trends aren’t relegated solely to the single-family landscape; they are also present in the commercial sector. Here are two of the most important trends investors should be keeping an eye on this summer:
Emerging trends in real estate don’t necessarily have to come out of nowhere. The majority of the real estate trends I spoke of here are the result of months, if not years, of anticipation. They are now trends because they appear ready to carry over the momentum they have already generated into summer. It is worth noting, however, that those aware of what’s going on stand a better chance of realizing success, and today’s investors are no exception. If you want to give yourself an advantage over the competition, be sure to listen to what the market is saying; it may be the only thing you need to take your career to another level. Key Takeaways:
On Point HomevestmentsWhen you buy a house or an apartment, there are several steps: You decide how much money you can spend; find a property you like; make an offer; negotiate an acceptance; sign a contract; line up your financing, and then close on the property. So, in some sense closing is what you’re working towards. It’s the point where you sign the papers that make the home legally yours, and it’s usually when you get the keys. (Note that it’s often not when you move in; that usually comes hours, or even days, later.) The exchange of “money for keys” is very similar to what happens when you rent. However, there are a couple of big differences when you’re buying instead of rent, and there’s more opportunity for things to go wrong. Let’s take a look at some of them, so they don’t happen to you: The Money What’s Supposed to Happen: A representative from your lending bank shows up with the money for your mortgage loan. What Could Go Wrong: In your “commitment letter,” the lending bank outlines certain conditions in order for your closing to happen (for example, you can’t close until you buy homeowner’s insurance.) You could forget to fulfill or violate one of the conditions (for example, by changing jobs between the time your commitment is issued and the time you close.) How to Prevent It: When your commitment letter comes, read it carefully to make sure that you are doing everything you’re supposed to do. Often there’s a list involved, so if the letter says, “your commitment is conditional on your doing A, B, and C,” go ahead and do A, B, and C. Also read the letter to see if there is a list of what violates your commitment. A common commitment breaker is a changing financial status, so don’t change jobs or make a major purchase between commitment and closing. As Michigan mortgage banker David Hall puts it, “Wait and sit on the milk crates for the first few weeks in the new home.” The Keys What’s Supposed to Happen: When you finish signing the paperwork, your broker is supposed to put a full set of keys in your hand, including keys to the front door, the mailbox, and the bike shed. What Could Go Wrong: The seller could forget to bring keys to closing (sometimes that’s a mental block because he or she doesn’t want to let go of the property) or you find out that the side door key has been lost since 2005. How to Prevent It: Have your real estate agent contact the seller to make sure that all the locks in the house are in good working order and to remind her to bring a full set of keys to closing. If you are doing your walk-through of the property right before closing, that’s a good time to remind the seller, too. The Paperwork What’s Supposed to Happen: If you’re getting a mortgage, the bank is supposed to itemize its charges on a form called the HUD-1 Settlement Statement, which indicates money going between the seller and the buyer. What Could Go Wrong: Although you’re supposed to be able to examine the HUD-1 in advance, often the charges on it are actually worked out at closing by the buyer’s, seller’s and bank’s attorney. So, you may see it late, not understand it, and leave without a copy of it (which you’ll need later when you file your income taxes.) How to Prevent It: About.com has a blank HUD-1 on its homebuying site. Take a look at the form before your closing so you have some idea of what it looks like. At closing, take a few minutes to read the form and make sure that everything looks like you expect it to. Also, ask your lawyer to make a copy of the form for you since your accountant will need it come tax time. On Point HomevestmentsReal estate agents often suggest that sellers either accept the first offer or at least give it serious consideration.Real estate agents around the world generally go by the same mantra when discussing the first offer that a seller receives on their home: “The first offer is always your best offer.” Of course, this isn’t true in every situation, but there are reasons why agents believe this, and why they often suggest that sellers either accept the first offer or at least give it serious consideration. Get in the buyer’s head To understand why the first offer is usually the one you should accept, consider the buyer and the journey he or she’s on. Buyers in the real estate market usually start by dipping their feet into the water. This may be before they even engage a real estate agent. They generally go to a few open houses, check out prices online, and start to do their homework. They may even make first contact with an agent to assess what the agent thinks about the state of the local market. From there, buyers begin to get more serious. They may start going on private, second or third showings with their agent. They really start to get engaged in the process. They become “the real dealer” — a buyer who is completely in the game, approved for a mortgage, and actively engaged with their mortgage lender or broker. Maybe they’ve even written an offer or two. They’ve narrowed down their search parameters, spent months learning the market, pricing and checking the comparables. (To learn more about the three types of homebuyers, read “Seller’s Guide to Understanding Today’s Buyer.”) Real dealers are often the ones who write the first offer a seller receives on a property. And that’s why their offers should be taken seriously. Real dealers will likely get an email notification about your listing within hours of it going online. Or, since they are so engaged with their agent at this point, the agent may spot it first and send them a text or email. This buyer will want to get in and see the property ASAP. Since they’re so familiar with the market, they’ll be able to tell once they step foot inside if it will work for them, if it’s priced right, if it shows well, and if it’s in line with present or past comparable sales. If the property meets their criteria, the real dealer, armed with all their knowledge and motivation, will make an offer. The real dealer Their offer may not come in within days of a property going on the market. But it will come from an informed buyer who is knowledgeable of the market. If a home is priced too high and a month or two goes by without an offer, it will be the real deal buyer who has been watching the listing and waiting to see how the market responds. If they note that there aren’t any offers on it and there is no activity after some time, the real dealer will come in with a low offer, which actually may be a good offer, on the seller’s home. While you may see it as an insulting “low ball” offer coming out of left field, you should still look closely at this offer. Who is the buyer? How long have they been looking? Have they written other offers nearby? Are they working with a good local agent? Does the offer come with a pre-approval letter? Is this offer actually a number that is close to the number your real estate agent initially suggested? As hard as it may seem to contemplate an offer much lower than your asking price, serious sellers should look at all the signs leading up to it and consider if this is the offer to accept. Trust your agent. And even better, trust the phrase, “The first offer is always your best offer.” On Point HomevestmentsA pocket listing is an unofficial, off-market listingOver the past year or so, “pocket listings” have become a more mainstream option for quietly marketing a home. If you haven’t heard this real estate term before, you probably will. Here is what today’s homebuyers and sellers need to know about pocket listings. Also known as a “quiet” or “off-market” listing, a pocket listing is a property that an agent keeps tucked away in his or her “pocket.” Though the seller has a signed listing agreement with a real estate agent, the property for sale isn’t officially listed in the MLS. Other traditional forms of marketing may be downplayed, too. Pocket listings started many years ago as a way for high-profile people or expensive homes to be quietly marketed. They were seen as exclusive because they were listed under the radar of mainstream agents, buyers and even the press. Pocket listings are growing in popularity As the real estate market has become more challenging, pocket listings have become more mainstream. In many markets, there are few good properties and low inventories, coupled with buyers who are motivated to see more homes. You’d think that would be a perfect reason to push homes on to the market. And yet, there are sellers who have been interested in selling but aren’t comfortable with current home values. These sellers may sit on the sidelines and will only sell if they can get the price they want. As soon as a home is listed in the MLS, the infamous “days on market” clock starts ticking. The longer your home sits on the market, the more “stale” it becomes and the less money you’re likely to be offered. Buyers, seeing that a home has been for sale for 30 or 60 days or even longer, will inevitably make low-ball offers. And so, instead of going on the market, a seller who wants a certain price may engage their real estate agent and put the listing out there as a “pocket” listing. Pocket listings let sellers test the market With a pocket listing, a seller and their agent can quietly test the market without adding it to the MLS. They can gauge reaction to the price they’re asking and see what kind of traffic they get and how the market receives the property without the MLS clock ticking. The agent can get the word out about the home using various marketing methods except the MLS — maybe even holding a small open house, doing a private broker’s tour, and stimulating word of mouth with other agents. Sometimes, pocket listings eventually get entered into the MLS. But in other cases they’re sold without ever making it into the database. Pocket listings have become a secondary home market In some markets, there are entire websites devoted to pocket listings or networking opportunities with other agents about upcoming listings and properties. What started as a way to get the word out about future listings has turned into a secondary market of homes for sale for well-connected real estate agents. While sellers may agree to a pocket listing and dictate how the information about their home is disseminated, many boards of Realtors have procedures and rules for how listings are to be input into the local MLS. Those rules include fines for agents who don’t input their listing within a certain time period. Time will tell if pocket listings are here to stay or just a direct result of our current real estate market. What pocket listings mean for sellers and buyers If you’re a seller, you should consider testing the waters with a pocket listing, even if it’s just for a week or two. You’ve got nothing to lose. For buyers, it’s important to work with a local agent who has established relationships with other agents in the community. That way, you can be certain that you’ll be made aware of all potential homes for sale. On Point HomevestmentsThe Redfin Blog beat us to this story, but it’s interesting nonetheless… The Los Angeles Times ran an article a while back citing a correlation between the words used in real estate listings and the length of time a home spends on the market, as well as the selling price. Oddly enough, “new paint” was the most commonly listed comment, yet drew lower sales in general. One researcher reasons that if you can’t find anything better to say than “new paint,” perhaps you shouldn’t say anything at all. Words that appeal to the beauty of a home seemed to turn the fastest sales and highest prices. “Landscaping,” “gourmet” and “granite” were among the words used in the lisings. The most blasphemous word you can use in a listing? “Motivated.” To our agent readers: are there key words you use (or avoid like the plague) that you feel have an effect on the length of time it takes to sell a home? On Point HomevestmentsTeardowns, knockdowns, bash-and-builds vs. McMansions, pop-tops, and snout homes: It’s a war out there these days, as detailed in New York Times article that would get anyone’s heart racing — even if you didn’t own a home. What’s happening is that folks are buying homes and hoping to tear them down to rebuild bigger ones or take existing homes and morph them into McMansions, of sorts. Communities where this is happening such as Laguna Beach, Calif., Nantucket, Mass., and Ocean City, N.J., are putting their foot down and getting help from the National Trust for Historic Preservation to slow down the madness. One funny anecdote in the article dealt with a real estate agent who was given the OK to build an addition to his home in Lewes, Del., but to make room, he needed to knock down a dilapidated chicken coop on the property that dated back to the 1800’s. Thinking it would be a slam-dunk to get the go-ahead in a public hearing he was met with fierce public disapproval and did not get the OK. The reason? It lent "value to the streetscape." So, whenever you drive down the street and see a dilapidated building ready to fall over, a community ordinance could be protecting its right to stand there. On Point HomevestmentsGet those rainy day funds in order — you're going to need them.You’re excited because you just found the perfect home. The neighborhood is great, the house is charming and the price is right. But if you’re a first-time home buyer, you might find out that the price is pretty far from perfect. If you’re shopping for your first home, prepare for additional — and often unexpected — home-buying costs. They catch many home buyers unaware and can quickly leave you underwater on your new home. Expect the unexpected For almost every person who buys a home, the spending doesn’t stop with the down payment. Homeowners insurance and closing costs, like appraisal and lender fees, are typically easy to plan for because they’re lumped into the home-buying process, but most costs beyond those vary. The previous owners of your home are the biggest factor affecting your move-in costs. If they take the refrigerator when they move out, you’ll have to buy one to replace it. The same goes for any large appliance. And while these may seem like a small purchase compared to buying a home, appliances quickly add up — especially if you just spent most of your cash on a down payment. You’ll also be on the hook for any immediate improvements the home needs, unless you negotiate them as part of your home purchase agreement. Unfortunately, these costs are the least hidden of those you may encounter. When purchasing a home, definitely hire a home inspector (this costs money too!) to ensure the home isn’t going to collapse the next time it rains. Inspectors look for bad electrical wiring, weak foundations, wood rot and other hidden problems you may not find on your own. Worse still, these problems are rarely covered by home insurance. If an inspector discovers a serious problem, you’ll then have to decide if you still want to purchase the home. Either way, you’ll be out the cost of hiring the inspector. Consider the creature comforts Another cost is your own comfort. It’s easy to not think fully about what you’re expecting from your new home until after you move in. Are you used to having cable? If so, is your new home wired for cable? It’s much harder to watch a technician crawling around punching holes in your walls when you own those walls. And if you’re moving from the world of renting to the world of homeownership, you’ll probably be faced with much higher utility bills. Further, you could find yourself paying for utilities once covered by a landlord, like water and garbage pickup. Plan ahead The only ways to face the unknown and unexpected are research and planning. This starts with budgeting both before house hunting and throughout your search. Look at homes in your budget that need improvements, and then research how much those improvements could cost. Nothing is worse than buying a home thinking you can fix the yard for a few hundred dollars and then realizing it will cost thousands. There’s really no limit to how prepared you can be. Say you find a nice home that’s priced lower than others in the area because of its age. You may save money on the list price, but with an older house, you could be slapped with a much higher home insurance payment, making the house more expensive in the long run. This is where preparation comes in. Research home insurance and property prices in the areas you’re considering to make more educated decisions before you ever make that first offer. Clearly define how much you intend to put toward your down payment, and then look at how much cash that leaves for improvements and minor costs, like changing the locks. That way, when you find a house at the high end of your range, you’ll know to walk away if it requires a new washer and dryer or HVAC system upgrade. Establish a rough estimate for as many costs as you can think of, and be extremely critical of homes at the top of your budget — otherwise, you could easily end up being house poor. Know your budget and plan ahead. Buying a home is a lot less scary when you know what you’re getting into. On Point Homevestments |
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