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New-Home Due Diligence and Vigilance | Realtor Magazine

Ask for a sample of the builder’s contract. Most have their own, distinct from other companies’.

Ask for clarification of home warranty coverage. Warranties are often issued by a third party.

Obtain a list of costs. What is standard versus an upgrade, and how much do upgrades cost? And remember that most builders pay commission on the contract price, not the final purchase price with the upgrades included.

Inspect for defects. New homes are not flawless. Request an inspection from a separate company.

Check out the neighbors. Review county records to learn what’s being built on adjacent land.

Consider HOA fees. What happens if the builder underestimates HOA fees and costs skyrocket after development is completed? Visit a builder’s previously completed developments and gauge home owners’ satisfaction with fees.

Learn about nearby closings. Review public records to see if the developer may be prone to dumping unsold properties at auction, meaning that recently sold homes’ values may drop.

Home Buying Tips: 6 Phrases That Make a Real Estate Listing Scary : Home : Realty Today

Homebuyers can often be easily lured by real estate listings written in the most flowery words. But beware, behind even the most positive words and phrases, nightmares may be lurking — like expensive renovations and land problems.

Here are seven phrases that could mean a scary home listing:

1. “Needs a little TLC”

When you see this phrase, watch out. “TLC,” short for “Tender Loving Care,” means work. Work means time and money. And most often than not, “a little” could actually mean a lot. The same can be true for words like “fixerupper” and “needs a little improvement.”

According to Househunt Network, you can ask the owners exactly what needs to be done before buying the house. Or, if you want to save yourself from the hassles of major renovation, skip this ad and continue browsing.

2. “As is”

Opposite of “needs a little TLC,” reading the phrase “as is” on a listing can be just as scary. This could mean a house needs a lot of fixing but sellers do not want to shoulder repair expenses.

“They feel they’re putting their best price out there, and they don’t want to get stuck with a buyer nickel-and-diming them for every repair,” realtor Deb Tomaro told CBS News.

Tomaro suggests making an inspection prior to purchasing the property and negotiating with the seller to deduct expenses from the selling price.

3. “Cash transactions only”

For Jon Boyd, real estate agent and former president of the National Association of Exclusive Buyers Agents, this phrase should be a red flag for every home buyer. “Cash only” means the home could have serious problems but the seller does not want to be disturbed.

“That’s one of the most useful real estate lingo things [to watch for],” Boyd said. “This means there could be an issue with the house that may make it difficult to qualify for a traditional mortgage.”

4. “Vacant home”

Ask how long the house has been vacant. There must be a serious reason why the property is abandoned.

In addition, an unoccupied home may have developed problems over time without the seller knowing it. During your walk through, make sure to check all the utilities if they are functioning correctly.

5. “Tenant-occupied property”

In contrast, a tenant-occupied house could mean good news, as some maintain the houses as if their own. Others, however, leave them in a bad condition, making the homeowner solely responsible for the damages. Take this listing of a Columbus, Georgia home posted on Zillow. The photos show the house needs a major cleaning job.

Want to Know If Someone Died in Your Home? There’s a Site for That – Real Estate News and Advice – realtor.com

Your disclosure form and home inspection reveal plenty about the house you’re buying. Oops, there is lead paint. Darn, termites have indeed been gnawing at the cedar siding. Yes, that is a hairline crack you see in the foundation.

But there’s one thing you may not glean: whether or not someone passed away in your home. California law requires owners to disclose if a death occurred on the premises—but only if it was within the previous three years.

Luckily, there’s a website that can tell you.

DiedinHouse.com “is the first of its kind, web-based service that helps you find out if anyone has died at any valid U.S. address,” the site claims.

DiedinHouse.com’s founder, Roy Condrey, told Forbes that the site was inspired by one of his own tenants claiming his property was haunted. “I went online to find a ‘Carfax’ of sorts for deaths in homes and I didn’t find anything, but I did find pages and pages of people asking if there’s a way to find out if their house is haunted,” he said. In fact, deaths have been documented in some 4.5 million homes in the U.S., but there was never a clearinghouse for that information. Until now.

Simply type in your location, pay the fee ($11.99 for a single search), and voilà: The site combs through millions of digital records to get the skinny. Wait, there’s more: The site is running a special! Your report will also reveal if the home has hosted meth labs or suffered a fire for no extra charge!

Will a death in the house really influence your decision? After all, for centuries people did die at home, and we’re starting to return to that tradition.

But whether a death in the house will make or break your decision to buy depends on how superstitious you are. Actually, believing in the paranormal might make you more open to solutions, as well. As we’ve learned, you can always hire a psychic to give your home a spiritual cleanse.

Make sure you’re ready when it’s time to sell your home

When you sell your home, you’ll likely get an earful of advice about finding the right agent. You’re less likely to hear what you should do before your first meeting with that agent. If you don’t prepare, it could affect your bottom line.

Anything you can do to make the Realtor’s job easier is going to benefit you during the process and when sale time comes what you want is the highest net return on your investment.

The most important thing to remember is that you’re most likely going to be working closely with your Realtor on a big transaction, so it’s a good idea to be prepared and ready to provide him or her with as much information as possible right from the start.

Here are things the seller needs to do before contacting and hiring a real estate agent.

Give yourself a quick refresher on your local market, as conditions have likely changed since you bought. The goal is for you and your Realtor to be on the same page in terms of the value.

Sometimes you’ll find conditions will be in your favor, and sometimes you may be disappointed with the current market, but regardless of what you discover, your research will help you and your Realtor create a realistic plan for selling your home.

Sellers should be realistic, using homes with comparable square footage, the same number of bedrooms and bathrooms and a similar level of amenities. It’s also important for sellers to consider their home’s condition relative to the comparable sales.

Before meeting with a listing agent, pull your loan documents and turn that estimate into a precise figure.

Knowing your loan amount upfront will help a Realtor know what strategy to take with your home. The easiest property to sell is unencumbered property, But that’s not always possible.

Realtors want to know about any issues like liens or property disputes so they can deal with them before the house hits the market.

Think about any tax issues, disputes you have had with contractors or other problems that could have allowed a creditor to put a lien on the house. Be honest about disputes with neighbors, especially if they concern property lines, because it’s easier to settle those matters before listing the property. And if you’re selling a property that belonged to a deceased relative, make sure the house has a clean title before contacting a Realtor.

It should go without saying that you want an agent to walk into a clean home. Think of it as making a great first impression. If the Realtor believes your home is fantastic, he or she will be persuaded to market it at a higher value.

Curb appeal is major concern. You want a Realtor to have a mental picture of your home being a prize, so if you need to mow the lawn or prune the bushes, do it.

While it’s tempting to add value to your home ahead of listing, it’s better to hold off on improvements, at least until you’ve hired your agent.

Why Every Buyer Needs a House Inspection

Most but not every home buyer requires a home inspection but every one of them should. Buyers of new homes and buyers that receive a warranty are the most likely to skip the house inspection. Every purchase offer should be made with a house inspection contingency clause. Every house has some problems, be those major or minor. Major problems that the seller refuses to correct can cause a purchase offer to be rescinded. Minor problems might or might not result in a slightly lower price being negotiated.

Some people confuse a house inspection with the appraisal. The appraisal is for the lender to assure that the value of the house is more than the loan being requested. The appraisal does not evaluate the major systems of the house or the performance of mechanical systems.

A house inspection is for the benefit of the buyer. When a buyer finds their dream home, they often only see the best parts. They fall in love with the solid granite kitchen counters, the shiny hardwood floors, and the fresh paint job. What they fail to notice is the sagging roofline, the pooling water under the foundation, and the DYI wiring on the electrical panel that isn’t safe.

Any inspection that comes back without any defects should be questioned and probably rejected as being improperly done. The defects might be as minor as landscaping mulch needing to be pulled back a few inches from the foundation to protect from wood eating bugs or a bathroom water faucet that needs to be replaced because it constantly leaks. Or the problems might be much bigger such as an attic infested with pests or a furnace that won’t make through the winter. The whole point of having an inspection done is to learn what problems exist with the house so that the buyer makes an informed decision before completing the purchase.

A good home inspection will be thorough. Most inspections begin with the outside of the house and include common features such as the roof, siding, exterior doors, and windows. Inspectors check the grading of the house for drainage issues. They’ll test to see if the gutters are in place and working. However, unless arranged for, most inspections don’t include outbuildings, swimming pools, underground sprinklers, and other features that are not attached to the house.

The inside is also thoroughly inspected. All of the major systems are checked. The furnace should be started, the air conditioner checked, water lines and drains examined, electrical system checked, etc. Issues such as two pronged electrical plugs that are not grounded should be noted in the inspection report.

It’s a good idea for the buyer to accompany the inspector on the inspection. For one reason, the inspector can point out exactly what problems exist in addition to writing them down in the report. When the buyer attends the inspection, it typically creates a more critical mind set than when he or she first fell in love with the house. This results in a better informed purchase decision. An inspection contingency clause in the purchase offer enables the buyer to rescind the offer if they don’t like the results of the inspection.

However, not every little detail will be included in the home inspection report. Items that the inspector expects the buyer to notice often are not included. These are typically minor issues such as a knob missing from a cabinet or slightly larger issues that are not safety or operational issues such as scratches on a hardwood floor. When a buyer attends the inspection with a more critical eye, they often pick up on some issues that were missed when they first viewed the home.

Chinese Slowdown Could Help U.S. Real Estate

Could the slowing Chinese economy actually end up being a boon to U.S. real estate?  Johns Hopkins economist Alessandro Rebucci thinks so. He was at NAR’s Washington offices for a REALTOR® University lecture on the impact of global capital flows on U.S. housing and he said China’s growing investment class will be looking for places to invest as their economy continues its slowdown, and that will make U.S. real estate, already attractive to them, even more attractive.

“If the Chinese see an economic drop,” he said, “U.S. housing markets could pick up speed.”

Right now, the Chinese housing market is in a good place, he says. Although housing in the country’s big cities, like Beijing and Szechuan, are over-priced, the country’s housing market overall isn’t in a price bubble. That’s because home prices in second- and third-tier cities are in relative balance with household income.

Even so, both the Chinese and U.S. housing markets are likely to ease in the year ahead, and that means Chinese investors will likely look to U.S. real estate as a place to put their money. It will help that the Federal Reserve is expected to start raising short-term interest rates at some point. That could cool home buying in the U.S., but it could also attract global investors attracted to the higher rates. At the same time, as U.S. home price increases slow because of the higher rates and slower demand, more Chinese money could flow into U.S. real estate.

Looking at the last big recession, from 2007 to 2009, Rebucci said the U.S. saw a steeper drop in home prices—about 20 percent—than other countries, but its recovery has been quicker and stronger. As a result, U.S. real estate remains attractive, particularly to the Chinese, who, he noted, have surpassed Canadians for the first time as the primary foreign buyers of U.S. real estate.

Renters May Need to Brace Themselves | Realtor Magazine

Rents skyrocketed in 2014 and many analysts did not think those escalating costs would be sustainable. But they have yet to slow in 2015 – and in fact, rents have gotten higher — and the increases likely will continue into next year.

Annual rent growth in September was 5.2 percent – the highest since 2011, according to Axiometrics, an apartment research firm. That also marks the eighth consecutive month the rate has been 5 percent or higher. A year ago, annual rent growth was 4.1 percent.

“The eight months the rate has been above 5 percent is the longest sustained period of strength we have seen,” says Stephanie McCleskey, vice president of research at Axiometrics. “The last growth cycle was only four years, and this cycle is already five years long — with no sign of stopping.”

Apartment construction has been increasing to meet rising demand, but some say it’s still falling far too short.

“New inventory coming to market is weighted to the high end; it’s urban, Class A, with a rich set of amenities, targeting the coveted college-educated millennial,” Sam Chandan, president of Chandan Economics, told CNBC. “Overall, we still have an affordability crisis in the United States with rents rising faster than incomes for the fourth-consecutive year.”

In September, apartment vacancies were low – at 95.3 percent occupied nationally. Axiometrics considers anything above 95 percent as a “full” market.

But weak income growth may not support rent growths much longer in some markets.

“There is only so hard you can push on rents,” Chandan says.

Some studies are showing that it is more affordable to buy a home than rent. But inventory constraints in the for-sale market – particularly on the lower end – can keep renters renting, as well as the inability to save for a down payment due to the high rental costs.

Lately, rent gains are highest in cities with boom tech sectors, such as in Seattle, Denver, and Portland, Ore. Rental prices are also above average in Nashville, Tenn., Charlotte. N.C., and several cities in Florida, Axiometrics reports.

“Younger, newly formed households continue to move out of their parents’ or roommate living arrangements and rent an apartment, driving up the demand for more rental units,” says David Crowe, chief economist for the National Association of Home Builders.

Meanwhile, homebuilders – such as Lennar and Toll Brothers – are adding more rental apartments to their mix.

“Thirty-five percent of new home starts in 2015 have been multi-unit,” CNBC reports. “That is higher than a year ago and the highest share since 1973. Developers are simply going to where demand is highest and most lucrative.”

National Mortgage News – Fannie More Bullish on Originations than MBA

SAN DIEGO — Fannie Mae is projecting interest rates will increase at a slower pace than the Mortgage Bankers Association, and that is why there is a wide variance in their respective forecasts for 2015 and 2016 industry originations.

The government-sponsored enterprise sees the average 30-year fixed mortgage rate rising only to 4.1% at the end of next year, said its chief economist Doug Duncan.

Meanwhile, MBA chief economist Mike Fratantoni predicts the 30-year fixed rate will rise to 4.8% at end of 2016.

Last week Fannie Mae projected volume of $1.7 trillion this year and $1.4 trillion next, Duncan said. MBA predicted volume of $1.45 trillion this year and $1.3 trillion in 2016 during its annual convention in San Diego on Tuesday.

Both forecasts call for growth in home purchase volume over the next few years, but the decline in refinance originations will be so steep that overall origination volume will decrease.

“Refinance activity will continue to decline as there are few remaining households that can benefit from an interest rate reduction and because rates will gradually begin to rise from historic lows in the coming years. Home equity products may see an increase in demand as home prices continue to increase at a decelerating rate,” Fratantoni said.

During a separate press briefing as well as a presentation to attendees, Fratantoni said he had become increasingly optimistic about the purchase market compared with earlier this year, as there has been a 4% gain in existing home sales and a 15% gain in new home sales this year.

Underlying the improved forecast is an expectation of 2% to 2.5% growth in gross domestic product annually between 2015 and 2018 plus robust job growth of 150,000 per month next year, he said. This would be down from 200,000 per month this year, but still strong enough to reduce unemployment to 4.8% by the end of next year.

 

Selling your home? A look at some tax tips – CBS News

The “basis” of your home is the value of your home for tax purposes. Your original cost basis is the amount of money that you paid for your home. As time goes by, events adjust this cost basis in either direction. Examples include appreciation or depreciation, improvements to your home, or damages that cause a drop in value.

The effect on your annual property taxes is straightforward. Over time, your property is reassessed, and your annual property taxes will be adjusted based on the revised value of your home. However, when it comes time to sell your home, your capital gain or loss from the home is considered as one change upon sale. It is the same principle as buying a stock and holding onto it for many years before selling it.

Basis forms the reference point for gain or loss, and thus the amount of tax involved with the sale. Understanding the concept of step-up basis and when it applies can help you avoid a significant tax hit upon sale.

Assuming the simple case with only appreciation changes, your capital gain on your home sale is the difference between the sale price and what you originally paid for the home. If you have been in your home for many years, that capital gain may be substantial and subject to a hefty tax.

Good news: In most cases, you can exempt up to $250,000 in capital gains ($500,000 for couples) as long as the home was your principal residence for two of the five years before your sale. This covers many straightforward home sales.

Bad news: This does not cover some situations such as investment properties, second homes, cases where a home or a partial interest in a home has been gifted to you, joint ownership with children, or inheritance of the home.

More good news: In the case of inheritance, you are able to claim a “step-up in home basis”, meaning that your basis in the asset is updated to the current market value of the home. The capital gains on the eventual sale are calculated using your stepped-up value as opposed to the original basis, which could save thousands of dollars in taxes.

Inheritance and estate taxes may apply depending on the value of the home and where you live. However, in the majority of cases, the capital gains tax you would pay upon sale without the step-up is far greater than the combined estate and inheritance taxes.

More bad news: Many people do not realize how the step-up in basis works, and incorrectly gift their home to their heirs or change the ownership to joint ownership with their heirs assuming that they are saving estate and inheritance taxes. This leaves heirs with a large tax burden upon an eventual sale.

There are cases where the step-up in basis is not straightforward, such as cases where a spouse passes away, and the home is held in joint tenancy with right of survivorship. This case results in a half-step-up in basis, based on the 50 percent of the home that the deceased spouse held.

As a general rule, you need to consider the step-up in home basis when considering the disposition of your home, especially if your home has greatly appreciated (or depreciated) over time. However, it is always best to consult with a professional to verify how the step-up in basis would work in your situation, and how to construct your estate plan to make sure that all of your wishes are met.