Category: Real Estate

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.

Six common mistakes made by first-time home buyers | PhillyVoice

The list of mistakes, both big and small, that first-time home-buyers make is a long one. No buyer, no matter how knowledgeable, is immune to all of them. But the following six are among the most common, and they can all be avoided largely just by being aware of them – and exercising some self-control and common sense when the excitement of the moment takes over!

Skipping the home inspection

It’s such a temptation when you’re eager to be a homeowner to say forget about the inspection. Inspections can be a downer, uncovering expensive repairs, throwing a monkey wrench into the closing date, re-opening negotiations with the seller. But buying a house without truly knowing the shape it’s in is a recipe for disaster. And often only the trained eye of a home inspector can see the really serious issues or flaws. Even if the inspection is time-consuming and inexpensive, causes delays, and may complicate the deal, it’s not something you can skip.

Not getting pre-approved for a mortgage

Every real estate agent has disappointing stories of clients who decided a particular home was perfect for them, only to discover later that they couldn’t qualify for a mortgage that would cover the purchase. Whatever your credit score or income, it’s essential to get pre-approved for a loan before placing an offer on a home. That way you can avoid wasting everyone’s time, including the seller’s, the brokers’, and your own. If you’re shopping without a pre-approved mortgage, you in essence have no real sense of what you can afford. Veteran real estate professionals have a saying: home-buying doesn’t begin with looking at houses, it begins with getting pre-qualified for a mortgage.

Not having any ‘vision’

Many first-time buyers have looked at so few properties in their lives that, when shopping for their first house, they get caught up in insignificant and irrelevant details – the color of the seller’s drapes, too-loud wallpaper in the dining room, or the fact that the kitchen is cluttered with the seller’s toys. They forget that they have to look beyond all this at the bones of a house – its overall condition, location, floor plan, and value. Cosmetic fixes and inexpensive repairs are easy. Also, it’s a mistake to be too picky. You can have a “wish list” of 50 features you want in your first home – but the home, in your price range and desired location, that has all 50 features does not exist. Home-buying, like so many things in life, requires compromise.

Trying to go it alone

Reputable real estate agents, expert loan officers or brokers, experienced real-estate lawyers – all these people all partners in the home buying process. It’s a classic amateur error to try to do-it-yourself. The complexities of residential real estate sales these days almost always make that a fool’s errand. Make sure you buy your first home professionally – and correctly.

Spending all your money on down-payment and closing costs

With a 20 percent down payment, most conventional mortgages waive the requirement of having mortgage insurance – which can be expensive. Because of this, many first-time buyers will struggle to put together the 20 percent down payment and use up all their savings – leaving them cash-poor in a new house. This is never a good position to be in. Better to put down 15 percent, pay for the mortgage insurance, and leave yourself the cushion you’re sure to need.

Making up your mind on one visit

It’s surprising how many people don’t return to the house they’re planning on buying several times before actually closing the deal. Have you seen the house at night? On weekends when children are playing? When traffic is heavy? Do you have any sense of the kind of neighbors you’ll have? Falling in love with a house at first sight is great. Now spend some time to getting to know it before submitting an offer and there’s no turning back.

No buyer does everything right, and in retrospect you can always point to “coulda woulda shoulda” things you might have done differently. However, you can at least be aware of the major, avoidable mistakes up front. It’s still true — buying a house is, for most people, the single largest investment they’ll ever make. The fewer errors you make along the way, the better.

Five Reasons To Work With a Realtor and You Can’t Ignore The Fourth | HULIQ

Many home buyers and sellers are wary of working with a real estate agent to buy or sell a property. However it is important to note that a transaction of sale involves many details and requires the participation of several specialists (Realtors, mortgage loan providers, home inspectors) from various areas, especially if the buyer is a foreigner or if the purchase is made through a mortgage financing.

Here are five reasons to visit a real estate agent for your when buying or selling a house.

The first is that the Realtor is a licensed professional. This means, for peace of mind, that the course of the real estate agent’s work should be done within the legal framework governing the profession’s department. Otherwise the Realtor puts his or her license at risk.

Second: The Realtor is a facilitator who is able to deal with all parts of the required process and ensure that the times of the contract documentation are met. Also, the Realtor is not interested that you buy a specific property, but rather the one that best suits your needs and makes you happier, or represents a good investment opportunity.

Third, is that the Real estate agent is a negotiator who knows the business environment and is working for the client’s benefit to obtain and negotiate qualitative and quantitative benefits within the transaction. Your Realtor’s interest is to achieve his or her customer’s satisfaction through a successful transaction that meets your expectations.

Fourth: The Realtor is a promoter. When selling your home, in addition to announcing the house for sale, your Realtor develops and entire marketing plan through other ways and colleagues ensuring you get the best fair price for your home. Your Realtor interviews and filters potential buyers and coordinate visits of only those stakeholders that are pre-qualified to purchase (How Buyers That Aren’t Pre-approved for a Mortgage Loan Are Hurting Themselves). This avoids the visits by curious people who don’t have the ability to purchase your home, saving you time.

If You Are a Home Buyer

Fifth, is that the good Realtor is a diligent representative. When they help you to buy a house, they can search for properties that meet your future needs at a price you are able to pay. They arrange appointments, and will keep you informed of new properties that go out to market with similar characteristics. And best of all, the commission is paid by the seller because the seller is more interested in selling the property.

Tips on buying your dream home

Everyone knows that buying a home is a serious decision, but choosing the right realtor is just as important.

There are many aspects to consider when hiring a realtor. Heath Anders and Matt Pierce from Anders Pierce Realty described a few tips and tricks for hiring a realtor and choosing your dream home.

First, it’s essential to get along with your realtor. Having a trustworthy realtor can make the home-buying process easier and less stressful.

In addition to being personable and responsive, the best realtors are familiar with things like building restrictions in certain neighborhoods and floodplain locations.

“You want somebody local who really knows the area,” Pierce said.

No matter how perfect a house seems, it’s important to get an inspection before putting in an offer.

“Whether it’s a new house or it’s a 100-year-old house, get it inspected,” Anders advised.

Finally, don’t forget to have your finances in order before you make an offer. Taking the extra time to find a trustworthy lender can make the difference between closing and losing out on a home.

Mortgage Rates Are Staying Below 4% | Realtor Magazine

Interest rates may remain lower longer than originally expected. The Federal Reserve released recent comments that suggested it may continue to hold off in raising short-term interest rates and weaker-than-expected consumer demand is all pushing Treasury yields lower.

“As the shock of the weak September employment report wore off, Treasury rates drifted higher,” says Sean Becketti, Freddie Mac’s chief economist. “In response, the 30-year mortgage rate climbed 6 basis points to 3.82 percent, marking 12 consecutive weeks below 4 percent. Late-breaking news suggests mortgage rates may remain in this territory a while longer. After this week’s survey closed, Federal Reserve Governor Daniel Tarullo was quoted suggesting the Fed may not act this year, and Wednesday the 10-year Treasury closed under 2 percent in reaction to economic releases indicating weak consumer demand.”

As such, for the 12th consecutive week, 30-year fixed-rate mortgages have remained below 4 percent.

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 15:

• 30-year fixed-rate mortgages: averaged 3.82 percent, with an average 0.6 point, rising from last week’s 3.76 percent average. A year ago, 30-year rates averaged 3.97 percent.
• 15-year fixed-rate mortgages: averaged 3.03 percent, with an average 0.6 point, increasing from last week’s 2.99 percent average. Last year this time, 15-year rates averaged 3.18 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.88 percent, with an average 0.4 point, holding the same as last week. A year ago, 5-year ARMs averaged 2.92 percent.
• 1-year ARMs: averaged 2.54 percent, with an average 0.2 point, dropping from last week’s 2.55 percent. Last year at this time, 1-year ARMs averaged 2.38 percent.