Category Archives: Real Estate Know-Hows

Agents: Stop Saying Buyers Are Liars

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People naturally go through buying stages as their lives change. Whether they’re aging, gaining wealth, expanding their families, or just maturing in their tastes, each potential client is going through an easily recognized cycle. That cycle puts buyers into three categories: those who are starting out and are truly just looking; the ones who have decided they are definitely going to do something, but haven’t decided what yet; and the ones who have a clear idea of what they want, including their price range and other details.

Stage one buyers are just toying with the idea of making a change. They’re not trying to be coy when they give vague answers to your questions about what they’re looking for. They legitimately don’t know. Agents can put themselves in a position to win their business down the road by taking on the role of adviser and asking them questions that move them forward mentally.

In stage two, buyers have chosen to make a change. They’ve put their houses on the market or have decided not to renew their rental agreement. They’ve already made a verbal commitment to each other or to friends and family that they are going to buy. They don’t know exactly what they want, but they do know a change is coming. Agents can distill two or three different options to help them narrow the field.

In stage three, customers come to the table knowing what they want — their price range, the features they can’t live without, and a notion of the type of floor plan that meets their needs. They are definitively in the market, and it’s only a matter of who’s going to win their business.

When agents fail to win that business, too often their response is that “buyers are liars.” They write them off as unserious people only interested in wasting their time. In truth, agents who are surprised by a customer going a different direction most likely aren’t asking the right questions to get inside buyers’ heads. When agents aren’t aware of what their potential buyers are thinking, they are the ones wasting their own time with the wrong people, losing business in the process.

On the other hand, when agents find out which stage buyers are in, they can meet them there. They don’t need to talk about price range if the prospects haven’t even decided whether or not they need a change. In this stage, buyers don’t need to hear specifics. They need to first understand the how their lives will improve if they make a change. In stage three, they don’t need to be persuaded that a change will improve their lives. They already know that and that’s why they came to the agent. Stage three buyers need to know why the agent, community, or home is the right one for their specific situation.

It’s important for agents to spend time with buyers in all stages of the process. This way, they’ll have a healthy pipeline of prospects as potential clients move through the stages. If agents are ever surprised by a customer’s decision, coach them to identify customer stages. That will allow your agents to meet customers where they are so they can move them into the next stage (and subsequently, their next home).

 

Credit to Jason Forrest

Jason Forrest is a sales trainer; management coach; member of the National Speakers Association’s Million Dollar Speakers Group; and author of three books, including his latest, Leadership Sales Coaching. One of Training magazine’s Top Young Trainers of 2012, Jason is an expert at creating high-performance sales cultures through complete training programs. He incorporates experiential learning to increase sales, implement cultural accountability, and transform companies into sales organizations.

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Improve Your Way to the Top

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In King of the Mountain, if you aren’t fighting hard, you aren’t really playing. And if you aren’t playing, you’re losing. In this children’s game, where the goal is to push whoever is occupying the high ground out of the way and take his or her spot at the top of the mountain, the only person whose success doesn’t depend on improving in position is the king.

But maintaining the status quo doesn’t benefit anyone besides the king. And even the king can’t just cruise along — when everyone else’s full energy is directed toward taking you down, you won’t last long if you aren’t constantly defending your territory. If you want your brokerage to end up on top, you have to make sure your sales associates are playing to win.

What percentage of agents on your team are sincerely playing to improve rather than playing to cruise? The answer is a telling indicator of your team’s potential. People who are cruising stick with what they’ve always done. They’re content with where they are. In contrast, those playing to improve constantly ask themselves “What can I do to get better?” They’re focused not on maintaining but on looking for the next opportunity and stepping into it. Just as King of the Mountain players can’t depose the monarch of the moment without stepping up their game, a team in cruise control is in no position to grow and reach new heights.

If you’re leading a team that has an abundance of cruisers, it’s time to shift to a new gear. Make it your 2016 goal to change people’s mindsets so that at least 80 percent of your team is operating in “improvement” mode at any given time. You won’t hit that target overnight, but you’ll start seeing rapid and sustainable improvement by making the following three adjustments to your team’s culture.

Build a Culture That Rewards Going For It

Too often, team cultures promote the “safe play”—put in your time, don’t rock the boat, follow the script, and, after x years, you’ll be in line for a payout. But you didn’t get into real estate to play it safe. Such a culture stifles innovation and puts your team in prime position to get lapped by the competition. Shake things up by finding ways to publicly praise your outside-the-box thinkers and doers. Make sure agents understand that the way it’s been done before probably isn’t some magic formula that’ll always work. Empower them to bring you any idea they’re willing to own — and to pitch the ones you approve to colleagues.

Challenge People to Set Big Goals

Use every coaching opportunity you have, whether a formal performance evaluation or a hallway high-five on a big sale, to lead your team members to dream boldly about what’s next. Let them know you’re pleased when they hit a home run, but don’t let them milk previous successes. You’re leading a team of people who have chosen a career in sales, so it’s safe to assume they’re okay with competition. Use that fact to snowball individual aspirations and successes into teamwide goals and big-time wins.

Only Add Team Members Who Raise the Bar

Building a team that’s fully on board with what you’re working toward is never more important than when you bring on someone new. Only hire people who will raise the bar. Think of each hire as an opportunity to add a piece you don’t have yet, and you’ll stimulate everyone to step up.

These three enhancements to your team’s culture aren’t rocket science, but they require a strong commitment to continuous improvement that starts with you. The results you’ll see aren’t hard to interpret, either. Your team should be either on top of the mountain or striving to get there. And either way, the fight to improve continues.

 

Credit to Jason Forrest

Jason Forrest is a sales trainer; management coach; member of the National Speakers Association’s Million Dollar Speakers Group; and author of three books, including his latest, Leadership Sales Coaching. One of Training magazine’s Top Young Trainers of 2012, Jason is an expert at creating high-performance sales cultures through complete training programs. He incorporates experiential learning to increase sales, implement cultural accountability, and transform companies into sales organizations. Learn more at

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8 Tax Breaks for Homeowners

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Mortgage interest

You can deduct all of the mortgage interest (not principal) payments you make on your home, up to a $1-million loan for a couple filing jointly. This applies to your home equity line of credit (on a loan up $100,000) and second mortgage as well.

If you own a second home, such as a vacation cottage or mobile home, you can deduct the mortgage interest for it as well, so long as you reside there for the longer of 14 days per year or 10 percent of the time it is rented out.

Mortgage points and insurance

In addition to the mortgage interest, you can also deduct the points you pay on your mortgage for your main home in the year you pay them, as well as points paid for a home equity loan. Points paid for refinancing your home mortgage generally have to be amortized over the length of the loan.

You can also deduct any premiums paid for private mortgage insurance (PMI) on your loan if you earned less than $109,000 in 2015 and the policy was taken out after 2006.

Property taxes

As strange as it sounds, you can deduct taxes on your taxes! Your property taxes are a deductible expense. Keep your property tax bills and proof of payment.

Home office

If you have some sort of home-based business, you may be entitled to a home office deduction on your taxes. There are several hoops to jump through to qualify for the deduction, the two biggest being that your home must be your primary place of business, and that you use the office space only for work. (The IRS spells out the rules for claiming the home office deduction in Publication 587.)

There are two ways to calculate your deduction. Under the simplified option, you can deduct $5 per square foot of your home office’s area, up to a maximum 300 square feet.

The more complex (but often more advantageous) option involves dividing the square footage of your office by the total square footage of your home; this yields the “business percentage” of your home. You then multiply allowable home costs — namely mortgage interest and utilities — by the business percentage to arrive at the deductible amounts.

Energy credits

If you implemented energy-efficient improvements to your home, you can get a credit of up to 10 percent of the cost of those improvements, to a maximum of $500. This covers expenses like new windows and doors, insulation, and high-efficiency heating and cooling systems. You could also get a credit for 30 percent of the cost of renewable energy systems, like solar power.

There could also be state tax credits for these items as well which you can stack on top of your federal credit.

Medical home improvements

If you have a medical condition that necessitates home improvements, such as adding a stair lift because you have arthritis or an air filter because your spouse suffers from allergies, you may be able to write off some of these costs as part of your medical deduction.

However, you can deduct only that portion of your medical costs that exceed 10 percent of your adjusted gross income (7.5 percent if you are 65 or older).

And in most cases, you can deduct only the difference between the cost of the equipment and the increase in value to the home from this improvement. Some improvements (such widening doorways to accommodate a wheelchair) add no marketable value to the home but are fully deductible if you meet certain income requirements.

Home sales

If you sold your home in the last year, you could be eligible for some tax savings resulting from that transaction. The costs of your real estate agent’s fees, advertising, and title insurance are deductible expenses. You can also deduct improvements you made to the home in order to sell it, but only if you have a taxable capital gain from the sale.

Home damages

If your home was damaged by weather, fire, theft, or another disaster, you’ve suffered a casualty loss, a portion of which may be deductible. If your loss was greater than 10 percent of your income and was not covered by insurance, you can deduct the loss. You’ll need to be able to document the value of what was lost, however.

 

Credit to Brette Sember

Brette Sember is a former attorney and author of more than 40 books, including The Divorce Organizer & Planner, The Complete Divorce, and How to Parent with Your Ex. She writes often about law, parenting, food, travel, health, and more. Brette also writes for AvvoStories

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What Investors Should Know BEFORE Selecting Condo Insurance

If you’re a buy and hold rental property investor and you own a condominium, you’ll want to make sure that you have the right coverage since buying condo insurance is different than buying single family home insurance.

In order to mitigate the risk of damage or loss to your rental property, here are some important things to consider when selecting your condo insurance policy.

Understand the Terms

Insurance companies offer different coverage for different properties based on the terms defined in your insurance policy. For example, coverage differs greatly between a condominium and a single family home. The coverage also differs on whether or not the property is defined in the policy as your primary dwelling or rental property.

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Read and reread the terms and conditions for any condo insurance policy before agreeing to their terms. You want to ensure that you are selecting the policy that best covers your investment from loss or damage.

HOA Coverage vs. Personal Property Coverage

Condominium insurance differs from single family home insurance in that condo owners share insurance liabilities with the condo’s homeowner’s association (HOA). Because of this, it can be difficult to understand which policy covers what events and damage.

Personal property condo coverage generally includes:

Interior structure

A condo owner’s personal property insurance is responsible for everything within the interior structure, starting at the studs and working your way in. Any damage that occurs to the electrical, plumbing, floors, drywall, fixtures, and appliances, for example, falls to the property owner and needs to be covered under their personal property insurance.

If the condominium is a rental property, however, you will not need to have as much coverage for personal belongings since that liability will fall to the tenant under their rental insurance.

Loss assessment

Loss assessment is a type of coverage that offers protection against damage caused to common areas owned by the condo’s homeowner’s association. If severe damage to HOA property exceeds the covered losses to the buildings or common areas, you and all other members of the HOA may need to supplement the difference to pay for repairs. If you have loss assessment coverage, you won’t have to pay for your portion of the repairs out of pocket. Pools, elevators, common areas, and recreation areas, for example, would fall under this coverage.

Liability coverage

Your personal property insurance coverage should also cover liability in the event that a person gets injured or their belongings become damaged while within your condo. This liability coverage helps cover the bills in case you’re held responsible for their injuries.

Loss of use

If your condo becomes uninhabitable due to a loss covered by your overall policy, this coverage can provide you with the fair rental value of the property.

HOA insurance master policies generally cover:

Exterior structures, common areas, and grounds

While your personal property coverage is responsible for everything within the interior structure, your HOA’s insurance is responsible for every exterior structure, including the roof, exterior walls, grounds, community buildings, and shared amenities.

The specifics of what an HOA’s master policy will cover varies by association, so it’s important to review the master policy thoroughly. Make sure that you understand the bylaws of your HOA as well as the details of their insurance coverage.

Ask about flood, water, and natural disaster coverage, so that you understand what you will be responsible for as a condominium owner. Research whether you need flood insurance for your condo and if your community abides by FEMA’s recommendations under the new Homeowner Flood Insurance Affordability Act of 2014. If the master policy doesn’t include flood insurance, you may need to ensure that you’re covered under your individual insurance policy or a supplemental food insurance coverage policy.

Understand the Best Coverage by Region

Many different factors affect how much your condo insurance premiums will be. Your location, the age of the structure, and its vulnerability to natural disasters, for example, all play into how high (or low) of a premium your insurance company will offer.

If your condominium is located in an area frequently affected by natural disasters, you can expect your insurance premiums to be higher. In fact, if you live in Florida, Texas, or Louisiana, you can expect to pay some of the highest premiums in the country.

If you would like to do more research how your region will affect your coverage, the National Association of Insurance Commissioner’s (NAIC) latest homeowners insurance report provides the most recently validated data on market distribution and average cost by policy form and amount of insurance.

Compare Quotes

When looking for condo insurance, it will be in your best interest to receive quotes from several different insurance companies. State Farm, Travelers, Liberty Mutual, Geico, and Progressive are of course some of the bigger and more well-known insurance companies that offer condo coverage. However, it might serve your interests to conduct a quick search of the Better Business Bureau to find a highly rated insurance company local to your area.

The National Association of Insurance Commissioners also recently published a comprehensive list of the “Property and Casualty Insurance Industry 2015 Top 25 Groups and Companies by Countrywide Premium.” This study can be helpful in guiding your decision on which company to trust with your insurance coverage.

Once you have quotes from several different companies, assess the coverage offered by the policy compared to price and the deductible. When you’re armed with quotes and policy coverage plans from other companies, you can use those policies as a tool to perhaps receive more coverage for a lower cost from a company’s competitor, saving you money on insurance in the long run.

Do Your Homework

Finding the right policy for your condo can be a time-consuming and frustrating task, but doing the research and making sure you have enough (but not too much) coverage will save you a lot of money down the line.

Remember always to request a copy of the master policy so you can see what is and is not covered by your HOA. Research whether or not you need flood insurance, and always compare quotes from multiple companies before settling on a policy.

 

Credit to Louis Conrad

Louis Conrad is currently the Co-Owner of Surge Homes, a company that develops land, builds houses and condominiums, and offers real estate sales and marketing services for all of its communities in and around Houston, TX.

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Home Inspections Can Save You Thousands: Here’s How to Get the Most Out of Yours

What IS a Home Inspection?

A home inspection is an inspection of the major systems and physical attributes of a property. Think furnace, AC, plumbing, electrical, roof, basement. The inspector comes into the home and sets up any testing like radon or mold. Then the inspector goes around the house looking at everything.

Each inspector has their own system and typically works from a checklist. They take a ton of pictures as they go through the house and make notes for their report.

They look at the age of each mechanical and also test to see if it is in working order. (Testing AC units when there is a low exterior temperature can cause system failure, so if your inspection is taking place in January in Colorado, that’s not a system that will be tested.)

They’ll turn the furnace way up to see how easily it turns on. Inspectors check the status of the unit — clean, dusty, not working at all — and include a note about all of this in their report, along with a basic life expectancy.

Example: Furnace is 9 years old. Average life expectancy for a furnace is 20-25 years. It was in working order when tested. Verify service history with seller.

If the inspector finds damaged or missing items, they will note those, too. The image below was taken directly from the inspection report for my most recent sale.

The missing item is not a big deal — it certainly doesn’t affect the unit, and it’s an easy fix.

What a Home Inspection is NOT

A home inspection will not guarantee that the systems are going to last for X years. It is entirely feasible to have a home inspection today and have every system stop working tomorrow. It’s not likely, but it could happen. The home inspection is a snapshot of the home at that particular time.

A home inspection will also not give you any information about the legal status of the home — they don’t cover title work or get into liens or permits.

Make the Most of Your Inspection

Be there. Physically be at the home during the inspection if at all possible. Get there right on time, and walk around the home with the inspector so they can show you everything they are seeing.

If you have small children, this is an ideal time for a babysitter. If you can’t find someone to watch them at your home, at the very least have someone watch them where the home inspection is taking place. You need to be able to focus as much as possible on the home inspector and what they are saying.

Ask questions! This is the only time the home inspector is going to be in the house. Trust me, it is FAR better to pepper him with questions about the property than to leave something unanswered. You are paying for this inspection — so ask any question you want, and keep asking until you completely understand the answer.

Do I Really Need an Inspection?

Here’s my Home Inspection Rule of Thumb.

If you’re asking if you need one, you need one.

It doesn’t make you a bad person. I get home inspections for every property I buy. It makes me feel more comfortable about the whole purchase. Even though I’ve been investing since before dirt was invented, I still want to know what I’m getting into.

A few years ago, I was looking at a townhouse in an awesome area. Newly rehabbed, I wasn’t expecting anything to be wrong with it, but I still wanted a home inspection. As we were outside finishing up, the inspector casually mentioned that the exterior was not stucco, but something called EIFS — Exterior Insulation Finishing System.

Hmm, what’s EIFS? Thankfully Google existed even back then, and a quick search told me I wanted no part of any property covered in EIFS. When installed correctly, it looks like beautiful stucco at a fraction of the price. When installed incorrectly, water gets trapped behind the product and can cause massive mold damage — to the point that the property becomes uninhabitable.

I didn’t stick around long enough to deal with that. Mold isn’t my thing, and the property wasn’t enough of a steal for me to figure that out.

Another thing was that exterior issues in a townhome or condo become the responsibility of the association. And anyone who has ever tried to deal with an association knows what a difficult task that can be. So, I walked. And I was happy to spend that $400 to discover that issue. Maybe “happy” isn’t the right word — but certainly not mad about it.

Pre-Inspected ISN’T a Good Thing

I’m on the MLS all the time. I’m either looking for properties for clients or myself or doing research into prices in a certain area.

I look at a LOT of listings, and something that pops up frequently is “Home is pre-inspected and comes with a brand name home warranty!”

This makes it SOUND like a good thing, but is it really? Who did that home inspection? You weren’t there to ask the inspector questions. You don’t know what he did or did not look at. You don’t know how long the inspector was in the property.

A home inspection lasts a LONG time. Multiple hours. You don’t know if the guy came through on a scooter and spent nine minutes in the house or if he got up on a ladder and inspected every single thing with a fine toothed comb. Pro tip: Pre-inspected homes aren’t gone over with a fine toothed comb.

Cheaper isn’t always better. In fact, most of the time it’s NOT better at all. Do you think the seller spent top dollar on a home inspection to provide to potential buyers? Probably not.

Do your own due diligence. This includes a home inspection. Trust but verify.

It’s Brand New — Do I Still Need One?

There is a difference between a home inspection and a building inspection. The building inspection is what you get when you are constructing a home to make sure the home meets current building codes. A home inspection is what you get when you are buying a home.

My dad bought a home once. Actually, I grew up a corporate brat — similar to a military brat, but he was on the corporate track rather than in the military. Corporate brats still get to move around a lot, though. Three schools in second grade, and all of the sudden I’m no longer shy. We moved on average every three years. I’ve never lived in a home for more than five years.

So my dad bought this house, and since it was brand new, he didn’t get a home inspection. Once we moved in, we discovered there was no attic access. No soffit vents, no attic vents, and the basement flooded every time it rained. My parents no longer have a wedding album.

When it was time to sell, it was no longer brand new, and the people who were buying it from us DID get a home inspection. Even though we lived there for eight years, that home inspection discovered that the fireplace — you know, that giant stack of HEAVY bricks and mortar on the side of the house — had no additional support underneath it, and it had started to sink. Pro tip: That’s not a cheap fix.

Home Inspections Are So Expensive — I Know What I’m Doing

Not everyone needs a home inspection. If you are an inspector, go ahead and do it yourself. If you’ve done 500 deals, you might not need one, either. If the property is a 100 percent teardown, you can probably skip it then, too.

But to forego an inspection simply because it is too expensive is the wrong reason to skip it. And the “wasted” $500, $800, $1,000 can actually save you tens of thousands in unexpected issues.

You can almost bet that your end buyer is going to get a home inspection.

Additional Tasks

Check for permitted rehabs. If the property you are buying is recently rehabbed or has been rehabbed since it was built — think built in the ’60s but looks like the ’80s — check with the city to make sure all the permits were pulled, inspected and completed. This isn’t covered in a property inspection, so you should do it yourself.

My current home was purchased through foreclosure. It had an original house and a large addition. I’ve been investing since before dirt was invented, but I didn’t think to check on permits. Guess what happened? We applied for a permit to build over the existing large first-level addition and were told that the addition didn’t exist. Uh-oh.

The illegal addition didn’t meet current setbacks, but my city is gracious enough to grandfather in existing structures as long as they meet current code.

An inspector came out and checked the foundation, which I had to dig up by hand. (Jealous?)

It turns out that even though the addition wasn’t permitted, it was still OK. We had to do some monkey business around the foundation for freeze/thaw issues, but we didn’t have to tear the whole thing down.

I have heard of people with unpermitted basements who had to rip out several parts of the drywall and ceiling to have the electric and plumbing inspected. If you’re unsure, a quick call or stop into the permit office can tell you an awful lot about your property.

How Do I Find A Good Home Inspector?

I’m hoping you have a good real estate agent who can give a great recommendation, but even that isn’t always the best way to find a good inspector.

Get recommendations from several different people — the forums or a local meetup is a great place to start networking with people. Other investors don’t have any skin in the game, so it makes no difference to them if you close on the house — or if you choose to walk away from it due to inspection issues. They’ll be more inclined to refer you to a great inspector.

A home inspection isn’t cheap, and it isn’t a guarantee. But skipping it — and finding huge issues after you’ve bought the home — can cost you so much more.

Do yourself a favor and get a good, quality home inspection

 

Credit to  Mindy Jensen

Mindy has flipped numerous homes in the past 10 years, one at a time and doing much of the work with her husband. She lives in Longmont, CO, and is always looking for an ugly duckling to turn into a swan.

 

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Should You Use the Listing Agent When Purchasing a Home?

First-time home buyers aren’t typically versed in the intricacies of agency disclosure, nor do they understand the concepts of a buyer’s agent and seller’s agent. They only know that the person they meet at an open house or email about a listing is an “agent.”

When they start getting more serious and want to inquire about a property, its price, condition or history, they typically direct their questions to the seller’s agent — which presents an immediate conflict of interest.

So what’s a buyer to do? It helps to understand the concept of agency before this happens.

A real estate agent’s loyalties and responsibilities change depending on the transaction. Here’s a quick rundown of the different roles an agent can play in any one transaction.

The listing agent

The listing agent or seller’s agent works for the seller and represents their interests in the sale. The seller hires their agent, typically in writing, to market and sell their home.

The listing agent’s responsibility is to get the seller the highest amount of money in the shortest period. Their fiduciary goals and loyalty should be with the seller at all times.

The buyer’s agent

Purchasing a home can be emotionally draining, not to mention financially stressful. Many consumers seek independent counsel from a buyer’s agent.

A buyer’s agent works with them for as long as it takes to make a purchase. They teach the buyers the market, show them lots of homes, and eventually advise when it comes time to make an offer and negotiate with the seller. An invaluable resource, a buyer’s agent stands by the buyer’s side for the duration of their home search.

The dual agent

Sometimes a buyer forgoes independent representation and chooses to work directly with the listing agent. This situation isn’t allowed in some states because of the conflict of interest. Where it is allowed, a dual agent represents both sides of the transaction at the same time.

In the case of a dual agent, it’s impossible for the agent to be completely loyal to either party. Both parties must agree to dual agency in writing, in advance.

Who pays for the agent?

The seller pays the real estate agent’s commission when the deal closes. The two agents then split the commission. In the case of the dual agent, the agent takes home the entire commission.

Should you use the listing agent as a dual agent?

Unless you are an experienced real estate investor, it’s best to stick with a buyer’s agent. There’s no cost, and a good buyer’s agent will provide an invaluable amount of advice and support in what can end up being a very stressful period.

The home search can involve many twists and turns, so having a loyal adviser along the way will help you make an informed decision on what is likely the largest purchase of your life.

 

Credit to Brendon DeSimone

Brendon DeSimone is a nationally recognized real estate expert and author of the book, Next Generation Real Estate: New Rules for Smarter Home Buying & Faster Selling. A fifteen year veteran of the residential real estate industry, Brendon has completed hundreds of transactions totaling more than $250M. His expert advice is often sought out by reporters and journalists, and he is regularly quoted in local and national press. Brendon is a regularly featured guest on major television networks and programs including CNBC, FOX News, Bloomberg, Good Morning America, ABC’s 20/20 and HGTV. Brendon is the manager of the Bedford and Pound Ridge Offices of Houlihan Lawrence, the leading real estate brokerage north of New York City.

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10 best real estate tips for 2016

Sales of single-family homes will rise modestly again in 2016 and median sales prices should be up 3% to 5%, trade groups and researchers say. While rising mortgage rates and a shortage of first-time buyers may temper that outlook some, the coming year should be another seller’s market for real estate.

Despite an upsurge in construction, home inventories remain low and multiple offers are still common.

While a 6-month home supply is considered a balanced housing market, most markets are well below that, some significantly. Moreover, supporting fundamentals are far more solid than about a decade ago in the pre-bust years of 2006-2007.

With that as a backdrop, here are 10 tips for buying and selling real estate in a presumed up-market in 2016.

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1. Buyers: Don’t overreach

A bidding war might spur you to overspend, but paying an inflated price can make it tough to resell when prices stabilize or sink. (Read 2008-2009 real estate columns as a reminder.)

A decision to pay a premium isn’t always an errant one, though, when you plan to live in the house long term. Rather than focus on overheated developments, look at comparable homes in neighboring areas with the same access to the schools and amenities that you value. Set a bid ceiling, and try to have a few other deals in the works so you’re less inclined to overbid.

2. Sellers: Exercise your clout, but don’t overplay it

If you set a price from 5% to 10% above the market, you’re more apt to get an offer close to your home’s real value than if you start much higher and force your listing to go stale. However, if your home has better qualities than area comps, you have a bit more latitude.

No need to pay closing costs or offer other incentives to the buyer, especially if it means keeping your in-demand home off the real estate market. For example, a sale contingent on the buyers selling their home is reasonable but only with a contractual escape for you, often called a “kick-out” clause. That gives you the right to continue marketing your home. If a less-encumbered bid comes in, you then offer the initial buyers a set time of 48 or 72 hours to withdraw their contingency.

3. Buyers: Be ready, be early, be flexible

Are the best houses still getting snapped up quickly? Then don’t wait until you find a home to go loan shopping. Keep your preapproval letter, as opposed to a basic prequalification letter, in tow. Winnow your neighborhood choices before you shop.

Line up an action-ready inspector for an immediate property visit.

Have your agent ask what the sellers would value most in the sale. If you can accommodate a fast settlement or short-term, rent-back condition or fewer contingencies and conditions, that can make you stand out when that dream home is hanging in the balance.

4. Sellers: Know your agent’s commission split

A heated market is causing sellers to question why they should pay the full 6% commission.

Hence, sellers’ agents are accepting less, then offering less of a split to buyers’ agents in a practice known as “sell to the commission.”

When the co-op fee is low, buyers’ agents tend to be less than enthusiastic in showing such houses, and yours will typically take longer to sell.

5. Buyers: Buying new?

Get what you pay for. Builders are cranking production to pre-recession levels. But some are cutting corners by hiring untrained help, not waiting for concrete to cure, painting walls without primers or quietly substituting cheaper materials such as a lower grade of countertop granite, or installing inadequate plumbing or HVAC units.

Consider hiring an independent inspector to oversee construction (at $400-plus). Builders may tell you not to worry because they’ll hire one. Ahem!

And, be sure the builder is established and that you research online reviews, complaint pages and consumer ratings. Ask specific questions about the crew’s experience and certifications.

 

6. Sellers: Know your influential rooms

Upgrades rarely pay for themselves, but there are 2 spaces that can make or break a home sale: the kitchen and master bath.

Because kitchens are the heart of the home, or the “new living room,” make yours homey. Hide the coffee maker and toaster. Add simple decorative touches to the wall behind the sink.

Sure, new granite countertops and appliances are optimal, but new hardware for cabinets, new faucets, new lighting fixtures and fresh (neutral) wallpaper are inexpensive touches that carry weight. Thoroughly scour and depopulate the fridge and take magnets off it, please.

For bathrooms, always display a sparkling bathtub and commode. A new tub liner, or “shell,” can make that marred tub look like new and save you from replacing it.

A new faucet, new lights, fresh caulking, a new towel rack or new mirror may be in order. Clean out the medicine cabinet. Of course, this doesn’t mean you shouldn’t declutter, depersonalize, paint and scrub the rest of your space, too.

7. Buyers: Beware hidden costs

When is a $250,000 house not a $250,000 house?

Answer: Always! Consider these and myriad other closing costs when buying:

  • Origination fee: On a $200,000 mortgage for a $250,000 home, assuming 3.5% interest and no points, you’d pay the lender about $1,800.
  • Home inspection: Even if the mortgage insurer doesn’t require one, get one for peace of mind.
  • Property taxes: You’ll usually pay a few months upfront.
  • Appraisal: The bank will need to determine how much the place is really worth.
  • Private mortgage insurance, or PMI: This depends on your down payment and credit rating.

Other pre-occupancy costs should include home insurance, title insurance and deed-recording fee, and possibly title insurance, survey costs, credit report fees, flood insurance and homeowners association dues/insurance.

On that $250,000 home, allow an extra $5,000 or more atop the sale price.

8. Sellers: Consider the replacement

You’re getting multiple offers on your home, with several over asking price. Wow, that was fast! But can you find your next home in time to move once you sign?

If not, one option would be to request a lease-back from the buyer, allowing you to remain in your old home for the time you need to shop for the replacement. This will be contingent on when the new owners need to occupy, and the period is usually limited to 60 days.

The other option is to slow the selling process by asking for a longer period before closing.

Whatever you do, get your prospects and finances lined up (see tip No. 3!). Yes, a seller’s market swings 2 ways!

9. Buyers: Seek out an up-and-coming neighborhood

Things to look for include proximity to a new or resurgent business center, the addition of a major employer, a light-rail station, a city cleanup initiative, young people moving there, crime watch and other neighborhood groups being formed, multiple renovations underway and other up-and-coming neighborhoods abutting it.

New retailers, restaurants and other commercial tenants are also a good sign. Research by RealtyTrac shows that homes in ZIP codes that have a Trader Joe’s grocery store appreciated 40% on average since the homes were last purchased. Homes with a Whole Foods nearby appreciated 34% on average.

10. Sellers and buyers: Don’t play the bubble game

Thousands of would-be sellers and buyers are agonizing over how they can time their next sale or purchase to coincide with the “pop” of this housing bubble, either by selling soon for optimal profit or swooping in with cash to pounce on post-pop pricing.

True, the bust of 2007-2008 was a loud and robust one, but don’t look for anything catastrophic this time. The present froth is being fueled by narrow supply and widespread demand, not easy credit and “liars’ loans.”

Most real estate cycles don’t explode like the last one; they just deflate slowly. Real estate continues to be a reliable long-term investment prone to usually modest peaks and valleys, done on a deal-by-deal basis and subject to local economies.

Good luck in the new year!

 

By Steve McLinden

 

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Four Steps to Selling Your Home for Top Dollar

We’re smack in the middle prime house-selling season. The National Association of Realtors predicts that 6.6 million existing homes will change hands this year.

But many markets around the country are cooling, and the inventories of homes for sale are rising. Compared to the hot real estate market of recent years, you can no longer automatically expect to sell a house quickly and for a high price.

However, sensible pricing and careful presentation can go a long way toward hastening a transaction. Follow these four tips, and you’ll be on your way to selling your home for a good price this summer:

  1. Find Out What Your House Is Worth

You can’t charge the right price unless you know what that is. So do a little research:

Go online. For a free Multiple Listing Service Home Market Check that shows what other residences like yours sold for recently in your area, visit the HomeInsight Web site. Or, check out Yahoo! Real Estate and click on “What’s my home worth.” Finally, visit Realtor.com, where you can browse more than 2.5 million residential listings and take advantage of several services that can help you to determine your home’s value.

Check local real estate listings. To get a more accurate sense of your home’s worth, look at local real estate listings (often searchable by neighborhood, house size, and price on local realtors’ Web sites) for a sense of what houses of similar size, condition, locations, and amenities are going for in your area. Large real estate brokerage firms tend to have the most sophisticated Web sites. Some of my favorite realtor sites include Coldwell Banker, Century 21, and Re/Max.

Attend open-house showings. To get to know a market in a weekend, check open-house listings and attend these events to see what your neighbors are selling their homes for. How do their homes look compared to yours? How are they priced? Talk to the real estate agents hosting the events to find out which properties are moving and why. Asking these questions can help you get a quick handle on the market — and let you know what you need to do to prepare your home for sale.

Get a comparative-value analysis from a professional. You don’t have to do this all yourself — and candidly, you shouldn’t. Get a referral for a real estate agent, and let them know that you’re considering selling your home. Ask them to provide you with a detailed “comparative-value analysis” on your home. The analysis will include information about recent sales of homes similar to yours. Ask the agent for an analysis that includes the last year or more of sales for a complete picture, but the most recent transactions are the ones to use as your benchmark.

While you’re at it, ask the agent to provide you with a listing of current homes like yours for sale and how long they’ve been on the market. Finally, request a marketing proposal stating at what price they’d list your house and what they’d do to help you sell it. There’s usually no charge for this service, as this is the agent’s chance to woo you as a client.

  1. Make It Look Pretty and Smell Nice Before the Sale

De-clutter the interior. Pare down before the move. Potential buyers want to see your house, not your possessions. A sparse interior containing just enough furniture to suggest each room’s purpose and to provide a sense of scale is ideal. Clean out drawers, empty closets and attics, vacate the basement, and tidy the garage.

Consider renting an inexpensive self-storage unit for items you don’t want in the house during a showing. And most importantly, lose the family photos. You want the visitor to think of the house as theirs, not yours.

Give it a good cleaning or hire a cleaning service to do a thorough, one-time job. Make ceilings, walls, floors, carpets, windows, faucets, and fixtures look good — dust, scrub, and polish until everything sparkles and smells clean.

Paint, repair, replace. The fastest and cheapest thing you can do to help you sell your house is repaint. A fresh coat of paint inside and out can quickly make your house look and smell new. When in doubt, paint the outside a color common in the neighborhood and the inside white.

If it’s broke and obvious, fix it! Cracked windowpanes, sticking doors, dripping faucets, running toilets — take care of them up front, so you don’t have to explain them away later. If you don’t want to do it yourself, make a “punch list” and hire a handyman service. Your investment will likely pay off many times over in a higher sale price — and, most importantly, a house that sells.

Create curb appeal. In the beginning, it always comes down this: How does the house look from the curb when the person drives up (assuming you aren’t selling a condo in a building). Studies have shown that simply repainting a house is the best investment you can make when reselling. If your home has synthetic siding, a good power washing may be able to help it shine like new again. Dirty or weathered decks can benefit from the same treatment.

Next, compare your landscaping to others in your neighborhood. You don’t have to have the cutest house on the block, but if your yard looks barren, plant some flowers (people love them) and a few bushes. Finally, new grass in the front can make an old yard look brand new (a fast and often cheap fix). Add new house numbers, a nice doorbell or knocker, and a plush new entry mat — they all help to make a great first impression. Oh, and make sure the front door looks great and functions perfectly.

Clean out the garage, and remove children’s toys from the yard. That goes for that creaky, rusty, long-abandoned swing set, too.

  1. Research a Sales Method

There’s more than one way to sell a house. Here are the three most popular choices:

Commissioned real estate agents are the traditional and most successful option. According to the National Association of Realtors, a recent study shows that sellers assisted by an agent get a price for their home 16% higher than those selling on their own. They offer many services for a commission that’s generally about 6 percent of your home’s sales price — but the fee is often negotiable. For more information, visit Realtor.com, which is owned and operated by the National Association of Realtors.

Flat-fee brokers perform many of the same services for a fixed fee — often less than a traditional agent’s commission. For more information, check out FlatFeeListing.com.

Selling it yourself allows you to potentially avoid broker fees and commissions altogether by doing your own marketing. However, there are costs and do-it-yourself work involved. ForSaleByOwner.com has more information.

  1. Consider renting out your house instead of selling it.

O.K., now that you know what you need to do to sell your house, I’d like you to consider another option that will not just make you some money, it may make you rich. Don’t sell your house now. Hang onto it and rent it out. That’s right — if you rent out your home for more than the cost of the mortgage payment, taxes, insurance, and maintenance costs, it’ll provide you with some extra income each month.

Real estate investors call this “positive cash flow” or “passive income.” That income is apt to increase over time, as your mortgage payment is likely fixed, but the rental’s value tends to grow. Eventually, the mortgage is paid off, you own the home free and clear, and you still get to collect the rent — and pocket almost all of it. Plus, the property will likely continue appreciate, even as it throws off cash.

Written by David Bach

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Tech to Control Homes

“Smart homes” usually mean extra phone jacks and high-speed Internet connections. But if the dreams of Microsoft, IBM, Sony and others come true, it could mean a whole lot more than speedy Internet service.

Just ask Todd Thibodeaux, vice-president of marketing and research at the Consumer Electronics Manufacturers Association, who predicts that half of all consumer electronics will have Internet access by 2004.

With that in mind, Microsoft has redesigned several rooms at its Redmond, Wash. campus to test a system that would allow a home computer to run a home’s operations.

In one room, with its pre-Colombian artwork and comfy couch, people can use voice commands — ala “Star Trek: The Next Generation” — or a remote control to manipulate lights, music and temperature or, of course, change TV stations.

The kitchen, meanwhile, has a host of computer monitors linked to the Internet allowing orders to be placed for groceries or for downloading recipes.

Also, the “home” has been equipped with a Fujitsu “Web Pad” — a portable device to issue commands and hook-up with the Internet — as well as a notebook computer and Microsoft cordless phone for issuing commands. The whole home, hypothetically, could be connected with Windows CE, a home-based network.

The company is also working on AutoPC, an automobile system that would create maps, check traffic and maybe connect via the Internet to your at-home gadgets and doohickeys.

But Microsoft’s rivals are also putting their shoulders to the home-tech millstone.

Sony is working on top-speed networks based on high-definition TV and IBM has allied with several computers and wireless communications companies to create networks linking home appliances to the Internet.

The Brave New World is right around the corner.

– See more at: http://frogpond.com/Tech-to-Control-Homes-FP1-binman06

Written by Brad Inman
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Real Estate Auction: A Superior Pricing Strategy

The property auction system of selling real estate when implemented effectively is without a doubt the most successful method of sale available. The auction system is designed to remove the price as an objection and encourage purchasers to act based on the benefits and features of the property itself.

Property is not unlike any other commodity whereby ‘the market’ will ultimately determine the final selling price. Naturally, the quality of the selling system implemented and the caliber of the salesperson can have a positive effect on the end result.

It is fair to say that the highest amount of activity generated for a home is normally in the first three to four weeks from the date the home is announced for sale to the market. A property auction is designed to capitalize on this high buyer activity period as the auction date set’s a date for the buyers to act after a 3-5 week marketing period.

Doesn’t it make sense to sell your home in competitive environment and in a period when the maximum amount of buyer interest is at hand?

Non Fixed Price Strategy Vs Fixed Price Strategy

The most common objection we receive from buyers, which often prevents them from inspecting property is based on the perception that the property is too expensive.

The auction system removes the price as an objection and ‘casts the net’ over the widest range of prospective purchasers. Our objective in an auction-marketing program is to make sure that all the likely buyers for a particular property are sold on the benefits of the home rather than the perception of price. Even buyers in slightly lower price ranges should be encouraged because we know that basic buyer psychology tells us that buyers buy up and they will normally pay 10-20% more for a property once thy have become emotionally involved in a property. We make sure that we don’t exclude buyers in lower price ranges who could end up paying more for a higher range property once they have been given time to become emotionally involved.

For example, let’s just say that we had two identical homes that are both worth around $100,000. House A decides to use the traditional method of marketing and uses an asking price of $119,000. House B however is being marketed via the auction system and calls for interest in excess of $90,000 and has set a date for buyers to act.

Now if you’re a buyer in the $90,000 – $120,000 price range, which home do you think you would inspect first?

Of course it would be House B.

What has happened with House A, with an asking price, is the buyer has been encouraged to inspect the home based on an unrealistic price. Most buyers are obviously interested in buying well and as a result they have probably inspected House B first.

This is the pricing tool used in conjunction with an auction campaign.

– See more at: http://frogpond.com/Real-Estate-Auction–A-Superior-Pricing-Strategy-FP1-datherton01#sthash.sQJfHUwh.dpuf

Written by Dane Atherton
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