Real Estate Articles

When you find your dream home, it’s only natural for your heart to beat a little faster. But you still need to get the best value for your dollar. Following are six ways to make you a happy and savvy homebuyer:

1. Find the Right Real Estate Agent:

An agent can be your most valuable asset. Word of mouth is good, but if you’re interested in a particular location take note of sold signs in the area to find a real estate agent who has special knowledge of the neighborhood.

2. Make a List of Needs and Wants:

Prioritize them because you likely won’t find a house with everything. Lenders, agents and the Canada Mortgage and Housing Corporation have online checklists that will help you focus on the important things.

3. Define What Value Means to You and Your Family and Follow Through:

If you believe you’ve found the right neighborhood, don’t just proceed with an offer. Make personal visits on different days and times. Talk to the neighbors and research the facilities and schools in the area.

4. Look Closely at the Boring Things:

Updated wiring in an older home is a great plus, and a basement that’s been flood-proofed is all-important in certain areas. However, that shiny, new siding you see could be hiding a not-so-new problem.

5. Energy Efficiency:

Power is only going to cost more in  the future, so look for an energy-efficient home. Some homes have an energy rating tag on the electrical panel. Look for a high rating. If there isn’t a rating tag, ask to see previous utility bills.

6. Don’t Overbuy for the Neighborhood:

Sellers may feel their $100,000 kitchen renovation should net them a 90% return, but if the neighborhood comprises modest 1970s bungalows with small kitchens, you may have trouble getting back the premium you paid when it comes time for you to sell.

For many, the dream of owning a rural “home away from home” is something that began in childhood.

Before you buy, however, you might want to answer the following questions:

How Far Away Is It? If you must travel two days by rail, then take a four-hour hike through the woods with a toddler strapped to your back, you may want to seriously reconsider the purchase. Ideally, you should be within a few hours of your home. If electricity is a serious consideration, you should make it clear to your real estate agent that you are not interested in properties off the grid.

How Close Are the Neighbors? Buyers typically want a private retreat as they’re trying to get away from the crowded urban sprawl. It’s okay to have neighbors as long as the surrounding trees give a reasonable illusion of privacy.

Is It Worth It? As a buyer, you must determine whether the value you’re paying is worth the return for your family. There are annual property taxes and insurance as well as the cost of upkeep to consider. Many buyers consider renting the property out for some additional income. However, there may be tax implications to renting your home, so seek professional advice from your tax advisor

By taking a good, hard look at the travel requirements, the modern luxuries and the financial aspects of rural home ownership, the dream of spending peaceful summers at the cabin can come true.

Renovating your home is all about adding value to the property. But it can be a jungle out there. Following are seven ways to maximize the return on your renovation investment so that you see a payback and not a loss when you sell:

1. Make Your Kitchen or Bathroom Sing: A sparkling up-to-date kitchen or bathroom with high-end materials, lots of moving-around room and a neutral color scheme will net you a return of between 75% and 100%.

2. Change Up Your Surfaces: Painting the inside or outside or both is an inexpensive fix with a big payback of 50% to 100%. Even better, replace the siding. It’s an excellent way to add value to your home.

3. Install Hardwood Floors: Some experts say you’ll get a return of  only between 50% and 75% for taking up the old carpeting and laying down hardwood or high-end laminate, but anecdotally real estate agents say clients are looking for hardwood and  that old, stained carpets may be a deal breaker.

4. Renovating the Unglamorous: Replacing a furnace or roof actually pays off big-time, with a return of 50% to 80% of your investment.

5. Add-ons: Make the attic into a bedroom to die for, or add a family room. You could get back 50% to 75% when you sell. Turning an unused room into a home office can also raise the value of your home in the eyes of potential buyers.

6. Outdoor Living: Buyers are looking for beautiful outdoor spaces. The addition of a deck alone can net you a 50% to 75% return. A sunroom can also add square feet to your living space, but don’t forget to make the transition between indoors and outdoors positively seamless.

7. Pay Attention to the Don’ts: Don’t follow the latest trend when planning your renovation. Go for timelessness in paint, fixtures and countertops. But don’t add a $100,000 kitchen to a $250,000 house and expect to recoup your investment. A renovation that suits your house and is done well with quality materials will make your family happy while adding value for future buyers.

Thanks to the Internet, virtual tours and Google Maps, it’s easier than ever to locate prospective properties when searching for real estate. But before you try to go it alone, it’s essential to understand the other advantages real estate agents bring to the table.

Experience: One of the biggest benefits of working with a local real estate agent is the level of experience brought to the table. Agents make it their business to know upcoming changes, the latest listings and even important trends that can influence your purchase.

Excellent Service: From skilled negotiations to compiling a list of prospective properties, real estate agents save time and money throughout the entire transaction. The average real estate agent is often able to negotiate substantial savings from the price of a home while increasing the ability of both parties to obtain the most meaningful milestones.

Education: The real estate market has undergone dramatic changes in recent years, with many more on the horizon. Real estate agents must take a specified number of continuing education credits every year to remain up-to-date on legislative changes and other procedures.

Expert Advice: Real estate agents do more than just list homes on the Multiple Listing Service. They also act as experts within the local market. In fact, the more specialized the type of property, the more important an agent tends to become. From condominium to commercial building, farm or single-family home, it’s essential to obtain advice provided by a reputable agent.

If you’re hiring a home inspector prior to signing off on a piece of property, there are a few things you might want to keep in mind.

Following are some important questions to ask:

Home Long Have You Been Working in the Field?

An inspector should be able to provide references and a history of experience. It’s also important to know about his or her background.

What Experience Do You Have With Residential Inspections?

A background in engineering or construction is a bonus, but if the inspector has never worked on a home, it won’t help much.

How Much Time Does an Inspection Take?

A thorough home inspection should take between two and three hours, depending on the size of the home.

Special considerations need to be taken when looking at wood-burning fireplaces and swimming pools.

What Will the Inspection Cost?

The cost of the average home inspection is $300 to $500, depending on the region, size of the home and the complexity of the building systems that are used.

What Type of Inspection Report Is Provided?

Some inspectors provide a big binder full of information, but if you don’t understand the report, that information is essentially useless. The report should be clear and help guide your final decision to purchase the home.

Do You Belong to a Home Inspection Association, and Do You Attend Continuing Education Courses?

Building technologies are constantly evolving, so an inspector should be educated to assess all aspects of a home, regardless of its age.

Membership in an organization like the American Society of Home Inspectors means the inspector has been certified and approved by that organization

Selling a home without the services of a professional real estate agent can be a complex process that requires a lot of time and commitment.

It can also leave homeowners with a few more gray hairs.

First, home sales require complex legal documentation. There are many templates to use, but they skim only the surface of the legalities.

Often the best way for an owner to deal with this issue is to have a lawyer draw up the paperwork after the rough details have been worked out with a potential buyer.

Second, finding a qualified buyer can be difficult.  Agents typically ensures that potential buyers are qualified to buy the property before they cross your doorstep.

Mortgage pre-approvals and extensive consultation typically ensures that the buyer is serious before a showing takes place.

Homeowners have limited access to a potential buyer’s financial qualifications before the sale.

Third, you must assess whether you have the ability to market your home and court potential buyers.

Real estate agents insulate the seller from direct contact with a potential buyer, reducing the emotion involved in the sale.

Using a real estate agent can seem more costly than selling a home on your own, but sellers need to measure whether they are prepared to invest their time and energy into the sale of their home.

When you drive up to your dream home it’s difficult to imagine a substitute residence, especially if you are a first-time buyer. Its curb appeal is unbeatable, you think to yourself.

But there are a number of things to consider before you take the plunge.

Location is one of the big factors.

Even in a down market people are willing to pay more for a home when the conveniences and other features indicate a favorable property.

Check out the conveniences and ask yourself some questions. Is the neighborhood safe? How about the schools? Are they among the best?

Real estate agents used to provide buyers with information about crime and whether the home was in a safe neighborhood, but that may now be more difficult to come by as the National Association of Realtors warned in a recent issue of Realtor magazine that agents should not disclose crime statistics, state that a neighborhood is a safe place to live or mention anything about the quality of the schools.

Why?

Agents must not violate Fair Housing Act steering guidelines. Agents are now suggesting that clients contact police for crime data and set up personal visits to schools for their quality performance data.

Some other things to think about include:

Noises and Smells: Are sounds from trains audible at bedtime? What about fire truck and ambulance sirens? Is freeway or factory noise constant? Are odors from a landfill obvious?

Construction: The city will know if planned roads and open land developments are acceptable.

Be Observant: Is the street a main thoroughfare for kids and teens, especially after school? Chat with neighbors if possible. A walk up and down the street will reveal barking dogs, and too many cars parked in driveways may indicate renters who don’t take pride in maintaining their properties. At night, watch out for drag racers and/or band rehearsals.

A comparative market analysis (CMA) is one of the most important considerations in any real estate transaction. It not only benefits both the buyer and seller, but a properly performed CMA is a critical step in establishing price versus value. Here is what you need to know about a CMA before buying or selling a home:

How It Works

A CMA is typically done by a real estate agent with extensive experience in the property type and location. A careful evaluation of the parcel is done to assess the condition, amenities and unique status of the specific property in comparison with others in the same vicinity. To obtain the best CMA, it is necessary to work with a qualified real estate professional who knows and understands the location.

How It Benefits the Buyer

A CMA helps the buyer differentiate unique aspects of the property so it can be compared with other potential properties in the immediate area. By weighing price, amenities, location and other variables, the buyer is more informed and able to support fiscal and other factors involved in the purchase.

How It Benefits the Seller

An important aspect of selling a property is the ability to price it right. A CMA alerts sellers to comparable properties and helps set an entry price point. Aggressive or highly motivated sellers would want to list their homes at the lower end of the spectrum, while others may take a more leisurely approach by pricing at the higher end but appealing to specific amenities.

Deciding whether to hire a home stager isn’t an easy decision. In tough economic times there’s a tendency for homeowners to cut back on any added fees. However, that could be a big mistake. Research indicates that the need for a home stager is even more important during a buyer’s market as competition is tougher. The following quiz can help you determine if you’d benefit from hiring a home stager:

1.  Does the Sales Price of the Home Place It Into the Luxury or Jumbo Mortgage Range? If so, there’s a good chance you’d benefit from hiring a home stager. Not only is the competition among higher-priced homes even more dramatic than  it is in affordable areas, but potential buyers expect to be impressed.

2.  Does the Property Have Problem Areas? For example, older homes may have eight-foot flat ceilings, smaller bedrooms and other age-related amenities that have fallen out of favor. Hiring a professional problem-solver is a good investment to ensure that you obtain top dollar for your property without breaking the bank.

3.  Was the Property a Cookie-Cutter Model? This is a commonly encountered problem for condo owners and for those who own properties in modest single-family, tract-built neighborhoods where there is limited variation to differentiate one property from another. The challenge is to stand out from the crowd in order to attract attention and seal the deal.

The bottom line here is that in a tough buyer’s market the benefits of hiring a home stager far outweigh the cost.

If you’re thinking about buying a home, it’s best to test for radon before the deal is done.

Home sales often occur at a fast pace, leaving little time to check for such problems. But it’s important to do so in order to avoid difficulties afterwards.

Radon is a cancer-causing gas that has secretly infiltrated millions of homes in the United States. The Environmental Protection Agency (EPA) estimates that it causes thousands of deaths each year.  The Surgeon General reports that only smoking is a greater cause of lung cancer.

Radon gas testing is rapidly becoming a common component in the home inspection process.

Radon is a naturally occurring gas which results from the breakdown of uranium, which is found in nearly all soils.

This radioactive gas typically moves up through the ground, penetrating cracks and openings in your home. Radon can be present in building materials or can infiltrate the home through the groundwater; however, these issues alone are often not enough to cause a substantial radon gas problem.

Testing for radon is relatively easy and inexpensive. Home kits are available for those who want to do it themselves. They are easy to use and accurate. The alternative is to hire a company to test your home or a home you are thinking of buying. The most common method of testing involves the placement of a device in the home for a period of two to 90 days.

Annual testing may be required for homes with a marginal gas reading, as levels fluctuate.

As there’s no known safe level of radon gas, certain upgrades can be made to a home to reduce the levels.

A soil suction radon prevention system uses a vent pipe system with a fan installed to draw radon gas from beneath the house and send it to the outside.

In addition, the foundation, crawl space and other cracks leading into the home should be sealed to reduce the amount of gas seepage.

Seniors who are at least 62 years of age and want to buy a new home can obtain a reverse mortgage and purchase a residence at the same time.

However, because of depressed home prices, since Oct. 1, 2009, borrowers who obtain reverse mortgages get 10% less than they would have before that date.

That change compensated for an estimated $800 million deficit in home prices. And now there are rumbles of even more reductions.

Reverse mortgages enable people 62 or older to use the equity in their homes and receive lump-sum payments, periodic checks, a line of credit or a combination of the three.

Lenders are repaid from the sale of the home when the borrower dies or moves. The maximum reverse mortgages backed by the Federal Housing Administration has been raised to $625,000 from $417,000. Origination fees are capped at $6,000.

The lender can never force senior homeowners out of their residences as long as the property taxes and the homeowners insurance are kept current and the property is maintained.

Recorded like any first mortgage, reverse mortgages mean that the residence cannot secure any other financing.

But if there is a small mortgage balance, such as less than 25% of the home’s market value, the borrower can still probably qualify by using a reverse-mortgage lump sum to pay off the old mortgage.

Because most senior citizens own their residences free and clear or with a small mortgage balance, this is usually not a problem. However, a mortgage balance over 40% of the home’s appraised value usually makes a reverse mortgage unavailable.

Greedy prospective heirs often discourage reverse mortgages because they feel their inheritance is being spent. Others encourage their senior citizen parents to obtain a reverse mortgage to enjoy their “golden years” in financial comfort.

Condo living often elicits images of carefree weekends sitting beside the pool, but there are some pros and cons to consider before making a purchase.

1. The Lifestyle Itself: One of the biggest advantages of condo living can also become a disadvantage. The sense of community, amenities and other features that originally attracted you to a community may change as your needs and desires change. Make sure you select a condo that truly reflects a lifestyle you will love.

2. Shared Responsibility: A condo association establishes many rules and regulations - typically by majority vote. Likewise, maintenance and repair costs are also shared by members. Things can get dicey when individual members are at odds with the majority. Examine your willingness to abide by rules, regulations and associated expenses to be adopted by the community.

3. Privacy and Autonomy: In some instances, condo living can resemble apartment living with less space and individual autonomy. To make the most of condo living it’s essential for residents to remain involved in the decisions and activities of the community. Those with a need for privacy and autonomy may feel more comfortable with single-family homes or other housing alternatives.

4. Still a Need for Repairs: Many major repairs and maintenance items are taken care of by condo associations, but not all, so condo owners aren’t completely off the hook. Condo owners should set aside a little time to take care of routine repairs and interior maintenance on their units.

First-time and seasoned homebuyers received some good news recently.

On Nov. 6, 2009, the federal government extended a valuable tax break to homebuyers under the Worker, Homeownership and Business Assistance Act of 2009.

The legislation was passed by the U.S. Congress as part of its plan to stimulate the U.S. housing market and address the economic challenges facing the country.

The act includes elements that extend time frames for homebuyers and ease eligibility requirements.

It extends a tax credit of up to $8,000 to first-time homebuyers.

It also extends a credit of up to $6,500 to current homeowners purchasing a new or existing home.

The credit applies to sales occurring between now and April 30, 2010, and covers home purchases completed by June 30, 2010.

The income-based qualification system allows for a $125,000 limit for a single taxpayer and a $225,000 limit for married couples filing joint returns.

The final tax credit is equal to 10% of the purchase price of the home being considered and it only applies to homes valued under $800,000 for qualified first-time homebuyers.

But there’s more good news.

The U.S. Department of Housing and Urban Development is allowing monetization of this tax credit, meaning that buyers with a Federal Housing Administration-insured mortgage can apply for and receive their anticipated tax credit immediately rather than wait until they file their income taxes to receive a refund.

This allows homebuyers to apply the funds to closing costs. Homebuyers can also use the funds to increase the amount that they put down on their home.

The tax credit applies to any home that is being used as a principal residence and includes detached homes, condominiums, townhouses and a wide variety of manufactured homes.

The appraisal process can leave sellers in a state of confusion. Unfortunately, lack of knowledge can be detrimental to obtaining the best price and fast closing for even the most competitive properties. Following are some guidelines to follow for best results:

1. Understand the Home Value Code of Conduct (HVCC): The code stipulates that brokers, loan officers and others who earn income from the close of a loan cannot select a specific appraiser or attempt to influence an appraised property value by questioning or disputing the appraisal.

2. Understand the Appraisal Process: Determining the value of a property requires experience in evaluating the local market, type of property and market value. Most appraisers take location, condition of the home, comparable sales in the area and potential income data into consideration when creating a Uniform Residential Appraisal Report or similar form.

3. Delineate the Scope of Work: Determine in advance whether or not you need a limited or complete appraisal, including the intended use of the report, delivery date and who will have access to the appraiser.

4. Don’t Confuse Price With Value: Many sellers confuse asking price with the market value of their home. While the two should relate to one another, they are not necessarily the same. For example, investment income may represent a premium over the market value due to the additional income generated. Ask your agent about special situations that may impact price versus value.

When it comes to buying and selling real estate, timing is of the utmost importance. Unfortunately, it’s also a topic few people truly understand. The following are some tips to keep in mind when speaking with your real estate agent.

Sell before buying or buy before selling?

It’s an age-old question, but asking a few strategic questions might enable you to narrow your decision down to the right choice for your individual situation.

Is selling or buying a necessity or do you have some flexibility?

Job relocation, change of marital status or other life situations often require a relocation within a specified period of time. Equally important are the needs of the other party. Work with your agent to understand the opportunities and limitations of both sides in order to create a win-win situation.

Buying before selling typically benefits those who simply must move or relocate within a specified period of time and who are unable or unwilling to lease or rent. It is also a popular option for those seeking an exchange of property under Section 1031 of the U.S. Internal Revenue Code or for those who are attempting to minimize taxation via other deals.

Can you obtain financing or afford to carry both mortgages for any period of time?

If so, you may have a little more flexibility at your disposal. Speak to your agent about a leaseback or other temporary term. It’s often possible to use these when negotiating terms.
Selling before buying can benefit those who are unable to obtain financing with an existing mortgage in place or who wish to use cash proceeds from the prior sale to fund repairs, renovations or an entire purchase.

In many instances, it is possible to arrange a simultaneous closing for both the home purchased and the home sold with contingencies that reflect this situation on both transactions.

Matters of the heart tend to hurt rather than help the negotiation process when it comes to buying and selling real estate. The following tips will help you manage the emotional ties that bind buyers and sellers to bad decisions.

Use an Agent: Agents do more than just show a home. They provide an impartial and objective opinion about the condition of a property, pricing and comparable real estate on the market.

Establish a Priority List Then Stick to It: Every stakeholder in the buying and selling process should have a priority list that includes needs and wants. Creating such a list helps you stay organized and reduces the risk of becoming emotionally entangled in a bidding war or falling in love with unnecessary yet expensive features that won’t add to the functionality of the home. Ask your agent to focus on finding buyers or homes that meet the main needs on your priority list, and move to the wants later.

Get a Second Opinion: Ask a friend or family member for his or her opinion, especially if you aren’t certain. But be prepared to listen to constructive criticism. Appraisers, inspectors and agents are also vital sources of expert information.

Document: Take plenty of photographs when buying or selling so you can share them with others. Sellers can assist buyers by providing a fact sheet that includes room dimensions, existing warranties, upgrades and other important features of the property. Or buyers can bring along a tape measure and a notebook to jot down important details.

Deciding whether to purchase a fixer-upper or go with a home in need of fewer repairs isn’t always simple.
The following information can help you calculate the true cost of purchasing a fixer:

Supplies, Labor and Time: Whether you do the job yourself or hire outside labor, repairs and renovations are notorious for costing more than you planned. If the home can’t be lived in while repairs are made, the additional cost of covering the mortgage, taxes and insurance while the home is vacant can also substantially add to the total cost.

Taxes and Insurance: Improvements often add to the cost of property taxes and insurance, so be sure to consider the long-term consequences. Properly performed repairs and renovations may help or hurt property tax values and homeowner insurance costs. It’s a good idea to get an estimate in advance. On the other hand, hiring outside crews to perform needed repairs can result in a tax write-off for investment properties.

Long-Term Profit Potential: Repairs and renovations can make your home more valuable, but only if the surrounding area is desirable. Whether investing for long-term appreciation or cash flow, carefully evaluate the desirability of the neighborhood.

Financing: Lenders often have different rates and requirements for properties in need of repair. Find out in advance if you are eligible for special funding, grants or tax incentives, especially when working with affordable housing options or first-time homebuyer programs.

Building Codes and Zoning: It is imperative to understand local building codes and zoning regulations before purchasing a fixer-upper. Never assume you can modify a structure without considering the building code. Likewise, zoning may dramatically alter the ability to use a property in a specific manner or make certain changes or additions. It’s just one more reason it’s more important than ever to work closely with your agent when purchasing a fixer-upper.

Communicating with your real estate agent is the key to developing a winning strategy to show your property in the best possible light.

The following tips might help you avoid frustration and increase the odds of a successful showing:

Be Honest: The first step is to be completely honest with your agent. Make sure the agent knows about the benefits and pitfalls of the property in advance, including needed repairs and deferred maintenance.

Get Organized: The more information about the property you can provide, the better. Make a list of all past repairs, warranties that may still be in effect, improvements made to the property, and what is included or excluded in the sale. Copies of receipts, warranty documents and other paperwork give your agent a great headstart.

Set a Schedule: Let the agent know the appropriate times for showing the home, as well as any other instructions. Notify agents of special situations well in advance, especially concerning pets or other important matters.

Knowledge and Network: Your agent is an expert in the local real estate community, so use him or her to your advantage. Allow the agent to develop a marketing plan and use local resources that maximize the appeal of your property. Likewise, ask the agent’s opinion about service providers and other vendors who may assist in the process of selling or purchasing property.

The decision of whether to remodel an existing home or buy another one has become more difficult because of the price of real estate declining across much of the nation.

A few years ago, the benefits of remodeling were quite simple due to the cost savings. Today it isn’t as straightforward.

The following are some things to think about when deciding whether to remodel or purchase a new property:

Lifestyle: Does your home continue to reflect your lifestyle? Experts agree the home should reflect anticipated lifestyle changes for the next five to seven years. If not, it might be a good idea to consider purchasing a new property.

Maintenance: Does your home require more maintenance and upkeep than desired, especially compared to newer homes? New homes offer the ability to “right size” the levels of yard work, repairs and other needs associated with home ownership.

Cost and Value: There are many factors that can weigh into the cost and value of a given property, including tax credits/write-offs, long-term appreciation, current level of depreciation, access to amenities, property taxes and insurance, utilities, maintenance, and much more. If you are not sure how to properly evaluate the true cost and value of your current property compared to a prospective property, ask your agent to provide estimates of principal, interest, taxes and insurance for comparable properties in the same neighborhood.

Community: Access and affiliation with friends, family and the local community are important when deciding whether or not to remodel or buy new, yet they are easily overlooked by many homeowners.

Depending upon the age of the neighborhood, it may be difficult or even impossible to find other properties in the immediate area.

On the other hand, over time many communities experience a decline in desirability as crime rates, traffic and other problems start to creep in.

Whether you are buying or selling, the language of real estate is often complex and confusing. Following is a plain-language explanation of commonly encountered real-estate-related lingo.

Title: Title to a property essentially denotes ownership interest and is designated by the name(s) on specific legal documents such as mortgages and deeds. The title can be held by an individual, couple or even a corporation.

Deed: A deed is used to transfer ownership of property from one person or entity to another person or entity.

Deed of Trust: A deed of trust is a document that transfers title in a property, with the stipulation that the transfer is contingent upon repayment of an existing loan.

Mortgage: A mortgage is a loan you take out to buy property.

Clear Title: Clear title indicates that the property is free of liens or legal questions surrounding ownership.

Chain of Title: The record of historical ownership of a property. The title company or real estate attorney typically reviews the record in order to determine clear title.

Clouded Title: Any property that has an existing question regarding ownership, chain of title or even liens may have a “clouded” rather than “clear” title, which may adversely impact the ability to obtain financing or properly record the title. Most clouded title issues require a release, court action or other legal intervention to remediate.