real estate Archives - Page 14 of 97 - Real Estate News and Commentary

July 29, 2019August 2, 2019

Take it or leave it

If you’re listing your home for sale with a Realtor, you will likely encounter a one-page disclosure that’s important yet often neglected. The purpose of the “Inclusions/Exclusions Disclosure and Addendum” is to communicate with the home buyer what conveys with house and what you intend to take. This helps you decide to “take it or leave it.” If completed as intended, the disclosure can help you avoid a dispute with the buyer after closing.

It’s understandable that, after completing a stack of listing documents and disclosures, home sellers want to quickly check the boxes of the obvious items that convey with the sale. However, in their haste, many sellers overlook or forget about the fixtures they intend to take it or leave it when they move. Common items that home sellers take include the chandelier (and other lighting fixtures), bathroom mirrors, brand new washer/dryer, or the extra freezer.

The up-to-date GCAAR Inclusions/Exclusions Disclosure and Addendum helps you decide what fixtures and personal property convey. The first paragraph states: “The Property includes the following personal property and fixtures, if existing: built-in heating and central air conditioning equipment, plumbing and lighting fixtures, sump pump, attic and exhaust fans, storm windows, storm doors, screens, installed wall-to-wall carpeting, window shades, blinds, window treatment hardware, mounting brackets for electronics components, smoke and heat detectors, TV antennas, exterior trees and shrubs. Unless otherwise agreed to herein, all surface or wall mounted electronic components/devices do not convey…”

You’ll notice that the disclosure specifically mentions wall mounted electronics and mounting brackets. This wording was added because new norms emerged with new technologies that created disputes about what was considered “permanently” attached. As wall mounted TV’s became commonplace, home buyers expected plasma TV’s to convey and unsightly wall mounts to be removed.

A more recent technology incorporated into a home that has become commonplace is the solar panel. Do they convey or not? Many home owners who install solar panels don’t actually own them, they are leased. Of course, confusion and disputes regarding solar panels have occurred, and are now listed in the Lease Items and Service Contracts section. To help clarify what leased items convey and transfer, the Inclusions/Exclusions Disclosure states: “Leased items/systems or service contracts, including but not limited to: solar panels & systems, appliances, fuel tanks, water treatment systems, lawn contracts, security system and/or monitoring, and satellite contracts do not convey unless disclosed here…”

It’s not uncommon for a dispute to arise at the walkthrough because the home seller decides to take a fixture or appliance that is not listed as an exclusion. Regardless whether the seller misunderstood or had a last-minute change of heart, the home buyer may be demanding the return of the item(s). And since the Inclusions/Exclusions Disclosure and Addendum is part of the contract, the buyer may have recourse.

Take it or leave it?

If you’re selling your home, deciding to “take it or leave it” may be the last on your mind. But take the time to read and complete the disclosures carefully. When completing the Inclusions/Exclusions Disclosure don’t be afraid to over communicate your intentions about taking or leaving fixtures and appliances. Make sure you list items you will take as “Exclusions.” It also helps to tag these items indicating “Does Not Convey,” so home buyers are on notice when they visit. Also, don’t forget to identify older appliances or fixtures that are staying, so the buyer doesn’t assume you are removing them. And of course, ask your agent for assistance if you’re unsure if specific items are fixtures and should be listed in the disclosure.

By Dan Krell
Copyright © 2019

Original located at https://dankrell.com/blog/2019/07/29/take-it-or-leave-it/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

July 12, 2019July 12, 2019

Next Market Downturn

The current US economy just hit a milestone by becoming the longest stretch of economic growth in our Nation’s modern history. The expansion is now in the 121^st month. The previous expansion record was 120 months, and occurred between March 1991 and March 2001. Most attribute the dot-com bubble as the precipitating event that ended that period of expansion. Many have been anticipating the end of the current expansion for several years. And they will eventually be correct when this period of economic growth inevitably ends in a downturn, recession, or correction. To prepare, experts suggest to start saving for the next market downturn.

Earlier this year, I wrote about housing market mini-cycles are different from a full-blown recession. Then (and now), housing indicators are mostly positive. Although the next next market downturn is unlikely to be caused by another housing crisis, it doesn’t mean that the housing market won’t be affected by other economic factors.

Whatever triggers the next recession will undoubtedly become an economic contagion that will spread across many industries, including housing. The chain of events are generally characterized as: consumer sentiment drops which causes people to spend less money which causes businesses to slow which results in unemployment. Home owners who lose their jobs may have difficulty in repaying their mortgages, and are at risk of default or losing their homes.

Lessons for the next market downturn

Economic and financial lessons are learned with each recession. The dot-com bubble recession in 2001 made many rethink the policy of raising interest rates when markets are signaling trouble. Many are still studying the Great Recession, but one of the take-aways is that job creation is key in economic growth and prosperity.

How will the next market downturn affect housing? The housing market typically responds to a recession through home price reductions. A NAR Economist’s Outlook from October 23, 2018 (How Do Housing Market Conditions Compare in 2004 and 2018?; nar.realtor) suggests that home prices will likely fall but not as sharply as we experienced in 2008. This is mostly due to home sale inventory and home prices. The housing market is much different than it was prior to the last recession. According to the latest NAR press release on existing home sales (nar.realtor), the median existing home sale price during May increased 4.8 percent. This is the 87^th consecutive month of year-over-year gains. Additionally, home sale inventory remains at historic lows.

Start saving

A recent press release from the JPMorgan Chase Institute indicates that the conventional wisdom about mortgage default may be incorrect (jpmorganchase.com). The institute’s study was published in report “Trading Equity for Liquidity: Bank Data on the Relationship between Liquidity and Mortgage Default.” A major conclusion is that having three months of housing costs in reserve can save your home in the event of recession and job loss. This is counter to the conventional wisdom of the post-recession era policies of home buyers having “skin in the game” by making larger down payments. Having home equity is also not a guarantee of making mortgage payments. Home equity is relative to the housing market and home prices. The study concluded that “liquidity is a more useful predictor of mortgage default than home equity, income level, and payment burden—especially for borrowers with limited liquidity at closing.”

Even though the Great Recession officially ended ten years ago, the memories are still fresh. There will be eventually a recession or market correction. And the main concern for most home owners is how to prepare. Unfortunately, we can’t predict the exact timing and severity of a recession. However, most experts suggest saving and having several months of reserves in case of job loss.

By Dan Krell
Copyright © 2019

Original located at https://dankrell.com/blog/2019/07/12/next-market-downturn

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July 4, 2019July 4, 2019

Swimming Pool and Home Value

Wouldn’t it be nice to beat the summer time heat in a swimming pool? Besides cooling off, the idea of having a swimming pool is attractive to many home owners for many reasons, including entertaining guests and exercise (if large enough). Pool company advertisements suggest a swimming pool can make your yard more attractive, and add value to your home. But is a swimming pool really worth it? It all depends on the local housing market and your lifestyle.

Statistics and information compiled by The Spruce (thespruce.com), an online lifestyle magazine, reveals swimming pool popularity from sources such as the Association of Pool & Spa Professionals and the US Census. Incredibly, there are 10.4 million residential and 309,000 public swimming pools in the United States. Swimming is the fourth most popular activity, and is the most popular among children and teens. The top five states with inground pools are California, Florida, Texas, Arizona, and New York. Swimming statistics in the US indicate that thirty-six percent of children and fifteen percent of adults swim annually.

Before you start digging, there’s a lot to consider. Besides liability and health concerns, let’s discuss a pool’s added value on your home. The question whether adding a swimming pool is a good investment depends on a number of factors. Real estate research typically validates such questions, unfortunately, studies are lacking. However, there is such an analysis from 1981 by Benedict J. Frederick (Effect of a Swimming Pool on Single-Family Home Value; Appraisal Journal; July 1981, Vol. 49 Issue 3, p376). Even Frederick confessed he was hard pressed to find academic interest in the topic, citing a previous study from 1961. Nonetheless, the study conducted in suburban Baltimore yielded these conclusions: A pool can add about 7 percent to the price of a home; a pool’s market value may be 50-75 percent of the pool’s replacement cost; having pool amenities, such as a heater, can boost value; 40 percent of the market believe having a pool is a liability.

A swimming pool’s added value may be tricky, especially if other neighborhood homes don’t have a pool. If you’re the only residential pool in the neighborhood, the added value to your home may be minimal. In fact, having a swimming pool may be a disincentive for many home buyers, and could negatively affect the value.

There’s also the expense of maintaining a pool. Melissa Dittmann Tracey, writing for Realtor Magazine (Are Pools Worth the Expense?; nar.realtor), points out that typical swimming pool maintenance can have an annual cost of about $3,000-$5,000. And that’s if everything works properly. If components need replacing, then the cost can rise quickly. Older pools require updates and component replacements. Resurfacing or redecking expenses can vary, but Tracey estimates a typical cost to be $5,000 to $10,000 (depending on size of pool). Renovating a pool can cost upwards of $20,000. If you’re tired of the pool and want to reclaim your back yard, removing a pool can also be expensive. Depending on the pool and yard size, a pool removal typically ranges from $3,000 to $15,000.

Given the research and industry statistics, the decision to build a back-yard swimming pool is more likely a lifestyle choice rather than for home improvement. However, for those who enjoy the pool but don’t want the expense or liability of ownership, joining a club or swimming at the public pool are common alternatives.

By Dan Krell
Copyright © 2019

Original located at https://dankrell.com/blog/2019/07/04/swimming-pool-and-home-value/

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June 24, 2019July 22, 2019

Downsizing myths debunked

Downsizing was once thought of as a rite of passage for empty-nesters and retirees. It was considered the next stage of homeownership after enjoying the big house and puttering in the yard. But everything you thought you knew about downsizing is probably stereotyped and incorrect. Housing and generational trends has everyone rethinking their downsizing plans.

Results of a recent survey that was conducted on behalf of Del Webb, a developer and builder of active adult communities, revealed that a majority of 50 to 60-years-olds are not planning to downsize (pultegroup.com). A majority of the survey’s respondents who are planning a future move indicated that they don’t intend to move into a smaller home.

Many older adults are actually are looking for a larger house! In fact, 71 percent who plan a future move want a single-family home, and 63 percent desire a home with three or more bedrooms. These results may be due in part to multi-generational and cohabitation housing trends. Many of the 50-year old’s who took part in the survey indicated they planned to buy a home that can also house their parents.

Jay Mason, vice president of market intelligence for PulteGroup, the nation’s third largest homebuilder and owner of the Del Webb brand, stated in the press release, “Rather than staying put, today’s 50- and 60-year olds are thinking ahead to their next big move. While millennials seem to make the headlines, there are over 140 million Generation X and baby boomers in the United States, many with the means, confidence and desire to stay active in the housing market.”

Mason described a majority of GenXer and baby-boomer respondents as “looking for a different quality of life when considering their next move.” Of those planning a move, 87 percent are leaning towards a suburban or rural area. More specifically, 60 percent described their next home as a “quiet, tranquil place where they can slow down and get some peace.”

Downsizing is a housing trend that is building momentum in younger generations as well. Many home owners who thought of having a large home and yard are rethinking their lifestyles. By reducing the time and costs of maintaining a large home and yard, they are able enhance their daily lives.

A major consideration is that downsizing doesn’t always reduce housing costs. It is possible that the newer condo (or house) you’re considering to purchase may actually cost more than the sale price of your current home. Besides the actual cost of the home, there are also associated costs of homeownership. For example, the property tax of your new home could be more than what you’re currently paying. Additionally, it is likely that your new home may have the additional cost of an HOA or condo fees.

Downsizing also doesn’t mean that you have to buy your next home. A Realtor Magazine news article (More Older Home Owners Choose to Rent; magazine.realtor; January 12, 2016) cites US Census data that indicates half of the home owners aged 55-64 are either staying in their current homes, or deciding to rent instead of purchasing another one.

Are you thinking of downsizing? Downsizing requires planning, not just about where to live but also considering the disposition of your current home. To help you decide if downsizing is in your future, consult with your CPA and/or financial planner to help you understand the costs of downsizing. To understand the current housing market and sale prices in your neighborhood, consult a local Realtor.

Original located at https://dankrell.com/blog/2019/06/24/downsizing-myths-debunked/

By Dan Krell
Copyright © 2019

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June 15, 2019June 3, 2020

Summer home safeguards

Did you know that the AAA estimates that there will be about 100 million Americans who will take a family vacation this year (aaa.com)? If you’re one of those millions planning a trip this summer, you’re likely stressing over your plans. Some of that stress is certainly vacation planning, but some may be about leaving your home vacant for several or more days. Besides planning your vacation, you should also plan to “summerize” your home by taking some summer home safeguards.

Just like winterizing a vacant home before winter, summerizing is safeguarding your home while your away on vacation. And just like winterizing a home, summerizing is implementing a preventative plan to secure your home and possibly save a few dollars. Here are a few common knowledge ideas for summer home safeguards.

To save a few dollars, many homeowners adjust the HVAC thermostat while vacationing. Some even turn off the HVAC system. However, if you have a basement or cellar, consider adjusting the thermostat to a reasonable temperature (and/or use a dehumidifier) to prevent mold growth in a dark and potentially humid area of the home.

If your home will be vacant for an extended period, consider unplugging “zombie” appliances. Zombie appliances are appliances that consume electricity even when they are not in use. Many small appliances and internet connected appliances (such as your TV and other entertainment devices) are included in this category.

One of the biggest concerns while away is the potential of returning to a waterlogged home. A faulty valve or supply line can leak at any time. If you’re away, you obviously can’t immediately respond to this scenario. Although some home owners turn off the water at the main valve, this can interfere with a sprinkler system. Most shut off specific valves to appliances and fixtures. Some vacationing home owners also shut off outside water hose bibs to prevent others from using water at their expense.

Securing your home can deter burglars and pests. Although it’s tempting to brag to your friends about your vacation, refrain from posting about your plans on social media. Store your valuables in a safe, inconspicuous place. If you don’t have a security system, consider installing a camera and lighting system that can alert you of unexpected activity. An exterior camera and lighting system can be a major deterrent. However, interior cameras can also alert you of a determined intruder so you can take appropriate action.

To deter mice and other rodents from ransacking your home while you’re away, ensure that the home’s doors and windows are shut and secure. Also, make sure the exterior dryer vent cover is closed. Find and seal any holes where rodents can gain access your home.

You may also want to employ some common some summer home safeguards strategies that make it appear as if you never went on vacation. Connect a few lights to a timer to give the impression that someone is turning on lights at night. Ask your neighbor or a friend to park in your driveway (or reserved space). Although stopping the paper and mail while on vacation may seem clever, some home owners have a friend or neighbor pick up the daily paper and mail.

One of the most common aspects of some summer home safeguards is having a trusted neighbor and/or friend occasionally check on the home. They can ensure the home is secure, pick up any packages left at the door, and deal with any necessary maintenance (such as adjusting the thermostat). Spreading this responsibility among multiple “guardians” can make it less of a burden and increase the frequency of “check-ins.”

Many local police departments offer a home security survey. Consider going through the survey to help with your planning.

Original located at https://dankrell.com/blog/2019/06/15/summer-home-safeguards/

By Dan Krell
Copyright © 2019

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