Real Estate News and Commentary

July 7, 2016September 20, 2018

Home buyer life hacks

“Life hacks” have been trending everywhere the last few years, from the internet to social media. Life hacks are typically actions or “wisdoms” to make life easier. However, home buyer life hacks are not easy to find.

The home buying experience can be time consuming and stressful. Over time, the home buyer’s responsibilities change. In fact, the home buying experience has drastically changed in the last decade. Consider that mortgage programs and Realtor® contracts changed and continue to evolve. Which includes the TILA-RESPA Integrated Disclosure (TRID) rule that went into effect last fall, which changed how a transaction settles. Here are a five home buyer life hacks to make the experience straightforward and more enjoyable.

The first home buyer life hack is to learn about the home buying process. Certainly a must for first time home buyers. However, even experienced home buyers may find themselves in strange waters if they’ve not bought or sold a home in the last couple of years. Becoming acquainted with home buying process can help you anticipate and prevent most surprises that can upset the flow of the transaction.

Home buyer life hack number 2 – make a budget. Creating a budget may take the romance out of the buying process, but will help you with your home search and contract decisions down the road. Consult a professional if necessary. In making your budget, consider your income, debts and other financial obligations, as well as your life style. Make a housing budget that includes mortgage, property taxes, HOA or condo fees (if any), homeowner’s insurance, utilities and maintenance. In creating your budget, also consider future changes to income and home related cost increases.

Home buyer life hack number 3 – know what to expect from the housing market. Knowing whether the housing market is benefiting the seller or buyer can help decide on a winning home buying strategy. Understanding that a low inventory market may necessitate you and your agent to do a little more leg work to find homes for sale. Know the current housing trends for the neighborhoods you are perusing, so you can prepare for competition and multiple offer scenarios.

Home buyer life hack number 4 – hire a professional. The process isn’t rocket science, however, you can easily find yourself in over your head if you’re not experienced in buying a home in today’s market. Although some home buyers believe they can get a better deal by not using an agent to help them buy a home, it could end up costing more because of poor negotiating in price, home inspection, and other add-ons. Hiring a buyer agent can also free up time that is necessary to conduct the process. Experts know the market such that they can help you determine the best offer price. They can also package your offer in a way that facilitates the transaction.

Most home buyers will follow home buyer life hacks 1 through 4. However, they will take for granted that everything they are told is true. Which brings us to home buyer life hack number 5 – do your due diligence. As you can imagine, not everything you are told is true or depicted accurately. “Trust and verify” can help you identify and reduce hidden and obscure risks by verifying the truth. Conduct your due diligence throughout the home buying process; from the veracity of a seller’s statements about their home to vetting the professionals you hire.

Original published at https://dankrell.com/blog/2016/07/07/5-home-buyer-life-hacks/

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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.

June 30, 2016July 11, 2019

Brexit benefits US housing

International home buyers (infographic from realtor.org)

The immediate response of Great Britain’s referendum to exit from the European Union was one of anxiety and fear. Some thought the separation would set off a global recession, matching the financial crisis of 2008. While others believed it would be a blip on the financial radar. Of course, the housing industry is watching to see how if the aftermath of the Brexit will affect home buyers and sellers. And it looks as if Brexit benefits US housing.

If you remember, last summer’s US market gyrations were attributed to China’s stock market declines. As a result, many home buyers who relied on their 401k’s (or other investments) for their down payments had to make other plans. Some were unable to buy. At that time, the National Association of Realtors® reported a decline in last August’s existing home sales, only to rebound in September (realtor.org). Will the aftermath of last week’s Brexit have a similar effect? Or maybe Brexit benefits US housing.

Some expect that British home prices will fall as a result of the Brexit, which could affect our housing market. Foreign home buyer investment in US housing will withdraw as foreign cash will look to the UK for housing bargains. This will most likely affect the luxury home sector of the market, where many foreign home buyers have parked their money.

In the meantime, initial reactions indicate that the Brexit benefits US housing! AnnaMaria Andriotis, writing for The Wall Street Journal (Mortgage Rates: How Low Can They Go?; wsj.com; June 28,2016) reported that mortgage interest rates may go lower as a result of the Brexit. Lower interest rates could make housing more affordable for home buyers, while home owners continue to have opportunities to lower their mortgage payments.

The housing market has already been brisk. The NAR reported on June 22^nd that existing home sales increased to its highest levels in nine years! Additionally, the S&P/Case-Shiller Home Price Index (spindices.com) reported June 28^th revealed an additional 5% year-over-year increase for April 2016.

NAR chief economist Lawrence Yun concluded that low mortgage rates are an incentive for many home buyers. Although he stated that first time home buyers are finding it difficult to enter the market for various reasons, repeat home buyers make up the majority of home sales. As home prices increase, many repeat home buyers are finding down payment funds in the form of the proceeds of their home sales.

Yun felt that first time home buyers may find that increasing home prices will be a continuing obstacle. This is compounded by the enduring low housing inventory. However, new home construction may add other options for home buyers.

Aside from the interest rate benefit to home buyers, mortgage lenders are finding new programs to help those with little down payment funds! Of course, the venerable FHA mortgage has been the go-to mortgage for those who qualify, because the down payment can be as low as 3.5%. The downside to the FHA mortgage is the mortgage insurance premium. To compete, Fannie Mae and Freddie Mac offer a 3% down payment program to those who qualify. Like its FHA counterpart, the conventional 3% down payment program has also required private mortgage insurance.

However, HousingWire (hosuingwire.com) has reported that a few lenders offer a 3% down payment mortgage program without the PMI. And within the last seven days, HousingWire reported that Quicken Loans and Guaranteed Rate Mortgage offer a 1% down payment mortgage program to those who qualify!

By Dan Krell
Copyright © 2016

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June 24, 2016October 20, 2020

Vacation home buying

Buying a vacation home

A trip to the beach or mountains may have you wondering about owning your own vacation home. And as it happened you’re not alone! An April 1^st 2015 National Association of Realtors® press release estimated that vacation home sales bounced back to peak levels in 2014. There was a massive 57.4% increase over 2013 sales! In contrast, during the same period there was an estimated 7.4% decrease in investment home sales. And an estimated 12.8% decrease in owner occupied home sales (realtor.org).

Although your motivations may be personal, the NAR’s 2015 Investment and Vacation Home Buyers Survey revealed that there are various reasons to buy a vacation home. Not a surprise, a majority of those surveyed (33% of respondents) indicated the primary reason they bought was to use for vacations or family retreats. However, 19% of respondents indicated their purchase was for a future retirement home, while 11% or respondents bought for the home to be used as a rental property.

Do the research

You’ll find vacation homes in different styles, sizes and prices. However, your favorite destination may dictate the price range and style. You may realize that although you are able to afford the week’s rental at your favorite retreat, you can’t afford to buy a vacation home there. However, if you broaden the search area, you may find suitable and lower priced vacation home nearby.

Benefits

You may have heard others talk about the benefits of their vacation home, such as being able to visit any time they desire without having to worry about reservations, or restrictive check-in and check-out times. They usually don’t have to worry about having too many guests either, as they can invite whomever they wish to keep them company. And they don’t have to worry about special accommodations – it’s their home after all!

Disadvantages

There are benefits of owning your own vacation to be sure. However, it’s probable that you may not hear vacation home owners talk about the downside. Jeff Brown, writing for US News and World Report, stated: “A second home can produce a wonderful family tradition or turn into a stress-inducing money pit.” (The Pros and Cons of Investing in a Vacation Home; usnews.com; February 10, 2016). Brown quoted Alison Bernstein, founder of Suburban Jungle, saying: “It is less expensive to stay in hotels in various destinations than it is to upkeep a home, including the hidden expenses of caretaking, overall operations of a home and property taxes…However, for those that are able to enjoy it, it is definitely worth it.”

Brown points out the increasing costs of ownership. Property taxes, insurance, and possibly a condo or HOA fee can increase. Additionally, the vacation home requires regular maintenance just like your primary residence. Repairs may compel you to make extra trips to work on the home rather than being a relaxing holiday.

Brown cautions that a vacation home may not be the best vehicle for investment because of the volatility of resort property. Additionally, if you need the money, it’s more difficult to tap the equity in a second home. Applying the tax advantages can be tricky too, so consulting with a tax professional before buying a vacation home would be wise. Self-managing the property can become aggravating, as it can be difficult to find tenants during the off season; however, hiring a management company can be pricey.

By Dan Krell
Copyright © 2016

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June 17, 2016December 6, 2019

Home owner savvy

The playwright Oscar Wilde must have been fond of the idiom “nowadays people know the price of everything and the value of nothing,” because he used it in back to back works; first in The Picture of Dorian Gray, and then a variation in Lady Windermere’s Fan. Today, corrupted forms of Wilde’s phrase are wrongly attributed or misquoted – but the point is well made. More psychologist then poet, Wilde seemed to characterize a core consumer behavioral trait of seeking short term gain vs long term value – which applies to home owner savvy!

Consumers in the 19^th century were much like consumers today, such that they sought out to get a bargain; often times overlooking the costs from which it comes by. And what may have been in Wilde’s time a conflation of price and value, is still common today – especially for home owners. While many home owners pride themselves on their frugality in home maintenance, they don’t realize the consequences of their poor choices when it comes time to sell their home. Home owner savvy is also knowing about value.

Today’s home owner’s frugality comes honestly as a result of the great recession. A McKinsey Global Institute consumer sentiment survey from a year and half ago sums it up in the title: America the frugal: US Consumer Sentiment Survey (Martinez, Motiwala, and Sher; mckinsey.com; December 2014). Martinez, Motiwala, and Sher wrote in their economic analysis that “…Multiple years of austerity have left consumers with altered views about spending. Almost 40 percent say they will probably never go back to their prerecession approach to buying…”

While looking to spend less on maintenance and home repairs, home owners often ignore the effects of their thriftiness on the long term maintenance costs of their home. Trying to spend less often means becoming reactive to maintenance issues, instead of proactive. Reactive maintenance typically means that the plumbing, electrical, or roof issue the owner is repairing, may have been an ongoing problem that may have also affected other systems of the home. However, proactive home maintenance is an ongoing process that can prevent minor problems from becoming costly major issues and is home owner savvy.

John Riha invoked Ben Franklin’s “An ounce of prevention is worth a pound of cure” when writing about home maintenance and house values (How Much Value Does Regular Maintenance Add to Your Home?; houselogic.com). He repeats a common theme that regular preventative maintenance doesn’t only save you money down the line, but can add to a home’s sale price. Riha quotes University of Connecticut and Syracuse University studies that implies the value of a regularly maintained home may increase by 1% a year!

Riha recommends a “proactive maintenance strategy” to help stay on top of necessary repairs and system replacements. He suggests saving 1% to 3% of a home’s cost for regular maintenance. To help keep it “interesting,” he suggests repairing and updating one room per year. If you are unsure where to begin, a home inspection may help identify areas of immediate concern; as well as develop a regular maintenance schedule. Also, keeping records of ongoing repairs and upgrades will cement in a home buyer’s mind the amount of care you had for your home.

Home owner savvy is not necessarily about being frugal with home maintenance, which is also not about knowing the price of everything; but in reality, diminish the value of their home. Regular home maintenance can not only keep you comfortable and safe through the year, it may help you sell your home faster and for more!

Original published at https://dankrell.com/blog/2016/06/17/home-owner-savvy/

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June 10, 2016

Vacation home preparation

Summer vacation home preparation is much like preparing it for the winter or severe weather. Much of the plan is conventional wisdom and incorporates penny pinching advice intended to prevent a potential hazard. The goal is to anticipate and minimize problems while your away by safeguarding the home’s systems and implementing a security plan.

Many electrical items we use are considered to be “zombie” appliances; meaning they use electricity even when not in use. Unplugging such items as the toaster, Keurig, and other small appliances that won’t be in use while you’re away will conserve energy (and may save you a few pennies). More so, shut down (and unplug) your computers and printers to not just conserve energy, but to also thwart hackers while your away.

Some people play with their home’s thermostat to save some money. The thought is that by setting the thermostat temperature much higher than usual, the air conditioner will not run as much (or at all). However, if you have a basement or cellar, you might consider setting the thermostat temperature to a more reasonable temperature to prevent mold from growing in your dark and humid basement.

Some shut off the water to the house to prevent a water hazard. However, shutting off valves at faucets, fixtures, or appliances may be a better plan if your home has a sprinkler system. And to prevent someone taking advantage of your absence and wash a car or two in your driveway, you might also consider shutting off the valves to the exterior hose bibs.

Besides protecting your home’s systems, think about home security too! First, refrain from posting your plans on social media. Although you may want to inform your Facebook friends and Twitter followers of your itinerary, broadcasting vacation plans in such a way could also get the attention of a would be criminal looking for their next break-in.

Although storing your valuables in a safe place could minimize loss, consider implementing crime deterrents as well. Installing motion activated lights on the home’s exterior may deter activity around the home at night; while electronic devices, such as the camera-doorbell, can notify you if there is any activity around the house during the day.

You may also consider implementing some common tactics to make it seem as if you never went on vacation. Having a few lights on a timer will appear as if someone is turning lights on and off. Besides having a neighbor pick up the mail and newspaper (many stop their paper and mail while they’re away), have them park in your driveway to make it seem as if someone is coming and going to and from the home. Additionally, have a neighbor or friend check in on the home regularly to ensure it is secure. Depending on the length of your vacation, they may drop in a few times, picking up any packages left at the door and adjusting the thermostat as necessary.

A summer vacation home preparation idea if your home is on the market – consider restricting showings to be by appointment only to ensure the house remains secure. Talk to your agent about how to contact you in case of an emergency, your agent may check in on the home regularly too. Don’t worry about missing out on a great offer on your home – if you will have email access, your agent can send you any offers and have you sign them electronically.

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