Debunking the Myth of Selling in Winter Months

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Many sellers are unsure whether or not to wait until next spring before listing their home. The confusion comes with a combination of age-old schools of thought that predict the spring season as being almost the only season for homes to sell successfully. Not true.

A lot of homeowners are under the impression that homes are not selling at all, whereas in our own experience, time and again we continue to see complete opposite results. So much so, that we are defying the myths of never ending days on market statistics with many properties going under contract in approximately two weeks. Here’s why.

There are so many buyers in the marketplace right now that are eager to lock in the phenomenal interest rates and market conditions that continue to allow a very significant amount of buying power. The interesting thing is that while it is a strong buyers’ market in that sense, sellers are still enjoying an edge with the lower inventory that comes with it being this time of year.

Regardless of which side of the fence you are on, either way you look at it the market is strong. People are out there buying. If there are fewer homes available on the market, then that only means that there is less selling competition. This of course translates to top dollar and incredibly quick, hassle-free transactions in which everyone comes out a smiling winner.

So to answer one of the most frequently asked questions I am getting these days, it IS a great time to sell your home. Sure, you could wait till spring. But keep in mind that so will countless other sellers and by the time springtime blooms are back out, so will equally as many more “for sale” signs, competing with you.

By listing your home now, you can harness the power of the buyers that are striving to find that perfect property before the holidays kick in.

Contact us today if you’d like a custom, home valuation report detailing exactly what we expect your home will sell for in today’s marketplace. Our team looks forward to hearing from you and helping your real estate goals come to fruition.

Is the First Offer the Best Offer?

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We’ve seen it time and again. A seller eagerly lists their home, finds a buyer with a serious offer but chooses to wait things out and see if other (better) offers come along. While it can happen and it does sometimes, the problem is that there is a process usually followed by buyers and along with it a pipeline. Here is a look at how they lead up to making an offer and how by the time the first buyer seriously considers your home they are likely the most viable one.

Buyers Are More Educated

With the advent of technology, the entire real estate industry has changed. Gone are the days when buyers would rely solely on their agent to find a home to suit their needs. Today, the Internet has taken over. In fact, studies show that over 90% of buyers spend weeks online searching for their perfect home before even talking to an agent.

So by the time a buyer is at your doorstep with an offer, there is a good chance they have thoroughly researched every aspect of the local market. They are fully aware of your competition, have weighed all pros and cons of your home and are seriously interested in your property. After countless open houses and obtaining plenty of education about the real estate market in their area, they know when they see a property that suits their needs. In many cases they are waiting for the perfect one to become available so the minute it does, they make an offer.

By the Time They Make an Offer, They Are Well Into the Process

Where sellers go wrong is to want to wait for more offers. In the process, those very serious buyers that have already made their interest in your home known will likely find another home to suit their needs. Buyers today are savvier than ever before – and with that education that they so readily find and absorb from various sources (the Internet, other publications, their peers, professionals) they have an acute knowledge of the market.

In the process of selling your home, it is critical to keep all factors in mind. Factors such as the condition of the market, your agent’s recommendations, current inventory levels, the number of days most properties remain on the market before being sold and of course prices. Putting all of that into play will change how you handle that first buyer but remember – the first buyer will almost always be your best buyer.
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For a consultation that is customized to your needs, contact us today. We look forward to serving you!

3 Tips to Get More Money for Your Home

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How many times do you hear about a negative experience in the real estate world after the fact, when it’s too late? Unfortunately, like many service-based professions it is often difficult to tell whether someone will be able to provide good service until it is too late.

But I can tell you that it does not have to be that way. Let’s talk about selling your home, for instance. The main goal at hand is usually to make the most money, right? So you would hope that the agent managing your home’s sale would do everything possible to make sure that happens.

But to make sure that you have the right person by your side, representing your best interests – here are some things to look for – that will ultimately yield you the most money for your home in the process.

Understanding the Comparative Market Analysis

You see things like “get your free home value report” all the time – but just what are those and how effective are they? Well one way you can up the ante on your net proceeds from the sale of your home is to carefully study the CMA given to you by your agent. If you don’t know what something means, ask your agent. And ask them to corroborate their findings with demonstrated data.

Utilize Strong Negotiation Methods to Get the Most of Your Sale

Having a weak negotiator could quite possibly be all it takes to make your transaction fall through. Here is another area where having the right agent will be pivotal to the success of selling your home for a good price. To confirm, while you are interviewing them – ask them you share their average list-to-sale ratio with you for the last twelve months.

Employ the Services of a Professional Appraiser

A tool that many home sellers neglect to realize they can use to pinpoint a more exact number is an appraisal. Though the commonly applied use of an appraisal is when a buyer has one done as a requirement for financing – you can also pay for one as the seller. This is particularly useful when you are seeing that your home has had no interest for a significant amount of time and it seems that price might be the issue. At a cost of about $350 to $400, it is a reasonable expense to be able to competitively price your home and get it sold!

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If you would like to sit down and discuss these or any other real estate related concerns you may have – let me know and I’d be happy to show you how I can help!

Why to Invest in Real Estate NOW

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So many people are wondering these days whether it is a good time to invest in property.  It’s no secret that interest rates are at an all-time historic low and when combined with the low housing prices we are still seeing these days, more and more people are considering real estate investment.

How can you tell if it is the right thing for you?  And if you do decide you want to venture into buying property for the sake of investment, how do you go about it and what type of dwelling makes the most sense?

The answer is largely dependent on your individual investment goals.

Overall Appreciation Perfect for Long-Term Security
The easiest way to enjoy significant returns on investment is through the purchase of a single-family home.  Historically more popular, these properties are easier to rent out, entail less day-to-day management and they can be assumed as primary residence at any given time the investor would so choose, providing an added sense of security.  Home values do appreciate with time and single-family homes typically rise in value faster than other rental property types.

It is important that the property is located in a desirable location and also that it is easily rentable.  Your Realtor can assist you with an analysis of the area’s statistics in term of rent versus buy situations as well as a look at what other similar properties are renting out for.

Slow and Steady Monthly Income
Rental units that comprise of anywhere from 2 to 12 (or more) family units within the property are perfect for monthly real-time cash flow. While they may not appreciate as much as single-family homes, they provide the comfort and safety net of steady monthly income.  If increased cash flow is the goal then opting for multi-unit rental properties may be the best route to take.

Demographics play a key role in determining your investment.  For instance, if you live in a college town then a rental home near the college or downtown would be ideal for many senior or grad level students that prefer easy access yet quality housing.  Conversely, resort homes are also attractive and as long as they are located near some tourist attractions you may be able to yield decent rental income. Rental units in big cities are also popular in the more bustling areas of town.

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Given the increase of rental units and investment properties being rented out, there has been an influx of property management companies set up.  Ideal for the silent investor or someone that does not have a lot of time to put into the actual management of properties, property management companies handle anything from market analysis, finding and screening tenants plus managing the move-in process to handling day-to-day affairs like collecting rent or property maintenance.

If you can afford it and have investment goals that line up with some of the returns that are apparent with property investment, contact your Realtor to get a feel for what is available out there.  This is definitely a very interesting time to pursue an investment property.

ObamaCare Tax on Investment Properties

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* Remember I am not a CPA, always consult your tax adviser. 

There is a lot of confusion centered on the health care bill’s impact on real estate transactions and the talk is not exactly accurate. Let me first clarify one thing: yes there is a new tax on real estate. But what most people don’t tell you is that the tax is only on applied profits earned above and beyond the capital gains tax limits and this is not a blanket tax applied to all real estate sales.

Additional Taxation Only on Applicable Capital Gains

First, let me explain the capital gains tax limits in most states. Most states have a $250,000 threshold on capital gains for single persons and a $500,000 cap for married couples. What that means is that if you are a single person and after the sale of your home if there is a profit over and beyond $250,000 – that amount will be taxed an additional 3.8%. Let’s go over this with an example. Say you bought a home for $300,000 and then sold it for $375,000. The profit amounts to only $75,000 (well within the $250,000 limit for non-married property owners) so you will not be taxed on that profit.

Now, here is an example of a married couple that sold their lakefront home: Originally bought in 2002 for $100,000. They renovated the home and now it is a gorgeous and very desirable property. Assuming that other homes consistently gained value and sold for a lot more in recent years, the couple in our example sold their home for $650,000 (Wow! Show me an investment opportunity like THAT!). This couple received a total of $550,000 profit on the sale of their home and given the $500,000 married people exemption on capital gains, the taxable amount would be $50,000. How much does it add up to? The total amount of additional tax this couple will pay at 3.8% would be a mere $1,900 – a far cry from the thousands of dollars the rumors would have you believe.

Generous Income Requirements Prior to Tax Imposition

Another important aspect of the new real estate taxes is that the tax only applies to individuals with at least a $200,000 annual income and couples with a joint income of at least $250,000. That automatically eliminates about 97% of the American population right there.

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So you see? It’s not all that bad. The only thing I can think of that is important to remember about the capital gains tax exemption is that it must be a primary residence of the person or people filing for the exemption. Here is a document generated by the National Association of Realtors with some more scenarios showing how the real estate tax would impact people.

* Remember I am not a CPA, always consult your tax adviser.

Why to Invest in Real Estate NOW

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You have probably heard over and over again lately about the phenomenal buying market out there for property enthusiasts. In fact, even if you are not a bona fide investor it is still a great time to get into the business of investing in property. One of the reasons for this ripe environment to invest and actually make significant amounts of money on that investment is the low costs of obtaining property that we are seeing today.

Today’s Low, Low Cost of Financing

Not only are homes priced lower but also the actual cost to borrow money to purchase the homes is also lower. Not too many years ago the cost of a mortgage was as high as many credit cards are today and when you compound that into 30-year fixed mortgages, the finance charges become astronomical. With today’s interest rates, however, monthly payments for the same house you might have purchased at the old interest rates are much lower.

Let’s look at a $200,000 home. If you financed it back in the 80s when rates were as high as 16% (or more) the total monthly payment amount would be about $2,900. Factor in today’s record-setting interest rates and the monthly payment is more than fifty percent less at around $1,200. This is for the same house!

Home Prices Remain Very Low

After the infamous market crash of 2007, housing prices plummeted and they have remained at or near bottom for quite some time now. For buyers and investors this translates to one of the best opportunities – especially when combining low home prices with record low interest rates. Not only is the home affordable, but so is the cost to borrow money to buy it.

Consider the example above of the $200,000 home. If your budget is $200,000 and you were not buying in today’s market – how much home would you be able to afford within that amount?  Of course, what you would be able to get will depend on location, neighborhood, style of home and other factors. But in general, the amount of house you would be able to afford ten years ago does not even compare to what you can get today for the same amount of money.

Invest for Pennies on the Dollar Now – Enjoy Sizable Returns Later

When billionaire investor Warren Buffett was recently asked about the best investment sectors of today he suggested investing in single-family homes on a 30-year fixed rate mortgage. This advice came in light of current market conditions that end up in pennies on the dollar investment schemes. Buying a home today for under $200,000 will easily yield more than double the returns by the time the mortgage is paid off. Many savvy homeowners today are also making extra payments to shorten the term length of their mortgages.

With the plethora of investors and buyers that are delving into the property market to seize the opportunities out there, many have been turning to any means possible to come up with the down payments. Whether dipping into savings, obtaining a home equity line of credit on an existing home, converting the purchased home into a rental property – buyers are getting creative.

If you would like to explore your options and find out how you can take advantage of the amazing investment opportunities right now, contact us today. We would love to guide you and come with up with some ideas that work for you.

Moving Out? In Today’s Real Estate Market, Which is Better, Renting or Selling?

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Contrary to what many experts, news media or analysts may have you believe, market conditions are not as bad as they are portrayed.  In some areas inventory is down, prices are up and the general consensus is a positive one, moving up in a positive outlook for the future.  But the question does arise when one is moving from a home – whether selling it now or renting it to hold out for a better selling price makes more sense.  Here we’ve put together some considerations that will help you discern which is the better choice for you.

Real Estate Is Always a Gamble, Now’s Not Any Different
There is no real way to tell exactly how the market will behave at any given time in the future but currently all trends reasonably point to both options being equally as viable.  If you opt to keep your home and rent it out, say for the next couple years or so, then there is a chance that prices will hit rock bottom and then begin to climb up again during that period.  However, there is also a chance that prices continue to plunge – in which case you would have been better off selling while a bit ahead of the game.

The main thing to keep in mind here is that even though things go up and down in the short term, real estate is a great long term investment and it’s fair to say that ultimately there will be a gain on your property value.  

Buyers’ Market Today, Who Knows What Happens Tomorrow
So many indications of it being a strong buyers’ market these days make it seem that the opportunities on the buying end of things are endless.  However anything can change and it can change fairly quickly.  Take our current interest rates.  Though buyers have been used to seeing such historically low interest rates for some time now, if the government decides to raise the rates it will instantaneously change things.  Since buyer’s ability to purchase will be affected in a major way, prices will concurrently come down. 

Heavy Foreclosure Inventory Appears to Dominate The Coming Path
Nationwide there are literally millions of foreclosure properties out there that need to go through the system.  As foreclosure and short sales flood the market, prices will plummet as a result of these distress sales.  In some markets this trend has crept into the upper-end niche of the real estate industry.

Why Renting Can Be Risky
If a homeowner rents out their property and while it is on rent the condition of the property suffers some damage – then they have negatively impacted the value of the home during a time when they had hoped for an increase in value.  This is the single biggest gamble when it comes to choosing to rent your home rather than selling it.

Also, there is no way to tell what the condition of the selling market may be when it comes time for you to decide to sell. 

Consult With Your Realtor To Assess Your Options
Realtors deal with myriad situations on a regular basis and they also intimately know the statistics of your neighborhood and surrounding areas.  By consulting with a trusted and reputable Realtor in your neighborhood, you can gain ample perspective on exactly how your property might fare in today’s market conditions.  An informed decision would be made, given the factors at hand so you can be assured that your choice is the best as per your own situation. 

Seize the Opportunity! It's One of the GREATEST Times in History to Upgrade Homes

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We have all seen the media reports of how the real estate market has been down in the dumps for years now.  But at the same time, we also see reports of how this is an excellent time to buy a house, whether as a first-time buyer or an existing homeowner looking to upgrade into a newer, bigger or better place.  To help illustrate how this can be true, despite the unstable real estate market, here is a simple equation with three parts:

SALE OF THE EXISTING HOME, PURCHASE OF A NEW HOME, INTEREST RATES

Selling The Home You Are Living In Now
Basically, you have two choices if you are thinking of selling your property – either do it now or do it later.  Selling it now would mean that you would suffer the loss of the last ten years’ worth of value downgrade.  For the last decade or so, home values have steadily dropped, to an average of about 10% less than what they were before.  So assuming a $200,000 home in this equation, consider the next level.

Buying A Bigger and Better Home

A reasonable upgrade to a home that, say, has a list price of $350,000 is an exciting prospect especially since its value just five years ago would be about $420,000.  Not only would you be buying more house, with the average square foot costing far less than it would have just a few years ago, but a few years down the line when the real estate doom starts to rebound, you will be sitting in a house that is worth much more than you purchased it for.  How is that possible?  The third part of our equation is how that is possible.

Financing On Super Low Interest Rates
There is hype all over the place about the historically low interest rates we have been seeing on the market for quite some time now.  This will not last – but while it does, the 30-year fixed rate mortgages that are available these days [to qualified buyers] are as low as 4.5%.  This is almost unprecedented and coupled with the buyers’ market that it is with the inventory levels we are seeing, this is quite simply the best time to buy and at the best rates.

Why Buy Now Instead of Waiting For Later?
Given the three parts to our equation, the question many homeowners ask is now or later.  To answer this, here is a simple chart that demonstrates what would happen if you sold your home now vs. later and if you bought a new upgraded home now or later – both scenarios taking into consideration the changing values of property.

Existing Home New Home Interest Rate Difference Saved
Upgrade Now $200,000 $350,000 4.5% $15,000
Upgrade Later $220,000 $385,000 6.5% -

To explain this further, 

Assume your home value goes up 10%, from $200,000 to $220,000.
But the new home you purchase would also increase in value, putting the original value of $350,000 at $385,000 in just a few years.  An important consideration is that the higher the mortgage, the higher your interest rate, (in other words loan amount conforming to conventional rates has gone down) which will affect you as time goes by and the current opportunities will no longer be there to avail.  The new interest rate that would go along with inflation would be an expected 6.5%, meaning that money for your mortgage would cost you more.

Keeping all these factors in mind, it is clear why now is the best time ever to be selling your home and upgrading into a new home.  The money saved is a sizable chunk of a down payment for many homebuyers. In this example, about $15,000 is the amount saved and the best part is that the super low mortgage rate gets locked in for thirty years.  

When you work out the numbers in the long run it is clear that availing the opportunity out there now is the perfect solution to owing the best possible home in the future.