Mistakes that home buyers should avoid

Real estate is a high stakes game. When buying a home buyers often worry about making a mistake that will cost them money. The market today is filled with challenges and home buyers anxiety is high. What should a buyer do to avoid making costly mistakes?

How to avoid costly mistakes

One of the most important things to avoid making costly mistakes is to be educated on the market you are buying in. Do not try to time the market. If you wait for the perfect time to buy, you may miss out. If fact the biggest mistake that homebuyer can make right now is not moving forward because they are waiting for interest rates to go down.

What if?

Here are some “what if” scenarios that you can ask yourself to help you see how to avoid some costly mistakes.

  1. “What if” you buy now and prices drop? If that happens you will not feel that until you sell and that will more than likely be years down the line. So you have not really lost anything by buying now.
  2. “What if” you buy now and interest rates go down? You can always refinance your mortgage when rates get low enough that it makes since to do so.
  3. “What if” you don’t buy now and prices and rates keep going up? If that is the case you may become priced out of the market and not be able to do anything buy rent for longer than you planned. Looking at these scenarios you can see that waiting to buy a home is not likely to change the fundamentals of the market. Long term real estate is still one of the best ways to build long term wealth. When you own your home, you are building equity. When you are renting, you are helping someone else gain equity.

Let’s buy now!

So you have decided to might be okay to buy and not wait. What other mistakes should you avoid? A mistake to avoid is falling in love with a house that you cannot afford. Make sure, when you decide the time is right, to get pre-approved with a lender so that you know what you can afford. Then make sure you look only within that price range. A home more expensive is going to impress and make it easy to fall in love. Pre-approval is important and can help you avoid stress and other costly mistakes.

These are just a few costly mistakes to avoid. This is part one of a two part series. Stay tuned to read part two and learn about more costly mistakes to avoid as a home buyer. The more you know the better your experience will be.

What home items are worth the splurge?

Many people today are staying in their homes longer. One of the reasons for this occurring is because current interest rates are at a twenty year high. If you are lucky enough to have an interest rate, on your home loan of 3% or 4% why not stay? You may find that the longer you stay in your home the more you find yourself spending money on your home to make it the best that it can be. When spending money on improvement, what things should you splurge on?

Mechanical and energy saving

Deciding what to splurge money on when buying things for you home is difficult. Remember, if something is inexpensive, but does not last, you really are not saving money in the long run. The savings that you made when you purchased the cheap item disappears when you have to buy again. Your objective should be to buy things that last when you are buying mechanical items. As an example, your furnace, is a place to splurge. Your furnace should last around twenty years. If you purchase a cheap furnace you may not get a unit with energy saving features. The unit also may require repairs or replacement sooner than a more expensive model. Water heaters and A/C units are also good mechanical items to splurge on. Here’s a list of items that are worth the splurge.

Here are some additional items worth splurging on

  1. Smart programmable thermostat. Properly controlling your heating and cooling is a great way to keep energy costs down. The best way to do this is with a smart programmable thermostat. They will cost more , but the energy savings will show up quickly. You can save eight percent on energy costs according to the U.S. Environmental Protection Agency. Your smart thermostat learns your schedule and balances temperatures throughout the day and saves you money.
  2. Green Appliances. The cost of an appliance can vary greatly. You can spend as little as $500 or as much as $2,500 for a washing machine. A refrigerator can cost between $600 and $2,400. Does it make sense to spend more to consume less energy? Many agree that smart appliances and tech appliances are a definite way to save money and energy in your home. They are also more friendly to the environment. All of that to say, they are worth the investment. Swapping out an old refrigerator for an Energy Star certified one can save you up to $200 a year on your electric bill.
  3. Flooring. This is another place to splurge, particularly in high traffic areas. This means spending the extra money whether you are buying carpet , hardwood or whatever your choice is. Your floors take a beating particularly if you have children or pets. You want to have flooring that is durable and long lasting and can stand up to your life!

Now you know where to splurge. Remember the things to splurge on and invest in should be based on durability of the item. If it can save you money over the life of the item it is also worth the splurge.

Selling a home with Solar Panels

How do you sell a home with solar panels? That may seem like an easy question to answer, you just sell it, but it is really not that easy.

Solar panels on homes more common

Solar panel installations on homes are becoming more common. People today are becoming more concerned about high energy costs and desire to save money. When selling a home with solar panels the owner will need to know about solar agreement that is in place. Some solar companies offer lease agreements and others offer purchase agreements. Lease agreements can be straightforward with the property owner paying a monthly fee to lease the panels from the company. These leases range from 5 to 20 years, typically. It is possible for the leases to even run longer than 20 years.

How were the panels purchased?

Alternatively, the owner may have a power purchasing agreement. With a power purchasing agreement, the property owner pays for the power being used. This is similar to paying for electricity from the utility company. But with the solar payments going to the solar company. The amount paid each month, depends on the amount of electricity that is used by the homeowner.

Transferring service agreement

When selling a home with solar panels, the parties must ensure that liens are paid off and panels are properly transferred. If a service agreement is in place on the panels, it will also need to be transferred. Not every solar company offer a service agreement. When the purchase contract is written, solar panels should be included.

Another option that the homeowner may have been offered when solar panels were installed was to enter into a payment plan on the panels, until payed in full. With a payment plan on solar panels, the homeowner is likely receiving credit from your electric provider for power created. Almost all of these agreements have provisions for the property owner to buy the panels outright. Depending on the agreement with the solar panel company, panels may allow for the loan to be transferred. Who pays off the loan is a point of negotiation between the buyer and seller at time of contract. The lender must be informed if the buyer is to assume the loan.

The process of selling a home with solar panels will require paperwork to be provided to real estate agents. The new home owner can enjoy energy savings just like the seller did, if information is provided and transfer of ownership is completed at time of sale. The process of selling just takes a few more steps and effort.

Moving with Pets

Moving can be a stressful time. It is stressful for everyone in the household from adults, kids, and even pets. How do you make the process easier for your furry, feathered or scaly friend? As humans we can use our brains and adjust emotionally to the disruption that is involved in a move. Our pets do not have that ability. Pets do not understand why we are putting things in boxes. This makes process is difficult for them. Fortunately animals are pretty resilient. What should you do to make it less stressful?

How do you make this stress free?

Our pets are creatures of habit and find comfort in routine and familiarity. One helpful tip to make the transition to a new home easier for your pets is to make sure that you take your furry friend to the new house for a visit, before the move. Let your pet spend time in the new environment, sniff things out and inspect the new place. Create a special place for your pet that has familiar toys and maybe even their bed. Each time they come to the new house they can find comfort in the new surroundings knowing that there are familiar things there too. All of this will help them feel more comfortable come moving day!

Moving day has arrived

Make sure that you have a plan for your pet for moving day. Careful planning can make all of the difference. It is best that your pet not be there during the moving process. Moving day is chaotic. Make sure that they have a safe environment for moving day. Make sure that you have your pet’s food, water, medications, toys and bedding with you so that your pet can settle in without interruption. Cats will need to be placed in a secure room, like a bathroom so that they can gradually get use to the new surroundings. Birds and retiles need special care to ensure that their cages and terrariums are secure and temperature controlled. Small pets like rabbitWhat do you do after moving day to make the new place home for your pet?

Moving is complete

After moving day anticipate possible behavior changes in your pet. Your animal may have a decreased appetite, hiding, aggression or other unusual habits. Recognize the signs and provide extra love and attention to help your pet adjust to the new home. Moving with pets can be stressful. Make sure that you take the time to make it as easy on your pet as possible. Home should be a sweet place for everyone.

What sellers should know about an inspection

Congratulations!  You have your home that you are selling under contract.  The next step in the process is the inspection. Usually the buyer will hire an inspector to inspect the property.  What do you need to know about an inspection?

Inspection, What you need to know

The inspection is the buyers opportunity to fully examine the house that they have under contract.  Most buyers will hire a professional inspector to conduct the inspection for them. This is not required.  The buyer can conduct their own inspection, they can have a friend, contractor or parent conduct the inspection.  It is the buyers right to spend time in the house and inspect. The inspection typically lasts from one to three hours.  During this time the person inspecting the property will look at everything from roof to foundation and everything in between. The purpose of the inspection is to give the buyer a clear picture of what they are buying. Ensure that the buyer and “inspector” have access to all working components of the home and that they are easily assessable! Inspection is completed, then what happens?

Inspection is complete

After the inspection, if a professional was hired, a report will be provided to the buyer. This report, will put in writing, the findings of the inspector. The report will list safety concerns and items not working as intended. It may also mention maintenance issues that need to be addressed. The buyer will review the report with their real estate agent. What happens next?

What will the buyer ask for?

The next step in the inspection process for the seller is that they will receive an objection from the buyer.  This does not always happen.  Sometimes the buyer agrees to accept the property as is. The objection will outline what the buyer would like to have the seller take care of prior to closing.  As the seller you can provide a credit to the buyer, do nothing or fix the items that the buyer is requesting. As the seller it is important to ask yourself, are these items that any buyer would request, or are these buyers being unreasonable.  Talk to your agent about what is reasonable and get a feel for how to proceed.  Once you and the buyer have agreed on what shall be done, you have made it through inspection.  Now, as the seller, you know what you should know about the inspection. 

No more questions?

Hopefully this clears up any questions you may have as a seller about the inspection. If you work with me I always provide individual consultations regarding how to handle the inspection objection once received. This can save you many dollars. I also have trusted trades people that can get the job done for the lowest cost and the least hassle. If you have specific questions I am always here to help.

What buyers should know about home inspection

Congratulations you have a home under contract. Here’s what is important for you to know about the home inspection. If you are like most buyers you only have a house inspected a handful of times in your life. What do you should you know about the process. Remember the inspector does not know the house. They spend several hours in the home to learn all that they can about the house in that amount of time.

They can only inspect what they can see

The inspector can only inspect what they can see. If the house is over crowded they are not allowed to move stuff all around, pull up carpet to see what is underneath. If you are hoping the house inspector can tell you if there is hardwood under the carpet, you have the wrong guy. It is not your home yet, so they cannot do damage to the home. Remember the inspection is to be non-invasive, visual inspection of the home.

Show up for inspection-wrap up

You are welcome to be present at the inspection, but let the inspector do their job and give them some space. No-one likes someone looking over their shoulder. The best way I have found is to let the inspector inspect the property and then stop by for the “wrap up.” This is when the inspector can show you the results and what they have found. You are able to get your questions answered at this time also. Before you hire and inspector make sure that they are willing to have you show up for “wrap up.”

Inspectors cannot predict the future

An inspector cannot predict the future. The job of the inspector is to assess the property and its condition on the date of the inspection. They might be able to provide you with their best guess as to what might happen in the future based on what they find the day of the inspection. But it is the inspector’s best guess and not a prediction. You cannot use the inspectors best guess to ask for the seller to repair or replace things nor can you hold the inspector liable for something that does eventually happen a week or a year after the inspection.

Another inspection might be recommended

As the buyer, you can be surprised when the inspector suggestions another inspection. Remember that the home inspector is a generalist. They know a bit about everything but not a lot about everything. The inspector may recommend that you get the roof inspected by a roofer. Or they see a concern with the wiring, and suggest an electrician look at the situation and give their recommendations. Please do not look at this as the inspector not doing their job and handing off responsibility to someone else. They are instead doing their job and catching an issue and recommending that you get a second more qualified assessment from a professional in a specific field.

Things sound worse than they are

After the inspection things sound worse than they are. You talk to the inspector and they start pointing out all of the things that are wrong. They also mention things in the house past the end of “useful life.” For example, the furnace is past its “useful life.” Does this mean fix as soon as possible? Ask the inspector questions to find out what needs to be fixed right away and what can be budgeted for the future. Remember that inspectors often list everything that they come across in the inspection report. They do this because they do not want someone coming back and saying that they failed to mention something. This doesn’t mean that hundreds of things are wrong with the house. This also doesn’t mean you need to prepare a laundry list of items to ask the owner to repair, replace or credit money to be done after closing. Creating a laundry list can hurt, more than help. Talk to your agent and develop a strategy to accomplish what you need. Now you know what is important to know about the home inspection, you are ready!

What it Takes to be a Great Landlord

Better landlords have better tenants. Considering the amount of time and effort that it takes to find a great tenant-some estimates are between twenty and thirty hours, with advertising, showing the property, and reviewing applications. Not to mention going through the lease process once you have found a tenant, signing the lease and key exchange. Keeping a great tenant can save you hours of your time and unnecessary hassle. Learn what it takes to be a great landlord and have the best possible chance of keeping those great tenants you have.

So what do you keep those great tenants and have them feeling that you are a great landlord? Most tenants will agree that a great landlord treats them as customers. The landlord follows the law and the lease. A great landlord is professional. They remember that they are running a business and their actions reflect this.

Here are some tips on being a great landlord

First and most important, provide your new tenant with a clean place to move into. This includes having all appliances sparkling. Make sure that carpets are professionally cleaned by a company that does carpet cleaning for a living. Providing your tenants with a clean property to move into reduces their stress and also sets the expectations of what the place should look like when they move out.

Be warm and welcoming to your tenant. If they are new to the area make sure that you are helpful with the best place to get a cup of coffee, best Mexican restaurant, and best grocery store. Provide them with a one page document that goes over what day is trash day, numbers for utilities and where to park their automobiles. Don’t forget to provide them with their new address, complete with zip code. If it is easy for you a nice touch is to provide them with a sheet of personalized return address labels. This may sound silly but small details make a huge difference. Don’t forget to write them a warm welcome letter that thanks them for renting your place and welcomes them to their new home and the community. Remember you are doing what it takes to be a great landlord. It is the the little things that make the difference.

Walk the tenants through the lease. This is an agreement between the two of you. You need to know that they know what their responsibilities are. Review the important sections. Walking them through the lease shows that you are someone that is fair and that they can trust. It is important that you also follow the lease. If there is ever a problem with the tenant, the lease is your guide on how to handle the problem. Be consistent. Always follow the lease exactly! If the tenant is late with the rent, there is no first chance, no matter what the story, “the lease says.”

Be accessible. If your tenant needs to reach you, you need to be reachable. Respond promptly when the tenant calls or emails. Remember this is a business. If you are going out of the country or unavailable for an extended period of time, let your tenant know what to do in case of an emergency. Provide them with a contact who can handle your business while you are away.

Always keep your cool! Never yell or swear at your tenant. Whatever the situation, whatever the problem, keep your cool. remember that your tenant is your customer and that you are providing a service. Also remember that your tenant is not your friend. You can be friendly, but draw the line there. This is a business relationship and it is important to keep that emotional distance in case there is ever a problem.

Now you have an idea of what it takes to be a great landlord. It is the little things that make all of the difference between you being an average landlord and being considered a great landlord by the tenants. These tips are just a few of what can be found in the book: Exposed, Success Secrets for Landlords. The book can be purchased from Barnes and Noble and Amazon!

Embarrassing Situations for Realtors

We can all use a smile from time to time. Here’s blog post about embarrassing situations for realtors. These situations can happen anytime. But most embarrassing moments happen when a realtor is working with a client. When with a client a realtor is on stage, anything you do is seen. These embarrassing situations I have personally experience at least once during my long career, few of these more than once.

Can’t get into the house!

The first embarrassing situation, is not being able to get into the house. The key simply will not unlock the door. This is something that as a realtor our clients count on, is our ability to provide them with access to the house. When we can’t it is embarrassing and we feel a bit stupid. But sometimes it is not as easy as it seems. When this has happened to me I have been known to ask my client if they can get the key to open the door. Often times they can. That only adds to my embarrassment, but at least we get into the house.

Where is the lockbox?

The next embarrassing situation is not being able to find the lockbox, where the key is stored. Agents are provided with showing instructions, but sometimes instructions the instructions do not mention the location of the lockbox. As the agent, you look on the door, the gas meter and all of the other places you usually find the lock box and you cannot find it. Then what often happens to me is my client finds it some place that I did not look. Guess what, this is another embarrassing moment.

Where is the key?

The agent and client have just finished looking at the property. They are all ready to leave. Everyone gets to the front door and the key is missing. The agent has no idea what happened to the key and they cannot leave until it is found. It is not in their hand or pocket or on the floor by the door or even in the lock of the door. Everyone is walking all over the house looking trying to find it so that the key can be put back in the lockbox and all can leave. This is one sure fire way to feel very embarrassed and to have another one of those embarrassing situations. Hopefully no one will ask, “Where was the last place that you saw the key.”

The cat got out!

Another embarrassing situation can also occur while out showing property. As the agent you are provided with showing instructions that there is an animal in the house that must stay inside. That animal that you were suppose to make sure stayed inside the house escapes outside. This is an embarrassing moment that has huge implications for you, the owner of the pet and the pet. Imagine chasing the animal, that escaped, all over the backyard, in the snow before you corner it and grab it to take back into the house. This was no laughing matter. The animal is stressed, very unhappy and trying to lash out at you. Once the escapee is back in the house we can all smile. Oh what a wonderful embarrassing situation.

Getting lost

Getting lost while out showing property is certainly an embarrassing situation for a realtor. Imagine following your realtor around while looking at property and they cannot find the property. This happened much more frequently before GPS, but can still happen today. GPS can give wrong directions, there is a lack of satellite service or getting distracted and missing a turn and lead to being lost. Clients often feel like we should know the location of every street and every house. When the realtor gets lost it is an embarrassing situation because we know the expectations that our clients have.

We have all been in embarrassing situations. Realtors are no different. I hope hearing about realtor’s embarrassing situations have brought you a smile. Now, I am checking a map to make sure I know where the houses are located I am showing this afternoon. No getting lost for me. Now, where did I put that key?

Are High Interest Rates Discouraging you from Buying a House?

A picture of a toy house to demonstrate the idea of Are High Interest Rates Discouraging you from Buying a House?

Are High Interest Rates Discouraging you from Buying a House? What do you do when you are ready to buy but the high interest rates have you discouraged?  You get creative.  The typical mortgage for buyers to obtain when purchasing, is a thirty year fix rate mortgage.  There are other mortgage options available. When interest rates are high you might be better off obtaining an adjustable mortgage, with a lower interest rate.  If that sounds scary, it shouldn’t. There are loan programs out there including a seven year ARM?  This loan offers an interest rate that stays fixed for the first seven years of the loan. In real estate you will hear agents say, you date the rate and marry the property. What this saying means is that you find the house that you love that you can live in for a long time and you refinance to bring your rate down when rates drop. There are other options available.

Explore other loan options

There are other loan options that will provide a lower the interest rate on the mortgage for awhile. An option available is called the 3/2/1 buy down. This mortgage works by having the interest lowered for the first year, then going up the second year and the third year, the loan is at the rate it will be for the life of the loan. As an example  the rate for the first year might be four percent. 

The second year the rate goes to five percent and the third year the rate is at six percent.  When you take out this type of loan there will be upfront costs. The upfront amount that you pay is the amount that the lender is not earning by reducing the interest for the first two years of the loan. The benefit is not long term.  You need to make sure that you are able to comfortably pay the loan in the third year at the higher interest rate. 

Don’t let high interest rates keep you from buying

A picture of text on a board to demonstrate the idea of Are High Interest Rates Discouraging you from Buying a House?

Are High Interest Rates Discouraging you from Buying a House? Higher interest rates do not need to discourage you from buying a house. There are creative solutions for the higher interest rates that we are experiencing. First step is to meet with a knowledgable, trusted, creative mortgage loan officer to explore what might work best for you.  Next, find a property that you love and a mortgage that will work for you until interest rates improve. When interest rates drop, then refinance your loan. Don’t let the interest rate keep you from buying.  Get into the market. Remember, if you need a recommendation for a good lender. Contact us!

What Is The 5% Rule In Real Estate?

An image of a blackboard to illustrate The 5% Rule In Real Estate

The 5% rule in real estate is a rational approach to figuring out if you are better off renting vs. buying a home at a particular time. Here is a simple explanation of the five percent rule. Multiply the value of the home, for example, the home is priced at $450,000, take that number, $450,000, times 5%. That number in my example would be $22,500. Lastly divide that number, $22,500 by 12. The number that you will have for this example would be $1,875. Consider this the break even point. If the monthly rent on a comparable home that you would want to live in is below that number ($1,875 in this example) it makes sense to continue to rent. If the monthly rent is higher than this number it makes sense to buy.

To Rent Or To Buy?

The five percent rule takes the emotion out of the decision of rent vs. buy and gives you hard numbers to think about. The cost of renting a home is simple. It is the amount that you pay in rent. The cost of owning a home is more complicated. You have to consider the maintenance costs the property taxes and these costs are assumed in this five percent rule. Moreover, they are using the number of one percent of the value of the home goes for taxes and maintenance. With this you arrive at a rational decision to buy or rent.

This formula does not take into account if you are in a financial position to buy a home. Moreover, it also does not take into account additional benefits to buying a home. You can deduct some or all of the interest that you pay on your mortgage from your taxes. That alone will push the the math to favor owning over renting. Moreover, this formula also does not take into account the wealth that you will build through appreciation of your asset, your home.

The 5% Rule In Real Estate: We Are Here If You Need Help

The decision about whether you should continue to rent or buy a home cannot be made completely based on the The 5% Rule In Real Estate nor can it be a completely emotional decision. Explore what is best for you. Additionally, ask professionals that you trust questions to get the answers that you need to make an informed decision. Contact us for more assistance.